Kerala High Court
Abdullakutty Haji vs H. Mushtafa on 25 September, 2024
Author: Kauser Edappagath
Bench: Kauser Edappagath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH
Wednesday, the 25th day of September 2024 / 3rd Aswina, 1946
CRP NO. 133 OF 2024
OS 206/2023 OF ASSISTANT SESSIONS COURT/PRINCIPAL SUB COURT / COMMERCIAL COURT,
PALAKKAD, PALAKKAD
REVISION PETITIONER:
ABDULLAKUTTY HAJI, AGED 66 YEARS S/O. THAPPY ABOOBACKER, THAPPY
HOUSE, PALATHINGAL, ULLANAM POST, NEDUVA VILLAGE TIRURANGADI TALUK,
MALAPPURAM, PIN - 679 573
BY ADVS.M/S.B.KRISHNAN & R.PARTHASARATHY,
RESPONDENT:
H. MUSHTAFA AGED 55 YEARS S/O. HUSSAINAR, BAITHUL MINAR, NADAKAVU,
AKATETHARA, PALAKKAD, PIN - 678 008
BY ADVS.L.RAJESH NARAYAN, CAVEATOR,MANU VYASAN PETER, P.B.KRISHNAN
(SENIOR ADVOCATE),P.B.SUBRAMANYAN,SABU GEORGE,B.ANUSREE,MEERA
P.,AISWARYA MOHAN,
This Civil Revision Petition having come up for orders on 25-09-2024
and upon perusing the Petition, the court on the same day passed the
following.:
"C.R."
DR.KAUSER EDAPPAGATH, J.
=================
OP(C) No.753/2024 & CRP No.133/2024
=================== ======
Dated this, the 25th day of September, 2024
REFERENCE ORDER
The common order passed in IA No.6/2024, and the issue of
maintainability of counter-claim in OS No.206/2023 on the file of
the Principal Sub Court, Palakkad (for short, 'the trial court') is
under challenge in the above Original Petition and Civil Revision
Petition.
2. I refer to the status of the parties hereunder as they
are referred to in the suit, i.e., the plaintiff and the defendant.
3. The plaint schedule property comprising a shop room
having a plinth area of 12,000 sq. ft situated on the ground floor
of a shopping mall viz. Thappy's Mall at Court Road, Palakkad
admittedly belongs to the defendant. It was taken on a license
basis by the plaintiff from the defendant to run a supermarket as
per the license deed executed between them on 26/4/2018
(marked as Ext.A1). The period of license was ten years w.e.f.
OP(C) No.753/2024 & CRP No.133/2024
26/4/2018. The license fee initially agreed was `3,50,000/- per
month with an enhancement @5% per annum. At present, the
license fee per month is `3,95,000/-. There is no dispute between
the parties regarding their jural relationship and the rate of
license fee.
4. The plaintiff instituted the suit originally as OS
No.200/2023 at the Munsiff Court, Palakkad, against the
defendant for a permanent prohibitory injunction restraining him
from trespassing into the plaint-schedule property or interfering
with the plaintiff in running the business conducted in the plaint-
schedule building. It is alleged in the plaint that the defendant
obstructed the plaintiff in running the business in the plaint-
schedule building to pressurise him to vacate the building so as
to let it out to a third party for higher rent. The suit was
subsequently transferred to the trial court as per the order in
Transfer OP No.167/2023 of the District Court, Palakkad and it
was renumbered as OS No.206/2023. The defendant entered
appearance and filed a written statement along with a counter-
claim. In the written statement, it was contended that the plaintiff
defaulted the payment of the license fee and the arrears of the
OP(C) No.753/2024 & CRP No.133/2024
license fee as of March 2023 would come to `1,34,07,140/-. It was
further contended that since the plaintiff defaulted the payment
of the license fee, the defendant revoked the license invoking
Clauses (5) and (10) of the agreement on 20/12/2022 w.e.f.
1/04/2023. It was also contended that on 27/4/2023, through the
mediator, the plaintiff approached the defendant, agreed to
surrender the vacant possession of the plaint schedule building,
made an endorsement on the reverse side of Ext. A1 agreement
that he would vacate it and hand over the key within twenty days
and handed over the original agreement to the defendant. The
said endorsement was separately marked as Ext. A1(a). In the
counter-claim, the defendant sought a mandatory injunction to
eject the plaintiff from the plaint-schedule building. Thereafter,
the defendant filed an application as IA No.6/2024 under Order
XII Rule 6 of CPC seeking to direct the plaintiff to leave the plaint-
schedule property based on the alleged admission. The plaintiff
filed a counter affidavit to the application inter alia, contending
that the counter-claim is not maintainable before the civil court
as the dispute involved is a commercial dispute, and it has to be
transferred to the Commercial Court under Section 15(2) of the
OP(C) No.753/2024 & CRP No.133/2024
Commercial Courts Act, 2015 ('CC Act' for short). The trial court,
after hearing both sides, dismissed IA No.6/2024, and the
counter-claim along with the suit was ordered to be transferred to
the Commercial Court. CRP No. 133/2024 has been filed by the
defendant challenging the common order. OP(C) No.753/2024
has been filed by the plaintiff to the extent of transferring the
counter-claim to the Commercial Court.
5. I have heard Sri. P. B. Krishnan, the learned Senior
Counsel for the plaintiff, and Sri. B. Krishnan, the learned counsel
for the defendant.
6. I will address the challenge to the order in IA
No.6/2024 and the maintainability of the counter-claim
separately, taking into consideration the rival submissions made
by learned counsel appearing on either side.
