Karnataka High Court
Mr. A. Krishna Murthy vs Mr. Shantharaj on 10 January, 2024
Author: M.Nagaprasanna
Bench: M.Nagaprasanna
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WP No. 27060 of 2023
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 10TH DAY OF JANUARY, 2024
BEFORE
THE HON'BLE MR JUSTICE M.NAGAPRASANNA
WRIT PETITION NO. 27060 OF 2023 (GM-RES)
BETWEEN:
1. MR. A. KRISHNA MURTHY,
SON OF LATE MR. N. ANJINAPPA,
AGED ABOUT 72 YEARS.
2. MR. B.K. BHUVANESH,
SON OF MR. A. KRISHNA MURTHY,
AGED ABOUT 38 YEARS.
3. MR. B.K. RAKESH,
SON OF MR. A. KRISHNA MURTHY,
AGED ABOUT 35 YEARS.
4. MRS. NANDAKUMARI,
D/O. MR. A. KRISHNA MURTHY,
Digitally signed by AGED ABOUT 33 YEARS.
PADMAVATHI B K
Location: HIGH
COURT OF ALL ARE RESIDING AT
KARNATAKA
1ST CROSS, NANJAPPA GARDEN,
BABUSAPALYA,
KALYAN NAGAR POST,
BENGALURU - 560 043.
...PETITIONERS
(BY SRI. SYED ZULFIKHAR AHMED KHURESHI, ADVOCATE)
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WP No. 27060 of 2023
AND:
1. MR. SHANTHARAJ,
SON OF LATE MR. GURUMURTHY REDDY,
AGED ABOUT 40 YEARS,
RESIDING AT NO. 14/94,
CHOWDESHWARI BUILDING,
BABUSAPALLYA,
KALYAN NAGAR POST,
BANGALORE - 560 043.
2. MR. RAMACHANDRA,
SON OF LATE MR. JUNJAPPA,
AGED ABOUT 50 YEARS,
RESIDING AT NO. 46,
CHALLAKERE VILLAGE,
KALYAN NAGAR POST,
BANGALORE - 560 043.
3. ARBITRATION AND CONCILIATION CENTRE
#49, 3RD FLOOR EAST WING,
KHADIJA BHAVAN,
RACE COURCE ROAD,
BENGALURU - 560 001,
REPRESENTED BY SOLE ARBITRATOR.
...RESPONDENTS
(BY SRI.DR. PRAJWAL K ARADHYA, ADVOCATE FOR C/R1)
THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF
THE CONSTITUTION OF INDIA PRAYING TO i) TO QUASH THE
ORDER PASSED ON MEMO, BY THE COMMERCIAL COURT OF
LXXXV ADDL. CITY CIVIL AND S J JUDGE, BANGALORE (CCH
NO. 86) DATED 15/11/2023 IN COM. A.P. NO. 96/2023 VIDE
ANNEXURE-A AND ALLOW MEMO VIDE ANNEXURE-F AND ETC.,
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WP No. 27060 of 2023
THIS PETITION, COMING ON FOR PRELIMINARY
HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:
ORDER
The petitioners are before this Court seeking the following
prayers:
"i) To quash the order passed on Memo, by the
Commercial Court of LXXXV Addl. City Civil & S J
Judge, Bangalore (CCH No.86) dated 15.11.2023 in
Com.A.P.No.96/2023 vide Annexure-A and allow
Memo vide Annexure-F and
ii) To grant such other further relief/s as this Hon'ble
Court deem fit under the facts and circumstances of
the case, in the ends of justice and equity."
2. Heard Sri. Syed Zulfikhar Ahmed Khureshi, learned
counsel appearing for the petitioners, Dr. Prajwal K. Aradhya,
learned counsel appearing for caveator/respondent No.1.
3. A memorandum of understanding is entered into
between the petitioners and the respondents for securing sites
from the hands of the Bangalore Development Authority ('BDA'
for short) and remittance of fees for the said job of securing the
sites from the BDA. Dispute arose between the two and leads
to Arbitration before the Arbitrator in Arbitration case
No.223/2022. An award of the Arbitrator is passed by allowing
the claim partially and a sum of Rs.23,93,488/- is directed to
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be paid. The petitioners then question the award of the
Arbitrator before the competent Court in Arbitration Appeal
No.26/2023 and the case is pending consideration before the
said Court. The respondents also question the award before the
competent Court in Commercial Appeal No.96/2023.
