Whether Commercial Court Can Entertain Suit For Recovery Of Possession Filed After Termination Of Tenancy? Supreme Court To Consider

The Supreme Court granted leave in a special leave petition which raised the issue whether a Commercial Court has jurisdiction to entertain a suit for recovery of possession filed after termination of tenancy?

In this case, the plaintiff-landlord, filed a suit for recovery of possession from the defendants-tenant before a Commercial Court. Against the order refusing to return the plaint, the tenant approached the Calcutta High Court by filing a revision petition. The issue considered before the High Court was whether a suit, primarily for recovery of possession of immovable property under Section 106 of the Transfer of Property Act, pertains to a "commercial dispute" under the Commercial Courts Act, 2015.

"The suits squarely arise out of a statutory right conferred by Section 106 of the Transfer of Property Act, having no direct nexus with the lease agreements in respect of the immovable properties concerned. Thus, the pre-condition of the applicability of Section 2(1)(c)(vii), that is, the emanation of the dispute out of the lease agreement, is not satisfied in the present suits.", the High Court held while allowing the Revision Petition.

Before the Apex court, Senior Advocate, K. V. Viswanathan, who appeared for the plaintiff landlord relied upon the judgment Ambalal Sarabhai Enterprise Ltd vs KS Infraspace LLP Limited 2020 (15) SCC 585 to contend that the suit before the Commercial Court was maintainable. 

The court, however, noted that the said judgment does not relate to a suit for eviction filed by the landlord against the tenant.

"We asked Mr. K. V. Viswanathan whether the petitioner would like to approach Civil Court rather than continuing with the suit filed before the Commercial Court to which Mr. K. V. Viswanathan, on instructions, has conveyed that he would like to have decision on merits as to whether Commercial Court should have a jurisdiction to entertain the suit filed after termination of tenancy.", the bench said while granting leave. The court also declined the request for early hearing of these appeals.

Calcutta HC view

Section 2(1)(c) of the Commercial Courts Act defines "commercial dispute" to be a dispute "arising out of" ... "agreements relating to immovable property used exclusively in trade or commerce" come within the ambit of "commercial dispute". The issue considered by the High Court was whether a suit, primarily for recovery of possession of immovable property under Section 106 of the Transfer of Property Act, pertains to a "commercial dispute" under the Commercial Courts Act, 2015.

To answer this, the court noticed that the cause of action in these suits clearly arises by virtue of the rights conferred by Section 106. In the event the suits were for termination of lease on the ground of forfeiture for violation of any of the clauses of the lease agreements and/or for specific performance of the agreements or suits of like nature, the suits would definitely come within the purview of "commercial dispute" as defined in Section 2(1)(c) of the Commercial Courts Act, 2015, the court observed.

"33. However, the dispute itself, in the present case, arises out of refusal by the defendants to comply with the notices issued by the lessor under Section 106 of the Transfer of Property Act, 1882, which is based on a statutory right independent and irrespective of any clause of the lease agreements.. Hence, the suits squarely arise out of a statutory right conferred by Section 106 of the Transfer of Property Act, having no direct nexus with the lease agreements in respect of the immovable properties concerned. Thus, the pre-condition of the applicability of Section 2(1)(c)(vii), that is, the emanation of the dispute out of the lease agreement, is not satisfied in the present suits. Thus, the secondary question as to whether the immovable properties are used exclusively in trade or commerce, pales into insignificance.", the court observed.

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