Kerala High Court
M/S. Tmt Granites Private Limited vs M/S. Canon Granites Private Limited on 29 January, 2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE SYAM KUMAR V.M.
WEDNESDAY, THE 29TH DAY OF JANUARY 2025 / 9TH MAGHA, 1946
FAO NO.98 OF 2024
ARISING OUT OF THE ORDER DATED 25.03.2024 IN IA
17/2024 IN OS NO.441/2023 OF ADDITIONAL SUB COURT-I,
THRISSUR
APPELLANTS/RESPONDENTS 1 & 2/DEFENDANTS 1 & 2:
1 M/S.TMT GRANITES PRIVATE LIMITED
MANGALAM DAM DESOM VANDAZHI VILLAGE,
ALATHUR TALUK, PALAKKAD 678706.
REPRESENTED BY ITS CHAIRMAN & MANAGING DIRECTOR,
TOM GEORGE, AGED 60 YEARS,
S/O. KIZHAKKEPARAMBIL GEORGE,
CHITTADI DESOM, VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
2 TOM GEORGE
AGED 60 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE,
CHITTADI DESOM, VANDAZHI VILLAGE,
CHITTADI P.O., ALATHUR TALUK,
PALAKKAD, PIN - 678706
BY ADVS.ENOCH DAVID SIMON JOEL
S.SREEDEV
RONY JOSE
LEO LUKOSE
KAROL MATHEWS SEBASTIAN ALENCHERRY
DERICK MATHAI SAJI
KARAN SCARIA ABRAHAM
RESPONDENTS/REVIEW PETITIONERS & RESPONDENTS 3 TO 13/
PLAINTIFFS & DEFENDANTS 3 TO 13 :
1 M/S.CANON GRANITES PRIVATE LIMITED
THRISSUR CORPORATION THRISSUR VILLAGE & TALUK,
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THRISSUR, REPRESENTED BY ITS MANAGING DIRECTOR,
JOS K. FRANCIS, AGED 63 YEARS, S/O.K.C.FRANCIS,
KUTTIKKADAN HOUSE, PRIYADARSINI NAGAR,
LOURTHUPURAM DESOM, PERINGAVU VILLAGE, THRISSUR
TALUK, EAST FORT P.O., THRISSUR, PIN - 680005
2 JOS K. FRANCIS
AGED 63 YEARS
S/O. K.C.FRANCIS, KUTTIKKADAN HOUSE, PRIYADARSINI
NAGAR, LOURTHUPURAM DESOM,PERINGAVU VILLAGE,
THRISSUR TALUK, EAST FORT, THRISSUR, PIN - 680005
3 SIMON K. FRANCIS
AGED 60 YEARS
S/O. K.C.FRANCIS, KUTTIKKADAN HOUSE,
PRIYADARSINI NAGAR, LOURTHUPURAM DESOM,
PERINGAVU VILLAGE, THRISSUR TALUK,
EAST FORT, THRISSUR, PIN - 680005
4 STELLA SIMON,
AGED 53 YEARS
W/O. SIMON K. FRANCIS, KUTTIKKADAN HOUSE,
PRIYADARSINI NAGAR, LOURTHUPURAM DESOM,
PERINGAVU VILLAGE, THRISSUR TALUK,
EAST FORT, THRISSUR, PIN - 680005
5 BENNY GEORGE,
AGED 55 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE, CHITTADI DESOM,
VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
6 SIBI GEORGE
AGED 50 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE, CHITTADI DESOM,
VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
7 SHAJI GEORGE,
AGED 58 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE, CHITTADI DESOM,
VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
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8 JOSE GEORGE
AGED 52 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE, CHITTADI DESOM,
VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 67870
9 JOBY GEORGE,
AGED 40 YEARS
S/O. KIZHAKKEPARAMBIL GEORGE, PARASSERI DESOM,
KIZHAKKANCHERY VILLAGE, ALATHUR TALUK,
PALAKKAD, PIN - 678684
10 BINITHA AUGUSTIN
AGED 48 YEARS
W/O. KIZHAKKEPARAMBIL BENNY GEORGE, CHITTADI
DESOM, VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
11 MERCY TOM
AGED 57 YEARS
W/O. KIZHAKKEPARAMBIL TOM GEORGE, CHITTADI DESOM,
VANDAZHI VILLAGE, CHITTADI P.O., ALATHUR TALUK,
PALAKKAD, PIN - 678706
12 GEORGE TOM,
AGED 34 YEARS
S/O. KIZHAKKEPARAMBIL BENNY GEORGE, CHITTADI
DESOM, VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
