Karnataka High Court
M. T. Kumar Setty S/O Late M Venkanna ... vs Harapanahalli Gopal Krishna S/O Late ... on 22 March, 2025
Author: S G Pandit
Bench: S G Pandit
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NC: 2025:KHC-D:5283-DB
COMAP No. 100027 of 2024
IN THE HIGH COURT OF KARNATAKA, DHARWAD BENCH
DATED THIS THE 22ND DAY OF MARCH, 2025
PRESENT
THE HON'BLE MR. JUSTICE S G PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
COMMERCIAL APPEALS NO.100027 OF 2024
BETWEEN:
T. KUMAR SETTY
S/O. LATE M. VENKANNA SETTY,
AGED ABOUT 54 YEARS,
RUNNING JEWELERY SHOP UNDER THE
NAME AND STYLE OF VENKANNA JEWELERS,
R/O. AGADI MAREPPA COMPOUND,
IIND STAGE, 1ST CROSS, 2ND HOUSE, BALLARI.
...APPELLANT
(BY SRI SHRIKANTH R.SATTIGERI, ADVOCATE,
SRI VITTHAL S.TELI, ADVOCATE AND
SRI C. SURESH VARMA, ADVOCATE)
AND:
HARAPANAHALLI GOPAL KRISHNA
S/O. LATE HARAPANAHALLI SANNAPPA SETTY,
MERCHANT, AGED 56 YEARS,
Digitally signed C/O. G.R.V. KRISHNAIAH SETTY,
by V N BADIGER
DOOR NO.117, WARD NO.XI, JUMMA MASJID
Location: HIGH
COURT OF STREET, BALLARI, PRESENTLY RESIDING AT
KARNATAKA DOOR NO.6-99, YERRAGUNTA VILLAGE,
KANEKAL TALUK, ANANTAPUR,
DISTRICT KARNATAKA.
...RESPONDENT
(BY SRI HARSH DESAI, ADVOCATE FOR C/R)
THIS COMAP IS FILED UNDER SECTION 13(1) OF THE
COMMERCIAL COURTS ACT 2015 R/W SECTION 96 OF CPC PRAYING
TO, SET ASIDE THE ORDER DATED 30.09.2024 IN COMM. OS
NO.41/2023 PASSED BY THE IV ADDITIONAL DISTRICT AND
SESSIONS JUDGE, (COMMERCIAL COURT BALLARI WHEREBY IT
DECREED THE SUIT FILED BY THE PLAINTIFF AND ETC.,
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NC: 2025:KHC-D:5283-DB
COMAP No. 100027 of 2024
THIS COMAP HAVING BEEN HEARD AND RESERVED ON
07.03.2025 AND COMING ON FOR PRONOUNCEMENT OF JUDGMENT
THIS DAY, C.M. POONACHA, J., DELIVERED THE FOLLOWING:
CORAM: THE HON'BLE MR. JUSTICE S G PANDIT
AND
THE HON'BLE MR. JUSTICE C.M. POONACHA
CAV JUDGMENT
(PER: THE HON'BLE MR. JUSTICE C.M. POONACHA) 1 Although the above appeal is listed for admission, with consent of learned counsels for both the parties, the above appeal is heard finally on merits.
2. The present appeal is filed under Section 13(1) of the Commercial Courts Act, 20151 R/w Section 96 of the Civil Procedure Code, 19082, by the defendant, challenging the judgment and decree dated 30.09.2024, passed in Com. Original Suit No.41/2023, by the IV Additional District and Sessions Judge (Exclusive Dedicated Commercial Court), Bellari3.
