Sunday, 6 October 2019

Whether it is mandatory to plead that suit is tenable before Commercial Courts Act?

 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.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 7843 OF 2019

Ambalal Sarabhai Enterprises Ltd. Vs K.S. Infraspace LLP & Anr. 

A.S. Bopanna,J.
Dated:October 04, 2019.

Leave granted.
2. The appellant herein is the plaintiff in Commercial
Court Suit No. 41/2018 filed before the Commercial
Court at Vadodara. The respondents herein are arrayed
as the defendants to the suit. The respondents on being
notified in the suit had appeared and filed the written
statement inter alia contending that the suit is not
maintainable as the dispute involved cannot be termed

as a commercial dispute within the meaning of Section
2(1)(c) of the Commercial Courts Act, 2015 (“CC Act,
2015” for short). In view of such contention, the
respondents herein also filed an application under Order
VII Rule 10 of the Civil Procedure Code seeking an order
to return the plaint to be presented in the Court in
which the suit should have been instituted. The
appellant herein though did not choose to file objection
to the said application, had however opposed the same.
The application was registered as Exhibit 15 and the
learned Judge of the Commercial Court on consideration
had through the order dated 17.10.2018 rejected the
application. The respondents herein claiming to be
aggrieved by the said order had approached the High
Court of Gujarat in R/Special Civil Application
No.17868/2018. The High Court through a detailed
order dated 01.03.2019 has allowed the petition, set
aside the order dated 17.10.2018 passed by the
Commercial Court, Vadodara and on allowing the
application filed under Order VII Rule 10 CPC directed
that the plaint be returned to the appellant herein to be

presented in the Court in which the suit should have
been instituted. The appellant herein, therefore,
claiming to be aggrieved by the order dated 01.03.2019
is before this Court in this appeal.
3. The brief facts which led to the present situation
is that the appellant herein executed an agreement to
sell dated 14.02.2012 in favour of the respondent No. 2
in respect of the land which is described in the
agreement. The respondent No. 2 assigned and
transferred all his rights under the said agreement to
sell in favour of respondent No.1 by executing an
assignment deed dated 12.10.2017. In that view, the
respondent No. 1 herein was to purchase the lands
which were the subject matter of the agreement from the
appellant herein. Accordingly, the sale was made under
a Deed of Conveyance dated 03.11.2017. Since certain
other aspects were to be completed regarding the change
relating to the nature of the use of the land for
conclusion of the transaction, the right of the appellant
in respect of the land was to be protected. In that view a
Memorandum of Understanding dated 03.11.2017 was

entered into between the appellant and the respondents
herein. As per the same, a Mortgage Deed was required
to be executed by respondent No. 1 herein in favour of
the appellant.
4. Accordingly, a Mortgage Deed dated 03.11.2017
was executed but the same had not been registered. It
is in that light the appellant herein filed the Commercial
Civil Suit No. 41/2018 so as to enforce the execution of
a Mortgage Deed. Consequently, the relief of permanent
injunction and other related reliefs were sought. It is in
the said suit, summon was issued to respondents herein
who are the defendants in the suit, wherein on filing the
written statement the application under Order VII Rule
10 of CPC was filed. The Commercial Court while
rejecting the application had referred to the
Memorandum and Articles of Association of the
appellant company and in that light taking note of the
business that they were entitled to undertake has
arrived at the conclusion that the plaintiff seems to be
carrying on the business as an estate agent and in that
circumstance has further arrived at its conclusion that