13 ANU TOM
AGED 33 YEARS
D/O. KIZHAKKEPARAMBIL BENNY GEORGE, CHITTADI
DESOM, VANDAZHI VILLAGE, CHITTADI P.O.,
ALATHUR TALUK, PALAKKAD, PIN - 678706
14 JACOB MATHEW
AGED 65 YEARS
S/O. VATTAKUZHIYIL MATHEW, KALLURKKADU DESOM,
MUVATTUPUZHA TALUK, ERNAKULAM, PIN - 686668
15 BABY DEVASSY,
AGED 24 YEARS
S/O. KOLANCHERRY DEVASSY, SREEMOOLA NAGARAM
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DESOM, CHOWARA VILLAGE, ERNAKULAM, PIN - 683571
BY ADVS.
M.R. Rajesh R2 TO R4
SANDHYA E.S.(K/2568/1999)
THIS FIRST APPEAL FROM ORDERS HAVING BEEN FINALLY
HEARD ON 22.01.2025, THE COURT ON 29.01.2025 DELIVERED THE
FOLLOWING:
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JUDGMENT
Dated this the 29th day of January, 2025 When a suit arising out of a commercial dispute is filed before a civil court, should the same be rejected under Order 7 Rule 11 (d) of the Code of Civil Procedure, 1908 (C.P.C.) or should the plaint be returned for proper presentation under Order 7 Rule 10 is the short but important question that comes up for consideration in this F.A.O.
2. This F.A.O. is filed challenging the order dated 25.03.2024 in I.A No.17 of 2024 in OS No.441 of 2023 of the Additional Sub Court, Thrissur.
3. Appellants were defendants 1 and 2 in the O.S. Respondents herein were the plaintiffs and defendants 3 to 13 in the suit. (Parties are referred to hereinafter as per their status in the suit). The suit was filed by the plaintiffs seeking declaration and realisation of money. The 1st plaintiff is a Private Limited Company engaged in the business of granite quarrying and processing. The 2nd plaintiff is its Managing Director and the other plaintiffs are its directors. It is FAO NO.98 OF 2024 6 2025:KER:6458 contended that, by virtue of an oral agreement, defendants 2 and 3 agreed to transfer the equity shares of the 1 st defendant Company to the 1st plaintiff Company for an amount of Rs.15 Crores. Accordingly, an amount of Rs.7,10,00,000/- was transferred through the overdraft account of 1st plaintiff Company at South Indian Bank, Thrissur and Rs.9,10,00,000/- through the current account of the 1 st plaintiff Company at South Indian Bank, Mudappallor Branch in favour of the 2 nd defendant. A separate oral agreement was entered by the plaintiff and defendants 2, 3, 5 and 9 who are the shareholders of a limited liability partnership firm called KNRC LLP to transfer their shares to the plaintiff Company and the 1 st plaintiff Company paid Rs.4,40,00,000/- to the shareholders. Even after several requests, defendants allegedly failed to transfer the equity shares of the 1st defendant Company and the shares of the LLP. They hence ought to have paid back the amount received from the 1st plaintiff Company with interest and profit. The suit was thus filed to declare that defendants 1 to 13 are FAO NO.98 OF 2024 7 2025:KER:6458 the trustees of the funds transferred from the owners of the 1 st plaintiff Company to the account of the 2 nd defendant who is the Managing Director of the 1 st defendant Company towards the value of the concerned equity shares and also for realisation of a sum of Rs.9,10,00,000/- (Rupees Nine Crores Ten Lakhs only).