7. The learned counsel for the defendant, Sri.B.Krishnan
submitted that there is an unequivocal admission in Ext.A1(a)
that the plaintiff would vacate the plaint-schedule building, and
as such, the defendant has established a prima facie case to
decree the suit on admission under Order XII Rule 6. The learned
OP(C) No.753/2024 & CRP No.133/2024
counsel further submits that Rule 6 of Order XII is wide enough to
afford relief not only in cases of admissions and pleadings but
also in the case of admission elsewhere. Per contra, the learned
Senior counsel for the plaintiff, Sri.P.B.Krishnan submitted that in
the counter statement filed to IA No.6/2024, the plaintiff has
categorically denied Ext.A1(a) endorsement, and as such, there
is no admission at all, so as to invoke Order XII Rule 6 of CPC.
The learned Senior counsel further submitted that the power
under Order XII Rule 6 of CPC is discretionary, it cannot be
claimed as a matter of right and the trial court rightly refrained
from exercising its discretion. Both sides relied on the following
decisions of the Supreme Court:
(i) Uttam Singh Duggal and Co. Ltd. v. United Bank of India,
(2000) 7 SCC 120
(ii) Karam Kapahi and Others v. Lal Chand Public Charitable
Trust and Another, (2010) 4 SCC 753
(iii) S.M. Asif v. Virender Kumar Bajaj, (2015) 9 SCC 287, and
(iv) Karan Kapoor v. Madhuri Kumar, (2022) 10 SCC 496.
8. Admissions can significantly impact the proceedings of
a case, often simplifying or narrowing down the issues that need
to be adjudicated upon. Order XII of CPC deals with admission by
a party to a suit. By enabling parties to acknowledge undisputed
OP(C) No.753/2024 & CRP No.133/2024
facts and documents formally, it reduces unnecessary litigation
and focuses on the real issues at hand, thereby promoting speedy
justice. Rules 1 to 6 of Order XII outline the procedures and
effects of admissions.
9. Rule 1 allows a party to give notice to the other party
admitting the whole or part of the case of the latter. This can
streamline the trial process by identifying undisputed facts and
focusing on the actual contentious issues. Rule 2 allows a party to
serve notice on the other party to admit any document. If the
other party fails to admit or deny the documents within the
prescribed time, the documents are deemed admitted unless the
court directs otherwise (R.2-A). Rule 3 specifies the form and
manner in which notices for admission of documents should be
given. This ensures uniformity and clarity in the admission
process. Similar to Rule 2, Rule 4 deals with serving notices to
admit any specific fact or facts mentioned in the notice for the
purposes of the suit. Rule 5 specifies the form and manner in
which notices for admission of facts should be given. Rule 6
enables either party at any stage of the suit to move for
judgment on the admissions which have been made by either
OP(C) No.753/2024 & CRP No.133/2024
side.
10. Rule 6 of Order XII of CPC which is relevant for these
cases reads as under:
"6. Judgment on admissions: (1) Where admissions of fact
have been made either in the pleading or otherwise,
whether orally or in writing, the Court may at any stage of
the suit, either on the application of any party or of its own
motion and without waiting for the determination of any
other question between the parties, make such order or
give such judgment as it may think fit, having regard to
such admissions.
(2) Whenever a judgment is pronounced under sub-rule
(1) a decree shall be drawn up in accordance with the
judgment and the decree shall bear the date on which the
judgment was pronounced."
From the language of Order XII Rule 6, it is clear that where a
claim is admitted, the court has jurisdiction to enter a judgment
for the plaintiff and to pass a decree on the admitted claim. The
object of this Rule is to enable the party to obtain a quick
judgment at least to the extent of the relief to which, according
to the admission of the defendant, the plaintiff is entitled. The
admissions on which the judgment under this Rule may be based
may be either in the pleading or otherwise. The words 'either in
the pleading or otherwise' in Rule 6 clearly indicate that it is open
OP(C) No.753/2024 & CRP No.133/2024
to the Court to base the judgment on admission made by a party
not only in the pleadings or under Rules 1 to 4 of the same order,
but also dehors the pleadings. Such admissions could be made
either orally or in writing. It has been held by the Supreme Court
that the expression 'otherwise' mentioned in sub-rule (1) of Rule
6 of Order XII CPC, is not confined to pleadings but also includes
documents filed along with the pleading or other materials
subsequently brought on the record which are admitted by the
other party (Bhim Rao Baswanth Rao Patil v. Madan Mohan Rao,
AIR 2023 SC 3574).
11. Order XII Rule 6 being an enabling provision, it is
neither mandatory nor peremptory but discretionary. The
legislative intent is clear by using the word 'may' that the said
power is discretionary. It cannot be claimed as a matter of right.
The court, on examination of the facts and circumstances, has to
exercise its judicial discretion, keeping in mind that a judgment
on admission is a judgment without trial which permanently
denies any remedy to the defendant, by way of an appeal on
merits. It is well settled that for an admission to qualify as a valid
admission under Rule 6 of Order XII, it necessarily has to be clear,
OP(C) No.753/2024 & CRP No.133/2024
unequivocal, unambiguous and unconditional. Otherwise, the
Court can refuse to invoke the power of Order XII Rule 6. In short,
discretion should be used only when there is a clear 'admission'
which can be acted upon [Himani Alloys Ltd. v. Tata Steel Ltd.,
2011 (7) SCR 60, Uttam Singh Duggal and Co. Ltd. (supra); Karam
Kapahi (supra) S.M. Asif (supra) and Karan Kapoor (supra)].
12. Coming to the merits of the case, the plaintiff, in the
counter statement to the application under Order XII Rule 6 CPC,
specifically denied the admission alleged to have been made by
him in Ext. A1 (a). This denial was unequivocal. As stated already,
it is trite that unless an admission is specific, clear, and categoric,
enabling the court to draw a decree, the power should not be
exercised to deny the valuable right of a defendant to contest the
claim. The trial court rightly refused to exercise the discretion.
Hence, the impugned order in IA No.6/2024 does not call for any
interference.
