Dismissed

M/S Hill Land Properties and Developers v. M/S Casa Grande Garden City Builders Private Limited

Karnataka HC14 Mar 2023WP/774/2023

Case brief

AI extract

What is this about?

The High Court dismissed a writ petition challenging a Commercial Court order that refused to entertain a Section 9 Arbitration Act application for lack of jurisdiction, as the underlying agreement concerned immovable property not exclusively used for trade or commerce, following the Supreme Court's interpretation in Ambalal Sarabhai.

What did the court decide?

Petition dismissed; interim protection granted by the Commercial Court not continued.

M/S Hill Land Properties and Developers Vs M/S Casa Grande… — Arbitration | Karnataka HC (2023)

¶1

¶2

WP No. 774 of 2023

¶3

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶4

DATED THIS THE 14^TH DAY OF MARCH, 2023

¶5

BEFORE

¶6

THE HON'BLE MR JUSTICE M.NAGAPRASANNA WRIT PETITION NO. 774 OF 2023 (GM-RES)

¶7

BETWEEN:

¶8

M/S. HILL LAND PROPERTIES AND DEVELOPERS (A PROPRIETORSHIP FIRM) NO. 22/1, MILLER TANK BUND ROAD, KAVERIYAPPA LAYOUT, VASANTHNAGAR, BENGALURU-560 052. REPRESENTED BY ITS PROPRIETOR MR. YOUSUF SHARIFF @ D.BABU

¶9

…PETITIONER (BY SRI REUBEN JACOB, SENIOR COUNSEL FOR SRI YADUPATHI. G., ADVOCATE)

¶10

Digitally signed by PADMAVATHI B K Location: HIGH COURT OF KARNATAKA

¶11

AND:

¶12

M/S. CASA GRANDE GARDEN CITY BUILDERS PRIVATE LIMITED (A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956) SALMA BIZHOUSE, NO.34/1, 3RD FLOOR, T-1 AND T-2, MEANEE AVENUE ROAD ULSOOR ROAD, NEAR ULSOOR LAKE BENGALURU-560 042. REPRESENTED BY ITS DIRECTOR

¶13

¶14

WP No. 774 of 2023

¶15

MR. SATHISH. C. G

¶16

…RESPONDENT

¶17

(BY SRI K.G.RAGHAVAN, SENIOR COUNSEL FOR SRI KARAN JOSEPH., ADVOCATE)

¶18

THIS WRIT PETITION IS FILED UNDER ARTICLE 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE ORDER DATED 09.01.2023 IN COM.A.A.NO.661/2022 PASSED BY THE COURT OF THE 83RD ADDITIONAL CITY CIVIL AND SESSIONS JUDGE AT BENGALURU CITY (COMMERCIAL COURT) (CCH-84) VIDE ANNEXURE-A AND ETC.,

¶19

THIS WRIT PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING:

¶20

ORDER

¶21

The petitioner is before this Court calling in question an order dated 09.01.2023 passed by the Commercial Court in Comm.A.A.No.661 of 2022 rejecting the claim of the petitioner holding that the Commercial Court has no jurisdiction to entertain an application under Section 9 of the Arbitration and Conciliation Act, 1996 (‘Act’ for short).

¶22

¶23

WP No. 774 of 2023

¶24

Heard Sri.Reuben Jacob, learned senior counsel appearing for petitioner and Sri.K.G.Raghavan, learned senior counsel appearing for respondent.

¶25

Brief facts that leads the petitioner to this Court in the subject petition, as borne out from the pleadings, are as follows:

¶26

The petitioner claims to be the absolute owner of land in Sy.No.61 situate at Gottigere village, Uttarahalli Hobli, Bangalore South Taluk measuring 8 acres and 36 guntas. The petitioner and the respondent enter into an agreement of sale of the aforesaid property for a particular consideration and in pursuance of the said agreement, a registered sale deed was executed on 19.07.2021. After the execution of the sale deed, both the parties i.e., the petitioner and the respondent enter into an agreement of deed of transfer of possession on 19.07.2021 on certain agreed terms and another agreement confirming aforesaid executions.

