Kerala High Court
Teliz Realtors vs Jtl Projects Private Limited on 24 March, 2025
Author: K.Babu
Bench: K. Babu
O.P.(C).No.598 of 2021
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE K. BABU
MONDAY, THE 24TH DAY OF MARCH 2025 / 3RD CHAITHRA, 1947
OP(C) NO. 598 OF 2021
AGAINST THE ORDER/JUDGMENT DATED IN OS NO.380 OF
2010 OF ASSISTANT SESSIONS COURT/II ADDITIONAL SUB
COURT,ERNAKULAM
PETITIONER/S:
1 TELIZ REALTORS
HAVING IT'S OFFICE AT NO.26- M.G.NAGAR,
PEROORKADA, THIRUVANANTHAPURAM, REP.BY ITS
MANAGING PARTNER PALLITHOTTATHU EASO THOMAS
2 PALLITHOTTATHU EASO THOMAS @ P.E.THOMAS
AGED 62 YEARS
S/O.P.T.EASO, RESIDING AT MGN 26, M.G.NAGAR,
PEROORKADA, THIRUVANANTHAPURAM
3 SHEILA ELIZEBETH THOMAS
AGED 61 YEARS
W/O.PALLITHOTTATHUEASO THOMAS, RESIDING AT MGN
26, M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM
4 DR. GEORGE MATHEW,
AGED 65 YEARS
S/O.LATE REV. A.C.MATHEW, HOUSE NO.6, GREEN
VALLEY VILLAS, VAZHAKKALA, B.M.C. P.O.,
ERNAKULAM DISTRICT NOW AT 40, BROAD FIELDS
AVENUE, EDGWARE, MIDDLESEX, UNITED KINGDOM
O.P.(C).No.598 of 2021
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REP.BY HIS POWER OF ATTORNEY HOLDER
PALLITHOTTATHU EASO THOMAS @ P.E.THOMAS, AGED 62
YEARS, S/O.P.T.EASO, RESIDING AT MGN 26,
M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM
5 DR. NIRMALA GEORGE MATHEW
AGED 64 YEARS
W/O.DR. GEORGE MATHEW, HOUSE NO.6, GREEN VALLEY
VILLAS, VAZHAKKALA, B.M.C. P.O., ERNAKULAM
DISTRICT NOW AT 40, BROAD FIELDS AVENUE,
EDGWARE, MIDDLESEX, UNITED KINGDOM REP.BY HIS
POWER OF ATTORNEY HOLDER PALLITHOTTATHU EASO
THOMAS @ P.E.THOMAS, AGED 62 YEARS,
S/O.P.T.EASO, RESIDING AT MGN 26, M.G.NAGAR,
PEROORKADA, THIRUVANANTHAPURAM
BY ADVS.
THOMAS ABRAHAM
ANIL K.NAIR
MERCIAMMA MATHEW
ASWIN.P.JOHN
R.ANANTHAPADMANABAN
THAYYIB SHA P.S.
RESPONDENT/S:
1 JTL PROJECTS PRIVATE LIMITED
33/2346-B, GEETHANJALI ROAD, VYTILA (P.O.),
ERNAKULAM KOCHI, REP.BY ITS MANAGING DIRECTOR
MRS. LALY JOSEPH.
2 SMT. LALY JOSEPH
AGED 46 YEARS
W/O.J.JOSEPH, MANAGING DIRECTOR M/S. JTL
PROJECTS PRIVATE LIMITED RESIDING AT 33/2346-B,
GEETHANJALI ROAD, VYTILA (P.O.), ERNAKULAM KOCHI
O.P.(C).No.598 of 2021
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19
3 V.J.JOSEPH
AGED 48 YEARS
S/O.JOSE, RESIDING AT C.C.NO. 33/2346-B,
GEETHANJALI ROAD, VYTILA (P.O.), ERNAKULAM KOCHI
19
BY ADV SRI.BIJU ABRAHAM
THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON
24.03.2025, THE COURT ON THE SAME DAY DELIVERED THE
FOLLOWING:
O.P.(C).No.598 of 2021
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"C.R."
K.BABU, J.
