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2023 DIGILAW 1053 (KAR)

Kiran Builders v. M. Surya Babu

2023-09-04

R.DEVDAS

body2023
JUDGMENT R.DEVDAS, J. - The petitioner partnership firm which is into construction activities is aggrieved by the rejection of I.A.No.2 wherein the petitioner-company, which was the respondent before the Commercial Court had sought for rejection of the plaint on the ground that the dispute cannot be treated as a commercial dispute as defined in the Commercial Courts Act, 2015. 2. The respondent herein had approached the Commercial Court raising a challenge to an arbitral award dtd. 4/7/2022 invoking Sec. 34 of the Arbitration and Conciliation Act, 1996. The petitioner herein filed I.A.No.2 seeking rejection of the arbitration application contending that the Commercial Court will have no jurisdiction to entertain the arbitration case since the dispute brought before the Commercial Court is not a commercial dispute within the meaning of Sec. 2(c) of the Commercial Courts Act, 2015. 3. The petitioner herein places reliance on a decision of this Court in W.P.No.11783/2020 in the case of M/s.Indraprastha Shelters (P) Ltd. /vs./ South India Biblical Seminary and Another, and a decision of the Apex Court in the case of Faqir Chand Gulati /vs./ Uppal Agencies Pvt. Ltd. and Anr.- (2008) 10 SCC 345 , which was in fact relied upon in M/s.Indraprastha Shelters (supra). Whereas the respondents herein placed reliance on a decision of the Division Bench of the Andra Pradesh High Court in the case of Blue Nile Developers Private Limited /vs./ Movva Chandra Sekhar and Ors. - 2021 SCC Online AP 3964. It was also contended that the said decision of the Division Bench of the Andhra Pradesh High Court was challenged by the aggrieved person before the Apex Court and the SLP was dismissed. The Commercial Court passed the impugned order dismissing I.A.No.2 filed by the petitioner and therefore the petitioner is before this Court. 4. Learned counsel for the petitioner submits that the decision in the case of M/s.Indraprastha Shelters (supra) was rendered by this Court while considering similar issue as to whether a Joint Development Agreement between the land owner and a developer could be construed as a joint venture and whether disputes arising out of such Joint Development Agreement fall within the definition of 'commercial disputes' as provided in the Act. This Court considered two decisions of the Apex Court in the case of Bunga Daniel Babu /vs./ Sri Vasudeva Constructions and others arising out of the Civil Appeal No.944/2016 decided on 22/7/2016 and Faqir Chand Gulati (supra). Having considered the two decisions, this Court came to a conclusion that a joint venture is to be distinguished from a relationship of independent Contractor, the latter being one who, exercising an independent employment, contracts to do work according to his own methods and without being subject to control of his employer. It was found that there was a covenant in the agreement which may render one party liable for any act or commissions of the other party. It was found that there is no active involvement of the landlord in the execution of the project and the person who had entered into an agreement to purchase one of the Villas has sought to raise a commercial dispute. Learned counsel would therefore submit that the decision in the case of M/s.Indraprastha Shelters has considered all the relevant factors including the question as to whether a contract arising out of a Joint Development Agreement would answer any of the descriptions contained in Sec. 2(1) of the Act and this Court has clearly held that a dispute arising out of a Joint Development Agreement will not answer to the definition of the "Commercial Dispute" as defined in the Act. It was also submitted that a review petition filed before the Co-ordinate bench in R.P.No.115/2021 was also dismissed at the hands of the Co-ordinate bench. 5. Per contra, learned counsel for the respondent would submit that the Commercial Court has rightly accepted the submissions made on behalf of the respondent herein that the decision in the case of Blue Nile Developers Private Limited (supra) rendered by the Division bench of the Andra Pradesh High Court would enunciate the correct position of law. It is submitted that the decision of the Division Bench in the case of Blue Nile Developers Private Limited (supra) has been upheld at the hands of the Apex Court. Further, the Delhi High Court has also followed the decision of Blue Nile Developers Private Limited (supra) in the case of Raj Kumar Gupta and Anr. /vs./ Jagan Nath Bajaj and Ors in CS (COMM) 374/2020 dtd. 19/9/2022. 