[Commercial Courts Act] Delhi HC Decision In Superon: Opening Of A Pandora's Box?

It is not in dispute that in the event that a suit is filed and registered as a commercial suit, the Commercial Courts Act would hold the field. The Act inter alia provides for certain procedural and appellate norms, which are in distinction to the rules formulated under the Code of Civil Procedure, 1908 (hereinafter referred to as the "CPC").

The Law

Section 13 of the Act deals with the Appeals from Commercial Courts and Commercial Divisions. It reads as "Any person aggrieved by the judgment or order of a Commercial Court below the level of a District Judge may appeal to the Commercial Appellate Court within a period of sixty days from the date of judgment or order.

(1A) Any person aggrieved by the judgment or order of a Commercial Court at the level of District Judge exercising original civil jurisdiction or, as the case may be, Commercial Division of a High Court may appeal to the Commercial Appellate Division of that High Court within a period of sixty days from the date of the judgment or order: Provided that an appeal shall lie from such orders passed by a Commercial Division or a Commercial Court that are specifically enumerated under Order XLIII of the Code of Civil Procedure, 1908 (5 of 1908) as amended by this Act and section 37 of the Arbitration and Conciliation Act, 1996 (26 of 1996).]

(2) Notwithstanding anything contained in any other law for the time being in force or Letters Patent of a High Court, no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the provisions of this Act."

The present analysis pertains to clause 13(1)(A), and its proviso. Whereas clause 13(1)(A) states that the Appellate jurisdiction of the Commercial Appellate Division, can be exercised from all orders and decrees of the Commercial Division (original jurisdiction of the High Court or District Judge), the proviso curtails the jurisdiction of the Appellate Division to orders specifically enumerated in Order XLIII of the CPC and Section 37 of the Arbitration and Conciliation Act, 1996.

The Facts

The decision in question, dealt with a situation wherein the Joint Registrar of the High Court (hereinafter referred to as "JR") in exercise of powers under the Delhi High Court Original Side Rule, 2018 (hereinafter referred to as the "Rules") read with Order VI rule 17, allowed an amendment to the plaint filed by the Plaintiff. Without getting into the factual matrix, it would be apposite to note that the amendment was allowed. The Defendant filed an appeal under Rule 5 of Chapter II of the said rules, which was registered as an Original Appeal^[2]. The Single Judge, dismissed the appeal and upheld the order of the JR. Against this order, the Appellant appealed to the Commercial Appellate Division. The applicant/respondent objected to the maintainability of the first appeal, which is the subject matter of this analysis.

The primary contention of the Respondent was that since the order against which the appeal was preferred, was neither an order enumerated under Order XLIII of the CPC or Section 37 of the Arbitration and Conciliation Act, 1996, the appeal was not maintainable under Section 13(1)(A) of Act.

The Commercial Appellate bench upheld the maintainability of the appeal, by distinguishing two prior judgments of the HC namely HPL (India) Ltd v. QRG Enterprises^[3] and Samsung Leasing Ltd v. Samsung Electronics Co. Ltd^[4]. In both these decisions, the Commercial Appellate Division rejected the maintainability of first appeals from orders under Order 6 Rule 17, CPC and an application to produce additional documents of the Single Judge exercising original side commercial jurisdiction.

The Court observed that "We regret our inability to agree. The distinction, sure, though subtle, between Samsung Leasing Ltd and the present case, lies in the fact that while, in Samsung Leasing Ltd , this Court was concerned with the maintainability of an appeal against an order, passed by the learned Single Judge exercising commercial jurisdiction, under Order VI Rule 17 of the CPC, we are concerned with the challenge to an order, not passed under Order VI Rule 17 of the CPC, but, rather, under Rule 5 in Chapter II of the 2018 Original Side Rules. For ready reference, Rule 5, in Chapter II of the 2018 Original Side Rules may be reproduced, thus: "5. Appeal against the Registrars orders. – Any person aggrieved by any order made by the Registrar, under Rule 3 of this Chapter, may, within 15 days of such order, appeal against the same to the Judge in Chambers. The appeal shall be in the form of a petitioner bearing court fees of ₹ 2.65." Clause (2) in Rule 3 in Chapter II of the 2018 Original Side Rules empowers the Registrar to decide any "application to amend the plaint, petition, written statement, the application or subsequent proceedings where the amendment sought is formal". It was ostensibly in exercise of the powers conferred by this clause that the learned Joint Registrar passed the order, dated 25th April, 2019, disposing of IA 10990/2018, against which OA 58/2019 came to be filed by the appellant. That being so, OA 58/2019 was relatable to Rule 5 in Chapter II of the 2018 Original Side Rules, extracted supra. The present appeal, before us, emanates, therefore, not from an order FAO (OS) (COMM) 237/2019 passed under Order VI Rule 17 of the CPC, but under Rule 5 in Chapter II of the 2018 Original Side Rules."