On challenge against the maintainability of counter-claim
13. The plaintiff challenged the maintainability of the
counter-claim on the ground that the dispute involved therein is a
commercial dispute of a specified value, and hence, the trial
OP(C) No.753/2024 & CRP No.133/2024
court lacks jurisdiction to entertain and try the counter-claim. The
trial court favoured the said challenge, and the counter-claim,
along with the suit, was ordered to be transferred to the
Commercial Court under Section 15(2) of the CC Act. While the
defendant challenges the finding of the trial court in the
impugned order that the dispute involved in the counter-claim is
a commercial dispute of a specified value, the plaintiff challenges
the direction of the trial court to transfer the counter-claim, along
with the suit under Section 15(2) of the CC Act. It is the
contention of the latter that the trial court, instead of transferring
the counter-claim, ought to have returned it under Order VII Rule
10 of CPC.
14. Section 6 of CC Act, which deals with the jurisdiction of
the Commercial Court, says that 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. A perusal of the above provision, along with the
Preamble, makes it clear that for the Commercial Court to
exercise jurisdiction, the twin test of pecuniary and subject-
OP(C) No.753/2024 & CRP No.133/2024
matter jurisdiction has to be satisfied. To put it succinctly, the CC
Act would be attracted to any action which relates to a
'commercial dispute' of a 'specified value' falling within the ambit
of Section 2(1) (c) and Section 2(1)(i) of the CC Act, respectively.
15. Clause (c) of Section 2(1) defines the 'commercial
dispute' to mean a dispute arising out of different sub-clauses. If
the dispute falls within any of the sub-clauses in Section 2(1)(c),
it becomes a 'commercial dispute'. The sub-clause (vii) refers to
disputes arising out of agreements in relation to immovable
property used exclusively in trade or commerce. The expressions
'arising out of' and 'in relation to immovable property' would
include all matters relating to all agreements in connection with
immovable properties. The immovable property should form the
dominant purpose of the agreement, and the said property
should be used exclusively in trade or commerce. The use of the
property for trade and business is determinative. Properties
which are not exclusively used for trade or commerce would be
excluded. Thus, the dispute arising out of an agreement relating
to immovable property used exclusively in trade or commerce
will qualify to be a commercial dispute within the meaning of
OP(C) No.753/2024 & CRP No.133/2024
Section 2(1)(c)(vii) of the CC Act.
16. The Explanation to Section 2(1)(c) stipulates that a
commercial dispute shall not cease to be a commercial dispute
merely because it involves the recovery of immovable property or
for the realisation of money out of immovable property given as
security or involves any other relief pertaining to immovable
property and would be a commercial dispute as defined in sub-
clause (vii) to clause (c). The expression 'any other relief
pertaining to immovable property' is significant and wide.
Harmonious reading of the Explanation with sub-clause (vii) to
clause (c) would include all disputes arising out of agreements
relating to immovable property when used exclusively in trade or
commerce, be it an action for recovery of immovable property or
realization of money given in the form of security or any other
relief pertaining to immovable property.
17. In the present case, let me examine first whether the
dispute involved in the counter-claim is a commercial dispute
within the meaning of Section 2(1)(c). It is not in dispute that the
jural relationship between the plaintiff and the defendant is that
of a licensor and licensee, and the subject matter of the license is
OP(C) No.753/2024 & CRP No.133/2024
a shop room in a shopping mall. It is also not in dispute that the
plaintiff took the building on license to start a supermarket and
has been conducting the said business under the name and style
'A to Z'. The relief sought in the counter-claim is a mandatory
injunction in respect of the plaintiff's possession over immovable
property, i.e., suit property. In the plaint, there is an unequivocal
assertion that the suit property was being used exclusively for
commercial purposes. It is not denied in the written statement
cum counter-claim. Thus, the immovable property, which is the
subject matter of the license agreement, is exclusively used for
trade or commerce. No doubt, the dispute between the parties
arose out of the said agreement. As stated already, the scope of
expressions 'arising out of' and 'in relation to immovable
property' used in Section 2(1)(c)(vii) of the CC Act would include
all suits in relation to immovable property used for commercial
purposes. The trial court, in the impugned order, found that the
dispute is with regard to an agreement related to immovable
property (plaint schedule property) used exclusively for trade or
commerce and hence would fall under the purview of Section 2(1)
(c)(vii) of the CC Act. Assailing the said finding, the learned
OP(C) No.753/2024 & CRP No.133/2024
counsel for the defendant, Sri. B. Krishnan vehemently argued
that the dispute involved in the suit or counter-claim cannot be
termed as a commercial dispute within the meaning of Section
2(1) (c)(vii) of the CC Act since the immovable property in
question was not being used for trade or commerce at the time of
the execution of the agreement. The learned counsel further
submitted that the expression 'used' in Section 2(1)(c)(vii) must
mean 'actually used' or 'being used' and it cannot be either
'ready for use' or 'to be used'. Though the building was ready for
use at the time of execution of the license agreement, it was
actually not used then, and the business was commenced
subsequently, submitted the counsel. Reliance was placed on the
decision of the Supreme Court in Ambalal Sarabhai Enterprises
Ltd. v. K.S. Infraspace LLP and Another [(2020) 15 SCC 585].
18. A 'dispute' relating to immovable property per se may
not be a commercial dispute. To qualify a 'dispute' to be a
'commercial dispute', it must fall under sub-clause (vii) of Section
2(1)(c) of the CC Act, viz., a dispute arising out of agreements
relating to immovable property used exclusively in trade or
commerce. Thus, the immovable property, which is the subject
OP(C) No.753/2024 & CRP No.133/2024
matter of the agreement between the parties, must be actually
and exclusively used for trade or commerce when the dispute
arises between the parties to qualify the said dispute as a
commercial dispute within the meaning of Section 2(1)(c)(vii). In
other words, the usage of the property for trade or commerce is
relatable to the date of the 'dispute' arising between the parties
and not to the date of execution of the agreement in question for
the applicability of Section 2(1)(c)(vii). It is not necessary that
the property was actually being used for trade or commerce as of
the date of the execution of the agreement.
