Bombay High Court
Magathane Kinara Co-Op. Hsg. Soc. Ltd vs Amogh Enterprises on 11 March, 2021
Author: A. K. Menon
Bench: A. K. Menon
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
IN ITS COMMERCIAL DIVISION
INTERIM APPLICATION (L) NO.4522 OF 2021
IN
COMMERCIAL SUIT NO.1249 OF 2019
Magathane Kinara CHS Ltd. .. Applicant-Org. Defendant
In the matter between
M/s. Amogh Enterprises .. Plaintiff
v/s.
Magathane Kinara CHS Ltd. .. Defendant
WITH
INTERIM APPLICATION (L) NO.343 OF 2021
IN
COMMERCIAL SUIT NO.1249 OF 2019
M/s. Amogh Enterprises .. Applicant/Plaintiff
v/s.
Magathane Kinara CHS Ltd. .. Defendant
Mr. S.A. Abhyankar, a/w Ms. Anjali Helekar, Punam Shinde, Mr. Aniket
Abhyankar for the Plaintiff.
Mr. Vagish Mishra a/w Uttam Dubey i/b. Law Counsellors for the
defendant.
CORAM : A. K. MENON, J.
DATED : 11TH MARCH, 2021.
1/15 ial-343-21 (c).doc wadhwa P.C. :
1. The defendant is a Co-operative Housing Society and has filed the present application seeking rejection of the plaint as being barred by law as contemplated under Order 7 Rule 11(d). It is also the case of the applicant that the suit discloses no cause of action against the applicant. The applicant- plaintiff has incorrectly filed the suit as a commercial suit when in fact the dispute is not a commercial dispute as contemplated under Section 2(1)(c) of the Commercial Courts Act, 2015. Apart from the nomenclature of a commercial suit, Mr. Mishra submits that the plaint contains no averment to support the plaintiffs' cause of action as a commercial dispute.
2. Mr. Mishra has highlighted the fact that the suit is in the nature of one seeking specific performance of the terms of a Memorandum of Understanding ("MOU") dated 16th May, 2014, no rights were created in favour of the plaintiff much less any right to initiate had to file the present suit as a commercial suit.
Mr. Mishra submitted that the plaintiff has failed to comply with the mandate of Section 79A of the Mahrashra Co-operative Societies Act whereby the developer is required to comply with 2/15 ial-343-21 (c).doc wadhwa certain guidelines and having failed to carry out his obligations has now sought to hold the society liable in damages in a sum of Rs.10,52,95,962/-. The claim for damages is an alternative prayer. The main prayer in the suit is for a declaration that the cancellation of an MOU dated 16 th May, 2014 vide a notices dated 22nd October, 2018 and 1st February, 2019 are illegal and not binding upon the plaintiff.
3. A mandatory order is also being sought against the present applicant to execute a agreement of re-development in relation to the societies building. Permanent and temporary injunctions are also sought restraining grant of development rights to any third party. Mr. Mishra submitted that the plaintiff has failed to pay stamp duty on the MOU. The agreement was not registered and the plaintiff kept avoiding his obligations under the MOU. The attempt was to mortgage the society's land to a third party. The dispute thus is not in relation to any trade or commerce and it is simply an MOU pertaining to proposed redevelopment of the societies property to construct residential flats. It is contended that the society has called upon the plaintiff to execute a redevelopment agreement since the year 2015. However, till the MOU was terminated, the plaintiff had failed and neglected to 3/15 ial-343-21 (c).doc wadhwa comply. Mr. Mishra has sought to rely upon the correspondence in this respect. Thus, the principal submission on behalf of the plaintiffs and as canvassed by Mr. Mishra is that the present suit is barred by law viz. the provisions of the Commercial Courts Act, 2015. The applicant has therefore raised this bar as a preliminary issue of law which requires to be considered by this court before considering the interim application filed by the plaintiff in which the plaintiff seeks a decree for want of a written statement. The written statement was not filed within time as contemplated under the Commercial Courts Act and the applicant herein has also filed a separate application for condonation of delay.
