The main legal principle established is that under the Commercial Courts Act, any construction contract, regardless of its use (residential or commercial), is considered a commercial dispute under Section 2(1)(vi).

JUDGMENT :

1. Heard learned Counsel for the parties.

2. This petition challenges an order passed by the District Court at Nashik, sitting as a commercial court. The impugned order has been passed on an application of the Petitioners herein, who are original defendants in the commercial suit, for return of the plaint for presentation to proper court under Order 7 Rule 10 of CPC.

3. The controversy in the matter is whether the suit filed by the Respondents herein (original plaintiffs) is a commercial suit. The dispute between the parties arises under an agreement by which the original defendants purportedly agreed to transfer their development rights, for construction of a building, to the plaintiffs in consideration of the latter sharing the development potential with them in the ratio of 43 : 57. This agreement, on the face of it, is prima facie a construction contract; it transfers development rights by way of construction of a building and sale of premises therein in a certain stated proportion as between the parties. The defendants’ submission before the District Court was that the transaction did not come within the purview of a “commercial dispute” defined under Clause (c) of Section 2(1) of Commercial Courts Act, 2015 (“Act”). The defendants submitted that the building proposed to be constructed was not used exclusively in trade or commerce as required by Sub-clause (vii) of Clause (c) of Section 2(1); so also, the transaction was not a construction or infrastructure contract covered by Sub-clause (vi) of clause (c) of Section 2(1). It was submitted that the suit not being thus a commercial dispute, the plaint should be returned for presentation to the proper court. The defendants relied on the decision of the Supreme Court in the case of Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infraspace LLP (AIR (2019) 13 SCALE 575), which holds that only those contracts of immovable properties, where the properties are put to commercial or trade use, are covered by Sub-clause (vii) of Clause (c) of Section 2(1) of the Act and give rise to a commercial dispute. The learned District Judge primarily proceeded on the footing that there was no dispute about the proposition stated by the Supreme Court in Ambalal Sarabhai Enterprises case. According to the learned Judge, the contract concerned construction and infrastructure of a building and was accordingly covered by Sub-clause (vi) of Clause (c) of Section 2(1) of the Act, and there was no question of invoking Sub-clause (vii) of Clause (c) of Section 2(1).

4. The question to be considered by a court when an application is made to it under Order 7 Rule 10 of CPC is a question of initial jurisdiction. Such jurisdiction depends on the case pleaded before the court by the plaintiff, such case having to be assessed on the averments made in, as also documents produced with, the plaint. The case pleaded by the plaintiffs here indicates that disputes between the parties arise out of a construction and infrastructure contract. The plaintiffs aver their agreement with the defendants by which development rights available to the latter in respect of a certain immovable property were sought to be assigned to the plaintiffs in consideration of a share in the development potential in a certain stated proportion. The development envisaged by the parties is, admittedly, by way of construction of a building. In other words, the contract is for construction of a building. If that be so, there is no infirmity to be found in the impugned order so far as the court’s assumption of initial jurisdiction is concerned. At that stage, the court is not really concerned with what is the defence to the action or what the defendants plead to be the nature of the dispute. It may well be that eventually, after a trial, after both parties are heard, evidence is led and the contract and its nature are finally assessed by the court, it may well turn out to be a case not involving a commercial dispute. In that case, however,