IN THE HIGH COURT OF JUDICATURE AT BOMBAY, BENCH AT AURANGABAD
ARUN R. PEDNEKER, J.
Sanjay Suganchand Kasliwal, Prop. Kasliwal Construction - Appellant
Versus
M/s. Golden Dreams Buildcon Pvt. Ltd. and Ors. – Respondents
Appeal From Order No. 34 Of 2023
Decided On : 10-11-2023
Commercial Court Act - Specific Performance of MOU - Section 2 (c), (i), (vi), (vii), (xi) - Order VII Rule 10 and 11 - [Section 2 (c), (i), (vi), (vii), (xi)] - The judgment discusses the interpretation of the Commercial Courts Act, 2015 and its applicability to the specific performance of a memorandum of understanding (MOU) for the development of immovable property. The court analyzes the terms of the MOU and determines whether the dispute falls within the purview of a 'commercial dispute' as defined under the Act. The court emphasizes the need for strict construction of the Act and the actual use of the property for trade or commerce, as opposed to potential use. The judgment also highlights the distinction between a 'construction contract' and a 'development agreement' in the context of immovable property.
Fact of the Case:
The plaintiff filed a suit for specific performance of a memorandum of understanding (MOU) dated 26.12.2009, related to the development of a property. The defendant nos.9 to 11 filed an application under the Commercial Courts Act, 2015 to return the plaint for presentation to the Commercial Court. The trial Court returned the plaint, and the appellant filed an Appeal from Order challenging the decision.
Finding of the Court:
The court found that the MOU was primarily a development agreement for the construction of immovable property and did not fall within the purview of a simple 'construction contract'. The court emphasized the need to analyze the dispute in terms of the specific provisions of the Commercial Courts Act, particularly clause (vii) of Section 2 (1) (c), to determine whether it constituted a 'commercial dispute'. The trial Court's decision to return the plaint was quashed, and the matter was remanded for fresh adjudication.
Issues: The main issue was whether the dispute regarding the specific performance of the MOU fell within the definition of a 'commercial dispute' under the Commercial Courts Act, 2015, particularly in relation to the use of immovable property exclusively in trade or commerce.
Ratio Decidendi: The court's decision was based on the interpretation of the terms of the MOU and the applicability of the Commercial Courts Act, 2015. The court emphasized the need for strict construction of the Act and the actual use of the property for trade or commerce, as opposed to potential use. The distinction between a 'construction contract' and a 'development agreement' in the context of immovable property was also crucial in determining the nature of the dispute.
Final Decision: The court quashed the trial Court's decision to return the plaint and remanded the matter for fresh adjudication, emphasizing the need to analyze the dispute in terms of the specific provisions of the Commercial Courts Act, particularly clause (vii) of Section 2 (1) (c), to determine whether it constituted a 'commercial dispute'.
JUDGMENT :
1. By the present Appeal from Order, the appellant is challenging the order dated 4th May, 2023 passed by the 8th Joint Civil Judge Senior Division, Aurangabad on an application filed on behalf of the respondents – defendant nos.9 to 11 under Section 2 (c), (i), (vi), (vii), (xi) and explanation (a) of the Commercial Court Act, 2015 [for short ‘Act of 2015’] read with Order VII Rule 10 and 11 of the Code of Civil Procedure for return of the plaint for presentation to the proper forum i.e. Commercial Court constituted under Section 3 of the Commercial Courts Act, 2015.
Brief facts giving rise to filing the present Appeal from Order can be summarized as under :
2. Memorandum of understanding dated 26.12.2009 came to be executed between plaintiff, defendant no.1 and defendant no.7. As per the said memorandum, the defendant no.1 i.e. Vendor was to get amount of consideration of Rs.35 crores towards development of suit property. As per the said MoU, the defendant no.1 agreed to give property Plot No. E-36-1 admeasuring 17000.00 (17,066.25) sq.mt. situated at MIDC Chikalthana, Aurangabad Tq. & Dist. Aurangabad for the development to the plaintiff and accordingly the defendant no.1 accepted the amount of Rs.5,92,55,000/-. As per the memorandum of understanding, the defendant nos.1 to 7 were to get the part property converted to residential use. A joint venture was to be constituted by the plaintiff and defendant no.7.
