Simplified Explanation of the Judgment
In a landmark judgment delivered on 29 November 2024, the Patna High Court addressed a critical issue involving the jurisdiction of Commercial Courts under the Arbitration and Conciliation Act, 1996 and the Commercial Courts Act, 2015. The judgment arose from three interconnected petitions concerning disputes between state-owned companies and private contractors over arbitration awards and execution proceedings.
The central question before the Court was whether a District Judge can transfer commercial arbitration cases to an Additional District Judge, or whether such matters must remain solely within the purview of the District Judge acting as the Commercial Court.
The petitioners—Bihar State Power Holding Company Ltd. and Hindustan Construction Company Ltd.—challenged orders passed by the District Judge, Patna, who had transferred their arbitration-related cases to Additional District Judges. They contended that such transfer was invalid under the Commercial Courts Act, 2015, which designated only the District Judge (not Additional District Judges) as the competent Commercial Court for cases involving disputes over ₹1 crore.
The Court examined the interplay between the Arbitration and Conciliation Act and the Commercial Courts Act. It took note of statutory definitions and previous decisions by the Hon’ble Supreme Court and Division Benches of the Patna High Court. Notably, the Court emphasized that under Section 2(1)(e) of the Arbitration Act, the “Court” for arbitration matters is the “principal Civil Court of original jurisdiction,” which typically refers to the District Judge. Furthermore, Section 10(3) of the Commercial Courts Act mandates that all arbitration-related applications in commercial matters be filed before the designated Commercial Court.
The petitioners argued that since the Bihar Government had, through a 2019 notification, designated only the District Judge as the Commercial Court for high-value disputes, transferring such cases to an Additional District Judge was beyond jurisdiction. They supported their stance by citing numerous Supreme Court decisions, including Jaycee Housing Pvt. Ltd. and PASL Wind Solutions, which underline the need to avoid inconsistent interpretation of jurisdiction provisions in special statutes like the Arbitration Act.
The respondents, however, maintained that the term “District Judge” includes Additional District Judges, as per Article 236(a) of the Constitution. They contended that the intent behind the Commercial Courts Act was to ensure speedy resolution, and allowing District Judges to transfer cases within their own cadre did not violate statutory provisions.
After considering both arguments and the relevant legal framework, the Patna High Court held that the 2019 notification of the Bihar Government specifically vested the authority of Commercial Courts in the District Judge and did not extend this to Additional District Judges. Therefore, transferring arbitration cases governed by the Commercial Courts Act to any other court, including that of an Additional District Judge, was beyond the jurisdiction granted under the law.
Significance or Implication of the Judgment
This judgment reinforces the principle of strict compliance with statutory designations in commercial litigation, especially concerning arbitration. It upholds the autonomy of Commercial Courts and ensures that procedural shortcuts do not dilute the legislative intent to create specialized forums for commercial disputes. For government bodies, it reiterates the importance of following proper legal channels and respecting judicial hierarchies.
This decision is particularly significant for public sector undertakings, contractors, and arbitration practitioners in Bihar, as it clarifies that only designated Commercial Courts (i.e., the District Judge) can hear and decide arbitration-related commercial disputes. The judgment is also a caution to lower courts to remain within their assigned jurisdiction unless specifically empowered by law.
Legal Issue(s) Decided and the Court’s Decision
- Whether arbitration matters under the Commercial Courts Act can be transferred by District Judge to Additional District Judges
❖ Held: No. Only the District Judge, as notified by the State Government, has jurisdiction. - Whether the definition of ‘Court’ under the Arbitration Act includes Additional District Judges
❖ Held: No. ‘Court’ means the Principal Civil Court, which is the District Judge alone. - Whether transfer of execution petitions arising from arbitration awards to ADJ courts is legally valid
❖ Held: No. Execution cases related to commercial arbitration must also be handled by the designated Commercial Court. - Whether Article 236(a) of the Constitution expands jurisdiction to Additional District Judges in this context
❖ Held: No. Constitutional inclusivity does not override statutory notifications under special Acts.
Judgments Referred by Parties
- Fuerst Day Lawson Ltd. v. Jindal Exports Ltd., (2011) 8 SCC 333
- Kandla Export Corporation v. OCI Corporation, (2018) 14 SCC 715
- PASL Wind Solutions v. GE Power Conversion India Pvt. Ltd., (2021) 7 SCC 1
- SBP & Co. v. Patel Engineering Ltd., (2005) 8 SCC 618
- State of U.P. v. Sabir Ali, AIR 1964 SC 1673
- MSP Infrastructure Ltd. v. MP Road Development Corp., (2015) 13 SCC 713
- State of Jharkhand v. Hindustan Construction Company, (2018) 2 SCC 602
- Jaycee Housing Pvt. Ltd. v. Orissa HC, (2023) 1 SCC 549
Judgments Relied Upon or Cited by Court
- M/s Vishal Builtech India Pvt. Ltd. v. Union of India, MJC No. 1323 of 2018
- M/s Johnson Paints Pvt. Ltd. v. M/s Johnson Paints Company, Commercial Appeal No. 8 of 2024
Case Title
Bihar State Power (Holding) Company Ltd. v. Gammon India Ltd. & Others
with
Bihar State Power (Holding) Company Ltd. v. Gammon Engineering & Construction Pvt. Ltd.
with
Hindustan Construction Company Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd.
Case Number
Civil Misc. Jurisdiction Nos. 752 of 2023, 755 of 2023, and 305 of 2024
Citation(s)– 2025 (1) PLJR 221
Coram and Names of Judges
Hon’ble Mr. Justice Arun Kumar Jha
Names of Advocates and who they appeared for
- For Petitioners (752 & 755/2023): Mr. Umesh Prasad Singh, Sr. Advocate with team
- For Respondents (752 & 755/2023): Mr. Shyam Kishore Sharma, Sr. Advocate with team
- For Petitioner (305/2024): Mr. Anurag Saurav with team
- For Respondent (305/2024): Md. Nadim Seraj
Link to Judgment
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