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2025 DIGILAW 706 (BOM)

Magathane Kinara Co-Op. Hsg. Soc. Ltd. v. Magathane Kinara Co-Op. Hsg. Soc. Ltd.

2025-04-08

ABHAY AHUJA

body2025
ORDER : 1. On 6 th March 2025, this Court had recorded that Mr.Mishra, learned Counsel for the Applicant (Defendant no.1) had concluded his arguments and Ms.Talati, learned Counsel for the Plaintiff had taken time. 2. Today, Ms.Talati has responded on behalf of the Plaintiff and Mr.Mishra, learned Counsel has also made submissions in rejoinder. 3. Accordingly, having heard the learned Counsel I pass the following order. 4. This Interim Application seeks return of the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908 (“CPC”) from the Commercial Division of this Court to be presented before Civil Court of jurisdiction. 5. Mr.Mishra, learned Counsel, appearing for the Defendant no.1 – society has submitted that the Suit has been filed seeking specific performance of a Memorandum of Understanding dated 16 th May 2014 (“MOU”) between the Plaintiff and the Defendant no.1 and for damages from the Defendant no.1 – society. 6. Mr.Mishra has submitted that the averments in the plaint and the supporting annexures in no manner indicate or even suggest that the dispute between the parties is a commercial dispute as defined under Section 2(1)(c) of the Commercial Courts Act, 2015 (the “Commercial Courts Act”), nor is there even an averment to that effect, and that, therefore, the Suit has improperly been registered as a Commercial Suit. 7. Mr.Mishra has submitted that the Suit is for specific performance of the MOU and does not give any right, title or interest in the Suit property to the Plaintiff nor is there a dispute which is commercial in nature. 8. The MOU, Mr.Mishra submits, and as averred in the plaint, was for re-development of the Defendant no.1 – society’s residential building which was not in a good condition. Mr.Mishra submits that since the Plaintiff – developer was not able to complete the re- development, the development agreement was admittedly not executed and the MOU was terminated by the Defendant no.1 – society on 22 nd October 2018 and it is the said termination that has been challenged by way of this Suit which has erroneously been filed as a Commercial Suit. 9. 9. Mr.Mishra refers to the reply filed by the Plaintiff and submits that the Plaintiff has opposed this application on the ground that the Defendant no.1 – society has no locus standi to file the application as it has not filed the written statement and that Interim Application No.115 of 2021 seeking condonation of delay of 407 days in filing the written statement is pending. Mr.Mishra refers to the provision of Order VII Rule 10 of the CPC and submits that the plaint can be returned at any stage of the Suit to be presented to the Court in which the Suit should have been instituted and that non-filing of the written statement or the pendency of an Interim Application seeking condonation of delay in filing written statement does not in any way bar the Defendant no.1 from making an application. 10. Mr.Mishra next submits that the second argument of the Plaintiff is that the terms and conditions of the MOU are commercial in nature as the MOU is for redevelopment of a building of the Defendant no.1 – society. Mr.Mishra reiterates that the MOU is with regard to redevelopment of a residential building and there is nothing commercial about the same. Mr.Akhilesh Dubey, learned Counsel for the Defendant No.2 however contradicts and submits that some of the units would be commercial although pre-dominantly the building would be for residential use. 11. Referring to the submissions in the reply that the present Commercial Suit is in respect of a commercial dispute as defined in sub-clause (vii) of Section 2(1)(c), Mr.Mishra for Defendant No.1 submits that the said provision clearly refers to agreements relating to immovable property(ies) used exclusively in trade or commerce whereas in the present case the immovable property is not used exclusively in trade or commerce. The MOU is for the redevelopment of the residential property and may have some commercial units and refers to paragraph 13 of the reply where the property in question for redevelopment has been described. 12. Further, Mr.Mishra submits that even assuming without admitting that the Plaintiff may have incurred monies for the purported redevelopment transaction, that cannot bring the Suit under the definition of a commercial dispute as claimed by the Plaintiff in the said paragraph 13, as the immovable property is not exclusively used in trade or commerce. 13. 12. Further, Mr.Mishra submits that even assuming without admitting that the Plaintiff may have incurred monies for the purported redevelopment transaction, that cannot bring the Suit under the definition of a commercial dispute as claimed by the Plaintiff in the said paragraph 13, as the immovable property is not exclusively used in trade or commerce. 