Gujarat High Court
Madhuram Properties vs Tata Consultancy Services Ltd on 10 July, 2017
Bench: M.R. Shah, B.N. Karia
C/AO/210/2017 CAV JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
APPEAL FROM ORDER NO. 210 of 2017
With
CIVIL APPLICATION NO. 8448 of 2017
In
APPEAL FROM ORDER NO. 210 of 2017
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE M.R. SHAH sd/
and
HONOURABLE MR.JUSTICE B.N. KARIA sd/
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1 Whether Reporters of Local Papers may be allowed to see YES
the judgment ?
2 To be referred to the Reporter or not ? YES
3 Whether their Lordships wish to see the fair copy of the NO
judgment ?
4 Whether this case involves a substantial question of law as NO
to the interpretation of the Constitution of India or any
order made thereunder ?
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MADHURAM PROPERTIES....Appellant(s)
Versus
TATA CONSULTANCY SERVICES LTD.,....Respondent(s)
=============================================
Appearance:
MR. P.C. KAVINA, SR, ADV WITH MR. KM ANTANI, ADVOCATE for the
Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE M.R. SHAH
and
HONOURABLE MR.JUSTICE B.N. KARIA
Date : 10/07/2017
CAV JUDGMENT
(PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Judge, Commercial Court, City Civil Court, Ahmedabad passed below Exh.20 in Commercial Civil Suit Page 1 of 15 HC-NIC Page 1 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT No. 239 of 2016, by which, the learned Judge has partly allowed the said application Exh.20 preferred by the original defendant and in exercise of powers under Order VII Rule 10 of the Code of Civil Procedure has returned the plaint to the original plaintiff to present it before the appropriate Court having jurisdiction to try and entertain the same, original plaintiff has preferred present Appeal From Order.
2.0. The facts leading to the present Appeal From Order in nutshell are as under:
2.1. That the appellant herein original plaintiff (hereinafter referred to as the "original plaintiff") has instituted Commercial Civil Suit No. 239 of 2016 in the Commercial Court at Ahmedabad for possession, permanent injunction, mesne profit and other reliefs as prayed for in the suit. That the original plaintiff prayed the following reliefs:
"a.The Hon'ble Court be pleased to pass a decree that the defendant to hand over possession of the flats described in the schedule to the Indenture of sublease bearing registration nos. 15397, 15400, 15403, 15407, 15410, 15413, 15415, 15421, 15423, 15425, 15428, 15430 to the plaintiff;
b. The Hon'ble Court be pleased to pass a decree for Rs. 4,76,78,400/ (Rupees Four Crore Seventy Eight Thousand Four Hundred Only) with interest @18% p.a. from the date of the suit till realization in favour of the plaintiff and against the defendant;
c. The Hon'ble Court be pleased to pass a decree that the Page 2 of 15 HC-NIC Page 2 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT defendant do pay mesne profits @rs.79,46,400/ (Rupees Seventy Nine Lacs Forty Six Thousand Four Hundred Only) per month till handing over of the possession of the flats to the plaintiff;
d.The Hon'ble Court be pleased to grant a permanent injunction restraining the defendant, their agents, employees, servants, representatives, persons claiming through them from transferring or creating third party interest or parting with possession in favour of third parties in respect of flats of "Madhuram Greens"."
