Allowed

Bank of Baroda and another v. M/s. Shri Avenues Private Limited and 2 others

Telangana HC16 Feb 2022CRP/576/2020

Case brief

AI extract

What is this about?

The High Court held that the dispute between a bank and a company regarding damages for business loss due to a CBI complaint is not a commercial dispute as defined by the Commercial Courts Act, 2015. Consequently, the Commercial Court had no jurisdiction to entertain the suit.

What did the court decide?

The docket order accepting jurisdiction of the Commercial Court is set aside; parties directed to approach the court having proper jurisdiction.

Bank of Baroda and another Vs M/s. Shri Avenues… — Company and Corporate | Telangana HC (2022)

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IN THE HIGH^{COURT FORTHE STATEOFTELANGANA} AT HYDERABAD

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WEDNESDAY,^{THE SIXTEENTHDAY OFFEBRUARY} TWO THOUSAND^{AND TWENTY TWO}

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PRESENT

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HONOURABLE^{THECHIEFJUSTICE SATISH CHANDRA SHARMA} AND THE HONOURABLE^{SRIJUSTICE ABHINAND KUMAR SHAVILI}

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CIVIL REV^{ISION PETITIONNO:576oF2020}

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Pelition under^{Afiicle227 ot constitution of lndia, aggrievedbythe docketorder} dated 27toglzo1g^{in cos No.22 of 2016 on the file of the Judge,commercialcourt -} cum- XXIV^{Additional Chief Judge'CityCivil Court, Hyderabad'}

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Between:

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Bank of Baroda,^{A Body corporateand a Nationalized BankWithbranches} ,'ii."o.t Jtio^{ptu"". at Aoaisi-nigl. Bianch, P'o Himayathnagar'Hvderabad} i"tindana Statb,^{Representedby its Branch}

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, i:iii'vd8"?;;; ;;i^{A-il;C6rporatewith its corporateof office situatedat}

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6I'0.'c er".r, Barooa cor[6ra1e 'Centre Bandlg East Bandra Kural Complex' rr,lrinoii +ooost^{Representadbv thel,4anasins} 3.E?1?i,o"a*a, DEFENDANTS

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AND

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1.1r4/s.ShriAvenuesPrivateLimited,Havingitsofficesituated.atPlotNol0andll CbR"d;h;u*^{r.tutur.reaiSniitiGarden crossRoad'Yaprall-lYderabad -} ;;dooi;i il;;s;nJiiip.av^{ltJDirectorshri H NadeemAhmed s/oH' Nazeer}

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Ahmed

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z. Ahmed^{'S"r,ii'illluo"",Ahmed, S/o. H NazeerAhmed Aged 4s-years'occupation.} ' 6ii!i.i,liOi*"cioi oi nil.. Sniii nvenues Private Limited Ryo. Flat No.603, Shiri F"ir Vi"*loj,rrent,^{opp. waterTant<, Ramnagar'. Anantapuram-51 5001'}

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a. bfiiiL"r'iii.,jiiisuoiiir1iiislo.^{L Sree Ramulu A!e-d4e vears'occupation'} " 6li!i"-,J.. oi*cior oi sriri nvenues Private Limited Fyo 12-4-'109' obuldev Nigir, Anantapuramu^{-5'15001,Andhra Pradesh..RESpONDENTS/} pLAtNTIFFS

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IAN 10F2 20

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Petition under^{Section 151 of CPC prayingthat in the circumslances stated in} the affidavit filed therewith,^{the High Court may be pleased to stay all further} proceedings in COS.No^{22 ot 2016on the file of the Hon'bleJudge' Commercial} Court Cum^{-XXIV Additional Chief Judge, City Civil Court'Hyderabad'}

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For the Petitioners^{: SRI SRINIVAS CHITTURU'Advocate}

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For the Respondents^{: SRIDISHIT BHATTACHARJEE,Advocate}

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The Court made^{thefollowing; ORDER}

