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Moushumi Bhattacharya, J.
LADYMOON TOWERS PRIVATE LIMITED – Appellant
Versus
MAHENDRA INVESTMENT ADVISORS PRIVATE LIMITED – Respondent
CS/99/2020
Commercial Dispute - The Commercial Courts Act, 2015 - Sections 2(1)(c)(i) and 34 - The dispute between the parties does not qualify as a 'commercial dispute' under the Act as the loan transaction was not in the ordinary course of business of the plaintiff and did not involve any mercantile documents
Fact of the Case:
The plaintiff filed a suit before the Commercial Division of the High Court for recovery of a loan amount of Rs. 64,50,000/- along with interest from the defendant. The defendant sought the return of the plaint and dismissal of the suit, arguing that the dispute is not a 'commercial dispute' under The Commercial Courts Act, 2015.
Finding of the Court:
The court found that the loan transaction between the plaintiff and the defendant was not in the ordinary course of the plaintiff's business, which was real estate and construction, and was more in the nature of a 'hand-loan' based on personal familiarity between the directors. The court also held that the dispute did not involve any mercantile documents, which is a requirement under Section 2(1)(c)(i) of the Act for a dispute to be considered a 'commercial dispute'.
Issues: Whether the suit filed by the plaintiff should be tried under the provisions of The Commercial Courts Act, 2015 or as a regular suit.
Ratio Decidendi: The court held that the dispute between the parties does not qualify as a 'commercial dispute' under Section 2(1)(c)(i) of The Commercial Courts Act, 2015, as the loan transaction was not in the ordinary course of the plaintiff's business and did not involve any mercantile documents.
Final Decision: The court directed the suit to be de-listed from the Commercial Division and transferred to the appropriate list governing the hearing of ordinary suits.
The Court: The present application is for return of the plaint and for dismissal of the suit. The issue which arises for decision is whether the suit, filed before a Commercial Division of this Court, should be tried under the provisions of The Commercial Courts Act, 2015 or be heard as a regular suit.
The plaintiff complains about the conduct of the defendant in not filing the written statement and seeking to take advantage of such by having the suit transferred to a regime with more liberal timelines. The defendant insists that the want of jurisdiction of the Commercial Division can be urged at any point of time and should be decided by this Court before the suit proceeds any further. The claim in the suit is for recovery of money advanced by the plaintiff to the defendant as a short term financial accommodation with an accrued rate of interest. The plaintiff has claimed a decree for Rs.64,50,000/- along with accrued interest. The defendant vigorously argues that the suit cannot be classified as a commercial suit as the dispute between the parties is not a commercial dispute, as defined in the Act. A “commercial dispute” has been defined under Section 2(1)(c) as a dispute arising out of a broad spectrum of transactions and agreements qualified by an explanation which provides an action for recovery of immovable property or for realisation of monies or where one of the contracting parties is the State or a Private body carrying on public functions the dispute shall not cease to be a commercial dispute within the meaning of Section 2(1)(c). The thrust of the present matter is whether the dispute in the suit falls within Section 2(1)(c)(i) which is set out below :-
“2(1) ...................
(c). “Commercial dispute” means a dispute arising out of— (i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
................”
In order to ascertain whether the present dispute qualifies as a “commercial dispute” within the purview of the Act, it is necessary to break down the classes of persons and transactions contemplated in the above clause. Since clauses (ii) to (xxii) do not apply in this case, the construction of 2(1)(c)(i) falls for consideration in the present case.
The statements in the plaint make it evident that the Directors of the plaintiff and the defendant were known to each other which served as a reason for the plaintiff to part with Rs.50 lakhs by way of a short-term loan. The Memorandum of Association of the plaintiff which is annexed to the plaint states that the plaintiff carries on business of acquisition by purchase, lease, etc., for development of land and buildings. The Objects of the Plaintiff Company provide that the plaintiff carries on real estate and construction business. It is hence evident that the plaintiff’s regular business is not of lending money and the plaint also does not contain any statement to that effect. The loan given by the plaintiff to the defendant was based on a familiarity between the Directors of the parties and can hence be assumed that the loan was in the nature of what is occasionally referred to as a “hand-loan” and was not given in the regular course of business or as a commercial loan. This assumes importance in the difference recognised under Section 34 of The Code of Civil Procedure, 1908 between the rate of interest to be adjudged on a decree for payment of money and a liability arising out of a commercial transaction. The aforesaid would find support from Manesh Rajkumar Kanhed vs. Ramesh Bhagwansa Walale; AIR 2007 Bom 86, wherein it was held that taking of a “hand-loan” for starting a business of agency cannot come within the four-corners of the definition of a commercial transaction. Dena Bank vs. Prakash Birbhan Katariya; AIR 1994 Bom 343 also rejected the idea of
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