Case Note & Summary
The petitioners, original defendants in a commercial suit, challenged an order of the District Court at Nashik sitting as a commercial court, which rejected their application under Order 7 Rule 10 of the Code of Civil Procedure, 1908 (CPC) for return of the plaint for presentation to the proper court. The dispute arose from an agreement where the defendants purportedly agreed to transfer their development rights for construction of a building to the plaintiffs in consideration of sharing the development potential in the ratio of 43:57. The defendants contended that the suit was not a commercial dispute under the Commercial Courts Act, 2015, as the building was not used exclusively in trade or commerce, relying on the Supreme Court decision in Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infraspace LLP. The District Judge held that the contract was a construction and infrastructure contract covered under Section 2(1)(c)(vi) of the Act, not requiring exclusive commercial use. The High Court upheld this view, emphasizing that jurisdiction under Order 7 Rule 10 CPC is determined by the plaintiff's averments in the plaint, not the defence. The court found that the agreement was prima facie a construction contract, falling within Sub-clause (vi) of Section 2(1)(c), and thus a commercial dispute. The court dismissed the petition, affirming the commercial court's jurisdiction.
Headnote
A) Commercial Law - Commercial Dispute - Construction Contract - Section 2(1)(c)(vi) Commercial Courts Act, 2015 - The court held that an agreement for transfer of development rights in consideration of construction of a building and sharing of development potential is prima facie a construction contract covered under Sub-clause (vi) of Clause (c) of Section 2(1) of the Act, and thus a commercial dispute. The court rejected the argument that the building must be used exclusively in trade or commerce, as that requirement pertains to Sub-clause (vii) and not Sub-clause (vi). (Paras 3-5)
B) Civil Procedure - Jurisdiction - Return of Plaint - Order 7 Rule 10 CPC - The court clarified that when considering an application for return of plaint, the court must assess the initial jurisdiction based on the case pleaded by the plaintiff in the plaint averments, not on the defence raised by the defendant. (Para 4)
C) Commercial Law - Commercial Dispute - Construction and Infrastructure Contract - Section 2(1)(c)(vi) Commercial Courts Act, 2015 - The court distinguished between Sub-clauses (vi) and (vii) of Section 2(1)(c), holding that Sub-clause (vi) covers agreements relating to construction and infrastructure contracts without requiring that the building be used exclusively in trade or commerce, unlike Sub-clause (vii) which requires such exclusive use. (Paras 3-5)
Issue of Consideration
Whether the suit filed by the respondents (original plaintiffs) is a commercial dispute under the Commercial Courts Act, 2015, particularly whether the agreement for transfer of development rights and construction of a building falls within the definition of 'commercial dispute' under Section 2(1)(c)(vi) or (vii) of the Act.
Final Decision
The High Court dismissed the writ petition, upholding the order of the District Court that the suit is a commercial dispute under Section 2(1)(c)(vi) of the Commercial Courts Act, 2015, and the commercial court has jurisdiction.
Law Points
- Jurisdiction determined by plaintiff's averments
- Construction contract covered under Section 2(1)(c)(vi) of Commercial Courts Act
- 2015
- Order 7 Rule 10 CPC application requires assessment of plaint allegations
Case Details
2020 LawText (BOM) (09) 29
WRIT PETITION (ST) NO. 92463 OF 2020
Mr.Milind M. Sathaye for Petitioners, Mr.Surel Shah i/b. Chetan Alai for Respondents
Vaijanath Dayanand Kale & Ors
Nerkar Properties LLP & Ors.
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Nature of Litigation
Writ petition challenging an order of the District Court at Nashik sitting as a commercial court, which rejected the petitioners' application under Order 7 Rule 10 CPC for return of the plaint for presentation to proper court.
Remedy Sought
The petitioners (original defendants) sought return of the plaint for presentation to the proper court on the ground that the suit was not a commercial dispute.
Filing Reason
The petitioners contended that the suit filed by the respondents (original plaintiffs) was not a commercial dispute under the Commercial Courts Act, 2015, as the building proposed to be constructed was not used exclusively in trade or commerce.
Previous Decisions
The District Court at Nashik, sitting as a commercial court, rejected the application under Order 7 Rule 10 CPC, holding that the contract was a construction and infrastructure contract covered under Section 2(1)(c)(vi) of the Commercial Courts Act, 2015.
Issues
Whether the suit is a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015?
Whether the agreement for transfer of development rights and construction of a building falls under Sub-clause (vi) or (vii) of Section 2(1)(c) of the Act?
Submissions/Arguments
Petitioners (defendants) argued that the building was not used exclusively in trade or commerce, thus not covered by Sub-clause (vii) of Section 2(1)(c) of the Act, and also not a construction contract under Sub-clause (vi).
Respondents (plaintiffs) argued that the agreement was a construction contract covered under Sub-clause (vi) of Section 2(1)(c) of the Act.
Ratio Decidendi
The jurisdiction of a court under Order 7 Rule 10 CPC is determined by the case pleaded by the plaintiff in the plaint. An agreement for transfer of development rights in consideration of construction of a building and sharing of development potential is prima facie a construction contract covered under Sub-clause (vi) of Section 2(1)(c) of the Commercial Courts Act, 2015, and thus a commercial dispute. The requirement of exclusive use in trade or commerce under Sub-clause (vii) does not apply to Sub-clause (vi).
Judgment Excerpts
The controversy in the matter is whether the suit filed by the Respondents herein (original plaintiffs) is a commercial suit.
The question to be considered by a court when an application is made to it under Order 7 Rule 10 of CPC is a question of initial jurisdiction. Such jurisdiction depends on the case pleaded before the court by the plaintiff, such case having to be assessed on the averments made in the plaint.
This agreement, on the face of it, is prima facie a construction contract; it transfers development rights by way of construction of a building and sale of premises therein in a certain stated proportion as between the parties.
Procedural History
The respondents (original plaintiffs) filed a commercial suit before the District Court at Nashik sitting as a commercial court. The petitioners (original defendants) filed an application under Order 7 Rule 10 CPC for return of the plaint for presentation to proper court, which was rejected by the District Court. The petitioners then filed the present writ petition before the Bombay High Court challenging that order.
Acts & Sections
- Commercial Courts Act, 2015: Section 2(1)(c)(vi), Section 2(1)(c)(vii)
- Code of Civil Procedure, 1908: Order 7 Rule 10
