(Prayer: Petition under Article 227 of the Constitution of India,praying that in the circumstances stated in the grounds filed herein,the High Court may be pleased topleased to allow the Petition by setting aside the order and decreetal of the XIII Additional District and Sessions Judge, at Vijayawada passed in lA.No. 373/2024 in O.S.No. 191 of 2011 dated 01-08-2024 and pass
IA NO: 1 OF 2024
Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased pleased to stay all further proceedings in O.S.No. 191 of 2011 passed by Court of the XIII Addl. District Judge, Krishna District, at Vijayawada, pending disposal of the CRP and pass)
1) This civil revision petition is filed by the petitioner/defendant No.3 under Article 227 of the Constitution of India challenging the order date 01.08.2024 passed in I.A.No.373 of 2024 in O.S.No.191 of 2011 by the XIII Additional District and Sessions Judge, Vijayawada, whereby, the Trial Court dismissed the said interlocutory application filed under Section 15 (2) of Commercial Courts Act, 2015 read with Section 151 of Code of Civil Procedure (for short ―C.P.C.‖) to transfer O.S.No.191 of 2011 to the Special Court constituted under the Commercial Courts Act at Vijayawada.
2) For the sake of convenience, the parties to the revision will hereinafter be referred as plaintiffs and defendants, as arrayed before the Trial Court in I.A.No.373 of 2024 in O.S.No.191 of 2011.
3) Originally, respondent No.1-plaintiff filed suit O.S.No.18 of 2011 on 23.04.2011 in the Court of XI Additional District and Sessions Jude, Gudivada and subsequently the same was transferred to the Court of VII Additional District and Sessions Judge, Vijayawada and renumbered as O.S.No.191 of 2011. The said suit is between respondent No.1- plaintiff – a Real Estate Company by name M/s.Nikhila Constructions and Developers Pvt. Ltd., Vijayawada and the legal heirs of deceased couple Anumolu Nageswara Rao and his wife Anumolu Vijaya Lakshmi represented by defendant Nos.2 and 3. The petitioner herein is defendant No.3 in the suit. The said suit was filed for specific performance of the joint venture development agreements dated 23.04.2008 and 08.08.2008 executed by the deceased couple Anumolu Nageswara Rao and Anumolu Vijaya Lakshmi regarding their land admeasuring Ac.11.05 ¼ cents situated in Manthena Village of Kankipadu Mandal of Krishna District.
4) The said Anumolu Nageswara Rao died intestate on 13.05.2008 in a road accident. Upon his death, his wife Anumolu Vijaya Lakshmi succeeded to all his properties including the suit schedule property. On 30.11.2008, Anumolu Vijaya Lakshmi also died. The cause of action for filing of the said suit arose on 23.04.2008. Though the executants of unregistered joint venture development agreements viz. Anumolu Nageswara Rao and Anumolu Vijaya Lakshmi died in the year 2008, the plaintiff company filed the suit in the year 2011.
5) Pending suit proceedings, the Parliament of India enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015. As the transaction covered by the suit being joint venture agreement relates to development of infrastructure and as per Section 15 (2) of the Commercial Courts Act, O.S.No.191 of 2011 is required to be transferred to Commercial Court constituted under the Commercial Courts Act, the petitioner herein – defendant No.3 filed I.A.No.373 of 2024 seeking transfer of the said suit O.S.No.191 of 2011 to the Special Court constituted under the Commercial Courts Act at Vijayawada.
6) The Court below, after considering the arguments of both the counsel, vide order dated 01.08.2024 dismissed the said interlocutory application filed by the petitioner herein. Aggrieved by the same, the present revision petition is filed by the petitioner – defendant No.3.
7) When the matter listed for hearing, on 01.10.2024 this Court passed the following interim order.
―As the matter requires consideration, the trial Court is directed to proceed up to the stage of arguments but shall not pass any Judgment pending the hearing of the Revision Petition.‖
8) Heard learned counsel for the petitioner – defendant No.3 and learned counsel for the respondent No.1 – plaintiff.
