Subordination of Commercial Courts: A Commercial Court is subordinate to the High Court, but it is not subordinate to the District Court for the purposes of Section 24 of CPC: Held by Hon'ble Delhi High Court

 

Case Brief: Namita Gupta vs. Suraj Holdings Limited

Title: Namita Gupta v. Suraj Holdings Limited, CM(M) 457/2023 Court: High Court of Delhi at New Delhi Decided On: January 9, 2024 Judge: Hon’ble Mr. Justice Navin Chawla

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Facts of the Case

• Original Suit: The respondent (plaintiff) filed a suit for recovery of Rs. 1,07,37,545.07 against the petitioner (defendant) in August 2019.

• Procedural History: Initially treated as an ordinary civil suit, the petitioner filed a written statement and a counter-claim. In February 2022, the petitioner moved an application under Order VII Rule 11 of the CPC, arguing the dispute was commercial and barred for non-compliance with Pre-Institution Mediation (Section 12-A of the Commercial Courts Act).

• Lower Court Orders: The Additional District Judge (ADJ) observed the dispute was commercial and sent the file to the Principal District and Sessions Judge (PDSJ) for transfer. The PDSJ subsequently transferred the suit to the Commercial Court.

Key Legal Issues

1. Does the Commercial Courts Act, 2015, exclude the application of Section 24 of the CPC (general power of transfer) for commercial disputes?

2. Does a District and Sessions Judge have the power under Section 24 of the CPC to transfer a suit to a Commercial Court?

Arguments

• Petitioner: Argued that the PDSJ lacks the power to transfer an ordinary suit to a Commercial Court; instead, the plaint must be returned under Order VII Rule 10 to be filed afresh with a Statement of Truth and mediation compliance.

• Respondent: Contended that Section 24 of the CPC remains applicable and the PDSJ, having administrative control over subordinate courts, can transfer such proceedings.

Court's Analysis and Findings

• Applicability of Section 24: The Court held that the Commercial Courts Act does not exclude Section 24 of the CPC. Since Section 24 is not mentioned in the Schedule of amended provisions, it remains in full force.

• Subordination of Commercial Courts: A Commercial Court is subordinate to the High Court, but it is not subordinate to the District Court for the purposes of Section 24.

• Procedural Errors: The ADJ erred in referring the file for transfer rather than returning the plaint, and the PDSJ lacked the jurisdiction to pass the transfer order.

• Curing Defects: While commercial suits require specific formats (Statement of Truth), these are curable defects that the plaintiff must rectify upon transfer.

Conclusion

The High Court set aside the orders of the ADJ and PDSJ. However, to serve the interests of justice and preserve the proceedings already conducted, the High Court exercised its own power under Section 24 of the CPC to officially transfer the suit to the Commercial Court