Actual Use of Property for Commerce, Not its Nature, Defines 'Commercial Dispute' under S. 2(1)(c)(vii) of Commercial Courts Act: Delhi High Court - 2025-08-05

Actual Use for Commerce is Key to Define 'Commercial Dispute', Not Property's Nature: Delhi High Court

New Delhi: In a significant ruling on the jurisdiction of commercial courts, the Delhi High Court has held that the actual use of an immovable property for trade or commerce is the determining factor for classifying a dispute as a "commercial dispute" under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. Justice Vikas Mahajan, while dismissing an application to reject a landlord's suit, clarified that the property's original nature, whether residential or commercial, is not the primary consideration.

Case Background

The case, Vinay Kumar Datt vs. Shri Sudhir Sachdeva & Ors. , revolves around a property in South Patel Nagar, New Delhi, which was leased in 1968 for the purpose of running a college. The plaintiff, Vinay Kumar Datt (landlord), filed a suit seeking eviction, possession, arrears of rent, and damages against the defendants, who operate Sachdeva College on the premises.

The plaintiff claimed that the defendants had stopped paying rent since May 2020, accumulated arrears of nearly ₹15 lakh, and made unauthorized constructions, leading to dues of over ₹1.17 crore from the Land and Development Office (L&DO), which the plaintiff had to pay.

Arguments of the Parties

The defendants filed an application for a summary judgment to dismiss the suit, raising several key arguments:

• Not a Commercial Dispute: They contended that the dispute did not qualify as a "commercial dispute" under the Commercial Courts Act, arguing that the property was originally residential.
• Barred by Delhi Rent Control Act: The defendants claimed the monthly rent was below the ₹3,500 threshold, which would place the tenancy under the protection of the Delhi Rent Control Act, 1958, thereby barring a civil suit for eviction.
• Improper Valuation and Vague Pleadings: They also alleged that the plaintiff had not paid the correct court fees and that the plaint was vague about the exact portion of the property under their occupation.

The plaintiff, represented by Mr. Sandeep Bajaj, countered these arguments, stating:

• Commercial Use is Decisive: The property was admittedly being used to run a college, a commercial activity, which squarely brings the dispute under the ambit of the Commercial Courts Act.
• Rent Exceeds DRC Act Limit: The plaintiff submitted that the monthly rent was ₹1,66,666, a fact previously admitted by the defendants' counsel in court, taking it far beyond the jurisdiction of the Rent Control Act.
• Pleadings are Clear: The plaintiff argued that the plaint, when read with the attached lease deed and site plan, clearly identified the leased portion of the property.

Court's Analysis and Legal Precedents

Justice Mahajan undertook a detailed examination of what constitutes a "commercial dispute" involving immovable property. The court addressed the defendants' contradictory stance of seeking a summary judgment under the Commercial Courts Act while simultaneously arguing that the court lacked jurisdiction.

The judgment distinguished an earlier single-judge bench view in Soni Dave (2016) , which suggested illegal commercial use of residential property would not qualify. Instead, the court relied on subsequent Division Bench rulings in Jagmohan Behl (2017) and Brij Mohan Sarna (2023) , and the Supreme Court's decision in Ambalal Sarabhai Enterprises Ltd. (2020) .

The court cited the Supreme Court's observation in Ambalal Sarabhai : "The words 'used exclusively in trade or commerce' are to be interpreted purposefully. The word 'used' denotes 'actually used'..."

Based on these precedents, Justice Mahajan concluded:

"In view of the above enunciation of law, it is no more res integra that it is the actual user, rather than legally permissible user, of immovable property which will be the determining factor for ascertaining whether it is a commercial dispute or not."

The court noted that the defendants themselves admitted in their written statement that the premises were used for running a college and that the area had been declared for "mixed land use/commercial" purposes.

Final Decision and Implications

The High Court rejected the defendants' application on all grounds. It held that:

1. The dispute is a "commercial dispute" because the property is actually and exclusively used for running a college.

2. The suit is not barred by the Delhi Rent Control Act, as the admitted rent of ₹1,66,666 per month far exceeds the statutory limit.

3. The plaint was not liable for rejection as the property was sufficiently identified through the lease deed and site plan, and the court fees paid were adequate.

4. A summary judgment was not warranted as the case involved triable issues, such as the validity of the tenancy termination notice and liability for damages, which require the recording of oral evidence.

The court's decision reinforces the principle that the function and actual use of a property are paramount in determining the jurisdiction of commercial courts. This ruling provides crucial clarity for litigants in landlord-tenant disputes where properties are used for commercial purposes, irrespective of their original classification. The application was accordingly dismissed, allowing the suit to proceed to trial.