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THE HON'T LE THE^{CHIEF JUSTICESATISH CHANDR.qSHARMA} AND T.EE II(^{N'BLE SRI JUSTICEABHINANDKUMARSHAV]LI}

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( IVIL REVISION PETITION No.5 76 0F 2020

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ORDER: lPet^{lP Hon'bteLlte ChrelJusrr.esdtrslClr'r'rdroshorrrr'rl}

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The^,,resent Civil^{Revrsion Petition is arisingout of a} docket orr er, dated^{27.O9.2019 passed in C.O.S.No'22of} 2016 by t re Commercial^{Court-cum-XlVAdditional Chief} Judge, Ci1 7 Civil^{Court, HYderabad.}

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The facts of the^{case reveal thatthe} petitioner defendant^{(Bank of Baroda)is a body corporate} and a Ni tionalised Bank^{having its branch at Adarsh} Nagar, H5 lerabad. The^{respondentNo.1/Piaintiff No' 1 is a} company registered^{under the Companies Act has fiied a} civil suir claiming^{damagesand money beforethe} Commerc a-1 Court-cum-XlV^{Additional Chief Judge, Citl'} Civil Cor- rt, .Hyderabad,^{stating that one of the former} Directors of the^{respondentNo' 1/ plaintiff No.1 company} Sri C.V.R rnganath^{Chowdaryalleged1y committed a fraud} by openir^g an Account^{in the name of M/s.Shiri Avenues} Private L mited in coilusion^{with the sta{f membersof the} Bank of Baroda, Adarsh^{Nagar Branch, Hyderabad and} encashed a cheque by^{altering the payee's nameThe} cheque^{'ncashed was to atune of Rs 3,25,00,000/-} (Rupees .hree crores and twenty^five lakhs^{oniy)' It has}

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been further stated^{in the plaint that the respondent} No. 1/plaintiff No.1^{companynor the other Directorswere} aware of the opening^{of sr-rch Account ald a complarnt was} lodged by the^{petitioner/ defendant(Bank of Baroda) with} the Central Bureau^{of Investigation(CBI) and the CBI has} initiated prosecution^{againstSrr C.V.Ranganath Chowdary} as well as the officials^{of Bank of Baroda.}

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In the plaint, it^{has been furtherstated that the} petitioner/ defendant^{(Bank of Baroda)issued a legal notice} to the respondent^{No. 1/plaintiffNo. I company stating that} the account was opened^{at the instanceof the respondent} No. 1/plaintiff^No. 1^{company along withother} Directors / shareholders^{resulting in aloss ofabout} Rs.3,25,00,000/ -^{(Rupeesthree croies and twentyfive} lakhs only) and therefore,^{the respondentNo' 1/plaintiff} No.1 company should^{make the loss good. The respondent} No. l/plaintiff No.1^{company contended beforethe trial} Court that without^{makingarry investigation into the fact} that whether the respondent^{No. i} /^{plaintiff No 1 company} and respondent Nos.2^{and 3} /^{plaintiff Nos.2and 3 (other} Directors) are actually^{involved or not, the legalnotice was} issued and they^{weresummoned by the CBI also and} however, the CBI^{has filed a charge sheet in case No RC-} 3(S)/ SCB/CBI/Chennai^{stating that the respondents/}

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plaintiffs a' e no way connected with the crimina-1 case. The respondenl ;/plaintiffs have not been charge-sheeted at all. It has a1 ;o been stated that a writ petition, i.e., W.P.No.75( O of 2012 was filed by the respondent No.1/plain iff No.1 company and the sarne was allowed on 22.O8.20ti holding that the CBI has initiated proceedings only again, t Sri C.V.Ranganath Chowdary and the action of the Stz te Bank of India, which has also initiated proceeding i on account of the crime, was set aside. It has also been r tated in the plaint that on account of the action of the pet .tioner/ defendant (Bank of Baroda), the CBI interfered n the matter and therefore, the respondents/ plaintiffs L ave suffered hea'"y financial loss as the State Bank of Ir dia, from whom the respondent No. l/plaintiff No.1 was lvailing overdraft facility, has suspended the overdraft li nit and therefore, the respondent No. 1/plaintiff No.1 was lorced to borrow a sum of Rs.5,00,00,000/ - (Rupees fi ,e crores only) from M/s.Srirarn City Union Finance Li. nited for completing the construction u,ork. The CBI has al io placed restrictions in respect of sae of flats, the flats < ould not be sold in time. The respondents/ plaintiffs : rave claimed damages from the petitioner/ defendant Bank of Baroda). The following amounts have , been claim :d by the respondents / plaintiffs:-

