Case Note & Summary
The appellants filed a commercial appeal under Section 13(1A) of the Commercial Courts Act, 2015 read with Order XLIII Rule 1 of the Code of Civil Procedure, 1908, challenging an order dated 14.03.2024 by the Principal District and Sessions Judge, Chikkamagaluru, which directed return of the plaint on grounds that the suit did not involve a commercial dispute. The appellants, as plaintiffs, had sought ejectment of the respondents from a property and recovery of arrears of rent and mesne profits, based on a lease deed dated 06.03.2021 for setting up a retail outlet for petroleum products. The property had been converted for commercial use via an order dated 03.12.2018. The sole legal issue was whether the dispute qualified as a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which covers disputes arising from agreements relating to immovable property used exclusively in trade or commerce. The appellants argued that the lease was for commercial purposes, while respondent No.1 contended that the property was not actually used as the business had not commenced. The court analyzed the lease deed, which explicitly stated the purpose of establishing a petrol pump, and noted that the property was converted for commercial use. It referred to Doypack Systems (P) Ltd. vs. Union of India to interpret 'arising out of' expansively and applied purposive interpretation to 'used', holding that actual use includes stages like construction and does not require operational revenue. The court found that the property was used for the respondent's commercial enterprise, as evidenced by construction and installation of fuel dispensing units. Consequently, the court held that the dispute was a commercial dispute, allowed the appeal, and set aside the impugned order, directing the commercial court to proceed with the suit.
Headnote
A) Commercial Law - Commercial Dispute Definition - Section 2(1)(c)(vii) Commercial Courts Act, 2015 - The High Court examined whether a dispute arising from a lease deed for a petrol pump constituted a commercial dispute under the Act. The court held that the lease deed, which expressly stated the purpose of setting up a retail outlet for petroleum products, and the property's conversion for commercial use, established that the immovable property was used exclusively in trade or commerce. The fact that the petrol pump was under construction and not yet operational did not detract from its commercial nature, as setting up the pump was integral to the business. The appeal was allowed, setting aside the order returning the plaint. (Paras 8-19) B) Statutory Interpretation - Purposive Interpretation - Section 2(1)(c)(vii) Commercial Courts Act, 2015 - The court applied purposive interpretation to the term 'used' in the definition of commercial dispute. It held that 'used' means actual use but cannot be read restrictively to exclude stages like construction or gestation of a commercial enterprise. The property's use for establishing a petrol pump, including construction activities, constituted actual use for commercial purposes, bringing the dispute within the ambit of the Act. (Paras 20-23)
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Issue of Consideration: Whether the suit instituted by the appellants involved a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015
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Final Decision
The High Court allowed the commercial appeal, set aside the impugned order dated 14.03.2024, and held that the dispute is a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, directing the commercial court to proceed with the suit
