Calcutta High Court (Appellete Side)
Everstrong Sales Pvt. Ltd vs Binod Kumar Mahipal & Ors on 30 June, 2025
Author: Arijit Banerjee
Bench: Arijit Banerjee
2025:CHC-AS:1148-DB
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
COMMERCIAL APPELLATE DIVISION
APPELLATE SIDE
Before:
The Hon'ble Justice Arijit Banerjee
And
The Hon'ble Justice Om Narayan Rai
FAT 3 of 2024
With
I.A. No. CAN 2 of 2025
Everstrong Sales Pvt. Ltd.
Vs.
Binod Kumar Mahipal & Ors.
For the Appellant : Mr. Abhrajit Mitra, Sr. Adv
Mr. Shoham Sanyal, Adv.
Mr. K.N. Jana, Adv.
For the Respondent No. 41 : Mr. Mainak Bose, Sr. Adv.
Mr. Rishabh Karnani, Adv.
Mr. Sourath Dutt, Adv.
Mr. Sanjay Kr. Baid, Adv.
Hearing Concluded on : 06.05.2025 Judgment on : 30.06.2025 Om Narayan Rai, J.:-
1. The instant appeal assails an order dated August 11, 2023 passed by the
learned Judge, Commercial Court at Rajarhat in Title Suit No. 20 of 2021
(C.C) whereby an application for rejection of plaint under Order VII Rule 11
of the Code of Civil Procedure, 1908 (hereafter “the Code”) filed by the
defendant no. 41 (respondent no. 41 herein) has been allowed.
Page 1 of 27
2025:CHC-AS:1148-DB
2. Since we are examining an order whereby an application for rejection of
plaint has been allowed, the case run in the plaint only needs to be noticed
together with the documents appended thereto. Briefly summed up the
plaint case is as follows:
a. The defendant nos. 1 to 32 being in need of funds for the purpose of
their business jointly approached the plaintiff for financial assistance
to the tune of Rs.7,00,00,000/- (Rupees Seven Crore). The said
defendants offered to secure repayment of the loan requested for by
them by mortgaging their respective undivided shares in land
measuring 394.77 decimals in Baranagar (hereafter “the suit
property”).
b. It was specifically agreed between the plaintiff and the defendant nos.
1 to 32 that the said loan sought for by the said defendants would be
utilized only for business purposes and that no part thereof would be
transferred to any of their heirs or legal representatives. It was further
represented to the plaintiff that the defendant nos. 2 to 36 had in two
divisions (one consisting of the defendant nos. 2 to 25 and the other
comprising the defendant nos. 26 to 32) executed two several powers of
attorney in favour of the defendant no.1 to look after and administer
their shares in the said suit property as also to negotiate terms
regarding mortgage of their share in the suit property.
c. It was on such understanding plaintiff had lent and advanced a sum of
Rs.7,00,00,000/- (Rupees Seven Crore) to the defendant nos. 1 to 32 in
tranches, which was to be repaid with interest within a period of 24
months.
Page 2 of 27
2025:CHC-AS:1148-DB
d. As agreed, repayment of the said loan was secured by mortgage of
immovable property executed by the defendant nos. 1 to 32 to the
extent of the said defendants’ undivided/unpartitioned 78.05% share
in the suit property. The defendant nos. 33 to 41 are the other co-
owners and co-sharers in respect of the suit property together with the
defendant nos. 1 to 32.
e. The said loan that was advanced by the plaintiff to the defendant nos.
1 to 32 was a commercial loan for business purposes and the property
that was mortgaged to secure repayment of the said loan was also used
exclusively in trade and commerce. The borrowers being the defendant
nos. 1 to 32 failed to repay the borrowed sum wherefore the
appellant/plaintiff instituted the aforesaid suit for recovery of a sum of
Rs.13,20,46,829/- with interest against the defendant nos. 1 to 32.
3. Based on the above-noted case run in the plaint, the plaintiff has claimed
the following reliefs in the suit:
“a. A preliminary decree in Form 5A of Appendix „D‟ of the Code of Civil Procedure
declaring the amount due to the plaintiff on the mortgage to be
Rs.13,20,46,829/- as on 31st August 2021 and directing the defendant nos. 1
to 32 to make payment of the aforesaid sum together with pendent lite interest
and interest on judgment at the contractual rate of 13.5 percent per annum;
b. In default of the defendant nos. 1 to 32 making such payment, decree for sale of
the undivided 78.05% share of the defendants in the property more fully
described in the Fisrt Schedule hereof and handing over of such sale proceeds
to the plaintiff in pro tanto satisfaction of its claim
Page 3 of 27
2025:CHC-AS:1148-DB
c. In case the proceeds of the sale are found to be insufficient to satisfy the amountdue under the decree to be passed, leave be given to the plaintiff to apply for
personal decree against the defendant nos. 1 to 32 for the balance…..”
4. The defendants contested the suit by filing their written statements in two
sets. The first set being the written statement filed jointly by the defendant
nos. 1 to 32 and the second set being the written statement filed by the
defendant nos. 33 to 41.
5. The defendant no. 41 also took out an application under Order VII Rule 11
of the Code contending that as the dispute raised in the suit was/is not
“commercial dispute” in terms of Section 2(1)(c) of the Commercial Courts
Act, 2015 (hereafter “the said Act”), therefore the subject suit was not a
commercial suit, that the same would not maintainable before the
Commercial Court at Rajarhat and that the said Court had no jurisdiction
to try and entertain the said suit.
