Amogh Enterprises vs Magathane Kinara Co-Op. Hsg. Soc. ...
2021 Latest Caselaw 4508 Bom

                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                    ORDINARY ORIGINAL CIVIL JURISDICTION


                   INTERIM APPLICATION (L) NO.343 OF 2021
                                      IN
                     COMMERCIAL SUIT NO.1249 OF 2019


M/s. Amogh Enterprises                         .. Applicant/Plaintiff
         v/s.
Magathane Kinara CHS Ltd.                      .. Defendant



Mr. S.A. Abhyankar, a/w Ms. Anjali Helekar, Punam Shinde, Mr. Aniket
Abhyankar for the Applicant / Plaintiff.

Mr. Vagish Mishra a/w Uttam Dubey i/b. Law Counsellors                  for the
defendant.


                                         CORAM : A. K. MENON, J.

DATED : 11TH MARCH, 2021.

P.C. :

1. The defendant is a Co-operative Housing Society and has filed the

present application seeking rejection of the plaint as being barred

by law as contemplated under Order 7 Rule 11(d). It is also the

case of the applicant that the suit discloses no cause of action

against the applicant. The applicant- plaintiff has incorrectly

filed the suit as a commercial suit when in fact the dispute is not a

commercial dispute as contemplated under Section 2(1)(c) of the

ial-343-21.doc wadhwa Commercial Courts Act, 2015. Apart from the nomenclature of a

commercial suit, Mr. Mishra submits that the plaint contains no

averment to support the plaintiffs' cause of action as a

commercial dispute.

2. Mr. Mishra has highlighted the fact that the suit is in the nature

of one seeking specific performance of the terms of a

Memorandum of Understanding ("MOU") dated 16th May, 2014,

no rights were created in favour of the plaintiff much less any

right to initiate had to file the present suit as a commercial suit.

Mr. Mishra submitted that the plaintiff has failed to comply with

the mandate of Section 79A of the Mahrashra Co-operative

Societies Act whereby the developer is required to comply with

certain guidelines and having failed to carry out his obligations

has now sought to hold the society liable in damages in a sum of

Rs.10,52,95,962/-. The claim for damages is an alternative

prayer. The main prayer in the suit is for a declaration that the

cancellation of an MOU dated 16 th May, 2014 vide a notices

dated 22nd October, 2018 and 1st February, 2019 are illegal and

not binding upon the plaintiff.

3. A mandatory order is also being sought against the present

ial-343-21.doc wadhwa applicant to execute a agreement of re-development in relation to

the societies building. Permanent and temporary injunctions are

also sought restraining grant of development rights to any third

party. Mr. Mishra submitted that the plaintiff has failed to pay

stamp duty on the MOU. The agreement was not registered and

the plaintiff kept avoiding his obligations under the MOU. The

attempt was to mortgage the society's land to a third party. The

dispute thus is not in relation to any trade or commerce and it is

simply an MOU pertaining to proposed redevelopment of the

societies property to construct residential flats. It is contended

that the society has called upon the plaintiff to execute a

redevelopment agreement since the year 2015. However, till the

MOU was terminated, the plaintiff had failed and neglected to

comply. Mr. Mishra has sought to rely upon the correspondence

in this respect. Thus, the principal submission on behalf of the

plaintiffs and as canvassed by Mr. Mishra is that the present suit

is barred by law viz. the provisions of the Commercial Courts Act,

2015. The applicant has therefore raised this bar as a preliminary

issue of law which requires to be considered by this court before

considering the interim application filed by the plaintiff in which

the plaintiff seeks a decree for want of a written statement. The

ial-343-21.doc wadhwa written statement was not filed within time as contemplated

under the Commercial Courts Act and the applicant herein has

also filed a separate application for condonation of delay.

4. Mr. Mishra has relied upon the decision of a Division Bench of

this Court in Mont Blanc Co-operative Housing Society Ltd. &

Anr. v/s. State of Maharashtra & Ors. 1 in support of his

contentions that section 79A and the directions issued thereunder

are mandatory. He also relies upon the decision of the Supreme

Court in Ambalal Sarabhai Enterprises Limited v/s. K.S.

