Calcutta High Court

Ashika Global Securities Pvt. Ltd vs Rita Kedia on 20 September, 2024

                 IN THE HIGH COURT AT CALCUTTA
                              ORIGINAL SIDE
                       COMMERCIAL DIVISION




Present:

The Hon'ble Justice Krishna Rao



                           GA No. 2 of 2023

                                     In

                        CS (COM) 341 of 2024

                        (Old No. CS 17 of 2022)


                  Ashika Global Securities Pvt. Ltd.

                                   Versus

                                 Rita Kedia




           Mr. Sourojit Dasgupta
           Mr. Aniket Chaudhary
                                              ... for the plaintiff.
           Mr. Reetobroto Kumar Mitra
           Mr. Rudrajit Sarkar
           Mr. Debangshu Dinda
           Mr. Rabindra Mitra
           Ms. Arundhati Barman Roy
           Mr. Tamoghna Saha
           Ms. Vanshika Newar
           Ms. Vrinda Kedia
                                              ... for the defendant.
                                        2


Hearing Concluded On : 19.08.2024

Judgment on             : 20.09.2024

Krishna Rao, J.:

1. The defendant has filed the present applications being GA No. 2 of 2023

for revocation of leave granted under Clause 12 of the Letters Patent

Act, 1865 and for rejection of CS-COM 341 of 2024 (Old No. CS. 17 of

2022) (Ashika Global Securities Private Limited -vs- Rita Kedia).

2. 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.

The contention of the defendant is that each and every commercial

dispute pending before the High Court or Civil Court cannot be

considered as commercial dispute unless such dispute comes within

the purview of definition of commercial dispute as per Section 2(1)(c) of

the Commercial Courts Act, 2015.

3. The defendant says that the document relied by the plaintiff on the

basis of which the loan was given to the defendant has not mentioned

whether it was a simple loan or during the business transaction. The

defendant says 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.

4. The defendant says that no amount has been taken by the defendant

from the plaintiff during business transaction. He submits that the

alleged transaction does not fall under the provisions of commercial

dispute as per the Commercial Courts Act, 2015.

5. The defendant says that no part of the cause of action had arisen

within the jurisdiction of this Court. He submits that the plaintiff has

failed to disclose any document to say that the defendant has agreed to

pay any amount to HDFC Bank, Stephen House Branch, Kolkata.

6. The defendant says that admittedly the defendant resides at Mumbai,

Maharashtra but the plaintiff has chosen to file the instant case at

Kolkata only to harass the defendant.

7. Plaintiff says 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 to be repaid by the defendant with

interest at the rate of 12% per annum.

8. The plaintiff says that the defendant has issued a Statement of

Confirmation of Accounts in favour of the plaintiff admitting his liability

of Rs.15,00,000/- as on 31st March, 2018. The plaintiff says that

issuance of Balance Confirmation is a mercantile document within the

meaning of Commercial Courts Act, 2015. The plaintiff has relied upon

the judgment in the case of Venkatesh Vincom Pvt. Ltd. vs. Spice of

Joy, Multicousin Restaurant cum Bar & Ors. reported in 2022 SCC

OnLine Cal 3010 and submitted that the dispute between the parties

is clearly 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 make the commercial transaction.

9. As regard to the cause of action, the plaintiff says that it is the specific

case of the plaintiff that the defendant had agreed to repay the loan

amount with interest at the Bank Account of the plaintiff maintained

with the HDFC Bank, Stephen House Branch, Kolkata which is within

the jurisdiction of this Court.

10. The plaintiff says that the place of repayment of loan is one of the most

essential terms of the agreement between the parties. He submits that

the defendant failed to repay the amount to the plaintiff at the said

bank account and thus a part of cause of action arose within the

jurisdiction of this Court.

11. The plaintiff says that the cause of action is a bundle of facts which is

to be proved by the plaintiff during the trial and on the basis of an

application, the cause of action cannot be decided.

12. Heard the Learned Counsel for the respective parties, perused the

materials on record. In G.A. No. 2 of 2023, the defendant has prayed for

revocation of leave granted under Clause 12 of the Letters Patent, 1865

on the ground that no cause of action arose within the jurisdiction of

this Court and the suit is not of commercial in nature.

13. 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.15,00,000/-

and as per discussion, the defendant has agreed to pay the said

amount at the rate of 12% interest per annum. In paragraph 4 of the

plaint, it is stated that the plaintiff has initially transferred an amount

of Rs. 15,00,000/- on 5th July, 2017 from its bank account maintained

with the HDFC Bank, Stephen House Branch, Kolkata which is

situated within the jurisdiction of this Court.

14. In paragraph 15 of the plaint, the plaintiff also mentioned that the

defendant required to make payment of his outstanding dues to the

plaintiff's bank account maintained with the HDFC Bank, Stephen

House Branch, Kolkata within the jurisdiction of this Court.

15. 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.

Rejection of the plaint in exercise of the powers under Order VII, Rule

11 of the Code would be on consideration of the principles laid down

by the Hon'ble Supreme Court in the case of T. Arivandandam v. T.

