Dismissed

P. Siva Mohan Reddy v. Dr. K. R. K. Reddy

Telangana HC24 Mar 2023CRP/3018/2022

Case brief

AI extract

What is this about?

High Court upheld Commercial Court's jurisdiction to adjudicate a suit arising from a Joint Venture Agreement, holding that a joint venture agreement falls squarely within Section 2(1)(c)(xi) of the Commercial Courts Act, 2015, and that the land being put to commercial use is irrelevant under said clause.

What did the court decide?

Civil Revision Petition dismissed; order of Commercial Court upholding its jurisdiction affirmed.

P. Siva Mohan Reddy Vs Dr. K. R. K. Reddy — Writ and Judicial Review | Telangana HC (2023)

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[³³⁰⁶ ]

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IN THE HIGH COURT FOR^THE STATE^{OF TELANGANA} AT HYDERABAD

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FRIDAY, THE TWENTY^{FOURTH DAYOF IVIARCH} TWO THOUSAND AND TWENTY^THREE

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PRESENT

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THE HONOURABLE SRI^{JUSTICE P NAVEEN RAO} AND THE HONOURABLE SRI JUSTICE^{J SREENIVAS RAO}

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CIVIL REVISION P^{ETITION NO: 3018OF 2022}

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Petition under A^/(icle 227 of^{constitution of lndia aggrieved by the orderdated} 2ttogt2oi in I.A.NO.^2O5 ot^{2022 in O.S.NO.135 of 2O22 on the file of the Court of} the Frincipal special Court^{in the Cadre of DistrictJudge for Trial and Disposalof} Commercial Disputes at^HYderabad

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Between:

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P. Siva Mohan Reddy, S/o.^{Late P. Venkata Reddy' Aged about53 Years'} Occ Business, Rl/o. Pent^{House, Block No. 1, Alpine Heights, Somajiguda,} Hyderabad- 500082.

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...PETITIONER/PETITIONER

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AND

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Dr. K. R. K. Reddy, S/o. Late^{K. Veera Reddy,Aged 55 Years, Occ Business'} Rlio. Plot No.24, Maruthinagar,^{Yousufguda, Hyderabad.}

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...RESPONDENT/RESPONDENT

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lA NO: 1 OF 2022

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Petition under Section 15'l^{CPC prayingthat in the crrcumstancesstated} in the affidavit filed in support of the^{petition,the High court may be pleasedto} grant stay of all further^proceedings in c. o-^{S. 135 of 2017 on the file of the} Frincipal Special Court in the^{Cadreof District Judge for Trial andDisposal of} commercial Disputes at Hyderabad,^{daled27. 09. 2022pending disposalof} Commercial Disputes at^HYderabad

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Counsel for the Petitioner:^{SRIPRABHAKARPERI}

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Counsel for the Respondent:^{SRIM.V. PRATAP KUMAR}

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The Court made the following:^ORDER

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l!(/ (\ J/i-l t Rl \t' it)l\ t)I :n::

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HON'BLE SRI JUSTICE P. NAVEEI{ RAO & HON'BLE SRI JUSTICE J. SREENTVAS RAO

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CIVIL REVISION PETITION NO.3O18 of 2022

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ORI)ER: ['er rr<n blte Sn Justice P Naueen Rc.o)

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Heard learned counsel for petitioner Sri Peri Prabhakar ancl learned counsel for respondent Sri M.V.Pratap Kumar.

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Parties are referrcd to as arrayed in t]re suit

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Bricfly noted to the extent relevant to decide the controversv thc plaint avermcnts are as under:

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According to plaintiff, defendant approached him by saling that he is rntending to develop Acs.S.OO land belonging to Mrs^(ihousia Begum situated in Survey No.129/f03, Road No, 1. I3arnjar:r Hills. H1'derabad as a^joint venture and requested pl:rintil[ tcr invcst. Plaintifl :rgreed to invest { 2 crores and offered to be a sleepir-tg partner. He r.vas assured that project would be completed in thrcc ,,cilrs.^{Plaintiffu,as requestedto take the responsibilityto sell the} propert_v, On 2.4.2OO9 Joint Venture Agreement was entcred into l:errveen plaintift and defendant. With fond hope of securing good returns, plaintrff invested { 2 crores. There was no progress in thc loint vellture in spite o[ sevcral requests made. Disturbed by this attitude. plaintiff reqlrested to refund his { 2 crores along with Internal Ratc o[ tlcturn (lRR)- Plaintiff alleges that the defendant has divertcd l-tis rnonev to anothcr venture. Lcgal notice issued to pay the money due, \,erc nor

