Research › Search › Judgment

Kerala High Court · body

2024 DIGILAW 120 (KER)

Dharvesh, S/o. Muhammed Sali v. Jose John S/o. Sivanandan Nadar

2024-01-30

C.JAYACHANDRAN

body2024
JUDGMENT : The petitioner herein is the defendant in C.S.No. 119/2022 pending before the Principal Sub Court, Thiruvananthapuram. The petitioner is aggrieved by Ext.P8 order, which declined a challenge made by the petitioner/defendant as regards the maintainability of the said suit. Maintainability was challenged on the premise that, the suit in question is not a commercial suit, or in other words, the dispute is not a commercial dispute in terms of section 2(1)(c)(vii) of the Commercial Courts Act, 2015. The said contention was repelled by the impugned Ext.P8 order, holding that the dispute is a commercial one and the suit filed before the Commercial Court is maintainable. 2. Heard Sri.Rinu S. Aswan, learned counsel for the petitioner and Sri. V.Suresh, learned counsel for the respondent. 3. Learned counsel for the petitioner would submit that the suit was one for return of advance sale consideration, pursuant to an agreement for sale in respect of a shop room. It was specifically pointed out that, at the time of entering into the agreement, there was no tenant in the shop room; that the shop room was got vacated from the then existing tenant before entering into the agreement and that no commercial or business activity was going on in the scheduled shop room at the time when the agreement was entered into, or for that matter, at the time when the suit was instituted. Learned counsel would invite the attention of this Court to the expression “used” as employed in sub-clause (vii) of Section 2(1)(c), to point out that the immovable property should have been actually used at the time of entering into the agreement, so as to make the dispute a commercial one. In this regard, the judgment of the Hon'ble Supreme Court in Ambalal Sarabhai Enterprises Ltd. v. K.S.Infraspace LLP and Others [ (2020) 15 SCC 585 ] and that of the High Court of Gujarat in Vasu Healthcare Private Limited v. Gujarat Akruti TCG Biotch Limited and Others [ AIR 2017 Guj 153 ] were relied on. Attacking the impugned order, learned counsel would submit that the learned Sub Judge took stock only of the pleadings in the plaint, without relying on the documents produced along with it. Attacking the impugned order, learned counsel would submit that the learned Sub Judge took stock only of the pleadings in the plaint, without relying on the documents produced along with it. It was also pointed out that the documents, which are now produced in this Court along with the counter affidavit, were not produced before the court below and hence cannot be looked into. Learned counsel invited the attention of this Court to the misuse of the provisions of the Commercial Courts Act, in portraying ordinary civil disputes as commercial disputes. 4. Refuting the above submissions, learned counsel for the respondent would first distinguish between the character of the subject matter and the character of the parties, wherein the former is relevant in considering, whether the suit in question is a commercial one or not, since it has a bearing on the jurisdiction of the Court. Referring to the definition of a commercial dispute under Section 2(1)(c)(vii), it was pointed out that, any dispute arising out of agreements relating to immovable property used exclusively in trade or commerce are commercial disputes, which are liable to be tried by the Commercial Courts. Learned counsel then invited the attention of this Court to Ext.P1 agreement for sale, wherein the subject matter of the sale is un-mistakably a shop room ( ). A shop in vernacular called essentially means a place where trade or commerce is conducted, is the submission made by the learned counsel, in which regard learned counsel would also refer to the Kerala Shops and Commercial Establishments Act, to reiterate that, a shop can only mean a place where a commercial activity is going on. It was then contented that there is no dispute with respect to the fact that the subject matter is a shop room, as could be seen from Ext.P2 lawyer's notice, wherein, there is specific reference to agreement for sale of a “shop room”. The pleading as regards the commercial nature of the transaction and the maintainability of the suit before the Commercial Court, is contained in paragraph no.23 of the plaint, to which the attention of this court is invited. The pleading as regards the commercial nature of the transaction and the maintainability of the suit before the Commercial Court, is contained in paragraph no.23 of the plaint, to which the attention of this court is invited. It was pointed out by the learned counsel for the respondent that, vide paragraph no.2 of the written statement, the only contention raised in challenging the jurisdiction of the Commercial Court is in the context of the disability of the plaintiff, being a Government