Order 4

Order Details: Ex-parte Judgement
Pdf Text: 1/11 Judgment in Com. Suit No. 483/2020
Lodged on : 06.03.2020
Admitted on : 18.12.2020
Decided on : 31.03.2023
Duration : Y M D
3 0 25
IN THE BOMBAY CITY CIVIL COURT AT MUMBAI
COMMERCIAL SUIT NO. 483 of 2020
CNR NO. : MHCC010029792020
Exh.28
Mr. Prakashchand Shantilal Jain ]
of Mumbai, Indian Inhabitant, ]
age 61 years, Occ : Business, ]
Karta of Prakashchand S. Jain HUF, ]
having address at flat no. 2601, Dwing, ]
Ashok Tower, Dr. S.S. Rao Road, ]
Mumbai 400 012. ] ...Plaintiff
Versus
1. M/s. Neev Realtors ]
a partnership firm ]
having its office at Neev Vittoria ]
Nesbit Road, Next to Mazgaon Sales ]
Tax office, Mumbai 400 010. ]
2. Chandulal Veerchand Jain ]
age : not known, Occupation : Business, ]
Partner of M/s. Neel Realtors ]
residing at 21, Kalpataru Apartments, ]
Seth Motisha Lane, Mazgaon Lane, ]
Mazgaon, Mumbai 400 010. ]
3. Jitendra Chandulal Jain ]
age : not known, Occupation : Business, ]
Partner of M/s. Neel Realtors ]
residing at 21, Kalpataru Apartments, ]
Seth Motisha Lane, Mazgaon Lane, ]
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Mazgaon, Mumbai 400 010. ]
4. Neev Infrastructure Private Limited ]
a company incorporated under the ]
Companies Act, 1956 being partner of ]
M/s. Neev Realtors having its registered ]
office at Neev Vittoria, Nesbit Road, ]
near Mazgaon Sales Tax Office, ]
Mumbai – 400 010 ] ...Defendants
Appearance:
Adv. Mr. Rajesh Patil along with Adv. Ish Jain for Plaintiff.
Adv. Ms. Minal Parab for Defendant Nos. 1 & 3.
CORAM : SHRI. A.S.SALGAR
ADHOC JUDGE, (C.R.NO.31)
DATED : 31st MARCH 2023
J U D G M E N T
(Delivered on : 31.03.2023)
The plaintiff has filed the present suit against the
defendants for the recovery of the amount of Rs.33,24,547/ along with
further interest at the rate of 18% per annum on the principal amount
of Rs.25,00,000/.
2. The plaintiff's case may be summarized as under :
The plaintiff is Karta of his HUF Prakashchand S. Jain HUF
a businessman dealing in Textiles. The defendant no. 1 is a partnership
firm and the defendant nos. 2 to 4 are the partners. The defendants
were in need of financial assistance and they approached the plaintiff,
expressed their need for loan on friendly relations so as to come out
from the financial difficulties and stringency faced by them in their
business and represented that the said loan was required for short term
and promised to return the amount with interest. The defendants had
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persuaded and induced the plaintiff to part with loan to the extent of
Rs.25,00,000/. On the assurances and promises of repayment of the
amount with interest, the plaintiff advanced a loan of Rs.25,00,000/ to
the defendants by cheque. The said amount has been duly credited in
the bank account of defendant no. 1. The defendants could not repay
the sum. The defendant nos. 2 and 3 time and again stated that their
business needed freehand sums and it was difficult for them to repay
the huge sum, however paid interest from time to time till 31.03.2017.
The defendants have signed and executed confirmation letter dated
01.04.2016 confirming acknowledging their liability of
Rs.26,64,250/ duly signed and executed by the defendant no. 1
through its authorized signatory/partner. The plaintiff has demanded
from the defendants the said amount with interest on several occasions.
The defendants promised to pay the principal amount along with
interest. The defendants deliberately avoided to discharge their liability.
Therefore, the plaintiff through his Advocate issued a legal notice on
08.04.2019 and reminder letter dated 18.04.2019 calling upon the
defendants to return the principal amount of Rs.25,00,000/ with
interest.