9) Sri O.Manohar Reddy, learned senior counsel appearing for the revision petitioner – defendant No.3 contended that as the agreement dated 23.04.2008 executed by late Anumolu Nageswara Rao and another agreement dated 08.08.2008 executed by his wife late Anumolu Vijayalakshmi as landowners come under Section 2 (1) (C) (XI) of the Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015, the appropriate Court to adjudicate the issue is the commercial Court and not the regular civil Court. Further, under the joint venture agreements, the plaintiff proposed to develop a layout on the suit schedule land of Ac.11.05 cents and agreed to pay 70% of sale proceeds to land owners and retain 30%, which makes it a commercial dispute, as such the suit is purely of commercial in nature. The trial Court having failed to consider the terms and conditions of the agreements in respect of which the dispute arose between the plaintiffs and defendants, dismissed the application filed by the petitioner herein. Further, the Commercial Appellate Court shall dispose of the appeal filed before it within a period of six months from the date of filing such appeal. As the dispute between the parties come under the definition of commercial dispute, the trial Court ought to have transferred the suit to the Commercial Court and requested to allow the revision.
10) Mr.N.Ashwani Kumar, learned counsel for the plaintiff – respondent No.1 contended that the present suit is filed by the plaintiff against the defendants for specific performance of contract and that the plaint schedule property is agricultural land and there is no change in its nature. Further, there is no trade or commercial aspects involved in the transaction relating to the plaint schedule property. Learned counsel for the plaintiff – respondent No.1 supported the order of the trial Court in all respects and contended that as the same was passed after considering the entire material on record, need not be interfered with by this Court, and requested to dismiss the revision.
11) Admittedly, respondent No.1-plaintiff filed suit O.S.No.18 of 2011 on 23.04.2011 in the Court of XI Additional District and Sessions Jude, Gudivada and subsequently the same was transferred to the Court of VII Additional District and Sessions Judge, Vijayawada and renumbered as O.S.No.191 of 2011. The said suit is between respondent No.1- plaintiff – a Real Estate Company by name M/s.Nikhila Constructions and Developers Pvt. Ltd., Vijayawada and the legal heirs of deceased couple Anumolu Nageswara Rao and his wife Anumolu Vijaya Lakshmi represented by defendant Nos.2 and 3. The petitioner herein is defendant No.3 in the suit. The said suit was filed for specific performance of the joint venture development agreements dated 23.04.2008 and 08.08.2008 executed by the deceased couple Anumolu Nageswara Rao and Anumolu Vijaya Lakshmi regarding their land admeasuring Ac.11.05 ¼ cents situated in Manthena Village of Kankipadu Mandal of Krishna District. The said Anumolu Nageswara Rao died intestate on 13.05.2008 in a road accident. Upon his death, his wife Anumolu Vijaya Lakshmi succeeded to all his properties including the suit schedule property. On 30.11.2008, Anumolu Vijaya Lakshmi also died. The cause of action for filing of the said suit arose on 23.04.2008. Though the executants of unregistered joint venture development agreements viz. Anumolu Nageswara Rao and Anumolu Vijaya Lakshmi died in the year 2008, the plaintiff company filed the suit in the year 2011.
12) Pending suit proceedings, the Parliament of India enacted the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (for short ―Commercial Courts Act‖)
13) Before going into the merits of the case, for better appreciation of the case, this Court feels it appropriate to refer to some provisions in the Commercial Courts Act.
14) Section 2 (c) of the Act defines ―commercial dispute‖, which is 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 and infrastructure contracts, 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.
Explanation.––A commercial dispute shall not cease to be a commercial dispute merely because—
(a) it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions;
15) Section 2 (xxii) (i) of the Act defines ―specified value‖, which is as follows:
―(i) ―Specified Value‖, in relation to a commercial dispute, shall mean the value of the subject-matter in respect of a suit as determined in accordance with section 12 1[which shall not be less than three lakh rupees] or such higher value, as may be notified by the Central Government.‖
16) Section 15 of the Commercial Courts Act deals with ―Transfer of pending cases‖, which is as follows:
15. Transfer of pending cases.—(1) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a commercial dispute of a Specified Value pending in a High Court where a Commercial Division has been constituted, shall be transferred to the Commercial Division.
(2) All suits and applications, including applications under the Arbitration and Conciliation Act, 1996 (26 of 1996), relating to a commercial dispute of a Specified Value pending in any civil court in any district or area in respect of which a Commercial Court has been constituted, shall be transferred to such Commercial Court:
Provided that no suit or application where the final judgment has been reserved by the Court prior to the constitution of the Commercial Division or the Commercial Court shall be transferred either under sub-section (1) or sub-section (2).