-------------------------------------
O.P.(C).No.598 of 2021
----------------------------------------
Dated this the 24th day of March, 2025
JUDGMENT
The petitioners, plaintiffs in a suit for recovery of
money, challenge Ext.P4 judgment of the trial Court
transferring the suit to the Commercial Court under
Section 15 of the Commercial Courts Act. Respondents
are the defendants. The plaintiffs instituted O.S.No.380
of 2010 before the Subordinate Judge's Court,
Ernakulam, seeking recovery of Rs.3,61,73,477/-.
Plaintiff No.1 is M/s Teliz Realtors, a partnership firm,
having its office at Thiruvananthapuram represented by
its Managing Partner. Defendant No.1 is M/s JTL Projects
Pvt. Ltd. Ernakulam, represented by its Managing
Director.
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2. The plaintiffs pleaded that defendant Nos. 2 and
3 formed a sham company and defrauded the plaintiffs by
giving false promises and obtained hefty amounts.
Defendant Nos. 2 and 3 declared through published
materials that the intention behind the company was to
make a housing project. According to the plaintiffs, the
defendants, with fraudulent and dishonest intention to
deceive them, made the plaintiffs to transfer large sums
of money to their accounts. The plaintiffs pleaded that the
defendants, while receiving the amount, fully knew that
the same were being received without the intention to
make or commence any project. According to the
plaintiffs, while receiving money and promising to
transfer landed properties, the defendants even furnished
false survey numbers and offered to transfer properties
over which they had no right. In those transactions, the
plaintiffs and the defendants entered into an agreement,
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which, according to the plaintiffs, was caused by undue
influence, fraud, and misrepresentation. The plaintiffs
pleaded that though the defendants represented that they
intended to engage in construction and infrastructure
activities, they had not even obtained any licence to do so
and falsely induced the plaintiffs to transfer amounts,
making them believe that the construction project would
be established. Though both the plaintiffs and defendants
entered into an agreement, it cannot be termed as a joint
venture agreement in the sense that the defendants never
intended to honour the terms in the agreement.
3. The defendants resisted the pleadings in the
plaint, inter alia, contending that the transaction alleged
is a commercial dispute. The question of maintainability
of the suit before the Civil Court was sought to be
decided as a preliminary issue. The trial Court held that
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the transactions pleaded in the plaint fall under Sections
2(c)(vi) and 2(c)(xi) of the Commercial Courts Act.
4. I have heard the learned counsel for the
petitioners and the learned counsel for the respondents.
5. The learned counsel for the petitioners
submitted that the defendants fraudulently induced the
plaintiffs to transfer money, highlighting properties over
which they have no right or ownership. The learned
counsel submitted that a fraudulent document resembling
the ingredients of a 'joint venture' was created at the
instance of the defendants, which never came into effect.
The learned counsel submitted that no construction was
ever done. Therefore, the transaction would not come
within the ambit of 'a construction and infrastructure
contract' as defined in Section 2(c)(vi) of the Commercial
Courts Act. The learned counsel submitted that this is a
case in which the defendants embezzled large sums of
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money from the plaintiffs by playing fraud. The learned
counsel relied on IHHR Hospitality (Andhra) Pvt Ltd.
v. Mrs. Seema Swami & Ors. [2022 SCC OnLine Del
3635].
6. The learned counsel for the respondents
submitted that the pleadings in the plaint revealed that
the transactionS alleged come under 'Construction and
Infrastructure Contracts' based on a joint venture
agreement. Therefore, the Commercial Court alone has
the jurisdiction to consider the matter.
7. The object of the Commercial Courts Act is to
provide means and ways for expeditious disposal of
commercial disputes. If commercial disputes take a long
time to resolve, the foreign investors will also be
detracted and will avoid investments in India. So also,
within our country, the usual delay in the disposal of
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commercial disputes in the Courts of law has adversely
affected the economy.
8. The Statement of Objects and Reasons to the
Commercial Courts Act, 2015, provides for the speedy
disposal of high-value commercial disputes so as to create
a positive image in the minds of the investor world about
the independent and responsive Indian Legal System.
Section 2(1)(c) of the Commercial Courts Act defines
'commercial dispute' and provides a special procedure for
the classes of litigations coming under it.
