Delhi High Court
Raj Kumar Gupta & Anr. vs Jagan Nath Bajaj & Ors. on 19 September, 2022
Author: Amit Bansal
Bench: Amit Bansal
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of Decision : 19th September, 2022
+ CS(COMM) 374/2020
RAJ KUMAR GUPTA & ANR. ..... Plaintiffs
Through: Mr. N. Prabhakar with Mr. Dhruv
Sharma and Mr. Uday Sharma,
Advocates.
versus
JAGAN NATH BAJAJ & ORS. ..... Defendants
Through: Mr. S.S. Tripathy and Mr. Gagan
Singh Bagga, Advocate for D-1.
Mr. Nitesh Kumar, Advocate for D-4.
Mr. Lovenish Mendiratta, Advocate.
CORAM:
HON'BLE MR. JUSTICE AMIT BANSAL
AMIT BANSAL, J. (ORAL)
I.A. 3221/2022(for condonation of delay in re-filing I.A.3220/2022
1. For the reasons stated in the application, the same is allowed and delay in re-filing I.A. No.3220/2022 is condoned.
2. The application stands disposed of.
I.A. 6249/2022(O-VI R-17 of CPC) & I.A. 6250/2022(O-VII R-14(3) of CPC)
3. By way of I.A. No.6249/2022, the plaintiffs seek to amend the plaint and by way of I.A. No.6250/2022, the plaintiffs seek to file additional documents.
4. Notice in these applications was issued on 25th April, 2022. No replies Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 1 of 8 have been filed on behalf of the defendants.
5. In I.A. No.6249/2022, it has been stated that inadvertently, the plaint mentions a receipt of sum of Rs.1.51 crores out of the agreed amount of total consideration of Rs.2.15 crores. The actual amount received by the defendants prior to the filing of the present suit is Rs.1,50,81,004/- and not Rs.1.51,00,000/-. In support thereof, I.A. No.6250/2022 has been filed on behalf of the plaintiffs seeking to file the bank statements.
6. The suit is at an early stage and issues are yet to be framed.
7. All the objections with regard to the merits of the matter can be addressed in the written statement to the amended plaint.
8. Therefore, no prejudice would be caused to the defendants if the aforesaid applications are allowed.
9. Accordingly, the amended plaint filed along with the application is taken on record and the additional documents sought to be filed by I.A. No.6250/2022 are permitted to be taken on record.
10. The applications stand disposed of in terms of above. I.A. 3220/2022 (of the defendants no.2, 3 & 5 u/Order VII Rule 11 CPC) & I.A. 7840/2022(of the defendants no.4 u/O-VII R-11 of CPC)
11. I.A No. 3220/2022 has been filed on behalf of the defendants no.2, 3 and 5 and I.A. No. 7840/2022 has been filed on behalf of the defendant no.4 seeking rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 (CPC).
12. The aforesaid applications are premised on the following grounds:
i. That the present suit as filed by the plaintiffs does not fall within the category of a commercial dispute under Section 2(1)(c) of the Commercial Courts Act, 2015 as the property in question is a Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 2 of 8 residential property. Reliance in this regard is placed on the judgment in Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP and Anr., (2020) 15 SCC 585.
ii. That the present suit is not maintainable on account of non-
compliance with Section 12 A (1) of the Commercial Courts Act, 2015 in as much as the plaintiffs have not taken recourse to pre- institution mediation.
iii. Plaintiffs have not valued the suit properly for the purposes of Court Fees and jurisdiction. The market value of the two floors of the property bearing no.E-59, South Extension Part 1 is about Rs.6 crores but the plaintiffs have valued the suit at only Rs.2.15 crores. iv. The Property Development Agreement dated 19th October, 2018 does not bear the signatures of all the parties and is not registered document.
13. No reply has been filed on behalf of the plaintiffs. However, oral submissions have been made. Counsel for the plaintiffs submits that:
i. In view of the fact that it is a Property Development Agreement entered into between the parties which involves re-development/ re- construction, the present suit is covered under Section 2 (1) (vi) of the Commercial Courts Act. Reliance is placed on the judgment of the Andhra Pradesh High Court in Blue Nile Developers (P) Ltd. v. Movva Chandra Sekhar, 2021 SCC OnLine AP 3964. ii. In view of the urgent interim reliefs sought in the present suit, Section 12 A of the Commercial Courts Act, 2015 would not be applicable to the present case.
iii. The suit has been correctly valued in terms of the aforesaid Property Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 3 of 8 Development Agreement dated 23rd October, 2018 entered into between the parties.
iv. The aforesaid Property Development Agreement is not required to be registered.
14. I have heard the counsels for the parties.
15. Relevant provisions of Section 2 (1) (c) of the of the Commercial Courts Act, 2015 defining "commercial dispute" are extracted below:
"2(1) (c).
...
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
...
(xi) joint venture agreements;"
16. Counsel for the plaintiffs has placed reliance on the judgment of a Division Bench of the Andhra Pradesh High Court in Blue Nile Developers (Supra). In the aforesaid case, the dispute involved construction of a residential project. The Division Bench came to the conclusion that construction agreements would be covered under the category of „Construction and infrastructure contracts‟ and would fall under Section 2 (1) (vi) of the Commercial Courts Act and therefore, held the suit to be maintainable as a commercial suit.
