2024 Supreme(Online)(GUJ) 7730

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/CIVIL REVISION APPLICATION NO. 149 of 2024 FOR APPROVAL AND SIGNATURE:

HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI ===================================================

1	Whether Reporters of Local Papers may be allowed to see the judgment ?	NO
2	To be referred to the Reporter or not ?	NO
3	Whether their Lordships wish to see the fair copy of the judgment ?	NO
4	Whether this case involves a substantial question of law as to the interpretation of the Constitution of India or any order made thereunder ?	NO

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RAMESHBHAI AMTHABHAI DESAI & ORS.

Versus MEERA EDUCATION TRUST THROUGH AUTHORIZED TRUSTEE FARZAN KURESHI & ANR.

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Appearance:

MR. MEHUL SHAH, SENIOR COUNSEL assisted by MR. D. P.

KINARIWALA(410) for the Applicant(s) No. 1,2,3 for the Opponent(s) No. 2 MR. DHAVAL DAVE, SENIOR COUNSEL assisted by MR ASHISH H SHAH(2142) for the Opponent(s) No. 1 ===================================================

CORAM:HONOURABLE MS. JUSTICE VAIBHAVI D. NANAVATI Date : 03/05/2024 ORAL JUDGMENT

1. The present Civil Revision Application under Section 115 of the Code of Civil Procedure, 1908, is directed, being aggrieved and dissatisfied by the impugned order dated 07.03.2024 passed below Exh.9, rejecting the application filed by the applicants for returning the plaint, under Order-7 Rule-10 of the Code of Civil Procedure, 1908, in Special Civil Suit No. 175 of 2023 by the 4^th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Vadodara, copy of the said order is duly produced at Annexure-A.

2. Brief facts leading to the filing of the present Application reads thus:

2.1. The respondent No.1 herein has filed Suit being Special Civil Suit No. 175 of 2023 before the Court of Senior Civil Judge, Vadodara for declaration and direction alongwith the prayer of permanent injunction. The Suit was filed with respect to the property situated behind Swaminarayan Temple on Survey No. 49, City Survey No. 749 at Atladara, Vadodara. So far as the prayer of declaration is concerned, it is prayed that the respondent No.1 is running a school in the capacity of the tenant. It was prayed that respondents have no right to interfere with the possession and with the educational activity being carried out in the school premises. It was further prayed that whatever writing or declaration or agreement, are there against the school, which are false and the same are without consent and has obtained by false declaration. So far as prayer of direction is concerned, it was prayed that the applicants be directed to execute a lease agreement as per the oral understanding. So far as prayer of permanent injunction is concerned, it was prayed that the applicants may be restrained from interfering with the possession and educational activity being carried out by the respondent no.1 in the school premises. The said plaint is duly annexed at Annexure-B to the application. 2.2. In response to the summons issued, the applicants herein appeared and filed application under Order-7 Rule-10 of the Code of Civil Procedure on 08.08.2023. The same was exhibited at Exh.8. In the said application, it was mainly contended by the applicants herein that the premises is used for the commercial purpose, and therefore, the provision of Commercial Courts Act, 2015 would be applicable and it is the Commercial Court, who has jurisdiction to entertain the Suit, and therefore, the plaint be returned, to be presented before the appropriate Court. The said application – under Order-7 Rule-10 of CPC, 1908 is duly produced at Annexure-C.

2.3. In view of the pendency of the application before the competent Court, the applicants approached this Court by way of filing Special Civil Application No. 856 of 2024, which came to be disposed of by order dated 05.02.2024 directing the competent court to decide the application below Exh.8 on 19.02.2024 and if the competent Court needs to hear the parties, then hear and decide the said application, within period of 15 days, the said order dated 05.02.2024 is duly produced at Annexure-E.

2.4. The competent Court has rejected the application filed by the present applicants under Order-7 Rule-10 of CPC, by impugned order dated 07.03.2024, on the ground that the plaintiff is educational institution, which was on lease of 33 years, which is cancelled on 28.02.2023 and the suit is for permanent injunction with reference to the interference of the possession, and therefore, the suit is not such that the same can be referred as a commercial dispute and the Civil Court has jurisdiction to decide the Suit, and accordingly, the application came to be dismissed.

