Kerala High Court
Abdullakutty Haji vs H. Mushtafa on 25 September, 2024
Author: Kauser Edappagath
Bench: Kauser Edappagath
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE DR. JUSTICE KAUSER EDAPPAGATH
Wednesday, the 25th day of September 2024 / 3rd Aswina, 1946
CRP NO. 133 OF 2024
OS 206/2023 OF ASSISTANT SESSIONS COURT/PRINCIPAL SUB COURT / COMMERCIAL COURT,
PALAKKAD, PALAKKAD
REVISION PETITIONER:
ABDULLAKUTTY HAJI, AGED 66 YEARS S/O. THAPPY ABOOBACKER, THAPPY
HOUSE, PALATHINGAL, ULLANAM POST, NEDUVA VILLAGE TIRURANGADI TALUK,
MALAPPURAM, PIN - 679 573
BY ADVS.M/S.B.KRISHNAN & R.PARTHASARATHY,
RESPONDENT:
H. MUSHTAFA AGED 55 YEARS S/O. HUSSAINAR, BAITHUL MINAR, NADAKAVU,
AKATETHARA, PALAKKAD, PIN - 678 008
BY ADVS.L.RAJESH NARAYAN, CAVEATOR,MANU VYASAN PETER, P.B.KRISHNAN
(SENIOR ADVOCATE),P.B.SUBRAMANYAN,SABU GEORGE,B.ANUSREE,MEERA
P.,AISWARYA MOHAN,
This Civil Revision Petition having come up for orders on 25-09-2024
and upon perusing the Petition, the court on the same day passed the
following.:
"C.R."
DR.KAUSER EDAPPAGATH, J.
================= OP(C) No.753/2024 & CRP No.133/2024 =================== ====== Dated this, the 25th day of September, 2024 REFERENCE ORDER The common order passed in IA No.6/2024, and the issue of maintainability of counter-claim in OS No.206/2023 on the file of the Principal Sub Court, Palakkad (for short, 'the trial court') is under challenge in the above Original Petition and Civil Revision Petition.
2. I refer to the status of the parties hereunder as they are referred to in the suit, i.e., the plaintiff and the defendant.
3. The plaint schedule property comprising a shop room having a plinth area of 12,000 sq. ft situated on the ground floor of a shopping mall viz. Thappy's Mall at Court Road, Palakkad admittedly belongs to the defendant. It was taken on a license basis by the plaintiff from the defendant to run a supermarket as per the license deed executed between them on 26/4/2018 (marked as Ext.A1). The period of license was ten years w.e.f. OP(C) No.753/2024 & CRP No.133/2024 -:2:- 26/4/2018. The license fee initially agreed was `3,50,000/- per month with an enhancement @5% per annum. At present, the license fee per month is `3,95,000/-. There is no dispute between the parties regarding their jural relationship and the rate of license fee.
4. The plaintiff instituted the suit originally as OS No.200/2023 at the Munsiff Court, Palakkad, against the defendant for a permanent prohibitory injunction restraining him from trespassing into the plaint-schedule property or interfering with the plaintiff in running the business conducted in the plaint- schedule building. It is alleged in the plaint that the defendant obstructed the plaintiff in running the business in the plaint- schedule building to pressurise him to vacate the building so as to let it out to a third party for higher rent. The suit was subsequently transferred to the trial court as per the order in Transfer OP No.167/2023 of the District Court, Palakkad and it was renumbered as OS No.206/2023. The defendant entered appearance and filed a written statement along with a counter- claim. In the written statement, it was contended that the plaintiff defaulted the payment of the license fee and the arrears of the OP(C) No.753/2024 & CRP No.133/2024 -:3:- license fee as of March 2023 would come to `1,34,07,140/-. It was further contended that since the plaintiff defaulted the payment of the license fee, the defendant revoked the license invoking Clauses (5) and (10) of the agreement on 20/12/2022 w.e.f. 1/04/2023. It was also contended that on 27/4/2023, through the mediator, the plaintiff approached the defendant, agreed to surrender the vacant possession of the plaint schedule building, made an endorsement on the reverse side of Ext. A1 agreement that he would vacate it and hand over the key within twenty days and handed over the original agreement to the defendant. The said endorsement was separately marked as Ext. A1(a). In the counter-claim, the defendant sought a mandatory injunction to eject the plaintiff from the plaint-schedule building. Thereafter, the defendant filed an application as IA No.6/2024 under Order XII Rule 6 of CPC seeking to direct the plaintiff to leave the plaint- schedule property based on the alleged admission. The plaintiff filed a counter affidavit to the application inter alia, contending that the counter-claim is not maintainable before the civil court as the dispute involved is a commercial dispute, and it has to be transferred to the Commercial Court under Section 15(2) of the OP(C) No.753/2024 & CRP No.133/2024 -:4:- Commercial Courts Act, 2015 ('CC Act' for short). The trial court, after hearing both sides, dismissed IA No.6/2024, and the counter-claim along with the suit was ordered to be transferred to the Commercial Court. CRP No. 133/2024 has been filed by the defendant challenging the common order. OP(C) No.753/2024 has been filed by the plaintiff to the extent of transferring the counter-claim to the Commercial Court.
5. I have heard Sri. P. B. Krishnan, the learned Senior Counsel for the plaintiff, and Sri. B. Krishnan, the learned counsel for the defendant.
6. I will address the challenge to the order in IA No.6/2024 and the maintainability of the counter-claim separately, taking into consideration the rival submissions made by learned counsel appearing on either side.