3. The parties will be referred to as per their ranking before the Trial Court, for the sake of convenience. 1 Hereinafter referred to as the 'Act of 2015' 2 Hereinafter referred to as the 'CPC' 3 Hereinafter referred to as the 'Trial Court' -3- NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024
4. The admitted factual matrix in brief leading to the present appeal are that the parties entered into a lease deed dated 09.02.2021, whereunder, the defendant, was inducted as tenant in shop premises in old Door No.11/242 Ward No.6 (present Door No.242/30), Bengaluru Road, Ballari4, on a monthly rent of ₹36,000/-, which was to be paid on or before 5th of every month. The lease period was from January-2021 to 19.12.2021. The lease was for the purpose of running gold and silver shop in the suit property. Since the defendant committed default in the matter of payment of rents from Januray-2021, the plaintiff got issued a legal notice dated 27.02.2023 in terms of Section 106 of the Transfer of Property Act, 18825, calling upon the defendant to vacate and hand over peaceful possession of the suit schedule property to plaintiff and to pay the arrears of rent of ₹9,36,000/- and damages of ₹50,000/- as also to pay future mesne profits.
5. The defendant although received the notice, but did not reply to the same. Hence, the plaintiff initiated 4 Hereinafter referred to as the 'suit property' 5 Hereinafter referred to as the 'T.P Act' -4- NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 mediation process, vide PIMS No.31/2023, before the Legal Service Authority, Ballari on 06.04.2023, consequent to which, the defendant entered appearance in the said proceedings and paid a total arrears of ₹6,50,000/- on 31.07.2023. Since the defendant did not agree to vacate the suit property and hand over the suit schedule premises to plaintiff, the District Legal Service Authority, Ballari, issued non-starter report on 03.08.2023. Subsequently, the plaintiff has filed the suit in Com. O.S. No.41/2023 before the Trial Court seeking for the following reliefs:
36. The plaintiff therefore prays that the Hon'ble court be pleased to pass a decree in favour of plaintiffs and as against the defendant for:
A) Direct/order the defendant to vacate and handover peaceful vacant physical possession of the plaint schedule property to the plaintiff and if the defendant fails to do so he may be ordered/ directed to be evicted / ejected through the due legal process of court and law.
B) To order for enquiry under Order XX Rule-
12 of CPC for ascertaining the mesne profits by way of damages for use and occupation of the plaint schedule property by defendant after determination of tenancy with effect from 15-03-2023 till the date of actual delivery of possession and pass a decree for the sum so ascertained subject to the payment of the court fee. -5-
NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 C) To grant the cost of the suit.
D) To grant any such other reliefs which the Hon'ble court deems fit and proper in the circumstances which would meet the ends of justice and equity.
6. The defendant/tenant entered appearance in the suit before the trial Court and filed his written statement denying the averments made in paragraph Nos.20 to 33 of the plaint. Further, the defendant has stated that he is taking necessary care and running the shop for jewellery sales purpose only. It is further averred that the parties had settled the matter with condition of rent enhancement from ₹36,000/- to ₹60,000/- per month and the plaintiff agreed to continue the tenancy of the defendant for ten years. Hence the plaintiff sought the Court to close the suit as settled in terms of compromise as averred in the written statement.
7. Based on the pleadings of the parties, the trial Court framed the following:
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 ISSUES
1. Whether plaintiff is entitled for vacant possession of suit schedule property from the defendant?
2. Whether plaintiff is entitled for mesne profits by way of damages?
3. Whether plaintiff is entitled for relief sought?
4. What order or decree?"
8. The plaintiff examined himself as PW.1. Ex.P.1 to P.9 have been marked. The defendant examined himself as DW.1. No documents have been marked on his behalf. The trial Court by its judgment and decree dated 30.09.2024 decreed the suit in part with costs and passed the following order.
ORDER Suit of the plaintiff is decreed in part with costs in the following terms:
Defendant is directed to hand over the vacant possession of the suit schedule property to plaintiff within one month from the date of this judgment, failing which plaintiff is entitled to recover the same as per due process of law.
It is further ordered that there shall be a separate inquiry for assessing future mesne profits as contemplated U/Order XX Rule 12 of CPC.-7-
NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 Draw decree accordingly.
Office is directed to furnish copy of this judgment to parties to this suit through E-Mail, if they have furnished their E-Mail I.Ds. as per Order XX Rule 1 of CPC as amended by Sec.16 of Commercial Courts Act, 2015.
