Civil courts retain jurisdiction over commercial disputes unless expressly barred by law; suits should be returned for proper presentation rather than rejected outright.

JUDGMENT

Dated this the 29^th day of January, 2025 When a suit arising out of a commercial dispute is filed before a civil court, should the same be rejected under Order 7 Rule 11 (d) of the Code of Civil Procedure, 1908 (C.P.C.) or should the plaint be returned for proper presentation under Order 7 Rule 10 is the short but important question that comes up for consideration in this F.A.O.

2. This F.A.O. is filed challenging the order dated 25.03.2024 in I.A No.17 of 2024 in OS No.441 of 2023 of the Additional Sub Court, Thrissur.

3. Appellants were defendants 1 and 2 in the O.S. Respondents herein were the plaintiffs and defendants 3 to 13 in the suit. (Parties are referred to hereinafter as per their status in the suit). The suit was filed by the plaintiffs st seeking declaration and realisation of money. The 1 plaintiff is a Private Limited Company engaged in the business of granite quarrying and processing. The 2^nd plaintiff is its Managing Director and the other plaintiffs are its directors. It is contended that, by virtue of an oral agreement, defendants 2 st and 3 agreed to transfer the equity shares of the 1 defendant st Company to the 1 plaintiff Company for an amount of Rs.15 Crores. Accordingly, an amount of Rs.7,10,00,000/- was st transferred through the overdraft account of 1 plaintiff Company at South Indian Bank, Thrissur and Rs.9,10,00,000/- through the current account of the 1^st plaintiff Company at South Indian Bank, Mudappallor Branch in favour of the 2^nd defendant. A separate oral agreement was entered by the plaintiff and defendants 2, 3, 5 and 9 who are the shareholders of a limited liability partnership firm called KNRC LLP to transfer st their shares to the plaintiff Company and the 1 plaintiff Company paid Rs.4,40,00,000/- to the shareholders. Even after several requests, defendants allegedly failed to transfer the equity shares of the 1^st defendant Company and the shares of the LLP. They hence ought to have paid back the amount received from the 1^st plaintiff Company with interest and profit. The suit was thus filed to declare that defendants 1 to 13 are the trustees of the funds transferred from the owners of the 1^st plaintiff Company to the account of the 2^nd defendant who is the Managing Director of the 1^st defendant Company towards the value of the concerned equity shares and also for realisation of a sum of Rs.9,10,00,000/- (Rupees Nine Crores Ten Lakhs only).

4. A written statement was filed by defendants 1 and 2 inter alia contending that the suit is barred by Section 6 of the Commercial Courts Act 2015, (hereinafter referred to as “the Act of 2015”) as the transfer of shares of a Private Limited Company comes under the purview of sale of goods defined under the Sale of Goods Act and under Section 2 (1) (c) (XVIII) of the Act of 2015.

5. The Sub Court considered maintainability as the preliminary issue and vide judgment dated 08.02.2024 rejected the suit under Order 7 Rule 11 (d) of the C.P.C., finding that the same cannot be entertained by virtue of Section 6 of the Act of 2015. The plaintiffs then filed I.A.No.17 of 2024 seeking to review the said judgment stating that there is an error apparent as the suit ought to have been returned to the plaintiff for proper presentation before the concerned commercial court and ought not to have been rejected. After hearing the parties and considering the objections filed by defendants 1 and 2, the Sub Court allowed the review petition and reviewed the judgment rendered earlier and directed that the plaint shall be returned to the plaintiff under Order 7 Rule 10 of the C.P.C. to be presented before the proper court. The defendants 1 and 2 have filed this F.A.O. challenging the said order reviewing the judgment.

6. Heard Sri.S.Sreedev, Advocate, appearing for defen