On IA No.6/2024
7. The learned counsel for the defendant, Sri.B.Krishnan submitted that there is an unequivocal admission in Ext.A1(a) that the plaintiff would vacate the plaint-schedule building, and as such, the defendant has established a prima facie case to decree the suit on admission under Order XII Rule 6. The learned OP(C) No.753/2024 & CRP No.133/2024 -:5:- counsel further submits that Rule 6 of Order XII is wide enough to afford relief not only in cases of admissions and pleadings but also in the case of admission elsewhere. Per contra, the learned Senior counsel for the plaintiff, Sri.P.B.Krishnan submitted that in the counter statement filed to IA No.6/2024, the plaintiff has categorically denied Ext.A1(a) endorsement, and as such, there is no admission at all, so as to invoke Order XII Rule 6 of CPC. The learned Senior counsel further submitted that the power under Order XII Rule 6 of CPC is discretionary, it cannot be claimed as a matter of right and the trial court rightly refrained from exercising its discretion. Both sides relied on the following decisions of the Supreme Court:
(i) Uttam Singh Duggal and Co. Ltd. v. United Bank of India, (2000) 7 SCC 120
(ii) Karam Kapahi and Others v. Lal Chand Public Charitable Trust and Another, (2010) 4 SCC 753
(iii) S.M. Asif v. Virender Kumar Bajaj, (2015) 9 SCC 287, and
(iv) Karan Kapoor v. Madhuri Kumar, (2022) 10 SCC 496.
8. Admissions can significantly impact the proceedings of a case, often simplifying or narrowing down the issues that need to be adjudicated upon. Order XII of CPC deals with admission by a party to a suit. By enabling parties to acknowledge undisputed OP(C) No.753/2024 & CRP No.133/2024 -:6:- facts and documents formally, it reduces unnecessary litigation and focuses on the real issues at hand, thereby promoting speedy justice. Rules 1 to 6 of Order XII outline the procedures and effects of admissions.
9. Rule 1 allows a party to give notice to the other party admitting the whole or part of the case of the latter. This can streamline the trial process by identifying undisputed facts and focusing on the actual contentious issues. Rule 2 allows a party to serve notice on the other party to admit any document. If the other party fails to admit or deny the documents within the prescribed time, the documents are deemed admitted unless the court directs otherwise (R.2-A). Rule 3 specifies the form and manner in which notices for admission of documents should be given. This ensures uniformity and clarity in the admission process. Similar to Rule 2, Rule 4 deals with serving notices to admit any specific fact or facts mentioned in the notice for the purposes of the suit. Rule 5 specifies the form and manner in which notices for admission of facts should be given. Rule 6 enables either party at any stage of the suit to move for judgment on the admissions which have been made by either OP(C) No.753/2024 & CRP No.133/2024 -:7:- side.
10. Rule 6 of Order XII of CPC which is relevant for these cases reads as under:
"6. Judgment on admissions: (1) Where admissions of fact have been made either in the pleading or otherwise, whether orally or in writing, the Court may at any stage of the suit, either on the application of any party or of its own motion and without waiting for the determination of any other question between the parties, make such order or give such judgment as it may think fit, having regard to such admissions.
(2) Whenever a judgment is pronounced under sub-rule (1) a decree shall be drawn up in accordance with the judgment and the decree shall bear the date on which the judgment was pronounced."
From the language of Order XII Rule 6, it is clear that where a claim is admitted, the court has jurisdiction to enter a judgment for the plaintiff and to pass a decree on the admitted claim. The object of this Rule is to enable the party to obtain a quick judgment at least to the extent of the relief to which, according to the admission of the defendant, the plaintiff is entitled. The admissions on which the judgment under this Rule may be based may be either in the pleading or otherwise. The words 'either in the pleading or otherwise' in Rule 6 clearly indicate that it is open OP(C) No.753/2024 & CRP No.133/2024 -:8:- to the Court to base the judgment on admission made by a party not only in the pleadings or under Rules 1 to 4 of the same order, but also dehors the pleadings. Such admissions could be made either orally or in writing. It has been held by the Supreme Court that the expression 'otherwise' mentioned in sub-rule (1) of Rule 6 of Order XII CPC, is not confined to pleadings but also includes documents filed along with the pleading or other materials subsequently brought on the record which are admitted by the other party (Bhim Rao Baswanth Rao Patil v. Madan Mohan Rao, AIR 2023 SC 3574).
11. Order XII Rule 6 being an enabling provision, it is neither mandatory nor peremptory but discretionary. The legislative intent is clear by using the word 'may' that the said power is discretionary. It cannot be claimed as a matter of right. The court, on examination of the facts and circumstances, has to exercise its judicial discretion, keeping in mind that a judgment on admission is a judgment without trial which permanently denies any remedy to the defendant, by way of an appeal on merits. It is well settled that for an admission to qualify as a valid admission under Rule 6 of Order XII, it necessarily has to be clear, OP(C) No.753/2024 & CRP No.133/2024 -:9:- unequivocal, unambiguous and unconditional. Otherwise, the Court can refuse to invoke the power of Order XII Rule 6. In short, discretion should be used only when there is a clear 'admission' which can be acted upon [Himani Alloys Ltd. v. Tata Steel Ltd., 2011 (7) SCR 60, Uttam Singh Duggal and Co. Ltd. (supra); Karam Kapahi (supra) S.M. Asif (supra) and Karan Kapoor (supra)].
12. Coming to the merits of the case, the plaintiff, in the counter statement to the application under Order XII Rule 6 CPC, specifically denied the admission alleged to have been made by him in Ext. A1 (a). This denial was unequivocal. As stated already, it is trite that unless an admission is specific, clear, and categoric, enabling the court to draw a decree, the power should not be exercised to deny the valuable right of a defendant to contest the claim. The trial court rightly refused to exercise the discretion. Hence, the impugned order in IA No.6/2024 does not call for any interference.