17. Relevant observations of Blue Nile Developers (Supra) are set out below:
"22. Hence from the above, it is clear that the "legislature" has included the various types of commercial transactions to bring Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 4 of 8 under the fold of "commercial dispute" in case of any dispute arises from any of those transactions. On a careful reading of the above said provision of the Act, it is obvious that the legislature has taken due care while incorporating the above said clauses from (i) to (xxii) in Section 2(1)(c) of the Act by avoiding the repetition of words and sentences without effecting the full fledged meaning of the same even on expansion of the said each clause. Therefore, either giving any restrictive meaning or reading of a clause in isolation and expansion of one word only in the said clause would hamper and frustrate the meaningful definition of the said clause on it's expansion by abrogating certain category of transactions from the purview of the benefit of the above said Act which is not otherwise the intendment of the legislature in bringing out the said enactment.
23. For the sake of illustration, if we confine the definition of clause (vi) of the above said provision of the Act to the infrastructure contracts only, then it would exclude the category of construction contracts and construction and infrastructure contracts from it's purview.
24. Suppose, if it is read as "construction and infrastructure contracts" as one word/one sentence, then it would exclude the category of the construction contracts and infrastructure contracts separately from its purview.
25. But that is not the intendment of the above said central enactment, as it is clear from the scope and object of the Act. All the types of "commercial transactions" are saved in the Section 2(1)(c) of the Act subject to the condition that it satisfies the "specified value" stipulated under the Act for the purpose of assumption of the jurisdiction by the Special Court/the Commercial Court. Except that no category of commercial transaction is excluded from the purview of the above said Act which is evident from the reading of the above said section and its clauses."
18. I am in respectful agreement with the view taken by the Andhra Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 5 of 8 Pradesh High Court. A restrictive meaning cannot be given to the phrase „construction and infrastructure contracts‟. The aforesaid phrase would include both „construction contracts‟ as well as „infrastructure contracts‟ and cannot be given a restrictive meaning to include only infrastructure contracts involving construction. This becomes clear from the use of the words „including tenders‟, which would imply that all tenders relating to construction contracts as well as infrastructure contracts would be covered under the scope of commercial disputes.
19. In the present case the plaintiff seeks specific performance of the Property Development Agreement, in terms of which the plaintiffs were to construct the property. The plaintiffs, being the builders are required to pay Rs.2,15,00,000/- crores to the defendants, being the owners of the property and carry out construction on the suit property at their own expense. In lieu thereof, the plaintiffs would be entitled to two floors of the building to be constructed and the remaining floors are to go to the defendants. Clearly, construction is the core of the aforesaid agreement and the dicta in Blue Nile Developers (supra) would be squarely applicable.
20. In the plaint it has been stated that the plaintiffs are in the business of developing the private properties belonging to the third parties in accordance with the property development agreement/ collaboration agreement inter se. The present agreement is in the nature of a collaboration agreement, which would also qualify as a „joint venture‟ agreement under Section 2 (1) (c) (xi) of the Commercial Courts Act. Black‟s Law Dictionary 7th Edition defines „joint venture‟ as „a business undertaking by two or more persons engaged in a single defined project'.
21. The subject matter of the suit is specific performance of the said Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 6 of 8 agreement. Therefore, in my view it would be covered under the definition of „commercial dispute‟ both under Section 2(1) (c) (vi) and Section 2(1) (c)
(xi) of the Commercial Courts Act.
22. In Ambalal Sarabhai (Supra), the Supreme Court was seized of a dispute with regard to execution of mortgage deed in respect of an immovable property that was not being used for trade or commerce. Therefore, the Supreme Court relying upon Section 2 (1) (c) (vii) of the Commercial Courts Act came to conclusion that the suit would not qualify as a commercial suit. The Supreme Court was not dealing with the case involving construction over the suit property or a Collaboration Agreement.
23. Counsel for the plaintiffs correctly submits that in view of the urgent interim reliefs sought in the present suit, by way of I.A. 8005/2020, the plaintiffs did not have to resort to the pre-institution mediation mechanism provided under Section 12 A of the Commercial Courts Act. In the present case, on the first date of the suit itself an ex-parte ad interim order was passed in favour of the plaintiffs restraining the defendants from alienating, transferring or creating third party interest in the suit property. The aforesaid order still continues.
24. The other objections such as the agreement being unregistered and not bearing the signatures of all the parties are in respect of merits of the case and cannot be grounds for rejection of the suit under Order VII Rule 11 of the CPC.
25. As regards the objection of the defendant with regard to valuation of the suit for the purpose of Court Fee, the plaintiffs have valued the suit for the purpose of obtaining relief of specific performance of the aforesaid agreement at Rs.2,15,00,000/-, the consideration payable in terms of the Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 7 of 8 aforesaid agreement. The contention of the defendants that the suit should have been valued on the basis of market value of the two floors of the property that would come to the share of the plaintiffs is untenable as the said floors are yet to come into existence.
26. I do not find any merit in the aforesaid applications and the same are dismissed.
CS(COMM) 374/2020
27. In view of the amended plaint being taken on record, the written statement to the amended plaint may be filed within thirty days.
28. Replication thereto, if any, be filed within fifteen days thereafter.
29. List before the Joint Registrar on 28th October, 2022 for completion of pleadings and marking of exhibits.
AMIT BANSAL, J.
SEPTEMBER 19, 2022 at Signature Not Verified Digitally Signed By:AMIT BANSAL CS(COMM) 374/2020 Signing Date:20.09.2022 Page 18:21:38 8 of 8