Whether the transaction between the partie – subject matter of the suit could be considered as a “commercial dispute” so as to enable the Commercial Court to entertain the suit.? – No – it applies to only commercial transactions – 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. – 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 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). -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 -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.- Accordingly, a Mortgage Deed dated 03.11.2017 was executed but the same had not been registered.- 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 – 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. Apex court held that – 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.

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.

  1. 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
    1
    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
    2
    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.
  2. 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
    3
    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.
  3. 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
    4
    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.
  4. 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.
  5. 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
    5
    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
    6
    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.
  6. 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
    7
    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.
  7. 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,
    8
    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.
  8. 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:
    9
    “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
    10
    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.
  9. 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
    11
    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.
  10. 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
    12
    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
    13
    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.”
  11. 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.
    14
    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.”
    15
    (emphasis supplied)
  12. 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
    16
    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.
  13. 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
    17
    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.
  14. 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.
  15. 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.
  16. 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.

  1. 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.
  2. 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)”.
  3. 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
    3
    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”.
  4. 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.
  5. 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.
  6. 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;
    5
    (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)].
  7. 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.
  8. 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
  9. 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.
  10. 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).
    ………”.
  11. 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.
  12. 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.”
  13. 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.
    ……….
  14. 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.
  15. 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
  16. 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”.
  17. 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
    11
    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.
  18. 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.
  19. 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.
  20. 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.
  21. 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.
  22. 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.
  23. 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.
  24. 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.
  25. 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.
    18