4. During the pendency of the said petition, a memo is
filed before the concerned Court to decide the jurisdiction, as
according to the petitioner, it was not a commercial dispute
that could be entertained before the concerned Court in
Commercial Appeal No.96/2023, as there was no commercial
dispute in terms of the Act existing. The concerned Court
rejects the memo holding that it is a commercial dispute and it
has jurisdiction to try the suit. Therefore, the petitioners are
before this Court in the subject petition.
5. Learned counsel appearing for the petitioners taking
this Court through the memorandum of understanding would
seek to contend that by no stretch of imagination, this could be
construed to be a commercial dispute as defined under
Section 2 of the Commercial Courts Act, 2015 ('the Act' for
short). He would contend that the Apex Court in identical
circumstances in the case of AMBALAL SARABHAI
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ENTERPRISES LIMITED V. K.S. INFRASPACE LLP AND
ANOTHER1 has considered what would be the commercial
dispute for the Commercial Court to entertain a suit before it.
6. Learned counsel appearing for the respondents
would submit that the issue is undoubtedly a commercial
dispute and therefore, the act of the Court in rejecting the
memo qua the jurisdiction cannot be found fault with.
7. I have given my anxious consideration to the
respective submissions made by the learned counsel and have
perused the material on record.
8. The afore-narrated facts are not in dispute. The
memorandum of understanding leads to a dispute between the
parties and the dispute leads to the arbitration. The Arbitrator
passes an award partially allowing the claim of the claimant,
which leads to two cases being filed, one by the petitioners and
the other by the respondents. In the case filed by the
respondents before the Commercial Court, the petitioners file a
memo that the Commercial Court has no jurisdiction to try the
suit, as it is not a commercial dispute.
(2020) 15 SCC 585
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9. On a perusal at the memorandum of understanding
or the award of the Arbitrator, it is clear that it is not a
commercial dispute at best it was a liaison agreement between
the petitioners and the respondents for execution of certain
work.
10. Learned counsel for the respondents has
strenuously contended that the said dispute would come within
the ambit of Clause 18 of Section 2 of the Act, which defines
what is a commercial dispute. According to him, this is an
agreement for services and therefore, it is a commercial
dispute. The said submission is noted only to be rejected.
11. The Apex Court in the case of AMBALAL supra has
held as follows:
"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
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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 OnLine Guj 1926]
impugned herein. The Commercial Court shall therefore
return the plaint indicating a date for its presentation
before the Court having jurisdiction.
17. The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015
(Act No. 4 of 2016) was published in the Gazette of India
on 1-1-2016. The Act is deemed to have come into force
w.e.f. 23-10-2015. Act No. 4 of 2016 was amended by
Central Act 28 of 2018, the Commercial Courts Act.
18. We may refer to the Law Commission's 253rd
Report, which inter alia made various recommendations.
Para 4.2 of Chapter IV--"Conclusions and Summary of
Recommendations" of the Law Commission's 253rd Report
reads as under:
"4.2. The Commercial Courts, the Commercial
Divisions and the Commercial Appellate Divisions of High
Courts that have been recommended are intended to
serve as a pilot project in the larger goal of reforming the
civil justice system in India. The goal is to ensure that
cases are disposed of expeditiously, fairly and at
reasonable cost to the litigant. Not only does this benefit
the litigant, other potential litigants (especially those
engaged in trade and commerce) are also advantaged by
the reduction in backlog caused by the quick resolution of
commercial disputes. In turn, this will further economic
growth, increase foreign investment, and make India an
attractive place to do business. Further, it also benefits
the economy as a whole given that a robust dispute
resolution mechanism is a sine qua non for the all-round
development of an economy." [See Para 4.2 of Chapter
IV--'Conclusions and Summary of Recommendations' of
Law Commission's 253rd Report -- Commercial Division
and Commercial Appellate Division of High Courts and
Commercial Courts Bill, 2015 (January 2015).]