it is a commercial dispute. The High Court on the other
hand had found fault with the manner in which the
Commercial Court had rested its consideration on the
Memorandum and Articles of Association and had
examined the matter in detail to come to a conclusion
that the immovable property in the instant case was not
being used for trade or commerce. In that regard, the
legal position enunciated by the various decisions was
referred to and had accordingly directed the return of
the plaint to be presented in an appropriate Court which
is assailed herein.
5. We have heard Shri Dhruv Mehta, learned senior
advocate for the appellant, Shri Deven Parikh, learned
senior advocate for the respondents and perused the
appeal papers.
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.
“Sec.2(1) In this Act, unless the context otherwise
requires,-
(a) xxx
(b) xxx
(c) “commercial dispute” means a dispute arising out
of –
(i) xxx
(ii) xxx
(iii) xxx
(iv) xxx
(v) xxx
(vi) xxx
(vii) agreements relating to immovable property
used exclusively in trade or commerce;
(viii) xxx
(ix) xxx
(x) xxx
(xi) xxx
(xii) xxx
(xiii) xxx
(xiv) xxx
(xv) xxx
(xvi) xxx
(xvii) xxx
(xviii) xxx
(xix) xxx
(xx) xxx
(xxi) xxx
(xxii) xxx
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
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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. 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. 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.
10. Be that as it may, the learned senior advocates on
both sides have sought to rely on the legal position
decided by the various High Courts in the absence of the
pronouncement of this Court. The learned senior
advocate in that regard have referred to the various
decisions on the same point. However, we do not find it
appropriate to refer to each of them and over burden
this order since we notice that the High Court in fact
has referred to various decisions while deciding the
instant case and has thereafter arrived at its conclusion.
The discussion as made by the High Court with
reference to the various decisions is also justified. In
that view, we would refer to the decision of a Division
Bench in the case of Jagmohan Behl vs. State Bank
of Indore, 2017 SCC OnLine Del 10706 relied on by the
learned senior advocate for the appellant. In that

regard, it is noticed that in the said case on taking note
of the provision contained in Clause 2(1)(c)(vii) of the CC
Act, 2015 it is held that the dispute involved therein
would constitute a commercial dispute and the
expression “arising out of” and “in relation to immovable
property” should not be given the narrow and restricted
meaning and the expression would include all matters
relating agreements in connection with the immovable
properties. The said conclusion reached was in a
circumstance where the immovable property in question
was undoubtedly being used for a trade or commerce
and it was held so when the claim in the suit is for
recovery of rent or mesne profit, security deposit etc. for
the use of such immovable property.
11. On the other hand, the learned senior advocate
for the respondents has relied on the decision of a
Division Bench of the Gujarat High Court in the case of
Vasu Healthcare Private Limited vs. Gujarat Akruti
TCG Biotech Limited, AIR 2017 Gujarat 153 wherein a
detailed consideration has been made and the
conclusion reached therein by taking note of an earlier

decision is that on a plain reading of Clause 2(1)(c) of CC
Act, 2015 the expression “used” must mean “actually
used” or “being used”. It is further explained that if the
intention of the legislature was to expand the scope, in
that case the phraseology “likely to be used” or “to be
used” would have been employed. The verbatim
consideration therein is as hereunder;
“Therefore, if the dispute falls within any of the clause 2(c)
the dispute can be said to be “commercial dispute” for
which the Commercial Court would have jurisdiction. It is
required to be noted that before the learned Commercial
Court the original plaintiff relied upon section 2(c)(i), 2(c)(ii)
and 2(c)(xx) of the Commercial Courts Act only. Learned
Counsel appearing on behalf of the original plaintiff has
candidly admitted and/or conceded that the case shall not
fall within clause 2(c)(i); 2(c)(ii) or 2(c)(xx) of the Commercial
Courts Act. It is required to be noted that before the learned
Commercial Court it was never the case on behalf of the
original plaintiff that case would fall within section 2(c)(vii)
of the learned Commercial Court. Despite the above we
have considered on merits whether even considering section
2(c)(vii) of the Commercial Courts Act, the dispute between
the parties can be said to be “commercial dispute” within
the definition of section 2(c) of the Commercial Courts Act
or not? Considering section 2(c)(vii), “commercial dispute”
means a dispute arising out of the agreements relating
to immovable property used exclusively in trade or
commerce. As observed hereinabove, at the time of filing of
the suit and even so pleaded in the plaint, the immovable
property/plots the agreements between the parties cannot
be said to be agreements relating to immovable property
used exclusively in trade or commerce. As per the
agreement between the party after getting the plots on lease
from the GIDC, the same was required to be thereafter
developed by the original defendant No. 1 and after
providing all infrastructural facilities and sub-plotting it,
the same is required to be given to other persons like the