(emphasis is ours)

The Ratio

In essence the Court held that since the two decisions adjudicated first appeals from orders not enumerated under Order XLIII, CPC , they stood on a separate footing vis-a-vis appeals from orders under Delhi High Court rules. This in the opinion of the author would lead to the opening of a pandoras box, which would whittle down the object of the Act, and the lead to an anomalous and impractical situation.

The Court explored the language of Section 13(1)(A) and held that it was an enabling provision. Assuming without accepting this interpretation, the judgement could possibly culminate in a perversity denuding contesting parties of their substantive rights.

The Analysis

A perusal of the Rule 3 of Chapter II, would indicate that there are 61 interlocutory applications (hereinafter referred to as "IA's") under the Rules (pari materia to rules under the CPC), that the JR has the power to adjudicate, as a designate of the Single Judge exercising original side jurisdiction. These include procedural and substantial IA's pertaining to inter alia amendment of pleadings, issuance of process, etc. However, what is important to note is that, the JR is merely a delegate of the Single Judge, and is not mandated to adjudicate these applications. Depending on the case management, and extraneous circumstances, several of these applications, are at times finally adjudicated by the Single Judge himself. In fact the language of Rule 3 Chapter II, reflects that the JR "may", adjudicate these IA's. Therefore, the intention of the legislature necessarily indicates that only in certain circumstances, the JR may exercise his powers and the Single Judge continues to retain these power under ordinary circumstances. The logical inference of this leads to two situations:

1. In one situation, where the Single Judge adjudicates an application under Order VI Rule 17 of the CPC, the party would be prevented from filing an appeal under 13 (1) A). This situation flows directly from the language of Section 13(1)(A) and is indisputable. In fact, the Court, in this decision has itself observed that "HPL India Ltd1 and Samsung Leasing Ltd2 , therefore, adjudicated on the maintainability of an appeal, under Section 13 of the Commercial Courts Act, against an order, passed by the learned Single Judge in exercise of commercial jurisdiction, under one or the other provision of the CPC. We are not concerned with such a challenge. The challenge, before us, is against an order, of the learned Single Judge, passed under Rule 5 in Chapter II of the 2018 Original Side Rules. Samsung Leasing Ltd , therefore, in our considered opinion, does not apply."

(emphasis is ours)

1. In the other situation and due to extraneous circumstances, if the JR adjudicates the said application, either party would have a right to appeal, first to the Single Judge under Rule 5, Chapter II, and then to the Commercial Appellate division under 13(1)(A) of the Act. Any practitioner, familiar with the original side in the Delhi High Court, would be aware that there is no uniformity, as to whether interlocutory applications under Chapter II Rule 3, are necessarily adjudicated by the JR.

The line of reasoning of the judgement creates an inefficient distinction between two applications under the same provision, seeking the same relief, under the same jurisdiction, only distinguished by whether the JR or the Single Judge decided them.

The Illustrative Anomaly

Taking this line of reasoning to its logical conclusion, it is possible to fathom a situation in a single commercial suit where the JR exercises his power under Rule 3 of Chapter II on the basis of an interlocutory application, and the parties to the proceeding would thereby have two statutory right of appeals. However, on the filing of a subsequent interlocutory application, if the Single Judge adjudicates the said application, neither party would have the right to appeal.

The Conclusion

1. This judgement of the Court creates an anomalous situation, opening the pandoras box for appeals against interlocutory applications in commercial suits. Parties would be bound to use Gorilla Tactics in the form of unnecessary IA's, and thereby exhaust consequential appellate remedies.
2. The substantive amendments made under the CPC through the Commercial Courts Act would be redundant, if this judgement is allowed to hold field. Especially, when the CPC itself, provides restricted remedies against interlocutory applications, and parties are left to trigger the constitutional powers of High Courts under Article 227 of the Constitution.
3. Further, the judgement treats two interlocutory applications under the same provision, under the same jurisdiction, to be treated differently depending on whether the JR or the Single Judge adjudicates the said application. This would tantamount to an arbitrary distinction, and a manifestly unjust situation for parties as highlighted above.
4. The judgement, whittles down the object of the Commercial Courts Act, pertaining to speedy disposal of commercial suits, and frustrates the intent of the legislature.

The author has only touched upon a limited point pertaining to the outcome and practicality of the said judgement. Several questions of law, remain unanswered and disputed, which shall be analysed in a separate article.

(The author is an Advocate at the High Court of Delhi. Views are personal. The author may be reached at amervaid@gmail.com)