Karnataka High Court
M/S Tefilah Infrastructure Pvt Ltd vs Mr Balwinder Singh Bagary on 8 July, 2025
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
1
Reserved on : 30.06.2025
Pronounced on : 08.07.2025
R
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 08TH DAY OF JULY, 2025
BEFORE
THE HON'BLE MR. JUSTICE M. NAGAPRASANNA
WRIT PETITION No.9689 OF 2025 (GM - CPC)
BETWEEN:
1. M/S.TEFILAH INFRASTRUCTURE PVT. LTD.,
HAVING ITS REGISTERED OFFICE AT:
23/5, REST HOUSE ROAD, OFF CHURCH STREET,
BENGALURU - 560 001.
2. SIDDHARTHA GUPTA
MANAGING DIRECTOR,
M/S. TEFILAH INFRASTRUCTURE PVT. LTD.,
23/5, REST HOUSE ROAD, OFF CHURCH STREET,
BENGALURU - 560 001.
... PETITIONERS
(BY SRI YASHIR ALI, ADVOCATE)
AND:
MR. BALWINDER SINGH BAGARY
S/O MR. KRIPAL SINGH,
RESIDING AT BAUHINIA, BURTONS WAY,
CHALFONT ST. GILES, BUCKINGHAMSHIRE,
HP8 4BP, ENGLAND.
REPRESENTED BY HIS SPA HOLDER -
2
RAJEEV GHADI,
RESIDING AT 1103-1104,
THE BAYA PARK, DR. SENAPATI MARG,
DADAR WEST, MUMBAI - 400 028.
... RESPONDENT
(BY SRI SHRISHAIL SHIVABASAPPA NAVALGUND,
ADVOCATE FOR R-1;
R-2 IS DELETED VIDE ORDER DATED 06.06.2025)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND
227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE
ORDER DATED 28.03.2023 PASSED IN COM. O.S. NO. 787/2022,
BY THE LEARNED LXXXIII ADDL. CITY CIVIL AND SESSIONS
JUDGE, BANGALORE (CCH-84) DISMISSING I.A. NO. III, FILED
UNDER ORDER VII RULE 10 AND SECTION 16 OF THE CPC READ
WITH SECTION 2 (1) (c) (vii) AND SECTION 6 OF THE
COMMERCIAL COURTS ACT, 2015, FILED BY THE PETITIONERS
SEEKING TO RETURN THE PLAINT FILED BY THE PLAINTIFF
THEREIN / RESPONDENT NO. 1 HEREIN TO BE RE-PRESENTED
BEFORE THE COMPETENT CIVIL COURT HAVING REGULAR
JURISDICTION OVER THE SUBJECT MATTER OF THE SUIT AND
CONSEQUENTLY ALLOW I.A. NO. III AND DIRECT THE
RESPONDENT NO. 1 TO RE-PRESENT THE PLAINT BEFORE THE
COMPETENT CIVIL COURT HAVING REGULAR JURISDICTION OVER
THE SUBJECT MATTER OF THE SUIT (ANNEXURE-A).
THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDERS ON 30.06.2025, COMING ON FOR PRONOUNCEMENT
THIS DAY, THE COURT MADE THE FOLLOWING:-
3
CORAM: THE HON'BLE MR JUSTICE M.NAGAPRASANNA
CAV ORDER
The petitioners/defendants in Commercial O.S.No.787 of 2022
pending before the LXXXIII Additional City Civil and Sessions Judge
at Bangalore are at the doors of this Court calling in question an
order dated 28-03-2023, by which the concerned Court dismisses
I.A.No.III filed by the petitioner under Order 7 Rule 10 r/w Section
16 of the CPC, seeking to return the plaint to be re-presented
before the competent civil Court on the score that the Commercial
Court does not have jurisdiction, as the issue before the Court was
not a commercial dispute.
2. Heard Sri Yashir Ali, learned counsel appearing for the
petitioners and Shri Shrishail Navalgund, learned counsel appearing
for respondent.
3. Facts, in brief, germane are as follows: -
The respondent who is the plaintiff institutes a commercial
O.S.No.787 of 2022 seeking a judgment and decree for recovery of
4
an amount of ₹3,97,35,644/- along with interest aggregating to
₹23,02,75,718/- contending that the plaintiff as an individual of
Indian origin is currently settled in United Kingdom. The plaintiff is
said to have invested in the year 2011 an amount of
₹2,99,47,777/- in the real estate project of the petitioners in the
name and style of Tefilah Rose. Dispute arose between the two.
