IMPORTANT POINT
A commercial dispute must have implications beyond the contracting parties, and not every construction agreement qualifies as such.

ORDER :

Moushumi Bhattacharya, J.

The Civil Revision Petition arises out of an impugned docket order passed by the Trial Court on 03.04.2024 on an application filed by the petitioners herein for impleading certain parties as respondents in the Arbitration Original Petition (ARB.O.P.No.13 of 2023).

2. The impugned order however discusses the nature of the dispute between the petitioners (also petitioners in the Trial Court) and the respondents and concludes that the dispute between the parties is not a commercial dispute and the Court accordingly has jurisdiction to entertain the petition.

3. We should clarify that the parties in the Civil Revision Petition have argued on the nature of the dispute, that is, whether the dispute is a “Commercial Dispute” as defined under the provisions of The Commercial Courts Act, 2015, and whether the Trial Court, not being a designated Commercial Court, had the jurisdiction to entertain the petitioners' application for addition of parties. In essence, learned counsel appearing for the petitioners argues that the learned Ist Additional District Judge, Ranga Reddy District at L.B. Nagar, did not have jurisdiction to entertain the petition since it is not a “Commercial Court” as defined under sections 2(1)(b) and 3(1) of the 2015 Act, while learned counsel appearing for the respondents urges otherwise.

4. The issue of extension of the Arbitrator’s mandate under section 29-A of The Arbitration and Conciliation Act, 1996, as applied for by the respondent No.1/claimant was not the issue before the Trial Court. Counsel have mentioned this issue as a part of the back-story to the dispute.

5. We proceed to give our reasons only on the point of the nature of the dispute brought before the Trial Court.

What is a “Commercial Dispute”?

6. Whether a dispute qualifies as a ‘commercial dispute’ as delineated under section 2(1)(c) of The Commercial Courts Act, 2015, would essentially be a matter of interpretation of the Agreement. Section 2(1)(c) defines ‘commercial dispute’ as a dispute arising out of a wide array of agreements from ordinary transactions of merchants and bankers to export and import of merchandise, admiralty and carriage of goods, license agreements, JVAs, technological development agreements, intellectual property rights, insurance and contracts of agency. The Explanation to Section 2(1)(c) clarifies that an action for recovery of immovable property or where one of the contracting parties is the State or a private body carrying out public functions may qualify as a commercial dispute. The range of agreements from (i) - (xxii) of section 2(1)(c) presumes that the agreements must have a commercial substratum i.e., a commercial flavour with regard to the understanding of the parties to the agreement and the impact of the agreement on trade and commerce as a whole.

7. In essence, a commercial dispute would be one where the nature of the agreement or the consequence arising therefrom would take the effect of the agreement beyond the private sphere of the contracting parties and create a ripple-effect of commercial movement beyond the main actors to the agreement. The specific nomenclatures of the agreements in section 2(1)(c) indicates that a dispute cannot readily be presumed to be a commercial dispute. The object and specific clauses of the agreement would always be the determinant of whether the source-agreement fits into 1 or more of the sub-clauses to section 2(1)(c) of the 2015 Act. The criterion is whether the parties to the agreement understood and envisaged the agreement as one falling under sub-clause 3 (i) - (xxii) to section 2(1)(c) and intended to treat the agreement as such.

8. Which begs the question: can each and every dispute automatically be categorized as a ‘commercial dispute’ under Section 2(1)(c) of the 2015 Act? The answer to this question must be an emphatic “NO”.

The more relevant question would be: Would every agreement with a measure of trade or commerce serve as the starting-poin