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IN THE HIGH COURT OF JUDICATURE AT MADRAS
P.T. ASHA, J.
R. Kumar and Another – Appellants
Versus
T.A.S. Jawahar Ayya and Others – Respondents
O.A. No. 686 of 2019, C.S. No. 431 of 2019
Decided On : 14-08-2020
Civil Procedure Code,1908 - Section 94 and 151 - Order 39 - Rules 1 and 2 - Original Side Rules - Order XIV - Rule 8 - Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act - Section 2 (1)(c)(i) - Mortgage deed - Property - Loan - Ad interim injunction - Application filed by plaintiffs seeking an ad-interim injunction restraining 4th respondent/4th defendant from alienating property described in schedule to Judges summon - Applicants have filed suit C.S. No. 431 of 2019 for recovery of a sum together with interest at rate of 30% per annum due towards loan borrowed by 1st defendant from plaintiffs on the security of the simple mortgage deed - Learned counsel for respondents 3 and 4 took out a preliminary objection stating that no orders can be passed in application by this Court as the dispute involved in suit is one that comes within jurisdiction of Commercial Court - Learned counsel requested this Court to consider this issue as a preliminary argument in application - Learned counsel appearing for applicants has no objection to same – Held, argument it would be apposite to briefly delve on case of applicants - Learned counsel appearing for 4th respondent would argue that definition of the commercial dispute as contained in Section 2 (1)(c)(i) would indicate that any ordinary transaction of merchants, bankers, financiers and traders would constitute a commercial dispute - Plaintiffs being financiers, dispute involved is a commercial dispute - Learned counsel has failed to appreciate that definition does not restrict describing transaction of those classes - In fact emphasis is on document evidencing the transaction and not the persons transacting - Every transaction of these classes of persons does not automatically become a commercial transaction unless transaction is effected through a mercantile document - Objects of Act would also lend support to this view - View of this Court finds support in the Judgment of the Delhi High Court referred supra where learned Judge has spelt out that only where transactions relating to a mercantile document that falls within definition of a Commercial dispute is contemplated under the Act - Court has to look into documents/the evidences of transaction - In instant case mortgage deed which is filed as document No. 7 would read that transaction is one entered into between applicant, as an individual and 1st respondent, as an individua – Order accordingly.
JUDGMENT :
P.T. ASHA, J.
Prayer: Judges Summons filed under Order XIV Rule 8 of the Original Side Rules read with Section 94 and 151 and Order 39 Rules 1 and 2 of the CPC praying to grant ad interim injunction restraining the 4th respondent/4th defendant from in any way dealing with the schedule property pending disposal of the above suit.
1. This is an application filed by the plaintiffs seeking an ad-interim injunction restraining the 4th respondent/4th defendant from alienating the property described in the schedule to the Judges summon. The applicants have filed the suit C.S. No. 431 of 2019 for recovery of a sum of Rs. 1,04,25,000/- together with interest at the rate of 30% per annum due towards the loan borrowed by the 1st defendant from the plaintiffs on the security of the simple mortgage deed.
2. When the above application was taken up for hearing Mr. K. Chandrasekhar, learned counsel for respondents 3 and 4 took out a preliminary objection stating that no orders can be passed in the application by this Court as the dispute involved in the suit is one that comes within the jurisdiction of the Commercial Court. The learned counsel requested this Court to consider this issue as a preliminary argument in the application. Mr. K.V. Sundararajan, learned counsel appearing for the applicants has no objection to the same.
3. The learned counsel for the respondents 3 and 4 would contend that the transaction between the applicants herein and the 1st respondent would squarely fall within the definition of a “Commercial Dispute” as provided in Section 2 (1)(c)(i) of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, herein after called the Act.
4. In order to appreciate the argument it would be apposite to briefly delve on the case of the applicants. The applicants would contend that the 1st respondent had approached them for a loan of Rs. 60,00,000/- and as security had offered to mortgage the property which is described in the schedule to the plaint. The 1st respondent had undertaken to repay the said amount of Rs. 60,00,000/- together with interest at 30% per annum.
5. The applicants would contend that despite executing the simple mortgage in favour of the applicants, the 1st respondent had sold the suit property and another property to the 3rd respondent vide registered sale deed 29.07.2016 and this sale deed was executed by the 2nd respondent as Power of Attorney Agent of the 1st respondent. Thereafter, the 3rd respondent had executed a settlement deed in favour of the 4th respondent on 03.05.2017 registered as Document No. 1193 of 2017 on the file of the SRO, Periamet in respect of the suit property and other properties. It is the contention of the applicants that these transactions are sham and nominal made with an intent to keep the property out of the reach of the applicants. Be that as it may, the applicants would contend that the sale and the settlement are all subject to the mortgage executed in their favour. Since no payments were made by the 1st respondent, the applicants have come forward with the instant suit.
6. The mortgage deed has been filed as document No. 7 along with the plaint. The recitals of the mortgage deed would read that the mortgagee, namely, the 1st respondent, has borrowed a sum of Rs. 60,00,000/- for meeting his personal expenses. The declared value of the property is a sum of Rs. 7,92,00,000/-.
7. The respondents more particularly the 4th respondent has filed his counter to the injunction application and the sum and substance of the counter is that the property in question has been mortgaged earlier under two registered mortgages in favour of Raja Holdings, Financiers and Merchants on 03.01.2014 registered as document No. 14/2014 and 15/2014 on the file of the Sub Registrar, Periyamet, Chennai. The 4th respondent would further contend that the mortgage which is the subject matter of this suit is a collusive one and that the applicants are very well aware
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