9. The word 'commercial dispute' is of wide
import. However, every commercial dispute cannot be
considered as a commercial dispute necessitating
invocation of Section 15 of the Act unless such disputes
come within the purview of the definition of 'commercial
dispute as provided in Section 2(1)(c) of the Act. In
Lady Moon Towers Pvt. Ltd v. Mahindra Investment
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Advisors Pvt. Ltd [2021 SCC Online Cal 4240 :
MANUI/WB/0547/2021], the Calcutta High Court
observed that the definition in Section 2(1)(c) of the Act
contemplates a "commercial dispute" and not any other
form of dispute where the basis of disagreement between
the parties has a non-commercial cause. The Calcutta
High Court held that the framers of the Statute
emphasised the commercial flavour of the transaction as
opposed to agreements between the parties without a
commercial purpose. A commercial purpose would
generally mean a transaction by which a person's
commercial or economic interests may be advanced and
would result in an economic benefit to that person. It
would not include an agreement where profit-making is
an incidental outcome of the transaction or may happen
by accident. The Calcutta High Court further observed
that in terms of Section 2(1)(c) ordinary transactions of
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merchants, bankers, financiers and traders such as those
relating to "mercantile documents", imply ordinary
transactions of the named persons and the "mercantile
documents" and which indicates that all transactions
between the specified classes of persons will not result in
a commercial dispute where the transaction does not
relate to mercantile documents.
10. In Kailash Devi Khanna vs. DD Global
Capital Ltd. [2019 SCC OnLine Del 9954] the Delhi High
Court held that all suits for recovery of monies cannot be
brought under Section 2 of the Act where the suit is not
based on any transaction relating to mercantile
documents. In Bharat Huddanna Shetty vs. Ahuja
Properties & Developers [2021 SCC OnLine Bom
13984] the Bombay High Court held that the dispute in a
suit cannot be treated as a commercial dispute simply on
the mandate that the transaction had occurred between
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merchants, bankers, financiers and traders. In R. Kumar
vs. T.A.S Jawahar Ayya [2020 SCC Onlinr Madras 28051
: MANU/TN/4159/2020] the Madras High Court held that
where the plaintiffs did not transact in the capacity of
financiers, the dispute was not a "commercial dispute".
11. In Ambalal Sarabhai Enterprises Ltd. vs.
K.S. Infraspace LLP and another [(2020) 15 SCC 585],
the Supreme Court observed thus:-
"13........Having taken note of the submission we feel
that the very purpose for which the CC Act of 2015 has
been enacted would be defeated if every other suit merely
because it is filed before the Commercial Court is
entertained. This is for the reason that the suits which are
not actually relating to commercial dispute but being filed
merely because of the high value and with the intention of
seeking early disposal would only clog the system and
block the way for the genuine commercial disputes which
may have to be entertained by the Commercial Courts as
intended by the lawmakers. In commercial disputes as
defined a special procedure is provided for a class of
litigation and a strict procedure will have to be followed
to entertain only that class of litigation in that
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jurisdiction. If the same is strictly interpreted it is not as
if those excluded will be non-suited without any remedy.
The excluded class of litigation will in any event be
entertained in the ordinary civil courts wherein the
remedy has always existed." {Emphasis supplied]
12. The relevant findings in the impugned order
reads thus:-
"9.In this case, the basic document to which the
dispute arose is the joint venture agreement between the
plaintiffs 1 to 3 and the defendants. The above referred
provisions under the commercial Court Acts clearly
shows that, the dispute arise out of a joint venture
agreement is a commercial dispute u/s. 2(c) (xi). The said
joint venture agreement was for the purchase of land and
construction connected to a villa project, hence it is also
a commercial dispute under section 2(c)(vi) of the
Commercial Court Act. The plaintiff had invested money
based on the above joint venture agreement dated
15.6.2007. Though the plaintiffs have alleged fraud
against the defendants, he filed the suit for recovery of
money which was invested by them to fulfill the joint
venture agreement. The joint venture agreement was for
the purpose of the purchase of immovable properties and
the construction and development of JTL Villa project.
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So, it is crystal clear that the dispute arose in this case is
comes u/s.2(c) (vi) and 2 (c) (xi) and explanation 'a' of the
Commercial Disputes Act. Hence this Court has no
jurisdiction, and the case is to be transferred u/s.15 of
the Commercial Disputes Act. As per Section 15 (2) of
the Commercial Court Act "All suits and applications
including applications under the Arbitration and
Conciliation Act, 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." Though the suit is of the year 2010,
and the Act is come into effect in the year 2015, it is
applicable to all the pending cases at the time when the
Act came into force. Hence this case is also comes under
the purview of Section 15. So, this case is transferred to
commercial court (Principal Sub Court, Ernakulam).
