Introduction:The judgment delivered by the Delhi High Court in the batch of transfer petitions led by Satyanarain Khandelwal v. Prem Arora represents a significant judicial exposition on the interplay between legislative intent, statutory interpretation, and the principle of retrospectivity in the context of commercial litigation reforms in India.
At its core, the case grapples with the applicability of the Commercial Courts (Amendment) Act, 2018, which reduced the "specified value" threshold for commercial disputes from Rs. 1 crore to Rs. 3 lakhs, thereby expanding the jurisdiction of designated commercial courts.
The petitioners, who were tenants involved in disputes over agreements to sell shops in a property, sought the transfer of their pending civil suits from ordinary civil courts to commercial courts, arguing that the amendment should apply retrospectively to suits filed before its commencement on May 3, 2018.
This contention invoked Section 15 of the parent Commercial Courts Act, 2015, which mandates the transfer of pending suits involving commercial disputes to specialized courts. The High Court, however, rejected this plea, emphasizing the prospective nature of statutes unless explicitly stated otherwise, and underscored the potential disruption to substantive rights and administrative processes if retrospectivity were imputed.
Drawing from foundational principles of jurisprudence, the court highlighted the presumption against retrospectivity to avoid unsettling vested rights, such as rights of appeal or procedural entitlements in ongoing litigations.
This decision not only clarifies the temporal scope of the 2018 Amendment but also reinforces the judiciary's role in adhering to the literal meaning of statutes while balancing the legislative objective of expediting commercial resolutions with the stability of existing legal proceedings.
By involving the High Court's administrative wing and soliciting responses on an internal decision dated February 4, 2020, which limited the amendment's application to post-2018 suits, the judgment provides a comprehensive analysis that could influence similar transfer applications across jurisdictions, particularly in high-volume commercial hubs like Delhi.
Factual Background:The disputes in this case originated from a property located at RZ-21/284, Gitanjali Park, West Sagarpur, New Delhi, comprising nine shops owned initially by the mother of Respondent No. 1, Prem Arora. The petitioners, including Satyanarain Khandelwal, Ishwar Singh, Prakash Chand Modi, Mahaveer Bansal, Radhey Shyam, and Manoj Kumar Bansal, were inducted as tenants by Respondent No. 2 (Prem Arora's father), each paying a security deposit.
In 2009, the mother executed a General Power of Attorney and a Will in favor of Respondent No. 1, followed by a Gift Deed in 2014, transferring ownership to him. Prior to formal ownership transfer, Respondent No. 1 approached the petitioners in late 2013 to sell them the shops they occupied, accepting advances via cheques dated between November 17 and 25, 2013.
These advances ranged from Rs. 2 lakhs to Rs. 4 lakhs per petitioner. On January 6, 2014, Agreements to Sell were executed, adjusting the prior security deposits against the sale consideration, with further payments made on January 14 and 30, 2014, bringing the total per shop (except for Modi's double shops) to Rs. 12 lakhs after adjustments.
Respondent No. 1, not yet the owner, sought extensions for execution, assuring the petitioners they were virtually owners and need not pay rent. However, tensions arose when Respondent No. 1 denied the agreements in subsequent proceedings, claiming forged signatures.
This led the respondents to file eviction suits in 2017 for possession, arrears of rent, and mesne profits against each petitioner, titled as Prem Arora & Anr. v. respective petitioners.
In response, the petitioners filed suits in December 2018 for specific performance of the Agreements to Sell and permanent injunctions against eviction. The underlying facts thus revolved around allegations of breach of contract, denial of agreements, and competing claims over property rights, with the commercial angle emerging from the immovable property transactions qualifying as "commercial disputes" under the 2015 Act.
Procedural Background:The procedural journey began with the respondents' 2017 eviction suits pending before the Additional District Judge at Patiala House Courts, New Delhi. The petitioners filed written statements denying eviction claims and highlighting the Agreements to Sell. In replications, Respondent No. 1 disavowed the agreements, prompting the petitioners' 2018 suits for specific performance. Recognizing overlapping issues, the petitioners sought transfer of their suits to the court handling the eviction matters via petitions allowed on February 5, 2019, by the District and Sessions Judge, consolidating proceedings before the Additional District Judge.
Subsequently, an application under Section 151 of the Code of Civil Procedure was filed for formal consolidation, citing common substantial questions and evidence, but this was dismissed on November 25, 2020. A review application met the same fate on June 25, 2021, leading to a Civil Miscellaneous Petition before the High Court, which was dismissed as withdrawn on September 2, 2021.
Invoking the Commercial Courts Act, 2015, as amended in 2018, the petitioners then filed the instant transfer petitions under Section 15(5) in 2021, arguing the suits involved commercial disputes over Rs. 3 lakhs and should be transferred to designated commercial courts.
Notices were issued, and on March 25, 2022, the High Court sought the High Court's administrative response on a February 4, 2020, decision limiting the 2018 Amendment to post-commencement suits.
Reasoning and Decision of Court:The High Court's reasoning commenced with framing the core issue: whether Section 19 of the 2018 Amendment, stating "Save as otherwise provided, the provisions of this Act shall apply only to cases relating to commercial disputes filed on or after the date of commencement of this Act," permits retrospective application to pre-2018 suits valued above Rs. 3 lakhs, enabling transfers under Section 15 of the 2015 Act.
Rejecting the petitioners' purposive interpretation, the court invoked cardinal principles from Supreme Court precedents like Monnet Ispat and Energy Ltd. v. Union of India and Hitendra Vishnu Thakur v. State of Maharashtra, affirming that statutes are prima facie prospective unless expressly or impliedly retrospective, to preserve vested rights and avoid unsettling past transactions.
The court found no ambiguity in Section 19's language, which explicitly limits application to post-commencement cases, and held that imputing retrospectivity would infringe substantive rights, such as unrestricted appeals or exemptions from mandatory pre-institution mediation under the new Section 12A. Administratively, it would burden commercial courts with small-value pre-2018 disputes, defeating the Act's goal of speedy resolution for high-value matters.
The Saving Clause in Section 19 was interpreted narrowly to preserve existing rights without creating new ones, and harmoniously with Section 15, not to extend retrospectivity. The court dismissed reliance on Hari Singh v. MS Superhouse Ltd., viewing it as a general directive inapplicable here. Ultimately, the petitions were dismissed on July 18, 2022, refusing transfer and affirming the 2018 Amendment's prospective operation.
Point of Law Settled in the Case:The judgment settles that the Commercial Courts (Amendment) Act, 2018, does not apply retrospectively to commercial disputes filed before May 3, 2018, even if their value exceeds the reduced threshold of Rs. 3 lakhs.
This precludes transfers of such pending suits from ordinary civil courts to commercial courts under Section 15 of the 2015 Act, based on the presumption against retrospectivity absent explicit legislative intent. It clarifies that the Saving Clause in Section 19 preserves pre-existing rights but does not extend the amendment's benefits to prior cases, ensuring stability in procedural and substantive entitlements while aligning with the Act's objective of efficient commercial adjudication without overwhelming specialized courts.
Case Title: Satyanarain Khandelwal Vs Prem Arora
Date of Order: 18th July, 2022
Case Number: TR.P.(C.) 47/2021
Name of Court: High Court of Delhi at New Delhi
Name of Hon'ble Judge: Hon'ble the Chief Justice Satish Chandra Sharma and Hon'ble Mr. Justice Subramonium Prasad
Disclaimer: Readers are advised not to treat this as substitute for legal advise as it may contain errors in perception, interpretation, and presentation
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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