¶27

The dispute between the two arose with regard to certain payment not being made by the respondent in terms of those agreements to the petitioner and the petitioner intended

¶28

¶29

WP No. 774 of 2023

¶30

to invoke the arbitration clause in the agreement for appointment of an Arbitrator to arbitrate the dispute between the two qua the aforesaid money claim. During the pendency of the said position of seeking arbitration of the dispute, petitioner knocks at the doors of the Commercial Court by filing an application under Section 9 of the Arbitration and Conciliation Act, 1996. The Commercial Court grants an ex parte interim order restraining the respondent herein from creating any third party rights in the schedule property.

¶31

The respondent entered appearance and the matter was heard and the hearing of the matter results in the impugned order. The impugned order is, the Court rejecting the claim of the petitioner holding that the Commercial Court had no jurisdiction to entertain the said application. It is this order that drives the petitioner to this Court in the subject petition.

¶32

Learned senior counsel Sri.Reuben Jacob appearing for the petitioner would submit that the Commercial Court should not have rejected the application filed by the petitioner under Section 9 of the Act, as it was a commercial dispute that ought

¶33

¶34

WP No. 774 of 2023

¶35

to have been entertained by the Commercial Court under the Commercial Courts Act. He would place reliance upon the definition of Commercial Dispute in terms of Section 2(1)(c)(vii) of the Act to contend that the agreement between the parties was concerning an immovable property and the immovable property as on date on which Section 9 application was filed was exclusively used for trade and commerce. The respondent without settling the claim of the petitioner, had begun to sell the property and therefore, would contend that the application under Section 9 was maintainable before the Commercial Court and the Commercial Court be directed to consider the matter on its merit.

¶36

On the other hand, the learned senior counsel Sri.K.G.Raghavan would refute the submissions to contend that the present petition is not maintainable, as an appeal is provided under Section 37 of the Arbitration and Conciliation Act, 1996 and therefore, the petition ought not to be entertained.

¶37

Without prejudice to the aforesaid submission, the learned senior counsel for the respondent would take this Court

¶38

¶39

WP No. 774 of 2023

¶40

through the documents appended to the petition with particular reference to the claim of the petitioner under Section 9 of the Act seeking to demonstrate that it was a money claim that was brought before the commercial Court without it being a commercial dispute as obtaining under Section 2(1)(c) of the Act. He would contend that the application before the Commercial Court would indicate that the grievance is with regard to non-payment of money, and it is generated long after signing of the agreement. At the time of signing of the agreement, the schedule property/immovable property was not put to use for trade and commerce and would therefore, submit that the order of the concerned Court i.e., the Commercial Court is in tune with law.

¶41

Both the learned senior counsel representing the petitioner and the respondent would place reliance upon the judgment of the Apex Court in the case of AMBALAL SARABHAI ENTERPRISES LIMITED V. K.S.INFRASPACE

¶42

LLP AND ANOTHER reported in (2020)15 SCC 585, the learned senior counsel for the petitioner takes this Court through certain paragraphs, and the learned senior counsel for

¶43

¶44

WP No. 774 of 2023

¶45

the respondent to some other paragraphs, both to buttress their respective submissions.

¶46

I have given my anxious consideration to the submissions made by the learned senior counsel for the respective parties and have perused the material on record.

¶47

The afore-narrated facts are not in dispute and therefore, they do not require reiteration. The issue between the petitioner and the respondent concerns execution of certain three agreements all on 19.07.2021, one is the registered sale deed of the immovable property being transferred to the name of the respondent for its development and other being the transfer of possession and the third condition/nuances of transfer.

¶48

It is an admitted fact that as on the date of execution of those agreements, the property was not used for trade and commerce. The parties entered into another agreement on the same date, which is a deed of transfer of possession and also drawing up certain conditions with regard to payment of amounts. It is in this agreement, the clause of dispute resolution by arbitration existed. The agreement insofar as the

¶49

¶50

WP No. 774 of 2023

¶51

claim of the petitioner and the settlement of dispute by arbitration reads as follows:

¶52

“…. …. ….