2.2. From the averments in the plaint, it appears that, the plaintiff and defendant entered into one indenture of sub lease on 28.10.2013 in respect of 216 flats situated in blocks No. A to L of residential blocks known as " Maduram Greens" situated at Sargasan, Tal & Dist. Gandhinagar on the terms and conditions mentioned in such indenture. It appears that by the aforesaid indenture, the plaintiff agreed to grant sub lease of such flats to the defendant for a period of three years. The commencement date was 28.10.2013 and the same was to end on the close of the business hours of 25.10.2015. After expiry of such initial period, the defendant was to hand over to the plaintiff the vacant possession of the such flats in the same state and condition as prevailing on the sublease commencement date. That indenture provide monthly rent for such flats and the aggregate of such monthly rental was Rs.36,12,000/. The aggregate built up area chargeable for the purpose of rent was 15162 sq mtr. The defendant was requried to pay Rs. 1,08,36,000/ as and by way of advance and same was to be adjusted against the rent payable for first three months. It is not Page 3 of 15 HC-NIC Page 3 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT disputed that said flats were leased for the residential purpose of the staff of the defendant. It is also not in dispute that the "Madhuram Greens" is residential project. That the dispute arose between the parties and it appears that the renewal did not materialize and the lease came to an end on 3.3.2016 and therefore, according to the plaintiff, the defendant became liable to handover the possession of the flats in the same state and conditions. As the possession of the flats were not handed over in the same state and condition on the commencement of the lease and the dispute arose between the parties and therefore, the plaintiff instituted the aforesaid suit in the Commercial Court, Ahmedabad for the aforesaid relief. That in the plaint, the plaintiff had pleaded the cause of action and the jurisdiction in para 20 and 21 as under :
"20. Cause of Action: The cause of action for filing the present suit has arisen when the plaintiff, after negotiations, agreed to grant subleave of their property known as "Maduram Greens" with effect from 28.10.2013 for a period of three years with monthly rentals of Rs.36,12,000/ (Rupees Thirty Six Lac Twelve Thousand only) payable to the plaintiff on the terms and conditions mentioned in the indenture of sublease and also when the defendant was required to pay Rs.1,08,36,000/ lacs as and by way of refundable non interest bearing security deposit and also when one of the clauses of the Indenture provides that upon expiry of the sublease and unless renewed by the defendant, it shall hand over to the plaintiff the vacant possession of the flats in the same state and condition as on the sublease commencement (reasonable wear and tear accepted) and also when 15 days before the end of sub lease period, the plaintiff is entitled to enter upon and inspect the flats and to communicate to the defendant any claims in relation to the damages to such flats occurred during the sublease period and also when for the months of October, November and December 2015, the defendant committed defaults in the payment of rent and also when after expiry of lease in October, 2015 the further period of Page 4 of 15 HC-NIC Page 4 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT four months till March, 2016 and also when such extension was granted by the plaintiff and also when the further renewal expired on 31.3.2016 and also when the defendant was liable to hand over possession of all the flats in the same state and condition before expiry of the lease and also when the plaintiff called upon the defendant by notices it allow them to examine the inspect the premises and also when the defendant did not cooperate the plaintiff and allow them to carry out such inspection and deliberately thwarted such exercise and also when the defendant continued to remain in possession of the flats and failed to hand over its possession to the plaintiff and also when the plaintiff has become entitled to recover the rentals from the defendant and also when the defendant failed and neglected to abide by the provisions of the lease deed relating to its expiry, inspection and handing over of possession and hence the plaintiff is constrained, to file the present suit for declaration, permanent injunction, mesne profits and other reliefs."
21. Jurisdiction: "Since the flats are situated within the jurisdiction of this Hon'ble Court has territorial jurisdiction to receive, entertain and decide the present suit. Moreover, the present dispute squarely falls within the definition of dispute under the provisions of Section 2(c) of the Commercial Courts Act, 2015."
2.3. That having been served with the summons of the suit, the defendant appeared before the learned Commercial Court and submitted application Exh. 20 under Order VII Rule 11 r/w Order VII Rule 10 of the Code of Civil Procedure r/w provision of the Commercial Courts, Commercial Division and Commercial Appellate Division High Courts Act, 2015 (hereinafter referred to as to the "Commercial Courts Act") and requested to reject the plaint as it is barred by law, contending inter alia that the dispute between the parties cannot be said to be Commercial Dispute, within the definition of Section 2(c) of the Commercial Courts Act and therefore, Commercial Court shall not have any jurisdiction to entertain the suit and / or to grant the reliefs prayed in the suit. In Page 5 of 15 HC-NIC Page 5 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT the alternative, it was prayed to return the plaint to the original plaintiff to present it before the appropriate Court having jurisdiction. That by impugned order, the learned Judge, Commercial Court has partly allowed the said application Exh.20 and in exercise of powers under Order VII Rule 10 of the Code of Civil Procedure r/w provision of the Commercial Court Act, plaint is ordered to be returned to the plaintiff to present it before the appropriate Court having jurisdiction by holding that considering provision of Section 2(c) of the Commercial Court Act the dispute between the parties for which suit has been preferred, the same cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Court Act and therefore, the suit before the Commercial Court shall not be maintainable and the Commercial Court shall not have any jurisdiction to grant reliefs as prayed in the plaint.
