2022 (10) TMI 872 - SC - Indian Laws

Arbitration - Jurisdiction and powers under the Commercial Courts Act, 2015 - Validity of Notification dated 13.11.2020, issued by the State of Odisha through its Principal Secretary, Law Department - whether in exercise of powers under Section 3 of the Commercial Courts Act, 2015, the State Government can confer jurisdiction to hear applications under Sections 9, 14 and 34 of the Arbitration and Conciliation Act, 1996, upon Commercial Courts which are subordinate to the rank of the Principal Civil Judge in the District, contrary to the provisions of Section 2(1)(e) of the Arbitration Act? HELD THAT - In the year 2003, the Law Commission of India suo moto took up the issue of constitution of Commercial Divisions in the High Courts with a view to facilitate fast disposal of high value commercial disputes. In its 188th Report, the Law Commission, after carrying out indepth study of Commercial Courts in United Kingdom, USA, Singapore etc. recommended setting up of Commercial Division in each of the High Courts to expedite commercial cases of high pecuniary value - the Objects and Reasons of Commercial Courts Act, 2015 is to provide for speedy disposal of the commercial disputes which includes the arbitration proceedings. To achieve the said Objects, the legislature in its wisdom has specifically conferred the jurisdiction in respect of arbitration matters as per Section 10 of the Act, 2015. At this stage, it is required to be noted that the Act, 2015 is the Act later in time and therefore when the Act, 2015 has been enacted, more particularly Sections 3 10, there was already a provision contained in Section 2(1)(e) of the Act, 1996. As per settled position of law, it is to be presumed that while enacting the subsequent law, the legislature is conscious of the provisions of the Act prior in time and therefore the later Act shall prevail. Considering the provisions of the Act, 2015 and the Objects and Reasons for which the Act, 2015 has been enacted and the Commercial Courts, Commercial Division and Commercial Appellate Division in the High Courts are established for speedy disposal of the commercial disputes including the arbitration disputes, Sections 3 10 of the Act, 2015 shall prevail and all applications or appeals arising out of arbitration under the provisions of Act, 1996, other than international commercial arbitration, shall be filed in and heard and disposed of by the Commercial Courts, exercising the territorial jurisdiction over such arbitration where such commercial courts have been constituted. The notification issued by the State of Odisha issued in consultation with the High Court of Orissa to confer jurisdiction upon the court of learned Civil Judge (Senior Division) designated as Commercial Court to decide the applications or appeals arising out of arbitration under the provisions of Act, 1996 cannot be said to be illegal and bad in law - appeal dismissed.

Issues Involved:
1. Conflict between Section 3 of the Commercial Courts Act, 2015 and Section 2(1)(e) of the Arbitration and Conciliation Act, 1996.
2. Jurisdiction of Commercial Courts vis-Ã -vis Principal Civil Court in arbitration matters.
3. Legislative intent and interpretation of the Commercial Courts Act, 2015 and Arbitration and Conciliation Act, 1996.
4. Speedy disposal of commercial disputes and arbitration proceedings.
5. Validity of the notification issued by the State of Odisha.

Detailed Analysis:

1. Conflict between Section 3 of the Commercial Courts Act, 2015 and Section 2(1)(e) of the Arbitration and Conciliation Act, 1996:
The appellants argued that the notification designating the Courts of Civil Judge (Senior Division) as Commercial Courts conflicted with Section 2(1)(e) of the Arbitration Act, 1996. They claimed that under Section 2(1)(e), the Principal Civil Court of original jurisdiction in a district should exclusively handle arbitration matters, excluding any Civil Court of a grade inferior to such Principal Civil Court. They contended that conferring jurisdiction on the Civil Judge (Senior Division) contradicted this provision.

2. Jurisdiction of Commercial Courts vis-Ã -vis Principal Civil Court in arbitration matters:
The appellants emphasized that Section 2(1)(e) of the Arbitration Act, 1996, specifies that only the Principal Civil Court of original jurisdiction should handle arbitration disputes, excluding inferior courts. They argued that the designation of Civil Judge (Senior Division) as Commercial Courts to handle arbitration matters under the Commercial Courts Act, 2015, was contrary to this provision. The High Court's dismissal of their writ petitions was based on the view that the Commercial Courts Act, 2015, being a later statute, should prevail.

3. Legislative intent and interpretation of the Commercial Courts Act, 2015 and Arbitration and Conciliation Act, 1996:
The Court examined the legislative intent behind the Commercial Courts Act, 2015, which aimed at the speedy disposal of high-value commercial disputes, including arbitration matters. The Court noted that the Act, 2015, was enacted later, and the legislature was presumed to be aware of the provisions of the earlier Arbitration Act, 1996. The Court held that Sections 3 and 10 of the Commercial Courts Act, 2015, should prevail, allowing Commercial Courts to handle arbitration matters.

4. Speedy disposal of commercial disputes and arbitration proceedings:
The Court highlighted that the objective of the Commercial Courts Act, 2015, was to ensure the speedy disposal of commercial disputes, including arbitration proceedings. The establishment of Commercial Courts aimed to facilitate early resolution of high-value disputes. The Court observed that accepting the appellants' arguments would frustrate the purpose of the Commercial Courts Act, 2015, and render Sections 3, 10, and 15 of the Act otiose and nugatory.

5. Validity of the notification issued by the State of Odisha:
The Court upheld the notification issued by the State of Odisha, conferring jurisdiction on the Civil Judge (Senior Division) designated as Commercial Courts to handle arbitration matters. The Court found that the notification was in consonance with Sections 3 and 10 of the Commercial Courts Act, 2015. The Court agreed with the High Court's view that the notification was not illegal or bad in law.

Conclusion:
The Supreme Court dismissed the appeals, affirming the High Court's judgment. The Court held that the Commercial Courts Act, 2015, being a later statute, should prevail over the Arbitration Act, 1996, in case of any conflict. The Court emphasized the legislative intent to ensure speedy disposal of commercial disputes, including arbitration matters, through the establishment of Commercial Courts. The notification issued by the State of Odisha was upheld as valid and in accordance with the provisions of the Commercial Courts Act, 2015. The Court appreciated the assistance rendered by the Amicus Curiae in the matter.

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