¶53

3. In the event of First Party fails to honor the cheque for Rs.62,67,93,750/- (Rupees Sixty Two Crores Sixty Seven Lakhs Ninety Three Thousand Seven Hundred Fifty Only) paid by way of Cheque bearing No.004055, dated 19/03/2022, drawn on Bank of Baroda, M.G.Road Branch, Bangalore in faour of VENDOR and Rs.30,93,75,000/- (Rupees Thirty Crores Ninety Three Lakhs Seventy Five Thousand Only), vide Cheque bearing No.004056, dated 19/03/2022, drawn at Bank of Baroda, M.G.Road Branch, Bangalore then the Second Party solely at its discretion would be at liberty to exercise all or any of the following action to be taken against the FIRST PARTY.

¶54

(a) Second Party may call upon the FIRST PARTY to execute a Deed to cancel the Sale Deed dated 19/07/2021 by the Second Party.

¶55

(b) Initiate criminal proceedings against the FIRST PARTY and its Directors for criminal breach of trust, cheating and other provisions of Law.

¶56

(c) To attach the Schedule Property for the recovery of the sale consideration or property alongwith interest at the rate of 24% PA from the due date till realization of entire amount.

¶57

4. In the event of any dispute, claim or controversy that may arise in respect of the terms of this Deed, the parties agree to settle such dispute, claim or controversy by holding mutual discussions. In the event that an amicable settlement of the dispute is not arrived at, the parties shall subject such dispute for resolution by arbitration before a single Arbitrator. The rules of such arbitration proceedings shall be in accordance

¶58

¶59

WP No. 774 of 2023

¶60

with the Arbitration and Conciliation Act, 1996, and the place of such Arbitration proceedings shall be in Bangalore and the language of the Arbitration shall be English and Kannada. The decision of such arbitrator shall be final, conclusive and binding upon the Partners.

¶61

SCHEDULE PROPERTY

¶62

ALL THAT PIECE AND PARCEL of undeveloped Residentially converted land bearing Survey No.61 measuring 8 Acre 36 Guntas (Duly converted for residential purposes vide Conversion Order bearing No.VG/PUC/JD/(BST)/CR/38/2007-8, Dated 05/06/2013 issued by Deputy Commissioner, Bangalore Urban District, Bangalore), situated at Gottigere Village, Uttarahalli Hobli, Bengaluru Sourth Taluk, Bangalore District, and bounded on the:

¶63

East by : Land bearing Sy.No.60 and 132; West by : Road connecting from Himagiri Meadows layout and Land bearing Sy.No.43, 44, 45 and 130; North by : Land bearing Sy.No.45 and 60; South by : Road and Remaining Land in Sy.No.61.” (Emphasis added)

¶64

As observed hereinabove, at the time of execution of sale

¶65

deed and the other agreements the property was not put to exclusive use for trade or commerce. Section 2(1)(c) of the Commercial Courts Act defines what is a commercial dispute. Sub-clause (vii) of Section 2(1)(c) is what is germane for

¶66

10 -

¶67

WP No. 774 of 2023

¶68

consideration of the present lis . Section 2(1)(c)(vii) reads as follows:

¶69

“…. …. ….

¶70

(vii) agreements relating to immovable property

¶71

used exclusively in trade or commerce ;”

¶72

Existence of three ingredients is imperative for the Commercial Court to entertain an application before it. There should be an agreement between the parties; the agreement should be of an immovable property; the immovable property for which the agreement is entered into between the parties should be put into use exclusively for trade or commerce. If these three ingredients are satisfied in a transaction between the parties and the dispute arises qua that agreement, it becomes a commercial dispute.

¶73

Whether the transaction between the parties would fit into the definition is what is required to be considered. For such consideration, it is germane to notice the application filed by the petitioner under Section 9 of the Act. The petitioner invokes jurisdiction of the Commercial Court by filing an application under Section 9 of the Act seeking interim

¶74

11 -

¶75

WP No. 774 of 2023

¶76

protection. The averments in the application assumes certain

¶77

significance:

¶78

“…. ….

¶79

….

¶80

4. The Applicant and the Respondent had entered into an arrangement for sale of the schedule property for a sale consideration of Rs.80,00,00,000/- and in pursuance thereof, a registered Sale Deed dated 19-07-2021 was executed by the Applicant in favour of the Respondent, which document was registered as Document No.JAY-1-01748/2021-22 in the office of Sub Register, Jayanagar, Bangalore, in respect of the schedule property for a total sale consideration of Rs.80,00,00,000/- (Rupees Eighty Crores Only.)