19. In the plaint, the plaintiff has in detail referred to the
nature of the transaction between him and the defendant. It is
clearly averred that the building was taken on license by the
plaintiff to start a supermarket, and the dispute arose when he
was conducting such a trade therein. The cause of action portion
also refers to the nature of the usage of the immovable property
and the date on which the dispute arose between the parties.
These averments are not controverted in the written statement.
In Ambalal (supra), the immovable property was not used for
trade or commerce as on the date of agreement or on the date of
OP(C) No.753/2024 & CRP No.133/2024
the suit. In the plaint there was no pleading therein also as to the
nature of the land or the purpose for which it was put to use. It
was in that context it was held that the agreement in question
cannot be said to be relating to immovable property used
exclusively for trade or commerce. Thus, the dictum laid down in
Ambalal (supra) cannot be applied to the facts of the present
case. That apart, Section 2(1)(c)(vii) does not contemplate a
trading or commercial activity being carried on in the immovable
property between the parties to the agreement. Nor does it say
that trading or commercial activity must be carried on in the
immovable property by both parties to the agreement. On a plain
reading of Section 2(1)(c)(vii), it is clear that exclusive usage of
the immovable property in trade or commerce by any of the
parties to the agreement is sufficient to fall the dispute within the
ambit of commercial dispute. The defendant constructed the mall
to let it out and earn profit out of it. It is a commercial activity. He
let out a shop room on one of the floors of the mall to the plaintiff
as part of his commercial activity. The plaintiff took the building
from the defendant to start a trade therein, and the dispute arose
while he was actually and exclusively conducting trade therein.
OP(C) No.753/2024 & CRP No.133/2024
Viewed from that angle, it can safely be concluded that the
immovable property was used for trade or commerce not only on
the date of the agreement but on the date of the suit as well.
Hence, I find no reason to interfere with the finding of the trial
court that the dispute involved in the counter-claim is a
commercial dispute within the meaning of Section 2(1)(c) (vii) of
the CC Act.
20. Having found that the dispute involved in the counter-
claim is a commercial dispute within the meaning of Section 2(1)
(c) (vii) of the CC Act, the next crucial question is whether the
said commercial dispute is of a specified value as per Section
2(1)(i) of the CC Act. Undisputedly, unless the twin factors of
'commercial dispute' and 'specified value' are met, a Commercial
Court cannot take cognizance of or try a suit or application placed
before it.
21. Clause (i) of Section 2(1) of the CC Act defines
'Specified Value', in relation to a commercial dispute, as to 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
OP(C) No.753/2024 & CRP No.133/2024
Central Government. The determination of 'specified value' is to
be as per Section 12, which reads as under:
"12. Determination of Specified Value. --(1) The Specified
Value of the subject matter of the commercial dispute in a
suit, appeal or application shall be determined in the
following manner:
(a) where the relief sought in a suit or application is for
recovery of money, the money sought to be recovered in
the suit or application inclusive of interest, if any,
computed up to the date of filing of the suit or application,
as the case may be, shall be taken into account for
determining such Specified Value;
(b) where the relief sought in a suit, appeal or application
relates to movable property or to a right therein, the
market value of the movable property as on the date of
filing of the suit, appeal or application, as the case may be,
shall be taken into account for determining such Specified
Value;
(c) where the relief sought in a suit, appeal or application
relates to immovable property or to a right therein, the
market value of the immovable property, as on the date of
filing of the suit, appeal or application, as the case may be,
shall be taken into account for determining Specified
Value; [and]
(d) where the relief sought in a suit, appeal or application
relates to any other intangible right, the market value of
the said rights as estimated by the plaintiff shall be taken
into account for determining Specified Value;"
The counter-claim was valued for the purpose of a court fee at
`500, and the court fee was paid under Section 27 (c) of the
OP(C) No.753/2024 & CRP No.133/2024
Kerala Court Fees and Suit Valuation Act, 1959 (for short, 'Court
Fees Act'). The trial Court found that as per Section 12 of the CC
Act, specified value of the subject matter of the commercial
dispute in a suit or counter-claim wherein the relief sought relates
to immovable property or to a right therein, is determined upon
the market value of the immovable property as on the date of the
institution of the suit and since the market value of the plaint
schedule property would be more than `10 lakh on a reasonable
estimation, the specified value of the subject matter of the
commercial dispute in the counter-claim is more than the
threshold limit of `3 lakh though the counter-claim was valued for
the purpose of court fee at `500 under Section 27 (c) of the Court
Fees Act. The learned counsel for the defendant assailed the said
finding mainly on two grounds:
(i) Since admittedly the jural relationship between the
plaintiff and the defendant is that of licensor and licensee and the
relief sought for in the counter-claim is to eject the plaintiff from
the plaint schedule building on the revocation of the license right
which is an intangible right, the specified value has to be
determined as per Clause (d) of Section 12 (1) of the CC Act and
OP(C) No.753/2024 & CRP No.133/2024
not under Clause (c);
(ii) Even if it is assumed that the relief sought in the
counter-claim falls under Clause (c) of Section 12 (1), valuation
for the purpose of jurisdiction is to be made under Section 27(c)
of the Court Fees Act where the defendant is entitled to compute
the court fee on the amount at which the relief sought is valued
in the counter-claim or on `500, whichever is higher, whether the
subject matter of the suit/counter-claim has a market value or
not. Reliance was placed on Surendran C.K v. Kunhimoosa (2021
KHC OnLine 7063) and Hindustan Petroleum Corporation, Mumbai
and Another v. Muhammed Illiyas and Others (2022 (6) KHC 68).