Contending that the plaintiff had to get amounts from the hands of
the petitioners institutes a commercial suit in Commercial
O.S.No.787 of 2022 before the concerned Court. An application
under Order 39 Rules 1 and 2 of the CPC was also filed seeking
restraint of the petitioners from alienating, encumbering or
disposing off the land parcels in the aforesaid investment. The
petitioners, on receipt of summons, file their written statement and
also filed an application under Order 7 Rule 10 of the CPC seeking
return of the plaint to the plaintiff, as the suit is not maintainable
before the Commercial Court. The concerned Court rejects the
application in terms of its order dated 28-03-2023. The petitioners
have challenged the said order, in the subject petition, for it having
been filed on 26-03-2025 two years thereafter.
5
4. The learned counsel appearing for the petitioners/
defendants would submit that there is no flavour of a commercial
dispute in the case at hand. It is a pure buy-back of the residential
apartment to be built on the land and it has to be tried as a normal
civil dispute and not as a commercial dispute. He would seek to
place reliance on the judgments of the Apex Court and that of the
Division Bench of Gujarat High Court to buttress his submission that
every dispute which has certain flavour of commercial nature or
involve finance would not become a commercial dispute.
5. Per contra, the learned counsel appearing for the
plaintiff/respondent would vehemently refute the submissions
contending that there is no warrant to interfere with the order
passed by the concerned Court, which reject the application filed by
the petitioners under Order 7 Rule 10 of the CPC, for the reason
that, it does have a flair of commercial dispute, as the plaintiff has
invested amounts in the project and that investment is for better
returns or the option of a buy-back when the apartments are ready.
Therefore, it is clear that the dispute concerns financial transaction
between the parties. He would seek dismissal of the petition.
6
6. I have given my anxious consideration to the submissions
made by the respective learned counsel and have perused the
material on record. In furtherance whereof, the only issue that falls
for consideration is:
'Whether the plaint averments would clearly indicate
that it is a commercial dispute or otherwise?'
7. The genesis of the relationship between the petitioners
and the respondent is the admitted investment made by the
plaintiff in the real estate project of the petitioners. The plaintiff and
defendants in the year 2011 enter into an agreement for
investment of ₹2,99,47,777/- initially in a project named Tefilah
Rose. The investment was for a period of 36 months with
guaranteed return of 48% and security of a part of the proposed
development equal to the value guaranteed return of the sum that
is invested. The plaintiff is said to have invested periodically the
following amounts:
"Sl.No. Date Rs.
1. 09-06-2011 40,64,731
2. 09-06-2011 17,92,500
7
3. 14-06-2011 1,37,97,800
4. 28-03-2012 43,31,250
5. 21-05-2012 42,27,000
Total 2,82,13,281"
The dispute between the two arose for repayment of the amounts.
It is then the plaintiff institutes original suit in Commercial
O.S.No.787 of 2022. The suit was entertained. The entertainment
of the suit is challenged before the Division Bench of this Court in
Commercial Appeal No.141 of 2023. The Division Bench grants an
interim order which reads as follows:
"ORDER
Heard the learned counsel for the appellants.
It is submitted that the appellants had preferred an
interlocutory application under Order VII Rule 10 of CPC praying
for return of the plaint on the ground that the transaction
involves purchase and sale of a residential apartment and that
the Commercial Courts Act, more particularly, Section
2(1)(c)(vii) defines 'Commercial Dispute' as under:-
"2. Definitions. - (1) xxx
(a) Xxx
(b) Xxx
(c) "commercial dispute" means a dispute arising out of-
(i) to (vi) xxx
(vii) agreements relating to immovable property used
exclusively in trade or commerce;"
8
That the immovable property involved is a residential
apartment and hence, the same is in applicable. In support of
his contention, reliance is placed on the ruling of the Hon'ble
Apex Court rendered in the case of Ambalal Sarabhai
Enterprises Limited vs. K. S. Infraspace LLP and Another
reported in (2020) 15 SCC 585.
Prima facie, the contention canvassed merits
consideration. Hence, there shall be stay of further proceedings
in Com. O. S. No.787/2022 pending on the file of LXXXIII Addl.
City Civil and Sessions Judge, Bengaluru. Accordingly,
I.A.No.1/2023 is allowed.
Issue emergent notice regarding admission."
The said Commercial Appeal comes to be disposed of by the
Division Bench on 12-03-2025 on a submission made by the
appellants that the appeal was not maintainable. By then two
orders had been passed and an interim order of stay in the
commercial original suit was operating. On revival of the
proceedings in Commercial O.S.No.787 of 2022, the petitioners file
an application under Order 7 Rule 10 of the CPC praying return of
the plaint to the plaintiff on the score that the commercial Court
had no jurisdiction. This is answered against the petitioners holding
that it was a commercial dispute and the Commercial Court did
have jurisdiction. It is this order that has driven the petitioners to
this Court in the subject petition.
9
8. The issue now would be, whether the investments made
for returns directly or indirectly or even tacitly would fall under
commercial dispute or otherwise. Since the order of the concerned
Court is called in question, the reasons so rendered to dismiss the
application become germane to be noticed. They read as under:
".... .... ....
