Andhra Pradesh High Court Affirms Commercial Courts Jurisdiction For Matters Valued Above ₹3 Lakhs

Andhra Pradesh High Court Affirms Commercial Courts Jurisdiction For Matters Valued Above ₹3 Lakhs

In a recent ruling, the Andhra Pradesh High Court bench, comprising of Justices R. Raghunandan Rao and Harinath N., emphasized that commercial matters valued at ₹3 lakhs and above must be adjudicated by the appropriate commercial court with jurisdiction.

The Bench highlighted, "The principal civil court of original jurisdiction would have to be treated as the commercial court having territorial jurisdiction over the said area. It may also be noted that Section 21 states that the Commercial Courts Act, 2015, save as otherwise provided, will have effect over every other law that is in force for the time being."

The Court further explained that Section 2(i) of the Commercial Courts Act, 2015 initially set the specified value for suits at ₹1 crores. This threshold was reduced to ₹3 lakhs by Ordinance No. 3 of 2018 and subsequently replaced by Central Act No. 28 of 2018, effective May 3, 2018.

In the case at hand, an arbitrator in 2014 ruled in favor of the respondent, awarding ₹32,99,625 plus 10% annual interest and costs. The respondent, in 2017, filed an arbitration execution plea with the Principal District Judge, East Godavari District, to enforce the award. The petitioners objected, arguing that the execution petition for ₹46,46,965 should have been filed in the commercial court at Visakhapatnam, as stipulated by the Commercial Courts Act, 2015.

On January 1, 2024, the district judge ruled that the jurisdiction objection was not maintainable, asserting that the commercial court's jurisdiction applied to amounts above ₹1 crores, while the amount sought was ₹46,46,965. Aggrieved by this decision, the petitioners moved to the High Court.

The respondent's counsel submitted that the execution petition proceedings had reached the auction stage, with only the finalization of auction terms remaining. They noted that the Supreme Court had stayed the transfer of the execution proceedings, rendering the Division Bench's order unreliable.

The High Court responded, "It is now settled law that it is only the suspension of a judgment that will stop the operation of the principles or interpretation of law set out in the said judgment." In the case of a stay, it is only the parties to the judgment that are affected, and the principle laid down in the said judgment would continue to hold the field and could be relied upon."

Ultimately, the High Court ruled that the matter should be placed before the Commercial Court at Visakhapatnam. The proceedings before the Principal District Judge, East Godavari District, were set aside, with the respondent given the option to transfer or approach the execution petition in the appropriate Commercial Court.