The Single Bench of the Delhi High Court in the case of Raj Kumar Gupta & Anr. vs Jagan Nath Bajaj & Ors. consisting of Justice Amit Bansal held that Construction Agreements entered into between parties is covered under the category of ‘Construction and infrastructure contracts’ u/s 2 (1) (vi) of the Commercial Courts Act.
Facts
Interim applications were filed on behalf of the defendants no.2, 3, 4 and 5 seeking rejection of the plaint under O7R11 CPC.
Contentions Made
Defendants: It was contended that the plaint it did not fall within the category of a commercial dispute u/s 2(1)(c) of the Commercial Courts Act, 2015 (“the Act”) as the property in question was a residential property. Moreover, the plaintiffs did not take recourse to pre-institution mediation u/s 12A (1) of the Act. They also contended that Plaintiffs have not valued the suit properly for the purposes of Court Fees and jurisdiction and that the Property Development Agreement did not bear the signatures of all the parties and is not registered document.
Appellants: It was contended that a Property Development Agreement between the parties which involves re-development/ reconstruction is covered u/s 2 (1) (vi) of the Act. Reliance was placed on Blue Nile Developers (P) Ltd. v. Movva Chandra Sekhar. It was also contended that in view of the urgent interim reliefs sought in the present suit, Section 12A of the Act would not be applicable. It was further contended that the suit has been correctly valued and that the aforesaid Property Development Agreement is not required to be registered.
Observations of the Court
The Bench noted that in Blue Nile Developers (P) Ltd. v. Movva Chandra Sekhar it was held that construction agreements would be covered under the category of ‘Construction and infrastructure contracts’ and would fall u/s 2 (1) (vi) of the Act and therefore, held the suit to be maintainable as a commercial suit. It concurred with the abovesaid view and noted that ‘construction and infrastructure contracts’ phrase would include both ‘construction contracts’ as well as ‘infrastructure contracts’ and cannot be given a restrictive meaning to include only infrastructure contracts involving construction.
It further noted that the present agreement is in the nature of a collaboration agreement, which would also qualify as a ‘joint venture’ agreement u/s 2 (1) (c) (xi) of the Act.
In this case the plaintiff sought specific performance of the Property Development Agreement, in terms of which the plaintiffs were to construct the property. The plaintiffs, being the builders were required to pay Rs.2,15,00,000/- crores to the defendants, being the owners of the property and carry out construction on the suit property at their own expense. In lieu thereof, the plaintiffs would be entitled to two floors of the building to be constructed and the remaining floors are to go to the defendants. So, it opined that since construction is the core of the aforesaid agreement, the dicta in Blue Nile Developers would be squarely applicable.
It further noted that the contention of the defendants that the suit should have been valued on the basis of market value of the two floors of the property that would come to the share of the plaintiffs was untenable as the said floors were yet to come into existence.
Judgment
The subject matter of the suit was specific performance of the said agreement. Therefore, it concluded that the same would be covered under the definition of ‘commercial dispute’ both u/s 2(1) (c) (vi) and 2(1) (c) (xi) of the Act. Not finding any merit in the aforesaid applications, the same were dismissed accordingly.
Case: Raj Kumar Gupta & Anr. vs Jagan Nath Bajaj & Ors.
Citation: CS(COMM) 374/2020
Bench: Justice Amit Bansal
Decided on: 19th September 2022
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