4. Mr. Mishra has relied upon the decision of a Division Bench of this Court in Mont Blanc Co-operative Housing Society Ltd. & Anr. v/s. State of Maharashtra & Ors. 1 in support of his contentions that section 79A and the directions issued thereunder are mandatory. He also relies upon the decision of the Supreme Court in Ambalal Sarabhai Enterprises Limited v/s. K.S. Infraspaces LLP & Anr. 2 dealing with the practice and procedure of commercial courts. He submitted that merely because the property is likely to be used in relation to trade and commerce, 1 (2007) 4 Mah.L.J.595 2 (2020) 15 SCC 585 4/15 ial-343-21 (c).doc wadhwa the same cannot be a ground to attract jurisdiction of the commercial court. Relying upon the decision of the Supreme Court in Raghwendra Sharan Singh v/s. Ram Prasanna Singh (Dead) by LRs.3 Mr. Mishra submitted that the plaintiffs have suppressed vital facts and in view of such suppression the plaint is liable to be rejected. Relied upon the observations of the Supreme Court in the said judgment which in turn refers to the decision in ITC Ltd. v/s. Debt Recovery Appellate Tribunal 4 wherein its was held that the basic question to be decided in an application under Order 7 Rule 11 of the CPC is whether a real cause of action has been set out in the plaint or it is something purely illusory which has been set out with a view to get out of order 7 Rule 11 of the Code. Mr. Mishra submitted that in the present case, the cause of action is illusory. There is no real cause of action and in view thereof, the suit is liable to be dismissed.
5. Mr. Mishra also relied upon the decision of Dahiben v/s.
Arvindbhai Kalyanji Bhanusali (Gajra) Dead through Legal Representatives & Ors.5 and relied upon nature of the enquiry required to be made by the court. In view of the above, Mr. Mishra submitted that the plaint has filed discloses no cause of 3 (2019) SC C Online SC 372 4 (1998 ) 2 SCC 70 5 ( 2020) 7 SCC 366 5/15 ial-343-21 (c).doc wadhwa action and therefore the plaint ought to be rejected.
6. In response, Mr. Abhyankar, the learned counsel on behalf of the plaintiff submitted that the plaintiff's application is clearly filed pursuant to order 7 Rule 11(d) as being barred by law. He submitted that the applicant had failed to demonstrate the bar under any law that would invite the court to pass an order rejecting the plaint. Adverting to the submissions made on behalf of the applicant, Mr. Abhyankar submitted that merely because the defendant believes that the dispute between the parties is not a commercial dispute, there is no question of there being any bar to filing the present suit. He referred to the reliefs in the plaint and submitted that clearly the plaintiff had a well defined cause of action which resulted from the illegal termination of the suit MOU.
7. The averments in the plaint clearly disclose that the plaintiff is aggrieved by the termination and seeks specific performance of the said MOU by causing the defendant society to execute a redevelopment agreement for interim reliefs and in the alternative for damages in a sum of Rs.10,52,95,962/-. Mr. Abhyankar therefore submitted that the applicant has filed the present 6/15 ial-343-21 (c).doc wadhwa application merely to delay the decree that the plaintiff is entitled to, having failed to file a written statement within the time specified under the Commercial Courts Act.
8. Having considered the submissions of the parties, I am of the view that the present application is misconceived. Order 7 Rule 11(d) is reproduced below for ease of reference;
"11. Rejection of plaint.--The plaint shall be rejected in the following cases:--
(a) .........
(b) .........
(c) ......
(d) Where the suit appears from the statement in the plaint to be barred by any law."
9. A plain reading of the aforesaid rule will reveal that in the event a suit is barred by a specific law, the suit may not be appropriate remedy that a plaintiff could choose. This is an aspect which will have to be established in a clear and unequivocal manner. The present application is in the nature of a defence to the suit. It claims that the suit is frivolous does not disclose a cause of action and is barred in law. That is different from saying that the filing of the suit itself is barred by law. Whether or not the suit discloses a cause of action is an aspect that would be gone 7/15 ial-343-21 (c).doc wadhwa into at the hearing of the suit itself. Suffice it to say that the application under Order 7 Rule 11(d) cannot succeed in the present set of facts.