original plaintiff. It is the case on behalf of the original
plaintiff that as the original defendant No. 1 has failed to
provide any infrastructural facilities and develop the plots
and therefore, a civil suit for specific performance of the
agreement has been filed. There are other alternative
prayers also. Therefore, it cannot be said that the
agreement is as such relating to immovable property used
exclusively in trade or commerce. It is the case on behalf of
the original plaintiff that as in clause (vii) of section 2(c), the
pharseology used is not “actually used” or “being used” and
therefore, even if at present the plot is not used and even if
it is likely to be used even in future, in that case also,
section 2(c)(vii) shall be applicable and therefore, the
Commercial Court would have jurisdiction. The aforesaid
has no substance. As per the cardinal principle of law while
interpreting a particular statute or the provision, the literal
and strict interpretation has to be applied. It may be noted
that important words used in the relevant provisions are
“immovable property used exclusively in trade or
commerce”. If the submission on behalf of the original
plaintiff is accepted in that case it would be adding
something in the statute which is not there in the statute,
which is not permissible. On plain reading of the relevant
clause it is clear that the expression “used” must mean
“actually used” or “being used”. If the intention of the
legislature was to expand the scope, in that case the
phraseology used would have been different as for example,
“likely to be used” or “to be used”. The word “used” denotes
“actually used” and it cannot be said to be either “ready for
use” or “likely to be used”; or “to be used”. Similar view has
been taken by the Bombay High Court (Nagpur Bench) in
the case of Dineshkumar Gulabchand Agrawal (Supra) and
it is observed and held that the word “used” denotes
“actually used” and not merely “ready for use”. It is
reported that SLP against the said decision has been
dismissed by the Hon'ble Supreme Court.”
12. Though we are informed that the said decision is
assailed before this Court in a Special Leave Petition we
are inclined to agree with the view expressed therein.

This is for the reason that this Court while examining
the issue relating to exclusive land use, though in the
different context has laid emphasis on the present user
of the land either for agriculture or non-agriculture
purpose being relevant. In that regard, the decision
relied on by the learned senior advocate for the
respondent in the case of Federation of A.P. Chambers
of Commerce & Industry and Ors. vs. State of A.P.
and Ors., (2000) 6 SCC 550 is noticed, wherein it is
observed as under:
“6. Section 3 of the said Act speaks of “land is
used for any industrial purpose”, “land is used for
any commercial purpose” and “land is used for any
other non-agricultural purpose”. The emphasis is
on the word “is used”. For the purpose of levy of
assessment on non-agricultural lands at the rate
specified in the Schedule for land used for
industrial purposes, therefore, there has to be a
finding as a fact that the land is in fact in praesenti
in use for an industrial purpose. The same would
apply to a commercial purpose or any other
non-agricultural purpose.”
“9. We are in no doubt whatever, therefore, that
it is only land which is actually in use for an
industrial purpose as defined in the said Act that
can be assessed to non-agricultural assessment at
the rate specified for land used for industrial
purposes. The wider meaning given to the word
“used” in the judgment under challenge is
untenable. Having regard to the fact that the said
Act is a taxing statute, no Court is justified in
imputing to the legislature an intention that it has
not clearly expressed in the language it has
employed.”