2.4. Feeling aggrieved and dissatisfied with the impugned order passed by the learned Judge, Commercial Court, Ahmedabad, by which, the learned Commercial Court has held that dispute between the parties cannot be said to be commercial dispute within the definition of Section 2(c) of the Commercial Courts Act and therefore, the Commercial Court shall not have any jurisdiction and thereby returning the plaint to the plaintiff to present it before the appropriate Court, the original plaintiff has preferred present Appeal From Order.
3.0. Shir P.C. Kavina, learned Senior Advocate has appeared on behalf of original plaintiff.
Page 6 of 15HC-NIC Page 6 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT 3.1. Shri Kavina, learned counsel for the original plaintiff has vehemently submitted that in the facts and circumstance of the case the learned Commercial Court has materially erred in holding that dispute between the parties cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act.
3.2. It is further submitted by Shri Kavina, learned counsel for the original plaintiff that the defendant is constituted under the provisions of Companies Act and that under Income Tax Act the defendant shall get benefit of deduction as expenditure and as the activities of the defendant is in the trade and commerce, the case shall fall under Section 2(c)(vii) of the Commercial Courts Act. It is submitted that therefore, for the dispute between the plaintiff and defendant with respect to the agreement / indenture entered into between the plaintiff and defendant, the dispute can be said to be Commercial Dispute within the definition of Section 2(c) of the Commercial Courts Act and therefore, the Commercial Court, Ahmedabad would have jurisdiction to entertain the suit and grant the reliefs prayed for in the suit. It is submitted that therefore, the learned Commercial Court has materially erred in holding that the dispute between the parties cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act and thereby the learned Commercial Court has materially erred in returning the plaint to the plaintiff to present it before the appropriate Court having jurisdiction.
3.3. t is further submitted by Shri Kavina, learned counsel for the Page 7 of 15 HC-NIC Page 7 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT original plaintiff that learned Commercial Court has materially erred in not appreciating that leasing of properties was in ordinary course of business of the plaintiff who was developer of real estate. It is further submitted that even otherwise the impugned order passed by the learned Commercial Court deserves to be quashed and set aside on the ground that the learned Commercial Court has returned the plaint to the plaintiff without following procedure specified under Order VII Rule 10 A of the Code of Civil Procedure.
3.4. t is further submitted by Shri Kavina, learned counsel for the original plaintiff that before retuning the plaint to the plaintiff the learned Commercial Court was required to follow the procedure as required under Order VII Rule 10 A of the Code of Civil Procedure, more particularly, subrule(2) of Order VII Rule 10 A and the plaintiff was required to be given an opportunity to specify the case in which, he proposes to present the plaint after its return. It is submitted that in the present case as no such opportunity has been given to the plaintiff and the learned Commercial Court has not followed the procedure as required under Order VII Rule 10 A of the Code of Civil Procedure, the impugned order passed by the Commercial Court returning the plaint is vitiated and same deserves to be quashed and set aside.
Making above submissions, it is requested to admit / allow the present Appeal From Order.
4.0. We have heard Shri Kavina, learned counsel for the appellant at length. We have perused the plaint and the impugned order passed by the learned Commercial Court.