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':l-: .#',z

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(a) t,o l. .l ona cco LI t'l lh p h Rs.¹ ,O8,O0,000 /' [-real esta n1 arke 11 ! ) fi the rate o Rs.l 5 pe f slt n tcad Rs.25oO, r sft {b) ThU e l0Fta ebil,i r-rlt ted th o,1 S 9S 0 btam2 0 5Ci t\ Rs.10,33.00,0^00/- ll On accou n lod il: :l g com plain atar sl the Plai tl ff N to t'l e\ tl fieIC 0 S e!eral llr ental a80n\ and hard h P lt d Pla n ll II \ !l if red nj ni o I repLr r1 rh m ket 'l ak n into consideration, repuhe !lrnon oe f PIao nrhriff \ o 2 pan]n d an cls i1rh:l'le perRssonal0 0 Rs.1,00.00,0001 cto c med to\rard loss o repu tion rnJ u rl and hardshi suffered TOTAL Rs.12,41,00,000/' 4 . Thus, in^{short, thewhole case ofthe} respondents/^{plaintiffs is that on account of the complaint} lodged by^{the petitioner/ defendant(Bank of Baroda) with} the CBI, they^{havesuffel ed loss in business' theywere} interrogated^{by the CBI and finally, the CBI has given them} clean chit anci^{therefore,the 1oss, which they have} suffered, should^{berecoveredfrom thepetitioner/} defendant^{(Bank of Baroda)'}

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The trial^{Court, by docket order'daled 27 '09'2019'} has held that^{as it is a commercial dispute' it has the} jurisdiction. to entertain^{the suit and the aforesaidorder} reads as under:^-

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"Perused^{the record As far theplaintiffs} are concerned,^{it is a commercialdispute since it falls under} Section^{2(C){1)(a)of the CommercialCourt Act' 2015as} the transaction^{ol Bank (ordinarybankingtransaction)} and hence, this^{courthas got jurisdictionto entertainthe} suit...,...".

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The^p :titioner/ defendant^(Bank ol^Baroda) ,^being aggrieved b'the aforesaid docket^{order passed by the trial} Court, has iiled the^present Civil^{Revision Petition stating} that the dis :ute between the^{petitioner/ defendant (Bank of} Baroda) ai: I the respondents/^{plaintiffs is not at all the} commercia. dispute and the^{sole question beforethis Court} is whether he dispute is a commercial dispute^{or rlot?}

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7 . The⁽ ommercial Courts Act, 2015^{r.vas enacted for} speedy disl osal of high value commercial^{disputeskeeping} in view the 188!h Report as well as the^{253'o Report of Law} Commissio r of India. Section 2(1)(c) of the^Commercia-l Courts Act. 2015 defines 'commercial^{dispute'as under:-}

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"2 Defi ritions:-⁽¹⁾ In this Act, unless the context otherw ie requires,-

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Ordinary transactions of merchants, bankers, financiers and traders such^as those relating to mercantile^documents, including enforcement and interpretation^of such documents;

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il export or import of merchandise or^service; ii) issues relating to admiralty and maritime law;

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v) transactions relating to aircraft,^aircraft engines, aircraft equipment and helicopters, including sales, leasing and linancing^{of the} same;

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,) carriage ol gootls; ,i) construction and inlrastructul e contracts, including tenders;

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rii) agreements relating immovable^propertY used exclusivcly in trade or commerce:

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riii) franchising agreements; x) distribution and licensing agreements;

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-..