(emphasis supplied)
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. 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. The Commercial Court shall therefore
return the plaint indicating a date for its presentation
before the Court having jurisdiction.
15. Accordingly, the instant appeal being devoid of
merit stands dismissed, with no order as to costs.
……………………….J.
(A.S. BOPANNA)
New Delhi,
October 04, 2019
18
R. BANUMATHI, J.
I have gone through the judgment of my esteemed Brother
Justice A.S. Bopanna. I am in full agreement with the conclusion
that in order to fall within Section 2(1)(c)(vii) of the Commercial
Courts Act, the immovable property must be “used exclusively” or
“being used exclusively” in trade or commerce. However, in view of
the importance of the question involved, I would like to give my
reasonings for concurring with the conclusion of my esteemed
Brother.
2. The Commercial Courts, Commercial Division and
Commercial Appellate Division of High Courts Act, 2015 (Act No.4 of
2016) published in the Gazette of India on 01.01.2016. The Act is
deemed to have come into force w.e.f. 23.10.2015. The Act No.4 of
2016 was amended by Central Act 28 of 2018 – The Commercial
Courts Act.
3. We may refer to the Law Commission’s 253rd Report, which
inter alia made various recommendations. Para (4.2) of Chapter
IV-“Conclusions and Summary of Recommendations” of Law
Commission’s 253rd Report reads as under:-
“4.2 The Commercial Courts, the Commercial Divisions and the
Commercial Appellate Divisions of High Courts that have been
recommended are intended to serve as a pilot project in the
1
larger goal of reforming the civil justice system in India. The goal
is to ensure that cases are disposed of expeditiously, fairly and
at reasonable cost to the litigant. Not only does this benefit the
litigant, other potential litigants (especially those engaged in
trade and commerce) are also advantaged by the reduction in
backlog caused by the quick resolution of commercial disputes.
In turn, this will further economic growth, increase foreign
investment, and make India an attractive place to do business.
Further, it also benefits the economy as a whole given that a
robust dispute resolution mechanism is a sine qua non for the
all-round development of an economy”.1
After Law Commission’s 253rd Report, the Act No.4 of 2016 was
amended by Central Act 28 of 2018.
4. Section 3 of the Act deals with Constitution of Commercial
Courts. As per Section 3 of the Act, the State Government shall,
after consultation with the High Court, by notification, constitute
Commercial Courts at District level if deemed necessary for the
purpose of exercising jurisdiction under the Act. As per Section
3(1A) of the Act, Commercial Courts shall have jurisdiction to try the
commercial disputes of a “Specified Value” which shall not be less
than three lakh rupees or such higher value, for whole or part of the
State, as it may consider necessary. After amendment in 2018,
proviso to Section 3 provides that Commercial Courts may be
1 See Para (4.2) of Chapter-IV-‘Conclusions and Summary of Recommendations’ of Law
Commission’s 253rd Report – Commercial Division and Commercial Appellate Division of High
Courts and Commercial Courts Bill, 2015.
2
constituted with respect to area over which the High Courts have
ordinary original civil jurisdiction. Section 5(1) of the Act provides for
the constitution of Commercial Appellate Division having one or
more Division Benches for the purpose of exercising jurisdiction and
powers conferred on it by the Act.
5. Section 6 deals with the jurisdiction of Commercial Court.
Section 6 of the Act reads as under:-
“6. Jurisdiction of Commercial Court. - 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 (5 of 1908)”.
6. Section 7 deals with the jurisdiction of Commercial Divisions
of High Courts. Section 7 of the Act reads as under:-
“7. Jurisdiction of Commercial Divisions of High Courts. – All
suits and applications relating to commercial disputes of a Specified
Value filed in a High Court having ordinary original civil jurisdiction
shall be heard and disposed of by the Commercial Division of that
High Court:
Provided that all suits and applications relating to commercial
disputes, stipulated by an Act to lie in a court not inferior to a
District Court, and filed or pending on the original side of the High

