A Full Bench of the Andhra Pradesh High Court has held that the 2018 amendment to the Commercial Courts Act, 2015, reducing the specified value for commercial disputes from ₹1 crore to ₹3 lakh, became operative automatically from the date of the amendment itself and did not require any separate government notification to come into force.
The Full Bench, comprising Justice Cheekati Manavendranath Roy, Justice Ravi Nath Tilhari and Justice Battu Devanand, answered a reference arising out of conflicting Division Bench judgments in Bellam Balakrishna v. Greenmount Developers, CRP No.1749/2023 & U.V. Satyanarayana v. M/s. Shriram City Union Finance Ltd., C.R.P. No. 740/2024 on the interpretation of Sections 2(1)(i) and 3(1A) of the Commercial Courts Act.
The reference arose in a batch of civil revision petitions where the following three questions were referred to the Full Bench:
• Whether the amendment made to Section 2(1)(i) of the Commercial Courts Act, 2015 by Amendment Act 28 of 2018 reducing the “specified value” from ₹1 crore to ₹3 lakh became operative automatically from 03.05.2018, or whether a notification by the Central Government or State Government was necessary for its implementation?
• Whether the amended “specified value” of ₹3 lakh could apply to cases which were already instituted prior to 03.05.2018 but remained pending on the date the amendment came into force?
• Which of the two earlier Division Bench judgments correctly laid down the law — U.V. Satyanarayana v. M/s. Shriram City Union Finance Ltd. or Bellam Balakrishna v. Greenmount Developers?
On the first question, the Full Bench held that a notification by the Central Government is required only if the “specified value” under Section 2(1)(i) of the Commercial Courts Act is to be increased beyond the statutory base value of ₹3 lakh. In the absence of any such notification, the specified value automatically remains ₹3 lakh without any upper cap. Thus, no Central Government notification was necessary for the amended base threshold of ₹3 lakh to operate.
On the second question, the Court held that although the statutory amendment existed, Commercial Courts in Andhra Pradesh could not start exercising jurisdiction over that category of disputes unless the State Government issued a notification under Section 3(1A), in consultation with the High Court, constituting Commercial Courts with corresponding pecuniary jurisdiction.
The court held that for the category of disputes valued between ₹3 lakh and less than ₹1 crore, the amended “specified value” would become operative in Andhra Pradesh only after the State Government issues a notification under Section 3(1A) of the Commercial Courts Act constituting Commercial Courts with corresponding pecuniary jurisdiction in consultation with the High Court.
The Bench distinguished between “specified value” under Section 2(1)(i) and “pecuniary value” under Section 3(1A), observing that the two expressions operate in distinct fields. While “specified value” concerns the valuation of the commercial dispute itself, “pecuniary value” relates to the distribution of jurisdiction among different levels of Commercial Courts. The Court held that notification under Section 3(1A) becomes relevant where Commercial Courts are constituted at levels below the District Judge level, requiring allocation of pecuniary jurisdiction among such courts.
On the third question, the Full Bench held that Bellam Balakrishna v. Greenmount Developers correctly laid down the law to the extent that the amended specified value between ₹3 lakh and less than ₹1 crore would not become operational unless the State Government issued a notification under Section 3(1A) in consultation with the High Court. However, the Court clarified that this requirement applies only to the segment of specified value from ₹3 lakh up to less than ₹1 crore.
The Court further held that U.V. Satyanarayana v. M/s. Shriram City Union Finance Ltd. did not lay down the correct law insofar as it applied the amended specified value retrospectively from 03.05.2018 to a case instituted prior to the amendment and pending on that date, without considering Section 19 of the 2018 Amendment.
The Full Bench, after answering the reference, laid down the legal consequences flowing from its interpretation of Sections 2(1)(i) and 3(1A) of the Commercial Courts Act, 2015. The Court clarified how commercial disputes and execution petitions would be dealt with in Andhra Pradesh, depending upon their valuation and the absence of a State notification under Section 3(1A). The Court held:
• Commercial disputes of the “specified value” of ₹1 crore and above, including execution petitions relating to such disputes, shall continue to lie before the Commercial Courts at Visakhapatnam District and Krishna District (Vijayawada) within their respective territorial jurisdictions.
• Commercial disputes, including execution petitions, valued from ₹3 lakh up to less than ₹1 crore shall not be instituted before the Commercial Courts at Visakhapatnam and Krishna District (Vijayawada) unless the State Government issues a notification under Section 3(1A) of the Commercial Courts Act, 2015. Until such notification, such matters shall continue before regular civil courts according to their pecuniary and territorial jurisdiction.
• Commercial disputes valued from ₹3 lakh up to less than ₹1 crore, which were pending before regular civil courts as on 03.05.2018, shall continue to be tried by those courts in terms of Section 19 of the 2018 Amendment.
• Commercial disputes valued from ₹3 lakh up to less than ₹1 crore instituted on or after 03.05.2018 shall also continue before regular civil courts until issuance of a notification by the State Government under Section 3(1A) of the Commercial Courts Act.
• The above position shall equally apply to execution petitions arising out of commercial disputes valued from ₹3 lakh up to less than ₹1 crore, irrespective of whether the underlying commercial dispute was instituted before or after 03.05.2018.
The Full Bench further observed that the State Government is expected to take necessary steps under Section 3, including Section 3(1A), of the Commercial Courts Act on a priority basis.