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f ,c./ d Js{J {-Rt'\o l0l8 Of^{:0: )} 1

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responded.^{PlaintiffinstitutedO.S.No'432 of 2Ol2 in the Court of III} Additional Chief^{Judge,City CivilCourt at HyderabadOn establishing} Commercial^{Court, itwas transferred to CommercialCourt' where} renumbered^{as C.O.SNo. 135 of 2017 'PlaintiffprayedLo grantdecree} directing the^{defendantto pay a sum of { 3,O8,0O,OOO/- together with} interest on^{principalamountand18% IRR witheffect from 9'4'2OO9 till} the date of hling^{of suit and future interesl(@ 18 % IRR per annum-}

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In the said suit,^{defendant filed IA'No 2O5 of 2022 uncler Order} VII Ruie 10 read^{with Section 151 of CPCto return the suit'}

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According to ttre^{defendant, the dispute raiscd rn the suit is not a} commercial dispute^{andtherefore the Commercial Court has no} lurisdiction^{to adjudicate the dispute'}

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On appreciating^{the respectivesubmissions. the Court bclolr held} that the dispute^{raised in the suit is commercial clispute and therelore} the Commercial^{Court has jurisdictiontoadjudicate lhe dispule'} Aggrieved thereby,^{this revision is preferred'}

¶32

While learned counsel^{for defendantvchemcntl-'contcnded that} there was no^{land, what was agreedupon \r'as} 'rt^{rnrtialstaEebefore} starting a^{ventureand land was not put to use anrl thc transactiotl} cannot be called^{as commercialdispute, learnecl counsel appearing for} plaintifl has taken us^{through the terms o[} loirlt^{vetrturcagrccmcnt} documcnt to^{buttresshis point that the disputc itrvolvedisa}

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P\RI .\ JSR,] CRP .\o )AI6^OL )t)::

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commercial dispute and the defendant is^{perusing vexatious litigation} only to drag on the htigation-

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g. Both learned counsel have taken^{usthroughtherelevant} provisions of the Commercial Courts Act,^{2015and relied on precedent} decisions.

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Foltou,ing clecisions^{arecited by learnedcounsel for defendant:}

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B.K.Muniraju Vs State of^{Karnatakaand othersrlBunga DanielBabu} Vs Sri Vasudeva Constructions^{and others2lAmbalal Sarabhai EnterPrises} Ltd vs K.S Infraspace^{LLP andothers3;Faqir Chand GulatiVs Uppal} Agencies Private Limited and^{anothera; andSandhya Hotels Art ltd and} Others Vs Amritha Mishras,

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Follow'ing decision^rs cited^{by learned counselfor plaintiff:}

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Telangana State Tourism^{Development Corporation Limited}

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Vs. A.A. Avocations hrt Ltd6.

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To appreciate respective^{contentions,it is necessaryto dwell into} relevant provisions ol the Act.^{They are Section 2(1)(c)(xi)7 and Section} 6s of the Commerci:rl Courts^{Act, 2015 (for short the Act. 2015)'}

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r l()(l8 r -l s('( li^I I ll0 t(, r 8 s( (. ll9 'Ilt)10I l5 S( ( il,t5 r{lllt) lll SL ( -l15

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'\1.\I II\ 011{l( :0llJ

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lLrll ('( Oul.in.^IS lli'(,^{(lrrll) j ,\l.t) l0l} t o"fioraroo.. (rl In rlrLs (1. ulrless Ihc^{conlextotherwrserequires'-(a) and (b) )ocx} lcl "-2-^{.olnnr.Lnl(trspLrIcmcansrdrsPrrr..ursrngouIot}

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(ixl Joint venture agteemeats;

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f\R/dJ-slL ('t l 'o iA l8 OF :0:)

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According to Section 2(l)(cl(xi) of the^{Act, 2015, a disputearising} out of a 'joint tonture agreemeat'^{is a commercialdispute. If there is a} dispute flowing out of Section^{2(i)(c)(xi)ofthe Act, 2015, the} Commercial Court alone has^{jurisdiction to adjudicate.Thc def-rnitionis} cxhaustir.e and includes all^{'Joint Venture Agreements'withoutany} cxception.

