Commercial Appeal Under Section 13 of the Commercial Courts Act

Which disputes and courts the section applies to

The Act applies to a commercial dispute, defined in section 2(1)(c) to include disputes from ordinary transactions of merchants and bankers, export and import, construction and infrastructure contracts, partnership and franchising agreements, intellectual property, insurance and many others, where the specified value is three lakh rupees or more.

Section 13 has two parts. Under section 13(1), a decision of a Commercial Court below the level of a District Judge is appealed to the Commercial Appellate Court at the District Judge level. Under section 13(1A), a decision of a Commercial Court at the District Judge level, or of the Commercial Division of a High Court, is appealed to the Commercial Appellate Division of the High Court.

In Delhi, the High Court's original side hears commercial suits above two crore rupees through its Commercial Division, and district-level Commercial Courts hear those below. Both send their appeals to the Commercial Appellate Division of the Delhi High Court. In Gurugram, the Commercial Court at the District Judge level sends its appeals to the Commercial Appellate Division of the Punjab & Haryana High Court at Chandigarh.

What can be appealed, and what cannot

The proviso to section 13(1A) limits appeals against interim orders to those specifically listed in Order XLIII of the Code of Civil Procedure, as amended by the Act, and to orders appealable under section 37 of the Arbitration and Conciliation Act, 1996. Section 13(2) then says that no appeal shall lie from any order or decree of a Commercial Division or Commercial Court otherwise than in accordance with the Act, notwithstanding anything in any other law, including the Letters Patent of a High Court.

In Kandla Export Corporation v. OCI Corporation (2018), the Supreme Court applied that bar strictly. It held that where section 37 of the Arbitration Act does not provide an appeal, a Letters Patent appeal cannot be used to create one in a commercial matter. The practical result is a closed list:

• a final judgment and decree: appealable;
• an order granting or refusing a temporary injunction, appointing a receiver, returning a plaint and the other Order XLIII orders: appealable;
• orders under the Arbitration Act that section 37 makes appealable, such as setting aside or refusing to set aside an award, and granting or refusing interim measures under section 9: appealable;
• orders outside these, such as refusing leave to amend, rejecting an application to condone delay in filing a written statement, or procedural directions: not appealable under section 13; the remedy, if any, is a petition under Article 227 or the final appeal.

Two kinds of decision are easy to overlook. The Act introduced summary judgment under Order XIII-A, which lets a commercial court decide a claim without a trial where the defence has no real prospect of success; a summary judgment is a judgment, appealable within the same 60 days. A judgment on admissions is treated the same way. In both cases the appeal usually turns on whether the court was right to decide without evidence, so the grounds should identify the factual disputes that needed a trial.

The 60-day limit and why delay is hard to excuse

Section 13(1A) requires the appeal to be filed within 60 days from the date of the judgment or order. The time taken for a certified copy is excluded, but no more.

In Government of Maharashtra v. Borse Brothers Engineers and Contractors (2021), the Supreme Court considered delay in appeals governed by section 13 and section 37. It held that, given the object of speedy disposal of commercial disputes, delay beyond the limitation period should be condoned only by way of exception and not as a rule, where the party has acted in good faith and without negligence. A short delay with a genuine explanation may be condoned; a long one rarely will be.

Section 14 of the Act asks the Commercial Appellate Court and the Commercial Appellate Division to endeavour to dispose of an appeal within six months of filing.

Preparing a commercial appeal

1. 1.Confirm that the suit was decided as a commercial dispute and identify the court's level, which fixes the appellate forum.
2. 2.Check that the order is on the appealable list; if it is not, consider Article 227 instead.
3. 3.Compute the 60-day period from the date of the order, and file well inside it.
4. 4.In an appeal against a money decree, prepare for a stay conditional on deposit or security, as in other civil appeals.
5. 5.In an appeal from an arbitration order, frame grounds within the limited scope of review that section 34 and section 37 permit.

Appeals involving arbitral awards overlap with our arbitration practice, and recovery decrees with our recovery suits work. A decision of the Commercial Appellate Division can be carried further only by a Special Leave Petition to the Supreme Court.