After the Law Commission's 253rd Report, Act No. 4 of
2016 was amended by Central Act 28 of 2018.
19. Section 3 of the Act deals with constitution of
Commercial Courts. As per Section 3 of the Act, the State
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Government shall, after consultation with the High Court,
by notification, constitute Commercial Courts at district
level if deemed necessary for the purpose of exercising
jurisdiction under the Act. As per Section 3(1-A) of the
Act, Commercial Courts shall have jurisdiction to try the
commercial disputes of a "specified value" which shall not
be less than three lakh rupees or such higher value, for
whole or part of the State, as it may consider necessary.
After amendment in 2018, the proviso to Section 3
provides that Commercial Courts may be constituted with
respect to area over which the High Courts have ordinary
original civil jurisdiction. Section 5(1) of the Act provides
for the constitution of Commercial Appellate Division
having one or more Division Benches for the purpose of
exercising jurisdiction and powers conferred on it by the
Act.
20. Section 6 deals with the jurisdiction of Commercial
Court. Section 6 of the Act reads as under:
"6. Jurisdiction of Commercial Court.--The
Commercial Court shall have jurisdiction to try all suits
and applications relating to a commercial dispute of a
specified value arising out of the entire territory of the
State over which it has been vested territorial jurisdiction.
Explanation.--For the purposes of this section, a
commercial dispute shall be considered to arise out of the
entire territory of the State over which a Commercial
Court has been vested jurisdiction, if the suit or
application relating to such commercial dispute has been
instituted as per the provisions of Sections 16 to 20 of the
Code of Civil Procedure, 1908 (5 of 1908)."
21. Section 7 deals with the jurisdiction of Commercial
Divisions of High Courts. Section 7 of the Act reads as
under:
"7. Jurisdiction of Commercial Divisions of High
Courts.--All suits and applications relating to commercial
disputes of a specified value filed in a High Court having
ordinary original civil jurisdiction shall be heard and
disposed of by the Commercial Division of that High
Court:
Provided that all suits and applications relating to
commercial disputes, stipulated by an Act to lie in a court
not inferior to a District Court, and filed or pending on the
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original side of the High Court, shall be heard and
disposed of by the Commercial Division of the High Court:
Provided further that all suits and applications
transferred to the High Court by virtue of sub-section (4)
of Section 22 of the Designs Act, 2000 (16 of 2000) or
Section 104 of the Patents Act, 1970 (39 of 1970) shall be
heard and disposed of by the Commercial Division of the
High Court in all the areas over which the High Court
exercises ordinary original civil jurisdiction."
22. Commercial Divisions are to be set up in High
Courts that are already having ordinary original civil
jurisdiction having one or more Benches consisting of a
Single Judge having experience in dealing with
commercial disputes for exercising powers under the Act.
As per Section 7(1) and the proviso thereto, Commercial
Division will hear and dispose of all suits and applications
relating to commercial disputes of a specified value, that
lie in a court not inferior to district court and filed in a
High Court having ordinary original civil jurisdiction and
also those cases transferred to High Court under Section
22(4) of the Designs Act, 2000 or under Section 104 of
the Patents Act, 1970.
23. Section 5 of the Act deals with the constitution of
Commercial Appellate Division. Section 5(1) of the Act
reads as under:
"5. Constitution of Commercial Appellate
Division.--(1) After issuing notification under sub-section
(1) of Section 3 or order under sub-section (1) of Section
4, the Chief Justice of the concerned High Court shall, by
order, constitute Commercial Appellate Division having
one or more Division Benches for the purpose of
exercising the jurisdiction and powers conferred on it by
the Act."
In terms of Section 5(2) of the Act, the Chief Justice
of the High Court shall nominate such Judges of the High
Court who have experience in dealing with commercial
disputes to be Judges of the Commercial Appellate
Division.
24. Section 2(1)(c) defines "commercial dispute" as
under:
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"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;
(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 semi-
conductor 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
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(xxii) such other commercial disputes as may be
notified by the Central Government.