Court, shall be heard and disposed of by the Commercial Division
of the High Court:
Provided further that all suits and applications transferred to
the High Court by virtue of sub-section (4) of section 22 of the
Designs Act, 2000 (16 of 2000) or section 104 of the Patents Act,
1970 (39 of 1970) shall be heard and disposed of by the
Commercial Division of the High Court in all the areas over which
the High Court exercises ordinary original civil jurisdiction”.
7. Commercial Divisions are to be set up in High Courts that are
already having ordinary original civil jurisdiction having one or more
Benches consisting of a Single Judge having experience in dealing
with commercial disputes for exercising powers under the Act. As
per Section 7(1) and the proviso thereto, Commercial Division will
hear and dispose of all suits and applications relating to commercial
disputes of a specified value, that lie in a court not inferior to district
court and filed in a High Court having ordinary original civil
jurisdiction and also those cases transferred to High Court under
Section 22(4) of the Designs Act, 2000 or under Section 104 of the
Patents Act, 1970.
8. Section 5 of the Act deals with the Constitution of Commercial
Appellate Division. Section 5(1) of the Act reads as under:-
“5. Constitution of Commercial Appellate Division. – (1) After
issuing notification under sub-section (1) of section 3 or order under
sub-section (1) of section 4, the Chief Justice of the concerned
High Court shall, by order, constitute Commercial Appellate Division
4
having one or more Division Benches for the purpose of exercising
the jurisdiction and powers conferred on it by the Act.
………”
In terms of Section 5(2) of the Act, the Chief Justice of the High
Court shall nominate such Judges of the High Court who have
experience in dealing with commercial disputes to be Judges of the
Commercial Appellate Division.
9. Section 2(1)(c) defines “commercial dispute” as under:-
“2. Definitions. - (1) In this Act, useless the context otherwise
requires,-
……….
(c) “Commercial dispute” means a dispute arising out of-
(i) ordinary transaction 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;
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(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 agreement;
(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
resource including electromagnetic spectrum;
(xx) insurance and re-insurance;
(xxi) contract of agency relating to any of the above; and
(xxii) such other commercial disputes as may be notified by the
Central Government.
Explanation.- A commercial dispute shall not cease to be commercial
dispute merely because-
(a) it also involves action for recovery of immovable property
or for realising 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;
(d) “Commercial Division” means the Commercial Division in a
High Court constituted under sub-section (1) of section 4;
(e) “District Judge” shall have the same meaning as assigned
to it in clause (a) of Article 236 of the Constitution of India:
(f) “Document” means any mater expressed or described upon
any substance by means of letters, figures or marks, or
electronic means, or by more than one of those means,
6
intended to be used, or which may be used, for the purpose of
recording that matters;
(g) “Notification” means a notification published in the Official
Gazette and the expression “notify” with its cognate meanings
and grammatical variations shall be construed accordingly;
(h) “schedule” means the Schedule appended to the Act; and
(i) “Specified Value”, in relation to a commercial dispute, shall
mean the value of the subject matter in respect of a suit as
determined in accordance with section 12 [which shall not be
less than three lakh rupees] or such higher value, as may be
notified by the Central Government.”
[Subs. by Act 28 of 2018, sec. 4(II), for “which shall not be less
than one crore rupees” (w.r.e.f. 3-5-2018)].
10. As noted above, clause (i) of Section 2 of the Act defines
“Specified Value”, in relation to a commercial dispute, shall mean
the value of the subject matter in respect of a suit as determined in
accordance with section 12 [which shall not be less than three
lakh rupees] or such higher value, as may be notified by the
Central Government”. Section 12 provides for criteria for valuation
of the suit, application or appeal for the purpose of the Act.
11. A matter will fall under the jurisdiction of the Commercial Court
or the Commercial Division of the High Court on the following
factors:-
(i) it shall be a commercial dispute within the meaning of
Section 2(1)(c) of the Act; and
(ii) such commercial disputes are of a specified value as per
Section 2(i) of the Act.
7
12. As per Section 11 of the Act, notwithstanding anything
contained in the Act, a Commercial Court or a Commercial Division
shall not entertain or decide any suit relating to any commercial
dispute in respect of which the jurisdiction of the civil court is either
expressly or impliedly barred under any other law for the time being
in force.
13. Section 15 of the Act deals with transfer of pending cases.
Section 15 of the Act reads as under:-
“15. Transfer of pending cases. – (1) All suits and applications,
including applications under the Arbitration and Conciliation Act,
1996 (26 of 1996), relating to a commercial dispute of Specified
Value pending in a High Court where a Commercial Division has