11. On looking to the plaint averments, according to
plaintiff, dispute comes within Sec.2(1)(c)(i) of Commercial
Courts Act, as plaintiff is a financial investor and has invested
funds in different projects in real estate and present claim is in
respect of one of such investment. Defendant in the affidavit
para no.10 and 11 has stated that dispute also do not come
under Sec.2(1)(c)(i), as the documents relied are not mercantile
documents connected to transactions of merchants, bankers,
financiers and traders. On looking to the documents on the basis
of which present suit has been filed, plaintiff's claim is based on
several agreements starting from 2011. By these agreements,
according to the plaintiff, investment has been made in the real
estate project of the defendants and for the amount agreed to
be paid, as per the terms of the agreement, present suit has
been filed. Defendants contend in their affidavit, that these
agreements are in the nature of agreement to sell and are not
mercantile documents. On looking to the various clauses of
these documents like, Memorandum of Agreement Dt:14.4.2014
and MOU Dt:12.5.2014 and also Demand promissory note
stated to have been executed by the defendant for payment of
amount and the agreements assuring particular returns and on
the failure to achieve particular return, defendant undertaking
to pay particular price for the plots and also the defendant
giving buy back option at the higher rate than the rate agreed
for purchasing the plots etc., and also on looking to the status
of the plaintiff as NRI settled in United Kingdom and financier as
stated in the plaint, it is clear that the dispute pertains to
ordinary transactions of financier as defined in Sec.2(1)(c)(i) of
Commercial Courts Act.
10
12. Though in the said section, there is reference to
mercantile documents etc., it is mentioned as 'such as', which
show that dispute relating to mercantile document is only
illustrative. Therefore, ordinary transaction of financier and such
financial transaction would come within this definition. In the
present case, as the dispute is based on several agreements
stating that plaintiff has invested in the real estate projects of
the defendants and plaintiff is stated to be NRI who has made
such investments in different countries, dispute related to these
agreements would be commercial dispute under Sec.2(1)(c)(i)
of Commercial Courts Act. Merely because property in respect of
which investment is made or merely because property given as
security, is residential property, commercial dispute coming
under Sec.2(1)(c)(i) of Commercial Courts Act, would not lose
its character as commercial dispute. Meaning of Commercial
dispute under Sec.2(1)(c)(vii) of Commercial Courts Act is not
exhaustive and dispute which comes under Sec.2(1)(c)(i) of
Commercia1 Courts Act, do not go out of meaning of
commercial dispute, if it does not fit in Sec.2(1) (c)(vii) of
Commercial Courts Act, because both are separate clauses
which separately include different disputes as commercial
dispute.
13. Learned counsel for the defendant has argued that
explanation in Sec.2(1)(c) of the Act will not help the plaintiff
as, "... an explanation added to statutory provision is not
a substantive provision in any sense of the term but as
the plain meaning of the word itself shows, it is merely
meant to explain or clarify certain ambiguities, which
may have crept in the statutory provision" as held in the
decision of the Hon'ble Supreme Court in S.Sundaram Pillai
V/s V.R.Pattabiraman (1985) 1 SCC 591. However,
Sec.2(1)(c) of Commercial Courts Act, states different disputes
which would be commercial dispute. All these disputes
independently would be commercial dispute and requirement of
all the clauses of Sec.2(1)(c)(i) to (xxii) is not necessary to
become a Commercial dispute. Therefore, contention of the
defendants that as property referred in the agreements are
residential property, dispute cannot be a commercial dispute
under any sub sections of Sec.2(1)(c) of the Commercial Courts
Act cannot be accepted. As the dispute raised by the plaintiff
prima facie appears to be commercial dispute u/s Sec.2(1)(c)(i),
11
this court is having jurisdiction and plaint cannot be returned as
prayed.
14. In the course of the arguments, learned counsel for
the defendants has also raised several points on maintainability
of the suit, on the ground that suit is for recovery of money and
the suit is barred under Money lenders act and also under
Karnataka Prohibition of charging exorbitant interest Act etc.,
These contentions are not taken in the application and
therefore, they are beyond the scope of present application.
Moreover, present application is under order 7 Rule 10 of CPC
for return of the plaint. If suit is not maintainable, remedy is not
return of plaint. Therefore, these arguments regarding
maintainability of the suit and the decisions cited by the plaintiff
to counter the arguments need not be considered in this order.
15. For all the discussions made above, defendants have
failed to show that the dispute raised in the present suit is not a
commercial dispute. Dispute raised by the plaintiff prima facie
comes within Sec.2(1)(c)(i) of Commercial Courts Act. Hence,
this court has jurisdiction to try the suit. Application filed by the
defendants U/o 7 Rule 10 CPC is devoid of merits and deserves
to be dismissed with cost. Accordingly, point No.1 is
answered in the Negative.