6. The plaintiff contested the said application filed by the defendant no. 41 by
filing its affidavit-in-opposition.
7. After considering the material on record and upon a contested hearing, the
learned Commercial Court allowed the defendant no.41’s application under
Order VII Rule 11 of the Code and rejected the plaint by observing as
follows:
“Critically analyzing the factual matrix it transpires that the suit property is an
undivided one and the plaintiff has extended loan facilities to some co-owners
in respect of the suit property and when the defendant no. 1 to 32 failed and
neglected the repayment, the plaintiff has been compelled to file the present
suit. The principal question before this Court as under what capacity the
plaintiff extended the loan whether in the capacity of money lender or non-
banking financial institution. On both counts the license as well as thePage 4 of 27
2025:CHC-AS:1148-DB
certificate from the RBI has not been disclosed in the plaint nor annexed with
the list of documents and further did not file memorandum of association
whereby it could also be ascertained the nature of business and lastly failed to
present the suit qualification of a “Commercial dispute” in the averments within
the purview of the Commercial Courts Act, it is necessary to break down the
classes of persons and transactions contemplated in the clause (ii) to (xxii)
which do not apply in the instant suit. The absence of MOU of the plaintiff
company together with money-lending license and RBI certificate makes me
hold the suit has not arisen out of commercial dispute and has no locus to
institute before the Commercial Court.
Therefore, in view of the aforesaid discussion, I am of the view plaint does not
contains sufficient pleading to the effect that the statements in the plaint are
not supported by relevant and important material documents which ultimately
demolishes the suit of the plaintiff following omission of material
facts/documents which leads to an incomplete cause of action which is bad in
law, accordingly the defendant no. 41 succeeds.”
8. Feeling aggrieved by the said order dated August 11, 2023 the plaintiff has
come up in appeal before us. It may be mentioned that the plaintiff-
appellant has also filed an application under Order 47 Rule 11 of the Code
seeking to bring on record inter alia its Memorandum of Association and a
document evincing that subsequent to the rejection of plaint, the plaintiff-
appellant had put in the requisite fees with penalty to obtain a money
lending license under the Bengal Money Lenders Act, 1940.
9. Mr. Abhrajit Mitra, learned Senior Advocate appearing on behalf of the
appellant/plaintiff invited the attention of this Court to the provisions of
Section 2(1)(c)(vii) of the said Act to submit that a dispute arising out of any
agreement relating to immovable property which was used in trade and
commerce would be treated as a commercial dispute in terms of the
aforesaid provisions. He thereafter took us through paragraph 19 of the
Page 5 of 27
2025:CHC-AS:1148-DB
plaint to show that the sum lent and advanced by the plaintiff to the
defendant nos. 1 to 32 was a commercial loan for business purpose and
repayment of such loan was secured by mortgage of the suit property and
that the suit property was used exclusively in trade and commerce. It was
submitted that since the said loan is secured by mortgage of immovable
property (created by way of registered Deed of Mortgage) and the said
immovable property is used exclusively in trade and commerce, therefore
the present suit which is based on a dispute arising from an agreement
relating to immovable property used in trade and commerce the same has
rightly been filed as a commercial suit.
10. Paragraph 3 of the plaint was also placed by Mr. Mitra to contend that as
the plaintiff and the defendant nos. 1 to 32 had agreed that the loans to be
advanced by the plaintiff would be utilized only for business purposes the
loan transaction clearly fell within the scope of 2(1)(c)(i) of the said Act.
11. It was further submitted that for the purpose of deciding an application
under Order VII Rule 11 of the Code, the Court is required to see the
averments made in the plaint and that the statements made in the plaint
are to be treated as true and correct. Paragraph 13 of a Single Bench
judgment of this Court rendered in the case of Lord Grih Nirman Private
Limited vs. Merlin Projects Limited1 was relied upon in support of the
aforesaid proposition.
12. The Court was then taken through the deed of mortgage dated September
7, 2016 which forms an annexure to the plaint and it was submitted that
the said deed clearly recorded that the plaintiff had lent and advanced a
1 2024 SCC OnLine Cal 9922
Page 6 of 27
2025:CHC-AS:1148-DB
sum of Rs.7,00,00,000/- (Rupees Seven Crore) to the defendant nos.1 to 32
for commercial purpose and that the property mentioned in the said deed
had been mortgaged for securing repayment of the said sum by the
borrowing defendants to the lender-plaintiff. Paragraphs 4, 14 and 37 of a
judgment of the Hon’ble Supreme Court in the case of Ambalal Sarabhai
Enterprises Limited vs. K.S. Infraspace LLP and Another2 were relied
on for the proposition that in a mortgage suit the determining factor as to
whether or not the Commercial Courts Act, 2015 would apply, is the usage
of the property on the date of the agreement.
13. It was submitted on behalf of the appellant that on a cumulative reading of
the case run in the plaint and the documents annexed thereto, it will be
absolutely clear that the plaintiff had lent and advanced the said sum of
Rs.7,00,00,000/- (Rupees Seven crore) for commercial purpose and that
there was an agreement in the form of a deed of mortgage which satisfied
the requirement of Section 2(1)(c)(vii) of the said Act of 2015 and that being
so the suit instituted by the appellant was clearly a commercial suit and
was maintainable before the Commercial Court.
