Back
Rules Civil Courts Cannot Hear BRD Finance Commercial Suit
The has laid down a significant jurisdictional marker, holding that once a State government designates certain courts as Commercial Courts under the , ordinary civil courts lose the authority to adjudicate commercial disputes of the . Justice Easwaran S. allowed the second appeal filed by , a kuri company, setting aside the judgments of the and the , and transferring the suit to the .
Jurisdictional Error at Every Stage
The case originated with O.S.No.968/2018, a recovery suit filed by BRD Finance before the , seeking to recover Rs. 3,47,587 from defendants Santhosh P. and Sujisha M.K. based on a promissory note. While the suit was pending, the issued G.O.(Ms)No.51/2020/Home dated , designating Sub Courts as Commercial Courts for the recovery of amounts exceeding Rs. 3 lakhs, in exercise of the powers under .
Despite this notification, the Munsiff Court proceeded to hear and dismiss the suit . That dismissal was affirmed by the in A.S. No.24/2024. Neither the plaintiff nor the lower courts noticed the fundamental . Even the appellant, BRD Finance, failed to raise the issue before the first appellate court.
The Core Legal Question
When the matter reached the High Court, Justice Easwaran S. admitted the appeal on a : “Whether after coming into force of the , can a civil court try and adjudicate a case of of a which is to be tried only by a commercial court?”
The respondents did not appear despite notice. The court heard arguments from , counsel for the appellant, who contended that mandated an automatic transfer of the suit to the designated Commercial Court once the notification was issued.
Court's Reasoning: A Clear Line on Jurisdiction
The High Court found considerable force in the appellant’s submissions. It held that the Munsiff Court ought to have transferred the case to the , the designated Commercial Court, upon the issuance of the notification. By proceeding to decide the suit , the Munsiff Court acted “clearly unsustainable and .”
Equally, the court noted that the error was perpetuated at the appellate level. The failed to recognize that an is itself not maintainable.
“Without transferring the same, the act of the Munsiff Court in proceeding to consider the suit on merits is clearly unsustainable and .”
“The said illegality was perpetuated at the appellate stage as well and the failed to notice the fact that an is not maintainable before it.”
The court refrained from entering into the merits of the findings recorded by the lower courts, vacating all such findings.
Decision and Directions
The High Court answered the in favor of the appellant. It set aside the judgment and decree dated in O.S.No.968/2018 of the , as well as the judgment in A.S. No.24/2024 of the . The suit was ordered to be transferred to the . The was directed to pass consequential orders on the administrative side for the transfer.
Upon receiving the transferred case, the is to issue fresh notices to both parties and adjudicate the matter . The court also directed a refund of the court fees paid by the appellant before the High Court and the first appellate court.
The judgment reaffirms a crucial procedural rule: where a Commercial Court has been designated for disputes of a , civil courts cannot ignore that designation and proceed as if the Commercial Courts Act does not exist. The dispute over the alleged debt now stands open for fresh consideration before the correct forum.
