Civil Court And Commercial Division Of High Court Has Concurrent Jurisdiction To Entertain Section 9 Petition If Dispute Amount Is B/w Rs. 10 Lakh & Rs. 1 Crore: Calcutta High Court

The Calcutta High Court single bench of Justice Moushumi Bhattacharya held that both Principal Civil Court and Commercial Division of the High Court has the jurisdiction to entertain Section 9 petition if the claim amount is between Rs. 10 lakhs to Rs. 1 crore. It rejected the contention that the City Civil Court doesn't have jurisdiction to receive or try the first application under Section 9.

Brief Facts:

The Petitioner filed a petition under Section 9 of The Arbitration and Conciliation Act, 1996 (“Arbitration Act”), seeking the appointment of a Receiver for an asset financed through a loan provided by the Petitioner to the Respondents. Additionally, the Petitioner requested a restraint on the Respondents from transferring or disposing of the said asset.

The Respondents, in response, contest the maintainability of the application on three grounds. Firstly, they argued that the application was barred under section 42 of the Arbitration Act. Secondly, they contended that the application was barred under Order XXIII Rule 1 of The Code of Civil Procedure, 1908 (CPC), pertaining to the withdrawal of suits. Lastly, they asserted that the application has not been filed before the jurisdictional Court in accordance with the arbitration agreement between the parties.

The Respondents contended that the City Civil Court at Calcutta has jurisdiction to entertain the application, emphasizing that the Petitioner's initial application was made before the High Court under section 9. It argued that the claim amount of Rs. 67.53 lakhs divests the jurisdiction of the High Court. Reference was made to section 2(1)(b) of The Commercial Courts Act, 2015, defining "Commercial Court," and it was argued that Order XXIII Rule 1 of the CPC was applicable, preventing the Petitioner from initiating a fresh proceeding on the same subject matter without court permission.

Observations by the High Court:

The High Court held that Section 2(1)(e) of the Arbitration Act, meticulously defined the term "Court," designating the forum where a party is obligated to bring a subject matter related to arbitration for adjudication.

It referred to a Notification published on 20.3.2020 in the Kolkata Gazette Extraordinary by the Judicial Department, Government of West Bengal. This notification, executed under the authority granted by section 3(1-A) of The Commercial Courts Act, 2015, altered the landscape by delineating the pecuniary jurisdiction of both the City Civil Court and the Calcutta High Court. The notification specifies the pecuniary jurisdictions of these courts in relation to the value of commercial disputes, establishing concurrent jurisdiction for commercial disputes ranging from Rs. 10 lakhs to Rs. 1 crore. Notably, considering the Petitioner's claim of approximately Rs. 67.53 lakhs, the High Court held that both the City Civil Court and the Commercial Division of the Calcutta High Court would have concurrent jurisdiction.

The High Court dismissed the argument presented by the Petitioner asserting that the Arbitration Act, is indifferent to a financial platform or pecuniary limits. Moreover, it underscored the financial aspect of commercial matters, particularly in arbitration involving a specified value. Section 10 of the Commercial Courts Act addresses this by distinguishing between applications or appeals arising from arbitrations in a commercial dispute of a specified value filed in the Original Side of the High Court (section 10(2)) and those that would ordinarily lie before any Civil Court with Original Jurisdiction in a district, excluding High Courts (section 10(3)). Both categories pertain to non-international commercial arbitrations, with Commercial Courts exclusively vested with jurisdiction to hear and dispose of appeals and applications arising from domestic arbitrations within the authority of the Principal Civil Court exercising territorial jurisdiction over the arbitration.

It held that Section 2(1)(e)(i) of the Arbitration Act, does not envision conflicts between the Principal Civil Court of Original Jurisdiction and the High Court exercising Ordinary Original Civil Jurisdiction in the same District. It is inclusive and treats the High Court as a principal Civil Court empowered to decide questions forming the subject matter of arbitration, akin to a suit.

Further, the High Court held that the Petitioner's withdrawal of the initial application from the City Civil Court was inconsistent with the construction outlined in section 42 in the Arbitration Act. It held that Petitioner, having abandoned its claim before a competent court with jurisdiction, cannot subsequently file a fresh application on the same cause of action before the High Court.

Therefore, the High Court held that it cannot be said that the High Court is the only court under Section 2(1)(e)(i) of the Arbitration Act for filing Section 9 petition. It held that the party is free to approach any court provided that it has been designated as the proper Court in terms of pecuniary limits.

Case Title: Cholamandalam Investment and Finance Company Limited vs Uma Earth Movers and Anr.

Case Number: A.P.- COM 370 of 2024.

Advocate for the Petitioner: Mr. Swatarup Banerjee, Adv. Ms. Shrayashee Das, Adv. Mr. Himanshu Bhawsingka, Adv. Mr. Rohan Kr. Thakur, Adv.

Advocate for the Respondent: Mr. Suddhasatva Banerjee, Adv. Mr. Dyutimoy Paul, Adv.