On challenge against the maintainability of counter-claim
13. The plaintiff challenged the maintainability of the counter-claim on the ground that the dispute involved therein is a commercial dispute of a specified value, and hence, the trial OP(C) No.753/2024 & CRP No.133/2024 -:10:- court lacks jurisdiction to entertain and try the counter-claim. The trial court favoured the said challenge, and the counter-claim, along with the suit, was ordered to be transferred to the Commercial Court under Section 15(2) of the CC Act. While the defendant challenges the finding of the trial court in the impugned order that the dispute involved in the counter-claim is a commercial dispute of a specified value, the plaintiff challenges the direction of the trial court to transfer the counter-claim, along with the suit under Section 15(2) of the CC Act. It is the contention of the latter that the trial court, instead of transferring the counter-claim, ought to have returned it under Order VII Rule 10 of CPC.
14. Section 6 of CC Act, which deals with the jurisdiction of the Commercial Court, says 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. A perusal of the above provision, along with the Preamble, makes it clear that for the Commercial Court to exercise jurisdiction, the twin test of pecuniary and subject- OP(C) No.753/2024 & CRP No.133/2024 -:11:- matter jurisdiction has to be satisfied. To put it succinctly, the CC Act would be attracted to any action which relates to a 'commercial dispute' of a 'specified value' falling within the ambit of Section 2(1) (c) and Section 2(1)(i) of the CC Act, respectively.
15. Clause (c) of Section 2(1) defines the 'commercial dispute' to mean a dispute arising out of different sub-clauses. If the dispute falls within any of the sub-clauses in Section 2(1)(c), it becomes a 'commercial dispute'. The sub-clause (vii) refers to disputes arising out of agreements in relation to immovable property used exclusively in trade or commerce. The expressions 'arising out of' and 'in relation to immovable property' would include all matters relating to all agreements in connection with immovable properties. The immovable property should form the dominant purpose of the agreement, and the said property should be used exclusively in trade or commerce. The use of the property for trade and business is determinative. Properties which are not exclusively used for trade or commerce would be excluded. Thus, the dispute arising out of an agreement relating to immovable property used exclusively in trade or commerce will qualify to be a commercial dispute within the meaning of OP(C) No.753/2024 & CRP No.133/2024 -:12:- Section 2(1)(c)(vii) of the CC Act.
16. The Explanation to Section 2(1)(c) stipulates that a commercial dispute shall not cease to be a commercial dispute merely because it involves the recovery of immovable property or for the realisation of money out of immovable property given as security or involves any other relief pertaining to immovable property and would be a commercial dispute as defined in sub- clause (vii) to clause (c). The expression 'any other relief pertaining to immovable property' is significant and wide. Harmonious reading of the Explanation with sub-clause (vii) to clause (c) would include all disputes arising out of agreements relating to immovable property when used exclusively in trade or commerce, be it an action for recovery of immovable property or realization of money given in the form of security or any other relief pertaining to immovable property.
17. In the present case, let me examine first whether the dispute involved in the counter-claim is a commercial dispute within the meaning of Section 2(1)(c). It is not in dispute that the jural relationship between the plaintiff and the defendant is that of a licensor and licensee, and the subject matter of the license is OP(C) No.753/2024 & CRP No.133/2024 -:13:- a shop room in a shopping mall. It is also not in dispute that the plaintiff took the building on license to start a supermarket and has been conducting the said business under the name and style 'A to Z'. The relief sought in the counter-claim is a mandatory injunction in respect of the plaintiff's possession over immovable property, i.e., suit property. In the plaint, there is an unequivocal assertion that the suit property was being used exclusively for commercial purposes. It is not denied in the written statement cum counter-claim. Thus, the immovable property, which is the subject matter of the license agreement, is exclusively used for trade or commerce. No doubt, the dispute between the parties arose out of the said agreement. As stated already, the scope of expressions 'arising out of' and 'in relation to immovable property' used in Section 2(1)(c)(vii) of the CC Act would include all suits in relation to immovable property used for commercial purposes. The trial court, in the impugned order, found that the dispute is with regard to an agreement related to immovable property (plaint schedule property) used exclusively for trade or commerce and hence would fall under the purview of Section 2(1)
(c)(vii) of the CC Act. Assailing the said finding, the learned OP(C) No.753/2024 & CRP No.133/2024 -:14:- counsel for the defendant, Sri. B. Krishnan vehemently argued that the dispute involved in the suit or counter-claim cannot be termed as a commercial dispute within the meaning of Section 2(1) (c)(vii) of the CC Act since the immovable property in question was not being used for trade or commerce at the time of the execution of the agreement. The learned counsel further submitted that the expression 'used' in Section 2(1)(c)(vii) must mean 'actually used' or 'being used' and it cannot be either 'ready for use' or 'to be used'. Though the building was ready for use at the time of execution of the license agreement, it was actually not used then, and the business was commenced subsequently, submitted the counsel. Reliance was placed on the decision of the Supreme Court in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP and Another [(2020) 15 SCC 585].
18. A 'dispute' relating to immovable property per se may not be a commercial dispute. To qualify a 'dispute' to be a 'commercial dispute', it must fall under sub-clause (vii) of Section 2(1)(c) of the CC Act, viz., a dispute arising out of agreements relating to immovable property used exclusively in trade or commerce. Thus, the immovable property, which is the subject OP(C) No.753/2024 & CRP No.133/2024 -:15:- matter of the agreement between the parties, must be actually and exclusively used for trade or commerce when the dispute arises between the parties to qualify the said dispute as a commercial dispute within the meaning of Section 2(1)(c)(vii). In other words, the usage of the property for trade or commerce is relatable to the date of the 'dispute' arising between the parties and not to the date of execution of the agreement in question for the applicability of Section 2(1)(c)(vii). It is not necessary that the property was actually being used for trade or commerce as of the date of the execution of the agreement.