¶81

.... …. ….

¶82

12. In terms of the Agreement dated 19-07-2021, the amounts due and payable shall be apportioned first towards the interest amount of 24% per annum and hence out of the payments received as aforesaid, the following amounts have been apportioned towards interest payable and the balance payable is as per the tabulated statement below:

¶83

Dues towards the Sale Deed dated 19-07-2021

¶84

Balance consideration payable	Rs.63,31,25,000/-
Interest at the rate of 24% per annum for 382 days from 19-07- 2021 till 05-08-2022	Rs.15,90,27,123/-
Amount received on 05-08-2022	Rs.62,67,93,750/-
Adjustment/Apportionment towards interest amount from out of Rs.62,67,93,750/-	Rs.62,67,93,750/- (-)

¶85

12 -

¶86

WP No. 774 of 2023

¶87

	Rs.15,90,27,123/-
Balance consideration payable	Rs.46,77,66,627/-
Adjustment /Apportionment towards principal amount from out of Rs.62,67,93,750/-	Rs.63,31,25,000/- (-) Rs.46,77,66,627/-
Balance Principal amount/Sale consideration payable	Rs.16,53,58,373/-
Total balance receivable towards Sale Deed dated 19-07-2021 read with agreement dated 19-07-2021	Rs.16,53,58,373/- plus interest at 24% per annum on the said amount from 05-08-2022 till date of payment.

¶88

Dues towards the Deed of Transfer of Possession

¶89

dated 19-07-2021

¶90

Balance consideration payable	Rs.31,16,74,000/-
Interest at the rate of 24% per annum for 382 days from 19-07- 2021 till 05-08-2022	Rs.7,82,85,677/-
Amount received on 05-08-2022	Rs.26,44,94,000/-
Adjustment/Apportionment towards interest amount from out of Rs.26,44,94,000/-	Rs.26,44,94,000/- (-) Rs.7,82,85,677/-
Balance consideration payable	Rs.18,62,08,322/-
Adjustment /Apportionment towards principal amount from out of Rs.62,67,93,750/-	Rs.31,16,74,000/- (-) Rs.18,62,08,322/-
Balance Principal amount/Sale	Rs.12,54,65,678/-

¶91

13 -

¶92

WP No. 774 of 2023

¶93

consideration payable
Total balance receivable towards Deed of Transfer of Possession	Rs.12,54,65,678/- plus interest at 24%
dated dated 19-07-2021 read with agreement dated 19-07- 2021	per annum on the said amount from 05-08-2022 till date of payment.

¶94

19. It is submitted that the schedule property is a residentially converted land and the respondent has started developing the schedule property and the Applicant has information that without clearing the aforesaid dues, the Respondent is creating third party interest/rights and hence, it is necessary that interim measure of protection of attachment of the schedule property for securing the recovery of he amounts due is required to be passed, as otherwise, the Applicant will create third party interest/rights with respect to the schedule property, which will affect the contractual right of the Applicant to recover the amounts due through attachment of the schedule property, to which the parties have specifically agreed under Clause 3(c) of the Agreement dated 19-07-2021. Copies of RERA project registration certificate, Building Licence and the brochure of Casagrand Hazen Project (that the Respondent is developing in the schedule property) as downloaded from the website of the Respondent [https://www.casagrand.co.in] are produced as DOCUMENT NOS.7, 8 & 9.

¶95

20. It is submitted that in terms of the Agreement dated 1907-2021, in the event the Respondent defaults in payment, the Applicant is at liberty to exercise its rights as provided in Clause 3 of the Agreement dated 19-072021 and Clause-3(c) provides for attachment of the schedule property for recovery of the sale consideration along with interest at the rate of 24% per annum from