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14.^'Joint ventu"e' titerally means '4^{contractual agreementtuherebg} tuo or more parties undertake an economic^actiuitg' ;^'o ioint^{oenture' is} 'art associrttion of ttDo or more persons to carry out a^{slngle business} enterpise for^profit' [Advanced^{Law Lexicon 3'd Editionby Ramnathan} I1'erl- 'a Joint venhtre' means^!@ business^{undertakingbg tuo or rnore} persons engttged in a single defined project-^{The necessary elemetrts} are:: (l ) an express or implied agreement;^{(2) a commonpurposeth.at the} qrctuyt Lntend.s to corry out; (3) Shared^{profits and lo-sses: ancl} ft)^Dach n:,r:rnLter's equal uoice in controlling the^project'- [Blacks^{Lau' Dictionarv} nrnth eclitionl.

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In Faqir Chand Gulati^{(supra), Hon'bleSuprcmeCourt} consrdered definition of term 'Joint veature'^{in various dictionaries.Thc} appellant is the owner of land in New Delhi. He^{entcredinto an} agreemcnt rvith the respondents to develop his land^{and construct}

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' (,. .tu.nijrr(,tr ol'( rNncr.ial ( our! The Comnrcrcul Cou.t shall ha!. runsdr.tron t(, r^ rl .! L\ J.n rlfl ..lt t{N :(i.'L rrr r(' .L.r,,r,nr.(,l .1.!.rrr'r r\Prrrlr(d^Valucansr soutof^{the e.t,reten&ryol theSl3I.(r.r$h'rr} lrr'l!'r '\r'\l ''rrlt'nrl ,rI\tj.r,,{j i \r, r ,.,rr!. lor lh.^purposes ot^rhrs s{uon,^{a commercraldrslut. shll h. rorr'JJrr.lL'-Lr': !!r tii tllr .nrrrJ} \r.,r! L,\J, \hr.r J Commcrclal Coun has been ,esled lunsdrcl()n rl^{LIL!rr1{ ririr!JL!!r'jrrrrr'rtr} 'u!ll i,.'.^.rr. Ln'r,rur.d a' t--r rlre provisions of section! l6 to l'r^{Lrlrh.(i\1! rr ( \ rt.'r'lL'ri} tL I

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7t.:-==

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P 'RJ & JSRJ CRP \o. t0l8 0F 20))

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apartments on it- Owing to several unauthorized deviations^{made by the} respondent, the appellant filed a complaint before the District Consumer Disputes Rcdressal Forum seeking reliefs against^the respondent, which was dismisscd. On appeal to the State^Forum,the appeal was dismissed again on the^ground that the agreement between the appellant and respondents lvas in the nature of^{a joint venture. This} was upheld by the National Commission as well. While considering^the question of law be fore the Honble Supreme Court whether a landowner entering into agreement $,'ith a builder^{for construction of apartment} building and for sharing of the construcLed area^{is a 'consumer'entitled} to maintain complaint against builder as service^{provider Hon'ble} Supreme Court noted thc definition of^{'joint uenture'asdefinedin few} journals. Paras 22 and 23 read as under:

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-22. Tl\e lollo\lng clt'iinrtion of "joint venture" occurring in Ameican Jurisprud<llce l2D^(L ticin..(,1^{.1(r. pp.} 19,22and23l^{is relevant:}

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"A^{joi^twndlreis} Jrequentlg^{defrned ds an assocldtlon oJ tutoor} more persons Jo.rnecl to cd"ry out d single^{businessentzrPrise} for profit. More specifically, it is ift dssociatio^ oJ Persons urith tntent, bg utag oJ co'"trd.ct, express or implied, to engage i1 dnd cdtry^outd single business tenaue Jor^joint profit, for^uthich Pu4rosc^strch persons conbine their property, ?rroneg, eflects, sklrl, dnd k toutledge, uithout creahng a partnership, a coqmration or other' busiless^ertdq, pursudnt to ai agreenent th.tt there shall be a @mmunitA of^interest among the pa,7es as to llk' pLt7)ose of the undenoking, and^{that each} jotnt uenturer rnrisl sf.rrl.l ut llte reletion of pnncipat, as uell as agent, as lo €,.Ic/l oJ tl? otlet coL'ent.rrer.s L,ithin tle^general s@pe^{oJ the} entery)t1se.