22. Section 12 (1) of the CC Act provides criteria for the
determination of the specified value for different kinds of suits.
Clause (a) specifies how the specified value is to be determined
in a suit for recovery of money, Clause (b) deals with how the
specified value is to be determined where the relief sought in the
suit relates to movable property, Clause (c) refers to cases where
the relief sought relates to immovable property, and Clause (d)
provides the methodology for determination of specified value
where the relief sought in the suit relates to any other intangible
OP(C) No.753/2024 & CRP No.133/2024
right. A close reading of the above provisions makes it clear that
while Clause (b) deals with suit in relation to movable property or
to a right therein, whether tangible or intangible, Clause (c) deals
with suit in relation to immovable property or to a right therein,
whether tangible or intangible. Clause (d) specifically deals with
any other intangible right not covered by Clause (b) or (c). Thus,
in a case where relief sought in a suit relates to immovable
property or to a right therein, whether tangible or tangible, the
determination of the specified value must be based on the
market value of the immovable property as on the date of filing of
the suit as provided under Clause 12(1)(c) of the CC Act. The
contention of the learned counsel for the defendant that the
specified value of the counter-claim has to be determined as per
Clause (d) of Section 12 (1) of the CC Act and not under Clause
(c), therefore, must fail.
23. The second contention of the learned counsel for the
defendant that the valuation of the suit/counter-claim has to be in
accordance with the Court Fees Act, even if the relief pertains to
a right in immovable property is mainly based on a decision of a
Single Judge of this court in Surendran (supra) and another
OP(C) No.753/2024 & CRP No.133/2024
decision of a Division Bench of this Court in Hindustan Petroleum
(supra). In Surendran (supra), in a similar factual setting, it was
held that the specified value of a commercial suit is liable to be
computed in accordance with the market value of the immovable
property in such suits where, even as per the Court Fees Act, the
value is to be determined on the basis of the market value of the
property. In respect of suits where the valuation under the Court
Fees Act is based on anything other than the market value of the
immovable property, the valuation under the Court Fees Act
should be the basis for deciding the pecuniary jurisdiction. In
Hindustan Petroleum (supra), it was held that when the valuation
made in accordance with the Court Fees Act is less than the
specified value as stated in Section 2(1)(i) of the CC Act, the suit
will not qualify to be a commercial dispute to be tried by a
commercial Court. The main prayer in the said suit was to declare
the termination of the lease and to direct the defendants to give
vacant possession of the plaint schedule properties to the
plaintiffs. The suit was valued at `58,000/- by the plaintiff, taking
note of the monthly rent of the lease in terms of Section 43 of the
Court Fees Act. The Division Bench found that the plaintiff, being
OP(C) No.753/2024 & CRP No.133/2024
the dominos litis, has chosen the Court having jurisdiction and
determined the valuation of the suit for the purpose of the reliefs
prayed for as per Section 43 of the Court Fees Act. Since the
valuation adopted by the plaintiff is in accordance with Section
43 of the Court Fees Act, the suit will not qualify to be a
commercial dispute to be tried by a commercial Court.
24. The Single Bench as well as the Division Bench of this
court relied on the decisions of the Delhi High Court in Soni Dave
v. M/s.Trans Asian Industries Expositions Private Limited (AIR 2016
Del 186) and of the Karnataka High Court in Fine Footwear Private
Limited v. Skechers USA Inc and Another (2019 SCC OnLine Kar
1024). In Soni Dave (supra), it was held that Section 12 of the CC
Act providing for determination of specified value as defined in
Section 2(1)(i) thereof is not intended to provide for a new mode
of determining the valuation of the suit for the purpose of
jurisdiction and court fees, the said provision has to be read
harmoniously with the Court Fees Act and the Suits Valuation Act
and reading so, the specified value of a suit where the relief
sought relates to immovable property or to a right thereunder
has to be according to the market value of the immovable
OP(C) No.753/2024 & CRP No.133/2024
property only in such suits where the suit as per the Court Fees
Act and/or the Suits Valuation Act has to be valued on the market
value of the property and not where as per the Court Fees Act
and the Suits Valuation Act the valuation of a suit even if for the
relief of recovery of immovable property or a right therein is
required to be anything other than market value. The same view
was taken by the Karnataka High Court in Fine Footwear Pvt. Ltd
(supra). It was held that the valuation of the suit for the purposes
of Court fee cannot be different from the 'specified value' as
contemplated under Section 12 of the CC Act.
25. Going by Section 27(c) of the Court Fees Act, the suit
for mandatory and permanent prohibitory injunction is not
required to be valued at the market value of the property. The
relief sought in the counter-claim is for a mandatory injunction
directing the plaintiff to quit from the plaint schedule, and the
court fee is paid under S.27(c) of the Court Fees Act in
accordance with the estimated value for the relief of mandatory
injunction. Being so, the specified value is way below `3,00,000/-
Thus, if the dictum laid down in Surendran (supra) and Hindustan
Petroleum (supra) that the valuation of a suit involving a
OP(C) No.753/2024 & CRP No.133/2024
commercial dispute has to be in accordance with the Court Fees
Act even if the relief pertains to a right in immovable property is
relied on and applied to the facts of the present case, necessarily
the counter-claim will have to fall outside the jurisdiction of the
Commercial Court. However, the learned Senior counsel for the
plaintiff Sri. P.B. Krishnan submitted that Surendran (supra) and
Hindustan Petroleum (supra) do not lay down the correct law and
are required to be referred to a larger Bench for an authoritative
declaration of law on the question.
26. In 2015, the CC Act was enacted, with the clear intent
of providing specialised procedures for expediting the
adjudication of 'commercial disputes'. The Preamble of the CC Act
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 for matters connected therewith or incidental
thereto."