3. The plaintiff further submitted that his Advocate received a
letter dated 04.05.2019 from the defendants, interalia seeking time to
verify their account, however the fact remains that the defendants did
not dispute the amount payable. The defendants attempted to take
undue advantage by playing tactics to gain time to discharge their
lawful liability. Once again the plaintiff through his Advocate sent
another letter dated 02.05.2019 and demanded the due amount with
interest. The defendants have duly received the said letter. However,
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the defendants neither made the payment nor responded to the said
letter. The plaintiff is entitled to recover from the defendants the total
amount of Rs.33,24,547/ with interest. Hence, the plaintiff filed the
present suit against the defendants and prayed that the defendants be
ordered to pay to the plaintiff a sum of Rs.33,24,547/ with interest at
the rate of 18% per annum.
4. The defendant nos. 1 & 3 submitted their Written
Statement at Exh.4 and resisted the suit. The defendants contended that
the suit is false, badinlaw and is not maintainable under the provisions
of Commercial Court Act, 2015. The suit filed by the plaintiff is not
maintainable, as the alleged dispute involved in the suit cannot be
termed as a commercial dispute. Hence, the suit is barred under the
provisions of the Commercial Court Act, 2015. The defendants further
contended that the suit is bad for misjoinder of the parties and hence is
liable to be dismissed. These defendants have denied all the allegations
made in the plaint. The defendants submitted that the defendant no. 3
is a partner of defendant no. 1 firm and defendant nos. 2 and 4 are not
the partners of defendant no. 1 firm. These defendants submitted that
they have not signed and executed a confirmation letter dated
01.04.2016 confirming acknowledging liability at the request of the
plaintiff as alleged. The confirmation of account referred by the plaintiff
under the paragraph is false and bogus document created by the
plaintiff. The plaintiff has no cause of action to file the present suit and
hence the Court has no jurisdiction to try and entertain the suit. Lastly,
the defendant nos. 1 and 3 prayed for dismissal of the suit with cost.
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5. The suit summons was duly served to the defendant nos. 2
& 4 but they failed to appear before the Court. Hence, as per order
dated 28.01.2021, the suit proceeded exparte against the defendant
nos. 2 & 4.
6. From the rival contention made by parties in their pleading,
my Learned Predecessor has framed issues at Exh.5.
7. In support of the pleading, the plaintiff namely
Prakashchand Shantilal Jain is examined at Exh.8. The additional
affidavit filed by the plaintiff is at Exh.8A. The plaintiff filed relevant
documents along with list Exh.9. Exh.12 is the original bank passbook
of Canara Bank, Exh.13 is the Ledger Statement of plaintiff's Canara
Bank, Exh.14 is TDS Certificates, Exh.15 is original Confirmation Letter,
Exh.16 is office copy of notice, Exh.17 is original postal receipts and
acknowledgment card, Exh.18 is office copy of reminder letter, Exh.19
is the original postal receipts and acknowledgment card, Exh.20 is
original letter dated 22.04.2019 received by Advocate for plaintiff from
the defendants, Exh.21 is office copy of letter dated 02.05.2019, Exh.22
is original postal receipts and acknowledgment card, Exh.23 is office
copy of particulars of claim, Exh.24 & 25 are the Certificates under
Section 65B of Indian Evidence Act. The evidence closure pursis of the
plaintiff is at Exh.26.
8. In the rebuttal, the defendant nos. 1 & 3 have not adduced
any oral evidence. The evidence closure pursis of defendant nos. 1 & 3
is at Exh.27.
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9. From the above facts and circumstances, six issues were
framed by my Learned Predecessor at Exh.5 and I have recorded my
finding in respect of issue no. 6 with the reasons to follows. For
deciding controversy between the parties, I have taken issue no. 6 for
discussion regarding jurisdiction.
ISSUES FINDING
6) Whether defendant no. 1 and 3
prove that the suit is not
maintainable against them as a
commercial suit?
In affirmative
7) What order as to cost? As per final order.
8) What order and decree? As per final order.
R E A S O N S
10. Heard Learned Advocate Mr. Ish Jain along with Mr. Rajesh
Patil for Plaintiff and Learned Advocate Ms. Minal Parab for Defendant
nos. 1 & 3 at length.