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Joidt wentures are, in general, goverred by the eme rules rs PartrcBhtPs. The r€tatiors of the parties to^{a joint} venture aDd thc^{mtuteof thctu as.sociatior} are s siEilar and closely akin to a^{pattoership that their rights, duties,s.rd} liabilities are gellera[y tcsted by rules^{which arc closely aralogous to ard} substaatia[y the sam€, if aot exactly the saEe^{as tho*} f,hicb govern partneGhips- Since the tegal consequ€nc.s of^{a joiEt} venture arc equivaleot^to those of a partnership, the courts f.eely apPly^pa.rtnershiP law to^{jotatYentures} sh€fl appropriate, Io fact, it has beer said that the trend itr th€ las hes beea to blu. the distinctioos betwecn a partDe6hip and a^joint Yerture, very little labeing found appricable to one that does not apply to the othcr. Thus, the liability for torts of parties to a joint venture agreeaent is gowerned by the tarc applicable to partnerships-

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f, \ R/ .( ./s/iJ ( Rl1 \i JOtS r)t. :1..:

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A joint uenture is to be distivuislled fom a retattonship of ndependent controctor, the latter beiftg one uho, exercising Gn uTdependent emplogment, contracts to do work @ccording to hts own rnetlrcds and urthout betng subject to the control of hts emploger except as to the result of the work, while a^joint uenture 6 a special combnation of tuo or more^persons where, in some specirtc uenture, a proJil ts pintLy sought tuitlLout ang actual pdrtnership or corporate desigttanon."

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To the same cflcct is the delinition in Corpus Juis Secundum lVoI a8-A, pp. 314 l5):

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"^{Joittt tEnhtre', dtann used interchangeablg @ndsgnongrious} uith joi^t adlE^ture', or cotEnt'aate, h-a.s been defined d.s d specidl conbiftatio^ o.f ar.,to ol tnbre persorts wrvrein sonr€ swctfic tEnture lor proFt is joitltlg sought ulithout ang o.cttt Tl p(trtnershlp or corpordte designatio^, or as an dssocidtion ol tuto or n@re pcrsons to cdrry out a siagle busiaess entcrprise Ior profit or d sp4ldl cornbildtion of persons undertdkiag jointlg so/,td sl,4clfic d.dtEtaArre Jot proJit, lor uhich purpose theg combine their propertg, ,raleg, elJects, skill, and knoaledge..- Atnong the dcts or conduct |/,,rich a,e Tn.dicatil,e oJ d Joint tEntute, no siftgle oae of ,uhach is cont olli^g in deterrrtining urhether a joint tEnture exists, dre : (1) joint ourftershlp dnd control oJ propertg; (21 sha,atg of expertses, profts and losses, and lwuing and exerclsmg soite t)orce m detenn[ning diuision of net earntngs;⁽³¹ communitA of controL ouer, dnd actiue parttcipation in, management and dtrection of brr-srness enterpnse; (4) intention of parties, express or implied; and (al llxurg of salarics byjoint agreement."

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(emphasis supplied)

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Learned counsel for defendant asserted t.l.at in order to know the

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rcal natllrc of the document, one has to look into the recitals and not the ritlc o[ the document. Learned counsel relied on B.K.Muniraju. In

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thc said decrsion, Hon'ble supreme Court held as under:

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'18. The document in^question uhlch^as filed ds^{AnneuureP-3, hasbeen} styled or titled as "cettificab of grdnt". In order to kno@ the redl nadue oJ the docurnent, one has to look tnto the "ecitd.ls oJ the documcnt and not the title oJ the documenL The i^tention is to be gdthered^jrorn the recltals in the deed, the conduct oJ the po.rtles o-ttd the evidence on record- [t is settled lalv rh.il Llrc qucslron o[ construction of a document is to be decided by finding ()Lrr rhc Lntcntion o[ the executant, flrstly, from a comprehensive reading oI rh. tc.ms oI thc document iLself, and then, by tooking intc-to the extenl pernrrssrblc thc prcvailing circumstances which persuaded the author^()f lhe d()cunrelll to cxccutc it. With a view to ascertain the nature o[^at r.rns.l(:Llon. rhe docurncnt has lo be read as a whole. A sentence or tcrnl Lls( d nril\ n(,t i)e determinative of the real nature of transaction. Rclcrenccr ln rhis r(g.rr(l can be made to the following czrses 1.c. lklllllodharv .Uorrrkrao l(1999) 3 SCC 5731, Subbegoludcl t. TlttrtrneqotLrla [(]oo.+l I SCC 7341 ar,d Bishuanath Prasad Sinqlr t'. Rty<'ttrTte f).r.s.r.l l(2OO6t 4 SCC 4321 .