Office of the Court is directed to transmit all the records
of the case with duly indexed list to that Court forthwith.
Parties are directed to appear before that court on
02.11.2020." (Sic)
13. It is advantageous to extract Section 2(c)(vi)
and 2(c)(xi) of the Act.
2...Definitions
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xxxx
(c) "commercial dispute" means a dispute arising out of-
xxx
(vi) construction and infrastructure contracts, including
tenders;
xxxx
(xi) joint venture agreements;
14. The trial Court held that since the dispute arose
out of a joint venture agreement and that it relates to a
construction and infrastructure contract, the dispute
comes under the definition of 'commercial dispute' under
the commercial Courts Act. The learned author in Corpus
Juris Secundum Volume 48A Page 391 explains the 'joint
venture' as follows:-
"A joint venture refers to an association of persons with
intent by way of contract to engage in and carry out a
business venture for joint profit for which they combine
their property, money, effects, skill, knowledge etc. "
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15. A joint venture highlights the intention of the
participating persons to join together without any
vitiating elements to participate in the joint business.
The question is when one person induces another with
malafide intention by way of undue influence and fraud
making him believe that he has an intention to commence
a joint business will take in the colour of joint venture.
The intention of the parties to genuinely participate in the
business joint activity is a necessary ingredient to form it
a joint venture. When one of the parties plays fraud on
another without any intention to commence any business
to embezzle money from another and make the other join
in an agreement which is sham in nature, it cannot have
the colour of a joint venture. In the present case, the
defendants never intended to commence any joint venture
business. As per the pleadings in the plaint, their only
intention was to embezzle money from the plaintiffs.
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16. Therefore, at any rate, based on the pleadings,
it cannot be concluded that there was a joint venture
agreement between the plaintiffs and defendants to bring
it within the meaning of joint venture agreement in
Section 2(c)(xi). The trial Court further held that the
contract entered into between the parties relates to
construction and infrastructure contracts. The specific
case of the plaintiffs is that the defendants never
intended to engage in any construction activity. They
even showed the properties over which they have no right
as their properties so as to induce the plaintiffs to deliver
money on the belief that the defendants intended to start
a construction project. Therefore, going by the pleadings,
it cannot be said that the agreement between the parties
is a construction and infrastructure contract.
17. In IHHR Hospitality (Andhra) Pvt Ltd.
(Supra), the Delhi High Court considered a similar
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question and held that if the plaintiff seeks recovery of
money which the defendant allegedly embezzled cannot
be termed as a "business transaction" or a "transaction
arising in the course of business".
18. In Curtis v. Oldfied Ltd. [(1925) 9 Tax Case
319], the question came before the Court was whether a
loss on account of embezzlement can be considered as a
loss during the trade. In that case, the Court held that
when a defalcation or embezzlement happens, it can be
treated as a trade loss when such diversion of money is
done unauthorisedly by an employee and he takes it out
of the ambit of the trade income. The Court held that if,
owing to the negligence or dishonesty of any subordinate,
some of the receipts of the business do not find their way
or some of the bills are not collected or some such similar
acts are performed, which may be an expense connected
with or arising out of the trade, it would be a "trade
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income" in its true sense. However, where the earnings
of a company are duly credited to the accounts of the
company and thereafter, the assets/money of the company
are taken out by somebody dehors the trade by its
position, it cannot be said that any loss which so occurs
can be termed as "a trade loss" or arising "in the course
of business".
19. In Ramaswami Chettiar and others v.
Commissioner of Income Tax [1930 SCC Online Mad
225], the Madras High Court considered the question of
whether theft of money can be termed as money lost in
the course of business. The Court held that to establish a
loss, two conditions must be satisfied: (1) it must be a loss
on the part of the stock and trade in the business, and (2)
it must be a loss on such a kind as is incidental to the
business. In that case, the company was in the business
of lending money but money had been lost through theft.
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The Court held that theft of money cannot be termed as
money lost in the course of business and as incidental to
it; therefore, any such loss on account of theft cannot be
considered to be in the ordinary course of business
transaction.
