Commercial Courts in Uttar Pradesh: Jurisdiction, Appeals, Commercial Disputes and Pre-Institution Mediation

Commercial disputes typically involve business/money, contracts, banking transactions, trade/business dealings, partnership agreements, construction/infra disputes, intellectual property, insurance claims, arbitration and matters relating to financial or mercantile transactions.

To speed up such proceedings, Parliament has provided a special statutory mechanism under the Commercial Courts Act, 2015 for adjudication of commercial disputes of a certain value.

As you will see from the uploaded material, Commercial Courts in Uttar Pradesh have been notified for different territorial areas. This means that commercial cases must be filed before the appropriate court depending on the state/district in which the dispute arises.

Importantly, these commercial courts are not intended for all civil suits. Rather, they only entertain disputes which fall within the statutory definition of a commercial dispute and which also meet territorial and pecuniary jurisdiction requirements.

Commercial Courts established in Uttar Pradesh

If you closely observe the above table, you will note that Commercial Courts in Uttar Pradesh have been established in 13 districts.

Importantly, these courts have also been granted jurisdiction over several other districts which surround the location of the Commercial Court. For this reason, parties must check territorial jurisdiction very carefully before filing any commercial suit, application or arbitration-related proceeding.

Which Court has Jurisdiction?

Notice how commercial disputes are allocated on a territorial basis. For instance, if a commercial dispute arises from the districts of Gautam Buddha Nagar, Hapur or Ghaziabad, the same would fall under the Commercial Court at Gautam Buddha Nagar. Similarly, a commercial dispute from Bulandshahr will fall under the Commercial Court at Meerut.

Meaning of Commercial Dispute

Commercial Dispute is defined under Section 2(1)(c) of the Commercial Courts Act, 2015. Put simply, if a dispute arises from commercial, business, financial, trade, mercantile or similar transactions, the same may be treated as a commercial dispute.

The above definition is broad. Commercial disputes can include ordinary transactions between merchants, bankers, financiers and traders. Disputes relating to mercantile documents, enforcement of commercial documents, financial documents and interpretation of such documents may also fall under the ambit of commercial disputes.

The definition also includes disputes relating to export or import of goods/services, admiralty and maritime jurisdiction, carriage of goods, construction/infra contracts, tender disputes, franchising agreements, distribution agreements, licensing agreements, consultancy agreements, management agreements, joint venture agreements and shareholder agreements.

Commercial Courts will even deal with partnership agreements, technology development agreements, intellectual property rights disputes, sale of goods, provision of services, insurance, re-insurance, agency contracts and every other commercial transaction which may be specified under law.

Commercial Disputes relating to Property

Just because a dispute relates to immovable property, doesn’t mean that the dispute cannot be commercial in nature. If the dispute arising out of a transaction is commercial in nature, the suit will still be deemed to be a commercial dispute even if the relief sought is for recovery of immovable property, recovery of money from immovable property provided as security or any other relief in relation to immovable property.

For example, disputes arising from property used for trade or commerce will generally be treated as commercial disputes if the cause of action is connected to a commercial agreement relating to such property. Another example would be where money is sought to be recovered from a property which was provided as security in a financial or commercial transaction.

Commercial Disputes Involving the Government

If a commercial dispute involves the State, a government agency, instrumentality of the State or a private body which performs public functions, such dispute may still be commercial in nature. The mere involvement of a government body will not take the dispute outside the realm of commercial litigation.

Once again, what matters for purposes of the Commercial Courts Act is whether the dispute arose from a transaction which falls within the meaning of commercial dispute under Section 2(1)(c).

Value Jurisdiction of Commercial Courts

The specified value requirement for all district level Commercial Courts is Rs. 3,00,000 or more (Rupees Three Lakh Only).

This means that a commercial dispute must have crossed the minimum specified value before it can be filed before a Commercial Court.

Value is critical for purposes of jurisdiction. Even if a dispute is commercial in nature, a plaint may be returned if the claimed amount or value of the subject matter in dispute does not reach the statutory threshold.

Territorial Jurisdiction of Commercial Courts

Only those Commercial Courts which have territorial jurisdiction over the matter can entertain commercial suits and applications.