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P\RI & JSRJ CRI' \a J018 OF )0))

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1 II I i

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l I I I I I I II I I t I I I I I l

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19, The above principtes make it clcar thar u,e have to see terms and conditrons and recitals in lhe document arld not the trtle alone. Though the document, according lo Lhe appeliarit, 'certificatc of gr.rnt", perusal of the clauses therein, clcarlv sho\es thaL Lhe land lvas sold on 4-3- 1948 in a public auction and Motappa purchased thc same for a price of Rs 408.12. In addition to the rccitals, thc "daJkhast rcgister cxtract" produced as Annexure C'before the High Court also sho*'s that the land in question was sold for a "price". Form I aLso indrcates that the land in question was purchased and what was pard bv the purchaser under the said document was the purchase pricc " (emphasis supplicdl

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In Bunga Daniel Babu v Sri Vasudeva Constructions and

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otherse, the appellant is the orvner of 1347 sq yards of land in Visakhapatnam. He entered into an MoU with the respondents for development of his land by constrllcting a multi storeyed apartment, which were to be sharcd betu,ecn tl-rem in a proportion of 40:60. However, the work was completed and flats handed over to the appellants with a lot of delay, The appcllant also had grievance pertaining to deviations from sanction plans and non-completion of various other works. His clarm lor compensaLion was rejected by the respondents. He approachecl thc District Consumer Disputes Redressal Forum- The District Forum held rhat the project could not be considered to be a^joint Venture and thus exclllded from the purview of tJre Act, and awarded compensation to rhe appellant. The State Commission and National Commission clid not agree with the District Forum on the ground th:rt thc flats u,crc built for commercial purposes, and not personal use- The issuc ftrr consideration was whether the appellant falls within the dellnition o[ 'consumer' in the Consumer Prbtection Act?

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n (20 r6) 8 scc 429

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P \ R,/ .I JSRJ CRP .\o l0l8 OI )(D2

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17.1. The Hon'ble Supreme^{Court held}

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"11. ln Kolparrultho^{(-ho irtrhleti-ust IToshtlin'alBtothe(Bonbay) A'tI'td-} rcitcrating thc prrnciplcs stated^{in I atniEngineering L?,ls(supra). the Courr ruled} whether a person r{ould fall^{within thedefinition of} "consumer"^{or notwould} be a queslion of facl in eterJ case..........^.

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'21. On a studied scrutin!' of the aforesaid^{clauses, it is clearas day} thar the appellanr^{is neither a partner nor a co-adventurer.He has no} sav or conirol over thc constrllction.^{He doesnot participatein the} busincss Hc is onl! entitled^{to, as per the MOU,acertain} construcred area. The^{extentof area, as hasbeen heldin Faqir} Chand^{(iuiilti (supra) docsnot makea differe4ce. Therefore, the} rrresistible conclusion^is that^{the appellantis a consumerunderthe} Act^"

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In Ambalal Sarabhai^{EnterprisesLtd v KS InfraspaceLLP and} Orsro the Appcltant hled^{the Commercial Cirril 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 Orclcr^{VII Rule 1O of Codeof Civil Procedure,19O8} contending that the clispute^{involvedin the case is not a commercial} dispute. The Commercial^{Court while rejecting the applicationhad} referred to the Memorand um^{ol Articlesof Associationof t]te Appeilant} company erncl takrng note of^{the business that they were entitledto} undermkc had arrived^{at the conclusionthat the Plaintiff seems to be} carr','ing on the business^{as an estateagent and in t]lat circumstance} has lurthcr arrivcd at its conclusion^{that it was a commercial dispute'} Thc Iligh Court on the other^{hand had found fault withthe manner in} rvhich ttrc Commcrcial Court^{had rested itsconsideration on the} Mcmoranclum and Articlcs of^{Associationand had examined the matter}

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t-2o-l(rt^{l: s((:a5 =Itr\Nti/S(l/1.178/201q}

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I\RJ&JSU ( RP \o 18 OF )022

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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^{prescntedin an} appropriate Court, In the said case, Hon'ble Supreme^{Court was} considering the scope of Section 2(l)(c)(vii) - agreements^relatingto immovable property used exclusively in trade or commerce.