Explanation.--A commercial dispute shall not cease to
be 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;
***
(d) "Commercial Division" means the Commercial
Division in a High Court constituted under sub-section (1)
of Section 4;
(e) "District Judge" shall have the same meaning as
assigned to it in clause (a) of Article 236 of the
Constitution of India;
(f) "document" means any mater expressed or
described upon any substance by means of letters, figures
or marks, or electronic means, or by more than one of
those means, intended to be used, or which may be used,
for the purpose of recording that matters;
(g) "notification" means a notification published in
the Official Gazette and the expression "notify" with its
cognate meanings and grammatical variations shall be
construed accordingly;
(h) "Schedule" means the Schedule appended to the
Act; and
(i) "Specified Value", in relation to a commercial
dispute, shall mean the value of the subject-matter in
respect of a suit as determined in accordance with Section
12 [which shall not be less than three lakh rupees] or
such higher value, as may be notified by the Central
Government."
(emphasis supplied)
[Subs. by Act 28 of 2018, Section 4(II), for "which
shall not be less than one crore rupees" (w.r.e.f. 3-5-
2018).]
25. As noted above, clause (i) of Section 2 of the Act
defines "specified value", in relation to a commercial
dispute, shall mean the value of the subject-matter in
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respect of a suit as determined in accordance with Section
12 [which shall not be less than three lakh rupees] or
such higher value, as may be notified by the Central
Government. Section 12 provides for criteria for valuation
of the suit, application or appeal for the purpose of the
Act.
26. A matter will fall under the jurisdiction of the
Commercial Court or the Commercial Division of the High
Court on the following factors:
(i) it shall be a commercial dispute within the meaning
of Section 2(1)(c) of the Act; and
(ii) such commercial disputes are of a specified value
as per Section 2(i) of the Act.
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.
28. Section 15 of the Act deals with transfer of
pending cases. Section 15 of the Act reads as under:
"15. Transfer of pending cases.--(1) All suits and
applications, including applications under the Arbitration
and Conciliation Act, 1996 (26 of 1996), relating to a
commercial dispute of a specified value pending in a High
Court where a Commercial Division has been constituted,
shall be transferred to the Commercial Division.
(2) All suits and applications, including applications
under the Arbitration and Conciliation Act, 1996 (26 of
1996), relating to a commercial dispute of a specified
value pending in any civil court in any district or area in
respect of which a Commercial Court has been
constituted, shall be transferred to such Commercial
Court:
Provided that no suit or application where the final
judgment has been reserved by the court prior to the
constitution of the Commercial Division or the Commercial
Court shall be transferred either under sub-section (1) or
sub-section (2)."
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29. Insofar as transferred cases, as per Section 15(4)
of the Act, the Commercial Division or Commercial Court
shall prescribe new timelines or issue further directions
for speedy and efficacious disposal of such suit or
application in accordance with Order 15-A of the Code of
Civil Procedure. New time period for filing written
statement shall be prescribed and the proviso to sub-rule
(1) of Rule 1 of Order 5 of the Code of Civil Procedure
shall not apply to the transferred cases and the Court
may, in its discretion, prescribe a new time period within
which the written statement shall be filed.
30. The Preamble of the Commercial Courts Act, 2015
reads as under:
"An Act to provide for the constitution of Commercial
Courts, Commercial Appellate Courts, Commercial Division
and Commercial Appellate Division in the High Courts for
adjudicating commercial disputes of specified value and
matters connected therewith or incidental thereto."
31. The Statement of Objects and Reasons of the
Commercial Courts Act reads as under:
"Statement of Objects and Reasons.--The proposal
to provide for speedy disposal of high value commercial
disputes has been under consideration of the Government
for quite some time. The high value commercial disputes
involve complex facts and question of law. Therefore,
there is a need to provide for an independent mechanism
for their early resolution. Early resolution of commercial
disputes shall create a positive image to the investor
world about the independent and responsive Indian legal
system.
