Commercial Courts Cannot Hear Non-Commercial Arbitration Disputes Without Specified Claim Value: MP High Court

The Madhya Pradesh High Court has clarified that arbitration challenges arising from non-commercial disputes with no determinable monetary value cannot be heard by Commercial Courts, even if such courts function at the level of a Civil Judge (Senior Division).

The court clarified that the Commercial Courts Act, 2015 applies only when two conditions are met, the dispute must be commercial in nature and must have a specified value as defined under the law.

Justice Vivek Jain said that where these requirements are absent, Commercial Courts do not have jurisdiction. The court observed:

“In the present case, since there is no specified value of the claim, therefore, the application could not have been transferred to the Commercial Court and it should continue only as per the Act of 1996 before the Court as defined in Section 2(e) as the Principal Civil Court of original jurisdiction, which shall be the Principal District Judge or any District Judge under him.”

The ruling came on a petition filed by Athletics Sangh Madhya Pradesh, which had challenged an arbitral award recognising the M.P. Athletics Association as the authorised body to represent the state before the Athletics Federation of India.

At the heart of the dispute was a long-standing rivalry between two sports associations over official recognition as the State's athletics body.

The arbitration itself traced back to a 2015 order of the High Court in a writ petition, where the Indian Olympic Association had argued that such disputes between rival state associations should be resolved through arbitration under its rules. Accepting this, the High Court directed the constitution of an arbitral tribunal.

The tribunal delivered its award on June 17, 2016.

Challenging that award, Athletics Sangh Madhya Pradesh filed applications under Section 34 of the Arbitration and Conciliation Act, 1996. The cases were initially heard by the District Court at Bhopal but were later moved to the court of the Civil Judge (Senior Division), which had been designated as a Commercial Court.

When the petitioner asked for the matters to be transferred back to the District Judge, the Principal District Judge rejected the request on June 25, 2025, leading to the present challenge before the High Court.

Before the court, the petitioner argued that reliance on the Supreme Court's ruling in Jaycee Housing (P) Ltd. v. High Court of Orissa was misplaced, as that judgment applies only to arbitration matters involving commercial disputes of specified value. The respondents maintained that once a Commercial Court had been constituted, it was competent to hear the applications.

The High Court disagreed. It said that Sections 10 and 12 of the Commercial Courts Act make it clear that arbitration matters come within the Commercial Courts framework only when the dispute is commercial in nature and its value can be worked out from the claims and counterclaims.

In the present case, the court pointed out, there was no monetary claim, no counterclaim, and nothing that could be valued in money terms, as the arbitration was limited to deciding which of the rival sports bodies would be recognised.

While reaffirming that the Commercial Courts Act can override the Arbitration Act in appropriate cases, the court made it clear that such overriding effect applies only to commercial disputes of specified value.

Allowing the petition, the High Court set aside the Principal District Judge's order dated June 25, 2025, and directed that the pending Section 34 applications be transferred either to the Principal District Judge, Bhopal, or to a District Court under him within 30 days.