servant, in doing any trade or commerce, coupled with a contention that the shop room is not being used by the plaintiff for conducting any trade or commerce. As regards the production of documents along with the counter before this Court, it was pointed out that, Ext.R1 is an agreement between the petitioner/defendant and his former tenant, where a bakery was being conducted by him. Ext.R2 series are photographs, which the defendants gave the plaintiff at the time of entering into the contract and Ext.R3 is the electricity bill pertaining to the shop room, wherein the tariff applicable is that of a commercial premise. Explanation to Section 2(1)(c) was then pointed out to assert that, merely because the advance amount is sought to be refunded, without seeking specific performance of the agreement, the dispute will not cease to be a commercial one. In support of the contention that the suit in question is a commercial suit, learned counsel relied upon two judgments; one of the Delhi High Court in Jagmohan Behl v. State Bank of Indore [2017 (3) KLT Online 2231 (Del.)] and the other by learned Single Judge of this Court in Althaf Ismail Sait v. Golden Choice Hospitality Pvt. Ltd. [ 2022 (6) KLT 625 ]. In answer to the contention made by the learned counsel for the petitioner that, Ext.P1 agreement refers to a remedy before a ‘Civil court’, learned counsel for the respondent would submit that, the said clause merely distinguishes between civil liability and the criminal liability; rather civil remedy as distinguished from the criminal remedy. It was finally submitted that, after the amendment of the Commercial Courts Act, it is the same court which tries an ordinary civil suit, as also, a commercial suit and the issue boils down to the head under which the matter has to be treated and considered. 5. It was finally submitted that, after the amendment of the Commercial Courts Act, it is the same court which tries an ordinary civil suit, as also, a commercial suit and the issue boils down to the head under which the matter has to be treated and considered. 5. In reply to the submission made by the learned counsel for the respondent, learned counsel for the petitioner would submit that, paragraph no.2 of the written statement refers to the non-maintainability of the suit, inasmuch as, the dispute is not a commercial one, as defined in Section 2(1)(c)(vii) of the Commercial Courts Act. The inability of the plaintiff as a government servant to do business is stated only as an additional reason and not as the sole one, as sought to be espoused by the learned counsel for the respondent. 6. Having heard the learned counsel appearing on both sides, this Court finds little merit in this Original Petition. This court will first refer to Ext.P1 agreement, wherein the subject matter of sale is one shop room, as could be seen from the last paragraph in page no.3 of the agreement, as also, from the description of the property in page no.5 and 6 of Ext.P1 agreement. In that regard, there cannot be any dispute that the subject matter is a single shop room having an area of 400 square links. As rightly contented by the learned counsel for the respondent, a shop room, in ordinary, as well as, legal parlance, implies a place where a commercial activity is being conducted. This Court will now refer to the specific pleading in Ext.P4 plaint, as to how and why the suit is sought to be maintained before a Commercial Court. Paragraph no.23 of the plaint is extracted here below. 23. The subject matter of the agreement is a shop room. It is used at present exclusively in trade and commerce. The said shop room and accessory rights in its appurtenant land was intended to be purchased by the plaintiff for user as a commercial occupancy as a shop. Hence the dispute involved in the suit is a commercial dispute as defined in Section 2 (1) (c) (vii) of the Commercial Courts Act 2015. 7. The said shop room and accessory rights in its appurtenant land was intended to be purchased by the plaintiff for user as a commercial occupancy as a shop. Hence the dispute involved in the suit is a commercial dispute as defined in Section 2 (1) (c) (vii) of the Commercial Courts Act 2015. 7. Having said so, this Court will address the core issue raised by the learned counsel for the petitioner, in the context of the expression “used” as employed in clause (vii) to Section 2(1)(c). Learned counsel for the petitioner would advance an argument that, unless and until the immovable property, which is a subject matter of the agreement, is actually and physically used exclusively for trade or commerce, the dispute cannot be construed as a commercial one, so as to attract the jurisdiction of a Commercial Court. The potentiality of the immovable property for being used for a commercial purpose, or for that matter, for trade or commerce, is no yardstick to canvas the jurisdiction under the Commercial Courts Act, is the submission made. Theoretically, the