Infraspaces LLP & Anr. 2 dealing with the practice and procedure

of commercial courts. He submitted that merely because the

property is likely to be used in relation to trade and commerce,

the same cannot be a ground to attract jurisdiction of the

commercial court. Relying upon the decision of the Supreme

Court in Raghwendra Sharan Singh v/s. Ram Prasanna Singh

(Dead) by LRs.3 Mr. Mishra submitted that the plaintiffs have

suppressed vital facts and in view of such suppression the plaint is

liable to be rejected. Relied upon the observations of the Supreme

Court in the said judgment which in turn refers to the decision in

(2007) 4 Mah.L.J.595

(2020) 15 SCC 585

(2019) SC C Online SC 372

ial-343-21.doc wadhwa ITC Ltd. v/s. Debt Recovery Appellate Tribunal 4 wherein its was

held that the basic question to be decided in an application under

Order 7 Rule 11 of the CPC is whether a real cause of action has

been set out in the plaint or it is something purely illusory which

has been set out with a view to get out of order 7 Rule 11 of the

Code. Mr. Mishra submitted that in the present case, the cause of

action is illusory. There is no real cause of action and in view

thereof, the suit is liable to be dismissed.

5. Mr. Mishra also relied upon the decision of Dahiben v/s.

Arvindbhai Kalyanji Bhanusali (Gajra) Dead through Legal

Representatives & Ors.5 and relied upon nature of the enquiry

required to be made by the court. In view of the above, Mr.

Mishra submitted that the plaint has filed discloses no cause of

action and therefore the plaint ought to be rejected.

6. In response, Mr. Abhyankar, the learned counsel on behalf of the

plaintiff submitted that the plaintiff's application is clearly filed

pursuant to order 7 Rule 11(d) as being barred by law. He

submitted that the applicant had failed to demonstrate the bar

under any law that would invite the court to pass an order

(1998 ) 2 SCC 70

( 2020) 7 SCC 366

ial-343-21.doc wadhwa rejecting the plaint. Adverting to the submissions made on behalf

of the applicant, Mr. Abhyankar submitted that merely because

the defendant believes that the dispute between the parties is not a

commercial dispute, there is no question of there being any bar to

filing the present suit. He referred to the reliefs in the plaint and

submitted that clearly the plaintiff had a well defined cause of

action which resulted from the illegal termination of the suit

MOU.

7. The averments in the plaint clearly disclose that the plaintiff is

aggrieved by the termination and seeks specific performance of

the said MOU by causing the defendant society to execute a

redevelopment agreement for interim reliefs and in the alternative

for damages in a sum of Rs.10,52,95,962/-. Mr. Abhyankar

therefore submitted that the applicant has filed the present

application merely to delay the decree that the plaintiff is entitled

to, having failed to file a written statement within the time

specified under the Commercial Courts Act.

8. Having considered the submissions of the parties, I am of the view

that the present application is misconceived. Order 7 Rule 11(d)

ial-343-21.doc wadhwa is reproduced below for ease of reference;

"11. Rejection of plaint.--The plaint shall be rejected in the following cases:--

(a) .........

(b) .........

(c) ......

(d) Where the suit appears from the statement in the plaint to be barred by any law."

9. A plain reading of the aforesaid rule will reveal that in the

event a suit is barred by a specific law, the suit may not be

appropriate remedy that a plaintiff could choose. This is an aspect

which will have to be established in a clear and unequivocal

manner. The present application is in the nature of a defence to

the suit. It claims that the suit is frivolous does not disclose a

cause of action and is barred in law. That is different from saying

that the filing of the suit itself is barred by law. Whether or not

the suit discloses a cause of action is an aspect that would be gone

into at the hearing of the suit itself. Suffice it to say that the

application under Order 7 Rule 11(d) cannot succeed in the

present set of facts.