¶96

14 -

¶97

WP No. 774 of 2023

¶98

the due date till realization of the entire amount. As Clause (4) of the agreement dated 19-07-2021 provides for settlement of disputes between the parties through arbitration the Applicant is taking steps to appoint arbitrator and in the meantime due to the urgency the Applicant has filed the present Arbitration Application under Section 9 of the Arbitration and Conciliation Act, 1996 seeking for interim measures and as the Respondent is proceedings with the sale of the apartments being constructed in project titled Casagrand Hazen being developed in the schedule property to prospective buyers and such action of the Respondent without clearing the dues of the Applicant will affect the legal recourse specifically agreed between the parties in Clause 3 of the Agreement dated 19-07-2021 especially with reference to clause 3(a) – Cancellation of sale deed dated 19-07-2021 and 3(c) – Attachment of the schedule property for recovery of the amounts due, it is just and necessary that interim measures be granted as otherwise the Applicant will be put to irreparable loss and injury. The Applicant has made out a prima facie case as the parties themselves have agreed for the steps regarding the cancellation of the sale deed dated 19-072021 and also for attachment of the Schedule property for recovery of the balance dues vide Clause 3(a) and 3(c) of the Agreement dated 19-07-2021 and the balance of convenience lies in favour of the Applicant.

¶99

26. The claim before the Arbitral Tribunal would be commercial dispute as defined in the Commercial Courts Act, 2015 of not less than Rupees Thirty Crores and hence this Hon’ble Court has jurisdiction to hear and dispose this matter.

¶100

prayer

¶101

wherefore, it is most respectfully prayed that:

¶102

15 -

¶103

WP No. 774 of 2023

¶104

a. Pending adjudication by the Arbitral Tribunal, this Hon’ble Court be pleased to issue an order of Interim Injunction restraining the Respondent from creating third party rights/interests in respect of the Schedule Property.

¶105

b. Direct the Respondent to furnish security of Rs.31,50,00,000/- [Rupees Thirty One Crores Fifty Lakhs only] towards the value of the possible claims and damages of the Applicant before the Arbitral Tribunal.

¶106

c. To pass such other order/s as this Hon’ble Court deems fit in the facts and circumstances of the case, including the award of costs, in the interest of justice and equity.

¶107

SCHEDULE PROPERTY

¶108

All the piece and parcel of undeveloped Residentially converted land bearing Survey No.61 measuring 8 Acre 36 Guntas ( Duly converted for residential purpose vide Conversion order bearing No.VG/PUC/JD/(BST)/CR/38/2007-08, Dated 05-06-2013 issued by Deputy Commissioner, Bangalore Urban District, Bangalore), situated at Gottigere Village, Uttarahalli Hobli, Bangalore South Taluk, Bangalore District and bounded on the East by Land bearing Sy.No.60 and 132, West by Road connecting from Himagiri Meadows Layout and Land bearing Sy.No.43, 44, 45 & 130, North by Land bearing Sy.No.45 and 60, South by road and Remaining Land in Sy.No.61.”

¶109

(Emphasis added)

¶110

16 -

¶111

WP No. 774 of 2023

¶112

The application was, on the face of it, seeking recovery of amount from the hands of the respondent. The recovery of amount may have arisen on account of the agreement that was entered into between the parties, but it is not for the immovable property being put to exclusive use of trade and commerce. The agreement did draw up certain payments to be made by the respondent, to the petitioner qua the development of the immovable property.

¶113

It is not in dispute that the immovable property which was the subject matter of the agreement was not immediately put into exclusive use for trade or commerce. Therefore, the petitioner has, registered a money claim before the Commercial Court seeking recovery of certain amounts, in term of the agreement ( supra ). Therefore, in the considered view of this Court, the Commercial Court was right in declining to entertain the application on the ground that it had no jurisdiction, after holding that it was not a commercial dispute within Section 2(1)(c)(vii) of the Act.

¶114

Reference being made to the judgment of the Apex Court in the case of AMBALAL SARABHAI ENTERPRISES

¶115

17 -

¶116

WP No. 774 of 2023

¶117

LIMITED V. K.S.INFRASPACE LLP AND ANOTHER¹

¶118

becomes apposite, to consider both the submissions of the learned senior counsel for the petitioner and the learned senior counsel appearing for respondent. The Apex Court has held as follows:

¶119

“…. …. ….

