The plaintiff is a businessman. The 1st defendant is a partnership firm; the 2nd and 3rd defendants are its partners. And the 2nd defendant is said to be the plaintiffs friend. Therefore, acting beyond the call of his business, the plaintiff has given “a friendly loan” to the defendants. The defendants executed a promissory note and issued cheques as well. But the cheques were dishonoured. So, the plaintiff has sued the defendants for recovery.
16. It is trite to observe that, for the Court to determine the nature of the suit, what matters at this stage is the plaint allegations and nothing else. Both the learned counsel agree of section 2, what applies is clause (c) (i) of sub-section (1), the lexical provision of the Commercial Courts Act, 2015. The transaction may be ‘ordinary’ but must have occurred between “merchants, bankers, financiers and [or] traders”. And that ordinary transaction may relate to “mercantile documents, including enforcement and interpretation of such documents”. A merchant or a trader need not be as such-always and invariably. That merchant or trader is an individual, at first. And he may transact with another only as an individual. An individual may help another individual and that help may take the shape of lending. Not every instance of lending must reek of business or trade; not every trader must always act as a trader.
17. Here, the plaintiff pleads that he lent a friendly loan to another needy friend. It is not a transaction between them in the course of their ordinary business; much less can it be treated as money lending perse.
18. First, the definition is exhaustive because section 2 (1) (c) (i) employs the expression “means”. Second, though it may be an ordinary transaction, it is not between or among merchants, bankers, financiers, or traders. So, it cannot be treated as a transaction, ordinary or otherwise, between merchants, bankers, financiers, or traders. It is indeed a private transaction sans any commercial or business trappings.
19. At any rate, the Commercial Courts Act, 2015 has not obliterated Order 37 of CPC. If I indulge in some generalisation, Order 37 is a genus and the Commercial Courts Act, 2015 a species.
20. Under these circumstances, I hold that the Suit ought to be treated as a Summary Suit rather than a Commercial Summary Suit. After re-numbering the suit thus, the Registry will place it before the Court the next week.
In the High Court of Bombay
(Before Dama Seshadri Naidu, J.)
Bharat Huddanna Shetty Vs Ahuja Properties & Developers and Others
Summons for Judgment No. 9 of 2021,
Decided on July 13, 2021
Citation: 2021 SCC OnLine Bom 13984.
The Judgment of the Court was delivered by
Dama Seshadri Naidu, J.:— The plaintiff is a businessman. The 1st defendant is a partnership firm; the 2nd and 3rd defendants are its partners. And the 2nd defendant is said to be the plaintiffs friend. Therefore, acting beyond the call of his business, the plaintiff has given “a friendly loan” to the defendants. The defendants executed a promissory note and issued cheques as well. But the cheques were dishonoured. So, the plaintiff has sued the defendants for recovery.
2. On the last occasion, the defendants pointed out that the suit must be treated as a Summary Suit rather than a Commercial Summary Suit, going by the plaint allegations. In that context, the plaintiffs counsel did not join the issue; instead, he requested the Court treat this Suit as a Summary Suit simpliciter. Then, through an order dt.5.7.2021, I required the Registry to re-number the Suit as Summary Suit.
3. Now, the Registry has brought to my notice the Minutes of the Meeting held on 31.3.2016 by a three-Judge Committee. That Committee took a decision, on the administrative side though, that
“the Registry shall transfer all Summary Suits to the Commercial Division and if any objection is received to the Notice issued to all the Advocates and Parties appearing-in-person with regard to, as to whether claim under pending Summary Suits is within the purview of definition of Commercial Dispute or not, then the same will be decided by the Hon'ble Court on Judicial Side.”
4. The above-extracted portion, thus, indicates that the Committee's decision, if ever, must affect the suits that had been pending by 31.3.2016. In other words, the Committee's decision is for the suits filed before that date. It does not bind the future cases. At any rate, I have once again heard the respective counsel based on the Registry's note.
5. Heard Mr. Gauraj Shah, the learned counsel for the plaintiff, and Mr. Mikhail Behl, the learned counsel for the defendants.
6. To begin with, the learned counsel for the plaintiff has drawn my attention to Section 2(1)(c)(i) of the Commercial Courts Act. He has contended that the suit is based on negotiable instruments, which are mercantile documents. He also submits that it is a transaction between business people. In the end, he has submitted that if the Court still reckons that it is a simple summary suit rather than a commercial summary suit, it may direct the Registry to have the suit renumbered as a summary suit.
7. But the learned counsel for the defendants has pointed out that it is allegedly a private transaction between an individual and partners of a firm. Nor has the alleged debt has arisen during any trading activity. So, he has insisted that it must be a simple summary suit.