9. Being aggrieved, the defendant has preferred the present appeal.
10. The sole contention put forth by the learned counsel Sri Vitthal S. Teli, appearing for the appellant/defendant is that the trial Court which was exclusively dedicated for commercial suits does not have the jurisdiction to adjudicate the suit since the dispute between the parties was not a commercial dispute in terms of Section 2(1)(c)(vii) of the Act of 2015.
11. Per contra, learned counsel for respondent/plaintiff Sri Harsh Desai, contended that the appellant/defendant did not take any specific defence that the suit is not maintainable before the trial Court. It is further contended that the Schedule to the Act of 2015, which amends the CPC specifies at Section 4(D)(ii), -8- NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 whereunder after Rule 3 of Order VIII of CPC, Rule 3A has been introduced and as per Rule 3A(4), which stipulates that the defendant who disputes jurisdiction of the Court, should state the reasons for doing so. It is contended that in the present case the appellant/defendant not having specifically disputed the jurisdiction of the trial Court, he cannot be permitted to put forth the said contention in the present appeal before this Court. It is further contended that the judgment and decree passed by the trial Court is just and proper.
12. Both the learned counsels have relied upon various judgments, which shall be considered in the course of this judgment to the extent of the same is required for adjudication of the dispute between the parties in the present appeal.
13. The submissions of the learned counsel of the parties have been considered and the material on record have been perused.
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14. The question that arises for consideration is, "whether the trial Court was justified in decreeing the suit of the plaintiff?"
15. The relevant factual matrix is undisputed inasmuch as the defendant was inducted into the suit property as a tenant by the plaintiff pursuant to agreement dated 09.02.2021 (Ex.D.4). It is further undisputed that the period of lease under the lease deed dated 09.02.2021 (Ex.P.4) was 11 months and the monthly rent was ₹36,000/-. The legal notice dated 27.02.2023 (Ex.P.5) issued by the respondent/plaintiff and the receipt of the same by the defendant is not in dispute.
16. At this juncture it is relevant to note that in the written statement filed by the defendant it is forthcoming that the defendant has not taken any specific contention with regard to jurisdiction of the trial Court.
17. It is further relevant to note from the impugned judgment of the trial Court that the defendant had filed I.A.No.4 under Section 151 of CPC to return the plaint to the
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 plaintiff to present the same before the Civil Court, which application was dismissed by the trial Court on 05.04.2024. It is submitted that the said order dated 05.04.2024 dismissing the I.A.No.4 has not been challenged by the defendant and the same has attained finality. Despite the rejection of I.A.No.4, since the defendant raised the question with regard to jurisdiction of the Court in the written arguments, the said aspect was considered by the trial Court, wherein at paragraph No.24 it has been held as follows:
24. Now the factual score of the present case is to be adjudged as per the principles laid down in the above referred decision. Any dispute arising out of agreement relating to immovable property used exclusively in trade and commerce will qualify to be a commercial dispute.
In the present case, the terms of Ex.P.4 coupled with pleadings of both parties to the lease agreement is in respect of suit shop premises, wherein commercial activities are taking place and suit premises are actually used for commercial purpose. Therefore, the present suit squarely comes within the purview of commercial dispute as per Sec.2(1)(c)(vii) of Commercial Courts Act, 2015. The agreement itself need not be for commercial transaction. If the suit premise is let, which is meant to be used for commercial purpose, comes within the ambit of commercial dispute. Therefore, first and foremost objection of defendant is overruled.
(emphasis supplied)
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18. Section 2(1)(c)(vii) defines "Commercial Dispute"
as a dispute arising out of "agreements relating to immovable property used exclusively in trade or commerce".
In the present case it is undisputed that vide the lease agreement dated 09.02.2021 (Ex.P.4) the suit property that was leased was for the purpose of running a jewellery shop by the defendant. Hence, it is undisputed that the defendant was using the suit premises exclusively for business purposes.
