Disputes related to properties used exclusively for educational purposes do not fall under the definition of 'commercial disputes' as per the Commercial Courts Act, requiring strict statutory interpretation.

ORDER

The petitioners are the defendants in Commercial O.S. No. 814/2022 on the file of the LXXXV Additional City Civil and Sessions Judge, Bengaluru – a designated Commercial Court under the provisions of the Commercial Courts Act, 2015 [for short, ‘the Commercial Court]. The petitioners have impugned the Commercial Court’s order dated 30.07.2022, and the Commercial Court by this order has rejected the petitioners’ application under Order VII Rule 10 of the Code of Civil Procedure [for short, ‘the CPC’].

2. The respondent’s suit in Commercial O.S. No.814/2022 is for the petitioners’ ejectment from the immovable property bearing BBMP Khata No. 78/4/1, BBMP Ward No.23, HBR Layout, Nagavara, Bangalore-560045 comprising of Stilt, Ground and three Upper floors [for short, ‘the subject property’] and for directions to the petitioners to pay Rs.12,31,185/- and Rs.6,34,86,974/- as alleged rental arrears and liquidated damages respectively. The third petitioner has filed the subject application under Order VII Rule 10 of CPC essentially asserting that the Commercial Court will not have jurisdiction to entertain the suit because the dispute between the respondent and the petitioners would not be a ‘commercial dispute’ as contemplated under Section 2 (1)(c)(vii) of the Commercial Courts Act, 2015 [for short, ‘the Commercial Court’s Act’]

3. The third petitioner has asserted, relying upon the provisions of Section 2 (1)(c)(vii) of the Commercial Courts Act, that a dispute to be a ‘commercial dispute’ will have to be a dispute in relation to an agreement pertaining to an immovable property which is used exclusively for trade or commerce. However the present dispute is between the petitioners and the respondent who are parties to the Lease Deed Dated 01.01.2020, and the subject property is demised under this lease deed to be used exclusively for educational purposes [i.e., for the purposes of running a School]. As the Lease Deed is an agreement relating to an immovable property that is utilized for running an educational institution [a School] it cannot be construed as an agreement relating to immovable property that is exclusively used for the purposes of either trade or commerce and therefore, the dispute is not a ‘commercial dispute’.

4. The respondent has resisted this application contending that there is suppression of facts. The respondent contends that the value of the transaction between the petitioners and the respondent exceeds Rs. 1 [one] crore - the threshold mentioned in Section 6 of the Commercial Courts Act, and a deeper scrutiny of the circumstances would establish the commercial nature of the transaction between them. The respondent has also contended that the dispute is in the context of the landlord- tenancy relationship with the petitioners, and the suit, which is filed after issuance of notice under Section 106 of the Transfer of Property Act, 1882 , in the circumstances of the case, will be maintainable before the Commercial Court.

5. The facts leading to the present commercial suit stated in brief would be that the first petitioner is constituted as a Public Charitable Trust under the Trust Deed dated 31.10.2014. The author of this Trust [the first petitioner - the third defendant in the commercial Suit] is Mr. R.R. Acharya, and he along with Mr. K.A. Poonacha is also appointed as one of