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2020 DIGILAW 1467 (KAR)

Property Infra Tech India (p ) Ltd. v. Urmila Ramesh

2020-07-23

M.NAGAPRASANNA

body2020
JUDGMENT M Nagaprasanna, J. - Sri Ravishankar Shastry G., learned counsel for the petitioner. Sri Vijay Krishna Bhat M., learned counsel for caveators - respondents appeared through video conferencing. Being aggrieved by the order dated 12.02.2019 passed in O.S. No.433/2018 by the II Additional Senior Civil Judge and Chief Judicial Magistrate, Mangaluru (hereinafter referred to as the 'trial Court') whereby, the trial Court has transferred the suit of the plaintiff to the Commercial Court on the ground that the dispute between the parties was commercial in nature and had to be dealt with by the Court constituted under the Commercial Courts Act, 2015 (hereinafter referred to as 'the said Act of 2015'), on a memo filed by the defendants therein, the plaintiff has preferred the instant writ petition. 2. Facts leading to filing of the instant writ petition are that, the petitioner who is the plaintiff in O.S.No.433/2018, filed a suit against the defendants therein (respondents herein) for recovery of the amount of Rs.2,47,18,493/- with interest from 01.12.2018 till the date of realisation. It transpires in terms of the pleadings that the plaintiff and the 2nd defendant were acquainted to each other through their business transactions. The 1st respondent is the wife of the 2nd respondent. On 06.06.2015, the petitioner-plaintiff and the 1st respondent entered into an agreement for sale of several immovable properties owned by the 1st respondent. On failure of the respondents to comply with the conditions of the agreement, the petitioner issued a notice on 18.02.2017 seeking refund of the earnest money paid in terms of the agreement of sale dated 06.06.2015. It appears that the respondents on receipt of notice, agreed to reimburse the entire amount with interest and since they could not mobilize the fund, the 1st respondent transferred the immovable property in favour of the petitioner on 11.10.2017 towards part of the earnest money received in terms of the agreement to sell. 3. In terms of the sale mentioned hereinabove, the amount of Rs.2.00 crores was set off and the balance was agreed to be paid within three months along with interest. The respondents having failed to adhere to outer limit of three months to pay the balance amount, the petitioner instituted a suit before the trial Court in O.S.No.433/2018 for recovery of Rs.1 crore. 4. The respondents having failed to adhere to outer limit of three months to pay the balance amount, the petitioner instituted a suit before the trial Court in O.S.No.433/2018 for recovery of Rs.1 crore. 4. On issuance of notice, the respondents herein filed a memo before the trial Court contending that the lis is one of a commercial dispute and the trial Court has no jurisdiction to entertain the suit in the light of the Commercial Courts established under the said Act of 2015 and the plaint will have to be transferred to the Commercial Courts dealing with commercial disputes. On the memo filed by the respondent, the petitioner filed his objections. Considering the plaint averments, memo and the objections, the trial Court gave a finding that the transaction between the parties was commercial in nature, the suit arose out of a joint venture business and it had no jurisdiction to entertain a commercial dispute and had to transfer the suit to the Commercial Court established under the said Act of 2015 and closed the suit by transferring the same to the Commercial Court established under the said Act. The petitioner - plaintiff, aggrieved by the order of the trial Court passed on the memo filed by the respondentsdefendants seeking transfer of the suit, filed the present writ petition. 5. The issue that falls for my consideration in this writ petition is whether the jurisdiction of the Civil Court under Section 9 of Code of Civil Procedure, 1908, is taken away with the establishment of the said Act of 2015, in the facts and circumstances of the case on hand. 6. In terms of the plaint averments the cause of action arose to the petitioner to file O.S. No.433/2018 was with regard to failure on the part of the respondents herein to comply with the agreement between the parties to return the earnest money that was paid pursuant to an agreement to sell. Since the issue involves the jurisdiction of the Court to try the suit and an interplay between the provisions of the said Act of 2015 and Section 9 of Code of Civil Procedure, 1908, the provisions relevant to the lis are required to be noticed and are extracted hereunder for the purpose of ready reference. Since the issue involves the jurisdiction of the Court to try the suit and an interplay between the provisions of the said Act of 2015 and Section 9 of Code of Civil Procedure, 1908, the provisions relevant to the lis are required to be noticed and are extracted hereunder for the purpose of ready reference. " The Code of Civil Procedure, 1908 Section 9: Courts to try all civil suits unless barred.