19. It is pertinent to note that in the written statement filed by the defendant before the Trial Court, no specific defence has been taken with regard to the commercial Court not having jurisdiction to try the suit.
20. Section 16(1) of the Act of 2015, specifies that the provisions of the CPC shall, in their application to any suit in respect of a commercial dispute of a Specified Value, stand amended in the manner as specified in the Schedule. Section 4(D)(ii) of the Schedule to the Act of 2015 specifies the amendments to be made in Order VIII Rule 3A of the CPC
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 and states that Rule 3A shall be inserted. Sub-Section 4 of Rule 3A states as follows:
"(4) If the defendant disputes the jurisdiction of the Court he must state the reasons for doing so, and if he is able, give his own statement as to which Court ought to have jurisdiction."
21. It is clear from the aforementioned that Schedule to the Act of 2015 specifically mandates a defendant to state reasons for him having disputed the jurisdiction of the commercial Court, which has admittedly not been done by the defendant in the present case.
22. Since the defendant has not taken a specific plea in the written statement, no issue with regard to jurisdiction was framed by the Trial Court. Despite no specific plea having been taken and no issue in that regard having been framed, as also, the order dated 05.04.2024, dismissing I.A No.4, having attained finality, since the defendant raised the issue of jurisdiction in the written arguments, the Trial Court once again considered the said contention of defendant in the impugned judgment and after adequately appreciating
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 the relevant factual matrix and noticing the legal position, the objection of defendant regarding jurisdiction was overruled by the Trial Court.
23. In the case of Ambalal Sarabhai Enterprises Limited Vs. K.S. Infraspace LLP and Another6, the Hon'ble Supreme Court was considering a fact situation, wherein, a memorandum of understanding was entered into between the parties, which required a mortgage deed to be executed. Accordingly, a mortgage deed dated 03.11.2017 were executed, but the same was not registered. Hence, a suit was filed before the commercial Court to enforce execution of a mortgage deed, as also the relief of injunction and other reliefs. An application was filed by defendant in the said suit under Order VII Rule 10 of CPC, which was rejected by the Trial Court and reversed by the High Court. The Hon'ble Supreme Court noticing the factual matrix in the said case has held that the dispute between the parties would constitute a commercial dispute as contemplated under Section 2(1)(c)(vii) of the Act of 2015 and held that the suit 6 (2020) 15 SCC 585
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 before the commercial Court was maintainable. The factual matrix in the said case is different from the facts of the present case.
24. A Co-ordinate bench judgment of this Court, in the case of Dhee Educational And Cultural Trust And Others Vs. M/s Hartana Projects LLP7 And Another, was considering a fact situation, wherein, a suit for ejectment was filed before the commercial Court and in the said suit an application was filed under Order VII Rule 10 of the CPC, which was rejected by the Trial Court. This Court noticing that defendant in the said suit was running an educational institution in the suit property held that the same would not come within the expression of "trade or commerce" as contemplated under Section 2(1)(c)(vii) of the Act of 2015 and held that the suit before the commercial Court was not maintainable. The factual matrix in the said case is also different from the facts in the present case. 7 High Court of Karnataka, decided on 30.01.2023
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25. In the case of Deepak Polymers Pvt. Ltd. Vs. Anchor Investments Pvt. Ltd.8, a learned Single Judge of the Calcutta High Court was considering a fact situation, wherein, a suit for recovery of possession of immovable property was filed under Section 106 of the T.P. Act before a commercial Court and an application under VII Rule 10 of the CPC was filed for return of the plaint, which is rejected by the Trial Court. The Calcutta High Court held that dispute in the said case would not come under the ambit of the provisions of Act of 2015 and held that the commercial Court did not have jurisdiction to try the suit. Hence, the application filed under Order VII Rule 10 of the CPC was allowed. In the said case, it was held as follows:
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.8
Order dated 24.06.2021, passed in C.O. No.759/2021 and other connected matters
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34. 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."