20. Applying the principles referred to above, the
acts of the defendants were not in the nature of
commercial transaction but in the nature of fraudulent
transactions. The pleadings in the plaint go to show that
the suit is for recovery of the amounts which were
allegedly embezzled by the defendants, which cannot be
termed as a business transaction or a transaction arising
out of a commercial dispute as defined in Section 2(1)(c)
of the Commercial Courts Act. Therefore, the Civil Court
has jurisdiction to deal with the matter. The judgment
transferring the suit under Section 15(2) of the
Commercial Courts Act is liable to be set aside.
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21. In the result, the Original Petition is allowed.
Ext.P4 judgment dated 07.10.2020 passed by the
Subordinate Judge's Court, Ernakulam, stands set aside.
It is submitted that the evidence in the case is over
and the case is posted for arguments. The transfer was
effected at the time when the case was posted for
arguments. Therefore, there will be a direction to the
Trial Court to consider and dispose of the matter within a
period of one month from the date of production of a
certified copy of the judgment.
Sd/-
K.BABU, JUDGE
kkj
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APPENDIX OF OP(C) 598/2021
PETITIONER EXHIBITS
EXHIBIT P9 A TRUE COPY OF IA NO.1957 OF 2012
SEEKING DIRECTION TO ANSWER THE
INTERROGATORIES IN OS NO.380 OF 2010
ALONG WITH INTERROGATORIES
EXHIBIT P10 THE TRUE COPY OF THE FIR NO.987 OF
2015 OF HILL PALACE POLICE STATION
EXHIBIT P11 THE TRUE COPY OF THE JUDGMENT DATED
20/02/2024 IN CRL.REV.PET NO.1217 OF
EXHIBIT P12 THE TRUE COPY OF THE JUDGMENT DATED
02/09/2024 IN CRL.RC NO.2 OF 2024
Annexure 1 True copy of the judgment (2021) KHC
6296, Janakiammal R. and Others v. S.
K. Kumarasamy (deceased)
Annexure 2 True copy of the decision of the
Hon'ble Delhi High Court in IHHR
Hospitality Pvt. Ltd. vs Mrs. Seema
Swami and Others
Annexure 3 True copy of the judgment of the
Hon'ble Supreme Court in Ayyasamy A.
v. A. Paramasivam and Others reported
in 2016 (10) SCC 386
Annexure 4 The relevant pages of Rule laid down
by the House of Lords in Derry v. Peek
reported in (1889), App.Ca.337.
EXHIBIT P7 THE TRUE COPY OF THE SALE AGREEMENT
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EXECUTED BY THE 2ND DEFENDANT IN
FAVOUR OF 2ND AND 3RD PLAINTIFFS TO
SELL 1 ACRE OF PROPERTY COMPRISED IN
SY NO.707 AND 294/1 OF THEKKUMBAGAM
VILLAGE.
EXHIBIT P1 THE TRUE COPY OF THE AMENDED PLAINT IN
EXHIBIT P8 THE TRUE COPY OF THE AFFIDAVIT IN
ANSWER TO THE INTERROGATORIES FILED BY
THE 2ND DEFENDANT IN IA 1957 OF 2012
EXHIBIT P2 THE TRUE COPY OF THE AMENDED WRITTEN
STATEMENT FILED ON BEHALF OF THE
DEFENDANTS 1 AND 3
EXHIBIT P2 (A) THE TRUE COPY OF THE AMENDED WRITTEN
STATEMENT FILED BY THE 2ND DEFENDANT.
EXHIBIT P2 (B) THE TRUE COPY OF THE AMENDED WRITTEN
STATEMENT FILED BY THE DEFENDANTS.
EXHIBIT P3 THE TRUE COPY OF THE ORDERS DATED
EXHIBIT P4 THE TRUE COPY OF THE JUDGMENT DATED
7.10.2020 IN O.S.NO.380 OF 2010 OF THE
2ND ADDITIONAL SUB COURT, ERNAKULAM.
EXHIBIT P5 THE COPY OF THE MEMORANDUM OF
AGREEMENT DATED 15.6.2007
EXHIBIT P6 THE TRUE COPY OF THE SALE AGREEMENT
DATED 10.9.2008 EXECUTED BY THE 2ND
DEFENDANT ON 10.9.2008 IN FAVOUR OF
THE 4TH AND 5TH PLAINTIFFS AGREEING TO
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SELL LANDED PROPERTIES HAVING AN
EXTENT OF 30 CENTS COMPRISED IN SURVEY
NO.707 OF THEKKUMBAGAM VILLAGE.