16. POINT No.2: For the discussion made on above
point, following order is passed:
ORDER
I.A.No.III filed under Order VII Rule 10 and sec.16
of CPC R/w Sec. 2(1)(c) (vii) and Sec.6 of Commercial
Courts Act, by the defendants is dismissed with cost of
Rs.5000/-.”
The concerned Court on the basis of pleadings in the plaint
averments holds that an investment for return of amount would
undoubtedly come within Section 2(1)(c) of the Commercial Courts
12
Act, 2015 (‘the Act’ for short). Submissions are made by the
learned counsel for the petitioners that it does not amount to
commercial dispute, as it is only an investment of money to buy an
apartment. It, therefore, becomes necessary to notice Section
2(1)(c) of the Act. It read as follows:
“2. Definitions.–(1) In this Act, unless the context
otherwise requires, –
… … …
(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;
13
(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 Government.
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;
14
(b) one of the contracting parties is the State or any of
its agencies or instrumentalities, or a private body
carrying out public functions;”
Section 2 of the Act deals with definitions. Section 2(1)(c) defines
what is a commercial dispute. The concerned Court places heavy
reliance upon Section 2(1)(c). Section 2(1)(c) defines a commercial
dispute arising out of ordinary transaction of merchants, bankers,
financiers and traders, such as those relating to mercantile
documents, including enforcement and interpretation of such
documents. Explanation is also found as to what is a commercial
dispute. A commercial dispute would not cease to be a commercial
dispute merely because it 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.
9. Section 2(1)(c) and the explanation has borne
consideration by the Apex Court and that of the Gujarat High Court.
The Apex Court in the case of AMBALAL SARABHAI
15ENTERPRISES LIMITED v. K.S. INFRASPACE LLP1, has held as
follows:
“…. …. ….
6. At the outset, it is noticed that the consideration
required in the instant case is as to whether the transaction
between the parties herein which is the subject-matter of the
suit could be considered as a “commercial dispute” so as to
enable the Commercial Court to entertain the suit. In that
regard, it is necessary to take note of Section 2(1)(c)(vii) of the
CC Act, 2015. The said provision to the extent relevant is
extracted here below for reference.
“2. Definition.–(1) In this Act, unless the context
otherwise requires–
(a)-(b) * * *
(c) "commercial dispute" means a dispute
arising out of--
(i)-(vi) * * *
(vii) agreements relating to immovable property
used exclusively in trade or commerce;
(viii)-(xxii) * * *"
From a perusal of the provision relied upon by the
learned Senior Advocates it is noticed that the disputes
arising out of agreements relating to immovable property
used exclusively in trade or commerce will qualify to be a
commercial dispute to be tried by Commercial Courts. The
question therefore would be that, in the instant case
though the parties have entered into a sale transaction of
the immovable property and presently in the suit the
registration of a mortgage deed pertaining to the
immovable property is sought, whether the immovable
property involved could be considered as being used
exclusively in trade or commerce.
… … …
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 the1
(2020) 15 SCC 585
16jurisdiction 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
MoujeSubhanpura 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.
9. Further on referring to the cause of action in Para 21,
the plaintiff has thereafter referred in Para 22 to the jurisdiction
of the Court to hear and decide the matter. It would be
appropriate to extract the same which reads as hereunder:
“22. Jurisdiction: The plaintiff states that the
defendants having their office at Vadodara land which is
the subject-matter of the instant suit is situated within the
territorial jurisdiction of this Hon’ble Court and hence this
Hon’ble Court has the jurisdiction to hear and decide the
matter.”
Even though in the paragraph describing jurisdiction the
plaintiff has stated with regard to the territorial
jurisdiction since the office and land being at Vadodara,
there is no reference indicating the reason for which the
plaintiff pleads that the court which is the Commercial
Court exclusively constituted to try the commercial
disputes has jurisdiction to try the instant suit. In that
background, a perusal of the prayer made in the plaint
17
would essentially indicate that the suit is one seeking for
specific performance of the terms of MoU whereunder it
is agreed that the mortgage deed be executed. Even if the
immovable property under the mortgage deed was the
subject-matter it was necessary to plead and indicate
that the same was being used in trade or commerce due
to which the jurisdiction of Commercial Court is invoked.
Without such basic pleadings in the plaint, any
explanations sought to be put forth subsequently would
only lead to a situation that if an objection is raised, in
every suit a consideration would be required based on
extraneous material even to ascertain as to whether the
intended transaction between the parties was of such
nature that it is to be construed as a commercial dispute.
… … ..