4. A written statement was filed by defendants 1 and 2 inter alia contending that the suit is barred by Section 6 of the Commercial Courts Act 2015, (hereinafter referred to as "the Act of 2015") as the transfer of shares of a Private Limited Company comes under the purview of sale of goods defined under the Sale of Goods Act and under Section 2 (1) (c) (XVIII) of the Act of 2015.
5. The Sub Court considered maintainability as the preliminary issue and vide judgment dated 08.02.2024 rejected the suit under Order 7 Rule 11 (d) of the C.P.C., finding that the same cannot be entertained by virtue of Section 6 of the Act of 2015. The plaintiffs then filed I.A.No.17 of 2024 seeking to review the said judgment stating that there is an error apparent as the suit ought to have been returned to the plaintiff FAO NO.98 OF 2024 8 2025:KER:6458 for proper presentation before the concerned commercial court and ought not to have been rejected. After hearing the parties and considering the objections filed by defendants 1 and 2, the Sub Court allowed the review petition and reviewed the judgment rendered earlier and directed that the plaint shall be returned to the plaintiff under Order 7 Rule 10 of the C.P.C. to be presented before the proper court. The defendants 1 and 2 have filed this F.A.O. challenging the said order reviewing the judgment.
6. Heard Sri.S.Sreedev, Advocate, appearing for defendants 1 and 2 (appellants) and Sri.M.R.Rajesh, Advocate, appearing for the plaintiffs (respondents 1 to 4).
7. It is submitted by the learned counsel appearing for defendants 1 and 2 that the Sub Court erred in reviewing the judgment and in directing the plaint to be returned. The judgment rendered earlier rejecting the suit under Order 7 Rule 11 (d) of the C.P.C. was legal and proper and the same ought not to have been reviewed or varied. Since the Act of 2015 specifically ousts the jurisdiction of the civil courts from entertaining any suits which arise out of a commercial FAO NO.98 OF 2024 9 2025:KER:6458 transaction, there is an inherent bar to entertaining such suits and the proper course to be followed is to reject the plaint and not to return the plaint for presentation before the proper forum. The dictum in C.K.Surendran v. Kunhimoosa [2023 (7) KHC 257] was not properly understood by the Sub Court and reliance placed on the said judgment is incorrect. Based on Section 6 and Section 15 of the Act of 2015, it is contended that the said provisions confer exclusive jurisdiction in the commercial courts to entertain commercial disputes and the same can only be read as a specific bar on civil courts entertaining a commercial dispute. The lack of a non-obstante clause in Section 6 is also pointed out as a factor. The mandates of Order 7 Rule 11 (d) of the C.P.C. are thus satisfied, so as to lead to a rejection of the suit rather than a return of the plaint under Order 7 Rule 10, it is contended. Parallels are also drawn with Section 34 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) which limits the jurisdiction of civil courts in certain matters whereby the civil courts cannot entertain suits or proceedings in matters that are within the jurisdiction of the FAO NO.98 OF 2024 10 2025:KER:6458 Debt Recovery Tribunal (DRT) or the Appellate Tribunal (DRAT). A plaint is to be rejected when from the averments in the plaint the suit appears to be barred by any law. (Reliance is placed on the dictum laid down by the Supreme Court in Dahiben v. Arvindbhai Kalyanji Bhanusali (Gajra) - Dead through LRs and others [(2020) 7 SCC 366]. Further, the review petition ought not to have been entertained as it was not accompanied by the requisite court fee as stipulated in Article 5 of Schedule I of the Kerala Court Fees and Suit Valuation Act, 1960 (for short "the Act of 1960"). The review petitioner was bound to pay a court fee on the basis of the valuation for the relief sought in the review petition viz., one-half of the fee payable on the plaint comprising the relief sought in the application for review. Reliance is placed in this respect on the dictum laid down by this Court in X v. Y (2023 KHC 9327). A further contention is also taken that the Sub Court while considering the preliminary issue ought to have answered the issue of the bar of limitation and lack of jurisdiction which had been raised by defendants 1 and 2 in their written statement. The lack of bonafides in first filing a suit and obtaining an ex-parte interim order overlooking the FAO NO.98 OF 2024 11 2025:KER:6458 statutory bar and thereafter at the stage of consideration of the preliminary issue seeking to return the plaint for proper presentation before the proper court having jurisdiction is as sharp practice. He thus prays that the F.A.O. may be allowed and the order of the Sub Court reviewing the judgment and returning the plaint be set aside.