10. The Commercial Courts Act does not operate as a bar

against filing of the present suit. The question whether the

ial-343-21.doc wadhwa dispute that the plaintiffs have come to court which is a

commercial dispute or not, is a matter to be decided at the hearing

of that suit. If the dispute is not a commercial dispute, the suit

will cease to be a commercial suit and will have to be relegated to

the category of regular suits seeking specific performance and in

the alternative in money decree. This is an aspect that would have

to be considered only at the hearing of the suit and not in the

manner that the defendant now seeks relief. I may observe that

after the suit was filed, the defendant has admittedly omitted to

file its written statement in the statutory period of 120 days. In

this behalf, the applicant has also filed a separate interim

application seeking condonation of 700 days delay in filing the

written statement. Thus the admitted position is that the written

statement has not been filed within time.

11. One other aspect Mr. Mishra has canvassed before me

today is that by virtue of the provisions of Section 91 of Co-

operative Societies Act the present suit is not maintainable. He

submits that this is a dispute between the Co-operative society

and the developer who will qualify. Mr. Mishra submits that

under Section 91(1)(c) the defendant will qualify as a person with

whom the society has disputes and therefore such disputes must

ial-343-21.doc wadhwa be filed before the Co-operative Court. In this behalf, the

contentions of Mr. Mishra regarding the applicability of Section

91(1)(c) as well as Section 79A and the directives issued

hereunder it must be borne in mind that the decision in Mont

Blanc (supra) pertains to the levy of non-occupancy charges

and the higher levy was in the teeth of the circular issued under

Section 79A. What the applicant appears to have lost sight of is

the fact that the levy of a non-occupancy charges pertain to the

business of the society whereas by now it is well settled that the

matter of re-development at the societies building does not

constitute such an item of business of the society. Thus the

directives issued under Section 79A and to which Mr. Mishra has

drawn my attention will not constitute a mandatory directive as

contemplated in the decision of Mont Blanc (supra). As far as

Section 91(1)(c) is concerned, in my view the contention of the

applicant is misconceived inasmuch as the plaintiff does not fit to

any of the capacities contemplated under Section 91 since chapter

9 pertains to settlement of disputes wherein one or the other party

are falling within the descriptions in Sections 91(1)(a) to 91(1)(e).

Clearly the plaintiff developer does not fall within any of those

descriptions. In my view that submission also must be rejected.

ial-343-21.doc wadhwa

12. Mr. Mishra may have a point in submitting that the dispute

is not a commercial dispute. The remoteness of the aspect of trade

and commerce, which the Supreme Court has referred to in

Ambalal Sarabhai (Supra) will have to be considered and can be

considered at the hearing of the suit itself. The facts before the

Supreme Court reveal that the plaintiff had sought execution of a

mortgage deed which is in the nature of specific performance of

terms of a Memorandum of understanding without reference to

the nature of the use of the immovable property in trade or

commerce as on date of the suit. In those circumstances, the

Supreme Court was of the opinion that the High Court was

justified in its conclusion that the Commercial Court shall return

the plaint indicating a date for its presentation before a court

having jurisdiction. In that case, the defendant had filed an

application under Order 7 Rule 10 of the CPC seeking an order to

return the plaint to be presented in a court which would have

jurisdiction.

13. In the present case, however, the defendant has chosen a

different route. It seeks rejection of the plaint. The aspect whether

the dispute in the suit amounts to a commercial dispute or not

ial-343-21.doc wadhwa will have to be separately considered and the present application

is not competent to decide upon that aspect. In the present

application one is only concerned with the aspect whether the

suit is barred under any law. Clearly the Commercial Courts Act

does not bar the filing of the present suit. It may be that the suit

does not qualify as a commercial suit for want of compliance with

the definition of a commercial dispute and this is an aspect that

will be considered when the suit is taken up for hearing. Needless

to mention the plaintiff has filed the suit as a commercial suit at

its own risk. The plaintiff will have to justify at the hearing of the

suit that the dispute in the suit qualifies as a commercial dispute

under the said Act.

