A court cannot exercise jurisdiction as a Commercial Court unless it is formally constituted and notified by the State Government in accordance with the procedure prescribed under Section 3 of the Commercial Courts Act, 2015.

Whether approved for reporting?¹Whether reporters of the local papers may be allowed to see the judgment?

Ajay Mohan Goel, Judge

(Oral g

By way of this Appeal, filed under Section 37 of the iArbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘1996 Act’), the State has assailed judgment dated 17.08.2024, titled The State of H.P. & anr. Vs. Sh. Hukam Singh Negi, passed by the learned District Judge, Shimla, H.P., in terms whereof, the objections preferred by the State under Section 34 of the 1996 Act, against the Arbitral Award dated 03.12.2019, passed by the Sole Arbitrator, was dismissed.

When the case was taken up for consideration today, it was urged that the judgment passed by the learned District Judge on the objections preferred before the said Court under Section 34 of the 1996 Act, was without jurisdiction as the objections under Section 34 of the 1996 Act against an arbitral award after coming into force of the Commercial Courts Act, 2015 could have been heard and adjudicated upon by the Commercial Couurts only. The said Court not being the Commercial oCourt had no jurisdiction either to entertain or to decideC the objections.

Learned Advocate General in order to assist the Court, drew the attention of the Court to Section 3 of the Commercial Courts Act, 2015 and submitted that in terms of said section, Commercial Courts at District level have to be established as provided and it is a matter of record that when the objections were preferred and decided by the learned District Judge, said Court was not a Commercial Court in terms of Section 3 of the Commercial Courts Act. Learned Advocate General Counsel submitted that, in fact, at the relevant time, there only was Commercial Division of High Court, which was constituted in terms of Section 4 of the Commercial Courts Act and in the light of this fact, the adjudication by the learned District Judge is without jurisdiction.

Learned counsel for the respondent also states that this being an admitted actual position and further as there appears to be inherent lack of jurisdiction with the learned District Judge to have had entertained and decided the objections, appropuriate orders be passed in the matter.

Hoaving heard the learned Advocate General and learneCd counsel for the respondent and having perused the statutory provisions of the Commercial Courts Act and taking into consideration the fact that the dispute in hand relates to a commercial dispute, this appeal is allowed by holding that the judgment passed by the learned District Judge in the objections filed by the present petitioner under Section 34 of the 1996 Act against the arbitral award, details whereof are given herein above, is non est and without jurisdiction.

Sub-section (1) of Section 3 of the Commercial Courts Act, inter alia, provides that the State Government may, after consultation with the concerned High Court, by notification, constitute such number of Commercial Courts at District level, as it may deem necessary for the purpose of exercising the jurisdiction and powers conferred on those Courts under the said Act.

Sub-section (2) of Section 3 of the Commercial Courts Act further provides that State Government shall, after consultation with the concerned High Court, by notification specify, the local ulimits of the area to which the jurisdiction of a Commercialo Court shall extend and may, from time to time, increaCse, reduce or alter such limits.

Similarly, Sub Section (3) thereof provides that State Government may, with the concurrence of the Chief Justice of the High Court, appoint one or more persons having experience in dealing with commercial disputes to be the Judge or Judges, of a Commercial Court either at the level of District Judge or a Court below the level of a District Judge.

Therefore, in order for a Court to excise the power of Commercial Court, the procedure prescribed under Section 3 of the Commercial Courts Ac