¶120

8. Though such rival contentions are put forth by the learned Senior Advocate on either side, these aspects cannot be dealt with in abstract. Instead the nature of the dispute and the jurisdiction to try the same is to be reflected in the suit itself since in a civil suit the pleadings, namely, averments in the plaint would at the outset be relevant to confer jurisdiction. Hence before adverting to the other aspects it would be necessary to carefully examine the plaint. The plaintiff has in detail referred to the nature of the transaction between the appellant and the respondents herein. In Para 5 thereof the detail of the land bearing R.S. No. 122 corresponding to City Survey Nos. 1101 and 1100/1 having land area of 9207 sq m at Mouje Subhanpura Reg. District, Vadodara is referred. Further the schedule of the property is indicated in Para 6 and reference is made to the Memorandum of Understanding where again the reference is made to the land. It is averred therein that it would be the total responsibility of Respondent 1 herein (Defendant 2 in the suit) to change the land use as well as to pay the amount that may be required for the permission. The amount to be paid as premium is referred and the right of the plaintiff to secure the mortgage deed in view of the terms of the MoU is stated. In the entire plaint there is no reference to the nature of the land or the type of use to which it was being put as on the date of the agreement to

¶121

1 (2020)15 SCC 585

¶122

18 -

¶123

WP No. 774 of 2023

¶124

sell/sale deed/memorandum of understanding or as on the date of the suit.

¶125

13. The learned Senior Advocate for the appellant would however, contend that a strict interpretation as in the case of taxing statutes would not be appropriate in the instant case where the issue relates to jurisdiction. In that regard, the learned Senior Advocate has referred to the Statement of Objects and Reasons with which the Commercial Courts Act, 2015 is enacted so as to provide speedy disposal of high value commercial disputes so as to create the positive image to the investors world about the independent and responsive Indian legal system. Hence, he contends that a purposive interpretation be made. It is contended that a wider purport and meaning is to be assigned while entertaining the suit and considering the dispute to be a commercial dispute. Having taken note of the submission we feel that the very purpose for which the CC Act of 2015 has been enacted would be defeated if every other suit merely because it is filed before the Commercial Court is entertained. This is for the reason that the suits which are not actually relating to commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes which may have to be entertained by the Commercial Courts as intended by the lawmakers. In commercial disputes as defined a special procedure is provided for a class of litigation and a strict procedure will have to be followed to entertain only that class of litigation in that jurisdiction. If the same is strictly interpreted it is not as if those excluded will be non-suited without any remedy. The excluded class of litigation will in any event be entertained in the ordinary civil courts wherein the remedy has always existed.

¶126

19 -

¶127

WP No. 774 of 2023

¶128

14. In that view it is also necessary to carefully examine and entertain only disputes which actually answers the definition “commercial disputes” as provided under the Act. In the instant case, as already taken note neither the agreement between the parties refers to the nature of the immovable property being exclusively used for trade or commerce as on the date of the agreement nor is there any pleading to that effect in the plaint. Further the very relief sought in the suit is for execution of the mortgage deed which is in the nature of specific performance of the terms of Memorandum of Understanding without reference to nature of the use of the immovable property in trade or commerce as on the date of the suit. Therefore, if all these aspects are kept in view, we are of the opinion that in the present facts the High Court was justified in its conclusion arrived through the order dated 1-3-2019 [K.S. Infraspace LLP v. Ambalal Sarabhai Enterprises Ltd., 2019 SCC OnLine Guj 1926] impugned herein. The Commercial Court shall therefore return the plaint indicating a date for its presentation before the Court having jurisdiction.

¶129

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 subclause (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.

¶130

20 -

¶131

WP No. 774 of 2023

¶132

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.”

¶133

(Emphasis supplied)

¶134

The Apex Court, at paragraph 13 (supra) delineates as to when an application before the Commercial Court could be entertained as a commercial dispute. At paragraph 37 the Apex Court after considering the entire spectrum of the Act holds that dispute would become a commercial dispute if it would fall within sub-clause (vii) of Section 2(1)(c) of the Act, which would be the agreements relating to immovable property used exclusively in trade and commerce. The Apex Court holds that the words “used exclusively used in trade and commerce”

¶135

21 -

¶136

WP No. 774 of 2023

¶137

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” on the date of the agreement.