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18.1. The Hon'ble Supreme Court held:

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'1O.^{At the outset,it is noticedthat thc considerarronrcquiredin the} instant case is as to whether the^{transaction ber\rcenthe parLieshercin} which is the subject matter of the sult coulci be^considered as^a "commercial dispute so as to enable the Commcrcial CourL to cnterlain the suit. In that regard, it ts ncccssan^{Lo takcnolc ol Section2(1)(c)(vii)of} the CC Act, 2015. Thc said^provision to thc^{e-{Lcrllrclcvantis extracted} here below for reference.

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Section 2(1) ln this Act, unlcss the context^{othcm ise r.(lulrcs.}

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(viil agreements relating to immovable property^used exclusivelyⁱⁿ trade or commerce;

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From a perusal, of the^p.ovtston rclierl^uport b<sup>the lcatrncdscnior advocates it is noticcd that the dispuLcs arisrng^{out oi agreementsrclating} to immovable property used ex(luslvch in ttaclt or^{L(,tnlre rce nill quality} to be a commercial disputc to bc tri(d^{ltr Clommtr-cralCoLlrts. Thcquestion} therefore would be that, in the instant^{case thoughthe partieshave} eEtered into a sale transaction of the^{imrnowablepropeity and} presenuy i! the suit the registration of a Mortgage Deed Pertaining to the lmmovable property is sought, whether^{the immovable proPerty} involved could be considered as being used exclusively^{in trade or} comttterce.

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f3. [...] the very purpose for^rvhich the CC {ct o[^{2015 hasbecn} enacted would be defeatcd il cvcn other^suLt mcrtl<sup>becauscltis filed before the Commercial Courl rs cntcrtiuncd^{'l'his is ior. thc reasonthat thc} suits which are not actuall,' relaLrng to^{comrrrcrcialdisprlle i)Lltllcingliled} merely because of the hrgh^{valueand wLth} th(^{irrteDtrolrof secking early} disposal would only clog the s\stcm.1Dd^block th(^{ualfor thc gcnuine} commercial disputes^lr'hich mar^{harc ro i)c cnlertain(d b\thc Corrmercial} Courts as intended b! lhc la\'^mitkers. ln^{cc,rnmerc:ialclrsprrtcs as dcfinecl} a special procedure is^providcd li,,r a class ol litigatron iln(l a^strict procedure will have to be lblloucd L() cntcLtain onh rhat class ol^litlgalion in that^{jurisdiction.} II the same rs strLCtl\ interprclcd^rt is^{r]ot as} il^those excluded will be non-surted !uthout an]^{remcd'. Thccxcludeclclass oI} litigation will in any cvcnL be entertaincd in thc ordinan^{Clivil Courts} wherein the rcmedy has al$ ar s cxrstctl.

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PNR,] { JSRJ CRP .\o J0l8 Of²⁰²⁾

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In that view it^{is also neccssixl"to carefullyexamineand entertain} only disputes^{lvhich actuall! ansll'|ers thc dennition "commercial disputes"} a" p.orriiad under the^{Act. In the instantcase,as already takennote} neither the agrecment^{between the parties refers to the nature of the} immovable propcrtl'^{bcing cxclusively used for trade or commerce as on} the date of Lhe^{agrecmen[ nor IS Lhcrc alnypleadrng to that €ffect in the} flaint.^{Further thle vcry rclief sought in the suit is forexecutionof the} 'N4ortgage Deed whlch is In Lhe nalure of specilic performance of the terms oi UJmtrandum of^{Understandinglvithoutreferenceto nature of the use} of the immovable^{propertyin trade or commerce as on the date of the suit'} Thercfore, if all^{these aspects itre kcpt in view'we are o[ theopinionthat in} the present facts the^{tiign Coun $'as justifiedin its conclusion arrived} through the^{order daled 01.03.2019 impugnedherein- The Commercial} Court"shall therefore^{return the plaint indicatinga date for its presentation} before the Court^{having jurisdictlon."}