10. The Commercial Courts Act does not operate as a bar against filing of the present suit. The question whether the dispute that the plaintiffs have come to court which is a commercial dispute or not, is a matter to be decided at the hearing of that suit. If the dispute is not a commercial dispute, the suit will cease to be a commercial suit and will have to be relegated to the category of regular suits seeking specific performance and in the alternative in money decree. This is an aspect that would have to be considered only at the hearing of the suit and not in the manner that the defendant now seeks relief. I may observe that after the suit was filed, the defendant has admittedly omitted to file its written statement in the statutory period of 120 days. In this behalf, the applicant has also filed a separate interim application seeking condonation of 407 days delay in filing the written statement. Thus the admitted position is that the written statement has not been filed within time.
11. One other aspect Mr. Mishra has canvassed before me 8/15 ial-343-21 (c).doc wadhwa today is that by virtue of the provisions of Section 91 of Co- operative Societies Act the present suit is not maintainable. He submits that this is a dispute between the Co-operative society and the developer who will qualify. Mr. Mishra submits that under Section 91(1)(c) the defendant will qualify as a person with whom the society has disputes and therefore such disputes must be filed before the Co-operative Court. In this behalf, the contentions of Mr. Mishra regarding the applicability of Section 91(1)(c) as well as Section 79A and the directives issued hereunder it must be borne in mind that the decision in Mont Blanc (supra) pertains to the levy of non-occupancy charges and the higher levy was in the teeth of the circular issued under Section 79A. What the applicant appears to have lost sight of is the fact that the levy of a non-occupancy charges pertain to the business of the society whereas by now it is well settled that the matter of re-development at the societies building does not constitute such an item of business of the society. Thus the directives issued under Section 79A and to which Mr. Mishra has drawn my attention will not constitute a mandatory directive as contemplated in the decision of Mont Blanc (supra). As far as Section 91(1)(c) is concerned, in my view the contention of the 9/15 ial-343-21 (c).doc wadhwa applicant is misconceived inasmuch as the plaintiff does not fit to any of the capacities contemplated under Section 91 since chapter 9 pertains to settlement of disputes wherein one or the other party are falling within the descriptions in Sections 91(1)(a) to 91(1)(e). Clearly the plaintiff developer does not fall within any of those descriptions. In my view that submission also must be rejected.
12. Mr. Mishra may have a point in submitting that the dispute is not a commercial dispute. The remoteness of the aspect of trade and commerce, which the Supreme Court has referred to in Ambalal Sarabhai (Supra) will have to be considered and can be considered at the hearing of the suit itself. The facts before the Supreme Court reveal that the plaintiff had sought execution of a mortgage deed which is in the nature of specific performance of terms of a Memorandum of understanding without reference to the nature of the use of the immovable property in trade or commerce as on date of the suit. In those circumstances, the Supreme Court was of the opinion that the High Court was justified in its conclusion that the Commercial Court shall return the plaint indicating a date for its presentation before a court having jurisdiction. In that case, the defendant had filed an 10/15 ial-343-21 (c).doc wadhwa application under Order 7 Rule 10 of the CPC seeking an order to return the plaint to be presented in a court which would have jurisdiction.
13. In the present case, however, the defendant has chosen a different route. It seeks rejection of the plaint. The aspect whether the dispute in the suit amounts to a commercial dispute or not will have to be separately considered and the present application is not competent to decide upon that aspect. In the present application one is only concerned with the aspect whether the suit is barred under any law. Clearly the Commercial Courts Act does not bar the filing of the present suit. It may be that the suit does not qualify as a commercial suit for want of compliance with the definition of a commercial dispute and this is an aspect that will be considered when the suit is taken up for hearing. Needless to mention the plaintiff has filed the suit as a commercial suit at its own risk. The plaintiff will have to justify at the hearing of the suit that the dispute in the suit qualifies as a commercial dispute under the said Act.