***
6. It is proposed to introduce the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts Bill, 2015, to replace the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts Ordinance, 2015, which inter alia, provides
for the following namely--
(i) constitution of the Commercial Courts at District
level except for the territory over which any High Court is
having ordinary original civil jurisdiction;
(ii) constitution of the Commercial Divisions in those
High Courts which are already exercising ordinary civil
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jurisdiction and they shall have territorial jurisdiction over
such areas on which it has original jurisdiction;
(iii) constitution of the Commercial Appellate Division
in all the High Courts to hear the appeals against the
orders of the Commercial Courts and the orders of the
Commercial Division of the High Court;
(iv) the minimum pecuniary jurisdiction of such
Commercial Courts and Commercial Division is proposed
as one crore rupees; and
(v) to amend the Code of Civil Procedure, 1908, as
applicable to the Commercial Courts and Commercial
Divisions which shall prevail over the existing High Courts
Rules and other provisions of the Code of Civil Procedure,
1908, so as to improve the efficiency and reduce delays in
disposal of commercial cases."
The object and purpose of the Commercial Courts Act
is to ensure that the Commercial Courts, Commercial
Appellate Courts, Commercial Division and Commercial
Appellate Division of the High Courts and also to ensure
that the commercial cases are disposed of expeditiously,
fairly and at reasonable cost to the litigant.
32. Section 13 deals with appeals from decrees of
Commercial Courts and Commercial Divisions. As per
Section 14 of the Act, the Commercial Appellate Court and
the Commercial Appellate Division shall endeavour to
dispose of appeals filed before it within a period of six
months from the date of filing of such appeal.
Fast Track Procedure for deciding the
commercial disputes
33. As per Section 16 of the Act, the provisions of the
Code of Civil Procedure as amended under the Act, shall
apply in the trial of suit in respect of a commercial dispute
of a specified value. Section 16 of the Act reads as under:
"16. Amendments to the Code of Civil Procedure,
1908 in its application to commercial disputes. --(1)
The provisions of the Code of Civil Procedure, 1908 (5 of
1908) shall, in their application to any suit in respect of a
commercial dispute of a specified value, stand amended
in the manner as specified in the Schedule.
(2) The Commercial Division and Commercial Court
shall follow the provisions of the Code of Civil Procedure,
1908 (5 of 1908), as amended by this Act, in the trial of a
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suit in respect of a commercial dispute of a specified
value.
(3) Where any provision of any rule of the
jurisdictional High Court or any amendment to the Code
of Civil Procedure, 1908 (5 of 1908), by the State
Government is in conflict with the provisions of the Code
of Civil Procedure, 1908 (5 of 1908), as amended by this
Act, the provisions of the Code of Civil Procedure as
amended by this Act shall prevail."
34. The Schedule to the Commercial Courts Act
amends various provisions of the Code of Civil Procedure
and thereby makes significant departure from the Code.
After Order 13 of the Code, Order 13-A -- "Summary
Judgment" has been inserted. Order 13-A contains the
scope and classes of suits to which Order 13-A applies,
grounds for summary judgment, procedure to be
followed, evidence for hearing of summary judgment,
orders that may be made by Court in such proceedings for
summary judgment, etc. After Order 15 of the Code,
Order 15-A--"Case Management Hearing" has been
inserted. Order 15-A provides for first case management
hearing (Rule 1); recording of oral evidence on a day-to-
day basis (Rule 4); powers of the court in a case
management hearing (Rule 6); adjournment of case
management hearing (Rule 7); consequences of non-
compliance with orders (Rule 8). By way of amendment,
several rules have been incorporated to make the matters
of commercial disputes on fast track. In Order 20 of the
Code -- "Judgment", Rule 1 has been substituted that
within ninety days of the conclusion of arguments, the
Commercial Court/Commercial Division/Commercial
Appellate Division to pronounce the judgment and copies
thereof shall be issued to all the parties to the dispute
through electronic mail or otherwise.
35. Various provisions of the Act, namely, case
management hearing and other provisions makes the
court to adopt a pro-active approach in resolving the
commercial dispute. A new approach for carrying out case
management and strict guidelines for completion of the
process has been introduced so that the adjudicatory
process is not delayed. I have referred to the various
provisions of the Act and the Schedule bringing in
amendments brought to the Civil Procedure Code to deal
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with the commercial disputes, only to highlight that the
trial of the commercial dispute suits is put on fast track
for disposal of the suits expeditiously. Various provisions
of the Act referred to above and the amendments inserted
to the Civil Procedure Code by the Schedule is to ensure
speedy resolution of the commercial disputes in a time
bound manner. The intent of the legislature seems to be
to have a procedure which expedites the disposal of
commercial disputes and thus creates a positive
environment for investment and development and make
India an attractive place to do business.