The term 'specified value' is used in the Preamble itself. A
perusal of the Preamble, as well as Sections 2(1) and 6, would
show that the CC Act would be attracted to any action which
OP(C) No.753/2024 & CRP No.133/2024
relates to a commercial dispute where the specified value of the
subject matter goes beyond the minimum pecuniary limit as
notified. It is pertinent to note that the CC Act not merely
provides for a procedure for adjudication of commercial disputes,
but with the intention of expediting the resolution of commercial
disputes, it has also provided for various other substantive
provisions to be followed in commercial disputes. Such
procedures are case management hearings, truncated trials,
summary judgments, etc. Even in the Statement of Object and
Reasons, the purpose behind the 2018 Amendment is borne out
as under:
"2. The global economic environment has since become
increasingly competitive and to attract business at
international level, India needs to further improve its ranking
in the World Bank 'Doing Business Report' which, inter alia,
considers the dispute resolution environment in the country as
one of the parameters for doing business. Further, the
tremendous economic development has ushered in enormous
commercial activities in the country including foreign direct
investments, public private partnership, etc., which has
prompted initiating legislative measures for speedy settlement
of commercial disputes, widen the scope of the courts to deal
with commercial disputes and facilitate ease of doing
business. Needless to say that early resolution of commercial
disputes of even lesser value creates a positive image
OP(C) No.753/2024 & CRP No.133/2024
amongst the investors about the strong and responsive Indian
legal system. It is, therefore, proposed to amend the
Commercial Courts, Commercial Division and Commercial
Appellate Division of High Courts Act, 2015.
xxx xxx xxx
4. It is proposed to introduce the Commercial Courts,
Commercial Division and Commercial Appellate Division of
High Courts (Amendment) Bill, 2018 to replace the Commercial
Courts, Commercial Division and Commercial Appellate
Division of High Courts (Amendment) Ordinance, 2018, which
inter alia, provides for the following namely:--
(i) to reduce the specified value of commercial disputes from
the existing one crore rupees to three lakh rupees, and to
enable the parties to approach the lowest level of subordinate
courts for speedy resolution of commercial disputes;"
While, initially, prescribing the 'specified value' of commercial
suits at `1 crore, and thereafter, reducing the same to `3,00,000/-
vide the Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts (Amendment) Act,
2018, the legislature was conscious of the value of the dispute
and, thus, it cannot be ignored. Section 12, which sets out the
basis for determining a specified value, is essentially placed in
the statute to subserve the provisions of the CC Act, which are
intended to require suits and applications relating to commercial
disputes of a specified value to be brought before the Commercial
Court. Depriving certain commercial disputes from being
OP(C) No.753/2024 & CRP No.133/2024
adjudicated by Commercial Courts ignoring the specified value
would not be in tune with the objectives of the CC Act. Not
ascribing a 'specified value' in the suit would be contrary to the
scheme of the CC Act, which requires every suit to have a
'specified value' if the subject matter of the suit is a commercial
dispute. As per Section 27(c) of the Court Fees Act, in a suit for
injunction, whether the subject matter of the suit has a market
value or not, the court fee shall be computed on the amount at
which relief sought is valued in the plaint or on rupees five
hundred, whichever is higher. If such valuation is permitted for
the purpose of jurisdiction as well, despite some objective criteria
being available for valuing commercial disputes in the CC Act - it
would defeat the very purpose of the enactment of special
provisions for valuing commercial disputes in the CC Act.
27. From the scheme of the CC Act, it is clear that the
'specified value' of a commercial suit may be different from the
valuation under the Court Fees Act for the purpose of
computation of court fee. Different yardsticks are provided under
each statute for the respective determination of the specified
value for the purpose of jurisdiction and for the valuation of the
OP(C) No.753/2024 & CRP No.133/2024
suit for the purpose of computation of court fee. Surendran
(supra) did not recognize the distinction between the concept of
the specified value for the purpose of jurisdiction and the
valuation of a suit for the purposes of court fees. Section 2(1)(i)
of the CC Act, which defines the specified value, and Section 12,
which essentially sets out the basis for the determination of
specified value, are intended to require suits and applications
relating to commercial disputes of a specified value being placed
before the commercial court. The CC Act confers the jurisdiction
on Commercial Courts to try Commercial disputes only if the
specified value of the subject matter exceeds `3 lakhs. The
'subject matter' of a suit is a facet separate and distinct from the
valuation of suits based on the relief claimed. While the former is
relevant for the purposes of considering whether a suit is liable to
be tried in accordance with the CC Act, the latter is concerned
with the question of court fees as payable in terms of the Court
Fees Act. The intent of Section 12 clearly appears to be restricted
to the determination of the value of the subject matter of the
commercial dispute alone. On the other hand, the provisions
contained in the Court Fees Act are principally concerned with the
OP(C) No.753/2024 & CRP No.133/2024
imposition of court fees. Thus, the value of the suit for the
purpose of the Court fee and the 'specified value' of the suit for
exercising jurisdiction in a commercial dispute relating to
immovable property could be different. Therefore, a distinction
has to be made between the value of the subject matter
determined for the purpose of jurisdiction under the CC Act and
the calculation of Court fees under the Court Fees Act. These
statutes would have to be harmoniously construed i.e., in a
manner so as to further the purpose of the legislation and not to
defeat it. The Court would have to take into consideration the
'specified value' based upon not merely the value of the relief
sought but also the market value of the immovable property
involved in the said dispute. It is possible and permissible that
the valuation of a suit based on the relief claimed for the
purposes of payment of court fee may be less than `3 lakhs
although the specified value might be more than the said
threshold limit. Merely because such a suit is valued at below `3
lakhs based on the relief claimed therein, there would be no legal
justification to treat the said valuation for the purpose of
jurisdiction as well if the specified value determined in terms of
OP(C) No.753/2024 & CRP No.133/2024
Section 12 of the CC Act is above the said limit. The well-settled
legal principle that the plaintiff is dominus litis and has the
discretion to value the suit in the manner he chooses has to be in
the context of the enactment of the CC Act. The principles cannot
be extended or stretched to justify the undervaluation of
commercial disputes to get over the jurisdiction of the
Commercial Courts. Such a practice would not only encourage
forum shopping, but also defeat the very purpose of the CC Act.