13. It is submitted that the plaint does not contain any averment to the effect that the Suit is a Commercial Suit or gives any description or details of the same that in any manner suggests the commercial nature of the Suit except to say that the Plaintiff has incurred and paid exorbitant amounts of monies for the redevelopment transaction. That, therefore, on the basis that there is no averment, the Suit cannot be considered as a Commercial Suit. 14. In support Mr.Mishra has also tendered across the bar a decision of the Division Bench of the Hon’ble Allahabad High Court in the case of New Okhla Industrial Development Authority vs. Pathik Software Education Private Limited and Another with connected matter , 2023 SCC Online All 4779 and refers to paragraph 44 thereof. 15. Referring further to paragraph 63 of the aforesaid decision, Mr.Mishra further submits that it was necessary for the Plaintiff to plead and substantiate that the suit property was used in trade or commerce, due to which the jurisdiction of Commercial Court has been invoked and without such basic pleadings in the plaint, any explanation sought to be put forth subsequently cannot be permitted. 16. Mr.Mishra, accordingly, submits that since there is no commercial dispute, a Commercial Court would have no jurisdiction to decide the present Suit and this Court direct return of plaint to be presented before an appropriate Court. 17. On the other hand, Ms.Talati, learned Counsel appearing for the Plaintiff / Respondent herein, has reiterated the submissions in the reply – the first one of the locus standi of the Defendant No.1 and the other of the applicability of Section 2(1)(c)(vii) of the Commercial Courts Act. Ms.Talati submits that the Defendant no.1 society has no locus to file this application, in as much as, it has not filed written statement and that the Interim Application seeking condonation of delay in filing written statement is still pending. Ms.Talati submits that the Defendant no.1 society has no locus to file this application, in as much as, it has not filed written statement and that the Interim Application seeking condonation of delay in filing written statement is still pending. Secondly, Ms.Talati submits that the Plaintiff has incurred and paid exorbitant amounts of monies for the redevelopment transaction, and therefore, the Suit has correctly been filed as a Commercial Suit. Ms.Talati submits that pursuant to Section 2(1)(c)(ii) of the Commercial Courts Act, disputes relating to immovable property used exclusively in trade or commerce are known to be commercial disputes. Ms.Talati relies upon the decision of a Single Judge Bench of this Court at Nagpur Bench in the case of Kanchanganga Relators Pvt. Ltd. Nagpur and Others vs. Monarch Infrastructure Developers Pvt. Ltd., Nagpur and Others , AIR 2019 Bom 102 in support of her contention and submits that the expression ‘agreements relating to immovable property used exclusively in trade and commerce’ has to be applied to the facts of a particular case in a wideand inclusive manner, so as not to render the provision redundant. 18. Ms.Talati, accordingly, submits that the application be rejected. 19. I have heard the learned Counsel and considered the rival contentions. 20. 18. Ms.Talati, accordingly, submits that the application be rejected. 19. I have heard the learned Counsel and considered the rival contentions. 20. Facts not being in dispute as regards the issues in question, before proceeding further, it would be apposite to set out the definition of the words “Commercial dispute” as provided under Section 2(1)(c) of the Commercial Courts Act as under : “2(1)(c) “commercial dispute” means a dispute arising out of–– (i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents; (ii) export or import of merchandise or services; (iii) issues relating to admiralty and maritime law; (iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same; (v) carriage of goods; (vi) construction and infrastructure contracts, including tenders; (vii) agreements relating to immovable property used exclusively in trade or commerce; (viii) franchising agreements; (ix) distribution and licensing agreements; (x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services; (xiv) mercantile agency and mercantile usage; (xv) partnership agreements; (xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services; (xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; (xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.” (emphasis supplied) 21. Admittedly, the Suit has been filed challenging the termination of the MOU. The plaint clearly suggests that the MOU was executed between the Plaintiff and the Defendant no.1 – society on 16 th May 2014 for the purposes of redevelopment of the property situated on C.T.S. No.203(p), 219, (p) and Building No.64, Gulmohar Road, Magathane, Borivali (East), Mumbai – 400 066, which contains terms such as alternate accommodation to the members, payment of rent/shifting charges to them as well as handing over possession of the building to the developer after the developer has obtained IOD from the corporation and for matters connected therewith. 22. 22. As far as the pleadings and the MOU are concerned, although there is no reference to any commercial use in the MOU, however since Mr.Akhilesh Dubey, learned Counsel for the Defendant No.2 has submitted that there are a few commercial units, this Court is assuming that the said property viz. CTS No.203(p), 219,(p) and Building No.64, Gulmohar Road, Magathane, Borivali (East), Mumbai 400 066, to be redeveloped also has certain commercial units, although neither the MOU nor the plaint in the Suit refers to any commercial units or the property, nor any supporting material to that effect has been brought to my notice. 