1) The petitioner, who is the defendant in Civil Suit (B) No. 03/2019, has preferred two writ petitions challenging therein the order dated 23.10.2019, passed by the VIIth Additional District Judge, Ambikapur, District Surguja, where an application moved by the petitioner, under Order VII Rule 10 read with 151 of the CPC has been rejected and further against the order dated 24.10.2019, whereby his right to file written statement has been closed.
2) The brief facts, of the present case, are that the respondent/ plaintiff instituted a Civil Suit for recovery of Rs. 15.56 lacs from the petitioner/defendant before the District Court, Ambikapur, on the ground that the plaintiff had deposited Rs. 15.54 lacs in the bank account of the defendant for participating in a tender proceeding, floated by the Water Resources Department, Jharkhand, as plaintiff was ineligible to participate in it. The amount of Rs. 15.54 lacs was transferred in the bank account of defendant through R.T.G.S. on 27.11.2017. Thereafter, the defendant participated in the bid process; however, he couldn’t become a successful bidder. Thereafter, the plaintiff requested the defendant many times to refund the amount of Rs.15.54 lacs, which was deposited at the time of bidding as security deposit with the Water Resources Department, Jharkhand. After failure of the defendant in tender proceeding, the security deposit of Rs. 15.54 lacs deposited with the said Department, was refunded back to the defendant, but the defendant did not pay any heed to the requests made by the plaintiff, therefore, the plaintiff filed a Civil Suit. Before filing of the written statement, the defendant moved an application under Order 7 Rule 10 of the CPC for return of plaint for presenting it before the Commercial Court, Raipur as the contents of the plaint disclose it as a commercial dispute as amount exceeding Rs. 3 lacs is involved in the suit.
3) The plaintiff filed reply to the aforesaid application on 11.10.2019 and submitted that there was no written agreement between the parties, and the dispute between the parties is not a commercial dispute as it was a mere transfer of funds into the bank account of the defendant.
4) The learned trial Court after hearing both the parties, rejected the application on the ground that the contents of the plaint do not reflect the dispute to be a “commercial dispute” as defined under Section 2(1)(c) of the Commercial Courts Act, 2015 (for short, 'the Act,2015'). The order was passed by the learned trial Court on 03.10.2019 and on the same date last opportunity was granted to the defendant to file written statement.
5) The defendant could not file the written statement till 14.10.2019; therefore he moved an application seeking additional time to file written statement. The learned trial Court vide order dated 24.10.2019 in accordance with the provisions of Order 8 Rule 1 of CPC closed the right of the petitioner to file written statement.
6) The defendant/petitioner has filed two petitions i.e. WP227/924/2019 & WP227/926/2019, in which, WP227/924/2019 is filed against rejection of application filed under Order 7 Rule 10 of the CPC, whereas, WP227/926/2019 is filed against closure of his right to file written statement.
7) Learned counsel appearing for the defendant/petitioner would submit that findings recorded by the learned trial Court are perverse and contrary to the record and trial Court has completely ignored the plaint averments. He would further submit that in para 3 of the plaint, the plaintiff has categorically pleaded that he had offered the defendant to participate in a bid on his behalf and same was accepted by the defendant. He would further submit that there was oral contract between the parties. He would also submit that if the dispute arises out of an agreement, irrespective of the fact whether such an agreement is oral or in writing, if it is in a nature of the commercial agreement, same shall fall within the definition of Section 2(1)(c) of the Act, 2015. He would refer to the Section 2(1)(c) of the Act, 2015, where the term “commercial dispute” is defined. He would also refer to para-9 of the plaint averments and submit that the plaintiff himself has admitted that it was a commercial transaction, thus, he would pray to set aside the order passed by the learned VIIth Additional District Judge, Ambikapur dated 23.10.2019.
8) With regard to impugned order passed by the learned trial Court in WP227 No.926 of 2019, learned counsel for the petitioner would submit that the order passed by the learned Court below is erroneous as Order 8 Rule 1 of the CPC is directory in nature, and one more opportunity ought to have been granted after imposing some cost, and thus, he would pray to allow the petition.
9) On the other hand, learned counsel appearing for the respondent would submit that mere transfer of funds between the parties cannot be termed as “commercial dispute”. He would further submit that no written document was executed between the parties, and the parties are private contractors, therefore, they are not covered within the definition of the Merchant, Bankers, Financier & Traders. He would further submit that no tender was allotted to any of the parties and they were not involved in construction of any infrastructure activities. He would also submit that there was no written agreement between the parties so as to establish the factum of participation in the tender process and thus, the dispute between the parties is not a “commercial dispute” therefore, the learned trial Court has rightly rejected the application.
With regard to Second petition, he would submit that several opportunities were granted to the defendant to file written statement, but he failed to avail the opportunities so granted, therefore, learned trial Court rightly closed the right of the petitioner to file written statement.
10) I have heard learned counsel for the parties and perused the documents annexed with petitions with utmost circumspection.