14. It was further submitted that the observation of the learned Commercial
Court that the plaintiff’s suit could not be maintained as a commercial suit
since the plaintiff did not have money lending license and the requisite
certificate from the Reserve Bank of India (hereafter “RBI”) is not correct
inasmuch as money lending license is not a requirement prescribed under
any of the provisions of Section 2(1)(c) of the said Act. It was then submitted
by the appellant that the appellant had already deposited the maximum fine
2 (2020) 15 SCC 585
Page 7 of 27
2025:CHC-AS:1148-DB
of Rs.1,000/- required to be paid/deposited in terms of the provisions of
Section 32 of the Bengal Money Lenders Act, 1940 and had thus cured the
defect, if any, in the institution of the suit. In support of such proposition
the plaintiff relied on another Single Bench judgment of this Court in the
case of Ashvin & Co. vs. Bajaj Tea House3.
15. It was then submitted on behalf of the plaintiff that
even it is assumed that the plaintiff’s suit is not maintainable as a
commercial suit before the Commercial Court the correct approach would
have been to transfer the suit from the Commercial Division to the non-
Commercial Division and that the plaint should not have been rejected
under Order VII Rule 11 of the Code. In support of the aforesaid proposition
the appellant relied on the following judgments:
i). Ladymoon Towers Private Limited vs. Mahendra Investment
Advisors Private Limited4 (paragraphs 1 and 2),
ii). Jai Balaji Industries Limited vs. Calderys India Refractories Ltd.
(Order dated 13th May, 2022 passed in C.S. No.19 of 2019),
iii). Sherawali Developers LLP vs. M/s. Majesty Homes & Ors.5
(Paragraph 12),
iv). Satyavama Commotrade Private Limited & Ors. vs. Global
Motocorp LLP & Anr. (Order dated 11th November, 2019 passed in FMA
No. 1522 of 2019)
v). Suraj Prakash vs. Neeraj Kumar & Ors.6 (Paragraphs 7, 8 and 11).
3 2010 SCC OnLine Cal 44
4 2021 SCC OnLine Cal 4240
5 MANU/DE/3640/2024
6 2023 SCC OnLine Del 4563
Page 8 of 27
2025:CHC-AS:1148-DB
16. It was further submitted that a Chartered High Court has no power to
return a plaint under Order VII Rule 11 of the Code and as such this Court
had in the case of Macneill and Magor Ltd. & Anr. vs. Mouhsen Ali &
Anr.7 (Paragraphs 19 to 21) transferred the case from this Court to a Court
having jurisdiction by exercising its power under Section 24(1)(a) of the
Code. It was further submitted that such power of transfer can be exercised
either under Section 151 of the Code in exercise of inherent power of the
Court or under Section 24 thereof.
17. Mr. Mainak Bose, learned Senior Advocate appearing for the respondent
no.41 (defendant no.41) supported the impugned order and submitted that
neither of the two sub clauses of Section 2(1)(c) of the said Act that have
been relied on by the plaintiff come to the aid of the plaintiff. It was further
submitted that the loan that had been sought to be recovered by the
plaintiff by way of the suit did not satisfy the requirements of a loan or
advance in ordinary transaction of merchants/bankers, financer and trader
inasmuch as the plaintiff is neither a bank nor a financial institution nor a
merchant nor a trader. It was also submitted that the plaintiff had made no
averment in the plaint in such regard. Placing reliance on the judgment of
this Court in the case of Venkatesh Vincom Private Limited vs. Spice of
Joy, Multicuisine Restaurant cum Bar and Others8 (Paragraphs 7, 9 and
11), it was submitted that for a transaction to be called a commercial
transaction in terms of Section 2(1)(c)(i) of the said Act, the same should
have arisen in the ordinary course of business of the litigant.
7 AIR 1985 Cal 460
8 2022 SCC OnLine Cal 3010
Page 9 of 27
2025:CHC-AS:1148-DB
18. The Memorandum of Association of the company that has been annexed by
the Plaintiff to its application under Order 41 Rule 27 of the Code was relied
on to show that the same did not permit the business of lending and
advancing money by the plaintiff. It was submitted that the loan transaction
done by the plaintiff in the suit cannot be said to be one in the ordinary
course of business of the plaintiff. Placing reliance on a judgment of this
Court in the case of Ladymoon Towers Private Limited4 (supra)
(paragraphs 5, 15, 19 and 20), it was submitted that unless the plaintiff
could show that the loan transaction which forms the subject matter of the
suit was a transaction in the ordinary course of business of the plaintiff, the
plaintiff’s suit could not be termed as a commercial suit. It was further
submitted that the suit property was a vacant land and not one which was
being used in the trade and commerce and that being so the plaintiff could
not have invoked the jurisdiction of the Commercial Court.
19. The defendant no. 41 has also relied on paragraphs 36 and 37 of the
judgment in the case of Ambalal Sarabhai Enterprises Limited2 (supra)
to assert that a suit relating to an immovable property being used
exclusively in trade and commerce can be instituted only if the suit property
is used exclusively in trade and commerce on the date of the filing of the
suit.
20. It was submitted that the learned Commercial Court rightly rejected the
plaint and did not return the same as contended by the plaintiff because the
Commercial Court lacked subject matter jurisdiction to entertain the suit. A
Page 10 of 27
2025:CHC-AS:1148-DB
Full Bench judgment of the Allahabad High Court in the case of Ananti vs.
