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2025 DIGILAW 226 (MP)

Hema Sharma v. New Agrawal Constructin Proprietor Deepak Airen

2025-03-26

ASHISH SHROTI

body2025
ORDER : ASHISH SHROTI, J. 1. The question that arises for consideration in this civil revision is as to whether the impugned order, dated 28.05.2024, passed by 7th District Judge, Gwalior in RCSA No.8/2015, refusing to transfer the suit filed by non-applicant/plaintiff under Section 15(2) of Commercial Courts Act, 2015 (in short 'Act') to the concerned Commercial Court, was justified in the facts and circumstances of this case. It is the submission of applicants (hereinafter referred as 'defendants') that although the suit filed by non-applicant (hereinafter referred as 'plaintiff') pertains to a prayer for grant of decree for specific performance of agreement, dated 10.10.2013, by applying definition of 'commercial dispute' as defined under Section 2(1)(c)(vi) of the Act, the subject matter of the suit is a commercial dispute and by virtue of Section 15(2) of the Act, the suit ought to have been transferred to the concerned Commercial Court. 2. The plaintiff has filed a suit stating to be a suit for specific performance for agreement, dated 10.10.2013, before the learned Trial Court. As per the pleadings made in paragraph - 2, the defendants entered into an agreement with the plaintiff for reconstruction of their residential house. Paragraph - 2 & 3 of the plaint narrates the nature of transaction between the parties and the same are reproduced hereunder: 3. Alleging non-compliance of the clause (?) of the agreement, the plaintiff has filed the aforementioned suit praying for a decree for execution of the sale-deed in its favour, in respect of half portion of ground and first floor of the house in question and in the alternative, it has prayed for refund of amount spent by it in reconstruction of the house along with the interest. 4. The suit was filed on 31.08.2015. It is pending before the Trial Court and is at the stage of final argument. The defendants filed the application under Section 15 of the Act of 2015 read with Order 7 Rule 10 of CPC alleging that the subject matter of the suit is a 'commercial dispute' as defined under Section 2(1)(c) of Act of 2015. It is their case that the subject matter of the suit falls within clause - (vi) of Section 2(1)(c) and therefore, pursuant to the provisions of Section 15(2) of the Act of 2015, the suit ought to have been transferred to the concerned Commercial Court. It is their case that the subject matter of the suit falls within clause - (vi) of Section 2(1)(c) and therefore, pursuant to the provisions of Section 15(2) of the Act of 2015, the suit ought to have been transferred to the concerned Commercial Court. It is their submission that after coming into force of Act of 2015, learned Trial Court is divested of its jurisdiction to try the suit. 5. The aforesaid application was opposed by the plaintiff and submitted that it is a simple suit for specific performance of contract and does not fall within the definition of commercial dispute and, therefore, learned trial Court has the jurisdiction to try the suit. The learned counsel for non-applicants submitted that the agreement was for construction of a residential building and it was not a commercial transaction between the parties, therefore, for this reason also it does not fall within the definition of commercial dispute. 6. In order to resolve the controversy, certain provisions of Act of 2015, which has deemed to have came into force w.e.f. 23.10.2015, needs to be considered. Section 2(1)(c)(vi) provides as under : 2. Definitions.—(1) In this Act, unless the context otherwise requires : (a) - (b) xxx xxx xxx (c) “commercial dispute” means a dispute arising out of –– (i) - (v) xxx xxx xxx; (vi) construction and infrastructure contracts, including tenders; (vii) - (xxii) xxx xxx xxx 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;" 7. Section 6 of the Act of 2015 deals with jurisdiction of Commercial Court and it reads as under: "6. Jurisdiction of Commercial Divisions of High Courts. – The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction. Explanation. Jurisdiction of Commercial Divisions of High Courts. – The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction. Explanation. – For the purposes of this section, a commercial dispute shall be considered to arise out of the entire territory of the State over which a Commercial Court has been vested jurisdiction, if the suit or application relating to such commercial dispute has been instituted as per the provisions of sections 16 to 20 of the Code of Civil Procedure, 1908." 8. It is seen that Section 6 of the Act of 2015 uses word "shall have jurisdiction to try all suits and applications relating to a commercial dispute of a specified value". Thus, if the suit falls within any of the clauses of Section 2(1)(c) of the Act of 2015, it has to be tried by the competent Commercial Court. Further under Section 9 of Code of Civil Procedure Code, the Civil Court has jurisdiction to try all suits of a civil nature, except those in respect of which the jurisdiction is barred either expressly or impliedly by a specific provision of law. The use of the word 'shall' in Section 6 of the Act of 2015 makes the provision of the said section mandatory and impliedly excludes the jurisdiction of Civil Court. Thus, after coming into force of Act of 2015, the civil court is not having the jurisdiction to try to suit if the subject thereof is a commercial dispute within the meaning of Section 2(1)(c) of the Act of 2015. 