Commercial Courts (Amendment) Act, 2018 cannot be applied retrospectively : Delhi High Court

Commercial Courts (Amendment) Act, 2018 cannot be applied retrospectively : Delhi High Court

The bench cleared that if the legislature intended it to be retrospective, it would have been specified

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 stated that there was no lack of clarity or ambiguity in Section 19 of the 2018 amended Act. It categorically stated that its provisions would apply to cases relating to commercial disputes filed on or after 3 May 2018, the date of the commencement of the Act.

The court stated that interpreting the amended Act to be retrospective in nature would affect the substantive rights of the parties who had already filed their suits in ordinary civil courts before the Act was enforced. It would also lead to administrative and practical difficulties, which was not the intention of the legislature while promulgating the Act.

It further cleared, "Had the legislature intended for the amended Act to be retrospective, they would have specified it."

The bench was dealing with a bunch of petitions for the transfer of a suit filed by the respondents that were pending on the ground that the parties had raised a common substantial issue.

It was stated that vide the February 2018 order, the District and Sessions Judge, Patiala House Courts, New Delhi, allowed the petition and transferred it to the Court of the Additional District Judge, Patiala House Courts, where it was 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 2015 Act was amended in 2018 by which all suits relating to a commercial dispute over a sum of Rs.3 lakhs filed on or before the institution of the amended Act were to be transferred to the designated commercial courts. Also, the title of the 2015 Act was shortened to Commercial Courts Act, 2015.

Thereafter, the petitioners approached the high court seeking a transfer of the civil suits pending before the Patiala House Courts to the designated commercial courts.

The question before the high court was whether the amended Act applied retrospectively to all the pending suits and applications filed prior to 3 May 2018 of over Rs.3 lakhs.

The bench noted, "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 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, the courts are bound to give effect to their meaning, irrespective of the consequences. It is not a 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 the legislation."

The court also clarified that the term "save as otherwise provided" prefixed in the Act was meant to be in the form of an exception. It said that the purpose of the Saving Clause was to preserve from destruction the existing rights, remedies and privileges.

While dismissing the petitions, the court added, "The petitioners cannot take advantage of the Saving Clause in the amended Act to state that it applies retrospectively to 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."