Chhannu and Others9 was pressed into service to assert that in a case of
lack of subject matter jurisdiction a Court ought to reject a plaint and not
return it. It was submitted that the plaintiff had drafted the plaint in a
manner so as to bring the suit within the jurisdiction of the Commercial
Court but once it was evident that the Commercial Court lacked subject
matter jurisdiction the only option left for the Commercial Court was to
reject the plaint. Paragraph 6 of a judgment of the Bombay High Court in
the case of Lt. Col. Anil Bhat and Others vs. CITI Bank, Mumbai10 was
relied on for the said proposition.
21. It was then submitted that as no specific averment has been made in the
plaint as to how is the suit property exclusively used in trade and commerce
and no supporting document has been annexed thereto showing that the
property is in fact being used for trade and commerce, the learned
Commercial Court has rightly rejected the plaint.
22. It was finally submitted that since the plaintiff has run a case of having lent
and advanced a sum of money to the defendant it was incumbent on the
part of the plaintiff to show that the plaintiff had a license permitting money
lending or a certificate of registration from RBI at least as on the date of
institution of the suit. Reliance in such regard was placed on the judgment
in the case of Nedumpilli Finance Company Limited vs State of
Kerala11. It was also submitted that the defect of conducting a business of
money lending under the Bengal Money Lenders Act, 1940 without having a
9 AIR 1930 All 193
10 AIR 2009 Bom 99
11
(2022)7 SCC 394
Page 11 of 27
2025:CHC-AS:1148-DB
money lending license could not have been cured by depositing license fee
and penalty after rejection of the plaint and by bringing the same on record
by way of an application under Order 41 Rule 27 of the Code.
23. We have heard the submissions made by the respective parties and have
considered the material on record.
24. At the outset the definition of “commercial dispute” as provided in Section
2(1)(c) of the said Act needs to be noticed:
(c) “commercial dispute” means a dispute arising out of–
(i) ordinary transactions of merchants, bankers, financiers and traders such as
those relating to mercantile documents, including enforcement and
interpretation of such documents;
(ii) export or import of merchandise or services:
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and
helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or
commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements;
(xiii) subscription and investment agreements pertaining to the services industry
including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered
trademarks, copyright, patent, design, domain names, geographical
indications and semiconductor integrated circuits;
(xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including
electromagnetic spectrum;
(xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and
(xxii) such other commercial disputes as may be notified by the Central
GovernmentPage 12 of 27
2025:CHC-AS:1148-DB
Explanation.– A commercial dispute shall not cease to be a commercial
dispute merely because–
(a) it also involves action for recovery of immovable property or for realisation of
monies out of immovable property given as security or involves any other
relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or
instrumentalities, or a private body carrying out public functions;
25. A reading of the provisions of Section 2(1)(c) of the said Act reveals that for
a dispute to be called a “commercial dispute” under the said Act, the same
must fall within one of the several sub-clauses of clause (c) of Section 2(1) of
the said Act. The expression “means” used in Section 2(1)(c) of the said Act
to define “commercial dispute” clearly indicates that the definition is
exhaustive and therefore a dispute not falling within the scope of any the
several sub-clauses of clause (c) of Section 2(1) of the said Act would not
qualify to be called a “commercial dispute”
26. Of all the disputes that have been enumerated under Section 2(1)(c) of the
said Act, the ones mentioned in sub-clauses (i) and (vii) of Section 2(1)(c)
(which have been underlined) are relevant for the case at hand.
27. It is, therefore, required to be seen as to whether the case run in the plaint
is such that the same can withstand a challenge thrown to it under Order
VII Rule 11 of the Code on the strength of any of the aforesaid clauses of
Section 2(1)(c) of the said Act.
28. It is now well settled that when the Court assesses the worth of a plaint
which is faced with the peril of rejection under Order VII Rule 11 of the
Code, the only question that needs to be answered is “if the averments made
in the plaint are taken in entirety, in conjunction with the documents relied
Page 13 of 27
2025:CHC-AS:1148-DB
upon, would the same result in a decree being passed”. (See: Dahiben vs.
Arvindbhai Kalyanji Bhanusali12 paragraph 23.11)
29. It is equally settled that while examining a plaint at the stage of Order VII
Rule 11 of the Code the plaint should be read meaningfully (not formally)
and in its entirety i.e. as a whole.(See Ram Prakash Gupta vs. Rajiv
Kumar Gupta & Ors.13)
30. We have gone through the plaint and the reliefs claimed therein. Simply put
the suit is one for recovery of money upon enforcement of mortgage. It
would qualify for a commercial suit if the dispute qua the parties satisfies
the definition of “commercial dispute” in terms of Section 2(1)(c) of the Act.
31. The following paragraphs of the plaint have been relied on by the plaintiff in
order to justify the institution of the suit as one arising from a commercial
cause:
“3. It was specifically agreed by and between the plaintiff and the
defendant nos. 1 to 32 that the loans to be advanced by the plaintiff to
the defendant nos. 1 to 32 would be utilized only for business
purposes and that the said defendants would not use/part/transfer
the loan amount to any of their legal heirs or any representatives.
19. The loan advanced by the plaintiff to the defendant nos. 1 to 32
was a commercial loan for business purposes secured by mortgage of
the property described in the First Schedule hereto. The said property
is also is used exclusively in trade and commerce and is situated at
Surya Sen Road (formerly Hasti Road) within Circle Nos. 3 and 7 of the
Baranagar Municipality in the District of North 24 Parganas within the
territorial jurisdiction of this Learned Court.”
