(Prayer: This commercial appeal/Comap is filed under Section 13 (1A) of the Commercial Courts Act, 2015 read with order XLIII Rule 1 (a) of the code of civil procedure, 1908 praying to set-aside the impugned order 02.08.2024 passed by the learned lxxxvii addl. city civil and sessions judge (exclusively dedicated commercial court) at Bengaluru (cch-88) in com. O.S. no.1171/2023 on i.a. no. 4 (annexure a). consequently, dismiss I.A. no. 4 filed in com. O.S. no.1171/2023. & etc.)

Cav Judgment:

Vijaykumar A. Patil, J.

1. This appeal is filed by the appellant/plaintiff under Section 13(1-A) of the Commercial Courts Act, 2015 (for short 'the Act') read with Order XLIII Rule 1(a) of the Code of Civil Procedure, 1908 (for short 'CPC') challenging the order dated 02.08.2024 passed on I.A.No.4 in Com.O.S.No.1171/2023 by the LXXXVII Additional City Civil and Sessions Judge (Exclusively Dedicated Commercial Court) at Bengaluru (CCH-88) (for short 'Commercial Court').

2. Sri.R.V.S.Naik, learned Senior counsel appearing for the appellant submits that the Trial Court has rightly held that the nature of premises as per the Memorandum of Understanding (for short 'MoU') is termed as the 'commercial premises' with exclusive statement that the premises is sought to be used for apparel business. However, the Trial Court proceeded to hold that the dispute cannot be classified as a commercial dispute as the premises were sought to be used but not 'already in use'. It is submitted that the MoU makes it clear on many accounts that the premises were sought to be used for trade and commerce and that the property is a commercial property, which has not been rightly appreciated by the Commercial Court. It is further submitted that the premises in question was already in use for commercial purpose. However, the Commercial Court, merely on the ground that the subject premises were not in actual use by the parties to the suit, proceeded to interpret Section 2(1)(c)Vii of the Act in an incorrect manner contrary to the object of the Act. It is also submitted that the Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED V K.S.INFRASPACE LLP AND ANOTHER ((2020) 15 SCC 585) has held that the plaint averments are required to be looked into to decide the jurisdiction of the Commercial Court. However, the Commercial Court, under the impugned order, in a cryptic manner has proceeded to hold that the suit filed by the appellant is not a commercial suit and ordered to return the plaint. Hence, he seeks to allow the appeal and consequently dismiss I.A.No.4.

3. Sri.H.S.Dwarakanath, learning counsel appearing for Sri.Sudhakar G.V, learned counsel for the respondent Nos.1 to 3 supports the decision of the Commercial Court and submits that the Commercial Court has rightly appreciated the law on the point and proceeded to allow I.A.No.4. It is submitted that the Commercial Court has rightly held that the law laid down by the Hon'ble Supreme Court makes it clear that in order to consider an immovable property under a commercial dispute, the said premises must already be in use for the purposes of trade/commerce and not 'ready to be used' or 'sought to be used'. In support of his contentions he places reliance on the decision of the Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED referred supra. He further places reliance on the decision of this Court in the case MRS.GEETA PETER KHUBANI Vs. M/s. MAXWORTH REALTY INDIA LIMITED AND OTHERS (Com.AP.No.188/2021 dt. 04.10.2023) . Hence, he seeks to dismiss the appeal.

4. We have heard the arguments of the learned counsel appearing for the appellant, the learned counsel appearing for the respondents Nos.1 to 3, perused the material available on record and have given our anxious consideration to the submissions advanced, judgments relied and the material on record.

5. The point that arises for our consideration in this appeal is:

                  "Whether the order dated 02.08.2024 passed by the Commercial Court on I.A.No.4 in Com.O.S.No.1171/2023 seeks an interference?"

6. On perusal of the plaint, it is averred that the respondents Nos.1 to 3 are the owners of the Schedule 'A' property and Schedule 'B' property, which is a three storeyed building situated at 4th Block, East Jayanagara. The appellant, with an intention to open a retail store got into a MoU dated 05.08.2022 with the respondents Nos.1 to 3 seeking to execute a lease agreement in favour of the appellant with regard to Schedule 'A' property. However, the respondents Nos.1 to 3 did not execute the lease agreement in favour of the appellant and instead executed another lease agreement dated 24.08.2023 with regard to the Schedule 'B' property in favour of the respondent Nos.4 and 5. Being aggrieved by the same, the appellant filed Com.O.S.No.1171/2023 seeking a declaration that the lease agreement dated 24.08.2023 in respect of the Schedule 'B' property is not binding on the plaintiff and also sought for the specific performance of the lease agreement by the respondent Nos.1 to 3 as per the terms of the MoU dated 05.08.2022.