¶138

On the bedrock of the aforesaid principles laid down by the Apex Court if facts of the case at hand as narrated hereinabove if considered, it would become unmistakably clear that the dispute between the petitioner and the respondent qua the sale deed, the first or the second agreement did not immediately result in immovable property, being exclusively used for trade and commerce and it was at the time of filing of the application, the property was put to use for trade and commerce, that would not clothe the commercial Court with the jurisdiction to entertain the application terming it to be a commercial dispute.

¶139

In the light of the judgment of the Apex Court and

¶140

the facts narrated hereinabove, there is no warrant of interference at the hands of this Court to the order of the

¶141

22 -

¶142

WP No. 774 of 2023

¶143

commercial Court in refusing to entertain the application on the ground that it has no jurisdiction. It had in law no jurisdiction.

¶144

Learned senior counsel appearing for petitioner, at this juncture, would submit that there is interim protection granted by this Court while entertaining the petition, that should be continued till the avails of any remedy. The order passed on 13.01.2023 reads as follows:

¶145

“Heard the learned Senior counsel, Sri. Reuben Jacob, appearing for the petitioner.

¶146

Issue emergent notice to the respondent.

¶147

Learned counsel appearing for the petitioner is also directed to serve a copy of the petition papers upon the learned counsel, who represents the respondent in the trial proceedings.

¶148

Learned Senior counsel would seek place reliance upon Section 2(1)(c) of the Commercial Courts Act, 2015 seeking to demonstrate that it was a dispute arising out of an agreement relating to immovable property exclusively used for trade or commerce.

¶149

It is the contention of the learned Senior counsel that the concerned Court has erred in observing that since it is a residential apartment that was being constructed, it cannot be used for trade or commerce.

¶150

23 -

¶151

WP No. 774 of 2023

¶152

Learned Senior counsel would submit that qua the respondent it was exclusively for trade and commerce.

¶153

The matter requires consideration.

¶154

The interim order that subsisted before the concerned Court shall continue till the next date of hearing.

¶155

List this matter on 27.01.2023 in the fresh matters list.”

¶156

Learned senior counsel taking cue from the interim order so granted seeks to contend that the same should be extended till he would stake his claim against the respondent before the appropriate Court. Now that the case is transferred. The interim protection is sought on two grounds. The interim protection was granted by the concerned Court i.e., the Commercial Court on 14.12.2022. The interim protection by the concerned Court reads as follows:

¶157

“ORDER

¶158

By an ad-interim exparte order on I.A.No.I, respondent is restrained from creating any third party rights/interest in the schedule property without settling claim of the applicant till next date.

¶159

24 -

¶160

WP No. 774 of 2023

¶161

The applicant shall comply with Rule 9(1) of High Court of Karnataka (arbitration proceedings before the courts)Rules 2001.

¶162

On compliance, issue interim order, notice on main application and I.A.No.I to the respondent, through court and RPAD, if PF paid and copy furnished.

¶163

Returnable by 13/01/2023.”

¶164

(Emphasis added)

¶165

It is this interim protection that is carried forward

¶166

during the pendency of the subject petition. The application before the Commercial Court is not entertained on the ground

¶167

that it had no jurisdiction. If the Commercial Court had no jurisdiction to entertain the application itself, it had no jurisdiction to grant the interim order as well. If the interim

¶168

order granted is without jurisdiction and the order is being confirmed by this Court, any protection that is granted would

¶169

be glorifying the want of jurisdiction by the concerned Court. Therefore, I decline to continue the interim order any further. It is for the petitioner to avail of such remedy as is available in law.

¶170

25 -

¶171

WP No. 774 of 2023

¶172

For the aforesaid reasons, petition stands dismissed.

¶173

Sd/JUDGE

¶174

BKP List No.: 1 Sl No.: 24

M/S Hill Land Properties and Developers v. M/S Casa Grande Garden City Builders Private Limited

Case brief

What is this about?

What did the court decide?

M/S Hill Land Properties and Developers v. M/S Casa Grande Garden City Builders Private Limited

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

Sri B S Vishwanath Vs the Public Information Officer

Shri. Mahadevaswamy. N Vs the State of Karnataka

Sri. Amrith P Shenoy Vs Authorised Officer

Smt. Bi Bi Ayesha Siddiqha Vs the Government of Karnataka

Venkatesh Vs K C Mohan Kumar

M/S.Santosh Traders Vs the Genral Manager