REPORTABLE                 

  IN THE SUPREME COURT OF INDIA

  CIVIL APPELLATE JURISDICTION

  CIVIL APPEAL NO.     7843      OF 2019    (Arising out of SLP (Civil) No.9391 of 2019)

Ambalal Sarabhai Enterprises Ltd.            .…Appellant(s)

Versus

K.S. Infraspace LLP & Anr.                 ….  Respondent(s)

J U D G M E N T

A.S. Bopanna,J.

      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

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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

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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

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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

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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   

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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

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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,

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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:

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“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   

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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

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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

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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

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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.

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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.”

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  (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   

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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

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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

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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

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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.

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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

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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

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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,

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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.  

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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

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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

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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

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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

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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

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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

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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

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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

16

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

17

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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