-The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. [Explanation I].-A suit in which the right to property or to an office is contested is a suit of a civil nature, notwithstanding that such right may depend entirely on the decision of questions as to religious rites or ceremonies. [Explanation II.-For the purposes of this section, it is immaterial whether or not any fees are attached to the office referred to in Explanation I or whether or not such office is attached to a particular place.]" The Commercial Courts Act, 2015 Section 2(1)(c)(vii) of the said Act of 2015, read as follows: "Sec. 2(1): In this Act, unless the context otherwise requires,- (a) xxxxxxx (b) xxxx (c) "commercial dispute" means a dispute arising out of- (i) xxxx (ii) xxxx (iii) xxxx (iv) xxxx (v) xxxx (vi) xxxx (vii) agreements relating to immovable property used exclusively in trade or commerce; (viii) xxxx (ix) xxxx (x) xxxx (xi) xxxx (xii) xxxx (xiii) xxxx (xiv) xxxx (xv) xxxx (xvi) xxxx (xvii) xxxx (xviii) xxxx (xix) xxxx (xx) xxxx (xxi) xxxx (xxii) xxxx 7. Section 2(1)(c) of the said Act of 2015 defines a commercial dispute. A commercial dispute in terms of the statute among other definitions also contains a dispute arising out of the agreements relating to immovable property used exclusively in trade or commerce. This is the only definition that can perhaps be used to define what is commercial dispute vis-a-vis the facts on hand. The statute is unequivocally clear that the agreements relating to immovable property are exclusively used in trade or commerce. To bring the present dispute within the ambit of definition of commercial dispute, the pleadings of the parties will have to be noticed. At the outset, the plaint averments insofar as it pertains to the transaction, which reads as follows: "III. 1. To bring the present dispute within the ambit of definition of commercial dispute, the pleadings of the parties will have to be noticed. At the outset, the plaint averments insofar as it pertains to the transaction, which reads as follows: "III. 1. Both Plaintiff Company and the 2nd defendant were/are dealing in real estate business like construction of multistoried buildings, sale of the same in and around Mangalore. The managing director of the plaintiff company and the 2nd defendants engaged in same kind of business and hence acquainted with each other very well. Plaintiff likewise during their business as proposed by the 2nd defendant on behalf of his wife 1st defendant to purchase the immovable properties of which is morefully mentioned herein below and for the sake of convenience hereinafter referred to as schedule properties both plaintiff and 1st defendant entered into an agreement for sale dated 06-06- 2015 and thereby committed each other several terms and conditions between themselves. To avoid repetition of facts retained copy of the agreement for sale dated 06-06- 2015 is produced herewith to read as part of this plaint. 9. The 2nd defendant utilized the earnest money paid by the plaintiff for his real estate business and thereby gained unlimitedly. In addition to this the very agreement for sale dated 06.06.2015 makes it very clear that the defaulting party shall liable to pay 18% interest to the other party. In addition to this the plaintiff paid the money towards the agreement for sale by borrowing loan (Over draw) from the SDCC bank Ltd. Therefore, the transaction between the plaintiff on the one hand and defendants on the other hand being commercial in nature the defaulting party shall pay commercial interest i.e., at the rate of 18% per annum on the principle amount as agreed and undertaken between themselves in terms of the contract. 10. It appears that the defendants jointly and severally have no intention of whatsoever nature to settle/pay the amount promised/committed upon service of notice dated 18.02.2018 and on 11.10.2017 on which dated the 1st defendant executed registered indenture of sale to the name of plaintiff towards settlement of part payment of earnest money by receiving the original agreement for sale dated 06.06.2015. This could be confirmed from the reply issued by the 1st defendant through her advocate dated 19.03.2018. This could be confirmed from the reply issued by the 1st defendant through her advocate dated 19.03.2018. The attempt of the plaintiff to recover the balance amount paid with interest by it from the defendants resulted in futile from time to time. The sole intention of the defendants is to gain illegally if possible and thereby sustain loss and damages to the plaintiff. Therefore there being no other alternative the plaintiff now constrained