V. Satyapal and Another reported in (1977) 4 SCC 467, the Hon'ble

Court has held that if on a meaningful, not formal, reading of the

plaint it is manifestly vexatious and meritless in the sense of not

disclosing a clear right to sue, the Court should exercise its power

under Order VII Rule 11 of the CPC taking care to see that the ground

mentioned therein is fulfilled. In Roop Lal Sathi v. Nachhattar

Singh Gill reported in (1982) 3 SCC 487, the Hon'ble Supreme Court

has held that where the plaint discloses no cause of action, it is

obligatory upon the court to reject the plaint as a whole under Order

VII, Rule 11 of the Code, but the rule does not justify the rejection of

any particular portion of a plaint. Therefore, the High Court could not

act under Order VII, Rule 11(a) of the Code of Civil Procedure, 1908 for

striking down certain paragraphs nor the High Court could act under

Order VI, Rule 16 to strike out the paragraphs in absence of anything

to show that the averments in those paragraphs are either

unnecessary, frivolous or vexatious, or that they are such as may tend

to prejudice, embarrass or delay the fair trial of the case, or constitute

an abuse of the process of the court. In ITC Ltd. v. Debts Recovery

Appellate Tribunal & Ors. reported in (1998) 2 SCC 70, it was held

that the basic question to be decided while dealing with an application

filed by the defendant under Order VII, Rule 11 of the CPC is to find

out whether the real cause of action has been set out in the plaint or

something illusory has been projected in the plaint with a view to get

out of the said provision. In Saleem Bhai and Others v. State of

Maharashtra and Others reported in (2003) 1 SCC 557, the Hon'ble

Supreme Court has held that the trial court can exercise its powers

under Order VII Rule 11 of the CPC at any stage of the suit before

registering the plaint or after issuing summons to the defendant at any

time before the conclusion of the trial and for the said purpose the

averments in the plaint are germane and the pleas taken by the

defendant in the written statement would be wholly irrelevant at that

stage. In Popat and Kotecha Property v. State Bank of India Staff

Association, (2005) 7 SCC 510, the Hon'ble Court has culled out the

legal ambit of Rule 11 of Order VII of the Code in these words : "There

cannot be any compartmentalization, dissection, segregation and

inversions of the language of various paragraphs in the plaint. If such

a course is adopted it would run counter to the cardinal canon of

interpretation according to which a pleading has to be read as a whole

to ascertain its true import. It is not permissible to cull out a sentence

or a passage and to read it out of the context in isolation. Although it

is the substance and not merely the form that has to be looked into,

the pleading has to be construed as it stands without addition or

subtraction of words or change of its apparent grammatical sense. The

intention of the party concerned is to be gathered primarily from the

tenor and terms of his pleadings taken as a whole. At the same time, it

should be borne in mind that no pedantic approach should be adopted

to defeat justice on hair-splitting technicalities".

16. From the aforesaid, it is apparent that the plaint cannot be rejected on

the basis of the allegations made by the defendant in his written

statement or in an application 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.

Essentially, whether the plaint discloses a cause of action, is a

question of fact which has to be gathered on the basis of the

averments made in the plaint in its entirety taking those averments to

be correct. A cause of action is a bundle of facts which are required to

be proved for obtaining relief and for the said purpose, the material

facts are required to be stated but not the evidence except in certain

cases where the pleadings relied on are in regard to misrepresentation,

fraud, wilful default, undue influence or of the same nature. So long as

the plaint discloses some cause of action which requires determination

by the Court, mere fact that in the opinion of the Judge the plaintiff

may not succeed cannot be a ground for rejection of the plaint.

17. After going through the entire plaint particularly paragraphs 4 and 15

of the plaint, this Court finds that cause of action also arose within the

jurisdiction of this Court.

18. The defendant raised the point that the impugned transaction does not

fall under the ambit of Commercial dispute as per the Commercial

Courts Act, 2015. It is not denied that the plaintiff is the Non-Banking

Financial Institution. As per the case of the plaintiff, the plaintiff has

lent and advance the loan amount of Rs. 15,00,000/- carrying interest

of 12% per annum to the defendant. The defendant has also issued

Confirmation of Accounts acknowledging the amount of Rs.

15,00,000/- as on 31st March, 2018.

19. In the plaint, there is no averment to say why the defendant has

borrowed the amount from the plaintiff. The plaintiff has only

mentioned that the defendant has utilized the said amount and has

reaped the benefits thereof. It is not the case of the plaintiff that the

defendant has taken loan from the plaintiff for the purpose of any

business and the defendant has utilized the said amount in this

business. The plaintiff in the cause title of the plaint only mentioned

that the defendant, namely, Rita Kedia carrying on business but it is

not clear that the defendant had taken the said amount for the purpose

of its business.

20. The judgment relied by the plaintiff in the case of Venketesh Vincom

(supra) but in the said case in paragraph 11, the Hon'ble Division

Bench of this Court held that:

"11. We do not find that the aforesaid judgment can be of any aid to the instant matter except for the proposition that unless the dispute satisfies the definition of a commercial dispute, any other disputes may not be brought before the Commercial Court. In the instant matter the Respondent no. 1 is admittedly running a multicuisine restaurant and bar and selling its products for profit. The appellant is a non-banking financial company and engaged in a business of financing or extending financial supports and making profit from the same. Any money given on loan is the ordinary transaction of the non banking financial company provided it augments income from such transactions. The Respondent no. 1 who is selling the product for profit is a merchant and, therefore, the transaction between the plaintiff who is engaged in a finance business extending loan for profit is a transaction between a financer and the merchant."

In the above case, the Hon'ble Court noticed that the plaintiff

being the Non-Banking Financial Institution lent and advance money to

the defendant and the defendant has used the said amount for the

purpose of its business of Bar and Restaurant but in the present case,

the plaintiff is silent for what purpose, the defendant has taken loan

from the plaintiff. Thus the judgment relied by the plaintiff is

distinguishable from the facts and circumstances of the present case.

21. Only the plaintiff being a Non-Banking Financial Institution, lent and

advance money to the defendant and the defendant has issued account

confirmation will not constitute commercial transaction. There is no

case is made out by the plaintiff that the plaintiff has lent and advance

an amount of Rs. 15,00,000/- to the defendant in course of business