Supreme Court: Designated Commercial Courts Subordinate To Rank Of Principle Civil Judge In The District Can Hear Appeals/Application Under Arbitration Act

The Supreme Court in the case Jaycee Housing Pvt. Ltd. vs Registrar (General), it has been observed by the Orissa High Court and has stated that Commercial Courts which are subordinate to the rank of the Principal Civil Judge in the District has no such jurisdiction to hear applications or appeals under Arbitration and Conciliation Act,1996.
The bench comprising of Justice MR Shah and Justice Krishna Murari observed and has rejected the contention that all applications or appeals arising out of arbitration (other than that of arising of the international commercial arbitration) shall only lie before the Principal Civil Court of the district.
In the present case, it was upheld by the court that the judgement delivered by the Orissa High Court and the notification issued by the State of Odisha for conferring jurisdiction upon the court of learned Civil Judge (Senior Division) designated as Commercial Court for deciding the applications or appeals arising out of arbitration.
Before the High Court, it was contended in the writ petition that under Section 2(1)(e) of the Arbitration Act, 1996, only the Principal Civil Court of original jurisdiction in a district (the Court of Principal District Judge) shall be the “Court” for the purpose of deciding the disputes stated under the Arbitration Act, 1996 and in the cases of an arbitration it does not include any Civil Court of a grade being inferior to such Principal District Judge. It was stated that according to them, for conferring the jurisdiction upon the Court of Civil Judge (Senior Division) to exercise the powers stated under the Commercial Courts Act including the proceedings under the Arbitration Act, 1996 would be contrary to Section 2(1)(e) of the Arbitration Act, 1996, which is under the Special Act. They approached the Apex Court, as the High Court dismissed the writ petition.
The Apex Court bench observed while dismissing the appeal that if the submission made on behalf of the appellants that all applications/appeals arising out of arbitration under the provisions of Act, 1996, other than the international commercial arbitration, in that case, shall lie before the principal civil Court of a district, not only the Objects and Reasons of enactment of Act, 2015 and establishment of commercial courts shall be frustrated, even Section 3, Section 10 & Section 15 shall become otiose and nugatory. Thus, if the submission on behalf of the appellants is accepted, in that case, though with respect to other commercial disputes, the applications or appeals shall lie before the commercial courts established and constituted under Section 3 of Act, 2015, with respect to arbitration proceedings, the applications or appeals shall lie before the principal civil Court of a district. However, there cannot be two fora with respect to different commercial disputes.”, the Apex Court bench observed while dismissing the appeal.
Accordingly, the court held that all appeals or applications arising out of arbitration under the provisions of Act, 1996, other than that of international commercial arbitration, shall be filed in and heard and be disposed of by the Commercial Courts, wherein the court exercising the territorial jurisdiction over such arbitration where such commercial courts have been constituted.