2.5. Being aggrieved and dissatisfied with the impugned order at Annexure-A, the applicants herein have approached this Court, with the following reliefs:

“A. Your Lordships may be pleased to admit and allow this application;

B. Your Lordships may be pleased to quash and set aside the order dated 07.03.2024 passed below Exh.9 in Special Civil Suit No. 175 of 2023 by the Ld. 4^th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Vadodara at Annexure-A to this application;

C. Pending, admission, hearing and final disposal of this application, be pleased to stay the execution, implementation and operation of the order dated 07.03.2024 passed below Exh.9 in Special Civil Suit No. 175 of 2023 by the Ld. 4^th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Vadodara at Annexure-A to this application D. Be pleased to stay the further proceedings of Special Civil Suit No. 175 of 2023 pending before the Ld. 4^th Additional Senior Civil Judge and Additional Chief Judicial Magistrate, Vadodara;

E. Be pleased to grant any other relief/s as may deem fit proper, in the interest of justice.”

3. Heard Mr. Mehul Shah, learned senior counsel assisted by Mr. D.P. Kinariwala, learned advocate appearing for the applicant and Mr. Dhaval Dave, learned senior counsel assisted by Mr. Ashish Shah, learned advocate appearing for the respondent no.1.

3.1. Mr. Mehul Shah, learned senior counsel submits that the plaintiff being an educational institution falls under the definition of Section 2(1)(C)(VII) of the Commercial Courts Act, 2015 (for short hereinafter referred to as ‘the Act, 2015’) and placing reliance on the same, submits that trade and commerce includes education. That the property is used for the commercial purpose, therefore, the suit would be in the nature of commercial dispute as defined under Section 2(1(C)(VII) of the Act, 2015.

3.2. Mr. Shah, learned senior counsel submits that the relief claimed in the plaint itself suggests that the plaintiff is seeking relief of specific performance of an agreement relating to an immovable property, used exclusively for the trade and commerce, and therefore, the application was filed for return of plaint and the plaint is required to be returned in view of Section 15 of the Act, 2015, however, the said application is erroneously dismissed by the competent Court. It is submitted that the specific performance of an agreement is sought for, of the property, which is used for the purpose of trade and commerce.

3.3. Mr. Shah, learned senior counsel submits that the Building Usage (B.U.) permission is issued by the Corporation for commercial purpose/ use, naturally, the dispute with respect to the said property would be a commercial dispute, as defined in Section 2(1)(C)(VII) of the Act, 2015. It is submitted that the plaintiff is an educational institution and education activities working for the development of education. Mr. Shah, learned senior counsel submits that, the property is used for the educational purpose and it cannot be said that the property is not a commercial property.

3.4. Reliance is placed on the judgment reported in 1992 (3) SCC 390 in the case of Municipal Corporation of Delhi V/s. Children Book Trust, wherein, placing reliance on the same, it is submitted that by Mr. Shah, learned senior counsel that the Hon’ble Apex Court has considered and came to the conclusion that an institution imparting education and run on commercial lines with profit motive is not a charitable institution. The property in question is running for absolutely commercial nature and only Commercial Court can entertain the said Suit.

3.5. Mr. Shah, learned senior counsel also placed reliance on the decision of the Hon’ble Supreme Court in the case of Ambalal Sarabhai Enterprises v/s. K.S. Infraspace LLP reported in

2020 (15) SCC 585.

3.6. It is submitted that, in view of the aforesaid ratio as laid down by the Hon’ble Apex Court, the impugned order be quashed and set aside and the plaint is requited to be returned in view of Section 15 of the Act, 2015.

4.1. Per contra, Mr. Dhaval Dave, learned senior counsel submits that, no interference is called for, in the impugned order, rejecting the application filed by the applicants herein under Order-7 Rule-10 of the CPC, wherein, the said application was rejected, mainly on the ground that the subject matter of the Civil Suit is such that the same would not qualify as a ‘commercial dispute’ under Section 2(c)(vii) of the Act, 2015 and since the agreement for which specific performance is sought by the respondent no.1, is not signed by the applicants, the provision of Arbitration contained therein is of no avail to the applicants for invoking the application of Section 8 of the Act, 1996.

4.2. It is submitted that reliance placed by the applicants on the decision (1992) 3 SCC 390 (supra), wherein, it is held in paragraphs- 34 and 65 that imparting education cannot be per-se construed as a charitable activity, so as to exclude the same from the purview of the same being called as trade or commerce. Placing reliance on the aforesaid ratio, the case of the applicants is that imparting education by running a school is a not an activity of trade or commerce, which would attract Section 2(c) (vii) of the Act, 2015. It is submitted that, the activity of imparting education is per-se charitable in nature and is an ‘occupation’ distinct and different from trade and commerce.