19. In the plaint, the plaintiff has in detail referred to the nature of the transaction between him and the defendant. It is clearly averred that the building was taken on license by the plaintiff to start a supermarket, and the dispute arose when he was conducting such a trade therein. The cause of action portion also refers to the nature of the usage of the immovable property and the date on which the dispute arose between the parties. These averments are not controverted in the written statement. In Ambalal (supra), the immovable property was not used for trade or commerce as on the date of agreement or on the date of OP(C) No.753/2024 & CRP No.133/2024 -:16:- the suit. In the plaint there was no pleading therein also as to the nature of the land or the purpose for which it was put to use. It was in that context it was held that the agreement in question cannot be said to be relating to immovable property used exclusively for trade or commerce. Thus, the dictum laid down in Ambalal (supra) cannot be applied to the facts of the present case. That apart, Section 2(1)(c)(vii) does not contemplate a trading or commercial activity being carried on in the immovable property between the parties to the agreement. Nor does it say that trading or commercial activity must be carried on in the immovable property by both parties to the agreement. On a plain reading of Section 2(1)(c)(vii), it is clear that exclusive usage of the immovable property in trade or commerce by any of the parties to the agreement is sufficient to fall the dispute within the ambit of commercial dispute. The defendant constructed the mall to let it out and earn profit out of it. It is a commercial activity. He let out a shop room on one of the floors of the mall to the plaintiff as part of his commercial activity. The plaintiff took the building from the defendant to start a trade therein, and the dispute arose while he was actually and exclusively conducting trade therein. OP(C) No.753/2024 & CRP No.133/2024 -:17:- Viewed from that angle, it can safely be concluded that the immovable property was used for trade or commerce not only on the date of the agreement but on the date of the suit as well. Hence, I find no reason to interfere with the finding of the trial court that the dispute involved in the counter-claim is a commercial dispute within the meaning of Section 2(1)(c) (vii) of the CC Act.
20. Having found that the dispute involved in the counter- claim is a commercial dispute within the meaning of Section 2(1)
(c) (vii) of the CC Act, the next crucial question is whether the said commercial dispute is of a specified value as per Section 2(1)(i) of the CC Act. Undisputedly, unless the twin factors of 'commercial dispute' and 'specified value' are met, a Commercial Court cannot take cognizance of or try a suit or application placed before it.
21. Clause (i) of Section 2(1) of the CC Act defines 'Specified Value', in relation to a commercial dispute, as to mean the value of the subject matter in respect of a suit as determined in accordance with Section 12 which shall not be less than three lakh rupees or such higher value, as may be notified by the OP(C) No.753/2024 & CRP No.133/2024 -:18:- Central Government. The determination of 'specified value' is to be as per Section 12, which reads as under:
"12. Determination of Specified Value. --(1) The Specified Value of the subject matter of the commercial dispute in a suit, appeal or application shall be determined in the following manner:
(a) where the relief sought in a suit or application is for recovery of money, the money sought to be recovered in the suit or application inclusive of interest, if any, computed up to the date of filing of the suit or application, as the case may be, shall be taken into account for determining such Specified Value;
(b) where the relief sought in a suit, appeal or application relates to movable property or to a right therein, the market value of the movable property as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining such Specified Value;
(c) where the relief sought in a suit, appeal or application relates to immovable property or to a right therein, the market value of the immovable property, as on the date of filing of the suit, appeal or application, as the case may be, shall be taken into account for determining Specified Value; [and]
(d) where the relief sought in a suit, appeal or application relates to any other intangible right, the market value of the said rights as estimated by the plaintiff shall be taken into account for determining Specified Value;"
The counter-claim was valued for the purpose of a court fee at `500, and the court fee was paid under Section 27 (c) of the OP(C) No.753/2024 & CRP No.133/2024 -:19:- Kerala Court Fees and Suit Valuation Act, 1959 (for short, 'Court Fees Act'). The trial Court found that as per Section 12 of the CC Act, specified value of the subject matter of the commercial dispute in a suit or counter-claim wherein the relief sought relates to immovable property or to a right therein, is determined upon the market value of the immovable property as on the date of the institution of the suit and since the market value of the plaint schedule property would be more than `10 lakh on a reasonable estimation, the specified value of the subject matter of the commercial dispute in the counter-claim is more than the threshold limit of `3 lakh though the counter-claim was valued for the purpose of court fee at `500 under Section 27 (c) of the Court Fees Act. The learned counsel for the defendant assailed the said finding mainly on two grounds:
(i) Since admittedly the jural relationship between the plaintiff and the defendant is that of licensor and licensee and the relief sought for in the counter-claim is to eject the plaintiff from the plaint schedule building on the revocation of the license right which is an intangible right, the specified value has to be determined as per Clause (d) of Section 12 (1) of the CC Act and OP(C) No.753/2024 & CRP No.133/2024 -:20:- not under Clause (c);
(ii) Even if it is assumed that the relief sought in the counter-claim falls under Clause (c) of Section 12 (1), valuation for the purpose of jurisdiction is to be made under Section 27(c) of the Court Fees Act where the defendant is entitled to compute the court fee on the amount at which the relief sought is valued in the counter-claim or on `500, whichever is higher, whether the subject matter of the suit/counter-claim has a market value or not. Reliance was placed on Surendran C.K v. Kunhimoosa (2021 KHC OnLine 7063) and Hindustan Petroleum Corporation, Mumbai and Another v. Muhammed Illiyas and Others (2022 (6) KHC 68).