(emphasis supplied)
26. A similar view has also been expressed by the learned Single Judges of the Calcutta High Court in a few other cases that have been placed on record. It is further placed on record that the judgment dated 24.06.2021, passed in the case of Deepak Polymers Pvt. Ltd.8 , was challenged before the Hon'ble Supreme Court of India in the case of Armstrong Investment Private Limited Vs. Sri. Sandip Bazaz Huf9, wherein, leave was granted vide order dated 30.07.2021. However, subsequently the said 9 Petition(s) for Special Leave to Appeal (C) No.11418/2021
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 Civil Appeal No.4659/2021, was dismissed as withdrawn vide order dated 06.05.2022. Thereafter, a Division Bench of the Calcutta High Court, has framed various points for consideration, which are extracted herein below for ready reference:
a. "Whether after issuance of notice under Section 106 of the Transfer of Property Act, 1882, the defendant or the parties cannot rely the agreement/or Lease Deed as the case may be?
b. Whether only on the basis of the case initiated under Section 106 of the Transfer of Property Act, 1882, it can be said that Court cannot look into the agreement between the parties and thus the suit cannot be treated as commercial suit in terms of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015?
c. Whether if the explanation Clause of Section 2(1)(c) of the Commercial Courts Act, 2015 taken into consideration along with Section 106 of the Transfer of Property Act, 1882, the suit can be treated as commercial suit in terms of the lease agreement/rent agreement entered between the parties?"
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27. However, the said orders passed by learned Single Judges of the Calcutta High Court are distinguishable on facts and would not be applicable to the facts of the present case.
28. It is also relevant to note that in all the said cases, applications under Order VII Rule 10 of the CPC was filed before the Trial Court for return of the plaint and the cases decided are arising out of orders passed on the said interim application. However, in the present case, the order dated 05.04.2024, dismissing I.A No.4, filed by defendant for return of the plaint has not been challenged. In the present case, the issue is sought to be raised by the defendant only in the present appeal. In this context, it is relevant to note that defendant has participated in the trial before the commercial Court and defendant having had an opportunity to put forth his contentions in a full fledge trial, no prejudice is caused to the defendant, since it cannot be said that the commercial Court inherently lacked the jurisdiction to adjudicate upon a suit arising out of the present nature.
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29. It is further relevant to note that the legal notice dated 28.02.2023 not merely terminated the lease of defendant/tenant, but also claimed arrears of rent of ₹9,36,000/- as also damages of ₹50,000/-. Pursuant to the disposal of COM. O.S. No.41/2023 before the Legal Services Authority, Ballari, the COM. O.S. No.41/2023, was initiated by the plaintiff. In the present suit has been filed, apart from the relief of possession of property, the plaintiff has also sought for an enquiry for ascertaining mesne profits by way of damages for use and occupation of the suit property after termination of the tenancy. Consideration of prayer for mesne profits would necessarily arise keeping in mind the lease deed dated 09.02.2021 and the use and occupation of the suit property, which was admittedly used for commercial purposes. Hence, it cannot be said that, in the present suit the plaintiff is merely invoking the statutory right under Section 106 of the T.P. Act. Considering all the prayers in the plaint, would necessarily infer adjudication of the rights of parties, having regard to the lease Deed dated 09.02.2021. Hence, it cannot be said that the dispute between the parties
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NC: 2025:KHC-D:5283-DB COMAP No. 100027 of 2024 in the suit is not a "commercial dispute" as contemplated under Section 2(1)(c)(vii) of the Act of 2015.
30. In view of the aforementioned, the appellant has failed in demonstrating that the judgment and decree passed by the Trial Court is in any manner erroneous and liable to be interfered with by this Court in the present appeal. Hence, the question framed for consideration is answered in the "affirmative".
31. The above appeal is dismissed as being devoid of merit with costs.
Sd/-
(S G PANDIT) JUDGE Sd/-
(C.M. POONACHA) JUDGE PMP Para 1 to 5 and 18 to end MRK para 7 to 17 CT:UMD