Supreme Court directs Allahabad High Court to respond on transferring pending matters to Commercial Courts

Supreme Court directs Allahabad High Court to respond on transferring pending matters to Commercial Courts

The bench comprised of Justices M. R. Shah and B. V. Nagarathna

The Supreme Court has asked the Allahabad High Court to respond on whether not transferring the pending arbitration matters/commercial cases to the concerned Commercial Courts can be said to be contrary to Section 15 of the Commercial Courts Act.

The Court was adjudicating the matter where the Court, in May, had issued certain guidelines to tackle the issue of delay in deciding matters related to commercial disputes in the state of U.P. The directions were issued after being apprised of the burgeoning pendency in the execution proceedings of arbitral awards and applications to set aside award under Section 34 of the Arbitration and Conciliation Act, 1996, in the state of UP.

The bench noted that the cases which are filed under the Arbitration Act prior to the establishment of the Commercial Courts Act are not transferred to the Commercial Courts and the jurisdiction is continued with the regular courts.

"Prima facie not transferring the pending arbitration matters/commercial cases to the concerned Commercial Courts can be said to be contrary to Section 15 of the Commercial Courts Act. Section 15 of the Commercial Courts Act deals with respect to transfer of pending cases, which reads as under:- '15. Transfer of pending cases...'", observed the bench, saying that let the High Court look into the same and respond on the aforesaid.

In response to a Notification of 21.07.2022 issued by the government of UP, by which the government has constituted four additional commercial courts in UP at Meerut, Gautam Buddha Nagar, Agra and Lucknow, the bench was of the opinion that from the Notification it appears that those four additional commercial courts would have jurisdiction over different Districts and that the aforesaid is likely to create more problems and delay in disposal of the commercial cases- For example, if the additional commercial court at Meerut would have jurisdiction over six different Districts, in that case the litigants in other Districts may have to go to Meerut even those districts may not have a large pendency.

"There may be a justification for additional commercial courts at Meerut, Gautam Buddha Nagar, Agra and Lucknow, as the case may be, but there may not be any justification for additional commercial courts in other Districts where the pendency of the commercial courts may be less than 750/1000…", the bench had recorded on Tuesday.

"Learned counsel appearing on behalf of the High Court and even the Registrar General, who is present in the Court, is not in a position to point out as to how many commercial cases are pending in the Commercial Courts at Meerut, Gautam Buddha Nagar, Agra and Lucknow and the respective Districts over which the aforesaid Commercial Courts, namely, Meerut, Gautam Buddha Nagar, Agra and Lucknow have jurisdiction", recorded the bench.

The Registrar General of the High Court is directed to file the specific affidavit pointing out the tendency of commercial/arbitration cases either by way of execution petitions or Section 34 of the Arbitration Act under Act, 1940 or under the 1996 Act in the respective Commercial Courts originally constituted, more particularly, the pendency in the Commercial Courts at Meerut, Gautam Buddha Nagar, Agra and Lucknow and the concerned Districts over which the aforesaid 4 Commercial Courts would have jurisdiction.

In May, 2022, the Supreme Court had directed the UP state government to consider the proposal made by the Allahabad High Court to create additional commercial courts in four districts and take a final decision within a period of four weeks. In July, the Allahabad High Court filed an affidavit and reported that approximately 40,000 Execution Petitions are pending in the State of UP, that now the execution petitions are distributed among the Judicial Officers and a judicial officer would have an average of 47 such cases before himself or herself, apart from judicial work, that between 01.05.2022 and 04.07.2022, 9678 Execution Petitions and 1373 Petitions under Section 34 of the Arbitration Act have been disposed of, and that the cases are transferred to the Additional District Judges in terms of Civil Laws (U.P. Amendment Act) 2019 and the distribution of the work has taken place in the month of May, 2022 itself. The bench comprising Justices Shah and Nagarathna had directed the High Court to submit a further status report and the progress in disposal of the matters relating to the commercial disputes.

At this juncture, AG K.K. Venugopal had argued that the Supreme Court has no jurisdiction to issue directions on administrative side to the High Courts. "We may remind that this is not an adversarial litigation at all. The High Court ought not to have and should not have taken the same as a prestige or ego issue. Only in a case where the High Court has failed to perform its duty and/or monitoring/supervision and even it can be seen that before this Court intervened, as such, no serious efforts were made by the High Court on administrative side to see that commercial cases are disposed of at the earliest, that is why this Court was required to intervene", the bench had said in July. The bench had said that the larger issue raised by AG will be dealt with and posted the matter to August 16, 2022