to file the above suit for recovery of money of which is morefully mentioned herein below against the defendants, hence this suit." 8. In terms of the plaint averments, it is nowhere in the agreement that the suit schedule property was being used for trade or commerce or the transaction between the parties was for trade or commerce. The agreement to sell that was entered into between the parties nowhere observes that the transaction being entered into concerning the suit schedule property was being used for trade or commerce. A perusal of the agreement would indicate that it was a pure and simple sale and purchase of immovable property i.e., a sale and purchase of pepper plantation in Surathkal village within Mangalore City Corporation. Unless the plaint or the instrument of the cause of action depicts unequivocally that the transaction is for the purposes of trade or commerce, the same would not come under the definition of "commercial dispute" as extracted hereinabove. 9. In this regard, it is apposite to refer to the case of AMBALAL SARABHAI ENTERPRISES LTD. VS. K.S. INFRASPACE LLP AND ANOTHER,2019 SCCOnLineSC 1311, wherein the Hon'ble Supreme Court interpreting the provisions of the said Act of 2015 has held as follows: "6. At the outset, it is noticed that the consideration required in the instant case is as to whether the transaction between the parties herein which is the subject matter of the suit could be considered as a "commercial dispute" so as to enable the Commercial Court to entertain the suit. In that regard, it is necessary to take note of Section 2(1)(c)(vii) of the CC Act, 2015. The said provision to the extent relevant is extracted here below for reference. In that regard, it is necessary to take note of Section 2(1)(c)(vii) of the CC Act, 2015. The said provision to the extent relevant is extracted here below for reference. From a perusal, of the provision relied upon by the learned senior advocates it is noticed that the disputes arising out of agreements relating to immovable property used exclusively in trade or commerce will qualify to be a commercial dispute to be tried by Commercial Courts. The question therefore would be that, in the instant case though the parties have entered into a sale transaction of the immovable property and presently in the suit the registration of a Mortgage Deed pertaining to the immovable property is sought, whether the immovable property involved could be considered as being used exclusively in trade or commerce. 7. The learned senior advocate for the appellant has made detailed submissions referring to the documents to contend that the appellant was running an industry in the land concerned which was acquired for that purpose and presently the respondent No.1 has purchased the same for developing the said land and in that view the land is one which is used for trade and commerce. The learned senior advocate for the respondents on the other hand has contended to the contrary that the appellant had ceased to function for the past several years and the company being defunct, the land involved was not being used for trade or commerce and even though the respondent No. 1 has sought for change of land use and to develop the land, the same would be subject to such change of land use that would be granted and the use to which it would be put in future. Hence it is contended that as on the date of transaction the land is not being used for trade or commerce and a suit at present would not be maintainable before the Commercial Court. 8. Though such rival contentions are put forth by the learned senior advocate on either side, these aspects cannot be dealt with in abstract. Instead the nature of the dispute and the jurisdiction to try the same is to be reflected in the suit itself since in a civil suit the pleadings, namely averments in the plaint would at the outset be relevant to confer jurisdiction. Instead the nature of the dispute and the jurisdiction to try the same is to be reflected in the suit itself since in a civil suit the pleadings, namely averments in the plaint would at the outset be relevant to confer jurisdiction. Hence before adverting to the other aspects it would be necessary to carefully examine the plaint. The plaintiff has in detail referred to the nature of the transaction between the appellant and the respondents herein. In para 5 thereof the detail of the land bearing R.S. No. 122 corresponding to City Survey No. 1101 and 1100/1 having land area of 9207 square metres at Mouje Subhanpura Reg. District, Vadodara is referred. Further the schedule of the property is indicated in para 6 and reference is made to the Memorandum of Understanding where again the reference is made to the land. It is averred therein that it would be the total responsibility of the respondent No. 1 herein (defendant No. 2 in the suit) to change the land use