Gujarat HC: Property Trade Disputes Are Commercial

Quick Summary

The Gujarat High Court has clarified that a dispute concerning property used exclusively for trade or commerce will be considered a commercial dispute under the Commercial Courts Act, 2015. This ruling came in a case where a property was sold for use as a warehouse, and a subsequent dispute arose over unpaid license fees and the return of the property. The court emphasised that the exclusive use of the property for business purposes is the key factor, even if the dispute involves the recovery of immovable property.

In M/S. Kushal Ltd. v. M/S. Tirumala Technocast Pvt. Ltd, the Gujarat High Court held that in order to find out whether a dispute relating to property is a 'commercial dispute' or not under the Commercial Courts Act, 2015, what has to be checked is if the concerned property is used 'exclusively' in trade or commerce.
A Division Bench comprising Justices NV Anjaria and Samir Dave noted that a dispute arising out of agreements relating to property used in trade and commerce exclusively would form a commercial dispute.
In this case, the respondent plaintiff has bought a property from the petitioner-defendant through a sale deed of 2019 to be used by the latter as a warehouse for business.
Subsequently, a Leave and License Agreement was signed between the two parties for a monthly fee which was due from the defendant.
Thereafter, a legal notice was sent to the Defendant to pay the due amount and to return the suit property but he continued possession of the property.
Consequently, the plaintiff filed a suit for permanent injunction.
The petitioner-defendant contended that just because the respondent sought for recovery of an immovable property, it should not be treated as a commercial suit as it has no characteristics of one.
The defendant relied upon Ambalal Sarabhai Enterprises Limited Vs. K. S. Infraspace LLP and Another [(2020) 15 SCC 585] to support its contentions.
He further contended that according to Sec 2(1)(c), the premises of the immovable property should be used for trade and commerce exclusively for the suit to be termed a commercial suit.
The Court observed that a dispute would not cease to be a commercial dispute just because it included recovery of an immovable property.
The Court further observed that the defendant was using the concerned property as a warehouse for business purposes.
The Ld. Court then referred to section 2(1)(c) of the 2015 Act which talks about commercial disputes and noted that even if any one of the ingredients in the sub-clauses of the section are satisfied, the dispute would be called a commercial dispute.
The Hon'ble Court agreed with the decision of the commercial Court and held that the suit attracts the material ingredients of a commercial dispute.
Accordingly, the appeal was dismissed.

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