Money Recovery Suit Won't Be Commercial Suit Unless Disputed Property Is 'Actually Used' In Trade and Commerce: Supreme Court

The Supreme Court held that merely because the dispute is related to an immovable property wouldn't per se make it a commercial dispute under the Commercial Courts Act, 2015 unless the immovable property is 'actually used' exclusively in trade or commerce.

Setting aside the High Court's decision which had considered a suit for money recovery as a commercial suit, the Bench Comprising Justices Hrishikesh Roy and Prashant Kumar Mishra remitted back the matter to the High Court to re-decide on whether the Suit for recovery of money would fall within the category of cases covered under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015 in light of Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP & Anr. (2020) 15 SCC 585.

In the Ambalal Sarabhai case, the implication of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015 was construed, where in the concurring judgment, the following was expressed by Justice Banumathi:

“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.”

The High Court has considered the respondents-plaintiff suit for money recovery as a commercial suit under the Commercial Courts Act, 2015.

The petitioner-defendant thus preferred a SLP before the Supreme Court.

Sr. Counsel Mr. P.S. Patwalia, representing petitioners-defendants, submitted that a simple money recovery suit and cannot be treated as a commercial suit. Mr. Patwalia stated that “if the view in the impugned judgment is accepted as correct, all money recovery suits will travel towards the commercial division and it will defeat the very purpose of creating the commercial divisions, to fast track commercial category suits.”

Per contra, Sr. Counsel Mr. Gopal Sankaranarayanan while referring to the explanation in Section 2(1)(c)(vii) of the Act stated that “a commercial dispute shall not cease to be a commercial dispute merely because the suit pertains to realisation of money.”

The bnech noted that the above issue is being settled in Ambalal Sarabhai Case, which held that the suit for money recovery related to immovable property cannot be simply considered as a commercial suit unless the dispute related to immovable property is 'actually used' exclusively in trade or commerce and not either “ready for use” or “likely to be used” or “to be used”.

Therefore, based on the rival parties' submission, the Supreme Court remanded back the matter to the Single Judge of the High Court to decide on whether the Suit should be treated as a commercial dispute, within the meaning of Section 2(1)(c) of the Commercial Courts Act, 2015.

“Accepting the above submission particularly in light of ratio in Ambalal, we deem it appropriate to set aside the impugned judgment of the learned Judge of the High Court rendered on 04.12.2018 in the CS No. 169 of 2018. The matter is remitted back to the High Court to re-decide on whether the Suit for recovery of money would fall within the category of cases covered under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. With this order, the Special Leave Petitions stand disposed of.”

Counsels For Petitioner(s) Mr. P S Patwalia, Sr. Adv. Ms. Mary Mitzy, Adv. Mr. Vivek Singh, AOR Mr. Ritik Dwivedi, Adv. Mr. Vishal Sundaramughan, Adv. Mr. Rajeev K Panday, Adv. Mr. K K Sinha, Adv.

Counsels For Respondent(s) Mr. Gopal Shankarnarayan, Sr. Adv. Ms. Preetika Dwivedi, AOR Mr. Abhisek Mohanty, Adv. Ms. Jhanvi Dubay, Adv.

Case Details: S.P. VELAYUTHAM & ANR. VERSUS M/S EMAAR MGF LAND LIMITED, SPECIAL LEAVE PETITION (CIVIL) Diary No(s). 2986/2024

Citation : 2024 LiveLaw (SC) 179

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