17) In the present case, originally, the plaintiff filed a suit for specific performance of contract which was executed by the deceased Anumolu Nageswara Rao and his wife on 23.04.2008 and 08.08.2008 with a specific agreement between both the parties that the plaint schedule property shall be developed into plots out of those plots 30% shall be allocated to the plaintiff and 70% to the owners. Therefore, learned counsel for the petitioner herein contended that the dispute is commercial dispute as it involves trade and business. Therefore, the suit filed by the plaintiff shall be tried by the Commercial Court and in support of his contention he relied on the decision of the High Court for the State of Telangana in
―P.Siva Mohan Reddy Vs. Dr.K.R.K.Reddy(2023 (2) ALT 641 (DB) (TS))‖. In the facts of the said case, on 02.04.2009 the plaintiff and the defendant therein have entered into Joint Venture Agreement and the title assigned to the said agreement is ―Joint Venture Agreement‖, while dealing with the disputes arose between the parties, the High Court for the State of Telangana, relying on the Judgment of the Hon’ble Supreme Court in ―Ambalal Sarabhai Enterprises Ltd. v. KS Infraspace LLP and Ors.( (2020) 15 SCC 585) held as follows:
―24. The terms of agreement disclose that the defendant has identified a land for development for commercial use and estimated investment required to execute the project at Rs.35 crores. Plaintiff agreed to invest Rs.2 crores. He has also undertaken to sell flats constructed as per the terms of agreement. The maximum period of completion of the project was three years. The clauses also talk of sharing of profits. Default clause also envisages payment of IRR @ 18% per annum to plaintiff. Thus, it is not a simple agreement to buy land and put the land to use, but to develop a land identified for the purpose to earn profits.
25. The further contention of learned counsel for defendant that the land was 'not put to use', and that in fact there was no land, therefore the dispute is not a Commercial dispute is stated to be rejected as it has no application to the facts of this case. Putting the land for commercial use is relevant, if Section 2(1)(c)(vii) clause is attracted. Clause (xi) of Section 2(1)(c) governs the case, which does not envisage land being put to use as pre-requisite to make the dispute as commercial dispute. On the contrary, as noticed in the earlier paragraphs, Joint Venture Agreement binds the commercial relationship. At any rate definition clause is open ended and does not impose any restraint or application to specified instances of joint ventures.
26. Further, Court is not venturing into merits of respective claims on scope of their joint venture and obligations flowing there from. These aspects require consideration by the trial Court. Court has only considered whether the dispute raised in the suit is a commercial dispute and whether the Commercial Court has jurisdiction to decide the dispute in the instant suit.
27. On thorough analysis of statutory scheme and precedent decisions, we hold that the Commercial Court has jurisdiction to adjudicate the dispute flowing out of 'joint venture agreement' in the instant suit.‖
18) In ―Ambalal Sarabhai Enterprises Ltd. v. KS Infraspace LLP and Ors.‖ (referred supra), the appellant therein filed the Commercial Civil Suit so as to enforce the execution of a Mortgage Deed. Consequently, the relief of permanent injunction and other related reliefs were sought. The defendant filed application under Order VII Rule 10 of Code of Civil Procedure, 1908 contending that the dispute involved in the case is not a commercial dispute. The Commercial Court while rejecting the application had referred to the Memorandum of Articles of Association of the Appellant company and taking note of the business that they were entitled to undertake had arrived at the conclusion that the Plaintiff seems to be carrying on the business as an estate agent and in that circumstance has further arrived at its conclusion that it was a commercial dispute. The High Court on the other hand had found fault with the manner in which the Commercial Court had rested its consideration on the Memorandum and Articles of Association and had examined the matter in detail to come to a conclusion that the immovable property in the instant case was not being used for trade or commerce. The High Court had accordingly directed the return of the plaint to be presented in an appropriate Court. While dealing with said case, the Hon'ble Supreme Court held as follows:
" 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.
19) In ―Legend Estates Private Limited and Others Vs. P.Srinivas Reddy and Others (C.R.P.Nos.1350, 1357 and 1365 of 2024 dated 30.04.2024)‖, relied on by the learned senior counsel for the petitioner herein, the High Court for the State of Telangana held that the Development Agreement cum General Power of Attorney as well as Supplementary Agreement falls within the scope and ambit of Section 2 (1) (c) of the Commercial Courts Act.
20) Learned counsel for respondent No.1 – plaintiff contended that the subject land is still agricultural land and the same was not actually used for trade or commerce. Further, the development agreement entered between the plaintiff – respondent No.1 and defendants cannot be a joint venture agreement and the conditions of the agreement should be read as a whole.