11. On the other hand, the learned Senior Advocate
for the respondents has relied on the decision of a
Division Bench of the Gujarat High Court in Vasu
Healthcare (P) Ltd. v. Gujarat Akruti TCG Biotech
Ltd. [Vasu Healthcare (P) Ltd. v. Gujarat Akruti TCG
Biotech Ltd., 2017 SCC OnLineGuj 724 : AIR 2017 Guj
153] wherein a detailed consideration has been made and
the conclusion reached therein by taking note of an
earlier decision is that on a plain reading of Section
2(1)(c) of the CC Act, 2015 the expression “used” must
mean “actually used” or “being used”. It is further
explained that if the intention of the legislature was to
expand the scope, in that case the phraseology “likely to
be used” or “to be used” would have been employed. The
verbatim consideration therein is as hereunder: (SCC
OnLineGuj para 33)
“33. Therefore, if the dispute falls within any of
the Section 2(c) the dispute can be said to be
“commercial dispute” for which the Commercial Court
would have jurisdiction. It is required to be noted
that before the learned Commercial Court the original
plaintiff relied upon Sections 2(c)(i), 2(c)(ii) and
2(c)(xx) of the Commercial Courts Act only. The
learned counsel appearing on behalf of the original
plaintiff has candidly admitted and/or conceded that
the case shall not fall within Sections 2(c)(i); 2(c)(ii)
or 2(c)(xx) of the Commercial Courts Act. It is
required to be noted that before the learned
18
Commercial Court it was never the case on behalf of
the original plaintiff that the case would fall within
Section 2(c)(vii) of the learned Commercial Court.
Despite the above we have considered on merits
whether even considering Section 2(c)(vii) of the
Commercial Courts Act, the dispute between the
parties can be said to be “commercial dispute” within
the definition of Section 2(c) of the Commercial
Courts Act or not? Considering Section 2(c)(vii),
“commercial dispute” means a dispute arising out of
the agreements relating to immovable property used
exclusively in trade or commerce. As observed
hereinabove, at the time of filing of the suit and even
so pleaded in the plaint, the immovable
property/plots the agreements between the parties
cannot be said to be agreements relating
to immovable property used exclusively in trade or
commerce. As per the agreement between the party after
getting the plots on lease from the GIDC, the same was
required to be thereafter developed by the original
Defendant 1 and after providing all infrastructural facilities
and sub-plotting it, the same is required to be given to
other persons like the original plaintiff. It is the case on
behalf of the original plaintiff that as the original Defendant
1 has failed to provide any infrastructural facilities and
develop the plots and therefore, a civil suit for specific
performance of the agreement has been filed. There are
other alternative prayers also. Therefore, it cannot be said
that the agreement is as such relating to immovable
property used exclusively in trade or commerce. It is the
case on behalf of the original plaintiff that as in
clause (vii) of Section 2(c), the phraseology used is
not “actually used” or “being used” and therefore,
even if at present the plot is not used and even if it is
likely to be used even in future, in that case also,
Section 2(c)(vii) shall be applicable and therefore,
the Commercial Court would have jurisdiction. The
aforesaid has no substance. As per the cardinal
principle of law while interpreting a particular statute
or the provision, the literal and strict interpretation
has to be applied. It may be noted that important
words used in the relevant provisions are “immovable
property used exclusively in trade or commerce”. If
the submission on behalf of the original plaintiff is
accepted in that case it would be adding something in
the statute which is not there in the statute, which is
not permissible. On plain reading of the relevant
19
clause it is clear that the expression “used” must
mean “actually used” or “being used”. If the intention
of the legislature was to expand the scope, in that
case the phraseology used would have been different
as for example, “likely to be used” or “to be used”.
The word “used” denotes “actually used” and it
cannot be said to be either “ready for use” or “likely
to be used”; or “to be used”. Similar view has been
taken by the Bombay High Court (Nagpur Bench)
in Dineshkumar Gulabchand Agrawal [Dineshkumar
Gulabchand Agrawal v. CIT, 2003 SCC OnLine Bom
1289 : (2004) 267 ITR 768] and it is observed and
held that the word “used” denotes “actually used”
and not merely “ready for use”. It is reported that
SLP against the said decision has been dismissed
[DineshkumarGulabchand Agrawal v. CIT, 2004 SCC
OnLine SC 13] by the Hon’ble Supreme Court.”
(emphasis in original)
… …. …
13. The learned Senior Advocate for the appellant would
however, contend that a strict interpretation as in the case of
taxing statutes would not be appropriate in the instant case
where the issue relates to jurisdiction. In that regard, the
learned Senior Advocate has referred to the Statement of
Objects and Reasons with which the Commercial Courts Act,
2015 is enacted so as to provide speedy disposal of high value
commercial disputes so as to create the positive image to the
investors world about the independent and responsive Indian
legal system. Hence, he contends that a purposive
interpretation be made. It is contended that a wider purport and
meaning is to be assigned while entertaining the suit and
considering the dispute to be a commercial dispute. Having
taken note of the submission we feel that the very
purpose for which the CC Act of 2015 has been enacted
would be defeated if every other suit merely because it is
filed before the Commercial Court is entertained. This is
for the reason that the suits which are not actually
relating to commercial dispute but being filed merely
because of the high value and with the intention of
seeking early disposal would only clog the system and
block the way for the genuine commercial disputes which
may have to be entertained by the Commercial Courts as
intended by the lawmakers. In commercial disputes as
defined a special procedure is provided for a class of
20
litigation and a strict procedure will have to be followed
to entertain only that class of litigation in that
jurisdiction. If the same is strictly interpreted it is not as
if those excluded will be non-suited without any remedy.