22. Section 12 (1) of the CC Act provides criteria for the determination of the specified value for different kinds of suits. Clause (a) specifies how the specified value is to be determined in a suit for recovery of money, Clause (b) deals with how the specified value is to be determined where the relief sought in the suit relates to movable property, Clause (c) refers to cases where the relief sought relates to immovable property, and Clause (d) provides the methodology for determination of specified value where the relief sought in the suit relates to any other intangible OP(C) No.753/2024 & CRP No.133/2024 -:21:- right. A close reading of the above provisions makes it clear that while Clause (b) deals with suit in relation to movable property or to a right therein, whether tangible or intangible, Clause (c) deals with suit in relation to immovable property or to a right therein, whether tangible or intangible. Clause (d) specifically deals with any other intangible right not covered by Clause (b) or (c). Thus, in a case where relief sought in a suit relates to immovable property or to a right therein, whether tangible or tangible, the determination of the specified value must be based on the market value of the immovable property as on the date of filing of the suit as provided under Clause 12(1)(c) of the CC Act. The contention of the learned counsel for the defendant that the specified value of the counter-claim has to be determined as per Clause (d) of Section 12 (1) of the CC Act and not under Clause
(c), therefore, must fail.
23. The second contention of the learned counsel for the defendant that the valuation of the suit/counter-claim has to be in accordance with the Court Fees Act, even if the relief pertains to a right in immovable property is mainly based on a decision of a Single Judge of this court in Surendran (supra) and another OP(C) No.753/2024 & CRP No.133/2024 -:22:- decision of a Division Bench of this Court in Hindustan Petroleum (supra). In Surendran (supra), in a similar factual setting, it was held that the specified value of a commercial suit is liable to be computed in accordance with the market value of the immovable property in such suits where, even as per the Court Fees Act, the value is to be determined on the basis of the market value of the property. In respect of suits where the valuation under the Court Fees Act is based on anything other than the market value of the immovable property, the valuation under the Court Fees Act should be the basis for deciding the pecuniary jurisdiction. In Hindustan Petroleum (supra), it was held that when the valuation made in accordance with the Court Fees Act is less than the specified value as stated in Section 2(1)(i) of the CC Act, the suit will not qualify to be a commercial dispute to be tried by a commercial Court. The main prayer in the said suit was to declare the termination of the lease and to direct the defendants to give vacant possession of the plaint schedule properties to the plaintiffs. The suit was valued at `58,000/- by the plaintiff, taking note of the monthly rent of the lease in terms of Section 43 of the Court Fees Act. The Division Bench found that the plaintiff, being OP(C) No.753/2024 & CRP No.133/2024 -:23:- the dominos litis, has chosen the Court having jurisdiction and determined the valuation of the suit for the purpose of the reliefs prayed for as per Section 43 of the Court Fees Act. Since the valuation adopted by the plaintiff is in accordance with Section 43 of the Court Fees Act, the suit will not qualify to be a commercial dispute to be tried by a commercial Court.
24. The Single Bench as well as the Division Bench of this court relied on the decisions of the Delhi High Court in Soni Dave v. M/s.Trans Asian Industries Expositions Private Limited (AIR 2016 Del 186) and of the Karnataka High Court in Fine Footwear Private Limited v. Skechers USA Inc and Another (2019 SCC OnLine Kar 1024). In Soni Dave (supra), it was held that Section 12 of the CC Act providing for determination of specified value as defined in Section 2(1)(i) thereof is not intended to provide for a new mode of determining the valuation of the suit for the purpose of jurisdiction and court fees, the said provision has to be read harmoniously with the Court Fees Act and the Suits Valuation Act and reading so, the specified value of a suit where the relief sought relates to immovable property or to a right thereunder has to be according to the market value of the immovable OP(C) No.753/2024 & CRP No.133/2024 -:24:- property only in such suits where the suit as per the Court Fees Act and/or the Suits Valuation Act has to be valued on the market value of the property and not where as per the Court Fees Act and the Suits Valuation Act the valuation of a suit even if for the relief of recovery of immovable property or a right therein is required to be anything other than market value. The same view was taken by the Karnataka High Court in Fine Footwear Pvt. Ltd (supra). It was held that the valuation of the suit for the purposes of Court fee cannot be different from the 'specified value' as contemplated under Section 12 of the CC Act.
25. Going by Section 27(c) of the Court Fees Act, the suit for mandatory and permanent prohibitory injunction is not required to be valued at the market value of the property. The relief sought in the counter-claim is for a mandatory injunction directing the plaintiff to quit from the plaint schedule, and the court fee is paid under S.27(c) of the Court Fees Act in accordance with the estimated value for the relief of mandatory injunction. Being so, the specified value is way below `3,00,000/- Thus, if the dictum laid down in Surendran (supra) and Hindustan Petroleum (supra) that the valuation of a suit involving a OP(C) No.753/2024 & CRP No.133/2024 -:25:- commercial dispute has to be in accordance with the Court Fees Act even if the relief pertains to a right in immovable property is relied on and applied to the facts of the present case, necessarily the counter-claim will have to fall outside the jurisdiction of the Commercial Court. However, the learned Senior counsel for the plaintiff Sri. P.B. Krishnan submitted that Surendran (supra) and Hindustan Petroleum (supra) do not lay down the correct law and are required to be referred to a larger Bench for an authoritative declaration of law on the question.