21) In ―Bunga Daniel Babu Vs. Sri Vasudeva Constructions and Others((2016) 8 SCC 429)‖, relied on by the learned counsel for respondent No.1 – plaintiff, the Apex Court held as follows:
―An agreement between the owner of a land and a builder, for construction of apartments and sale of those apartments so as to share the profits in a particular ratio may be a joint venture, if the agreement discloses an intent that both parties shall exercise joint control over the construction/development and be accountable to each other for their respective acts with reference to the project.‖
22) In ―Abdul Rashid Vs. Bidhan De Sarkar(2025 SCC OnLine Cal 2048)‖, the High Court of Calcutta held as follows:
―The expression "development agreement" has not been defined statutorily. In a sense, it is a catch-all nomenclature which is used to be describe a wide range of agreements which an owner of a property may enter into for development of immovable property. As real estate transactions have grown in complexity, the nature of these agreements has become increasingly intricate. Broadly speaking, (without intending to be exhaustive), development agreements may be of various kinds:
17.1. An agreement may envisage that the owner of the immovable property engages someone to carry out the work of construction on the property for monetary consideration. This is a pure construction contract;
17.2. An agreement by which the owner or a person holding other rights in an immovable property grants rights to a third party to carry on development for a monetary consideration payable by the developer to the other. In such a situation, the owner or right holder may in effect create an interest in the property in favour of the developer for a monetary consideration;
17.3. An agreement where the owner or a person holding any other rights in an immovable property grants rights to another person to carry out development. In consideration, the developer has to hand over a part of the constructed area to the owner. The developer is entitled to deal with the balance of the constructed area. In some situations, a society or similar other association is formed and the land is conveyed or leased to the society or association;
17.4. A development agreement may be entered into in a situation where the immovable property is occupied by tenants or other right holders. In some cases, the property may be encroached upon. The developer may take on the entire responsibility to settle with the occupants and to thereafter carry out construction; and
17.5. An owner may negotiate with a developer to develop a plot of land which is occupied by slum dwellers and which has been declared as a slum. Alternately, there may be old and dilapidated buildings which are occupied by a number of occupants or tenants. The developer may undertake to rehabilitate the occupants or, as the case may be, the slum dwellers and thereafter share the saleable constructed area with the owner.‖
..........
In the present suit as per the Development Agreement entered between the plaintiff and the defendants being the owners of the property allowed the Developer to build, construct and erect a new building after demolishing the existing structure with the liberty to sell and transfer the flats/rooms/car parking space to the intending purchasers with respect to the developer's allocation only. There is no condition with respect to distribution of shares of profit. It is the simple agreement between the parties that the plaintiff being the developer will construct a new building and 50% of the new building is allocated to the developer with the right to sell and 50% will remain with the owners.
24. Considering the above, this Court finds that the Development Agreements entered between the developer and the owners cannot be a Joint Venture agreement and thus the case of the plaintiff is not coming under the purview of any of the clauses of Section 2(1)(c) of the Commercial Courts Act, 2015.
23) The above said judgment rendered by the learned single Judge of the High Court of Calcutta is not a binding precedent, but it has persuasive value. In the present case, the petitioner herein has entered into development agreement with the plaintiff with regard to the suit schedule property with some conditions viz., that the plaintiff shall bear necessary plan expenses for getting the plan sanctioned to divide the property into plots at their own costs through DTCP layout and the owner of the property shall sign the applications for the layout and the plaintiff shall pay the required fees etc., and to get the plan sanctioned from DTCP. Clause (4) of the agreement is very much essential, which is as follows:
―The plot yield (in yards) in the said layout is to be arranged such that 70% (plots) is available to the 1st party and 30% (plots) to the 2nd party as per the contractual conditions established by us‖
24) Except the said clause, there is no other clause which attracts the commercial activity. Therefore, the said development agreements entered between the developer and the owners cannot be said to be Joint Venture agreements.
25) Further, as per Section 2 (c) (vii) of the Commercial Courts Act, 2015, if the subject agreement relating to immovable property used exclusively in trade or commerce, the dispute can be termed as commercial dispute. Section 2 (1) (c) (vii) of the Commercial Courts Act is as follows:
(vii) agreements relating to immovable property used exclusively in trade or commerce;
26) A dispute relating to immovable property per se may not be a commercial dispute. The fact remains that there is no dispute with regard to the status of the property as on the date of the agreement. It is also not in dispute that the land was not being used for commercial purposes as on the date of the agreement. Except clause (4) with regard to sharing of the plots between the plaintiff and owners, there is no other clause to come to a conclusion that it is a commercial transaction. The conditions incorporated in the development agreement would disclose that the agricultural land owned by the owners shall be developed by the plaintiff by obtaining approval for layout from the concerned authorities, thereafter, the plaintiff would be allocated 30% of the plots and 70% of the plots to the owners, which is to be done in future. Therefore, the agreements between the parties cannot be said to be agreements relating to immovable property used exclusively in trade or commerce as on the date of agreements.