For territorial purposes, the Commercial Courts Act also requires that the suit or application must satisfy provisions of Sections 16 to 20 of the Code of Civil Procedure, 19

Document 2:

efe carved out for both International Commercial Arbitration and Domestic Commercial Arbitration in Part I of Chapter IV.

Civil Court’s power to grant interim measures while arbitration proceedings pending

If during pendency of arbitration proceedings if any party to the arbitration proceedings seeks relief from court for grant of interim measures, section 9 allows civil courts to entertain such applications. However, these are subject to two conditions:

• (1) parties to arbitration agreement have not opted out of civil court’s jurisdiction under Section 8 , which means they have not agreed to exclude Section 9; and
• (2) parties have not agreed to opt arbitration institution or arbitrator whose rules provide power to grant similar relief.

Section 17 also provides for power to refer parties to arbitration where there is arbitration agreement. There is no bar that remedy cannot be sought under section 9 and section 17 simultaneously.

Court can grant injunction or appoint guardian, receiver etc on interim measures

Courts are granted power under Section 9 for grant of interim measures which include grant of injunction and appointing a guardian, receiver or manager which is subject to provisions of the act and procedure code, 1908.

Relief sought under section 9 should be India connected

Relief granted under section 9 shall apply only if subject matter in respect of which relief is sought is connected with India. For example – claiming damages under international arbitration agreement (where the cause of action didn’t arise in India) cannot be subject matter of section 9 unless there exists some connection with India.

Scope of interim measures under section 9 is wide

Courts can grant any interim measure or order as it thinks fit for:

• (1) doing complete justice between parties; and
• (2) securing the assets in dispute.

Court may order interim measures in case where proceedings are pending under this act or under previous arbitration laws.

Decision under section 9 shall be by courts exercising ordinary civil jurisdiction.

Right to approach court under Section 9 cannot be extinguished

Right of any party to make an application under Section 9 shall not be extinguished only because arbitration proceedings have been commenced, or an award has been made.

Court not to inquire into merits while deciding application under Section 9

Courts while deciding application under Section 9 are barred from inquiring into merits of the dispute.

Court to act expeditiously while deciding application under section 9

Courts shall act expeditiously while deciding applications under section 9. Meaning thereby courts should dispose off such applications as early as possible.

Application for Interim measures can be presented to different courts

An application under Section 9 can be presented to any court even if arbitration proceedings are pending before another court.

Appear Appearance by parties while deciding application under Section 9

Unless an arbitral tribunal has been constituted, both parties to the arbitration agreement have to personally appear before courts while deciding application under Section 9. Subsequent proceedings can be carried out through pleaders.

Appeal from order granting or refusing temporary measures

Any party can prefer appeal from order granting or refusing any temporary measure under section 9 to Supreme Court or High Court as the case may be, within thirty days from the date of the order.

Order granting or refusing temporary measures not to be stayed by the appellate court

Appellate court may not stay order granting or refusing temporary measure, unless application for stay is made before granting of such measure or within seven days from the date of order.

Court can grant temporary measures for better adjudication of case

Courts while granting temporary measure under section 9 may so order for proper adjudication of the case.

Court may grant temporary measures subject to sufficient security

Temporary measures granted by courts under section 9 maybe subject to sufficient security.

Application for temporary measure under section 9 analogous to civil suit

Application filed under section 9 shall be deemed to be a civil suit as per meaning of civil suit under code of civil procedure,1908. However, rules of summoning and serving notice under civil procedure code shall not apply to arbitration proceedings.

Section 8 vs. Section 9

Section 8 deprives power of civil courts to entertain any proceeding related to arbitration agreement. Whereas section 9 grants power to civil courts for grant of interim measures of protection even when there is pending arbitration proceeding or arbitration agreement.

Enforcement of award obtained through section 9 would not be governed by Chapter IV part I of Act

Section 2(2)(b) read with section 47(c) provides that where application is made under section 9 and award is obtained, such award shall not be governed by chapter IV part I (International Commercial Arbitration) of Act.

Frequently Asked Questions