8. Per contra the learned counsel appearing for the plaintiffs submitted that the Sub Court was correct in reviewing the judgment and alerting the rejection of the suit with a return of the plaint. The analogy drawn with the SARFAESI Act is wrong as there is no specific bar in the Act of 2015 unlike the SARFAESI Act and the attempted conjoint reading of Section 6 and Section 15 of the Act of 2015 and the attempt to deduce therefrom a 'bar' leading to rejection of the plaint, is chimerical. The most proper and legally envisaged course to be adopted by the civil court once it finds that the plaint has not been presented before the proper court is to return it as envisaged under Order 7 Rule 10 of the C.P.C. The contention that the review petition is not accompanied by the court fee as mandated is unsustainable and is of no consequence in view of FAO NO.98 OF 2024 12 2025:KER:6458 Section 68 of Act of 1960 which stipulates that when an application for review of judgment is admitted on the ground of some mistake or error apparent on the face of the record, and on rehearing the Court reverses or modifies its former decision on that ground, it shall direct the refund to the applicant of so much of the fee paid on the application as exceeds the fee payable on any other application to such Court under Article 11
(g) and (t) of Schedule II. The reliance placed by the learned Sub Judge on C.K.Surendran (supra) to review the judgment is valid and proper and calls for no interference. The learned counsel thus seeks to dismiss the F.A.O.
9. It is trite that under section 9 of the C.P.C., the civil court has the jurisdiction to try all suits of a civil nature, except those in respect of which the jurisdiction is barred either expressly or impliedly by a specific provision of law. [See Dhulabhai v. State of Madhya Pradesh and another (AIR 1969 SC 78)]. Order 7 Rule 11 of the C.P.C. provides for rejection of plaint, and clause (d) thereof specifies the mandate as "where the suit appears from the statement in the plaint to be barred by any law". Order 7 Rule 11(d) of the C.P.C. thus FAO NO.98 OF 2024 13 2025:KER:6458 has application when it could be shown that the suit is barred under any law. On the other hand, Order 7 Rule 10 permits a court to return a plaint if it finds that it lacks jurisdiction to hear the case. Thus if the court does not have the proper territorial, pecuniary, or subject matter jurisdiction to handle the suit Order 7 Rule 10 comes into play. The said provision also outlines the procedure for returning a plaint when the court is not competent to hear the case based on jurisdictional issues. Section 6 of the Act of 2015 stipulates that the commercial court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction. Section 15 of the Act of 2015 mandates the transfer of pending commercial disputes to commercial courts or commercial divisions.
