The Andhra Pradesh High Court has ruled that commercial matters valued at ₹3 lakh or more must be heard by commercial courts, not regular civil courts. This significant judgment was delivered by a division bench comprising Justice R. Raghunandan Rao and Justice N. Harinath in Civil Revision Petition No. 740 of 2024 on July 4, 2024.
The case involved petitioners U.V. Satyanarayana and others against the respondent M/s Shriram City Union Finance Ltd. The dispute arose from an arbitration award of ₹32,99,625 plus interest in favor of Shriram Finance, which sought execution through an Arbitration Execution Petition (No. 151 of 2017) before the Principal District Judge, East Godavari District.
The petitioners, represented by advocate A. Sai Naveen, challenged the jurisdiction of the Principal District Judge, arguing that the execution petition for ₹46,46,965 should have been filed in the Commercial Court at Visakhapatnam as per the Commercial Courts Act, 2015.
The court examined two key legal issues:
1. The jurisdiction of commercial courts versus regular civil courts in executing arbitration awards.
2. The applicable pecuniary limit for commercial court jurisdiction.
Addressing these issues, the court made several important observations:
1. On commercial court jurisdiction, Justice Raghunandan Rao cited Section 10(3) of the Commercial Courts Act, 2015, stating: “If such arbitration is other than an international commercial arbitration, all applications or appeals arising out of such arbitration under the provisions of the Arbitration and Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any principal civil court of original jurisdiction in a district (not being a High Court) shall be filed in, and heard and disposed of by the Commercial Court exercising territorial jurisdiction over such arbitration where such Commercial Court has been constituted.”
2. Regarding the pecuniary limit, the court noted: “Section 2(i) of the Commercial Courts Act, 2015 had fixed the specified value to mean a value in respect of a suit which shall not be less than Rs.1,00,00,000/-. However, this value was reduced to Rs.3,00,000/- by an Ordinance No.3 of 2018, which was subsequently replaced by the Central Act No.28 of 2018, with effect from 03.05.2018.”
The court concluded that the execution petition should be transferred to the Commercial Court at Visakhapatnam, which has territorial jurisdiction over East Godavari District. It set aside all proceedings in the execution petition before the Principal District Judge, East Godavari District.
The respondent’s counsel, Maheswara Rao Kunchem, argued that the Arbitration Act designates the Principal District Judge as the civil court for arbitration-related matters. However, the court held that the Commercial Courts Act, 2015 takes precedence in commercial disputes above the specified value.
This judgment clarifies the jurisdiction of commercial courts in Andhra Pradesh and emphasizes the importance of adhering to the reduced pecuniary limit of ₹3 lakh for commercial matters. It aligns with the broader intent of the Commercial Courts Act to expedite the resolution of commercial disputes through specialized courts.
