The Delhi High Court has set aside an order passed by the Principal District & Sessions Judge transferring a commercial suit from one court to another based on allegations of bias. The Bench of Justice Girish Kathpalia restored the suit to the court of Sh. Rakesh Pandit, District Judge, Commercial Court, South West, Dwarka Courts, noting that the transfer order was passed without adhering to established guidelines.
The matter, titled Bull Value Incorporated VCC Sub-Fund v. Delphi World Money Ltd, involved a challenge to the transfer of the subject commercial suit. The High Court questioned the propriety of transferring a case without obtaining comments from the concerned judge and whether passing a status quo order could reasonably ground an apprehension of bias.
Background of the Dispute
The commercial suit in question was filed on November 15, 2025. Shortly thereafter, on November 17, 2025, the learned Commercial Court Judge initially seized of the matter recused himself. Subsequently, the respondent/defendant filed a petition for transfer of the suit, which was withdrawn on November 19, 2025.
On November 27, 2025, the Principal District & Sessions Judge dismissed an application filed by the respondent under Section 24 of the Code of Civil Procedure (CPC) seeking a transfer of the suit. However, the Principal District & Sessions Judge directed the Commercial Court to decide the sequence of hearing pending applications—specifically, whether the application under Order VII Rule 10 CPC (return of plaint) should be heard prior to the application under Order XXXIX Rules 1 and 2 CPC (temporary injunction).
Later that same day, the Commercial Court took up the matter in the post-lunch session. After being apprised of the directions, the court partly heard the counsel for the petitioner on the Order VII Rule 10 application. Due to the unavailability of the senior counsel for the respondent, the matter was adjourned to December 1, 2025, with a direction to the parties to “maintain status quo which was existing as on that day till next date.”
Aggrieved by this, the respondent filed another application under Section 24 CPC on November 28, 2025. The Principal District & Sessions Judge allowed this subsequent application and transferred the suit. The transfer was based on the respondent’s allegation that the Commercial Court judge was biased because he “did not record in order dated 27.11.2025 complete narration of the order of the same day as passed by the Principal District & Sessions Judge and also because the concerned commercial court passed status quo order till next date.”
Proceedings Before the High Court
The petitioner, Bull Value Incorporated VCC Sub-Fund, approached the High Court challenging the transfer order.
During the arguments, the Senior Counsel for the petitioner relied on the judgment of a coordinate bench in Directorate of Enforcement vs Ajay S. Mittal, 2024:DHC:4419, contending that the “guidelines were clearly flouted while passing the impugned order.”
The petitioner also drew the Court’s attention to a specific allegation made in the transfer petition, wherein the respondent claimed that “on 21.11.2025, the concerned judicial officer also appeared to have logged in on the VC link of the High Court to observe the proceedings.”
Justice Kathpalia termed this a “shocking allegation against a judicial officer,” remarking, “One wonders, why the concerned High Court Judge hearing the matter was not informed instantly that the learned judicial officer was linked in the VC.”
Court’s Analysis and Observations
The High Court raised several critical questions regarding the procedure adopted by the Principal District & Sessions Judge:
- “Whether the transfer of the subject commercial suit ordered by the learned Principal District & Sessions Judge without obtaining comments from the learned District Judge, who was holding the earlier commercial court was proper exercise.”
- “Whether in the proceedings under Section 24 CPC, the Principal District & Sessions Judge can direct a trial court as to how the proceedings have to be carried out.”
- “Whether merely because towards end of the day while adjourning the matter, if the court directs parties to maintain status quo, an apprehension of bias can arise in the mind of the reasonable man.”
- “Whether such transfer order would not have a demoralising effect on the judicial officer, who has been condemned unheard on the allegation of bias.”
Decision
During the hearing, the Senior Counsel for the respondent, after consulting with the briefing counsel, submitted that they had instructions to consent to the allowing of the petition. The respondent submitted that the impugned order be set aside and the suit be sent back to the original court.
Accepting this submission, Justice Kathpalia ordered:
“Accordingly, the petition stands allowed… setting aside the impugned order and sending the suit back to the court of Sh. Rakesh Pandit, District Judge, Commercial Court, South West, Dwarka Courts, Delhi.”
The Court directed both parties to appear before the said court on December 12, 2025, to address arguments in compliance with the directions of the Division Bench in FAO(COMM) 336/2025.
Additionally, the High Court directed that a copy of the order be “immediately dispatched to the concerned Principal District & Sessions Judge for information and necessary action.”