10. It is Section 6 of the Act of 2015, which assumes relevance to the case at hand rather than Section 15 thereof, and Section 6 does not specifically stipulate a 'bar' on civil courts. It only lays down the jurisdiction that the commercial courts are visited with in matters involving commercial disputes. FAO NO.98 OF 2024 14
2025:KER:6458 On this point, this Court has in C.K.Surendran (supra) as follows:
"7. It is quite interesting that the wording used in S.6 of the Act that the commercial court "shall have jurisdiction to try all suits and applications" relating to a commercial dispute of a specified value does not say anything about the ouster of jurisdiction of regular civil court. In fact, there is no exclusion of the jurisdiction of the civil court either under S.6 or under S.7 of the Act and no non - obstante clause akin to that of S.11 of Kerala Buildings (Lease and Rent Control) Act or any other special enactment, is incorporated in the abovesaid two provisions. The mere user of the word "shall" will not by itself constitute ouster of jurisdiction. Certainly, the legislative intention will not support the proposition that the jurisdiction of civil court will not stand ousted by the commencement of Commercial Courts Act, 2015. It was enacted for the speedy disposal of certain commercial disputes by establishing sufficient machinery to meet the requirement. The bar and the non - obstante clause incorporated under S.8 of the Act is pertaining to a civil revision on any interlocutory order of a commercial court and hence will not give any assistance so as to give an extended meaning or interpretation to the provisions, S.6 and S.7 of the Act. S.9 of the Act was subsequently omitted by the Amendment Act of 2018 (Act 28 of 2018) with effect from 03/05/2018. But, the legislative intent can be safely discerned from the language used in S.15 of the Act by the user of expression "shall stand transferred", which would amply make it clear that the transfer of pending cases is somewhat mandatory and automatic, though a formal order of transfer is necessary to effectuate the transfer of cases."
It has also been held in C.K.Surendran's case (supra) that :
"While section 15 gives and exclusive mandate of transfer of pending litigations ( commercial disputes of specified value) by giving exclusive jurisdiction to newly constituted commercial courts, having the effect of an implied bar of jurisdiction of regular civil court, no such mandate was incorporated in Section 6 of the Act regarding fresh litigation having the FAO NO.98 OF 2024 15 2025:KER:6458 effect of implied bar of jurisdiction or any express bar. Mere user of the expression" shall be heard and disposed of" will not convey exclusive jurisdiction or ouster of jurisdiction of regular civil court."
Thus in so far as Section 6 of the Act of 2015 does not envisage a bar or an ouster, the contention put forth that said provision confers exclusive jurisdiction in the commercial courts to entertain commercial disputes and the same can only be read as a specific bar on civil courts entertaining a commercial dispute cannot be countenanced. Consequently, when a civil court finds that the suit presented before it involves a commercial dispute for which jurisdiction has been specifically conferred on a commercial court, it is open to the said court to return the plaint as envisaged in Order 7 Rule 10 of the C.P.C. It cannot be said that the suit has only to be rejected by invoking Order 7 Rule 11(d) of the C.P.C. for the reason that there is a 'bar' against the entertainment of such a suit.
11. It is noted that the Sub Court has in the impugned order graciously admitted that the court committed a mistake in rejecting the plaint instead of returning the same to the plaintiff for presentation before the proper forum. It has also been stated that the review petition had been allowed to correct the FAO NO.98 OF 2024 16 2025:KER:6458 mistake that had thus occasioned. In the said context and in the facts and circumstances of the case, the contention that a review would not lie and if at all it would, the same ought to have been accompanied by a court fee of one-half the fee payable on the plaint, are not legally relevant or sustainable. Further, it is submitted by both sides that the plaint has been presented before the jurisdictional commercial court and the same has been accepted into file.
In view of the above, the F.A.O. is not sustainable in law and it is dismissed. No costs.
Sd/-
SYAM KUMAR V.M. JUDGE csl FAO NO.98 OF 2024 17 2025:KER:6458 APPENDIX OF FAO 98/2024 PETITIONERS' ANNEXURES Annexure A1 A TRUE COPY OF THE JUDGMENT DATED 08.02.2024 IN O.S. 441/2023 ON THE FILES OF THE ADDITIONAL SUBORDINATE JUDGES COURT NO. 1 THRISSUR Annexure A2 ORIGINAL OF THE APPEAL MEMORANDUM IN CMA 36 /2024 FILED BY THE APPELLANT BEFORE THE HONORABLE DISTRICT COURT, THRISSUR.
Annexure A3 CERTIFIED COPY OF ORDER DATED
02.08.2024 IN CMA 36/2024 ON THE FILES
OF THE IV ADDITIONAL DISTRICT COURT,
THRISSUR.