26. In 2015, the CC Act was enacted, with the clear intent of providing specialised procedures for expediting the adjudication of 'commercial disputes'. The Preamble of the CC Act reads as under:
"An Act to provide for the constitution of Commercial Courts, [Commercial Appellate Courts,] Commercial Division and Commercial Appellate Division in the High Courts for adjudicating commercial disputes of specified value and for matters connected therewith or incidental thereto."
The term 'specified value' is used in the Preamble itself. A perusal of the Preamble, as well as Sections 2(1) and 6, would show that the CC Act would be attracted to any action which OP(C) No.753/2024 & CRP No.133/2024 -:26:- relates to a commercial dispute where the specified value of the subject matter goes beyond the minimum pecuniary limit as notified. It is pertinent to note that the CC Act not merely provides for a procedure for adjudication of commercial disputes, but with the intention of expediting the resolution of commercial disputes, it has also provided for various other substantive provisions to be followed in commercial disputes. Such procedures are case management hearings, truncated trials, summary judgments, etc. Even in the Statement of Object and Reasons, the purpose behind the 2018 Amendment is borne out as under:
"2. The global economic environment has since become increasingly competitive and to attract business at international level, India needs to further improve its ranking in the World Bank 'Doing Business Report' which, inter alia, considers the dispute resolution environment in the country as one of the parameters for doing business. Further, the tremendous economic development has ushered in enormous commercial activities in the country including foreign direct investments, public private partnership, etc., which has prompted initiating legislative measures for speedy settlement of commercial disputes, widen the scope of the courts to deal with commercial disputes and facilitate ease of doing business. Needless to say that early resolution of commercial disputes of even lesser value creates a positive image OP(C) No.753/2024 & CRP No.133/2024 -:27:- amongst the investors about the strong and responsive Indian legal system. It is, therefore, proposed to amend the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. xxx xxx xxx
4. It is proposed to introduce the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Bill, 2018 to replace the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Ordinance, 2018, which inter alia, provides for the following namely:--
(i) to reduce the specified value of commercial disputes from the existing one crore rupees to three lakh rupees, and to enable the parties to approach the lowest level of subordinate courts for speedy resolution of commercial disputes;"
While, initially, prescribing the 'specified value' of commercial suits at `1 crore, and thereafter, reducing the same to `3,00,000/- vide the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts (Amendment) Act, 2018, the legislature was conscious of the value of the dispute and, thus, it cannot be ignored. Section 12, which sets out the basis for determining a specified value, is essentially placed in the statute to subserve the provisions of the CC Act, which are intended to require suits and applications relating to commercial disputes of a specified value to be brought before the Commercial Court. Depriving certain commercial disputes from being OP(C) No.753/2024 & CRP No.133/2024 -:28:- adjudicated by Commercial Courts ignoring the specified value would not be in tune with the objectives of the CC Act. Not ascribing a 'specified value' in the suit would be contrary to the scheme of the CC Act, which requires every suit to have a 'specified value' if the subject matter of the suit is a commercial dispute. As per Section 27(c) of the Court Fees Act, in a suit for injunction, whether the subject matter of the suit has a market value or not, the court fee shall be computed on the amount at which relief sought is valued in the plaint or on rupees five hundred, whichever is higher. If such valuation is permitted for the purpose of jurisdiction as well, despite some objective criteria being available for valuing commercial disputes in the CC Act - it would defeat the very purpose of the enactment of special provisions for valuing commercial disputes in the CC Act.
27. From the scheme of the CC Act, it is clear that the 'specified value' of a commercial suit may be different from the valuation under the Court Fees Act for the purpose of computation of court fee. Different yardsticks are provided under each statute for the respective determination of the specified value for the purpose of jurisdiction and for the valuation of the OP(C) No.753/2024 & CRP No.133/2024 -:29:- suit for the purpose of computation of court fee. Surendran (supra) did not recognize the distinction between the concept of the specified value for the purpose of jurisdiction and the valuation of a suit for the purposes of court fees. Section 2(1)(i) of the CC Act, which defines the specified value, and Section 12, which essentially sets out the basis for the determination of specified value, are intended to require suits and applications relating to commercial disputes of a specified value being placed before the commercial court. The CC Act confers the jurisdiction on Commercial Courts to try Commercial disputes only if the specified value of the subject matter exceeds `3 lakhs. The 'subject matter' of a suit is a facet separate and distinct from the valuation of suits based on the relief claimed. While the former is relevant for the purposes of considering whether a suit is liable to be tried in accordance with the CC Act, the latter is concerned with the question of court fees as payable in terms of the Court Fees Act. The intent of Section 12 clearly appears to be restricted to the determination of the value of the subject matter of the commercial dispute alone. On the other hand, the provisions contained in the Court Fees Act are principally concerned with the OP(C) No.753/2024 & CRP No.133/2024 -:30:- imposition of court fees. Thus, the value of the suit for the purpose of the Court fee and the 'specified value' of the suit for exercising jurisdiction in a commercial dispute relating to immovable property could be different. Therefore, a distinction has to be made between the value of the subject matter determined for the purpose of jurisdiction under the CC Act and the calculation of Court fees under the Court Fees Act. These statutes would have to be harmoniously construed i.e., in a manner so as to further the purpose of the legislation and not to defeat it. The Court would have to take into consideration the 'specified value' based upon not merely the value of the relief sought but also the market value of the immovable property involved in the said dispute. It is possible and permissible that the valuation of a suit based on the relief claimed for the purposes of payment of court fee may be less than `3 lakhs although the specified value might be more than the said threshold limit. Merely because such a suit is valued at below `3 lakhs based on the relief claimed therein, there would be no legal justification to treat the said valuation for the purpose of jurisdiction as well if the specified value determined in terms of OP(C) No.753/2024 & CRP No.133/2024 -:31:- Section 12 of the CC Act is above the said limit. The well-settled legal principle that the plaintiff is dominus litis and has the discretion to value the suit in the manner he chooses has to be in the context of the enactment of the CC Act. The principles cannot be extended or stretched to justify the undervaluation of commercial disputes to get over the jurisdiction of the Commercial Courts. Such a practice would not only encourage forum shopping, but also defeat the very purpose of the CC Act. The aforementioned distinction between the concept of the specified value for the purpose of jurisdiction and the valuation of a suit for the purposes of court fees was not considered by the Division Bench in Hindustan Petroleum (supra) either.
