SC: “Use” in S.2(1)(c)(vii) of Commercial Courts Act means “actually used”

The Hon’ble Supreme Court, on 4th October 2019 in the matter of Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP & Anr. pronounced that merely because, the property is likely to be used in relation to trade and commerce, the same cannot be the ground to attract the jurisdiction of the Commercial Court. For attracting the jurisdiction of the Commercial Court it should be “actually used” in relation to trade and commerce.

The Hon’ble Supreme Court observed that:

The disputes arising out of agreements relating to immovable property used exclusively in trade or commerce will qualify to be a commercial dispute to be tried by Commercial Courts. (Para 6 of the judgement by Hon’ble Justice A.S. Bopanna)

The nature of the dispute and the jurisdiction to try the same is to be reflected in the suit itself since in a civil suit the pleadings, namely averments in the plaint would at the outset be relevant to confer jurisdiction. (Para 8 of the judgement by Hon’ble Justice A.S. Bopanna)

The very purpose for which the Commercial Courts Act, 2015  has been enacted would be defeated if every other suit merely because it is filed before the Commercial Court is entertained. This is for the reason that the suits which are not actually relating to commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes which may have to be entertained by the Commercial Courts as intended by the law makers. In commercial disputes as defined a special procedure is provided for a class of litigation and a strict procedure will have to be followed to entertain only that class of litigation in that jurisdiction. If the same is strictly interpreted it is not as if those excluded will be non-suited without any remedy. The excluded class of litigation will in any event be entertained in the ordinary Civil Courts wherein the remedy has always existed. (Para 13 of the judgement by Hon’ble Justice A.S. Bopanna)

A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2(1)(c) of the Act viz. “the agreements relating to immovable property used exclusively in trade or commerce”. The words “used exclusively in trade or commerce” are to be interpreted purposefully. The word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. (Para 22 of the judgement by Hon’ble Justice R. Banumathi)

Merely because, the property is likely to be used in relation to trade and commerce, the same cannot be the ground to attract the jurisdiction of the Commercial Court. (Para 24 of the judgement by Hon’ble Justice R. Banumathi)

Copy of judgement: Judgement_04-Oct-2019

-Adv. Tushar Kaushik

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