IN THE HIGH COURT OF KARNATAKA
R.Devdas, J.
Kiran Builders – Appellant
Versus
M. Surya Babu – Respondent
Writ Petition No. 3873 of 2023 (GM-RES)
Decided On : 04-09-2023
COMMERCIAL DISPUTE - JURISDICTION OF COMMERCIAL COURTS - Commercial Courts Act, 2015, Section 2(c); Arbitration and Conciliation Act, 1996, Section 34 - The court analyzed the definition of 'commercial dispute' under Section 2(c) of the Commercial Courts Act, 2015, determining that disputes arising from construction and infrastructure contracts fall within this definition. The court emphasized the exhaustive nature of the definition and the inclusion of joint venture agreements, ultimately affirming the jurisdiction of the Commercial Court to hear the case.
Fact of the Case:
The petitioner, a partnership firm engaged in construction, challenged the rejection of its application to dismiss a plaint on the grounds that the dispute did not qualify as a commercial dispute under the Commercial Courts Act, 2015. The respondent had invoked Section 34 of the Arbitration and Conciliation Act, 1996, to challenge an arbitral award.
Finding of the Court:
The court found that the Commercial Court correctly determined that the dispute was a commercial dispute as defined by the Commercial Courts Act, particularly under Section 2(c), which includes construction and infrastructure contracts.
Issues: Whether the dispute raised by the respondent qualifies as a commercial dispute under the Commercial Courts Act, 2015, and whether the Commercial Court has jurisdiction to entertain the arbitration application.
Ratio Decidendi: The court held that disputes arising from construction and infrastructure contracts are classified as commercial disputes under Section 2(c)(vi) of the Commercial Courts Act, 2015, thus affirming the jurisdiction of the Commercial Court to hear the case.
Final Decision: The writ petition was dismissed, upholding the Commercial Court's decision to reject the application for dismissal of the plaint.
JUDGMENT
R.DEVDAS, J. - The petitioner partnership firm which is into construction activities is aggrieved by the rejection of I.A.No.2 wherein the petitioner-company, which was the respondent before the Commercial Court had sought for rejection of the plaint on the ground that the dispute cannot be treated as a commercial dispute as defined in the Commercial Courts Act, 2015.
2. The respondent herein had approached the Commercial Court raising a challenge to an arbitral award dtd. 4/7/2022 invoking Sec. 34 of the Arbitration and Conciliation Act, 1996. The petitioner herein filed I.A.No.2 seeking rejection of the arbitration application contending that the Commercial Court will have no jurisdiction to entertain the arbitration case since the dispute brought before the Commercial Court is not a commercial dispute within the meaning of Sec. 2(c) of the Commercial Courts Act, 2015.
3. The petitioner herein places reliance on a decision of this Court in W.P.No.11783/2020 in the case of M/s.Indraprastha Shelters (P) Ltd. /vs./ South India Biblical Seminary and Another, and a decision of the Apex Court in the case of Faqir Chand Gulati /vs./ Uppal Agencies Pvt. Ltd. and Anr.-(2008) 10 SCC 345, which was in fact relied upon in M/s.Indraprastha Shelters (supra). Whereas the respondents herein placed reliance on a decision of the Division Bench of the Andra Pradesh High Court in the case of Blue Nile Developers Private Limited /vs./ Movva Chandra Sekhar and Ors. - 2021 SCC Online AP 3964. It was also contended that the said decision of the Division Bench of the Andhra Pradesh High Court was challenged by the aggrieved person before the Apex Court and the SLP was dismissed. The Commercial Court passed the impugned order dismissing I.A.No.2 filed by the petitioner and therefore the petitioner is before this Court.
4. Learned counsel for the petitioner submits that the decision in the case of M/s.Indraprastha Shelters (supra) was rendered by this Court while considering similar issue as to whether a Joint Development Agreement between the land owner and a developer could be construed as a joint venture and whether disputes arising out of such Joint Development Agreement fall within the definition of 'commercial disputes' as provided in the Act. This Court considered two decisions of the Apex Court in the case of Bunga Daniel Babu /vs./ Sri Vasudeva Constructions and others arising out of the Civil Appeal No.944/2016 decided on 22/7/2016 and Faqir Chand Gulati (supra). Having considered the two decisions, this Court came to a conclusion that a joint venture is to be distinguished from a relationship of independent Contractor, the latter being one who, exercising an independent employment, contracts to do work according to his own methods and without being subject to control of his employer. It was found that there was a covenant in the agreement which may render one party liable for any act or commissions of the other party. It was found that there is no active involvement of the landlord in the execution of the project and the person who had entered into an agreement to purchase one of the Villas has sought to raise a commercial dispute. Learned counsel would therefore submit that the decision in the case of M/s.Indraprastha Shelters has considered all the relevant factors including the question as to whether a contract arising out of a Joint Development Agreement would answer any of the descriptions contained in Sec. 2(1) of the Act and this Court has clearly held that a dispute arising out of a Joint Development Agreement will not answer to the definition of the "Commercial Dispute" as defined in the Act. It was also submitted that a review petition filed before the Co-ordinate bench in R.P.No.115/2021 was also dismissed at the hands of the Co-ordinate bench.
5. Per contra, learned counsel for the respondent would submit that the Commercial Court has rightly accepted the submissions made on behalf of the respondent herein that the decis
Disputes arising from construction and infrastructure contracts are considered commercial disputes under the Commercial Courts Act, 2015, thereby granting jurisdiction to commercial courts to adjudic....
A commercial dispute must have implications beyond the contracting parties, and not every construction agreement qualifies as such.
Point of Law : Commercial Court has jurisdiction to adjudicate the dispute flowing out of ‘joint venture agreement’.
Commercial disputes under Section 2(1)(c)(vi) of the Commercial Courts Act must pertain to agreements that exhibit commercial characteristics beyond private contracts, requiring strict interpretation....
The court reaffirmed that disputes involving contracts for construction and development, such as the MOU in question, fall within the jurisdiction of commercial courts under the Commercial Courts Act....
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