Commercial Courts (Amendment) Act, 2018 Cannot Be Applied Retrospectively: Delhi High Court

The Delhi High Court has observed that the Commercial Courts (Amendment) Act, 2018 cannot be applied retrospectively.

A division bench comprising of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad was of the view that it cannot be said that there is any lack of clarity or ambiguity in sec. 19 of the 2018 Amending Act which categorically states that its provisions will apply to cases relating to commercial disputes filed on or after the date of commencement of the Act, i.e. May 3, 2018.

"Furthermore, interpreting the Amending Act to be retrospective in nature will affect the substantive rights of the parties who have already filed their suits in ordinary Civil Courts before the Amending Act was enforced. Holding it otherwise will and also lead to administrative and practical difficulties which cannot be said to be the intention of the Legislature while promulgating the said Amending Act. Had the Legislature intended for the Amending Act to be retrospective in nature, there is nothing that could have prevented the Legislature from explicitly specifying the same," the Court said.

The Bench was dealing with a bunch of transfer petitions for transfer of a suit filed by the Respondents where the suits filed by the Petitioners were pending on the ground that the parties had raised a common substantial issue.

It was stated that vide order dated February 5, 2019,, the District and Sessions Judge, Patiala House Courts, allowed the transfer petition and transferred the petition filed by the Petitioners to the Court of Additional District Judge, Patiala House Courts, where the suits filed by the Respondents were pending.

The Commercial Courts, Commercial Division and Commercial Appellate Division Act, 2015 was enacted by the Legislature under which all suits over a sum of Rs.1 Crore were to be transferred from Ordinary Courts to the designated Commercial Courts.

The said Act of 2015 was amended in the year 2018 in which all suits relating to a commercial dispute over a sum of Rs.3 lakhs filed on or before the institution of the Amending Act, 2018, were to be transferred to the designated Commercial Courts. Furthermore, the title of the 2015 Act was shortened to Commercial Courts Act, 2015.

The Petitioners thus approached High Court seeking transfer of the Civil Suits which were pending before Additional District Judge, Patiala House Courts, New Delhi, to the designated Commercial Court on the ground that the suits were commercial in nature and pertain to "commercial disputes" as defined under the 2015 Act.

The question which arose for consideration before the Court was whether sec. 19 of the Amending Act will apply retrospectively to all the pending suits and applications of a specified value of more than Rs. 3 lakhs that were filed prior to May 3, 2018?

The Court noted that a basic principle of jurisprudence is that statutes must have a prospective effect on the ground that a retrospective application of the same threatens to disturb matters that have already been settled, and therefore, undermine and invade contractual and personal relationships existing under the law that has already been in operation.

"In order to ensure that statutes that are being newly promulgated do not disturb such previously settled matters, a strong presumption exists that the law is prospective in operation, unless explicitly made retrospective," it said.

It added "Furthermore, the golden rule of interpretation is that words of the statute must prima facie be given their ordinary meaning and when the words of a statute are clear, plain and unambiguous, then the Courts are bound to give effect to their meaning, irrespective of the consequences. It is not sound principle of construction to brush aside words in a statute and thereby substitute the intention of the legislature. It is well settled that Judges must refrain from legislating, and that they have to remember that there is a line, though thin, which separates adjudication from legislation."

The Court also noted that the term "save as otherwise provided" that has been prefixed in sec. 19 of the Amending Act is meant to be in the form of an exception. It said that the purpose of the Saving Clause is to preserve from destruction certain rights, remedies and privileges already existing.

"This Clause saves all the rights that were previously there; it does not create any new rights. In light of this, the Petitioners cannot take advantage of the Saving Clause in Section 19 of the Amending Act to state that the Amending Act applies retrospectively to Section 15 of the 2015 Act and that the disputes pertaining to the lowered specified value of Rs.3 lakhs, which are pending before the District Courts, will come under the purview of the Commercial Courts Act, 2015," the Court added.

In view of the said observations, the Court concluded that the Amending Act shall not apply retrospectively and therefore, the Bench was not inclined to transfer the civil suits pending before the Additional District Judge, Patiala House Courts, New Delhi, to the designated Commercial Court.

The pleas were accordingly dismissed.

Title: SATYANARAIN KHANDELWAL v. PREM ARORA And other connected matters 

Citation: 2022 LiveLaw (Del) 700

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