as well as to pay the amount that may be required for the permission. The amount to be paid as premium is referred and the right of the plaintiff to secure the Mortgage Deed in view of the terms of the MoU is stated. In the entire plaint there is no reference to the nature of the land or the type of use to which it was being put as on the date of the Agreement to Sell/Sale Deed/Memorandum of Understanding or as on the date of the suit." 9. Further on referring to the cause of action in para 21, the plaintiff has thereafter referred in para 22 to the jurisdiction of the Court to hear and decide the matter. It would be appropriate to extract the same which reads as hereunder: "22. Further on referring to the cause of action in para 21, the plaintiff has thereafter referred in para 22 to the jurisdiction of the Court to hear and decide the matter. It would be appropriate to extract the same which reads as hereunder: "22. Jurisdiction: The Plaintiff states that the Defendants having their office at Vadodara land which is the subject matter of the instant suit is situated within the territorial jurisdiction of this Hon'ble Court and hence this Hon'ble Court has the jurisdiction to hear and decide the matter." Even though in the paragraph describing jurisdiction the plaintiff has stated with regard to the territorial jurisdiction since the office and land being at Vadodara, there is no reference indicating the reason for which the plaintiff pleads that the Court which is the Commercial Court exclusively constituted to try the commercial disputes has jurisdiction to try the instant suit. In that background, a perusal of the prayer made in the plaint would essentially indicate that the suit is one seeking for specific performance of the terms of MoU whereunder it is agreed that the Mortgage Deed be executed. Even if the immovable property under the Mortgage Deed was the subject matter it was necessary to plead and indicate that the same was being used in trade or commerce due to which the jurisdiction of Commercial Court is invoked. Without such basic pleadings in the plaint, any explanations sought to be put forth subsequently would only lead to a situation that if an objection is raised, in every suit a consideration would be required based on extraneous material even to ascertain as to whether the intended transaction between the parties was of such nature that it is to be construed as a commercial dispute. 13. The learned senior advocate for the appellant would however, contend that a strict interpretation as in the case of taxing statutes would not be appropriate in the instant case where the issue relates to jurisdiction. In that regard, the learned senior advocate has referred to the statement of objects and reasons with which the Commercial Courts Act, 2015 is enacted so as to provide speedy disposal of high value commercial disputes so as to create the positive image to the investors world about the independent and responsive Indian Legal System. Hence, he contends that a purposive interpretation be made. Hence, he contends that a purposive interpretation be made. It is contended that a wider purport and meaning is to be assigned while entertaining the suit and considering the dispute to be a commercial dispute. 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 law makers. 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 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. 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 High Court was justified in its conclusion arrived through the order dated 01.03.2019 impugned herein. Therefore, if all these aspects are kept in view, we are of the opinion that in the present facts the High Court was justified in its conclusion arrived through the order dated 01.03.2019 impugned herein. The Commercial Court shall therefore return the plaint indicating a date for its presentation before the Court having jurisdiction." (Emphasis supplied) In terms of the said Act of 2015 and the law declared by the Hon'ble Supreme Court interpreting the statute, the order impugned will have to be considered. 10. The order passed by the trial Court on the memo reads as follows: "This is suit filed for recovery of advance amount under the agreement dated 06.06.2015. It is further alleged that as per this agreement the plaintiff and defendant have agreed to sell the schedule property for a sum of Rs.3,00,00,000/- but later due to impossible of performing the said contract another land was sold to the plaintiff for a sum of Rs.2,00,00,000/-. But the defendants did not repaid the remaining Rs.1,00,00,000/- to the plaintiff. Hence the present suit filed. The defendant after their appearance filed this memo stating that this court has no jurisdiction as the amount liable for recovery is more than Rs.1,00,00,000/- and hence the plaint has to be return to the Commercial