Designated Commercial Courts Subordinate To Rank Of Principal Civil Judge In The District Can Hear Appeals/Application Under Arbitration Act: Supreme Court

The Supreme Court observed that Commercial Courts which are subordinate to the rank of the Principal Civil Judge in the District has jurisdiction to hear applications/appeals under Arbitration and Conciliation Act,1996.

The bench of Justices MR Shah and Krishna Murari rejected the contention that all applications/appeals arising out of arbitration (other than the international commercial arbitration) shall only lie before the Principal Civil Court of a district.

The court upheld the Orissa High Court judgment and the notification issued by the State of Odisha to confer jurisdiction upon the court of learned Civil Judge (Senior Division) designated as Commercial Court to decide the applications or appeals arising out of arbitration.

Before the High Court, the writ petitioners contended that under Section 2(1)(e) of the Arbitration Act, 1996, only the Principal Civil Court of original jurisdiction in a district (Court of Principal District Judge) shall be the "Court" for the purpose of deciding the disputes under the Arbitration Act, 1996 and in case of an arbitration it does not include any Civil Court of a grade inferior to such Principal District Judge. Therefore, according to them, to confer the jurisdiction upon the Court of Civil Judge (Senior Division) to exercise the powers under the Commercial Courts Act including the proceedings under the Arbitration Act, 1996 would be contrary to Section 2(1)(e) of the Arbitration Act, 1996, which is the Special Act. As the High Court dismissed their writ petitions, they approached the Apex Court.

"If the submission on behalf of the appellants that all applications/appeals arising out of arbitration under the provisions of Act, 1996, other than the international commercial arbitration, shall lie before the principal civil Court of a district, in that case, not only the Objects and Reasons of enactment of Act, 2015 and establishment of commercial courts shall be frustrated, even Sections 3, 10 & 15 shall become otiose and nugatory. If the submission on behalf of the appellants is accepted, in that case, though with respect to other commercial disputes, the applications or appeals shall lie before the commercial courts established and constituted under Section 3 of Act, 2015, with respect to arbitration proceedings, the applications or appeals shall lie before the principal civil Court of a district. There cannot be two fora with respect to different commercial disputes.", the Apex Court bench observed while dismissing the appeal.

The court therefore held that all applications or appeals arising out of arbitration under the provisions of Act, 1996, other than international commercial arbitration, shall be filed in and heard and disposed of by the Commercial Courts, exercising the territorial jurisdiction over such arbitration where such commercial courts have been constituted.

Case details

Jaycee Housing Pvt. Ltd. vs Registrar (General), Orissa High Court | 2022 LiveLaw (SC) 860 | CA 6876 OF 2022 | 19 October 2022 | Justices MR Shah and Krishna Murari

Counsel: Adv Uttara Babbar for appellants, Adv Gaurav Aggarwal as amicus curiae 

Headnotes

Arbitration and Conciliation Act, 1996 ; Sections 2(1)(e), 9,14 and 34 - Commercial Courts Act, 2015 ; Section 3 -  State Government can confer jurisdiction to hear applications under Sections 9, 14 and 34 of the Arbitration and Conciliation Act, 1996, upon Commercial Courts which are subordinate to the rank of the Principal Civil Judge in the District -  All applications or appeals arising out of arbitration under the provisions of Act, 1996, other than international commercial arbitration, shall be filed in and heard and disposed of by the Commercial Courts, exercising the territorial jurisdiction over such arbitration where such commercial courts have been constituted. (Para 6-11)

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