36. A perusal of the Statement of Objects and
Reasons of the Commercial Courts Act, 2015 and the
various amendments to the Civil Procedure Code and
insertion of new rules to the Code applicable to suits of
commercial disputes show that it has been enacted for
the purpose of providing an early disposal of high value
commercial disputes. A purposive interpretation of the
Statement of Objects and Reasons and various
amendments to the Civil Procedure Code leaves no room
for doubt that the provisions of the Act require to be
strictly construed. If the provisions are given a liberal
interpretation, the object behind constitution of
Commercial Division of Courts viz. putting the matter on
fast track and speedy resolution of commercial disputes,
will be defeated. If we take a closer look at the Statement
of Objects and Reasons, words such as "early" and
"speedy" have been incorporated and reiterated. The
object shall be fulfilled only if the provisions of the Act are
interpreted in a narrow sense and not hampered by the
usual procedural delays plaguing our traditional legal
system.
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
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would defeat the objects of the Act and the fast tracking
procedure discussed above.
38. On 3-11-2017, a Memorandum of Understanding
was executed between the appellant-plaintiff, respondent-
defendant and Ketan Bhailalbhai Shah, second
respondent. As per the terms of MoU, parties executed a
deed of conveyance of the land. A mortgage deed was
executed simultaneously along with the MoU with respect
to the part of the land admeasuring 15,000 sq ft in favour
of the plaintiff. It was understood between the parties
that Respondent 1 would apply for change of land use
permission for the land in question on signing of the MoU.
Mortgage deed was executed by Respondent 1 in favour
of the appellant in order to ensure performance of
obligations under the MoU. But the said mortgage deed
was not presented for registration.
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.
40. In Ujwala Raje Gaekwar v. Hemaben Achyut
Shah [Ujwala Raje Gaekwar v. Hemaben Achyut Shah,
2017 SCC OnLine Guj 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
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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.
41. In Vasu Healthcare (P) Ltd. v. Gujarat Akruti TCG
Biotech Ltd. [Vasu Healthcare (P) Ltd. v. Gujarat Akruti
TCG Biotech Ltd., 2017 SCC OnLine Guj 724 : AIR 2017
Guj 153] , referred to in extenso by my learned Brother,
it was held that: (SCC OnLine Guj para 33)
"33. ... On plain reading of the relevant 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"."
We entirely agree with the above purposive
interpretation adopted by the Gujarat High Court.
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
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
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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.
The Apex Court considering an identical circumstance has
held that all disputes involving monetary claim would not
become a commercial dispute ipso facto unless it comes within
the definition of a commercial dispute as found in Section 2 of
the Act.
12. The Apex Court considers that every dispute being
referred to the Commercial Court would clog the Court and
defeat the very constitution of the Commercial Court and for
the purpose for which it is constituted. Therefore, issue stands
answered by the Apex Court in the case of AMBALAL supra.
13. The petition deserves to succeed on the score of it
being covered on all fours by the judgment rendered by the
Apex Court in the case of AMBALAL supra.
14. Learned counsel appearing for the respondents
submits that the petitioners have already preferred a suit
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before the concerned Court and the present Commercial Appeal
in 96/2023 also be clubbed along with the same and be heard
by the same court.
15. It is for the petitioners to file an appropriate
application to that effect.
17. For the aforesaid reasons, the following:
ORDER
(i) The petition is allowed.
(ii) The order passed on memo by the
Commercial Court of LXXXV Additional City
Civil and Sessions Judge, Bengaluru (CCH-86)
dated 15.11.2023 in Com.A.P.No.96/2023 is
quashed.
(iii) It is declared that Commercial Appeal before
the concerned Court was not maintainable.
Sd/-
JUDGE
SJK
CT:SNN
