Amar Puri v. Samar S Puri

1. The present appeal filed under Order XLIII Rule 1 of Code of Civil Procedure, 1908(hereinafter referred to as „CPC‟) is directed against the order dated 18.09.2024, passed by the Trial Court, whereby the suit was held to be a Commercial Suit and the plaint was returned under Order VII Rule 10 CPC.

2. The facts, in a nutshell, are that in the plaint, the plaintiff had asserted that Commercial/industrial Shed bearing No.6A, D.D.A Sheds, Okhla Industrial Area, Phase-II, New Delhi (hereinafter the „suit property‟) was allotted to him by DDA in an Auction held on 30.10.1981, whereafter he became its exclusive owner on payment of the sale consideration. A Possession Letter dated 04.08.1982 was also issued in his name. Thereafter, the suit property was used by the plaintiff as the office of his partnership firm namely, “M/s DESCON India”. It was further claimed that the defendant, who is the elder brother of the plaintiff, was running his partnership firm in the name of “M/s Associated Engineers” from the adjacent premises bearing Shed No. 5-A, D.D.A Sheds, Okhla Industrial Area, Phase-II, New Delhi and requested the plaintiff to permit him to use the portion of suit property. The plaintiff claimed that he used the suit property till the year 1996-1997, whereafter his office shifted to C-2, D.D.A. Golf View Apartments, Saket, New Delhi-110017. On defendant‟s request, plaintiff permitted him to run the latter‟s partnership business on the suit property. It was further claimed that on the demise of the youngest brother of the parties, namely Shri Rajiv Puri, with whom the defendant was running his aforesaid business, the partnership firm got dissolved. However, despite requests, the defendant refused to vacate the suit property. In this backdrop, the claim was filed seeking recovery of possession, damages/mesne profits and permanent injunction.

3. During the pendency of the suit, the defendant filed an application under Order VII Rule 10 CPC claiming that since the suit property was being used for commercial purposes, the dispute fell within the ambit of Section 2(1)(c)(vii) of the Commercial Court Act, 2015. It was also claimed that the relief for mesne profits was covered under the said Section. While relying on the decision of this Court in Jagmohan Behl v. State Bank of Indore[1], it was submitted that the expression “arising out of” in Section 2(1)(c)(vii), in relation to agreements concerning immovable property, is wide and expansive and is not to be given a narrow or restricted 2017 SCC OnLine Del 10706 interpretation. It was contended that the said expression would include all matters relating to agreements connected with immovable property used in trade or commerce, including oral agreements. Further, reliance was placed upon Harshad Chiman Lal Modi v. DLF Universal & Anr.2, learned counsel submits that the decree passed in a suit by a Court lacking subject matter jurisdiction would be a nullity.

4. The plaintiff, however, contested the said application, contending that the suit property had been permitted to be used by the defendant and was handed over out of respect and not for any commercial consideration. Hence, the requirement of Section 25 of the Indian Contract Act is not satisfied. The oral agreement cannot amount to an agreement envisaged under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015.

5. The Trial Court, while considering Section 52 of the Indian Easements Act, 1882, which defines „license‟ as a right granted by one person to another to do, or continue to do, in or upon the immovable property of a grantor something which would otherwise be unlawful, has observed that no consideration is required for a valid licence and that a mere agreement (oral or written) between the parties whereby such license is granted would be sufficient. The Trial Court has noted the averments made in the plaint wherein it was stated that the plaintiff had acceded to the defendant‟s request and had permitted him to use the suit property for business purposes. In this backdrop, it was held that the dispute was covered by a provision of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015.

6. Learned counsel for the appellant submits that no objection as to jurisdiction was raised either in the written statement or at the stage of framing of issues with respect to the maintainability of the suit under the Commercial Courts Act, 2015. It is contended that the controversy lies in a narrow compass, namely, whether the arrangement pleaded in the plaint can be construed as an “agreement relating to immovable property used exclusively in trade or commerce” within the meaning of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. The said provision reads as under:- “(vii) agreements relating to immovable property used exclusively in trade or commerce.”

7. Pertinently, for consideration of prayer for return of plaint under Order VII Rule 10 CPC, only the averments made in the plaint alone need to be examined.

8. Before proceeding further, let me take note of the position of law noted by Supreme Court in Ambalal Sarabhai Enterprise Limited v. K.S. Infraspace LLP[3], where it elaborately discussed the jurisdiction of Commercial Court and further held that a strict construction to the provisions of Commercial Court Act is required otherwise any liberal interpretation shall defeat the very objection for the purpose of the said Act i.e. speedy disposal of high value commercial disputes. It was further clarified that the expression “used exclusively in trade or commerce” refers to property which is actually being used for commercial purposes, and not property which is merely ready for use, likely to be used, or to be used for trade or commerce in future. In the present case the plaint itself shows that the suit property is a commercial/industrial shed and that the defendant was permitted to use it for business activities.

9. Similarly, in Meena Vohra v. Master Hosts (P) Ltd.4, the learned Single Judge of this Court held that, for a dispute to be categorised as a „commercial dispute‟, the transaction should be supported by a document that records, governs, or evidences trade, commerce, or business activity. This Court further observed that the absence of such a document raises doubts as to whether a dispute can be classified as a „commercial dispute‟ under the Commercial Courts Act, 2015. It was further held that a dispute shall qualify as a „commercial dispute‟ when it arises from transactions involving merchants, bankers, financiers, or traders or relating to mercantile documents, including their enforcement and interpretation etc. The Court also held that a commercial dispute inherently carries a commercial flavour, encompassing elements of trade and business. The relevant observations of the Court are as under:-

11. However, the issue in the present case is not whether a gratuitous licence is legally valid, but whether the arrangement pleaded in the plaint possesses the commercial character contemplated under Section 2(1)(c)(vii) of the Commercial Courts Act. Admittedly, the property in question is a commercial/industrial shed and, as per the plaint itself, the defendant was permitted to use the premises for running business activities. Therefore, the arrangement has a commercial character and concerns immovable property being used for commercial purposes. The alleged permissive gratuitous use will not make the agreement non-commercial for deciding the applicability of Commercial Courts Act.

12. In arguendo, learned counsel has prayed that in the alternative, the suit be transferred to the Commercial Court instead of the plaint being returned.

13. In this regard, this Court takes note of the fact that the present suit was instituted in July, 2017 i.e., prior to the decision of the Supreme Court in Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd.[6] where prospective applicability of the judgment was declared. The relevant paragraphs from the judgment on the effect of the ruling on the pending suits is as under:- “113.1. We declare that Section 12-A of the Act is mandatory and hold that any suit instituted violating the mandate of Section 12-A must be visited with rejection of the plaint under Order 7 Rule 11. This power can be exercised even suo moto by the court as explained earlier in the judgment. We, however, make this declaration effective from 20-08-2022 so that stakeholders concerned become sufficiently informed.