32. In the case at hand the plaint has been attacked on the ground that the
Court whereat it has been filed lacks jurisdiction to entertain a commercial
12 (2020) 7 SCC 366
13 (2007) 10 SCC 59
Page 14 of 27
2025:CHC-AS:1148-DB
suit. From a meaningful reading of the plaint in conjunction with the
documents annexed therewith it cannot be said with absolute certainty that
the plaint is not based on a commercial dispute between the parties. The
aforementioned paragraphs of the plaint, relied on by the plaintiff read
cumulatively with the other paragraphs thereof indicate the existence of a
commercial dispute, at least at this stage, when only the averments made in
the plaint and the documents annexed thereto are to be considered without
reference to the defense case.
33. The assertion of Mr. Bose that since there is no averment in the plaint to
the effect that the plaintiff carries on business of money lending, therefore a
dispute arising from the loan transaction between the plaintiff and the
defendant nos. 1 to 32 would not qualify to be termed as a “commercial
dispute” in terms of Section 2(1)(c) of the said Act would not, in the
considered view of this Court, lead to rejection of the plaint in the facts and
circumstances of the instant case. Indeed if the suit was simply one for
recovery of money lent and advanced, then absence of an averment of the
nature as contended by Mr. Bose could have had a serious bearing on the
plaint upon a challenge being mounted to it under Order VII Rule 11 of the
Code but such is not the situation here.
34. As already indicated hereinabove, the instant suit is one for recovery of
money by sale of the mortgaged property in enforcement of the mortgage.
Paragraph 19 of the plaint contains a clear averment to the effect that the
property that has been mortgaged “is also is used exclusively in trade and
commerce.”
Page 15 of 27
2025:CHC-AS:1148-DB
35. We have perused the Deed of Mortgage annexed to the plaint which reveals
that the immovable property that has been mortgaged to secure repayment
of the said loan is possessed by the defendant nos. 1 to 32 and that they
have “unfettered right and entitlement to develop and make appropriate
constructions on the said property”. While it is true that there is no recital in
the deed that can throw any light on the present mode of user of the said
property the averment contained in the plaint that the same is used
exclusively for trade and commerce at the moment helps the plaint in
fending off the attack. Such averment cannot be simply ignored unless
something starkingly contradictory is shown from the plaint or the
documents annexed thereto.
36. We are alive to the fact that Mr. Bose has asserted that the land is a vacant
land but then such assertion is an assertion of a defendant in defense to the
plaint case which cannot be taken note of for deciding the fate of a plaint
under Order VII Rule 11 of the Code. In any case even a vacant land can be
used for a commercial purpose. Development of land itself can be a
commercial venture. Whether in the case at hand it is so or not cannot be
ascertained at this stage. When at the moment, it cannot be said with
certainty that the said property is not being used for commercial purpose
the plaint cannot be rejected more so when the plaint specifically avers that
the property “is used exclusively in trade and commerce”. We need not
overemphasize that at this stage we have to accept the averments made in
the plaint to be true and correct. Needless to say however, that the plaintiff
would remain obliged to prove that which it has averred in the plaint in
order to get the ultimate relief claimed by it from the Commercial Court.
Page 16 of 27
2025:CHC-AS:1148-DB
37. While on this, certain observations of the Hon’ble Supreme Court in the
case of Kamala & Ors. vs. K.T. Eshwara Sa & Ors.14 need to be
recounted:
“21. Order 7 Rule 11(d) of the Code has limited application. It must be shown that
the suit is barred under any law. Such a conclusion must be drawn from the
averments made in the plaint. Different clauses in Order 7 Rule 11, in our
opinion, should not be mixed up. Whereas in a given case, an application for
rejection of the plaint may be filed on more than one ground specified in various
sub-clauses thereof, a clear finding to that effect must be arrived at. What would
be relevant for invoking clause (d) of Order 7 Rule 11 of the Code are the
averments made in the plaint. For that purpose, there cannot be any addition or
subtraction. Absence of jurisdiction on the part of a court can be invoked at
different stages and under different provisions of the Code. Order 7 Rule 11 of
the Code is one, Order 14 Rule 2 is another.
22. For the purpose of invoking Order 7 Rule 11(d) of the Code, no amount of
evidence can be looked into. The issues on merit of the matter which may arise
between the parties would not be within the realm of the court at that stage. All
issues shall not be the subject-matter of an order under the said provision.
23. The principles of res judicata, when attracted, would bar another suit in view
of Section 12 of the Code. The question involving a mixed question of law and
fact which may require not only examination of the plaint but also other evidence
and the order passed in the earlier suit may be taken up either as a preliminary
issue or at the final hearing, but, the said question cannot be determined at that
stage.
24. It is one thing to say that the averments made in the plaint on their face
discloses no cause of action, but it is another thing to say that although the same
discloses a cause of action, the same is barred by a law.
25. The decisions rendered by this Court as also by various High Courts are not
uniform in this behalf. But, then the broad principle which can be culled out
therefrom is that the court at that stage would not consider any evidence or enter
into a disputed question of fact or law. In the event, the jurisdiction of the court is
found to be barred by any law, meaning thereby, the subject-matter thereof, the
application for rejection of plaint should be entertained.”
(Emphasis supplied by underlining)
14 (2008) 12 SCC 661
Page 17 of 27
2025:CHC-AS:1148-DB
38. Going by the dictum of the Hon’ble Supreme Court in the aforementioned
case, the defendant no.41 (i.e. the applicant in the application for rejection
of plaint) may get one more chance to take a bite at the same cherry (which
it has now missed) once the cherry grows a little older and reaches the stage
of Order 14 Rule 2 of the Code, when the pleadings would be complete and
Court would have the authority to enter into the disputed factual arena as
well.