been constituted, shall be transferred to the Commercial Division.
(2) All suits and applications, including applications under the
Arbitration and Conciliation Act, 1996 (26 of 1996), 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:
Provided that no suit or application where the final judgment
has been reserved by the Court prior to the constitution of the
Commercial Division or the Commercial Court shall be transferred
either under sub-section (1) or sub-section (2).
………”.
14. Insofar as transferred cases, as per Section 15(4) of the Act,
the Commercial Division or Commercial Court shall prescribe new
timelines or issue further directions for speedy and efficacious
8
disposal of such suit or application in accordance with Order XVA of
the Code of Civil Procedure. New time period for filing written
statement shall be prescribed and the proviso to sub-rule (1) of rule
1 of Order V of the Code of Civil Procedure shall not apply to the
transferred cases and the Court may, in its discretion, prescribe a
new time period within which the written statement shall be filed.
15. The preamble of the Commercial Courts Act, 2015 reads as
under:-
“An Act to provide for the constitution of Commercial Courts,
Commercial Appellate Courts, Commercial Division and Commercial
Appellate Division in the High Courts for adjudicating commercial
disputes of specified value and matters connected therewith or
incidental thereto.”
16. The Statement of Objects and Reasons of the Commercial
Courts Act reads as under:-
“Statement of Objects and Reasons
The proposal to provide for speedy disposal of high value
commercial disputes has been under consideration of the
Government for quite some time. The high value commercial
disputes involve complex facts and question of law. Therefore, there
is a need to provide for an independent mechanism for their early
resolution. Early resolution of commercial disputes shall create a
positive image to the investor world about the independent and
responsive Indian legal system.
……….
6. It is proposed to introduce the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Bill, 2015
to replace the Commercial Courts, Commercial Division and
9
Commercial Appellate Division of High Courts Ordinance, 2015 which
inter alia, provides for the following namely:-
(i) constitution of the Commercial Courts at District level except
for the territory over which any High Court is having ordinary
original civil jurisdiction;
(ii) constitution of the Commercial Divisions in those High
Courts which are already exercising ordinary civil jurisdiction
and they shall have territorial jurisdiction over such areas on
which it has original jurisdiction;
(iii) constitution of the Commercial Appellate Division in all the
High Courts to hear the appeals against the Orders of the
Commercial Courts and the Orders of the Commercial Division
of the High Court;
(iv) the minimum pecuniary jurisdiction of such Commercial
Courts and Commercial Division is proposed as one crore
rupees; and
(v) to amend the Code of Civil Procedure, 1908 as applicable
to the Commercial Courts and Commercial Divisions which
shall prevail over the existing High Courts Rules and other
provisions of the Code of Civil Procedure, 1908 so as to
improve the efficiency and reduce delays in disposal of
commercial cases.
……...”
The object and purpose of Commercial Courts Act is to ensure that
the Commercial Courts, Commercial Appellate Courts, Commercial
Division and Commercial Appellate Division of the High Courts and
also to ensure that the commercial cases are disposed of
expeditiously, fairly and at reasonable cost to the litigant.
17. Section 13 deals with appeals from decrees of Commercial
Courts and Commercial Divisions. As per Section 14 of the Act, the
Commercial Appellate Court and the Commercial Appellate Division
10
shall endeavour to dispose of appeals filed before it within a period
of six months from the date of filing of such appeal.
Fast Track Procedure for deciding the Commercial Disputes
18. As per Section 16 of the Act, the provisions of the Code of
Civil Procedure as amended under the Act, shall apply in the trial of
suit in respect of a commercial dispute of a specified value. Section
16 of the Act reads as under:-
“16. Amendments to the Code of Civil Procedure, 1908 in its
application to commercial disputes. – (1) The provisions of the
Code of Civil Procedure, 1908 (5 of 1908) shall, in their application
to any suit in respect of a commercial dispute of a Specified Value,
stand amended in the manner as specified in the Schedule.
(2) The Commercial Division and Commercial Court shall follow the
provisions of the Code of Civil Procedure, 1908 (5 of 1908), as
amended by this Act, in the trial of a suit in respect of a commercial
dispute of a Specified Value.
(3) Where any provision of any rule of the jurisdictional High Court
or any amendment to the Code of Civil Procedure, 1908 (5 of
1908), by the State Government is in conflict with the provisions of
the Code of Civil Procedure, 1908 (5 of 1908), as amended by this
Act, the provisions of the Code of Civil Procedure as amended by
this Act shall prevail”.
19. The Schedule to the Commercial Courts Act amends various
provisions of the Code of Civil Procedure and thereby makes
significant departure from the Code. After Order XIII of the Code,
Order XIIIA - “Summary Judgment” has been inserted. Order XIIIA