27) Under similar circumstances, the High Court of Karnataka at Bengaluru in ―M/s Umrah Developers Vs. M/s J Sons Developers in Commercial Appeal No.186 of 2023 vide Order dated 11.10.2023‖ held that if the subject land was an agricultural land as on the date of the agreement, any dispute that arises pursuant to the said agreement cannot be said to be a commercial dispute.
28) If the dispute falls within any of the clause 2 (c) of the Commercial Courts Act (extracted above), the dispute can be said to be ―commercial dispute‖ for which the Commercial Court would have jurisdiction. Considering section 2 (c) (vii), ―commercial dispute‖ means a dispute arising out of the agreements relating to immovable property used exclusively in trade or commerce. While discussing the scope of Section 2 (c) (vii) of the Commercial Courts Act, the High Court of Gujarat at Ahmedabad in ―Vasu Healthcare Private Limited Vs. Gujarat Akruti TCG Biotch Limited(AIR 2017 Guj 153)‖ held as follows:
―On plain reading of the relevant clause it is clear that the expression ―used‖ must mean ―actually used‖ or ―being used‖. If the intention of the legislature was to expand the scope, in that case the phraseology used would have been different as for example, ―likely to be used‖ or ―to be used‖. The word ―used‖ denotes ―actually used‖ and it cannot be said to be either ―ready for use‖ or ―likely to be used‖ or ―to be used‖.‖
29) The present case squarely falls under the parameters of the said judgment as the subject property was not put to use as on the date of agreements as admitted by both the parties and even as on today, the nature of the property has not been changed from agricultural land to commercial activities. Therefore, the disputes arising out of the development agreements do not fall within the ambit of commercial disputes.
30) In the present case, as stated by the learned counsel, in pursuance of the interim order granted by this Court on 01.10.2024, trial has been completed and arguments were also heard, but the judgment was not pronounced due to pendency of this revision petition. Learned counsel for the petitioner contended that if the case is transferred to Commercial Court, as per Section 14 of the Commercial Courts Act, appeal filed against the judgment or order of the Commercial Court by the aggrieved party would be disposed of by the Commercial Appellate Court within a period of six months from the date of filing of such appeal, but if an appeal is filed before the appellate Court against the decree and judgment of the Civil Court, it would take long time.
31) In ―M/s Umrah Developers Vs. M/s J Sons Developers in Commercial Appeal No.186 of 2023 vide Order dated 11.10.2023‖ the High Court of Karnataka at Bengaluru held that the desire of the litigants to secure early disposal of their disputes though not falling under Section 2 (c) of the Commercial Courts Act would go to clog the system. Mere stipulation of time frame in Commercial Courts Act for disposal of appeal by the Commercial Appellate Court is not a ground to seek transfer of the present case to Commercial Court.
32) Admittedly, as on the date of filing of the suit or on the date of filing of the interlocutory application seeking transfer of the case to the Commercial Court, the subject land was being used for agricultural purpose subject to compliance of certain conditions for future development. The nature of the land even as on today remains as agricultural land, but has not been changed for commercial purpose. Moreover, the same is not ready to use for trade or commerce as on the date of entering into the agreements, therefore, the dispute between the parties would not fall within the ambit of Section 2 (c) of the Commercial Courts Act.
33) In view of the aforesaid discussion, this Court is of the opinion that the Trial Court did commit no error warranting interference of this Court in the order dated 01.08.2024 passed in I.A.No.373 of 2024 in O.S.No.191 of 2011 and the revision is devoid of merits, consequently, the revision is liable to be dismissed.
34) In the result, the Civil Revision Petition is dismissed. However, as the judgment in the suit could not be pronounced due to pendency of this revision, the trial Court is directed to proceed further and dispose of the suit in accordance with law as expeditiously as possible, preferably within a period of 8 weeks from today. No costs.
35) Consequently, miscellaneous applications pending if any, shall also stand dismissed.
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