23. As noted above Section 2(1)(c)(vii) of the Commercial Courts Act requires that for a dispute to be a commercial dispute with respect to agreements relating to immovable property, the immovable property has to be used exclusively in trade or commerce, which means that the entire use of the immovable property has to be exclusively for trade or commerce. 24. In the case of Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace LLP and Another (supra), the Hon’ble Supreme Court has had the occasion to deal with Section 2(1)(c)(vii) of the Commercial Courts Act and the Hon’ble Supreme Court has observed that it is necessary to carefully examine and entertain only disputes which actually answers the definition of commercial dispute. That the dispute relating to immovable property per se may not be a commercial dispute but it becomes a commercial dispute if it inter alia falls under sub- clause (vii) of Section 2(1)(c) of the Commercial Courts Act. The words “used exclusively in trade or commerce” in sub-clause (vii) are to be interpreted purposefully. The word “used” denotes “actually used” and not “ready for use” or “likely to be used” or “to be used” but it should be “actually used”. If the suit filed is not in respect of a commercial dispute and is entertained as such there would be no difference between the regular civil suit and a suit filed in the Commercial division suits which would frustrate the very object for the establishment of the Commercial Courts Act. Paragraphs 14 and 37 of the said decision are usefully quoted as under : “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. Paragraphs 14 and 37 of the said decision are usefully quoted as under : “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 1-3-2019 (K.S. Infraspace LLP v. Ambalal Sarabhai Enterprise Ltd., 2019 SCC OnLine Guj 1926) impugned herein. The Commercial Court shall therefore return the plaint indicating a date for its presentation before the Court having jurisdiction. 37 . A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2(1)(c) of the Act viz. "the agreements relating to immovable property used exclusively in trade or commerce". The words "used exclusively in trade or commerce" are to be interpreted purposefully. The word "used" denotes "actually used" and it cannot be either "ready for use" or "likely to be used" or "to be used". It should be "actually used". Such a wide interpretation would defeat the objects of the Act and the fast tracking procedure discussed above.” (emphasis supplied) 25. In the case of New Okhla Industrial Development Authority vs. Pathik Software Education Private Limited and Another with connected matter (supra), the Allahabad High Court has considered the provisions of the Commercial Courts Act and after a detailed analysis held in paragraphs 44, 45, 62 and 63 as under : “44. In the case of New Okhla Industrial Development Authority vs. Pathik Software Education Private Limited and Another with connected matter (supra), the Allahabad High Court has considered the provisions of the Commercial Courts Act and after a detailed analysis held in paragraphs 44, 45, 62 and 63 as under : “44. From the perusal of the provisions extracted as above, it is noticed that the disputes arising out of lease deed of 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 executed the lease deed of the land in question on 19.01.2007, which was subsequently cancelled by the order/notice dated 07.01.2021 and presently in the aforesaid suit the declaration/cancellation of the notice dated 07.01.2021 pertaining to the land in question is sought, whether the immovable property involved could be considered as being used exclusively in trade or commerce. 45. In the case of Bachhaj Nahar v. Nilima Mandal (supra), Hon'ble Supreme Court dealt with the issue as to whether court can go beyond what is pleaded in pleadings for adjudication and while deciding the appeal also made a distinction on what is to be determined while adjudicating upon easement rights. The Supreme Court held that courts cannot exercise its judicial position to grant relief which is not even sought by parties in the pleadings. Relevant paras of the above judgment are reproduced hereinafter:— “22. The observation of the High Court that when a plaintiff sets forth the facts and makes a prayer for a particular relief in the suit, he is merely suggesting what the relief should be, and that it is for the court, as a matter of law, to decide upon the relief that should be granted, is not sound. Such an observation may be appropriate with reference to a writ proceeding. It may even be appropriate in a civil suit while proposing to grant as relief, a lesser or smaller version of what is claimed. But the said observation is misconceived if it is meant to hold that a civil court may grant any relief it deems fit, ignoring the prayer. 23. It is fundamental that in a civil suit, relief to be granted can be only with reference to the prayers made in the pleadings. But the said observation is misconceived if it is meant to hold that a civil court may grant any relief it deems fit, ignoring the prayer. 