Page 8 of 15HC-NIC Page 8 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT 4.1. At the outset, it is required to be noted that by the impugned order learned Commercial Court has returned the plaint to the original plaintiff to present it before the appropriate Court having jurisdiction, while exercising the powers under Order VII Rule 10 of the Code of Civil Procedure. While passing the impugned order, learned Commercial Court has observed and held that as the dispute between the parties cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act, for the dispute between the parties for which the suit has been preferred and for the reliefs prayed for in the suit, suit before the learned Commercial Court shall not be maintainable and the learned Commercial Court shall not have any jurisdiction.
4.2. Therefore, the short question which is posed for the consideration of this Court is whether in the facts and circumstances of the case, learned Commercial Court has erred in holding so and whether the dispute between the parties for which, the suit is filed and the reliefs are sought, can be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act or not ?
4.3. Considering the averments in the plaint and the cause of action pleaded and even the nature of dispute between the parties and the reliefs sought in the plaint, it appears that the dispute is with respect to the agreement entered into between the plaintiff and the defendant in respect of 216 flats situated in block Nos. A to L of residential premises developed by the appellant styled as "Madhuram Greens". It is not in dispute that "Madhuram Greens" is Page 9 of 15 HC-NIC Page 9 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT a residential project and the flats in question were given to the defendant on lease to be used for residential purpose. The agreement of lease was entered into between the plaintiff and defendant in respect of aforesaid residential flats to be used for residential purpose. At the cost of repetition, it is observed that the project "Madhuram Greens" is a residential project / scheme. Therefore, the agreement / indenture between the plaintiff and the defendant in respect of aforesaid 216 residential flats cannot be said to be an agreement relating to immovable property used exclusively in trade or commerce. Considering the subsection (vii) of Section 2(c) of the Commercial Courts Act, the "commercial dispute" means a dispute arising out of agreements relating to immovable property used exclusively in trade or commerce. As observed herein above, the agreements are relating to immovable property exclusively for residential purpose and same cannot be said to be agreement relating to immovable property used exclusively in trade or commerce. The immovable property in question 216 residential flats are used exclusively for residential purpose and same cannot be said to be used exclusively in trade or commerce. Under the circumstances, considering Section 2(c)(vii) of the Commercial Courts Act, the dispute arising out of the indenture / agreement in question cannot be said to be relating to immovable property used exclusively in trade or commerce and therefore, said cannot be said to be commercial dispute as defined under Section 2(c) of the Commercial Courts Act.
5.0. Now, so far as submission on behalf of the plaintiff that as the defendant company is registered under the Companies Act and Page 10 of 15 HC-NIC Page 10 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT carrying on its activity in trade or business and even the plaintiff is also a builder and dealing in the real estate and is leasing the property and therefore, the dispute between the parties can be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act is concerned, the aforesaid has no substance. Merely because, the activity of the defendant is in the trade or commerce and / or merely because the plaintiff is a builder and in the business of real estate and leasing the property any dispute between the plaintiff and defendant cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act. As observed herein above, as per Section 2(c)(vii) of the Commercial Courts Act, commercial dispute means a dispute arising out of agreements relating to immovable property used exclusively in trade or commerce. Therefore, while considering the question whether the dispute between the parties can be said to be "commercial dispute" the status of the plaintiff and defendant is not required to be considered. If the case, falls within any of the provisions of Section 2(c) of the Commercial Courts Act then and then only, it can be said to be commercial dispute. Section 2(c) of the Commercial Courts reads as under:
2(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 helicoptors, 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 Page 11 of 15 HC-NIC Page 11 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT 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 reinsurance;
(xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government.
5.1. Under the circumstances, as the agreement / indenture for which dispute has arisen is with respect to immovable property used exclusively for residential purpose and cannot be said to be immovable property used exclusively in trade or commerce, the learned Commercial Court has rightly held that dispute between the parties cannot be said to be "commercial dispute" within the definition of Section 2(c) of the Commercial Courts Act and therefore, the learned Commercial Court has rightly held that the Commercial Court shall not have any jurisdiction and therefore, the learned Commercial Court has rightly returned the plaint to the original plaintiff to present it before the appropriate Court having the jurisdiction.