The excluded class of litigation will in any event be
entertained in the ordinary civil courts wherein the
remedy has always existed.
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 its conclusion arrived through
the order dated 1-3-2019 [K.S. Infraspace LLP v. Ambalal
Sarabhai Enterprises Ltd., 2019 SCC OnLineGuj 1926]
impugned herein. The Commercial Court shall therefore
return the plaint indicating a date for its presentation
before the Court having jurisdiction.
… … …
27. As per Section 11 of the Act, notwithstanding
anything contained in the Act, a Commercial Court or a
Commercial Division shall not entertain or decide any suit
relating to any commercial dispute in respect of which the
jurisdiction of the civil court is either expressly or impliedly
barred under any other law for the time being in force.
… … …
37. A dispute relating to immovable property per se
may not be a commercial dispute. But it becomes a
commercial dispute, if it falls under sub-clause (vii) of
Section 2(1)(c) of the Act viz. “the agreements relating
to immovable property used exclusively in trade or
21
commerce”. The words “used exclusively in trade or
commerce” are to be interpreted purposefully. The word
“used” denotes “actually used” and it cannot be either
“ready for use” or “likely to be used” or “to be used”. It
should be “actually used”. Such a wide interpretation
would defeat the objects of the Act and the fast-tracking
procedure discussed above.
... ... ...
40. In Ujwala Raje Gaekwar v. Hemaben Achyut
Shah [UjwalaRaje Gaekwar v. HemabenAchyut Shah, 2017 SCC
OnLineGuj 583] , Special Civil Suit No. 533 of 2011 was
instituted for declaration that the sale deed valued at Rs 17.76
crores executed by the appellant-original Defendant 1 in favour
of Respondent 4 be declared illegal and also, for permanent
injunction with respect to the land in question. The appellants-
defendants thereon filed an application that in sale deed,
it has been clearly mentioned that the agreement relating
to immovable property used exclusively in trade or
commerce and falls within the meaning of Section
2(1)(c)(vii) of the Commercial Courts Act and that the
matters above, the value of rupees one crore are to be
transferred to the Commercial Court. Trial court rejected
the said application which was challenged before the
Gujarat High Court. The Gujarat High Court held that the
aim, object and purpose of establishment of Commercial
Courts, Commercial Divisions and Commercial Appellate
Divisions of the High Court is to ensure that the cases
involved in commercial disputes are disposed of
expeditiously, fairly and at reasonable cost to the litigant,
and if such a suit which is as such arising out of the
probate proceedings and/or is dispute with respect to the
property are transferred to the Commercial
Division/Commercial Court, there shall not be any
difference between the regular civil courts and the
Commercial Division/Commercial Courts and the object
for the establishment of the Commercial
Division/Commercial Courts shall be frustrated.
… … …
42. The object and purpose of the establishment of
Commercial Courts, Commercial Divisions and
Commercial Appellate Divisions of the High Court is to
ensure that the cases involved in commercial disputes are
22
disposed of expeditiously, fairly and at reasonable cost to
the litigants. Keeping in view the object and purpose of
the establishment of the Commercial Courts and fast-
tracking procedure provided under the Act, the statutory
provisions of the Act and the words incorporated thereon
are to be meaningfully interpreted for quick disposal of
commercial litigations so as to benefit the litigants
especially those who are engaged in trade and commerce
which in turn will further economic growth of the
country. On the above reasonings, I agree with the
conclusion arrived at by my esteemed Brother A.S.
Bopanna, J.”
(Emphasis supplied)
Prior to the judgment of the Apex Court in AMBALAL SARABHAI
ENTERPRISES LIMITED‘s case supra, a Division Bench of Gujarat
High Court in the case of MADHURAM PROPERTIES v. TATA
CONSULTANCY SERVICES LIMITED2, answering an identical
circumstance of investment, has held as follows:
“…. …. ….
14. At the outset, it is required to be noted that by the
impugned order learned Commercial Court has returned the
plaint to the original plaintiff to present it before the appropriate
Court having jurisdiction, while exercising the powers under
Order VII Rule 10 of the Code of Civil Procedure. While passing
the impugned order, learned Commercial Court has observed
and held that as the dispute between the parties cannot be said
to be “commercial dispute” within the definition of Section 2(c)
of the Commercial Courts Act, for the dispute between the
parties for which the suit has been preferred and for the reliefs
2
2017 SCC OnLine Guj 725
23
prayed for in the suit, suit before the learned Commercial Court
shall not be maintainable and the learned Commercial Court
shall not have any jurisdiction.