Court. The same was opposed by the plaintiff contending that there is no loan transaction or more particularly the commercial transaction in between themselves and the defendants so can the plaint can be returned. In support of the memo the defendants have relied upon the original and amendment Act along with gazette notification wherein it clearly says that the commercial dispute as per Section 2(C) which reads thus 'ordinary transaction of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such document'. Therefore from this clear definition of commercial dispute if we apply this to the facts of this case then it is clear that the agreement transaction in between the parties was a commercial dispute. Likewise according to section 4(vii) it says that the commercial court have the jurisdiction and power to decide the agreements relating to immovable property used exclusively in trade or commerce. Therefore the said agreement dated 06.06.2015 is a commercial transaction in between the plaintiff and defendants. Likewise according to section 4(vii) it says that the commercial court have the jurisdiction and power to decide the agreements relating to immovable property used exclusively in trade or commerce. Therefore the said agreement dated 06.06.2015 is a commercial transaction in between the plaintiff and defendants. xxxxx Further on perusal of the said agreement it is clear that there is a converse situation that if the seller fails to perform the contract the purchaser can get the double amount but this is not applicable to the present case as the defendants themselves revoke the agreement. Therefore the said agreement is with respect to immovable property use exclusively in trade or commerce. xxxxx xxxxx xxxxx The defendant by relying upon the above proposition contend that the transaction in between the plaintiff and the defendants being a commercial transaction for more than Rs.1,00,00,000/-, this court has no jurisdiction to entertain the suit. On perusal of the said available documents on record, it is true that the present suit is filed for recovery of money and the transaction in between the plaintiff and defendants is a commercial transaction which cross Rs.1,00,00,000/- and as per Section 2(1) of commercial Court Act it shall be treated as commercial transaction. Therefore this court has no jurisdiction to entertain this suit as the suit claim arise out of joint venture business. The dispute is also a commercial dispute in between the parties and hence I proceed to pass the following: ORDER Memo filed by the defendants is allowed without cost. The suit of the plaintiff is transferred to the commercial court as per procedure of law. Therefore suit closed." (Emphasis supplied) 11. A perusal of the order of the trial Court would indicate that the transaction in terms of the agreement with respect to immovable property is being exclusively used in trade or commerce without even referring to the statutory provision as to how a commercial dispute is defined under the said Act of 2015. Above all, the trial Court records that the transaction between the plaintiff and the defendants is a commercial transaction as the suit claim arose out of a joint venture business. Above all, the trial Court records that the transaction between the plaintiff and the defendants is a commercial transaction as the suit claim arose out of a joint venture business. The reasoning of the trial Court that it is a commercial transaction is without any reference to the statutory provision as to what is a commercial transaction under the said Act of 2015 and the finding that the suit arose out of the joint venture business is its own ipse dixit as both the parties admit that it was neither pleaded nor argued before the trial Court that the suit arose out of a joint venture business. No record was placed before the trial Court or before this Court with regard to the suit claim arising out of a joint venture business. 12. Thus, in terms of the statutory provisions and the law laid down by the Hon'ble Supreme Court in the aforementioned case, the order of the trial Court on the memo filed by the respondents - defendants therein suffers from non-application of mind. 13. In the circumstances of the case and for the reasons indicated hereinabove, I pass the following: ORDER (i) Writ petition is allowed in part. (ii) The order of the II Additional Senior Civil Judge and Chief Judicial Magistrate, Mangaluru dated 12.02.2019 in O.S.No.433/2018 is hereby set aside. (iii) The matter is remitted back to the trial Court for fresh consideration, keeping in mind the above provisions of the Act and the law laid down by the Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LTD. Vs. K.S. INFRASPACE LLP AND ANOTHER,2019 SCCOnLineSC 1311 . (iv) The trial Court shall decide the issue within three months from the date of receipt of a copy of the order.