6.0. Now, so far as submission on behalf of the plaintiff that as Page 12 of 15 HC-NIC Page 12 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT while returning the plaint, the learned Commercial Court has not followed the procedure as required under the provision of Order VII Rule 10 A of the Code in as far as no opportunity has been given to the plaintiff to submit the application to specify the Court in which he proposes to present the plaint after its return and therefore, the impugned order deserves to be quashed and set aside is concerned, the aforesaid has no substance. It is required to be noted that in the present case it was the defendant who submitted the application under Order VII Rule 10 of the Code of Civil Procedure. Order 7 Rule 10 A of the Code of Civil Procedure shall be applicable in a case where, in any suit, after the defendant has appeared, the Court is of opinion that the plaint should be returned, it shall before doing so, intimate its decision to the plaintiff. The object and purpose of Order VII Rule 10 A seems to be to give an opportunity to the plaintiff before returning the plaint. Order VII Rule 10A (2) provides that where an intimation is given to the plaintiff under subrule(1), the plaintiff may make an application to the Court specifying in which Court, he proposes to submit plaint after its return. Therefore, after intimation as provided under subrule (1) of Order VII Rule 10A of the Civil Procedure Code, it is for the plaintiff to make an application to the Court as provided in sub rule(2) of Order VII Rule 10A. No duty is cast upon the Court except as provided under Order VII Rule 10A(1) of the Civil Procedure Code. Subrule(2) of Order VII Rule 10 A shall be applicable only in a case where after the intimation of the decision of the Court is given to the plaintiff as per subrule (1) of Order VII Rule 10 A and thereafter, plaintiff having been satisfied accepts that the suit is filed before the wrong Court having no jurisdiction, Page 13 of 15 HC-NIC Page 13 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT an opportunity is given to the plaintiff to submit an appropriate application satisfying in which Court he proposes to submit the plaint after its returned. In the present case, in fact, no such eventuality is taken place. On the contrary, the plaintiff asserts that the Commercial Court in which the suit is preferred has jurisdiction. Therefore, as such it cannot be said that as while passing the impugned order, the learned Commercial Court has not followed the procedure as required under Order VII Rule 10 A of the Civil Procedure Code and therefore, the impugned order deserves to be quashed and set aside. Before passing the impugned order, on the application submitted by the defendant, the plaintiff has been given an ample opportunity and after considering the submissions made on behalf of the rival parties, thereafter, the learned Commercial Court has passed the impugned order. Under the circumstances, it cannot be said that the impugned order is vitiated and / or deserves to be quashed and set aside as sought to be contended on behalf of the plaintiff.
7.0. In view of the above and for the reasons stated above, more particularly, considering the Section 2(c) of the Commercial Courts Act r/w Order VII Rule 10 of the Civil Procedure Code, it cannot be said that the learned Commercial Court has committed any error in retuning the plaint to the plaintiff to present it before the appropriate Court having jurisdiction. Under the circumstances, we see no reason to interfere with the impugned order passed by the learned Commercial Court. We are in complete agreement with the view taken by the learned Commercial Court. Under the circumstances, present Appeal From Order deserves to be dismissed Page 14 of 15 HC-NIC Page 14 of 15 Created On Tue Jul 11 00:32:50 IST 2017 C/AO/210/2017 CAV JUDGMENT and is accordingly dismissed. Consequently, the Civil Application No.8448 of 2017 stands dismissed.
8.0. From the impugned order passed by the learned Commercial Court, it appears that while returning the plaint, the learned Commercial Court had granted 20 days time to the plaintiff to present the plaint before the Court having the jurisdiction, which the plaintiff had challenged in the present proceedings and by now 20 days time has expired. Therefore, so as to enable the plaintiff to present the plaint before the Court having jurisdiction, we grant further 20 days time from today to the plaintiff to present plaint before the Court having the jurisdiction. With this, present Appeal From order stands dismissed.
sd/ (M.R. SHAH, J.) sd/ (B.N. KARIA, J.) Kaushik Page 15 of 15 HC-NIC Page 15 of 15 Created On Tue Jul 11 00:32:50 IST 2017