39. The judgments cited by the parties may now be dealt with. The judgment of
the Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprises
Limited2 (supra) has been relied on by both the parties. The respondent
no.41 has relied on the same to contend that for a dispute arising out of an
agreement relating to an immovable property to be called a commercial
dispute the property must actually be used for commercial purpose as on
the date of institution of the suit and the deed of mortgage does not show
that such property is being used for commercial purpose. At the risk of
prolixity we reiterate that at the stage of Order VII Rule 11 of the Code, all
that the Court is required to see is as to whether such a case has been
made out in the plaint which, if the averments made in the plaint are taken
to be true and correct, would be entitled to succeed. In the case at hand
there is a specific pleading that the mortgaged property is used for trade
and commerce. The said judgment in the facts of the present case therefore,
does not help the defendant no.41. In the said case the Hon’ble Supreme
Court found that the pleadings in the plaint were deficient, which is not the
Page 18 of 27
2025:CHC-AS:1148-DB
case here in view of the specific pleading in the plaint as already mentioned
hereinabove. In this regard paragraphs 8, 14 and 39 thereof may be noticed:
“8. Though such rival contentions are put forth by the learned Senior Advocate
on either side, these aspects cannot be dealt with in abstract. Instead the
nature of the dispute and the jurisdiction to try the same is to be reflected in
the suit itself since in a civil suit the pleadings, namely, averments in the plaint
would at the outset be relevant to confer jurisdiction. Hence before adverting to
the other aspects it would be necessary to carefully examine the plaint. The
plaintiff has in detail referred to the nature of the transaction between the
appellant and the respondents herein. In Para 5 thereof the detail of the land
bearing R.S. No. 122 corresponding to City Survey Nos. 1101 and 1100/1
having land area of 9207 sq m at Mouje Subhanpura Reg. District, Vadodara is
referred. Further the schedule of the property is indicated in Para 6 and
reference is made to the Memorandum of Understanding where again the
reference is made to the land. It is averred therein that it would be the total
responsibility of Respondent 1 herein (Defendant 2 in the suit) to change the
land use as well as to pay the amount that may be required for the permission.
The amount to be paid as premium is referred and the right of the plaintiff to
secure the mortgage deed in view of the terms of the MoU is stated. In the
entire plaint there is no reference to the nature of the land or the type of use to
which it was being put as on the date of the agreement to sell/sale
deed/memorandum of understanding or as on the date of the suit.
xxxxx xxxxxxx xxxxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx
14. In that view it is also necessary to carefully examine and entertain only
disputes which actually answers the definition “commercial disputes” as
provided under the Act. In the instant case, as already taken note neither the
agreement between the parties refers to the nature of the immovable property
being exclusively used for trade or commerce as on the date of the agreement
nor is there any pleading to that effect in the plaint. Further the very relief
sought in the suit is for execution of the mortgage deed which is in the nature
of specific performance of the terms of Memorandum of Understanding without
reference to nature of the use of the immovable property in trade or commerce
as on the date of the suit. Therefore, if all these aspects are kept in view, we
are of the opinion that in the present facts the High Court was justified in itsPage 19 of 27
2025:CHC-AS:1148-DBconclusion arrived through the order dated 1-3-2019 [K.S. Infraspace
LLP v. Ambalal Sarabhai Enterprises Ltd., 2019 SCC OnLine Guj 1926]
impugned herein. The Commercial Court shall therefore return the plaint
indicating a date for its presentation before the Court having jurisdiction .
xxxxx xxxxxxx xxxxxxxxxxx xxxxxxxx xxxxxxxx xxxxxxxx
39. It appears that the trial court has proceeded under the footing that the parties
to the suit more particularly, the appellant-plaintiff seems to be carrying on
business as estate agent and to manage land, building, etc. and the very object
as enumerated in Memorandum and Articles of Association of the appellant-
plaintiff company established that the property in question is being used
exclusively in trade or commerce rather in the business of the plaintiff. As rightly
pointed out by the High Court, there is nothing on record to show that at the time
when agreement to sell came to be executed in 2012, the property was being
exclusively used in trade and commerce so as to bring dispute within the ambit
of sub-clause (vii) of Section 2(1)(c) of the Act. Merely because, the property is
likely to be used in relation to trade and commerce, the same cannot be the
ground to attract the jurisdiction of the Commercial Court.”
(Emphasis supplied by underlining)
40. The case of Ladymoon Towers Private Limited4 (supra) has also been
relied on by both the parties. While the appellant has relied on the same to
buttress its contention that if this Court finds that a suit which ought to
have been filed as commercial suit has been filed as an ordinary civil suit or
vice versa, the proper path to follow would be to transfer the same to the
appropriate Court having jurisdiction, the respondent no.41 has relied on
the same to contend that for a dispute to be called a commercial dispute in
terms of section 2(1)(c)(1) of the Act, there must be an averment in the plaint
as regards an agreement involving a mercantile document.
