Transfer of Commercial Suits from regular courts to Commercial Courts: What Calcutta High Court held [Read Judgment]

A Single Bench of the Calcutta High Court comprising of Justice Debangsu Basak on January 9, 2020 clarified the procedure to be adopted for transfer of cases from regular Courts to the Commercial Courts as per the Commercial Courts Act, 2015.

Issue Involved

The issue prompting the discussion was whether an appeal lies against an order of grant of extension of time to file written statement if the matter falls under the purview of the Commercial Courts, 2015?

Facts of the case

The facts leading to the instant matter arose when the defendant nos. 1 to 8 caused breach of the contract, which they had entered into with the plaintiff. The plaintiff filed a suit seeking recovery of a sum of Rs 3,32,00,000/- with damages.

In the suit, the plaintiff had applied for a judgment and decree on admission, which was allowed, vide judgment and decree dated July 26, 2016.

However, the same was set aside by the Appellate Court on August 22, 2017. Thereafter, a Special Leave to Appeal was preferred against the judgment of the Appellate Court before the Supreme Court. The Supreme Court issued notice on January 22, 2018. The matter is still pending before the Supreme Court.

Subsequently, the defendant nos. 3, 4 and 5 filed three applications seeking extension of time to file written statements. These were allowed between July 3, 2018 and February 1, 2019 upon payment of costs.

The order dated February 1, 2019, allowing defendant nos. 3 and 4 to file written statements was challenged before the Division Bench. The Division Bench dismissed the appeals as ‘not maintainable’, since the appeals arose out of orders extending the time to file written statement in a suit where the dispute is a ‘commercial dispute’ falling under the Commercial Courts Act, 2015.

While recounting the facts of the case, the High Court took particular note that the instant suit was filed on January 30, 2015, before the Commercial Courts Act was gazetted on December 31, 2015 with effect from October 23, 2015.

Decision

The Court held that based upon the pleadings enumerated in the plaint, the disputes which are involved in the instant suit can be stated to be one falling under the purview of Section 2(1)(c)(xi) of the Commercial Courts Act, 2015 which states that:-

“2. Definitions- (1) In this Act, unless the context otherwise

requires,-

(c) “commercial dispute” means a dispute arising out of –

…

(xi) joint venture agreements;”

The Court further went onto hold that since the suit was filed prior to coming into effect of the Commercial Courts Act, 2015, Section 15 of the Act which prescribes for ‘Transfer of pending cases’ would be attracted in the instant case.

Section 15(1) of the Act provides for the transfer of all pending suits and applications, including application under the Arbitration and Conciliation Act 1996, relating to a commercial dispute of a specified value to the Commercial Division. Such transfer can take place on the direction of the Court or the Registry of the Court without the intervention of the parties.

However, in the instant matter, the suit was never transferred to the Commercial Division under Section 15(1) of the Act and neither did any of the parties approach the Commercial Appellate Division of the High Court to get the matter transferred from the regular Court to the Commercial Division for trial.

The Court, therefore, held that since the suit involved in the matter comprises of a commercial dispute, it ought to be transferred to the Commercial Division for the purposes of trial.

The Court further went on to reiterate that after the matter has been transferred in accordance with Section 15(1) of the said Act to the Commercial Court, it is incumbent upon the Commercial Division to hold case management hearing in respect of the transferred suit in order to prescribe new timeline or issue further directions, as may be necessary for the purposes of speedy and efficacious disposal of such suit or application.

The Court thus, held that since the procedure as mentioned above, have not been followed in the instant case, the transferee Court in its discretion has the power to prescribe a new time period within which a written statement shall be filed and thus, granted extension of time to the defendant no.2 to file its written statement on judicially recognised principles.

It further laid emphasis on the proviso to Section 15(4) of the said Act, which lays down that sub-rule (1) of Order V of the Code of Civil Procedure, 1908 shall not apply to a transferred suit. The Court further discussed the overriding effect of Section 15(4) of the Act on Section 16, which provides for following the provisions of the Code of Civil Procedure, 1908, as amended by the Act of 2015 for the purposes of trial of a commercial dispute of a specified value.

The plaintiff was represented by Advocates Suman Dutt, Saunavo Basu and Balanko Sen. The defendants were represented by Senior Advocate SP Sarkar and Advocates AK Awasthi and Aishwarya Kumar Awasthi.

[Read the Judgment]