As to issue no. 6
11. The evidence of PW1 Mr. Prakashchand Jain is Exh. 8 and
Exh.8A. He has reproduced all the contents of the plaint in his
examinationinchief. He has filed the documentary evidence at Exh.12
to 25. According to the plaintiff, the subject matter is a commercial
dispute and hence the Commercial Court has jurisdiction. On the
contrary it is the contention of defendant nos. 1 and 3 that the suit is
not maintainable as alleged dispute involved in the suit cannot be
termed as commercial suit within the meaning of Section 2 (1)(c) of the
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Commercial Court Act, 2015. According to the defendants, the suit is
barred under the provisions of Commercial Court Act, 2015.
12. I have gone through the averments made in the plaint. As
per averments made in the plaint, the plaintiff advanced to the
defendants a sum of Rs.25,00,000/ by cheque. According to the
plaintiff, the defendants were in financial difficulty and they requested
the plaintiff for business loan and therefore on 26.08.2015 the plaintiff
lent and advanced to the defendants a sum of Rs.25,00,000/. This
averment made by the plaintiff in the plaint prima facie shows that
there was friendly loan transaction between the plaintiff and the
defendants. The transaction of advancing the amount as friendly loan is
not a commercial transaction. The disputes which are in the nature of
ordinary transactions of merchants, business, financers and traders will
fall within the purview of 'commercial disputes', and particularly those
relating to mercantile documents. Thus, it covers the ordinary/normal
transactions carried out by the entities mentioned in the said clause and
the term 'merchant' would cover a person who buy and trade, in any
commodity and therefore, the term as explained correspond to the all
sort of traders, buyers and sellers. It appears that there is no trading
transaction between plaintiff and defendants. The business of the
plaintiff is not of money lending. The subject matter does not fall within
the definition of commercial dispute defined under section 2(1)(c) of
Commercial Courts Act. The dispute which are in the nature of ordinary
transactions of merchants, business, financers and traders will fall
within the purview of 'commercial dispute'. The advancing of amount as
a friendly loan is not a commercial dispute in nature. The pleading of
the plaintiff itself indicates that the nature of the transaction is not
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commercial transaction. In my view, this suit does not come under the
definition of commercial dispute. Therefore, this Court has no
jurisdiction to entertain the suit.
13. The question that arise for consideration is whether the
singular transaction by way of hand loan would fall within the meaning
of commercial dispute, as the Act of 2015 intend to cover only
commercial disputes and not any other form of disputes where the basis
of disagreement between the parties has a non commercial cause. The
transaction involved must have a commercial favour and its genesis lies
in the body that the parties entered into the said transaction with the
commercial purpose. The dispute arising out of the transaction between
the persons who are classified in Clause (i) of the Section 2(c) only
qualify to be covered by the definition of commercial dispute. In the
present case, the plaintiff did not transact in the capacity of financer.
The dispute was not a commercial dispute and that an ordinary
transaction of the four classes of persons mentioned in Section 2(1)(c)
(i) arising out of mercantile documents alone would fall within the
definition of commercial dispute. Therefore, taking a hand loan for
whatever purposes including starting a business of agency or any other
business cannot come within the four corners of the definition of
commercial transaction. In my view, the transaction between the parties
is not a commercial transaction and especially when it is an admitted
position that it was a friendly loan between the plaintiff and the
defendants. In my view, the transaction of advancing the amount as a
friendly loan is not commercial in nature.
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14. On the point of “commercial dispute” the Hon’ble Supreme
Court in case of Ambalal Sarabhai Enterprises Limited Vs. K.
S.Infraspace and another :(2020) 15 SCC 585 held that,
“For a dispute to be a commercial dispute under S. 2(1) (c) (vii), the
agreement between the parties must refer to immovable property
used/being used exclusively in trade or commerce. The word “used”
occurring in S.2(1)(c)(vii) denotes “actually used” and it cannot be
either “ready for use” or “likely to be used” or “to be used”. Merely
because the property is likely to be used in relation to trade and
commerce, the same cannot be a ground to attract jurisdiction of
Commercial Court. Such a wide interpretation would defeat the
object of Commercial Courts Act with regard to speedy disposal of
commercial disputes thereunder. In present case, there was nothing
on record to show that at the time when the agreement to sell
concerned came to be executed, the property was being exclusively
used in trade and commerce so as to bring the dispute within the
ambit of S. 2(1)(c)(vii) of Commercial Courts Act. Consequently, the
impugned order of High Court directing Commercial Court to return
the plaint for its presentation before the appropriate court was
proper”.
