Commercial Court Cannot Dismiss Non-Commercial Suit; Must Return Plaintiff: Delhi High Court

The Delhi High Court has held that when a commercial court finds that a dispute does not qualify as a “commercial dispute” under the Commercial Courts Act, it cannot dismiss the suit on that ground and must instead return the plaint so that the litigant can approach the appropriate civil court.

A Division Bench of Justice Anil Kshetarpal and Justice Amit Mahajan set aside a Commercial Court order that had dismissed a recovery suit filed by former employee Pramod Kumar against Gannon Dunkerley & Company Limited.

The bench said the Commercial Court went wrong in treating a lack of jurisdiction as a fatal defect. “By dismissing the suit, the Commercial Court treated a jurisdictional defect as a substantive failure of the cause of action,” the Court observed.

Kumar had worked with the company for over 27 years and had risen to the position of Deputy General Manager. In February 2020, after he applied for leave to attend his son's wedding, his services were terminated. He claimed that several dues remained unpaid, including salary in lieu of notice, leave encashment, travel expenses, and refund of a security deposit, totalling about Rs 4.10 lakh. When repeated legal notices did not yield payment, he filed a recovery suit before the Commercial Court.

The Commercial Court dismissed the suit, holding that a service-related dispute between an employee and a private employer does not fall within the definition of a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act. Kumar challenged this order, arguing that even if the court lacked jurisdiction under the Act, it could only return the plaint under Order VII Rule 10 of the Code of Civil Procedure. He said dismissing the suit altogether shut him out from pursuing his claims on merits before any court.

The High Court agreed that the dispute was non-commercial and that recovery of salary or terminal benefits does not fall within the categories listed under the Act. However, it made clear that this was where the Commercial Court's role ended.

The bench explained that “dismissal” of a suit amounts to a final adjudication, while “return of a plaint” is only a procedural step taken when the court is not the correct forum.

Drawing on settled principles, the court clarified that if a dispute does not qualify as a commercial dispute, “the Commercial Court does not lose the power to do justice; rather, it loses the jurisdiction to hear that specific matter, thereby necessitating the return of the plaint to the appropriate forum.”

Setting aside the dismissal, the Court restored the suit and directed the Commercial Court to return the plaint while permitting the competent civil court, with the consent of both sides, to utilise the existing pleadings and evidence to avoid a de novo trial. 

For Appellant: Advocate Rajeev Kumar Rai

For Respondent: Advocates Vaibhav Tyagi and Kartikeya Misra