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(x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment agreements pertaining to the services industry including outsourcing servjces and financial services;

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(xiv) mercantile agency and mercantile usage; (xv) partnership agreements; (xvi) technologr development agreementS; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;

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

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

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(,,*) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and

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

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Explanation.- A commercial dispute shall not cease to be a commercial dispute merely because-

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(a) it also involves action lor recovery oI immovable property or lor realisation oI monies out of immovable property given as security or involves any other relief pertaining to immovable property;

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(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions;

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(d) "Commercial Division" means the Commercial Division in a High Court constituted under sub-section (1) of Section 4.

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(e) "District Judge" shall have the same meaning as assigned to it in clause (a) of Article 236 ol the Constitution of lndia;

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(f) "document" means any matter expressed or described upon any substance by means of letters, figures or marks, or electronic means, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter;

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IIi'

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(g) "notification" means a notification published in the Official Gazette and the expression "noti[y" with its cognatc meanings^and grammaticai variations shall be construed accordingiy;

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(h) "Schedule" means the Schedule appended to the Act;

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{i)^{"SpecifiedVaiue", in relationto a commercial} dispute, shall mean the value ol the subjectmatter in respect of a suit as determined in accordance with Section 12 shall not be Iess than three lakh rupees or such higher value, as may be notified by the Central Government",

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B. This C curt has carefully gone through the a-foresaid definition a rd the dispute in the present relates to claime of damages on account of the act of Bank of Baroda in approachin; , the CBI, which has^{allegedly resulted in} business 1o rs to the respondents/ plaintiffs. The dispute is not at all ar .sing out of merchants, bankers, financiers and traders suc :r as those relating to mercantile documents, including enlorcement a:-rd interpretation of such documents and it does not fall under the definrtion clause 'commercia dispute'. This Court fails to understarrd as to how the di rpute in the present case between the perrties falls within the meaning of 'commercial dispute' as defined under Sect rn 2(1)(c) of the Commercia.l Courts Act, 2015 and the C ,mmercia-1 Court is proceeding aheaci in the matter. Thr respondents / piaintiffs are claiming damages for the loss of business goodwill and for other business losses ald by no stretch of imagination, in the peculiar

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facts and circumstances of the^{case, the commercia-1suit is} maintainable.

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g. In the considered opinion of this Court, the docket order, dated^{27 .O9 .2019, passed by the Commercial Court-} cum-XXIV Additional Chief^{Judge, City Civil Court'} Hyderabad, deserves to^{be set asideand is accordinglyset} aside. However, the^respondents /^{piaintiffs sha1l certainly} be at liberty to approach^{the court having jurisdictionin} the matter and certainly^{not beforea commercial court.}

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With the aforesaid^{observations, the Civil Revision} Petition stands allowed.

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Miscellaneous petitions, if^{any pending,sha1l stand}

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dismissed. There^{shall be no orderas to costs.}

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Sd/.K.AMMAJI ASSISTANT REGISTRAR i/rRUE coPY// G SECTION OFFICER To 1. The Judge, Commercial Court -cum'^{XxlVAdditional Chief Judge, City Civil} Court, Hyderabad. 2. One CC io Sri Srinivas^{Chitturu, Advocate (OPUC)} 3. One CC to Sri Dishit^{Bhattacharjee, Advocate (OPUC)} 4, Two CD Copies 5. One Spare Copy

Kj. 4.,

HIGH COURT

OATED:1610212022

ORDER

CRP.No.576 of²⁽²⁰

ALLOWING^{THI CRP}

7 ffil, --r'r \ -,' ?tFltuzr

Bank of Baroda and another v. M/s. Shri Avenues Private Limited and 2 others

Case brief

What is this about?

What did the court decide?

Bank of Baroda and another v. M/s. Shri Avenues Private Limited and 2 others

Case brief

What is this about?

What did the court decide?

What the court decided

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