The aforementioned distinction between the concept of the
specified value for the purpose of jurisdiction and the valuation of
a suit for the purposes of court fees was not considered by the
Division Bench in Hindustan Petroleum (supra) either.
28. Under the Court Fees Act, suits are classified into
different categories for purposes of court fee and for determining
the jurisdiction of courts. Section 53 of the Court Fees Act
envisages a scheme for determining the jurisdiction in cases
where there is no specific provision in the Court Fees Act
prescribing the mode of valuation of suits for the purpose of
jurisdiction. Section 53, which deals with valuation for
jurisdictional purposes, is in two parts. It reads thus:
OP(C) No.753/2024 & CRP No.133/2024
"53. Suits not otherwise provided for - (1) In a suit as to whose
value for the purpose of determining the jurisdiction of Courts,
specific provision is not otherwise made in this Act or in any
other law, value for that purpose and value for the purpose of
computing the fee payable under this Act shall be the same.
(2) In a suit where fee is payable under this Act at a fixed rate,
the value for the purpose of determining the jurisdiction of
Courts shall be the market value or where it is not possible to
estimate it at a money value such amount as the plaintiff shall
state in the plaint.'
The above provision suggests that the valuation for the purpose
of jurisdiction and for the purpose of court fee need not be the
same. There are cases where a specific provision is made in the
Act regarding the value of the property for the purpose of
jurisdiction (for instance, Ss.23 and 28 of the Act specifically
provide for jurisdictional value). There may be other statutes
which contain such provisions. Those provisions will naturally
govern the mode of valuation for the purpose of jurisdiction of
suits which are governed by such provisions. In cases which do
not attract such provisions prescribing the mode of valuation of
suits for the purpose of jurisdiction, the principle laid down in
Section 53(1) will apply, that is, in such cases the valuation for
the purpose of jurisdiction shall be the same as the valuation for
purpose of computing the court fee payable. There are yet other
OP(C) No.753/2024 & CRP No.133/2024
cases where, irrespective of the value of the subject matter, a
fixed court fee is fixed under the Act (for instance, a suit for
partition). In such cases, under Section 53(2), the value for the
purpose of jurisdiction should ordinarily be the market value of
the property. In cases where it is not possible to estimate the
market value at a monetary value, the plaintiff is given the liberty
to state the monetary value of the relief in the plaint, and a court
fee should be paid on such monetary value. Sub clause (1) which
deals with cases where ad valorem court fee is payable covers
three situations namely:
(a) Where a specific provision is made in the Court
Fees Act relating to valuation for the purpose of
jurisdiction,
(b) Where a provision is made in any other law for the
purpose of jurisdiction,
(c) Where no specific provision is made in the Court
Fees Act for the jurisdictional purpose.
29. To determine the valuation for the purpose of the
jurisdiction of the Court, the first step is to find out whether any
of the specific provisions of the Court Fees Act provides for the
OP(C) No.753/2024 & CRP No.133/2024
valuation for the purpose of the jurisdiction of the Court. If a
specific provision is found therein to determine the valuation for
the purpose of jurisdiction, then the procedure contemplated
under the said provision has to be followed. If no provision is
found therein, to determine the valuation for the purpose of
jurisdiction, the second step is to find out whether any other law
deals with the valuation for the purpose of jurisdiction or confers
the jurisdiction on the Court. If any other law provides for the
valuation of the suit for the purpose of jurisdiction, then the
procedure contemplated under such law is to be followed to
determine the valuation which will have a bearing on the
jurisdiction. If any other law confers the exclusive jurisdiction on
a particular court, then irrespective of valuation for the purpose
of court fee, said court will have the jurisdiction to try the suit. If
the Court Fees Act or provisions of any other law do not govern
the valuation for the purpose of the jurisdiction of the Court or do
not confer the jurisdiction on a particular Court, then by default,
the valuation for the purpose of court fee under the Court Fees
Act will be the valuation for the jurisdiction. Thus, Section 53(1) of
the Court Fees Act engrafts a legal fiction equating valuation for
OP(C) No.753/2024 & CRP No.133/2024
the purpose of computing the fee payable under the Act to the
jurisdiction value only in cases where there is no specific
provision in the Court Fees Act or in any other law regarding the
mode of valuation for the purpose of jurisdiction.
30. There is no specific provision in the Court Fees Act as
to the mode of valuation for purposes of jurisdiction in respect of
suits for injunction. Thus, the next step is to find out whether any
other law provides for valuation or confers the jurisdiction to try
such a suit. I have found that the dispute on hand is a
commercial dispute within the definition of 'Commercial Disputes'
under Section 2(1)(c)(vii) of the CC Act. There is a specific
provision in the CC Act regarding the mode of valuation of the
subject matter of the commercial dispute in a suit, appeal or
application for the purpose of jurisdiction. Section 12 provides as
to how the 'specified value' of the commercial suit is to be
valued. Thus, there is no scope to value the suit under the
provisions of the Court Fees Act as Section 12 of the CC Act
provides the method to determine the 'specified value' which has
the bearing on the jurisdiction of the Court, and Section 53(1) of
the Court Fees Act recognizes such provision 'in any other law'
OP(C) No.753/2024 & CRP No.133/2024
dealing with the jurisdiction of the Court, in situations already
discussed. A similar view was taken by the Karnataka High Court
in M/S BTV Kannada Private Limited v. M/S EAGLESIGHT Media
Private Limited (Civil Revision Petition No.426 OF 2023 (IPR),
decided on 7th day of June, 2024).
