Commercial Courts Act Amendment Lowering Threshold To ₹3 Lakh Took Effect In 2018, Andhra Pradesh HC Rules In 2:1 Ruling
The Andhra Pradesh High Court has, by a 2:1 majority, held that Parliament's 2018 amendment lowering the minimum threshold for commercial disputes from ₹1 crore to ₹3 lakh took effect immediately, bringing such disputes within the commercial courts' framework without any separate State notification.
The Court held that the threshold that determines whether a dispute qualifies as a commercial dispute (specified value) is distinct from the monetary limits that determine which court hears it (pecuniary value).
“Therefore, if the Central Government intends to fix the higher value than the value fixed in the Statute, then a notification is required to be given fixing the said higher value. The disjunctive word “or” has been used after the wording “which shall not be less than three lakh rupees”, which clearly separates the first part of the section with the second part of the section which conferred power on the Central Government to fix such higher value by way of issuing notification. Therefore, we have absolutely no hesitation to hold that notification again for fixing the Specified Value at not less than three lakh rupees is not required as the Statute itself has prescribed the said base limit. We emphatically hold that it is only when the Central Government intends to fix such higher value, then a separate notification is required to be given in terms of the second part of Section 2(1)(i) of the Act.,” the majority held.
A Full Bench of Justice Cheekati Manavendranath Roy, who authored the majority opinion; Justice Battu Devanand, who concurred; and Justice Ravi Nath Tilhari, who partly dissented, resolved a conflict between earlier rulings of the High Court on whether the reduced threshold introduced by the 2018 amendment became automatically operational or required further State action.
The dispute arose from execution proceedings initiated before the XI Additional District Judge at Tadepalligudem to enforce an arbitral award of about ₹78.66 lakh. The judgment debtor challenged those proceedings, arguing that once commercial courts had been constituted in Andhra Pradesh, only the designated commercial court could entertain execution proceedings arising from such a commercial dispute. According to the petitioner, the civil court lacked jurisdiction.
The petitioner argued that Parliament itself reduced the threshold from ₹1 crore to ₹3 lakh through the 2018 amendment. It said no further executive action was needed unless the government intended to prescribe a higher threshold.
The respondents argued that even if the amendment changed the statutory threshold, commercial courts could not assume jurisdiction unless the State Government separately fixed the applicable monetary limits. Until then, they argued, ordinary civil courts continued to retain jurisdiction.
Accepting the petitioner's case, the majority held that the amendment itself changed the qualifying threshold for commercial disputes and that the State Government's power to prescribe pecuniary limits operated in a separate field.
“Both the terms 'Specified Value' as defined under Section 2(1)(i) in Chapter I of the Act and the 'pecuniary value' as contemplated in Section 3(1A) in Chapter II of the Act are two different and distinct terms which operate in two different fields. They are not one and the same. So, the whole problem arose in formulating the above questions for reference as the said difference and distinction between the two terms “Specified Value” and “pecuniary value” is not noticed and as they are taken as one and the same.”
The majority held the State's power to determine monetary jurisdiction could not override Parliament's decision to reduce the threshold for commercial disputes.
It further held that once a special court is created under a special law to hear a specific category of disputes, its jurisdiction cannot be displaced merely because the pecuniary jurisdiction of ordinary civil courts remains unchanged.
“When a special court is constituted under a special enactment to decide a particular nature of dispute i.e., a commercial dispute of a Specified Value, irrespective of the pecuniary limits or jurisdiction conferred on an ordinary Civil Court under the Andhra Pradesh Civil Courts Act, 1972 which is a State enactment, the special court would have jurisdiction to try the said particular nature of dispute. Therefore, the Commercial Court, which is a special court constituted under the special enactment, would have ample jurisdiction to try the dispute involving above the value of three lakh rupees and it is perfectly competent to try and dispose of the said cases.”
Justice Ravi Nath Tilhari agreed that Parliament had reduced the threshold for qualifying commercial disputes to ₹3 lakh. However, he disagreed with the majority's conclusion that this automatically shifted jurisdiction to commercial courts.
According to him, the amendment changed which disputes qualified as commercial disputes but did not by itself determine which court could hear them. In his view, the State still had to confer the relevant pecuniary jurisdiction before ordinary civil courts could be excluded.
“The amendment of Act 28 of 2018 cannot be read as specifying the 'specified value' of its own force. After such amendment, the notification must follow.”
He added, “In the absence of any notification, merely by the amendment it cannot be that the specified value for Commercial Court stands amended as not less than three lakh rupees or that the commercial disputes of the specified value from three lakh rupees shall be in the Commercial Court and the jurisdiction of the Civil Court stands barred or ousted.”
The majority approved the earlier ruling in U.V. Satyanarayana and held that Bellam Balakrishna did not lay down the correct law.
For Petitioners: Advocates Venkat Challa, G.V.S. Kishore Kumar and S.V.S.S. Siva Ram
For Respondents: Advocates V. Yatendra Kumar and Somu Krishna Murthy