The High Court at Delhi (High Court) recently in the case ofDish TV India Limited. v. Gulf DTH FZ LLC,FAO(OS) 26/2019 & CM APPL. 34384/2016, Judgment dated July 18, 2024, hasheld that, the provisions of the Commercial Courts Act, 2015 ("Commercial Courts Act") will not apply until and unless the suit relating to a commercial dispute is transferred to the commercial division.
Facts of the Case:
The respondent no. 1/plaintiff, Gulf DTH FZ LLC, run of a direct-to-home (DTH) satellite subscription pay television platform in the Middle East and North African region ("said territory"). The appellant/defendant no. 1, Dish TV India Ltd, is a DTH service provider. The respondent no. 1/plaintiff claimed to have the exclusive license to transmit by satellite as well as by other means, various television channels in the said territory and thus filed a suit seeking,inter alia, permanent injunction restraining the appellant/defendant no. 1 from recharging its pay-TV services or from activating any smart cards for use by the consumers residing in the said territory.
The issue arose when the Single Bench of the High Court closed the right of the appellant/defendant no.1 to file their written statement on the ground that they have not filed the same within the mandate of 120 days period as stated in Order VIII Rule 1 of the Code of Civil Procedure Code, 1908 ("CPC") as amended by the Commercial Courts Act, 2015 prior to transferring the said suit to the commercial division.
Issues:
- Whether the provisions of the Commercial Courts Act will apply to the suit relating to a commercial dispute when the same is yet to be transferred to the commercial division?
- Whether the present appeal was maintainable in view of Section 13 of the Commercial Courts Act?
- Whether closing the right to file the written statement beyond 120 days was correctly held by the Single Bench?
Submissions:
The learned counsel for the appellant/defendant no. 1 submitted that, right to file the written statement was closed when the said suit was an ordinary suit i.e. prior to transferring such suit to the commercial division. Therefore, the provision of the Commercial Courts Act will not apply, and the impugned order was appealable under Section 10 of the Delhi High Court Act, 1966. Also, the said suit was filed even before the formation of the commercial division of the High Court at Delhi. Therefore, in case of transferred cases, the discretion under Section 15(4) of the Commercial Courts Act must be exercised and the said period of 120 days for filing written statement was ought to be extended.
The learned counsel for the respondent no. 1/plaintiff submitted that as per the notification by which the Commercial Courts Act came into force, the same became applicable to all the pending suits before the High Court which comes under the definition of the 'commercial dispute' under Section 2(c) of the Commercial Courts Act. Since the suit was a commercial suit and admittedly, the period of 120 days to file the written statement stood expired, the appellant/defendant no. 1 had waived their right to file the written statement as under proviso to Order VIII Rule 1 of CPC as amended by the Commercial Courts Act. It was also stated that that the instant appeal is not maintainable as under Section 13(2) of the Commercial Courts Act. Reliance was also drawn on Section 21 of the Commercial Courts Act which states that Commercial Courts Act would have overriding effect on all other laws for the time being in force in case of a conflict. Also, they relied on Section 15(3) of the Commercial Courts Act and stated that the provisions of the Commercial Courts Act shall apply to those procedures which were not complete at the time of transfer.
Findings:
All three issues were decided together and the High Court relying on the judgment inBrahmos Aerospace Private Limited. v.FIIT JEE Limited, [(2019) 7 PTC 667 (DB)], Nirman Consultants Private Limited. v.NNE Limited., [FAO(OS) (COMM) 82/2019 & C.M.16626/2019] and Raj Process Equipments and Systems Private Limited. v. Honest Derivatives Private Limited., [CIVIL APPEAL No.8089 OF 2022], as well as on the proviso to Section 15(4) of the Commercial Courts Act held that, only when a pending suit relating to a 'commercial dispute' is transferred to the commercial division, the provisions of Commercial Courts Act shall apply. In the present case, the suit was not filed under the commercial division and therefore the said suit qualified as a pending suit as under Section 15 of the Commercial Courts Act. In view of the same the suit was required to be transferred to the commercial division by a formal order of a competent court and the said formal order in the present case was passed after the right to file the written statement was closed. It was held that, till the time the present suit was converted into a Commercial Suit, it continued to be an ordinary civil suit and the provisions of the Commercial Courts Act shall not apply. In view of the above, neither the bar under Section 13 of the Commercial Courts Act nor the mandatory period of 120 days to file the written statement would apply in the present case. In fact, in case of transferred suits, the commercial court/commercial division is empowered to exercise discretion under proviso to Section 15(4) of the Commercial Courts Act to extend such period of 120 days for filing written statement.
Author's View:
The High Court concluded that merely because a suit relates to a "commercial dispute" under Section 2(c) of the Commercial Courts Act, the provisions of the Commercial Courts Act will not apply. Such provisions of the Commercial Courts Act will apply once the suit relating to a commercial dispute is transferred to such commercial division by a formal order of any competent court.
This update has been contributed by Soorjya Ganguli (Partner) and Arti Bhattacharyya (Senior Associate).
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