15. Therefore, the short question which is posed for the
consideration of this Court is whether in the facts and
circumstances of the case, learned Commercial Court has erred
in holding so and whether the dispute between the parties for
which, the suit is filed and the reliefs are sought, can be said to
be “commercial dispute” within the definition of Section 2(c) of
the Commercial Courts Act or not?
16. Considering the averments in the plaint and the
cause of action pleaded and even the nature of dispute between
the parties and the reliefs sought in the plaint, it appears that
the dispute is with respect to the agreement entered into
between the plaintiff and the defendant in respect of 216 flats
situated in block Nos. A to L of residential premises developed
by the appellant styled as “Madhuram Greens”. It is not in
dispute that “Madhuram Greens” is a residential project and the
flats in question were given to the defendant on lease to be
used for residential purpose. The agreement of lease was
entered into between the plaintiff and defendant in respect of
aforesaid residential flats to be used for residential purpose. At
the cost of repetition, it is observed that the project
“Madhuram Greens” is a residential project/scheme.
Therefore, the agreement/indenture between the plaintiff
and the defendant in respect of aforesaid 216 residential
flats cannot be said to be an agreement relating to
immovable property used exclusively in trade or
commerce. Considering the sub-section (vii) of Section
2(c) of the Commercial Courts Act, the “commercial
dispute” means a dispute arising out of agreements
relating to immovable property used exclusively in trade
or commerce. As observed herein above, the agreements
are relating to immovable property exclusively for
residential purpose and same cannot be said to be
agreement relating to immovable property used
exclusively in trade or commerce. The immovable
property in question – 216 residential flats are used
exclusively for residential purpose and same cannot be
said to be used exclusively in trade or commerce. Under
the circumstances, considering Section 2(c)(vii) of the
24
Commercial Courts Act, the dispute arising out of the
indenture/agreement in question cannot be said to be
relating to immovable property used exclusively in trade
or commerce and therefore, said cannot be said to
be commercial dispute as defined under Section 2(c) of
the Commercial Courts Act.
... ... ...
18. Under the circumstances, as the
agreement/indenture for which dispute has arisen is with
respect to immovable property used exclusively for
residential purpose and cannot be said to be immovable
property used exclusively in trade or commerce, the
learned Commercial Court has rightly held that dispute
between the parties cannot be said to be “commercial
dispute” within the definition of Section 2(c) of the
Commercial Courts Act and therefore, the learned
Commercial Court has rightly held that the Commercial
Court shall not have any jurisdiction and therefore, the
learned Commercial Court has rightly returned the plaint
to the original plaintiff to present it before the
appropriate Court having the jurisdiction.”
(Emphasis supplied)
The Division Bench of Gujarat High Court holds that agreement or
indenture arising with respect to immovable property used
exclusively for residential purpose cannot be said to be an
immovable property used exclusively in trade and commerce. It
therefore, holds that the Commercial Court did not have jurisdiction
and the plaint ought to have been returned.
25
10. The Apex Court in the case of S.P. VELAYUTHAM v.
M/S. EMAAR MGF LAND LIMITED3, on an identical investment
following AMBALAL SARABHAI ENTERPRISES LIMITED‘s case
has held as follows:
“…. …. ….
3. The primary challenge in these Special Leave Petitions
is to the order dated 04.12.2018 whereunder, the learned Judge
of the High Court held that the C.S. No. 169 of 2018 filed by the
respondent-plaintiff is a commercial suit, within the meaning of
Section 2(1)(c) of the Commercial Courts Act, 2015. The Court
justified its decision, inter alia, by citing the ratio in Jagmohan
Belal v. State Bank of Indore (decided on 22.09.2017), Monika
Arora v. Neeraj Kohli in CM(M) No. 850 of 2016 (decided on
01.09.2016) and Soni Dave v. Trans Asian Industries
Expositions Pvt. Ltd. reported in AIR 2016 Del 186.
4. On the other hand, to argue that this was a simple
money recovery suit and cannot therefore be treated as a
commercial suit, the defendants relied on the Gujarat High
Court decision in Vasu Healthcare Private Limited v. Gujarat
Akruti TCG Biotech Limited reported in (2017) AIR (Gujarat)
153.
5. It is argued with some emphasis by the
defendants that it is only a Suit for recovery of money
and if the view in the impugned judgment is accepted as
correct, all money recovery suits will travel towards the
commercial division and it will defeat the very purpose of
creating the commercial divisions, to fast track
commercial category suits. In support of such contention,
the counsel would rely on sub-clause (vii) of Section
2(1)(c) to say that the concerned agreements must
pertain to immovable property used exclusively in trade
or commerce. According to Mr. Patwalia, the agreements
relate to properties which were not used exclusively for
3
S.L.P. (Civil) Diary No(s).2986 of 2024
26
trade or commerce but there could possibly be use of
such property in future, for commercial purpose.