23. It is fundamental that in a civil suit, relief to be granted can be only with reference to the prayers made in the pleadings. That apart, in civil suits, grant of relief is circumscribed by various factors like court fee, limitation, parties to the suits, as also grounds barring relief, like res judicata, estoppel, acquiescence, non-joinder of causes of action or parties etc., which require pleading and proof. Therefore, it would be hazardous to hold that in a civil suit whatever be the relief that is prayed, the court can on examination of facts grant any relief as it thinks fit. In a suit for recovery of Rs. one lakh, the court cannot grant a decree for Rs. Ten lakhs. In a suit for recovery possession of property ‘A’, court cannot grant possession of property ‘B’. In a suit praying for permanent injunction, court grant a relief of declaration or possession. The jurisdiction to grant relief in a civil suit necessarily depends on the pleadings, prayer, court fee paid, evidence let in, etc. 24. In the absence of a claim by plaintiffs based on an easementary right, the first defendant did not have an opportunity to demonstrate that the plaintiffs had no easementary right. In the absence of pleadings and an opportunity to the first defendant to deny such claim, the High Court could not have converted a suit for title into a suit for enforcement of an easementary right. The first appellate court had recorded a finding of fact that plaintiffs had not made out title. The High Court in second appeal did not disturb the said finding. As no question of law arose for consideration, the High Court ought to have dismissed the second appeal. Even if the High Court felt that a case for easement was made out, at best liberty could have been reserved to the plaintiffs to file a separate suit for easement. But the High court could not, in a second appeal, while rejecting the plea of the plaintiffs that they were owners of the suit property, grant the relief of injunction in regard to an easementary right by assuming that they had an easementary right to use the schedule property as a passage. 25. But the High court could not, in a second appeal, while rejecting the plea of the plaintiffs that they were owners of the suit property, grant the relief of injunction in regard to an easementary right by assuming that they had an easementary right to use the schedule property as a passage. 25. We accordingly allow these appeals and set aside the judgment and order of the High Court and restore the judgment of the first appellate court. Parties to bear their respective costs.” 62. Though such rival contentions were put forth by the counsel on either side, the said submissions 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 pleadings set up in the suit itself before the Commercial Court. The pleadings made in the averments in the plaint would at the outset be relevant to confer jurisdiction to the competent Commercial Court. Therefore, before adverting to the merits and other aspects, it would be necessary to carefully examine the plaint, written submission and other pleadings set up by the parties before the Commercial Court. The defendant company has referred to the nature of the transaction between the appellant authority and plaintiff company. As the details regarding the pleadings and plaint were already given in detail as above, this is admitted situation that in terms of the lease agreement neither the plaintiff company deposited the amount as per scheduled nor raised any construction within stipulated time. Even it has not moved any application for extension or enlargement of time for raising the constructions even before filing of the suit. 63. The Commercial Court is exclusively constituted to try the commercial disputes, which has jurisdiction to try the same. In that background, a perusal of the prayer made in the plaint would essentially indicate that the suit was filed seeking declaration/cancellation of notice dated 07.01.2021 issued by the defendant authority by which the lease deed dated 19.01.2007 executed in favour of the plaintiff company was cancelled by the defendant-authority. Even if the immovable property under the lease deed was the subject matter, it is necessary to plead and substantiate that the same was being used in trade or commerce due to which the jurisdiction of Commercial Court was invoked. Even if the immovable property under the lease deed was the subject matter, it is necessary to plead and substantiate that the same was being used in trade or commerce due to which the jurisdiction of Commercial Court was 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. (emphasis supplied) 26. After observing that there is no commercial dispute and the Commercial Court had no jurisdiction in view of the Commercial Courts Act, the Court allowed both appeals and set aside the judgment and decree passed by the Commercial Court. 27. Further, in the case of Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace LLP and Another (supra), the Hon’ble Supreme Court in paragraph 14 has observed with respect to the facts of that case that in the instant case, 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 agreement nor is there any pleading to that effect in the plaint. Further, it has also been observed therein that the very same relief sought in the suit was for execution of the mortgage deed which was in the nature of the specific performance of the terms of the MOU and was without reference to the nature of the use of the immovable property in trade or commerce as on the date of the suit. Therefore, in the facts of that case the Commercial Court was directed to return the plaint indicating a date for its presentation before the Court having jurisdiction. 