14. In Ambalal Sarabhai (supra) a Memorandum of

Understanding came to be executed on 3 rd November, 2017

between the appellant and the respondents. In terms thereof, a

mortgage deed was required to be executed by the respondent in

favour of the appellant. A mortgage deed was then executed on

3rd November, 2017 but the same was not registered. In that light

the appellant filed a commercial civil suit so as to enforce

execution of the mortgaged deed. Consequently, a permanent

injunction was also sought. Upon issuance of summons to the

ial-343-21.doc wadhwa respondent, the respondent filed a written statement and an

application under Order 7 Rule 10. The commercial court

rejected the application and referred to the Memorandum and

Articles of the appellant company, took note of the business that

they were engaged in and concluded that the plaintiff was

carrying on business as an estate agent and in the circumstances,

concluded that it is a commercial dispute. The High Court on the

other hand found fault that the manner in which the commercial

court had considered the effect of the Memorandum and Articles

of Association. The High Court examined the matter in greater

detail and came to the conclusion that immovable property in that

case was not being used for trade or commerce and in view

thereof, the High Court rejected the appellant's contention and

directed the plaint to be returned and to be presented before an

appropriate court. The Supreme Court has dealt in greater detail

with the concept of a commercial dispute under the Commercial

Courts Act and this is an aspect that will need to be gone into. The

rival contentions in the present case on this aspect is not one to be

agitated in an application under Order 7 Rule 11(d) and for that

reason also the present application cannot succeed.

ial-343-21.doc wadhwa

15. As far as suppression of facts is concerned, the bar that was

pleaded in Raghwendra Sharan Singh (supra) was a bar under

the law of limitation since a gift deed was executed on 6 th March,

1981 and the Suit should have been filed within limitation

provided under Article 59 of the Limitation Act within three years

of execution of the gift deed. The suit in question had been filed

after more than 22 years of execution of the deed and hence was

found that the suit was not maintainable in view of Section 91

and 92 of the Evidence Act and Section 47 of the Registration Act.

16. Mr. Mishra has specifically relied upon the observation on

the Supreme Court that this court is required to consider the basic

question whether the cause of action pleaded is a real cause of

action or a something purely illusory. In my view an application

under Order 7 Rule 11(d) is not competent to examine that part

of the applicants' contention. Thus, no support can be derived

from the decision in Raghwendra Sharan singh (supra). As far as

the decision in Mont Blanc (supra) is concerned, that dealt with

the applicability of directions issued under Section 79A by the

State Government. In my view the directions of the State

Government issued in the circular dated 3 rd January, 2009 will

not have a material bearing on the facts at hand.

ial-343-21.doc wadhwa

17. Section 79A of the MCS Act does not operate as a bar to

filing of the present suit. In Dahiben (supra) also the court was

considering a bar under the law of limitation and that the

averments of the plaint would have to reveal that the suit was

barred by limitation. It was not a case where there is a bar under

any other statute. The court was not concerned with the aspects

that we are presently faced with. The Court held that the remedy

under Order 7 Rule 11 of the CPC was an independent and

special remedy. The court is empowered to summarily dismiss the

suit at the threshold without proceeding to record evidence and

conducting a trial. In Dahiben (supra) the Supreme Court was

concerned with an application under Order 7 Rule 11(d)

wherein it was contended that the suit was barred under the law

of limitation. That is not evident in the case at hand wherein

rejection of the plaint is sought only on the ground that there is a

bar under statute and that statute which the applicant relies upon

is a Commercial Courts Act. In my view, the statements in the

plaint do not reveal any statutory bar. It may be incorrectly filed

as a commercial suit and the remedy in such a case would be to

seek return of the plaint or conversion of the suit to a regular suit

ial-343-21.doc wadhwa and that is an aspect which will have to be considered only at the

hearing of an appropriate application not in the nature of the

present one.

18. For the aforesaid reasons, I am unable to find any substance

in the present application and the application must fail. In view

thereof, I pass the following order;

                       (i)       IA (L) no.343 of 2021 is dismissed.

                       (ii)      No orders as to costs.




                                                                        (A. K. MENON, J.)




          Digitally
          signed by
          Sandhya
Sandhya   Wadhwa
Wadhwa    Date:
          2021.03.11
          18:32:23
          +0530





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