BRD Finance's Suit Must Be Heard by Commercial Court: Kerala High Court Sets Aside Rulings

A Case of Jurisdictional Overreach

In a significant ruling that reinforces the primacy of the Commercial Courts Act, 2015, the Kerala High Court has set aside judgments of both the Munsiff Court and Sub Court in Chavakkad, holding that they lacked jurisdiction to hear a commercial dispute of a specified value. The Court directed that the suit be transferred to the Principal Sub Court, Thrissur—the designated commercial court for such claims.

Justice Easwaran S., presiding over the single bench, was hearing a Regular Second Appeal filed by BRD Finance Ltd., a kuri company, against the concurrent dismissal of its suit for recovery of ₹3,47,587 based on a promissory note.

When a Civil Court Stepped Out of Bounds

The original suit, O.S. No. 968/2018, was instituted before the Munsiff Court, Chavakkad. However, during its pendency, the Government of Kerala issued a notification (G.O. Ms. No. 51/2020/Home) on February 24, 2020, designating all Sub Courts in the State as commercial courts for recovery claims exceeding ₹3 lakh, under Section 3(1) and (2) of the Commercial Courts Act, 2015.

Despite this, the Munsiff Court proceeded to adjudicate the suit on merits and dismissed it. The appeal before the Sub Court, Chavakkad, also ended in affirmation. The appellant then approached the High Court, arguing that the lower courts had acted without jurisdiction.

The Core Legal Question

The substantial question of law framed by the High Court was: “Whether after coming into force of the Commercial Courts Act, 2015, can a civil court try and adjudicate a case of commercial dispute of a specified value which is to be tried only by a commercial court?”

The appellant, represented by counsel G. Krishnakumar, contended that Section 15 of the Act mandated automatic transfer of such suits to the designated commercial court. The Munsiff Court's failure to transfer the case rendered its proceedings void ab initio, and the appellate court's oversight perpetuated the illegality.

The High Court's Verdict: No Shortcuts in Commercial Disputes

Finding considerable force in the appellant's submissions, Justice Easwaran S. observed that once the State notification was in place, the Munsiff Court was bound to transfer the suit. He stated unequivocally:

“Without transferring the same, the act of the Munsiff Court in proceeding to consider the suit on merits is clearly unsustainable and without jurisdiction.”

The court further noted that the jurisdictional defect was not cured at the appellate stage. “The said illegality was perpetuated at the appellate stage as well and the Sub Court, Chavakkad failed to notice the fact that an appeal against an order rendered without jurisdiction is not maintainable before it,” the judgment read.

The Final Order and Its Implications

Without entering into the merits of the underlying dispute, the High Court set aside both the trial court's decree dated January 31, 2024, and the appellate court's judgment dated September 18, 2025. All findings recorded by the lower courts were vacated.

The court directed that O.S. No. 968/2018 be transferred to the Principal Sub Court, Thrissur, which will now issue fresh notices to the parties and proceed with the case on its merits. The appellant was also granted a refund of the court fee paid before the High Court and the first appellate court.

This ruling serves as a clear reminder that procedural compliance with the Commercial Courts Act is not optional—designated commercial courts alone have the authority to adjudicate commercial disputes of a specified value, and any deviation by a civil court will be struck down as lacking jurisdiction.