7. In this suit, the respondent No.3 filed I.A.No.4 under Order VII Rule 10 of the CPC seeking to return the plaint on the ground that the dispute in question is civil in nature and does not fall under the ambit of a commercial dispute as the per the Act. The Commercial Court, after considering the material on record proceeded to allow I.A.No.4 and ordered for return of the plaint on the ground that the dispute cannot be classified as a commercial dispute as per the provisions of the Act.

8. The Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED referred supra, at paragraphs 36, 37, 39 and 42 held as under:

                  "36. A perusal of the Statement of Objects and Reasons of the Commercial Courts Act, 2015 and the various amendments to the Civil Procedure Code and insertion of new rules to the Code applicable to suits of commercial disputes show that it has been enacted for the purpose of providing an early disposal of high value commercial disputes. A purposive interpretation of the Statement of Objects and Reasons and various amendments to the Civil Procedure Code leaves no room for doubt that the provisions of the Act require to be strictly construed. If the provisions are given a liberal interpretation, the object behind constitution of Commercial Division of Courts viz. putting the matter on fast track and speedy resolution of commercial disputes, will be defeated. If we take a closer look at the Statement of Objects and Reasons, words such as “early” and “speedy” have been incorporated and reiterated. The object shall be fulfilled only if the provisions of the Act are interpreted in a narrow sense and not hampered by the usual procedural delays plaguing our traditional legal system.

                  37. A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2(1)(c) of the Act viz. “the agreements relating to immovable property used exclusively in trade or commerce”. The words “used exclusively in trade or commerce” are to be interpreted purposefully. The word “used” denotes “actually used” and it cannot be either “ready for use” or “likely to be used” or “to be used”. It should be “actually used”. Such a wide interpretation would defeat the objects of the Act and the fast tracking procedure discussed above.

                  39. It appears that the trial court has proceeded under the footing that the parties to the suit more particularly, the appellant-plaintiff seems to be carrying on business as estate agent and to manage land, building, etc. and the very object as enumerated in Memorandum and Articles of Association of the appellant-plaintiff company established that the property in question is being used exclusively in trade or commerce rather in the business of the plaintiff. As rightly pointed out by the High Court, there is nothing on record to show that at the time when agreement to sell came to be executed in 2012, the property was being exclusively used in trade and commerce so as to bring dispute within the ambit of sub-clause (vii) of Section 2(1)(c) of the Act. Merely because, the property is likely to be used in relation to trade and commerce, the same cannot be the ground to attract the jurisdiction of the Commercial Court.

                  42. The object and purpose of the establishment of Commercial Courts, Commercial Divisions and Commercial Appellate Divisions of the High Court is to ensure that the cases involved in commercial disputes are disposed of expeditiously, fairly and at reasonable cost to the litigants. Keeping in view the object and purpose of the establishment of the Commercial Courts and fast tracking procedure provided under the Act, the statutory provisions of the Act and the words incorporated thereon are to be meaningfully interpreted for quick disposal of commercial litigations so as to benefit the litigants especially those who are engaged in trade and commerce which in turn will further economic growth of the country. On the above reasonings, I agree with the conclusion arrived at by my esteemed Brother A.S. Bopanna, J."

                  (Emphasis supplied)

9. In the aforesaid decision, considering the object of the Act, the Hon'ble Supreme Court held that the nature of the dispute and the jurisdiction to try the said dispute has to be found out from the pleading and thereby record a finding with regard to the jurisdiction as to whether the dispute involved is a commercial dispute or not. Section 2(c) defines 'commercial dispute' as follows:

                  "2(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;

                  (ii) export or import of merchandise or services;

                  (iii) issues relating to admiralty and maritime law;

                  (iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;

                  (v) carriage of goods;

                  (vi) construction andinfrastructurecontracts, including tenders;

                  (vii) agreements relating to immovable      property used exclusively in trade or commerce;

                  (viii) franchising agreements;

                  (ix) distribution and licensing agreements;

                  (x) management and consultancy agreements;

                  (xi) joint venture agreements;

                  (xii) shareholders agreements

                  (xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;

                  (xiv)   mercantile agency and mercantile usage;

                  (xv) partnership agreements; (xvi) technology development agreements;

                  (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;

                  (xviii) agreements for sale of goods or provision of services;

                  (xix)   exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;

                  (xx)    insurance and re-insurance;

                  (xxi)   contracts of agency relating to any of the above; and

                  (xxii)   such other commercial disputes as may be notified by the Central Government."

