High Court calls for dedicated division to handle commercial disputes

Srinagar, Sep 22: The High Court of J&K and Ladakh has called for the constitution of a Commercial Division of the Court for the disposal of arbitration proceedings relating to commercial disputes of specified value pending before it.

A bench of Justice Sanjay Dhar said this after it concluded that even after de-operationalisation of the Constitution of Jammu and Kashmir 1957 and the enactment of the J&K Reorganization Act, 2019, the High Court of J&K and Ladakh is vested with the ordinary original civil jurisdiction as well as extraordinary original civil jurisdiction.

The legal question for determination before the court was whether, after the de-operationalisation of the Constitution of Jammu and Kashmir under promulgation of the Constitution (Application to Jammu and Kashmir) Order, 2019 C.O 272, the High Court of Jammu & Kashmir and Ladakh retained ordinary original civil jurisdiction.

If the answer was yes, whether the High Court has the jurisdiction to entertain and decide the cases relating to arbitration in a commercial dispute of a specified value without the constitution of a Commercial Division in terms of Section 4 of the Commercial Courts Act, 2015.

“From the legislative history of the High Court of Jammu and Kashmir, which is now known as High Court of Jammu and Kashmir and Ladakh, it comes to the fore that ordinary original civil jurisdiction was vested with the said High Court initially in terms of Section 56 (2) of the J&K Constitution Act 1939 (1996 BK), which was later on saved by Section 102 of the Constitution of Jammu and Kashmir, 1957,” the court said.

“With the de-operationalization of the Constitution of Jammu and Kashmir, 1957 upon issuance of Constitution Order 272 dated August 5, 2019, the source of jurisdiction to entertain and decide original civil suits in terms of the J&K Constitution Act, 1939, as saved by Section 102 of the Constitution of J&K, 1957, has certainly been taken away and the same is no longer available to the existing High Court of J&K and Ladakh,” it added.

The Court observed that with the de-operationalisation of the Constitution of J&K, 1957, the existing High Court does not have the luxury of deriving ordinary original civil jurisdiction from any constitutional provision and that there is no statutory provision in the Act of 2019 which specifically confers ordinary original civil upon the existing High Court.

“However, the Letters Patent for the High Court of Judicature for Jammu and Kashmir issued by the Maharaja in 1943 are still in operation,” it said. “This is so because in terms of Section 77 read with clause 2(14) of the Removal of Difficulties Order issued vide S.O.3912 (E), the law in force concerning practice and procedure in the High Court of Jammu and Kashmir on the date of enforcement of the Jammu and Kashmir Reorganization Act, 2019, would continue to hold the field unless varied or revoked”.

The Court underscored that the “Letters Patent” for the High Court of Judicature for Jammu and Kashmir issued by the Maharaja on August 28, 1943, governs the practice and procedure in the High Court and the same was in force as of the date of enforcement of the J&K Reorganization Act, 2019.

“The Letters Patent including clause (10) thereof, would, therefore, continue to hold the field unless and until the same is varied or revoked”.

“A five Judge Bench of this Court in the case of L. Tota Ram vs. State, AIR 1975 J&K 73, has held that jurisdiction about civil suits and original proceedings in the High Court of Jammu and Kashmir is not only derived from Section 56(2) of the Jammu and Kashmir Constitution Act, 1996, which was left intact by Section 102 of the Constitution of J&K, 1957, but it is also derived from clause (10) of the Letters Patent”, the court said.

“Therefore, when a Letters Patent grants to the High Court power to hear and decide original civil proceedings, the same would not vanish upon de-operationalization of a constitutional provision conferring a similar jurisdiction upon the High Court,” the court said.

Whether the High Court has jurisdiction to entertain and decide the cases relating to arbitration in a commercial dispute of a specified value without the constitution of a Commercial Division in terms of Section 4 of the Commercial Courts Act, 2015, the court held that it was clear that the proceedings in respect of arbitration in a commercial dispute of specified value (other than international arbitration), if filed on the original side of the High Court, have to be heard and disposed of by the Commercial Division of the High Court whereas such proceedings that are ordinarily filed before other civil courts, have to be heard and decided by a Commercial Court.

“Unless a Commercial Division of the High Court is constituted, the arbitration proceedings relating to commercial disputes of specified value filed on the original side of the High Court, cannot be heard and decided,” the court said.

The court observed that in keeping with Section 4 of the Commercial Courts Act, it is clear that in High Courts having ordinary original civil jurisdiction, the Chief Justice of the High Court may, by order, constitute a Commercial Division consisting of a Single Judge to exercise the jurisdiction and powers conferred under the Act.

The court observed that while the Chief Justice of the High Court of Jammu and Kashmir and Ladakh has vide Order No.548 of 2024/RG dated May 9, 2024, constituted Commercial Appellate Division in terms of Section 5 of the Commercial Courts Act in both wings of the High Court of Jammu & Kashmir and Ladakh, Commercial Division of the High Court in terms of Section 4 of the Commercial Courts Act has not been constituted in any wing of the High Court so far.

“In the absence of an order relating to the constitution of the Commercial Division of the High Court, the arbitration matters relating to commercial disputes of specified value filed before the High Court cannot be decided by the High Court in the exercise of its original civil jurisdiction after coming into force of the Commercial Courts Act.

“…constitution of a Commercial Division in a High Court, which is vested with ordinary original civil jurisdiction, is an absolute imperative to deal with the cases involving commercial disputes of specified value that may have been filed in the said High Court. Such cases have necessarily to be transferred to a Commercial Division constituted in terms of section 4 of the Act. “

The Court directed its Registrar General to place the matter before the Chief Justice for his consideration so that an appropriate decision is taken about the constitution of a Commercial Division of the High Court for disposal of arbitration proceedings relating to commercial disputes of specified value pending on the original side of the Court.

“It is also suggested that feasibility of fixing a different higher specified value for entertaining proceedings relating to commercial disputes by the Court in its ordinary original civil jurisdiction be also explored”.

The Court observed that since a large number of arbitration proceedings relating to commercial disputes are pending in the High Court saying in the absence of a Commercial Division, these cannot proceed further.

“As such, the Registrar General is requested to take urgent steps in the matter,” the court said and deferred the petitions till the constitution of the Commercial Division.