14. In Ambalal Sarabhai (supra) a Memorandum of Understanding came to be executed on 3 rd November, 2017 11/15 ial-343-21 (c).doc wadhwa between the appellant and the respondents. In terms thereof, a mortgage deed was required to be executed by the respondent in favour of the appellant. A mortgage deed was then executed on 3rd November, 2017 but the same was not registered. In that light the appellant filed a commercial civil suit so as to enforce execution of the mortgaged deed. Consequently, a permanent injunction was also sought. Upon issuance of summons to the respondent, the respondent filed a written statement and an application under Order 7 Rule 10. The commercial court rejected the application and referred to the Memorandum and Articles of the appellant company, took note of the business that they were engaged in and concluded that the plaintiff was carrying on business as an estate agent and in the circumstances, concluded that it is a commercial dispute. The High Court on the other hand found fault that the manner in which the commercial court had considered the effect of the Memorandum and Articles of Association. The High Court examined the matter in greater detail and came to the conclusion that immovable property in that case was not being used for trade or commerce and in view thereof, the High Court rejected the appellant's contention and directed the plaint to be returned and to be presented before an 12/15 ial-343-21 (c).doc wadhwa appropriate court. The Supreme Court has dealt in greater detail with the concept of a commercial dispute under the Commercial Courts Act and this is an aspect that will need to be gone into. The rival contentions in the present case on this aspect is not one to be agitated in an application under Order 7 Rule 11(d) and for that reason also the present application cannot succeed.
15. As far as suppression of facts is concerned, the bar that was pleaded in Raghwendra Sharan Singh (supra) was a bar under the law of limitation since a gift deed was executed on 6 th March, 1981 and the Suit should have been filed within limitation provided under Article 59 of the Limitation Act within three years of execution of the gift deed. The suit in question had been filed after more than 22 years of execution of the deed and hence was found that the suit was not maintainable in view of Section 91 and 92 of the Evidence Act and Section 47 of the Registration Act.
16. Mr. Mishra has specifically relied upon the observation on the Supreme Court that this court is required to consider the basic question whether the cause of action pleaded is a real cause of action or a something purely illusory. In my view an application under Order 7 Rule 11(d) is not competent to examine that part 13/15 ial-343-21 (c).doc wadhwa of the applicants' contention. Thus, no support can be derived from the decision in Raghwendra Sharan singh (supra). As far as the decision in Mont Blanc (supra) is concerned, that dealt with the applicability of directions issued under Section 79A by the State Government. In my view the directions of the State Government issued in the circular dated 3 rd January, 2009 will not have a material bearing on the facts at hand.
17. Section 79A of the MCS Act does not operate as a bar to filing of the present suit. In Dahiben (supra) also the court was considering a bar under the law of limitation and that the averments of the plaint would have to reveal that the suit was barred by limitation. It was not a case where there is a bar under any other statute. The court was not concerned with the aspects that we are presently faced with. The Court held that the remedy under Order 7 Rule 11 of the CPC was an independent and special remedy. The court is empowered to summarily dismiss the suit at the threshold without proceeding to record evidence and conducting a trial. In Dahiben (supra) the Supreme Court was concerned with an application under Order 7 Rule 11(d) wherein it was contended that the suit was barred under the law 14/15 ial-343-21 (c).doc wadhwa of limitation. That is not evident in the case at hand wherein rejection of the plaint is sought only on the ground that there is a bar under statute and that statute which the applicant relies upon is a Commercial Courts Act. In my view, the statements in the plaint do not reveal any statutory bar. It may be incorrectly filed as a commercial suit and the remedy in such a case would be to seek return of the plaint or conversion of the suit to a regular suit and that is an aspect which will have to be considered only at the hearing of an appropriate application not in the nature of the present one.
18. For the aforesaid reasons, I am unable to find any substance in the present application and the application must fail. In view thereof, I pass the following order;
(i) IA (L) no.4522 of 2021 is dismissed.
(ii) No orders as to costs.
(A. K. MENON, J.)
Digitally
signed by
Sandhya
Sandhya Wadhwa
Wadhwa Date:
2021.03.18
11:05:25
+0530
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