41. It is the respondent no.41’s assertion that as in the case on hand there is
no pleading as regards any money lending business and there is no
agreement pertaining to mercantile documents, the suit cannot be termed to
Page 20 of 27
2025:CHC-AS:1148-DB
be a commercial suit. We have noticed that there is a deed of mortgage
annexed to the plaint that records the factum of loan having been advanced
by the plaintiff/appellant to the defendant/respondent nos. 1 to 32 for
business purpose. The suit is one for recovery of money upon sale of the
mortgaged property in enforcement of mortgage and there is a specific
averment in the plaint that the mortgaged property is used for commercial
purposes. In such a fact situation, reference to or even existence of any
mercantile document is immaterial. It would have mattered if the dispute
was one which was only relatable to the plaintiff’s business of money
lending or solely based on an agreement to lend and advance a sum of
money because in such a situation the only provision available to the
plaintiff would have been section 2(1)(c)(i) of the said Act. In the instant case
the pleadings of the plaintiff are two pronged – one pertaining to the grant of
commercial loan and the other relating to mortgage of property used for
commercial purpose. The bald pleading that the loan is commercial in
nature does not impress us, therefore, if the dispute had pertained only to
such loan, without any mortgage, then in the facts of the present case, the
plaint could probably not have crossed the hurdle of Order VII Rule 11 but
since the averments made in the plaint indicate that the dispute pertains to
the mortgaged property used for commercial purpose therefore the plaint
case presently satisfies the conditions of Section 2(1)(c)(vii) of the Act.
Therefore at the present stage we are not minded to reject the plaint. The
aforesaid judgment therefore does not help the defendants at all.
42. Insofar as the judgment in the case of Lord Grih Nirman Private Limited1
(supra) relied on by the appellant is concerned, it deals with a situation
Page 21 of 27
2025:CHC-AS:1148-DB
where the suit which was instituted as an ordinary civil suit was allowed to
proceed so, since the plaintiff’s assertion that there was no agreement
between the parties of the nature contemplated by Section 2(1)(c)(i) of the
said Act was required to be established on evidence. The defendant therein
had filed an application for rejection of plaint asserting that as there was an
agreement between the parties that satisfied the test of Section 2(1)(c)(i) of
the said Act and therefore the suit could only be tried by a commercial
Court. Such application was repelled by the learned Single Judge. The
Division Bench upheld the order with a modification, observing as follows:
“15. The argument that the suit has been wrongly filed on the ordinary original
civil jurisdiction as the dispute is a commercial dispute was rightly discounted
by the learned Single Judge since the existence of the agreement is required to
be first proved on trial. The former issue needs to be finally decided and then
only, the determination of its nature can be explored. In such circumstances,
we are of the opinion that at this stage it is unnecessary to delve deeper into
the pleas as to whether the agreement is a pure construction contract or as to
whether the dispute involved in the suit is a commercial dispute as defined
under Section 2(1)(c) of the 2015 Act more so when, the dismissal of the
application for rejection of plaint would not prevent the appellant from
renewing the application at an appropriate stage of the trial.
16. In view of the discussion made hereinabove, we are not inclined to interfere
with the order impugned in the present appeal. However, the observation of the
learned Single Judge in the concluding part of the order that the “dispute
involved in the suit are not „commercial dispute‟ for the reasons stated above”,
is contrary to the observations made in the earlier part of the order.
Accordingly, the said observation is set aside.”
43. Although the case at hand involves an inverse factual scenario as
compared to that involved in the case of Lord Grih Nirman Private
Limited1 (supra) yet the ratio of the said judgment squarely applies to the
case at hand i.e. in case of a disputed question of fact the suit must proceed
till the Court assumes authority to get into the pleadings of both the parties
as well the evidence adduced by them.
Page 22 of 27
2025:CHC-AS:1148-DB
44. Insofar as the judgment in the case of Ashvin & Co.3 (supra) is concerned,
the same is an authority on the point that a claim on account of money lent
and advanced by a money lender would not be barred by the provisions of
the Bengal Money-Lenders Act, 1940 but no decree could be passed unless
the money lender cures the defect of not having obtained a license under the
said Act of 1940. The said judgment may further the case of the appellant
inasmuch as the appellant contends that the appellant has cured the defect
by putting in the requisite fees and fine for getting a money lending license.
However at this stage the same is not required to be gone into inasmuch as
the plaint can be sustained on a different ground altogether as already
discussed hereinabove.
45. The judgment in the case of Nedumpilli Finance Company Limited11
(supra) cited by the defendant no.41 is again of no help to the said
defendant. The said judgment was rendered to answer the following
question (as would be evident form paragraph 1 of the report):
“The question as to whether Non-Banking Financial Companies (for short
“NBFCs”) regulated by Reserve Bank of India, in terms of the provisions of
Chapter III-B of the Reserve Bank of India Act, 1934 (hereinafter referred to as
“the RBI Act“) could also be regulated by the State enactments such as Kerala
Money Lenders Act, 1958 (hereinafter referred to as “the Kerala Act“) and Gujarat
Money Lenders Act, 2011 (hereinafter referred to as “the Gujarat Act“), has arisen
for our consideration in these appeals, with the Kerala and Gujarat High Courts
taking opposite views.
46. In the case at hand it is nobody’s case that the Plaintiff is a Non-Banking
Financial Company. The question with which we are concerned in the
present case is whether the dispute that has arisen between the parties is
such that the same can be termed as a commercial dispute justifying
institution of a commercial suit in terms of the Commercial Courts Act,
Page 23 of 27
2025:CHC-AS:1148-DB
2015. We have held that the suit is one for recovery of money upon sale of
the mortgaged property in enforcement of the mortgage which property, as
stated in the plaint, is used for commercial purposes. In such view of the
matter, the plaint cannot be and ought not to be rejected on the ground of
non-availability of certificate from RBI.
