Disputes Arising Out Of Immovable Property 'Actually Used' In Trade Or Commerce Alone Are 'Commercial Disputes': SC [Read Judgment]

The bench comprising Justice R. Banumathi and Justice AS Bopanna made it clear that the words 'used exclusively in trade or commerce' denotes "actually used" and it cannot be either "ready for use" or "likely to be used" or "to be used". 

The issue considered in the appeal [Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infraspace LLP] was 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. Section 2(1)(c) (vii) of the Act defines "Commercial dispute" as a dispute arising out of agreements relating to immovable property used exclusively in trade or commerce.

As per the appellants, the land concerned which was acquired for that purpose and presently it was purchased for developing the said land and in that view the land is one which is used for trade and commerce. On the other hand, the respondents 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.

The bench agreed with the view taken by the Gujarat High Court in Vasu Healthcare Private Limited vs. Gujarat Akruti TCG Biotech Limited, AIR 2017 Gujarat 153 , 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 was further held 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. Justice Bopanna said:

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 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.

While upholding the High Court order to return the plaint, the court also noted that the 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.

In her concurring opinion, Justice Banumathi observed:

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.

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