28. Under the Court Fees Act, suits are classified into different categories for purposes of court fee and for determining the jurisdiction of courts. Section 53 of the Court Fees Act envisages a scheme for determining the jurisdiction in cases where there is no specific provision in the Court Fees Act prescribing the mode of valuation of suits for the purpose of jurisdiction. Section 53, which deals with valuation for jurisdictional purposes, is in two parts. It reads thus:
OP(C) No.753/2024 & CRP No.133/2024 -:32:- "53. Suits not otherwise provided for - (1) In a suit as to whose value for the purpose of determining the jurisdiction of Courts, specific provision is not otherwise made in this Act or in any other law, value for that purpose and value for the purpose of computing the fee payable under this Act shall be the same.
(2) In a suit where fee is payable under this Act at a fixed rate, the value for the purpose of determining the jurisdiction of Courts shall be the market value or where it is not possible to estimate it at a money value such amount as the plaintiff shall state in the plaint.' The above provision suggests that the valuation for the purpose of jurisdiction and for the purpose of court fee need not be the same. There are cases where a specific provision is made in the Act regarding the value of the property for the purpose of jurisdiction (for instance, Ss.23 and 28 of the Act specifically provide for jurisdictional value). There may be other statutes which contain such provisions. Those provisions will naturally govern the mode of valuation for the purpose of jurisdiction of suits which are governed by such provisions. In cases which do not attract such provisions prescribing the mode of valuation of suits for the purpose of jurisdiction, the principle laid down in Section 53(1) will apply, that is, in such cases the valuation for the purpose of jurisdiction shall be the same as the valuation for purpose of computing the court fee payable. There are yet other OP(C) No.753/2024 & CRP No.133/2024 -:33:- cases where, irrespective of the value of the subject matter, a fixed court fee is fixed under the Act (for instance, a suit for partition). In such cases, under Section 53(2), the value for the purpose of jurisdiction should ordinarily be the market value of the property. In cases where it is not possible to estimate the market value at a monetary value, the plaintiff is given the liberty to state the monetary value of the relief in the plaint, and a court fee should be paid on such monetary value. Sub clause (1) which deals with cases where ad valorem court fee is payable covers three situations namely:
(a) Where a specific provision is made in the Court Fees Act relating to valuation for the purpose of jurisdiction,
(b) Where a provision is made in any other law for the purpose of jurisdiction,
(c) Where no specific provision is made in the Court Fees Act for the jurisdictional purpose.
29. To determine the valuation for the purpose of the jurisdiction of the Court, the first step is to find out whether any of the specific provisions of the Court Fees Act provides for the OP(C) No.753/2024 & CRP No.133/2024 -:34:- valuation for the purpose of the jurisdiction of the Court. If a specific provision is found therein to determine the valuation for the purpose of jurisdiction, then the procedure contemplated under the said provision has to be followed. If no provision is found therein, to determine the valuation for the purpose of jurisdiction, the second step is to find out whether any other law deals with the valuation for the purpose of jurisdiction or confers the jurisdiction on the Court. If any other law provides for the valuation of the suit for the purpose of jurisdiction, then the procedure contemplated under such law is to be followed to determine the valuation which will have a bearing on the jurisdiction. If any other law confers the exclusive jurisdiction on a particular court, then irrespective of valuation for the purpose of court fee, said court will have the jurisdiction to try the suit. If the Court Fees Act or provisions of any other law do not govern the valuation for the purpose of the jurisdiction of the Court or do not confer the jurisdiction on a particular Court, then by default, the valuation for the purpose of court fee under the Court Fees Act will be the valuation for the jurisdiction. Thus, Section 53(1) of the Court Fees Act engrafts a legal fiction equating valuation for OP(C) No.753/2024 & CRP No.133/2024 -:35:- the purpose of computing the fee payable under the Act to the jurisdiction value only in cases where there is no specific provision in the Court Fees Act or in any other law regarding the mode of valuation for the purpose of jurisdiction.
30. There is no specific provision in the Court Fees Act as to the mode of valuation for purposes of jurisdiction in respect of suits for injunction. Thus, the next step is to find out whether any other law provides for valuation or confers the jurisdiction to try such a suit. I have found that the dispute on hand is a commercial dispute within the definition of 'Commercial Disputes' under Section 2(1)(c)(vii) of the CC Act. There is a specific provision in the CC Act regarding the mode of valuation of the subject matter of the commercial dispute in a suit, appeal or application for the purpose of jurisdiction. Section 12 provides as to how the 'specified value' of the commercial suit is to be valued. Thus, there is no scope to value the suit under the provisions of the Court Fees Act as Section 12 of the CC Act provides the method to determine the 'specified value' which has the bearing on the jurisdiction of the Court, and Section 53(1) of the Court Fees Act recognizes such provision 'in any other law' OP(C) No.753/2024 & CRP No.133/2024 -:36:- dealing with the jurisdiction of the Court, in situations already discussed. A similar view was taken by the Karnataka High Court in M/S BTV Kannada Private Limited v. M/S EAGLESIGHT Media Private Limited (Civil Revision Petition No.426 OF 2023 (IPR), decided on 7th day of June, 2024).