3. Since the MOU dated 26.12.2009 was not acted upon by the defendants, the plaintiff filed a suit for specific performance of the memorandum of understanding dated 26.12.2009 in respect of property plot No.E-36-1 admeasuring 17000.00 (17,066.25) sq.mt. Situated at MIDC Chikalthana, Aurangabad Tq. & Dist. Aurangabad and Perpetual injunction. The property is described in the plaint at para 1.
4. In the plaint it is pleaded that as per the terms and conditions of the MOU plaintiff was required to pay only the amount of Rs.3.5 crore prior to construction permission and to pay Rs.2.5 crore after obtaining construction permission by defendant no.1. However, defendant no. 1 did not obtain the conversion of land from industrial to residential and the construction permission, but still plaintiff paid the amount of Rs.5,92,55,000/- as stated above. The plaintiff further contended that the plaintiff also called upon the said defendants to execute and register a Development Agreement as regards the suit property. It is further contended that the plaintiff was ready and willing to pay the balance agreed consideration amount of Rs.29,07,45,000/-, and thus, the plaintiff’s cause of action to file the present suit. It lastly arose in the month of February, 2023, after several meetings, when the defendant nos.1 to 11 refused to execute the Development Agreement in favour of the plaintiff and also defendant nos.9 to 11 launched its project under the name of Dream World Phase-1 on the suit property on 25.02.2023. The cause of action arose at Aurangabad. In view of the place of cause of action, the situation of the property, and the residence of the parties, the suit is filed in Aurangabad.
5. The plaint contains following prayers :
PRAYERS
b. Defendants no.1 to 11 may be directed to execute the Development Agreement and Power of Attorney in respect of the property described in Para 1 of the plaint by obtaining the Consent of defendant no. 12 for the execution of the Development Agreement and Power of Attorney and to present the same to the Sub-Registrar, Aurangabad as per terms of Memorandum of Understanding dated 26.12.2009.
c. The Deed of Assignment bearing registration no. 4569/2021 dated 21.6.2021 executed by Defendant Nos.1, 7 and 9 is illegal, null and void ab initio and not binding on Plaintiff and is liable to be cancelled.
d. The perpetual injunction may kindly be issued against the defendants to restrain them from alienating, selling, and creating third party interest, in
Ambalal Sarabhai Enterprises Ltd. Vs. K.S. Infraspace LLP and another reported in 2020 (15) SCC 585
Vasu Health Care Pvt. Ltd. Vs. Gujarat Akruti TCG Biotech Ltd. Reported in AIR 2017 SC 153
Dhulabhai Vs. State of M.P. reported in AIR 1969 SC 78
Kanchanganga Realtors Pvt. Ltd. V/s Monarch Infrastructure reported in AIR 2019 Bom 102
Vaijinath Kale Vs. Nerkar Property LLP reported in 2021 (3) Mh.L.J. 202.
AI
A suit for specific performance of an MOU regarding redevelopment of residential property does not constitute a commercial dispute under the Commercial Courts Act if the property is not used exclusiv....
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....
Point of law: Section 2(1)(c) of Act, 2015 defines what is meant by ‘commercial dispute’ and instances are mentioned in various clauses incorporated therein. ‘Commercial dispute’ means a dispute aris....
Point of Law : Commercial Court has jurisdiction to adjudicate the dispute flowing out of ‘joint venture agreement’.
A dispute arising from an agreement to sell immovable property used for trade is a commercial dispute, mandating resolution in a Commercial Court, as clarified by statutory definitions.
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