15. Hon’ble Bombay High Court in case of Glasswood Realty
Pvt. Ltd. and others v/s. Chandravilas Kailashkumar Kothari: 2021
SCC Online Bom 5032 : (2022) 1 Bom CR 527, held
“9. The disputes which are in the nature of ordinary transactions of
merchants, business, financers and traders will fall within the
purview of ‘commercial disputes’, and particularly those relating to
mercantile documents. Thus, it covers the ordinary/normal
transactions carried out by the entities mentioned in the said clause
and the term ‘merchant’ would cover a person who buy and trade, in
any commodity and therefore, the term as explained correspond to
all sort of traders, buyers and sellers. A trader is, necessarily a person
who engages himself in trading in goods;buying and selling them at
profit and the word ‘trader’ has received a liberal interpretation with
passage of time, being not only one who sell goods substantially in
the form in which they are bought, but it would also cover a member
of stock exchange,who buy and sell securities on the exchange floor
or one who buys and sells commodities and commodity futures for
others, in anticipation of speculative profit. A ‘financer’ as per Oxford
Dictionary is an administrator, collector of taxes or one who is skilled
in levying and managing public money or as a capitalist concerned in
financial operations. The aforesaid is an indicator that the goal of a
financier is to secure ample revenue.
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17. In the wake of the above, the impugned order which take a view
that the transaction of advancing the amount as a friendly loan is
commercial in nature, is an erroneous finding as a solitary transaction
of advancing loan, on friendly terms, unlike a commercial lending
with the prevailing market rate, would fall short or ordinary
transaction of a financer, banker. More so, even the plaintiff is
conscious of this position and in her response to the Application filed
for return of plaint for presentation of appropriate court, she admits
so”.
16. The ratio laid down by the Hon'ble Supreme Court and the
Hon'ble High Court applies to the present case. Hence, it can be said
that advancing amount as friendly loan does not fall within definition of
commercial dispute. In the light of aforesaid rulings, I am of the view
that the dispute between the parties is not a commercial dispute. Hence
the plaint is liable to be returned to the plaintiff for presentation before
proper Court.
17. In the present case, the plaintiff has specifically pleaded
that the defendants were in need of loan. On his request, the plaintiff
advanced loan to the defendants. The pleading of the plaintiff itself
indicates that he advanced friendly loan to the defendants. The business
of the plaintiff is not of money lending. There is no trading transaction
between the plaintiff and the defendants. The suit does not fall under
the definition of commercial dispute. Therefore, this Court has no
jurisdiction to entertain the suit. In my view, the plaint needs to be
returned to the plaintiff for presentation before the proper Court.
Hence, I answer issue no. 6 in the affirmative. Hence, I pass the
following order:
ORDER
1) The plaint be returned to the plaintiff for presentation in
the proper Court.
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2) The Registrar (C) is directed to convert and assign the
suit before the appropriate Court.
3) The plaint alongwith the suit proceeding be sent to the
Board Department.
4) The parties to appear before the assigned Court on
25/04/2023.
Dated : 31.03.2023 (A.S. Salgar)
Adhoc Judge,
City Civil Court
Gr. Mumbai.
Dictated on : 31.03.2023
Transcribed on : 12.04.2023
Checked & signed on : 18.04.2023
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE ORIGINAL
SIGNED JUDGMENT/ORDER”
UPLOAD DATE TIME NAME OF STENOGRAPHER
18.04.2023 4.50 p.m. Prachi Y. Potdar
Stenographer Grade I
Name of the Judge HHJ Shri. A.S. Salgar
(C.R.NO. 31)
Date of Pronouncement of
Judgment/Order.
31.03.2023
Judgment/order signed by P.O on 18.04.2023
Judgment/order uploaded on 18.04.2023 9
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