9. Further, Section 15(2) provides that all suits and applications relating to a commercial dispute of a specified value pending in any Civil Court in any district or area in respect of which a Commercial Court has been constituted shall be transferred to such Commercial Court. Thus, a conjoint reading of provisions of Section 6 & Section 15 of the Act of 2015 makes it clear that if the subject matter of present suit falls within the definition of commercial dispute, it ought to have been transferred to Commercial Court on coming into force of the Act i.e. 23.10.2015. Thus, a conjoint reading of provisions of Section 6 & Section 15 of the Act of 2015 makes it clear that if the subject matter of present suit falls within the definition of commercial dispute, it ought to have been transferred to Commercial Court on coming into force of the Act i.e. 23.10.2015. Meaning thereby, the plaintiff does not have choice of alternative forum and all suit relating to commercial disputes has to be adjudicated by the commercial courts once established. 10. In the impugned order, the learned Trial Court has assigned following reasons while rejecting the defendants' application: i. that the plaintiff's suit is a suit for specific performance of contract and permanent injunction; ii. that vide work distribution memo, the matter has been allocated to the court of Seventh Additional District Judge on 04.09.2015 and has been accordingly registered in Panji A. 11. The second reason assigned by the learned Trial Court is apparently unsustainable inasmuch as an administrative order, like work distribution memo, cannot override the mandatory provision of a statue. The other reason assigned by learned Trial Court for rejecting the application that it is only a suit for specific performance of contract and permanent injunction, is also unsustainable inasmuch as the issue as to whether the subject matter of suit is commercial dispute or not cannot be decided merely on the basis of relief claimed in the plaint. The issue needs to be decided taking into account the entire pleading as a whole and taking into account the documents filed in support of the plaint particularly the agreement between the parties. Thus, both the reasons assigned by learned Trial Court are unsustainable. 12. The moot question that arises for consideration in this case is as to whether the subject matter of suit is covered by Section 2(1)(c) of the Act of 2015. The learned counsel for applicant has invoked clause (vi) of Section 3(1)(c) of the Act to say that the subject matter of suit is 'commercial dispute'. It is profitable to mention here that while deciding the issue as to whether the subject matter of a suit is a commercial dispute or not, the pleading made in the plaint as a whole needs to be looked into and not the prayer clause alone as has been done by the learned Trial Court. It is profitable to mention here that while deciding the issue as to whether the subject matter of a suit is a commercial dispute or not, the pleading made in the plaint as a whole needs to be looked into and not the prayer clause alone as has been done by the learned Trial Court. Further, the documents filed in support of plaint can also be examined in order to decide as to whether the subject matter of suit is a commercial dispute or not. My view in this regard finds support by judgment passed by coordinate bench of this court in the case of M/s Bhopal Fracture Hospital & others vs. Savitri Devi Vijaywargiya passed in C.R. No.24 of 2024 wherein it has been held as under: "5. For the purpose of Commercial Courts Act, it is not only the averments made in the plaint which can be looked into but the entire documents and pleadings of defendant can also be looked into to ascertain the exact nature of the transaction entered into between the parties." 13. Before adverting to the issue involved in this case, certain observations of the Apex Court made in the case of Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infrastructure & another reported in (2020)15 SCC 585 may be referred. After referring to various provisions of the Act of 2015, including the statement of object and reasons, the Apex Court held in para 36 as under: "36. A perusal of the Statement of Objects and Reasons of the Commercial Courts Act, 2015 and the various amendments to Civil Procedure Code and insertion of new rules to the Code applicable to suits of commercial disputes show that it has been enacted for the purpose of providing an early disposal of high value commercial disputes. A purposive interpretation of the Objects and Reasons and various amendments to Civil Procedure Code leaves no room for doubt that the provisions of the Act require to be strictly construed. If the provisions are given a liberal interpretation, the object behind constitution of Commercial Division of Courts, viz. putting the matter on fast track and speedy resolution of commercial disputes, will be defeated. If we take a closer look at the Statement of Objects and Reasons, words such as ‘early’ and ‘speedy’ have been incorporated and reiterated. If the provisions are given a liberal interpretation, the object behind constitution of Commercial Division of Courts, viz. putting the matter on fast track and speedy resolution of commercial disputes, will be defeated. If we take a closer look at the Statement of Objects and Reasons, words such as ‘early’ and ‘speedy’ have been incorporated and reiterated. The object shall be fulfilled only if the provisions of the Act are interpreted in a narrow sense and not hampered by the usual procedural delays plaguing our traditional legal system." 14. Thus, the provisions of the Act of 2015 are required to be strictly construed and are to be interpreted in a narrow sense. 