10. The case on hand is required to be examined by considering Section 2(1)(c)(vii) of the Act. The appellant filed a suit for a declaration that the lease agreement dated 24.08.2023 in respect of Schedule 'B' property is not binding on it, sought a direction to the respondent Nos.1 to 3 by way of specific performance to execute a registered lease deed in favour of the appellant in respect of Schedule 'A' property in terms of the MoU dated 05.08.2022 and consequently, to direct the respondents to handover the possession of Schedule 'A' property to the appellant/plaintiff. The appellant also sought alternative prayers for damages and for refund of the deposit amount with interest. The scope of the plaint clearly indicates that the appellant is seeking to enforce the MoU dated 05.08.2022 insofar as Schedule 'A' property is concerned by way of specific performance. The pleading in the plaint and the prayer sought makes it clear that the schedule property is a commercial property wherein the respondent agreed to let the said premises for commercial use of the appellant. The material on record further makes it clear that as on the date of presentation of the plaint, though the schedule property was a commercial property, it was not in use by the parties to the suit. The Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED referred supra, clearly held that the dispute relating to immovable property per se cannot be a commercial dispute. However, it will become a commercial dispute only if the dispute falls within sub- clause (vii) of Section 2(1)(c) of the Act. The word 'used' exclusively in trade and commerce is to be interpreted purposefully and the word 'used' denotes 'actually used' and it cannot be 'ready for use', 'likely to be used' or 'to be used'.

11.    This Court has also noticed the decisions of the Delhi High court in the case of JAGMOHAN BEHL Vs. STATE BANK OF INDORE (2017 SCC Online Del 10706) , wherein it was held as under:

                  "11. Clause (c) defines the “commercial dispute” in the Act to mean a dispute arising out of different sub-clauses. The expression “arising out of” in the context of clause (vii) refers to an agreement in relation to an immoveable property. The expressions “arising out of” and “in relation to immoveable property” have to be given their natural and general contours. These are wide and expansive expressions and are not to be given a narrow and restricted meaning. The expressions would include all matters relating to all agreements in connection with immoveable properties. The immoveable property should form the dominant purpose of the agreement out of which the dispute arises. There is another significant stipulation in clause (vii) relating to immoveable property, i.e., the property should be used exclusively in trade or commerce. The natural and grammatical meaning of clause (vii) is that all disputes arising out of agreements relating to immoveable property when the immoveable property is exclusively used for trade and commerce would qualify as a commercial dispute. The immoveable property must be used exclusively for trade or business and it is not material whether renting of immoveable property was the trade or business activity carried on by the landlord. Use of the property as for trade and business is determinative. Properties which are not exclusively used for trade or commerce would be excluded.

12. The Andhra Pradesh High Court in the case of MAHABALESHWARAPPA AND SONS, BELLARY AND ORS Vs. COMMISSIONER OF LAND REVENUE, GOVERNMENT OF ANDHRA PRADESH, HYDERABAD AND OTHERS (MANU/AP/0014/1997) , has held as under:

                  "12. Applying the above principle laid down in different decisions to the facts of the present case, the word 'used' has to be interpreted to connote a wider meaning. If that interpretation is adopted, non-agricultural lands not only 'actually used' but are 'meant to be used' or 'set apart for being used' are also liable for assessment under the Act.

                  21. The Motor Vehicles Taxation Act levies taxes on motor vehicles, whereas the NALA Act determines assessment on non-agricultural lands. Both the Acts are different and one cannot be compared with the other. While enacting the Motor Vehicles Taxation Act, the Legislature probably wanted to have the provision clearly explained for proper understanding. For that reason, it is not obligatory to interpret the word 'used' occurring in Section 3 of the NALA Act by taking the said analogy in order to give it a restricted meaning. The Legislature has intended the word 'used' to 'meant to be used' or 'set apart for being used' does not suffer from any infirmity or illegality and is well in consonance with the intendment of the Legislature. Therefore, we see no grounds to take a different view from the one expressed by the Full Bench."

13. The High Court of Gujarat in the case of M/s. KUSHAL LIMITED THROUGH AUTO SIGN AND MANAGING DIRECTOR MR. YOGEST GHANSHYAMBHAI PATEL Vs. M/s. TIRUMALA TECHNOCAST PRIVATE LIMITED (Special Civil Application No. 3572 of 2022 dtd 10.06.2022) , held as under:

                  "5.2 Whether the test in Section 2 (1) (c) (vii) is satisfied or not may be appreciated from the averments in the plaint. From the para 3 quoted above, it would be seen that the plaintiff has in term stated that the defendant was using the suit property 'as warehouse for its business'. Therefore, it is a clear case and admission on part of the plaintiff that the property was been used for business purpose and it was a warehouse. Similarly, it was stated in para 4 that 'since the present defendant herein is using the suit property for its warehouse, the defendant herein had urged the plaintiff to take the suit property on Leave and Licence basis.'

                  5.2.1 In para 12 (a) of the plaint it was stated that the property was purchased by the plaintiff by registered sale deed from the defendant and that the defendant was using the property as warehouse for its business activities. There appears yet another averment in para 12 (b) that the Leave and Licence Agreement may be executed to enable the defendant to locate new property for its business activities. In other words, prior to and on the date of institution of the suit, the suit property was exclusively used in trade or commerce, for which there was no gainsaying.