second limb of the argument appears to be correct, that a mere possibility of the building being put to a potential use for trade or commerce, is not sufficient. This has been held by the Gujarat High Court, as also, by the Hon’ble Supreme Court in the two decisions relied upon by the learned counsel for the petitioner. In Ambalal Sarabhai (supra), the subject matter of the agreement, was 50,000 square feet of vacant land, as could be seen from paragraph no.38 of the judgment. A clear provision was envisaged pursuant to signing an MOU for change of land, so as to make it amenable for commercial use. In that case, the plaintiff approached the Court claiming that the property in question is intended to be used for commercial purpose and the jurisdiction of a Commercial Court was canvassed accordingly. As rightly argued by the learned counsel for the respondent, the character of the land remains non-commercial at the time of agreement, as also, at the time of institution of the suit; and it was only an ambition of the plaintiff to convert the land for commercial use, in which context only, the Hon'ble Supreme Court held that the suit is not a commercial one and therefore, not maintainable before the Commercial Court. This Court also notice from paragraph no.14 of that judgment that, neither the agreement between the parties, nor the pleadings refers to the nature of the immovable property as one being exclusively used for trade or commerce. 8. The situation with respect to the judgment in Vasu Healthcare Private Limited (supra) is also not different. The recitals in paragraph no.2.2 of the judgment would indicate that, the land in question was yet to be developed for a biotech park. The Division Bench of the Gujarat High Court found in paragraph no.7.3 that, as per the agreement in question therein, the property has to be got developed by the original defendant no.1 therein, after getting the plots on lease from GIDC and has to provide all infrastructure facilities. Faced with that situation, a contention was raised by the original plaintiff that the language employed in Section 2(1)(c) is not “actually used” or “being used” and therefore, if the plot is likely to be used for commercial purpose in future, the same also would attract the definition of a commercial dispute under Section 2(1)(c)(vii). It was this contention which was repelled by the Division Bench, holding that the expression “used” meant, “actually used” or “being used”; and not ready for use or likely to be used. 9. In the instant facts, this Court should necessarily take note that the subject matter as already indicated, is a shop room having an area of 400 square links; that the said room, being a shop room, can only be used for the purpose of a commercial activity; and that, infact, the said room was actually used for a commercial activity at the time of entering into the contract or immediately before that for running a bakery, as could be seen from Ext.R1 agreement produced before this Court. Merely because the petitioner herein got the tenant vacated, so as to surrender vacant possession to respondent/plaintiff, the nature and character of the room in question will not cease to be commercial. As pointed out by the learned counsel for the respondent, the character of the subject matter is what which governs. The sole purpose of obtaining vacant possession of the room was to enable the sale, as contemplated in Ext.P1 agreement, which also has to be borne in mind. 10. As pointed out by the learned counsel for the respondent, the character of the subject matter is what which governs. The sole purpose of obtaining vacant possession of the room was to enable the sale, as contemplated in Ext.P1 agreement, which also has to be borne in mind. 10. This Court also finds that the judgments relied upon by the learned counsel for the respondent of the Delhi High Court, as also, by this Court, would only fortify the above view taken by this Court. The expression “arising out of” has been given an expanded meaning in Jagmohan Behl(supra) by the Delhi High Court. The explanation to Section 2(1)(c) was also taken stock of, which is extracted here below: Explanation: A commercial dispute shall not cease to be a commercial dispute merely because- (a) it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property; (b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions; 11. It could thus be seen that, a commercial dispute will not cease to be so, merely because it involves an action for realization of money out of the immovable property given as security or when it involves any other reliefs pertaining to the immovable property. By any stretch of imagination, it cannot be said that the dispute herein had not arisen out of Ext.P1 agreement. The up-shot of the above discussion is that, Ext.P8 order suffers from no illegality or infirmity, thus warranting no interference from this Court. This Original Petition fails and the same will stand dismissed.