Commercial Courts Act 2015 applies to commercial suits filed before its enactment: Delhi High Court

The Delhi High Court has held that the restrictions on appeals under the Commercial Courts Act, 2015 apply even to commercial suits filed before the law came into force. [Yes Bank v. Modi Rubber]

A three-judge Bench of Justices V Kameswar Rao, Chandrasekharan Sudha and Amit Mahajan ruled that litigants in such suits cannot claim the wider appellate remedies available under the earlier legal regime merely because the proceedings began before October 23, 2015.

"We hold that the provisions of the Commercial Courts Act shall be applicable to suits filed prior to its commencement, even if the suits were converted or re-numbered into commercial suits only on a later date," the judgment stated.

The ruling came on a reference arising from an appeal filed by Yes Bank against a March 2019 order that allowed Modi Rubber Limited to amend its plaint in a recovery suit. The suit was filed in 2014 for recovery of ₹33.13 crore with interest and damages. It arose from credit facilities extended by Yes Bank in connection with a joint venture between Modi Rubber’s subsidiary and Continental AG.

Although the suit preceded the Commercial Courts Act, it was renumbered as a commercial suit only in 2020. Yes Bank argued that its right to appeal under Section 10 of the Delhi High Court Act had vested when the suit was instituted and could not be curtailed by subsequent legislation.

The majority opinion - authored by Justice Rao and concurred with by Justice Sudha - rejected this contention.

It held that Section 15 of the Commercial Courts Act mandates the transfer of all pending suits involving commercial disputes of the specified value to the High Court's commercial division. Their formal conversion or renumbering by the Registry is only a ministerial exercise and does not determine when the Act becomes applicable, the Court said.

“From 23.10.2015, in respect of a suit instituted prior to the operation of the Commercial Courts Act, the provisions of the Act, including Section 13, would apply, notwithstanding the date on which the suit was converted or re-numbered into a commercial suit,” the judgment said.

The Court added that a right of appeal is neither natural nor inherent, but is created by statute. A subsequent enactment can take away such a right expressly or by necessary implication.

Section 13 permits appeals against only those orders specifically enumerated under Order XLIII of the Code of Civil Procedure and Section 37 of the Arbitration and Conciliation Act. An order allowing amendment of a plaint under Order VI Rule 17 is not included in Order XLIII.

The Bench consequently overruled its 2019 ruling in Brahmos Aerospace Private Limited v. FIIT JEE Limited, which held that Section 13 would not apply until a pending suit was formally renumbered as a commercial suit. It affirmed the contrary view in Samsung Leasing Limited v. Samsung Electronics Company Limited.

Justice Mahajan agreed that Yes Bank’s appeal was not maintainable, but differed from the majority’s broader reasoning. He held that the restriction would apply before formal transfer only when the court hearing the ordinary suit was also vested with commercial jurisdiction.

Where separate civil and commercial courts exist, an order passed by a civil judge before transfer would remain appealable under the ordinary law, he said.

Senior Advocate Jayant Mehta assisted the court as amicus. He was assisted by Advocates Pallav Arora and Suvan Jain.

Yes Bank was represented by Advocates Neeraj Yadav and Aditi Sharma.

Senior Advocate Warisha Farasat with Advocates Nazrul Islam, Akbar Taj and Suvarna Swain appeared for the respondents.

[Read Judgment]