6. In Ambalal Sarabhai Enterprises Limited (supra) the Supreme Court held that the dispute to be a commercial dspute under Section 2(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'.

                  6.1     The test that the property is actually used for trade or commerce and for business purpose as warehouse, is satisfied in the present case. As mentioned above, even on the date of institution of the suit and thereafter the property was used as warehouse.

                  6.2 In Gujarat State Warehousing Corporation Vs. Divine Developers being Special Civil Application No. 9705 of 2019 decided on 24.12.2020 wherein the facts were that the suit was instituted by plaintiff for recovery of damages. The case was that the property comprising of four godowns were given to the defendant for the purpose of storing the groundnut and that the rentals were not paid. The suit was instituted in the commercial court, pursuant to which, application under Order VII Rule 11 was filed by the defendant to contend that the letting of the godown by the plaintiff to the defendant would not make the commercial dispute and the suit was not maintainable as commercial suit. This court negatived the contention.

                  6.2.1   Decision of the Supreme Court in Ambalal Sarabhai Enterprises Limited (supra) was relied on by Gujarat State Warehousing Corporation (supra). What was observed and held was as under, "Dispute arising out of agreement whereby godwon was leased on rent for the purpose of storage of goods could well be said to be falling within the clause of agreements relating to immovable property used exclusively in trade and commerce. When the godown owned by the plaintiffs was rented by the defendant on a fixed rent, and the suit claim and relief sought for pertained to damages arising out of suc subject transaction, the dispute arising therefrom becomes a 'commercial dispute' within the meaning of the Section 2(1)(c) of the Act"

                  6.3     The acid test is that the property is used exclusively in trade or commerce. Dispute arising out of agreements relating to property used exclusively in trade and commerce would constitute a commercial dispute. The grounds raised in the plaint support of the relief prayed could not be said to be germane in concluding and deciding whether the dispute unfolded is commercial dispute. Nor the prayers made are decisive. The commercial court below is entirely right, a elaborated above, that the material ingredients of 'commercial dispute' in the Section are satisfied in the facts of the present case. The suit before the commercial court would be competent when there exists a commercial dispute."

14. In the aforesaid decisions, different High Courts have interpreted the word 'used' found in Section 2(1)(c)(vii). The decision of the Delhi High Court and the Andhra Pradesh High Court is prior to the decision of the Hon'ble Supreme Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED referred supra. The decision of the Gujarat High Court is subsequent to the decision of the Hon'ble Supreme Court in AMBALAL SARABHAI ENTERPRISES LIMITED referred supra.

15. The Gujarat High Court clearly found in the facts of that case that prior to and on the date of the suit, the property was being used exclusively in trade and commerce and that the license deed was executed for taking the said property as a warehouse for its business. In the instant case, as on the date of the agreement between the parties, there is no such averment and the contract in question is a simple lease deed without stating the purpose of the lease.

16. We notice that different High Courts have interpreted and had referred to the said decision as well.

17. In the instant case, we notice that the plaint specifically states that the plaintiff has multiple retail stores all over India and was desirous of setting up its retail store in Jayanagar, Bengaluru. It was further stated that defendants No.1 to 3 owned the commercial property in 11th Main Road, Jayanagar and the MOU was entered into for the purpose of taking the Schedule Property out on lease for the said commercial purpose of conduct of retail business of the plaintiff. The term sheet or the MOU dated 05.08.2022 specifically refers to the property as commercial premises, measuring approximately 15,400 square feet of built-up area in the building 'NAPA PRIME' consisting of basement, ground plus 3 floors. The terms of minimum guarantee rent/revenue share would also show that apart from the minimum guaranteed rent, revenue share of 9% of annual net sales, if higher, would be the rent for the premises. The respondent does not deny the contention that the premises in question are commercial in nature or that the purpose of the MOU was for leasing out of the premises for conduct of a retail store.

18. In the above factual situation, we are of the opinion that the instant case is the one where the agreements entered into between the parties falls squarely within the definition of a 'Commercial Dispute', since the agreement in question is an agreement relating to immovable property used exclusively in trade or commerce. There is no contention raised that the property is used for any other purpose.

19. In the above view of the matter, we are of the opinion that this is specifically a case, which falls within the object and purpose of establishment of Commercial Courts and is required to be dealt with under the provisions of the said Act, which provides timelines for disposing of such matters.

20. In the above circumstances, we are of the opinion that the order passed by the Commercial Court cannot be sustained. The same is accordingly set aside. The Commercial Court is directed to restore the suit, consider and dispose of the same in accordance with law.

21. Consequently, the appeal is allowed.