6. Per contra, Mr. Gopal Sankaranarayanan, learned
senior counsel would refer to the explanation in Section
2(1)(c)(vii) in the above context to say that a commercial
dispute shall not cease to be a commercial dispute merely
because the suit pertains to realisation of money.
7. The above issue was considered in Ambalal
Sarabhai Enterprises Limited v. K.S. Infraspace LLP &
Anr. reported in (2020) 15 SCC 585 where the implication
of Section 2(1)(c)(vii) was construed. In the concurring
judgment, the following was expressed by Justice
Banumathi:
“37. A dispute relating to immovable property
per se may not be a commercial dispute. But it
becomes a commercial dispute, if it falls under sub-
clause (vii) of Section 2(1)(c) of the Act viz. “the
agreements relating to immovable property used
exclusively in trade or commerce”. The words “used
exclusively in trade or commerce” are to be
interpreted purposefully. The word “used” denotes
“actually used” and it cannot be either “ready for
use” or “likely to be used” or “to be used”. It should
be “actually used”. Such a wide interpretation
would defeat the objects of the Act and the fast
tracking procedure discussed above.”
8. As is seen, the above judgment in Ambalal was
pronounced only on 04.10.2019 and well before that, the
impugned judgment was rendered by the learned Single Judge
on 04.12.2018.
9. The counsel for the rival parties therefore submit that
the learned Single Judge of the High Court should be permitted
to re-decide on whether the Suit should be treated as a
commercial dispute, within the meaning of Section 2(1)(c).
10. Accepting the above submission particularly in
light of ratio in Ambalal, we deem it appropriate to set
aside the impugned judgment of the learned Judge of the
High Court rendered on 04.12.2018 in the CS No. 169 of
27
2018. The matter is remitted back to the High Court to re-
decide on whether the Suit for recovery of money would
fall within the category of cases covered under Section
2(1)(c)(vii) of the Commercial Courts Act, 2015. With this
order, the Special Leave Petitions stand disposed of.”
(Emphasis supplied)
The finding was by following AMBALAL SARABHAI ENTERPRISES
LIMITED and remitting the matter back to the concerned Court in
the light of the fact that in AMBALAL SARABHAI ENTERPRISES
LIMITED the judgment was pronounced on 04-10-2019 and the
judgment rendered by the learned single Judge was on 04-12-2018.
It was directed to be reconsidered as to whether the issue would
come within Section 2(1)(c) of the Act.
11. On a coalesce of the judgments rendered by the Apex
Court and that of Gujarat High Court, the agreement between the
parties which forms the fulcrum of the lis is required to be
considered. The agreement is for the purpose of investment in a
residential apartment complex that is to be constructed by the
petitioners. Since it is residential complex, it is not for trade or
commerce. The option for buy-back will not amount to the issue
becoming a commercial dispute. Though much water has flown
28
between the parties right from 2011, this Court is now required to
answer whether this would amount to a commercial dispute or
otherwise. Identical agreement and investment were considered by
the Division Bench of Gujarat High Court, to which I am in
respectful agreement.
12. Insofar as the judgment relied on by the learned counsel
appearing for the respondent, there can be no qualm about the
principles laid down therein. The investment, in the said case, was
for construction of mega shopping mall. Shops in the shopping mall
would undoubtedly be used for trade and commerce. The
agreement executed between the two was clear that when the
shops are sold or rented out, the amount of investment would be
returned with applicable interest. The said judgment would not
become applicable to the facts of the case on hand, as the
investment in the case at hand is clearly for a project which seeks
to construct residential apartments. Merely because an option of
buy-back is available to the investor, it does not become a
commercial dispute. In that light, the plaint ought to have been
returned. Even looking at the plaint averments, the Commercial
29
Court has entertained the dispute as it runs counter to what the
Apex Court has held in AMBALAL SARABHAI ENTERPRISES
LIMITED’S case and the Division Bench of Gujarat High Court . In
that light, the petition deserves to succeed.
13. For the aforesaid reasons, the following: –
ORDER
(i) Writ Petition is allowed.
(ii) The order dated 28-03-2023 passed by the LXXXIII
Additional City Civil and Sessions Judge, Bengaluru on
I.A.No.III in Com.O.S.No.787 of 2022 stands quashed.
(iii) The application, I.A.No.III filed by the petitioners under
Order 7 Rule 10 of the CPC in Com. O.S.No.787 of
2022, is allowed. The plaint is directed to be returned
to the plaintiff for taking appropriate action in
accordance with law, if he so desires.
Sd/-
(M.NAGAPRASANNA)
JUDGE
Bkp/CT:MJ
[ad_1]
Source link