15. Section 2(1)(c) of the Act of 2015 defines 'commercial dispute' and provides for a wide range of disputes encapsulated in clauses (i) to (xxii). It includes a wide range of agreements from ordinary transactions of merchants and bankers to export and import of merchandise, admiralty and carriage of goods, license agreements, JVAs, technological development agreements, intellectual property rights, insurance and contracts of agency. In this case, we are concerned and dealing with clause (vi) of Section 2(1)(c) of the Act viz. "construction and infrastructure contracts, including tenders". While deciding the issue, the Explanation (a) of Section 3(1)(c) assumes importance which provides that a commercial dispute shall not cease to be a commercial dispute merely because it also involves action for recovery of immovable property or for realization of monies out of immovable property given as security or involves any other relief pertaining to immovable property. Thus, without looking into the nature of transaction between the parties and examining the same in view of provisions of Section 2(1)(c) of the Act, it cannot be determined as to whether the subject matter of suit is a commercial dispute or not. 16. In essence, a commercial dispute would be one where the nature of the agreement or the consequence arising therefrom would take the effect of the agreement beyond the private sphere of contracting parties and create a ripple effect of commercial movement between the parties to the agreement. The specific nomenclatures of the agreements in Section 2(1)(c) of the Act indicates that a dispute cannot readily be presumed to be a commercial dispute. The specific nomenclatures of the agreements in Section 2(1)(c) of the Act indicates that a dispute cannot readily be presumed to be a commercial dispute. The object and specific clauses of the agreement would always be the determinant of whether the source agreement fits into one or more of the sub-clauses to Section 2(1)(c) of the Act. The criterion is whether the parties to the agreement understood and envisaged the agreement as one falling under sub-clauses (i) to (xxii) of Section 2(1)(c) of the Act and intended to treat the agreement as such. 17. Section 2(1)(c)(iv) includes within it the commercial disputes relating to "construction and infrastructure contracts, including tenders". The use of the term 'construction and infrastructure contracts' has to be taken as a single phrase and cannot be read as construction contract and infrastructure contracts separately. The term 'construction' has been defined in Oxford learners dictionary as "the process or method of building or making something" while the "infrastructure mean the basic physical and organizational structures and facilities (e.g. buildings, roads, power supplies) needed for the operation of a society or enterprise". Had it been only a construction agreement, the subject matter of suit i.e. reconstruction of the residential house of defendants, may have fallen under Clause (vi) of Section 2(1)(c) of the Act of 2015. However, for satisfying the requirement of Section 2(1)(c)(vi) of the Act of 2015, the agreement has to be construction and infrastructure contract. A commercial dispute arising out of a construction and infrastructure contract must necessarily have an impact which stretches beyond the contracting parties. In other words, a construction and infrastructure contract must partake of a commercial character in terms of conception of the project, the performance of it and end with a commercial product - one that premises good exchange value in terms of profitability. 18 . In the agreement between the parties in this case, the element of infrastructure is missing. There is no commercial element involved so far as the defendants are concerned. It may be that the activity of plaintiff, being a builder, is commercial, but at the same time it is purely a private activity so far as the defendants are concerned. In the agreement between the parties in this case, the element of infrastructure is missing. There is no commercial element involved so far as the defendants are concerned. It may be that the activity of plaintiff, being a builder, is commercial, but at the same time it is purely a private activity so far as the defendants are concerned. Considering the pleadings of the present case and the recitals of agreement between the parties, it is clear and evident that the agreement executed is purely a private contract for reconstruction of a residential building and does not fall within the definition of commercial dispute under Section 2(1)(c)(vi) of the Act of 2015. 19. The counsel for applicant has placed reliance upon the judgment rendered by Hon'ble High Court of Andhara Pradesh in the case of Blue Nile Developers Pvt. Ltd. vs. Movva Chandra Sekhar reported in 2021 SCC Online AP 3964. It was a case where action was initiated by respondent therein for recovery of certain sum of money on the ground that an excess amount was paid to the petitioner therein with respect to the construction of the villa as described in plaint schedule. The Hon'ble Andhra Pradesh High Court, while giving wide interpretation to the definition of commercial dispute, interpreted the term 'construction and infrastructure contracts' as distinct and independent to each other. In other words, both the terms were bifurcated into construction contracts and infrastructure contracts separately. In view of discussion made by me in preceding paragraphs, I am in respectful disagreement with the view taken by Hon'ble Andhra Pradesh High Court. The view taken by the Andhra Pradesh High Court is not in consonance with the law laid down by Apex Court in the case of Ambalal Sarabhai (supra) wherein it has been held that the provisions of the Act have to be strictly construed and should be interpreted in narrow sense in order to give purposive interpretation to the statement of objects and reasons. I am in respectful disagreement with another judgment cited by the learned counsel for applicant passed by Delhi Court in the case of Raj Kumar Gupta & another vs. Jagannath Bajaj & others reported in 2022 SCC Online Delhi 2995 since the same is based upon judgment of Andhra Pradesh High Court in the case of Blue Nile Developers (supra). 20. 20. In view of the aforesaid discussion, the subject matter of suit does not fall within the ambit of 'commercial dispute' as defined under Section 2(1)(c)(vi) of the Act of 2015. The order passed by learned Trial Court is upheld though on different grounds. The revision petition thus fails and dismissed.