The Calcutta High Court, while allowing an application filed for revocation of leave granted under Clause 12 of the Letters Patent, 1865, held that only the plaintiff, being a Non–Banking Financial Institution, lent and advanced money to the defendant, and the defendant has issued account confirmation will not constitute a commercial transaction.
Brief Facts:
The plaintiff filed the suit before the Commercial Division on the pretext that the plaintiff is a Non-Banking Financial Institution engaged in the business of granting loans and advances to various entities, and the defendant has also approached for a short-term loan of Rs. 22,50,000/- and as per discussion, the defendant agreed to pay the said amount at the rate of 12% interest per annum. The defendant has filed G.A. No. 2 of 2023 for revocation of leave on the ground that the suit filed by the plaintiff is not a commercial dispute.
Contentions of the Plaintiff:
The Learned Counsel for the Plaintiff submitted that in paragraph 1 of the plaint, it is categorically mentioned that the plaintiff is a Non-Banking Financial Institution and the loan granted to the defendant is to be repaid by the defendant with interest at the rate of 12% per annum. He argued that the dispute between the parties is a commercial dispute, and any money given on loan by a Non-Banking Financial Corporation, the component of interest being agreed between the parties itself, makes the commercial transaction.
Contentions of the Defendant:
The Learned Counsel for the Defendant submitted that the document relied on by the plaintiff based on which the loan was given to the defendant has not mentioned whether it was a simple loan or during the business transaction. He argued that merely because the plaintiff is a Non-Banking Financial Company, any dispute between the parties cannot be said to be a commercial dispute within the definition of Section 2(1)(c) of the Commercial Courts Act, 2015.
Observations of the Court:
The Court noted that under Order VII, Rule 11 of the Code of Civil Procedure, 1908, the Court has jurisdiction to reject the plaint where it does not disclose a cause of action, where the relief claimed is undervalued, and the valuation is not corrected within a time as fixed by the Court, where insufficient court fee is paid and the additional court fee is not supplied within the period given by the Court, and where the suit appears from the statement in the plaint to be barred by any law.
The Court observed that so long as the plaint discloses some cause of action that requires a determination by the Court, the mere fact that, in the opinion of the Judge, the plaintiff may not succeed cannot be a ground for rejection of the plaint. The Court has to read the entire plaint as a whole to find out whether it discloses a cause of action, and if it does, then the plaint cannot be rejected by the Court exercising the powers under Order VII, Rule 11 of the CPC. Further, the Court said that only the plaintiff, being a Non–Banking Financial Institution, lent and advanced money to the defendant, and the defendant has issued account confirmation will not constitute a commercial transaction.
The decision of the Court:
The Calcutta High Court, allowing the application, held that the suit filed by the plaintiff was not covered under any of the clauses of Section 2(1)(c) of the Commercial Courts Act, 2015.
Case Title: Ashika Global Securities Pvt. Ltd. v Aditya Kedia
Coram: Hon’ble Justice Krishna Rao
Case No.: GA No. 2 of 2023
Advocate for the Plaintiff: Mr. Sourojit Dasgupta
Advocate for the Defendant: Mr. Reetobroto Kumar Mitra
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