In a recent judgement by the Supreme Court of India, a case involving a dispute over the jurisdiction related to land use has been discussed. The case delves into the interpretation of the Commercial Courts Act, shedding light on the nuances of classifying disputes as commercial under the Act. The implications of this judgement are crucial for understanding the parameters within which commercial disputes are to be adjudicated. Stay tuned for more insights into the case and its legal ramifications.
Facts
- The appellant filed a Commercial Civil Suit No 41/2018 to enforce the execution of a Mortgage Deed.
- A Mortgage Deed dated 03.11.2017 was executed but not registered.
- Appellant executed an agreement to sell dated 14.02.2012 in favor of Respondent No 2 for the land described in the agreement.
- Memorandum of Understanding dated 03.11.2017 was entered into between the parties.
- Respondent No 2 transferred all rights under the agreement to sell to Respondent No 1.
- Respondent No 1 was to purchase the lands subject to the agreement from the appellant.
- Respondents contended that the suit was not maintainable as a commercial dispute under the Commercial Courts Act, 2015.
- Respondents filed an application under Order VII Rule 10 seeking to return the plaint to the correct court of jurisdiction.
- Appellant challenged the order dated 01.03.2019 before the Court in this appeal.
- RLC failed to provide satisfactory explanation for the discrepancies in their records
- The Court noted that RLC had not produced any documentary evidence to support their contentions
- RLC’s claim of compliance with statutory provisions was found to be unsubstantiated
- In the absence of credible evidence, the Court held RLC accountable for their non-compliance with regulations
Also Read: Solapur Municipal Corporation vs. Majarewadi Gram Panchayat Employees
Issue
- The main issue to be determined is whether the transaction between the parties can be considered a ‘commercial dispute’ under the CC Act, 2015.
- Section 2(1)(c)(vii) of the CC Act, 2015 is crucial in determining the nature of the dispute.
- The classification of the dispute as commercial will impact whether the Commercial Court has jurisdiction to entertain the suit.
Arguments
- The appellant’s senior advocate argues that a strict interpretation like in taxing statutes is not appropriate in a jurisdiction-related issue.
- The central question is whether the immovable property involved in the sale transaction for which a Mortgage Deed is sought can be considered as exclusively used in trade or commerce.
- The appellant’s advocate contends that the land in question was utilized for an industry, acquired for that purpose, which is now being developed by the respondent.
- In contrast, the respondent’s senior advocate argues that the defunct status of the company means the land is not currently used for trade or commerce.
- The suit’s maintainability before the Commercial Court hinges on whether the land was being used for trade or commerce at the time of the transaction.
- The nature of the dispute and jurisdiction to hear it depend on the specifics detailed in the plaint of the civil suit.
- The plaintiff describes the land in detail, referring to survey numbers and the Memorandum of Understanding outlining responsibilities regarding land use change.
- A High Court decision emphasizes that ‘used’ in commercial disputes must mean ‘actually used’ or ‘being used’ to fall under Commercial Court jurisdiction.
- The original plaintiff in the Commercial Court case did not rely on certain clauses of the Commercial Courts Act, clarifying the scope of jurisdiction.
- The enactment of the Commercial Courts Act aimed at expeditious resolution of high-value commercial disputes to boost investor confidence in the Indian Legal System.
- The original plaintiff did not argue that the case falls within section 2(c)(vii) of the Commercial Courts Act before the learned Commercial Court.
- The court decided to consider whether the dispute between the parties can be categorized as a ‘commercial dispute’ as per the definition in section 2(c) of the Commercial Courts Act.
- Despite no initial argument for section 2(c)(vii), the court assessed the case on its merits within the context of commercial dispute classification.
Also Read: Jagdishchandra v. Joint Charity Commissioner & Ors.
Analysis
- The High Court considered various decisions while deciding the case.
- The word ‘used’ in the judgement was argued to have a narrow meaning.
- Disputes related to immovable property used exclusively in trade or commerce are classified as commercial disputes for Commercial Courts.
- The plaintiff filed for specific performance of an agreement due to the defendant’s failure to develop plots.
- The absence of references to the nature of the land indicated by the plaint affects the jurisdiction of the Commercial Court.
- Legal interpretations on the ‘used’ in the relevant provision were referred to for clarity.
- The dispute in question should constitute a commercial dispute as per the legal interpretations.
- The importance of ‘immovable property used exclusively in trade or commerce’ was highlighted in the legal analysis.
- The literal and strict interpretation must be applied while interpreting statutes.
- The plaintiff’s lack of specific references regarding the immovable property’s use affected the jurisdiction of the Commercial Court.
- The High Court found fault in the Commercial Court’s decision regarding the property not being used for trade or commerce.
- The agreement between parties did not exclusively relate to immovable property used in trade or commerce.
- Sec.2(1) of the Act provides definitions for terms used in the Act unless the context requires otherwise.
- The term ‘commercial dispute’ is defined under Sec.2(1) as a dispute arising out of various situations, including agreements relating to immovable property used exclusively in trade or commerce.
- The provision outlines the specific circumstances under which a dispute can be classified as a commercial dispute under the Act.
- The High Court discussed the decision of a Division Bench in the case of Jagmohan Behl vs. State Bank of Indore, 2017 SCC OnLine Del 10706.
- The learned senior advocate for the appellant relied on this case during the argument.
- The decision of the Division Bench was referred to in order to justify the discussion made by the High Court in the present case.
- The word ‘used’ denotes ‘actually used’ and not merely ‘ready for use’.
- The emphasis in the Act is on the phrase ‘land is used’ for specific purposes.
- For assessment on non-agricultural lands, there must be a finding that the land is currently being used for the intended purpose.
- This finding of current use applies to industrial, commercial, or any other non-agricultural purposes.
- A purposive interpretation should be made in entertaining the suit and considering the dispute to be a commercial dispute.
- A wider purport and meaning should be assigned while determining the nature of the dispute.
- Not all suits filed before the Commercial Court should be entertained, especially those not genuinely related to commercial disputes.
- The Commercial Courts should strictly follow the special procedure provided for commercial disputes and not entertain other types of litigation in that jurisdiction.
- Excluded class of litigation will still have a remedy in the ordinary Civil Courts.
- It is crucial to carefully examine and entertain only disputes that actually fall under the definition of ‘commercial disputes’ as provided under the Act.
- The specific case under consideration does not involve the exclusive use of the immovable property for trade or commerce as specified in the agreement between the parties or in the plaint.
- The relief sought in the suit is for the execution of the Mortgage Deed, which is akin to specific performance of the terms of the Memorandum of Understanding without considering the use of the property for trade or commerce.
Decision
- The instant appeal has been dismissed due to lack of merit
- No costs have been awarded in this decision
- The Commercial Court is instructed to return the plaint for presentation before the appropriate jurisdiction
- The High Court decision dated 01.03.2019 was justified based on the facts of the case
Case Title: AMBALAL SARABHAI ENTERPRISES LTD. Vs. K.S. INFRASPACE LLP
Case Number: C.A. No.-007843-007843 / 2019