4.3. Reliance was also pleased on the ratio as laid down by 11 judges Bench decision of the Hon’ble Supreme Court rendered in the matter of TMA Pai Foundation v/s. State of Karnataka reported in (2002) 8 SCC 481. Reliance was also placed on the decision dated 30.01.2023 of the Hon’ble Karnataka High Court in Writ Petition No. 18093 of 2022 in the matter of Dhee Educational and Cultural Trust & Ors. v/s. M/s. Hartana Projects LLP. It is submitted that the facts of the present case are almost pari-materia to the facts of the said case.

4.4. Placing reliance on the same, it is submitted that the activity of imparting education is neither trade nor commerce, so as to attract the applicability of Section 2(c)(vii) of the Act, 2015. Mr. Dave, learned senior counsel submitted that the reliance placed on the decision of Ambalal Sarabhai (supra), it was ruled that the word trade or commerce featuring in section 2(c)(vii) of the Act, 2015 is required to be construed narrowly and not broadly, so as to ensure that only the activities, which are strictly construed as trade or commerce are included therein, without expanding the scope.

4.5. On merits, it is submitted by Mr. Dave, learned senior counsel that even if assuming without prejudice, if running of a school is trade or commerce, the same would not attract the applicability of section 2(c)(vii) of the Act, 2015, in view of the fact that the aforesaid would not satisfy the three fold requirements, (i) The factum of agreement should not be in dispute between the parties to the suit; (ii) The agreement must be in respect of an immovable property; and (iii) The immovable property should be used exclusively for trade or commerce, pursuant and in furtherance of such an agreement.

4.6. In the facts of the present case, the aforesaid three requirements of the provision are not being met. The factum of agreement of which specific performance is sought, is disputed by the applicants. The immovable property in question can be said to be used for trade or commerce only upon the specific performance of the agreement having been granted in favour of the respondent no.1 and the registered lease deed is executed in due compliance thereof.

4.7. Mr. Dave, learned senior counsel submits that, at present the use of the immovable property by respondent no.1 for running a school cannot be said to be pursuant to and in furtherance of the agreement between the applicants and respondent no.1, whose specific performance is sought. In view thereof, Section 2(c)(vii) of the Act, 2015 is not applicable to the facts of the present case.

4.8. Mr. Dave, learned senior counsel submits that the reliance is placed by the applicants herein on the decision of this Court in Kushal Limited reported in (2023) 1 GLR 620, wherein, the decision is with respect to a warehouse, which can always be construed as an activity of trade or commerce. Therefore, in the facts of the present case, the same would not apply.

4.9. Mr. Dave, learned senior counsel submits that as regards point of arbitration, the same was not argued by the applicants, during the course of hearing of the Revision Application. It is submitted that against the rejection of application under Section 8 of the Arbitration Act, Revision is not maintainable, as the Arbitration Act provides for an appeal against an order, refusing to refer the subject matter of suit to arbitration under Section 8 of the Arbitration Act.

4.10. Mr. Dave, learned senior counsel lastly submitted that, no interference is called for in the findings arrived at by the competent Court that the draft agreement was not signed by the applicants, and therefore, the arbitration clause cannot be invoked.

ANALYSIS:

5. Having heard the learned senior counsels appearing for the respective parties, the following emerge:

(A) The opponent no.1 – Meera Education Trust is a registered public charitable Trust under Bombay Public Trust Act vide Registration No. E/4684/ Vadodara and is involved in various kinds of educational activities and is in the field of education, having filed the Suit being Special Civil Suit No. 175 of 2013 seeking declaration, specific performance and permanent injunction against the defendants.

(B) The cause of action for filing the suit arose as stated in Para-8 of the plaint, which reads thus:

“(8) Cause of suit :-

Cause of the suit has arisen since I, the defendant No.1 has executed rent agreement in favour of the plaintiff on 2/4/2014, and thereafter also I, plaintiff, am given absolute trust, reliance and by making false submission, by taking disadvantage, plaintiff’s rent agreement was cancelled and thereafter, also when decided to make a draft for executing a rent agreement and when plaintiff paid necessary stamp duty and registration fee for executing the said rent agreement and thereafter, when it transpired that the defendant no.1 of this case does not intend to execute a new rent agreement thereafter, constant possession occupancy of the plaintiff has been continued even today also and thereafter, at present, for the last few days, the defendant Nos. 1 to 3 of this case are intimidating me to vacate the suit property and thereafter, the cause of this suit has continued to arise in the jurisdiction of this Honourable Court.”

