Jurisdiction Clarified: Patna HC Restricts ADJ Powers in Commercial Disputes

In a significant ruling concerning the interpretation of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (the "2015 Act"), the Patna High Court has held that the power to adjudicate commercial disputes exceeding the specified threshold of Rs. 1 crore lies exclusively with the District Judge, as notified by the State Government. The court emphasized that this adjudicatory function cannot be delegated to Additional District Judges (ADJs).

The Dispute: From Road Contracts to Courtrooms

The appellant, Bihar State Road Development Corporation Ltd. (BSRDCL), was embroiled in a dispute with M/s M.G Contractors (P) Ltd. regarding a highway construction project in Bihar. Following an arbitration award, the appellant filed a challenge under Section 34 of the Arbitration and Conciliation Act, 1996 .

The crux of the legal challenge arose when the matter—initially handled by the District Judge—was subsequently transferred to the court of an Additional District and Sessions Judge. The appellant argued that this transfer was legally impermissible, asserting that the Bihar Government’s 2019 notification specifically assigned this jurisdiction to the "District Judge" and not the sub-ordinate Additional District Judges.

Legal Arguments: Defining the 'District Judge'

The appellant relied heavily on previous division bench rulings, including M/s Vishal Builtech India Pvt. Ltd. v. The Union of India and M/s Johnson Paints Pvt. Ltd. v. M/s Johnson Paints Co. , arguing that the legislative intent behind the 2015 Act was to create specialized courts for speedy disposal, which the District Judge alone was empowered to oversee under the Bihar notification.

Conversely, the respondent sought to broaden the definition of "District Judge." Drawing upon Article 236(a) of the Constitution of India and Section 2(1)(e) of the 2015 Act, the respondent argued that the term "District Judge" by definition encompasses Additional District Judges. They cited the Kerala High Court’s decision in Kasim V.K. v. M. Ashraf , which maintained that Additional District Judges share the same powers as the District Judge and as such, no jurisdictional error occurs when they hear commercial petitions.

The Court’s Analysis: Distinguishing Roles

The High Court flatly rejected the respondent’s attempt to equate the two roles. The Bench harmonized the provisions of the Bengal, Agra and Assam Civil Courts Act, 1887 , noting:

> "A conjoint reading of Section ‘3’ and Section ‘8’ of the Act of 1887 would leave no room for doubt that the Court of the District Judge and that of the Court of the Additional Judge are two different Courts."

The Court clarified that while ADJs function under the District Judge for the "speedy disposal" of business, their roles are distinct from the statutory constitution of a Commercial Court under the 2015 Act. The notification of August 2, 2019, was explicit in its designation of the District Judge, and the Court reaffirmed that this power could not be further delegated downward.

Key Observations

• On Statutory Independence: "The District Judge (now known as ‘Principal District Judge) of a District who has been constituted as a Commercial Court within the meaning of Act of 2015 does not derive any power to further transfer its adjudicatory power as a Commercial Court to the Additional Judges."
• On Legislative Intent: "The Notification dated 02.08.2019, constituting a Commercial Court under Section 3 of the Act of 2015 has kept itself confined to the Court of Civil Judge (Senior Division) and to the Court of District Judge."
• On Precedent: "We find no plausible reason to take a different view from that of our own Division Bench in the case of M/s Johnson Paints Pvt. Ltd."

The Final Verdict

Finding merit in the appellant's argument, the Court set aside the order transferring the case to the Additional District & Sessions Judge-VIII. The case records were ordered to be transferred back to the Principal District Judge of Patna.

This ruling serves as a vital reminder that in matters of commercial jurisdiction, the specific statutory designations provided by government notifications must be adhered to strictly. It prevents the dilution of the "Commercial Court" status by ensuring that only courts explicitly empowered by law handle these high-value, time-sensitive matters.