47. We have noticed that the learned Commercial Court has treated the non-
availability of RBI’s certificate and absence of money lending license as the
principal grounds for rejecting the plaint. The learned Court has myopically
analyzed the plaint which will appear from the following observations in the
order impugned:
The principal question before this Court as under what capacity the plaintiff
extended the loan whether in the capacity of money lender or non-banking
financial institution. On both counts the license as well as the certificate
from the RBI has not been disclosed in the plaint nor annexed with the list of
documents and further did not file memorandum of association whereby it
could also be ascertained the nature of business and lastly failed to present
the suit qualification of a “Commercial dispute” in the averments within the
purview of the Commercial Courts Act, it is necessary to break down the
classes of persons and transactions contemplated in the clause (ii) to (xxii)
which do not apply in the instant suit. The absence of MOU of the plaintiff
company together with money-lending license and RBI certificate makes me
hold the suit has not arisen out of commercial dispute and has no locus to
institute before the Commercial Court.
48. Two points of analysis by the learned Court emerge from the above – a)
Under what capacity has the plaintiff extended financial assistance and b)
the nature of plaintiff’s business. The aforesaid points, irrespective of
whether the same are considered together or singularly, would be relevant
to find an answer to only one question – whether the dispute in question has
Page 24 of 27
2025:CHC-AS:1148-DB
arisen from a transaction that satisfies the conditions mentioned in section
2(1)(c)(i) of the said Act and not to answer the question as to whether the
dispute is covered by the provisions of 2(1)(c)(vii) of the said Act. The learned
Commercial Court has referred to “clause (ii) to (xxii)” of the said Act but such
reference appears to be a fleeting one inasmuch as it has missed to note
that the averments in the plaint and the nature of relief claimed presently
satisfy the test of section 2(1)(c)(vii) of the said Act.
49. The judgment in the case of Venkatesh Vincom Private Limited8 (supra)
relied by the respondent no. 41 is of no avail to the said respondent
inasmuch as the same was rendered in a fact situation that was covered by
the provisions of Section 2(1)(c)(i) of the said Act. In the said case a
transaction arising in the ordinary course of business of a litigant has been
held to be a commercial transaction even without any agreement. The case
before us falls under Section 2(1)(c)(vii) of the said Act since the averments
in the plaint, the reliefs prayed for and the document annexed therewith,
make it apparent that the suit is one for recovery of money upon sale of the
mortgaged property (stated in the plaint to be used for commercial purpose).
50. The Delhi High Court judgments in the cases of Sherawali Developers
LLP5 (supra) and Suraj Prakash6 (supra) and the unreported judgments of
this Court in the cases of Jai Balaji Industries Limited vs. Calderys
India Refractories Ltd. (supra) and Satyavama Commotrade Private
Limited & Ors. vs. Global Motocorp LLP & Anr. (supra) have been cited
to demonstrate that suits which satisfied the tests of a commercial suit have
been transferred to the commercial division by the Courts. We note that the
case of Satyavama Commotrade Private Limited (supra) was one where
Page 25 of 27
2025:CHC-AS:1148-DB
the parties had agreed that the suit was a commercial suit and as such the
Court had no option to delve deep into the matter and decide any issue as
regards the nature of the suit. The same is of no avail to either of the parties
here in any case.
51. Macneill and Magor Ltd. & Anr.7 (supra) is an authority on the point that
since this Court has no authority to return a plaint under Order VII Rule 10
of the Code in view of the provisions of Order XLIX Rule 3 of the Code, a
suit, if found to be not maintainable before this Court, could be transferred
to the appropriate Court having jurisdiction in exercise of powers under
section 24 of the Code. The aforesaid judgments need not be discussed here
in any detail view of the fact that we have held that the plaint should not be
rejected.
52. The judgments in the case of Ananti (supra) and Lt. Col. Anil Bhat and
Others (supra) which have been cited by the respondent no.41 are
authorities for the proposition that a plaint would have to be rejected if the
Court lacks subject matter jurisdiction, would not help the said defendant
inasmuch as we have found that, at the present moment, the averments
made in the plaint, the reliefs claimed therein and the documents annexed
thereto read cumulatively bring the plaintiff’s case within the scope of
section 2(1)(c)(vii) of the said Act. It therefore cannot be said at this stage
that the learned Commercial Court lacks subject matter jurisdiction.
53. In view of the above discussion and the reasons provided hereinabove we
are of the considered view that the plaint should not have been rejected by
the learned Commercial Court. We therefore allow the appeal being FAT 3 of
2024 by setting aside the order dated August 11, 2023 passed by the
Page 26 of 27
2025:CHC-AS:1148-DB
learned Judge, Commercial Court at Rajarhat in Title Suit No. 20 of 2021
(C.C). The application for rejection of plaint under Order VII Rule 11 of the
Code filed by the defendant no.41 stands rejected, the plaint is resurrected
and the suit being Title Suit No. 20 of 2021 (C.C) is restored to the file of
learned Judge, Commercial Court at Rajarhat. No costs.
54. Since we have allowed the appeal, the application under Order 41 Rule 27
of the Code for producing additional evidence stands disposed of
accordingly.
55. Urgent photostat certified copy of this judgment, if applied for, be supplied
to the parties upon compliance of all formalities.
I agree.
(Arijit Banerjee, J.) (Om Narayan Rai, J.)
Page 27 of 27