(C) In view thereof, the prayers as prayed for in the Suit in Para-10 by the original plaintiff, reads thus:

“(10) Therefore, prays that, 1. As the rights of the undersigned Plaintiff are included under the Agreement and the Act in the entire property alongwith construction admeasuring 98426 Sq.Ft. in the name of the school run by the undersigned Plaintiff namley, The Tree House High School, falling in the premises concerned admeasuring 4806 Sq.Mt. located in mouje village Atladara in registration District Vadodara, Sub-district Vadodara, B/h Swaminarayana Temple and as on today also plaintiff’s legal possession is being there towards the place, the defendants do not have any right or power to do any act which may cause hindrance or obstruction in the educational proceedings running in the said property and take any action against it and if any agreements, writings have been executed against it without plaintiff’s implied consent and by giving trust and reliance to the plaintiff and by making false submissions then they are not bound to the plaintiff, be pleased to declare such.

2. As the rights of the undersigned Plaintiff are included under the Agreement and the Act in the entire property alongwith construction admeasuring 98426 Sq.Ft. in the name of the school run by the undersigned Plaintiff namely, The Tree House High School, falling in the premises concerned admeasuring 4806 Sq.Mt. located in mouje village Atladara in registration District Vadodara, Sub-district Vadodara, B/h Swaminarayana Temple in this regard, the defendant No.1 to 3 should execute necessary agreements, writings in favour of plaintiff as understanding has been done with defendant No.1 to execute rent agreement. Be pleased to pass an order against the defendant No. 1 to 3 to comply the such conditions.

3. As the rights of the undersigned Plaintiff are included under the Agreement and the Act in the entire property alongwith construction admeasuring 98426 Sq.Ft. in the name of the school run by the undersigned Plaintiff namely, The Tree House High School, falling in the premises concerned admeasuring 4806 Sq.Mt. located in mouje village Atladara in registration District Vadodara, Sub-district Vadodara, B/h Swaminarayana Temple, the defendants or their companions, persons be restrained from causing hindrance or obstruction in the plaintiff’s possession under contract and legal and the defendants be restrained from acting in such a manner which may cause hindrance or obstruction towards possession of the plaintiff

4. Be pleased to awards to cost of the suit from defendants.

5. Be pleased to grant any other and further relief/s which may deem fit and proper.”

(D) It is apposite to refer to the relevant part of the impugned order dated 07.03.2024, which reads thus:

“(7) According to the Opponent, the contention taken in the Plaintiff's claim is that the so-called contract is subject to professional terms and conditions as per Commercial Law. The the disputes regarding money transactions in the contract are also commercial in nature. The property mentioned is also a commercial property. Also all the parties are involved in commercial activities and in view of that, there is a dispute as mentioned in Section 2(1)(c) of the Commercial Disputes Act 2015. So first of all on looking at the above clause, it states that ;

“commercial dispute” means a dispute arising out of -

(i) ordinary transactions of Merchant, Bankers, Financiers and Traders such as those relating to mercantile documents, including enforcement and interpretation of such documents :

(ii) agreement relating to immovable property used exclusively in trade or commerce.

The explanation provides that a commercial dispute would otherwise not cease to be commercial dispute merely because action involves recovery of immovable property or realization of money out of immovable property or involve any other relief pertaining to immovable property.

If any ingredients in the sub-clauses in the section are satisfies the dispute would become commercial dispute sub clause (vii) of this definition section says that the commercial dispute means a dispute arising out of agreements relating to immovable property views exclusively.

In Ambalal Sarabhai Enterprises Limited the Supreme Court held that the dispute to be commercial dispute under sec. 21(1)(c)(vii) the agreement between the parties must refer to immovable property used or being used exclusively in trade and commerce. It was held that the word used in the section was indicative of the requirement that the property is actually used and it cannot be either ready for use or likely to be used or to be used”

In the present case, the Plaintiff has filed the present suit to seek specific enforcement of the Contract and to seek permanent injunction.

- The Plaintiff Mira Education is an educational institution which is registered as Trust.

- The Plaintiff has executed a Service Agreement with the Opponent no. 4 on 23/12/2008. According to which, the Plaintiff has obtained rights to use the name of ‘The Tree House’ as well as to use its educational resources as well as its working method (procedure) mentioned therein.

