The Commercial Courts have no jurisdiction to try the disputes in respect of immovable property, which are not used exclusively in Trade or Commerce- Supreme Court clarified

The Supreme Court has decided an important question of law relating to the provisions under Section 2(1)(c)(vii) of the Commercial Courts Act.

          The appellant has filed a suit before the Commercial Court for enforcing a Mortgage Deed coupled with a Memorandum of Understanding entered into between the Appellant and the Respondents in connection with change relating to the use of Land. Since the Respondents failed to perform their obligations, the Appellant filed the said suit for enforcing the Mortgage Deed.

          The above suit was entertained by the Commercial Court and on appearance, the Respondents filed an application under Order 7 Rule 10 of CPC questioning the jurisdiction of Commercial Court and sought for a prayer to return the plaint to present before the Civil court of competent jurisdiction. The ground raised by the Respondents is that the transactions are not involving any commercial transactions and it is only relating to an immovable property. However, the Commercial Court dismissed the said application on the ground that the Appellant is carrying on business as Estate agent and hence it is a commercial dispute.

          The respondents approached the High Court as against the order of the Commercial Court and the High Court allowed the application of the respondent by concluding that the land in question has not been used exclusively for any trade or commerce and hence the dispute do not fall under any of the definitions as provided under section 2(1)(c) of the Act. As against the order of the High Court, the Appellant preferred the appeal before the Supreme Court of India.

          After hearing the parties and after analysing various decision of the High Court as there is no judgment of the Apex Court in this regard is available, the Supreme Court has dismissed the appeal by concluding that the nature of the business of the parties is absolutely irrelevant in order to decide whether the dispute is commercial one or not, but the relevancy is whether the dispute involves any commercial transaction between the parties or not.

          So, it is the firm conclusion of the Apex court that disputes arising out of agreements relating to immovable property used exclusively in trade or commerce will qualify to be a commercial dispute to be tried by Commercial Courts. Thus, in order to qualify a dispute as a commercial dispute regarding an immovable property, it must be exclusively used in Trade or Commerce.

It is further held by the Hon’ble Supreme Court that “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”

Thus, the proposed use of land will not have any bearing in deciding the issue whether it is a commercial dispute or not.

(Case Law:  CIVIL APPEAL NO. 7843 OF 2019 (Arising out of SLP (Civil) No.9391 of 2019) Ambalal Sarabhai Enterprises Ltd. Vs. K.S. Infraspace LLP & Anr. – Date of Decision of SC- 04-10-2019)