28. Therefore, in the facts of that case the Commercial Court was directed to return the plaint indicating a date for its presentation before the Court having jurisdiction. 28. In the facts of the present case as well, as also noted above, neither the MOU nor the pleadings in any manner suggest the nature of the immovable property sought to be developed, although as noted above, the MOU in respect whereof the termination has been challenged refers to terms such as alternate accommodation to the members, payment of rent/shifting charges to them as well as handing over possession of the building to the developer after the developer has obtained IOD from the corporation and for matters connected therein. 29. Ergo, from a careful examination of the plaint, it emerges that there is no indication or suggestion that the use of the said immovable property is exclusively for trade or commerce. Neither a perusal of the MOU nor of the pleadings in any manner suggest that the suit property has been used exclusively in trade or commerce. The Suit, in my view, does not disclose a dispute as defined under Section 2(1)(c)(vii) of the Commercial Courts Act as claimed by the Plaintiff. There is neither any pleading nor any substantiation that the said property was exclusively used in trade or commerce due to which the jurisdiction of the Commercial Court was invoked. Accordingly, in the facts of this case, the decision of the Nagpur Bench of this Court in the case of Kanchanganga Relators Pvt. Ltd. Nagpur and Others vs. Monarch Infrastructure Developers Pvt. Ltd., Nagpur and Others (supra), would not assist the Plaintiff’s case. It is to be noted that in the case of Kanchanganga Relators Pvt. Ltd. Nagpur and Others vs. Monarch Infrastructure Developers Pvt. Ltd., Nagpur and Others (supra) this Court has clearly observed in paragraph 12 of the said decision that the expression ‘agreement relating to immovable property used exclusively in trade or commerce’ has to be applied in a wide and inclusive manner to the facts of a particular case and that there should be material on record to show that the immovable property in respect of which the agreement has been executed, is being used or intended to be used for trade or commerce. In the facts of this particular case, as noted above, there is no material on record to show that the immovable property in question, in respect of which the MOU had been executed, is being used or is even intended to be used for trade or commerce. No doubt, the words ‘any other relief pertaining to immovable property’ has to be given a broad interpretation in view of explanation (a) to Section 2(1) (c)(vii), however, that is not what is of concern here, as there is no indication whatsoever in the pleadings to the effect that the immovable property in question is being used or even capable of being used exclusively in trade or commerce. In my view, therefore, the decision in the case of Kanchanganga Relators Pvt. Ltd. Nagpur and Others vs. Monarch Infrastructure Developers Pvt. Ltd., Nagpur and Others (supra) is distinguishable and will not be applicable to the facts of this case. 30. I, therefore, agree with Mr.Mishra, learned Counsel for the Defendant No.1/Applicant. The plaint does not contain any averment to the effect that the Suit is a Commercial Suit nor gives any description or details of the same to even remotely suggest that the immovable property in question is capable of being exclusively used in trade or commerce or dispute is a commercial dispute except to say that the Plaintiff has incurred and paid exorbitant amount of monies for the redevelopment transaction. Expenditure of monies has no bearing on the decision as to whether the dispute is a commercial dispute or not. 31. The Plaintiff has raised an objection that an application under Order VII Rule 10 of the CPC cannot be filed until and unless a written statement has been filed by the Defendant no.1. The said proposition is without any substance. Order VII Rule 10 of the CPC clearly provides that the Court can at any stage of the Suit return the plaint to be presented before the appropriate Court and the fact that no written statement has been filed or that an interim application seeking condonation of delay in filing written statement is pending, in my view, is of no consequence to file or decide this application seeking return of plaint under Order VII Rule 10 of the CPC. 32. 32. Apropos the above discussion, I am of the view that the plaint be returned under Order VII Rule 10 of the CPC to be presented and filed as a Civil Suit in a Court of jurisdiction and not as a Commercial Suit in the Commercial Division. 33. The application is, accordingly, allowed in terms of prayer clause (a) which reads thus : “(a) This Hon'ble Court be pleased to return the Plaint in the above matter from the Commercial Division of this Court and be presented before the appropriate Civil Court/Non-Commercial Division having jurisdiction, as per the provisions under Order VII Rule 10 of the Code of Civil Procedure, 1908.” 34. Let the plaint be presented before the appropriate Court within a period of two weeks.