- The disputed place was of the ownership of opp. no. 4, and it was kept on rent by the Plaintiff for the period of 33 years to run Tree House and the said Rent Agreement was executed on 02/04/2014. The monthly rent of Rs. 1,50,000/- was to be paid for the same.

At present total 1950 students are studying in the said School which was kept on rent for the period of 33 years and the Original Rent Agreement done with the Oppo. no. 4 was canceled on 28/02/2023.

- As mentioned by the Plaintiff, if Oppo. no. 4 sells the property to Oppo. no. 5, then the Plaintiff had shown willingness to pay the rent of Rs. 30,00,000/ and it was decided to draft a new Rent Agreement for the period of 27 years.

- An Agreement to Sale was executed between Oppo. no. 4 and Oppo. no. 2 on 15/07/2022.

- As stated by the Plaintiff, the payments were done to the Oppo.

no. 2 as follows ; Rs. 50,00,000/- on 14/07/2022 and Rs. 50,00,000/- on 31/10/2022. Oppo. no. 2 had returned the said deposit to the Plaintiff on 14/02/2023. Oppo. no. 1 had purchased the disputed matter from Oppo. no. 4 vide Registered Sale Deed, but as stated by the Plaintiff, the opponents have not done any Rent Agreement with him (the Plaintiff). However, as the disputed place was a School, as stated by the Plaintiff a school is running at that place.

- As stated by the Plaintiff, according to the conditions of the Rent Agreement, the below mentioned amounts have been paid to Oppo. no. 1, which are as follows ;

Rs. 1,00,00,000/- - as Security Deposit.

Rs. 32,40,000/- and Rs. 5,00,000/- as Rent.

Hence, the Plaintiff has filed present suit to get the Declaration as well as Stay Order with a prayer that Opponents shall execute the Rent Agreement in his favor (of the Plaintiff) as per the stipulated terms.

Oppo. no. 1 to 3 has represented that, also according to section

8 of Arbitration and Conciliation Act, the present Court does not have Jurisdiction to conduct hearing of the present suit. Also it is further stated that if on considering the Service Agreement dtd. 23/12/2008 of the Plaintiff, then according to the said Agreement also, it has been clearly revealed that the said Agreement is of commercial nature and it was decided by the Plaintiff and Oppo. no. 4 to execute the Contract on the basis of professional understanding between them. Also as the specific condition for arbitration have been decided in condition no.14.6 of the Contract as well as the present Plaintiff had drafted the Lease Deed through his Advocate which was executed with the Oppo. Nos. 1 to 3 in which the Clause of Arbitration as well as Jurisdiction were decided in condition no. 14 also. As the present Court does not have jurisdiction to run the trial of Plaintiff, hence it is urged to return (transfer) the said suit in the Court having its jurisdiction.

In that reference, it is important to consider Section-8 of Arbitration and Conciliation Act.

Power to refer parties to arbitration where there is an arbitration agreement. :—

A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.

(2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof:

(3) Notwithstanding that an application has been made under sub-section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.

Now, in that reference, if on considering the representations of Oppo. Nos. 1 to 3, there was the clause of Arbitration in the Contract which was executed between Plaintiff and Oppo. no. 4, but that Contract has been canceled on 28/02/2023. Whereas, no signature of any of the parties are there in the draft which have been produced by the Plaintiff, which could not be said as Contract. In these conditions also the said suit is not liable to be returned.

As stated by the Opponents, the said suit is related to the immovable property, only the Commercial Court has jurisdiction to run its trial. But, the present Court does not agrees with the argument of the aforesaid argument of the advocate of opponent. But, on looking to the authority of the Commercial Court, agreement relating to immovable property used exclusively in trade and commerce.

Looking to the facts of the present case, the Plaintiff is an educational institution, which is working for the development of education and for which the Plaintiff had kept (the said property) on lease of 33 years on contract with oppo. no. 4. The said Contract have been canceled on 28/02/2023. According to the dispute which took place between the Plaintiff and the Opponents, the Plaintiff has filed the present suit for not interfering in the possession of Plaintiff, to execute the Rent Agreement and to get Permanent Injunction (Stay) Order. Hence it is not possible to include all the suits related to immovable property in Commercial Court. Thus, as the only authority to run the trial of said suit is lying with the Civil court, hence, the application of the Opponent to transfer the said suit in Commercial Court is not liable to be permitted. Below mentioned Order is passed under the application of the Opponent.