31. It is also relevant in this context to refer to Section 21
of the CC Act which reads thus:
"21. Act to have overriding effect: Save as otherwise
provided, the provisions of this Act shall have effect,
notwithstanding anything inconsistent therewith contained
in any other law for the time being in force or in any
instrument having effect by virtue of any law for the time
being in force other than this Act".
As seen above, Section 21 has an overriding effect over anything
inconsistent with the provisions of the CC Act, except as
otherwise provided. Hence, it cannot be said that the provisions
of the Court Fees Act prevail over Section 12 of the CC Act when
it comes to the valuation of the subject matter for the purpose of
the jurisdiction of the Court, in a commercial dispute, in a
situation where any other law provides for the valuation of the
suit for the purpose of jurisdiction or jurisdiction irrespective of
valuation. Surendran (supra) and Hindustan Petroleum (supra)
OP(C) No.753/2024 & CRP No.133/2024
did not take into account the interplay between Section 53(1) of
the Court Fees Act and Section 12 of the CC Act while finding that
the valuation of the subject matter of the commercial dispute in a
suit has to be in accordance with the Court Fees Act even if the
relief pertains to a right in immovable property.
32. The dictum laid down in Surendran (supra) that the
specified value of a commercial dispute in a suit is liable to be
computed in accordance with the market value of the immovable
property only in such suits where, even as per the Court Fees Act,
the value is to be determined on the basis of the market value of
the property and the valuation of the subject matter of the
commercial dispute has to be in accordance with the Court Fees
Act in respect of suits where the valuation under the Court Fees
Act is based on anything other than the market value of the
immovable property and in Hindustan Petroleum (supra), that
when the valuation made in accordance with the Court Fees Act
is less than the specified value as stated in Section 2(1)(i) of the
CC Act, the suit will not qualify to be a commercial dispute to be
tried by a commercial Court do not appear to be in consonance
with the object and scheme of the CC Act and statutory
OP(C) No.753/2024 & CRP No.133/2024
provisions such Sections 2(1), 6, 12 of the CC Act and Section
53(1) of the Court Fees Act. Therefore, I agree with the
submission of the learned Senior counsel for the plaintiff, Sri. P.B.
Krishnan that the law declared in Surendran (supra) and
Hindustan Petroleum (supra) need to be reconsidered.
33. The challenge in the Original Petition is against the
direction of the trial court in the impugned order to transfer the
counter-claim, along with the suit under Section 15(2) of the CC
Act. Section 15(2) contemplates the transfer of suits and
applications relating to a commercial dispute of a specified value
pending on the date of commencement of the Act and not a
transfer of suit filed after coming into force of the Act. Once the
suit is accepted on file, the only option available to the court is to
return the plaint under Order VII Rule 10 of CPC. Therefore, the
trial court ought to have returned the suit and the counter-claim
under Order VII Rule 10 of CPC instead of transferring the same
under Section 15(2) of the CC Act.
34. The learned counsel for the defendant, Sri.B.Krishnan
submitted that crores of rupees are now due by the plaintiff to
the defendant towards the licence fee, and there may be a
OP(C) No.753/2024 & CRP No.133/2024
direction to the plaintiff to make payment of the admitted arrears
and also to continue to pay the licence fee hereafter every month
without fail. There is no dispute between the parties regarding
their jural relationship and the rate of license fee. Admittedly, the
licence fee per month at present is `3,95,000/-. In the written
statement, the defendant has contended that the plaintiff has
defaulted on the payment of the licence fee and arrears as of
March 2023 would come to `1,34,07,140/-. However, the plaintiff
has disputed the said figure. At any rate, the plaintiff is bound to
pay the licence fee from the date of the suit which is not in
dispute. The learned counsel for the defendant relied on the
decision of the Supreme Court in Bijay Kumar Manish Kumar Huf v.
Ashwin Bhanulal Desai [(2024) SCC OnLine SC 980] wherein in a
dispute between the landlord and tenant, the Supreme Court
directed the tenant to make payment of the admitted arrears of
rent during the pendency of the S.L.P. holding that such a
direction was necessary to ensure complete justice between the
parties. It was observed in the said decision that the court cannot
lose sight of the fact that the very purpose for which a property is
rented out is to ensure that the landlord by way of the property is
OP(C) No.753/2024 & CRP No.133/2024
able to secure some income and if the income remains static over
a long period of time or in certain cases yields no income, then
such a landlord would be within his rights, subject of course, to
the agreement with their tenant, to be aggrieved by the same.
The learned senior counsel for the plaintiff has fairly conceded
that the plaintiff is prepared to pay the admitted arrears of the
licence fee. Therefore, the direction sought by the learned
counsel for the defendant can be granted.
The upshot of the above discussions is as follows:
(i) The dismissal of IA No.6/2024 by the trial court is
confirmed.
(ii) The finding of the trial court in the impugned order
that the dispute involved in the counter-claim is a commercial
dispute within the meaning of Section 2(1)(c) (vii) is upheld.
(iii) The plaintiff is directed to pay the arrears of the license
fee from the date of the suit till 30/09/2024 after deducting the
payment already made, if any, to the defendant within three
months from today. The plaintiff shall continue to pay the licence
fee without fail every month with effect from 01/10/2024 till the
final disposal of the suit and counter-claim.
OP(C) No.753/2024 & CRP No.133/2024
(iv) The Registry is directed to place the papers before the
Hon'ble Chief Justice for being placed before a Bench of two
Judges for an authoritative pronouncement on the question
involved.
(v) The final decision on the issue of maintainability of the
counter-claim shall be taken after order is passed on reference.
Sd/-
DR. KAUSER EDAPPAGATH
JUDGE
Rp
25-09-2024 /True Copy/ Assistant Registrar
