BRD Finance Ltd, a kuri company that runs chit schemes in Kerala, sued Santhosh P before the Munsiff Court at Chavakkad to recover about Rs 3.47 lakh due on a promissory note. Nothing unusual about that, until the Kerala government stepped in halfway through the litigation and changed which court was allowed to hear it.
On 24 February 2020, while the suit was still pending, the State notified all Sub Courts in Kerala as Commercial Courts for the purpose of hearing commercial disputes of a specified value, which under the Commercial Courts Act, 2015 then stood at anything above Rs 3 lakh. BRD Finance's claim, at Rs 3.47 lakh, fell squarely inside that bracket. Nobody flagged the point. The Munsiff Court carried on, heard the suit on its merits, and dismissed it. BRD Finance appealed to the Sub Court at Chavakkad, which upheld the dismissal, again without anyone raising the jurisdiction question.
It was only in second appeal before the Kerala High Court that BRD Finance argued, for the first time, that both courts below had acted without jurisdiction. Justice Easwaran S. agreed, and did not treat the lateness of the objection as a bar. The notification creating Commercial Courts had taken the power to decide specified-value commercial disputes away from ordinary civil courts, including the Munsiff Court, from the date it came into force. A decree passed by a court that no longer had that power is not voidable at the choice of a party who forgets to object; it is void, and a void decree can be pointed out at any stage, including for the first time in second appeal.
The judge was equally unimpressed by the fact that the first appellate court, the Sub Court, had also missed the point. He held that an appellate court carries an independent duty to satisfy itself that the court below had jurisdiction to pass the judgment under appeal, and its failure to notice a jurisdictional defect does not cure it. If anything, it compounds the illegality, because the appeal then affirms a nullity instead of correcting it.
Santhosh P argued that BRD Finance could not now complain about a forum it had itself approached and continued to litigate in without protest for years. The Court was not persuaded. Consent or acquiescence can waive many procedural objections, but it cannot confer jurisdiction on a court where a statute has taken that jurisdiction away. Parties cannot, by their silence, keep alive a forum the legislature has closed.
Having found both the trial court's judgment and the first appellate court's judgment unsustainable, the High Court set aside both and transferred the original suit to the Principal Sub Court, Thrissur, the court now designated to try specified-value commercial disputes from that jurisdiction, for a fresh hearing on the merits. It also directed a refund of the court fee BRD Finance had paid both in the first appeal and in the second appeal before the High Court, since those proceedings had, in the Court's own characterisation, been rendered an exercise in futility by the jurisdictional defect.
The ruling is a reminder that the Commercial Courts Act did not just add a new label to existing courts; in states that notified Sub Courts or Civil Courts as Commercial Courts for specified pecuniary thresholds, it carved out a slice of ordinary civil jurisdiction and handed it to a different forum, with effect from the date of notification regardless of when the suit was filed. Litigants and, as this case shows, judges at two levels can lose sight of that carve-out for years, especially in a small-value recovery suit where nobody thinks to check whether a notification issued mid-litigation has quietly moved the goalposts. The Kerala High Court's answer is that the defect does not go away with time or with everyone's silence; it has to be corrected whenever it surfaces, even if that means restarting a suit from scratch after a decade of litigation that led nowhere.