31. It is also relevant in this context to refer to Section 21 of the CC Act which reads thus:
"21. Act to have overriding effect: Save as otherwise provided, the provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any law for the time being in force other than this Act".
As seen above, Section 21 has an overriding effect over anything inconsistent with the provisions of the CC Act, except as otherwise provided. Hence, it cannot be said that the provisions of the Court Fees Act prevail over Section 12 of the CC Act when it comes to the valuation of the subject matter for the purpose of the jurisdiction of the Court, in a commercial dispute, in a situation where any other law provides for the valuation of the suit for the purpose of jurisdiction or jurisdiction irrespective of valuation. Surendran (supra) and Hindustan Petroleum (supra) OP(C) No.753/2024 & CRP No.133/2024 -:37:- did not take into account the interplay between Section 53(1) of the Court Fees Act and Section 12 of the CC Act while finding that the valuation of the subject matter of the commercial dispute in a suit has to be in accordance with the Court Fees Act even if the relief pertains to a right in immovable property.
32. The dictum laid down in Surendran (supra) that the specified value of a commercial dispute in a suit is liable to be computed in accordance with the market value of the immovable property only in such suits where, even as per the Court Fees Act, the value is to be determined on the basis of the market value of the property and the valuation of the subject matter of the commercial dispute has to be in accordance with the Court Fees Act in respect of suits where the valuation under the Court Fees Act is based on anything other than the market value of the immovable property and in Hindustan Petroleum (supra), that when the valuation made in accordance with the Court Fees Act is less than the specified value as stated in Section 2(1)(i) of the CC Act, the suit will not qualify to be a commercial dispute to be tried by a commercial Court do not appear to be in consonance with the object and scheme of the CC Act and statutory OP(C) No.753/2024 & CRP No.133/2024 -:38:- provisions such Sections 2(1), 6, 12 of the CC Act and Section 53(1) of the Court Fees Act. Therefore, I agree with the submission of the learned Senior counsel for the plaintiff, Sri. P.B. Krishnan that the law declared in Surendran (supra) and Hindustan Petroleum (supra) need to be reconsidered.
33. The challenge in the Original Petition is against the direction of the trial court in the impugned order to transfer the counter-claim, along with the suit under Section 15(2) of the CC Act. Section 15(2) contemplates the transfer of suits and applications relating to a commercial dispute of a specified value pending on the date of commencement of the Act and not a transfer of suit filed after coming into force of the Act. Once the suit is accepted on file, the only option available to the court is to return the plaint under Order VII Rule 10 of CPC. Therefore, the trial court ought to have returned the suit and the counter-claim under Order VII Rule 10 of CPC instead of transferring the same under Section 15(2) of the CC Act.
34. The learned counsel for the defendant, Sri.B.Krishnan submitted that crores of rupees are now due by the plaintiff to the defendant towards the licence fee, and there may be a OP(C) No.753/2024 & CRP No.133/2024 -:39:- direction to the plaintiff to make payment of the admitted arrears and also to continue to pay the licence fee hereafter every month without fail. There is no dispute between the parties regarding their jural relationship and the rate of license fee. Admittedly, the licence fee per month at present is `3,95,000/-. In the written statement, the defendant has contended that the plaintiff has defaulted on the payment of the licence fee and arrears as of March 2023 would come to `1,34,07,140/-. However, the plaintiff has disputed the said figure. At any rate, the plaintiff is bound to pay the licence fee from the date of the suit which is not in dispute. The learned counsel for the defendant relied on the decision of the Supreme Court in Bijay Kumar Manish Kumar Huf v. Ashwin Bhanulal Desai [(2024) SCC OnLine SC 980] wherein in a dispute between the landlord and tenant, the Supreme Court directed the tenant to make payment of the admitted arrears of rent during the pendency of the S.L.P. holding that such a direction was necessary to ensure complete justice between the parties. It was observed in the said decision that the court cannot lose sight of the fact that the very purpose for which a property is rented out is to ensure that the landlord by way of the property is OP(C) No.753/2024 & CRP No.133/2024 -:40:- able to secure some income and if the income remains static over a long period of time or in certain cases yields no income, then such a landlord would be within his rights, subject of course, to the agreement with their tenant, to be aggrieved by the same. The learned senior counsel for the plaintiff has fairly conceded that the plaintiff is prepared to pay the admitted arrears of the licence fee. Therefore, the direction sought by the learned counsel for the defendant can be granted.
The upshot of the above discussions is as follows:
(i) The dismissal of IA No.6/2024 by the trial court is confirmed.
(ii) The finding of the trial court in the impugned order that the dispute involved in the counter-claim is a commercial dispute within the meaning of Section 2(1)(c) (vii) is upheld.
(iii) The plaintiff is directed to pay the arrears of the license fee from the date of the suit till 30/09/2024 after deducting the payment already made, if any, to the defendant within three months from today. The plaintiff shall continue to pay the licence fee without fail every month with effect from 01/10/2024 till the final disposal of the suit and counter-claim.
OP(C) No.753/2024 & CRP No.133/2024 -:41:-
(iv) The Registry is directed to place the papers before the Hon'ble Chief Justice for being placed before a Bench of two Judges for an authoritative pronouncement on the question involved.
(v) The final decision on the issue of maintainability of the counter-claim shall be taken after order is passed on reference.
Sd/-
DR. KAUSER EDAPPAGATH
JUDGE
Rp
25-09-2024 /True Copy/ Assistant Registrar