contains the scope and classes of suits to which Order XIIIA
applies, grounds for summary judgment, procedure to be followed,
evidence for hearing of summary judgment, orders that may be
made by Court in such proceedings for summary judgment, etc.
After Order XV of the Code, Order XVA–“Case Management
Hearing” has been inserted. Order XVA provides for first Case
Management Hearing (Rule 1); recording of oral evidence on a
day-to-day basis (Rule 4); powers of the Court in a Case
Management Hearing (Rule 6); adjournment of Case Management
Hearing (Rule 7); consequences of non-compliance with orders
(Rule 8). By way of amendment, several rules have been
incorporated to make the matters of commercial disputes on fast
track. In Order XX of the Code – “Judgment”, Rule 1 has been
substituted that within ninety days of the conclusion of arguments,
the Commercial Court/Commercial Division/Commercial Appellate
Division to pronounce the judgment and copies thereof shall be
issued to all the parties to the dispute through electronic mail or
otherwise.
20. Various provisions of the Act namely Case Management
Hearing and other provisions makes the court to adopt a pro-active
approach in resolving the commercial dispute. A new approach for
carrying out case management and strict guidelines for completion
12
of the process has been introduced so that the adjudicatory process
is not delayed. I have referred to the various provisions of the Act
and the Schedule bringing in amendments brought to the Civil
Procedure Code to deal with the commercial disputes, only to
highlight that the trial of the commercial dispute suits is put on fast
track for disposal of the suits expeditiously. Various provisions of
the Act referred to above and the amendments inserted to Civil
Procedure Code by the Schedule is to ensure speedy resolution of
the commercial disputes in a time bound manner. The intent of the
legislature seems to be to have a procedure which expedites the
disposal of commercial disputes and thus creates a positive
environment for investment and development and make India an
attractive place to do business.
21. 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
13
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.
22. 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.
23. On 03.11.2017, a Memorandum of Understanding was
executed between the appellant-plaintiff, respondent-defendant and
Ketan Bhailalbhai Shah-second respondent. As per the terms of
14
MOU, parties executed a Deed of Conveyance of the land. A
mortgage deed was executed simultaneously along with the MOU
with respect to the part of the land admeasuring 15,000 sq.ft. in
favour of the plaintiff. It was understood between the parties that
respondent No.1 would apply for change of land use permission for
the land in question on signing of the MOU. Mortgage deed was
executed by respondent No.1 in favour of the appellant in order to
ensure performance of obligations under the MOU. But the said
mortgage deed was not presented for registration.
24. It appears that the trial court has proceeded under the footing
that the parties to the suit more particularly, the appellant-plaintiff
seems to be carrying on business as Estate Agent and to manage
land, building, etc. and the very object as enumerated in
Memorandum and Articles of Association of the appellant-plaintiff
company established that the property in question are being used
exclusively in trade or commerce rather in the business of the
plaintiff. As rightly pointed out by the High Court, there is nothing on
record to show that at the time when agreement to sell came to be
executed in 2012, the property was being exclusively used in trade
and commerce so as to bring dispute within the ambit of sub-clause
(vii) of Section 2(1)(c) of the Act. Merely because, the property is
15
likely to be used in relation to trade and commerce, the same
cannot be the ground to attract the jurisdiction of the Commercial
Court.
25. In the case of Ujwala Raje Gaekwar v. Hemaben Achyut Shah
2017 SCC Guj 583, a Special Civil Suit No.533/2011 was instituted
for declaration that the sale deed valued at Rs.17.76 crores
executed by the appellant-original defendant No.1 in favour of
respondent No.4 be declared illegal and also, for permanent
injunction with respect to the land in question. The
appellants-defendants thereon filed an application that in sale deed,
it has been clearly mentioned that the agreement relating to
immovable property used exclusively in trade or commerce and falls
within the meaning of Section 2(1)(c)(vii) of the Commercial Courts
Act and that the matters above, the value of rupees one crore are to
be transferred to the Commercial Court. Trial court rejected the said
application which was challenged before the Gujarat High Court.
The Gujarat High Court held that the aim, object and purpose of
establishment of Commercial Courts, Commercial Divisions and
Commercial Appellate Divisions of the High Court is to ensure that
the cases involved in commercial disputes are disposed of
expeditiously, fairly and at reasonable cost to the litigant, and if such a suit which is as such arising out of the probate proceedings and/or
is dispute with respect to the property are transferred to the
Commercial Division/Commercial Court, there shall not be any
difference between the Regular Civil Courts and the Commercial
Division/Commercial Courts and the object for the establishment of
the Commercial Division/Commercial Courts shall be frustrated.
26. In Vasu Healthcare Private Limited v. Gujarat Akruti TCG
Biotch Limited & Another 2017 SCC OnLine Guj 724, referred to in
extenso by my learned Brother, it was held that “on plain reading of
the relevant clause, it is clear that the expression “used” must mean
“actually used” or “being used”. If the intention of the legislature was
to expand the scope, in that case the phraseology used would have
been different as for example, “likely to be used” or “to be used”.
The word “used” denotes “actually used” and it cannot be said to be
either “ready for use” or “likely to be used”; or “to be used”. We
entirely agree with the above purposive interpretation adopted by
the Gujarat High Court.
27. The object and purpose of the establishment of Commercial
Courts, Commercial Divisions and Commercial Appellate Divisions
of the High Court is to ensure that the cases involved in commercial
disputes are disposed of expeditiously, fairly and at reasonable cost

to the litigants. Keeping in view the object and purpose of the
establishment of the Commercial Courts and fast tracking procedure
provided under the Act, the statutory provisions of the Act and the
words incorporated thereon are to be meaningfully interpreted for
quick disposal of commercial litigations so as to benefit the litigants
especially those who are engaged in trade and commerce which in
turn will further economic growth of the country. On the above
reasonings, I agree with the conclusion arrived at by my esteemed
brother Justice A.S. Bopanna.
………………………….J.
[R. BANUMATHI]
New Delhi;
October 04, 2019.

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