¶99

ln Sandhya^{HotelsPrrt Ltd v Amritha Sharmall alsoHon'ble} Supreme Court^{was considering the word 'used'inSection2(l)(c)(vii)'In} the said case, the^{second apphcant, the Managing Director of Sandhya} Hotels P,,t Ltd, approached^{the respondent/plaintiff asking her to} purchase a house situated^{withinthe approved layout of the Jubilee} Hills Cooperativc^{House BuildingSocietyLimited, claiming that his} company had^{enterecl into :in agrecment {'ith Smt' M' Jayasree, and} that the amount tou'ards^{sale considerationhas to be paid to the vendor} and he will^{get the sale deed directll:conveyedfrom Smt' M' Jayasree to} the plaintiff. Believing^{this, thc plaintiflenteredinto an agreementwith} the second defer-rd:rnt^{and paid the amounts through cheques and} RTGS to the second^{defendant and to itscompany,amountingto} < 14.00 Crorcs.^{Thoughthe second dcfenclanthas put the plaintiff in} possession ol thc schedulc^{property' inn'hich the plaintiff setup a} boutrque, the^{propcrlv u'as still norregistcreclinthe name of the} plaintiff. Thc plaintrff^{found out that the defendant had executeda sale}

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'^{N.'IANUltJ,'L)lxs,l0 I 3}

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t'\R t <t _/.\R.J t k/' \t, tt)t\ t)1. )A))

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decd in the name of the first defendant. The second defendant promised to register a sale deed in favour of the plaintift, but did not cven turn up for registration. Referring to certain incidents i'hcre tho clcfendants cheated the plaintiff and others, the plainriff filed a surr tor specific performance in the Civil Court. Later on, the defendants filecl a memo before the Civil Court to transfer the case to the Commercial Court since the value involved is more than rupees C)ne Crore ancl that the said court has become funcfus orficlo. Re.;ection of this requcst led to tiling ot the present appeal under Section 9 o[ rhe Acr

¶105

19,1. The Hon'ble Supreme Court held:

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"5 The question that arises for consideration ls Wherhcr in rhc rrrr(,n s(,r of facts, the dispute between the parties can b(,t.rtrc(l ,.,,.,,,r,,,r,.,.,.,1 dispute?

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Explanation (a) to section 2(r)(c) statcs thar a (onrr)r(.r(.ri)r rrrslrrrL. srr.rrl not cease to be a commercial dispute merclv becaus|

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a) ir also involves action for recoven- ol. rrnmov,rlrt. l)r()l)(^{l I\ (ra1(l,} realization of monies out of immovabi(. pr,,lx rr\ (r;.rl ;t\ s(,r Lltlt, ()r involves aly other relief pertaining to immor;:rbl,. p.,,1r:,,r, I l. Merely because, there was a transactlon involvr A r tnt()rrl)l(. 1)r,)|](.,r\ (('orth more than One Crore and merel-," bet.ausc. ,,n ,,n*r,,r,, ()l Ils. Il Cr.res u.as- paid, the dispute would not bccomc ir ,,,n,nl..,i,,.1 (irsl).r(.. rr .equires to be qualified with other condirions.

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t2. The word "used" in Section 2(l)(cXvlt) rvrrulcl rnr.rrn ir(tLlull\ Lrsr.(l or -being used'as held by the Gujarat High corrrt rn t ,rsu lrt,rrrrh,,,T(. I,.!irr. Lrmrted v. GuJarat Akruti TCG Brotech Lrmrtcd il|r(l ()rh(.rs (10 Ill .+ SC(. 3-27 and Bombay High Court tn Dineshkuntirr(irrlirb<.lt,,rtrl .\sr.rrri,l . Commissioner of Income Tax and anorhcr 1JOot1 ,, sC1: qJ; t.h,.t:,,rrrr held that i[ the intention of thc latter uas l{) cxpirn(l tlr(, sc()p(. ()l rll( phraseologr used, would have becn diffcrcnt Thr, .'rlrcl ustlcl <lt.rtort.s 'actually used" and it cannot be said to be eilhcr rcirrlr tirr trscl or lrkr.lv ro be uscd", or^"to bc used". It was also hcld lhirt lh(.\r)r(l ]i,,.,,1 ,i,,,,,,,,.. actu.Jly used" and not merely 'readv fcrr ust.