8. To put the issue in perspective, let us check what section 2 (1) (c) (i) of the Commercial Courts Act, 2015 says.
Section 1(1)(c) “commercial dispute” means a dispute arising out of—
(i) ordinary transactions 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; (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 agreements; (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 resources including electromagnetic spectrum; (xx) insurance and re-insurance; (xxi) contracts 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 a commercial dispute merely because-
(a) it also involves action for recovery of immovable property or for realisation 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;
(Italics supplied)
9. In Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP,1 the Supreme Court considered the above provision. I reckon that decision will clinch the issue. There, the appellant agreed to sell a piece of land to the 2nd respondent. Then, the 2nd respondent assigned all his rights under the agreement to the 1st respondent. Though a deed of sale was executed, certain other aspects remained unfulfilled for completing the transfer. So the parties entered into a Memorandum of Understanding, under which the 1st respondent had to execute a deed of mortgage in the appellant's favour. This arrangement has given rise to a dispute at the appellant's behest.
10. To begin with, the appellant filed a commercial civil suit to compel the 1st respondent to execute a mortgage deed. The respondents entered appearance and objected to the maintainability of the commercial civil suit. But the Commercial Court rejected the respondents' application under Rule 10 of Order 7, CPC. The trial Court referred to the appellant Company's Memorandum and Articles of Association and took note of the business the Company could undertake. Thus, it concluded that the dispute was commercial.
11. But the High Court found fault with the trial Court. It concluded that the immovable property was not being used for trade or commerce.
12. Taken to the Supreme Court, Ambalal Sarabhai Enterprises has observed, per A.S. Bopanna, J, that the suit is one seeking specific performance of the terms of MoU. “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 be of no avail. Ambalal Sarabhai has further observed that “the suits which are not actually relating to commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes which may have to be entertained by the Commercial Courts as intended by the lawmakers”. According to it, in commercial disputes as defined, a special procedure is provided for a class of litigation, and a strict procedure must be followed to entertain only that class of litigation in that jurisdiction.
13. As to the facts, Ambalal Sarabhai Enterprises has held that the agreement between the parties does not reveal that the immovable property is exclusively used for trade or commerce, nor is there any pleading to that effect in the plaint.
14. In a concurring opinion, R. Banumathi J., has held that the object and purpose of the establishment of Commercial Courts, Commercial Divisions, and Commercial Appellate Divisions of the High Court is to ensure that the cases involved in commercial disputes are disposed of expeditiously, fairly, and at reasonable cost to the litigants. Keeping in view the object and purpose of establishing the Commercial Courts and fast-tracking procedure provided under the Act, the statutory provisions of the Act are to be meaningfully interpreted for quick disposal of commercial litigations. It is to benefit the litigants, especially, those who are engaged in trade and commerce. Such expeditious adjudication, in turn, will further the country's economic growth.
15. Indeed, learned author Sharath Chandran, in his Commentary on The Commercial Courts Act, 2015,2 perhaps one of the earliest lucid commentaries on this emerging branch of law, has noted that “although the Law Commission had envisaged that a liberal interpretation ought to govern the definition, the Supreme Court in Ambalal Sarabhai Enterprises has opined that the definition will have to be interpreted strictly”. Granted, the procedural laws require liberal interpretation, but the objective behind any provision, procedural or substantive, ought not to be forgotten. Faced with an embarrassing three-digit position in the international rankings on the Ease of Doing Business reckoning, India has come up, among other things, with this legislation. Lumping everything commercial together floods the adjudicatory arteries of the judicial system. The worthier, more truly trade-related disputes, then, take a back seat. A liberal approach may, thus, trigger the law of unintended consequences. Perhaps, Ambalal Sarabhai Enterprises avoids that peril.
16. It is trite to observe that, for the Court to determine the nature of the suit, what matters at this stage is the plaint allegations and nothing else. Both the learned counsel agree of section 2, what applies is clause (c) (i) of sub-section (1), the lexical provision of the Commercial Courts Act, 2015. The transaction may be ‘ordinary’ but must have occurred between “merchants, bankers, financiers and [or] traders”. And that ordinary transaction may relate to “mercantile documents, including enforcement and interpretation of such documents”. A merchant or a trader need not be as such-always and invariably. That merchant or trader is an individual, at first. And he may transact with another only as an individual. An individual may help another individual and that help may take the shape of lending. Not every instance of lending must reek of business or trade; not every trader must always act as a trader.
17. Here, the plaintiff pleads that he lent a friendly loan to another needy friend. It is not a transaction between them in the course of their ordinary business; much less can it be treated as money lending perse.
18. First, the definition is exhaustive because section 2 (1) (c) (i) employs the expression “means”. Second, though it may be an ordinary transaction, it is not between or among merchants, bankers, financiers, or traders. So, it cannot be treated as a transaction, ordinary or otherwise, between merchants, bankers, financiers, or traders. It is indeed a private transaction sans any commercial or business trappings.
19. At any rate, the Commercial Courts Act, 2015 has not obliterated Order 37 of CPC. If I indulge in some generalisation, Order 37 is a genus and the Commercial Courts Act, 2015 a species.
20. Under these circumstances, I hold that the Suit ought to be treated as a Summary Suit rather than a Commercial Summary Suit. After re-numbering the suit thus, the Registry will place it before the Court the next week.
21. The defendants may come up with a rejoinder in the interim application for leave to defend the plaintiff has taken out.
———
2 Bloomsbury, New Delhi, 2021, P.2.8
No comments:
Post a Comment