6. Further, the Delhi High Court has also followed the decision of Blue Nile Developers Private Limited (supra) in the case of Raj Kumar Gupta and Anr. /vs./ Jagan Nath Bajaj and Ors in CS (COMM) 374/2020 dtd. 19/9/2022. 6. Having heard the learned counsels and on perusing the petition papers, this Court finds that while deciding the case in M/s.Indraprastha Shelters (supra) heavy reliance was placed on Faqir Chand Gulati. However, what has to be noticed is that in the case of Faqir Chand Gulati arose out of the Consumer Protection Act 1986 and it could not have a direct bearing on a case arising out of the Commercial Courts Act. In Faqir Chand Gulati (supra), the Hon'ble Supreme Court was concerned about the question as to whether an agreement between a land owner and a builder could be construed as a joint venture, whether there was a relationship of service provider and a consumer and whether disputes between the owner and the builder could be regarded as 'deficiency of service'. However, as rightly pointed out by the learned counsel for the respondent, a decision regarding the maintainability of a dispute raised before the Commercial Court and an objection regarding maintainability of such dispute has to be considered having regard to the provisions contained in the Commercial Courts Act and more particularly the definition of the term 'commercial dispute' as provided in Sec. 2(c) of the Act. 7. No doubt, the definition clause contained in Sec. 2(1) enumerates all transactions which shall be construed as commercial dispute and therefore the provision is an exhaustive definition. Amongst various categories which are provided under clause (c), at sub- clause (ix) Joint Venture Agreement finds place. The co- ordinate bench while considering the case of M/s.Indraprastha Shelters (supra) found that the term 'Joint Venture Agreement' was considered and discussed in Faqir Chand Gulati. It is clear that the attention of the co- ordinate Bench was not drawn to sub-clause (vi) where the words "construction and infrastructure contracts are found. This clause has been considered by the Division Bench of the Andhra Pradesh High Court. The Andhra Pradesh High Court, having regard to the said provisions i.e., sub-clause (vi)-'construction and infrastructure contract' held that the legislature has included various types of commercial transactions in the fold of "commercial dispute" which could be decided by the commercial courts. This clause has been considered by the Division Bench of the Andhra Pradesh High Court. The Andhra Pradesh High Court, having regard to the said provisions i.e., sub-clause (vi)-'construction and infrastructure contract' held that the legislature has included various types of commercial transactions in the fold of "commercial dispute" which could be decided by the commercial courts. It was noticed that the legislature has taken due care while incorporating clauses (i) to (xxii) in Sec. 2(1)(c) of the Act. The other part of the reasoning flowing from the decision of the Division Bench is concerned towards an argument which was advanced that the words "construction and infrastructure" being used as a single term, such contract should consist of both the activity viz., construction as well as infrastructure. For the present case, this Court need not advert to the said findings given by the Division Bench of the Andhra Pradesh High Court. 8. Having regard to the expressed provisions contained in the definition clause viz., 2(1)(c)(vi), it is clear that disputes arising out of "construction and infrastructure contract" are also commercial disputes, which can be tried by commercial courts. That being the position, the impugned order dismissing the application in I.A.No.2 filed at the hands of the petitioner, relying on the decision in the case of the Blue Nile Developers Private Limited (supra) cannot be faulted. It has been submitted at the bar that several conflicting decisions have come from the Commercial Courts while considering similar questions. It is therefore made clear that an agreement for construction and infrastructure which may be titled as Joint Development Agreement, construction agreement etc., would clearly fall within the definition clause, more particularly sub-clause(vi) of clause (c) of sub-sec. (1) of Sec. 2 of the Act. 9. Consequently, the writ petition stands dismissed. 10. Pending I.As., if any, stand disposed of.