Justice Easwaran S was delivering the judgment in a Regular Second Appeal filed by BRD Finance Ltd. against judgments of the Munsiff Court, Chavakkad and the Sub Court, Chavakkad.

The issue before the High Court was whether, after the coming into force of the Commercial Courts Act, 2015, a civil court can try and adjudicate a commercial dispute of specified value which is required to be tried by a Commercial Court.

The dispute arose from a suit instituted by BRD Finance Ltd., a kuri company, seeking recovery of Rs. 3,47,587 from the defendants on the basis of a promissory note. The suit was originally instituted before the Munsiff Court, Chavakkad.

During the pendency of the suit, however, the State Government issued an order dated February 24, 2020, exercising its powers under Section 3(1) and (2) of the Commercial Courts Act, 2015. The notification designated the Sub Courts as Commercial Courts for recovery claims exceeding Rs.3 lakh across the State.

The appellant argued that, in view of Section 15 of the Commercial Courts Act, the suit ought to have been transferred by the Munsiff Court to the designated Commercial Court. Instead, the Munsiff Court proceeded to hear the suit and dismissed it on merits.

The Court held that once the State notification designated the Sub Courts as Commercial Courts for recovery claims exceeding Rs.3 lakh, the Munsiff Court ought to have transferred the suit to the Principal Sub Court, Thrissur.

“Without transferring the same, the act of the Munsiff Court in proceeding to consider the suit on merits is clearly unsustainable and without jurisdiction.” the Court observed.

The High Court further observed that the jurisdictional defect was not cured when the matter reached the first appellate court.

The Sub Court, Chavakkad had affirmed the Munsiff Court's judgment. The High Court held that this too was unsustainable because an appeal against an order rendered without jurisdiction was not maintainable before the Sub Court.

The High Court thus set aside both the judgment and decree of the Munsiff Court and the appellate judgment of the Sub Court, without entering into the merits of the underlying dispute.

The Court directed that the original suit be transferred to the Principal Sub Court, Thrissur, which would thereafter issue notice to the parties and proceed with the case on its merits. The appellant was also held entitled to a refund of the court fee paid before the High Court and the first appellate court.

Case Title: BRD Finance Ltd. v Santhosh P and Anr.

Case No: RSA 194/ 2026

Citation: 2026 LiveLaw (Ker) 459

Counsel for Appellant: G. Krishnakumar, Nina P. Augustine, Athulya P, Sooraj Sunil P