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I3 It has -b€en brought to our noticc tititr lh(. S 1..1, I.rk,cl irgrrr sr rlrt luclgmcnt^{of Nagpur} Bench of the Bomlla\ lligli (.()ri , l(l u1 . ,,,,g,,,,,rt r1,,. ludgme:,t^{of-theGujarat HighCorlrt,rrt.rcirls,r,t,r,,,,r.,i,iil} llrc .\l)(.\ Court. Therefore, the word uscd thcrcirt musl l)(. su(.lt 1r,r,p,:irr., 1,,,.1,,,

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?\N IJSRJ CRP \o J0l8 OF )D2

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being "actually used" or^"being uscd" and not likely to b€ used or to be used at a later point of time."

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From the above decisions, it is noticed that Hon'ble Supreme Court was dealing with specilic aspects of what constitutes a commercial dispute in the peculiar facts of those cases. In none of these cases, scope of Section 2(1)(c)(xi) was considered.

¶115

It is beyond pale of doubt that a 'Joinr ventute' presupposes an association by two or more persons Lo Join together to undertake an economic activity. Further, the Clause (xi) of Section 2(1)(c) of the Act, 2015 only uses the term 'Joint venture', plain and simple, it is very extraustive and does not givc scope to any other interpretation. Therefore, whenever a dispute arises in pursuance to a 'Joint ve^ture'it is a Commercial dispute.

¶116

To test the validit], ol ttre subrnissions o[ learned counsel for the defendant we have also looked into thc clauses of the agrecment.

¶117

On 2.4.2OO9 plaintiff and defendant have entered into Joint Venture Agreement which r,'"as filed along rvith the plaint. The titie assigned to the agreement is',/oin, Venture Aqreentent'.

¶118

The terms of agreement disclose that the defendant has identified a land for development for commercial use ancl estimated investment required to executc thc prolect al- t 35 crorcs. Plaintiff agrecd to invest { 2 crores. He has also undcrtaken to sell flats constructed as per the terms of agreemellt. Thc maximum penod ol complction of the project

¶119

/,&/,( /(/ ('RP . ;ttltl ()l :0::

{

\ \

u.,as three years. The clauses also talk of sharing o[ profits. Default clause also envisages payment of IRR @ 18 Y" per annum to plaintiff. Thus, it is not a simple agreement to buy land and put the land Lo use, but to dcvelop a land identified for the purpose to earn profits.

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¶125

¶126

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 dispure 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(l)(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 clispute. On the contrary, as noticed in the earlier paragraphs, .loint Vcnture Agreement binds the commercial relationship. At any ratc clcfinition clatrse is open ended and does not impose any restr:rint or applir::rtion to specified instances ofjoint ventures.

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)(r. Further, Court is not venturing into merits of respcctir",e clarrns on scope o[ their^joint venture and obligations flou.rng tl'rcrc front. Thcse aspects require consideration by the trial Court, Court has onlr considered whether the dispute raised in the suit is tr cornmcrci:rl clispute and vvhether the Commercial Court has jurisdiction to (lecide thc dispute in the instant suit.

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27 On tl.rorough analysis of statutory scheme :rncl precedent clecisions, rve hold *rat the Commercial Court h:rs jLlrisdictiolt to

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P 'r?,/⁽⁽ ./S&/ ( Rt'\o l0l/J OF )0:-'

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adjudicate the dispute^{flowing out of 'joint uenture agreement' ifi the} instanl suit.^{We upholdthe decisiono[ CommercialCourt'Civil} Revision Petition fails.^{It is accordingly dismissed Miscellaneous} applications,^{if any pending stand closed'}

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SD/- MOHD. SANAULLAH^ANSARI ASSISTANT REGISTRAR

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//TRUE COPY//

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SECT OFFICER

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ONE FAIR COPY^{TO THE HON'BLE SRI JUSTICEP. NAVEEN RAO} IFOR THEIR LORDSHIPS^{KIND PERUSAL)} ONE FAIR CO.iiTO^{iTTE HON'BLE SRIJUSTICE J.SREENIVASRAO} - (FOR THEIR LORDSHIPS KIND PERUSAL)

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To,

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ThePrincioalspecialCourtintheCadreofDistrictJudgefortrialand Disoosal oi Cofimercial^{Disputes at Hyderabad}

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2 on6 cc to SRI PRABHAKAR^{PERI Advocate tol^u-ill..} J on; ca io sni v.v.^{PRATAP KUMARAdvocate [oPUC]} 4 Two CD CoPies 5 12 LR Copies c, fhe UnAer Secretary,^{Unionof lndia, t'4inistry of Law, Justice & Company} Affairs, New Delhi.

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