11) Before dwelling into the merits of the case, it would be advantageous to go through certain provisions of the Indian Contract Act, 1872 (for short, 'the Act, 1872'). Section 2(a), 2(b), 2(h) and Section 10 of the Act, 1872 read thus:-
“2(a).When a person signifies to another his willingness to do or to abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence, he is said to make a ‘proposal’;
2(b).When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal, when accepted, becomes a ‘promise’;
2(h). An agreement enforceable by law is a ‘contract’;
10. What agreements are contracts. -- All agreements are contracts if they are made by the free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void.
Nothing herein contained shall affect any law in force in [India] and not hereby expressly repealed by which any contract is required to be made in writing or in the presence of witnesses, or any law relating to the registration of documents.”
12) Now coming to the provisions of Section 2(1)(c) of the Commercial Courts Act, 2015 which reads as under:-
Section 2(1)(c) “commercial dispute” means a dispute arising out of––
“(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;
(ii) export or import of merchandise or services;
(iii) issues relating to admiralty and maritime law;
(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;
(v) carriage of goods;
(vi) construction and infrastructure contracts, including tenders;
(vii) agreements relating to immovable property used exclusively in trade or commerce;
(viii) franchising agreements;
(ix) distribution and licensing agreements;
(x) management and consultancy agreements;
(xi) joint venture agreements;
(xii) shareholders agreements...
(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;
(xiv) mercantile agency and mercantile usage;
(xv) partnership agreements;
(xvi) technology development agreements;
(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;
(xviii) agreements for sale of goods or provision of services;
(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;
(xx) insurance and re-insurance;
(xxi) contracts of agency relating to any of the above; and
(xxii) such other commercial disputes as may be notified by the Central Government.
Explanation.––A commercial dispute shall not cease to be a commercial dispute merely because—
(a) it also involves action for recovery of immovable property or for realisation of monies out of immovable property given as security or involves any other relief pertaining to immovable property;
(b) one of the contracting parties is the State or any of its agencies or instrumentalities, or a private body carrying out public functions;”
13) In the present case, the plaintiff filed a civil suit for recovery of amount of Rs. 15.54 lacs making averment that in the month of November, 2017 a tender was floated by the Water Resources Department, Jharkhand, and the plaintiff requested the defendant to participate in the said bid as he was not eligible to participate in it. It is further pleaded that the defendant accepted the proposal of the plaintiff on 26.11.2017, and consented to participate in the tender process. In para-4 it is stated that on 27.11.2017, tender form and other documents were sent through email to the plaintiff and bank account number of the defendant was also obtained, and on 27.11.2017 at 2:33 hrs. Rs. 15.54 lacs were transferred in the bank account of the defendant through R.T.G.S. It is also pleaded that the defendant could not qualify in the bid; therefore, the security amount of Rs. 15.54 lacs was refunded by the said department of Jharkhand. In para-9, it is stated that the amount of Rs. 15.54 lacs is still lying with the defendant as a trustee and he is utilizing these funds in trade & business activities and getting benefits from it.
14) From the averments made in para-3 of the plaint, it appears that a proposal was given by the plaintiff to the defendant on 26.11.2017 and it was accepted on the same date. Pursuant to acceptance of proposal, on 27.11.2017 tender documents were sent through Email and amount of Rs. 15.54 lacs were also transferred through R.T.G.S. Though the contract was not a written contract even then, it was a valid contract according to the Section 10 of the Act, 1872 as it was made under free consent of the parties, for a lawful consideration and with a lawful object. Further, the consent was not obtained by employing coercion, undue influence, fraud, misrepresentation, or mistake.
15) It is vehemently argued by learned counsel for the respondent that there was no written contract between the parties but it is not required that terms of a contract should always be reduced into writing in order to conclude it.
16) In Ladymoon Towers Private Limited Vs. Mahendra In-vestment Advisors Private Limited, 2021 SCC OnLine Cal 4240, the High Court of Calcutta observed thus-
“4. In order to ascertain whether the present dis-pute qualifies as a “ commercial dispute” within the purview of the Act, it is necessary to break down the classes of persons and transactions contemplated in the above clause. Since clauses (ii) to (xxii) do not apply in this case, the construction of 2(1)(c)(i) falls for consideration in the present case.
“………. Ordinary transactions of merchants, bankers, financiers and traders ………….”.
“Merchants”
6. P. Ramanatha Aiyar's The Law Lexicon, 2nd Edi-tion, Reprint 2010 defines a “merchant” as one who buys and trades in anything and as merchandise in-cludes all goods and wares exposed to sale in fairs or markets. The definition of merchant extends to all sorts of traders, buyers and sellers.
“Bankers”
7. In Halsbury's Laws of England, Fourth Edition, Volume 3, a banker has been defined as one who is involved in the business of receipt of money on cur-rent or deposit account and the payment of cheques drawn by and the collection of cheques paid in by a customer. Section 5(b) of The Banking Regulation Act, 1949 defines the work of a Banker on the same lines.
“Traders”
8. The commonly accepted definition of a “trader” is one who trades in goods, buys goods and sells them at a profit. Black's Law Dictionary, Eighth Edi-tion, also defines a trader as one who sells goods substantially in the form in which they are bought or as a member of a stock exchange, buys and sells securities on the exchange floor or one who buys and sells commodities and commodity futures for others or for his/her own account in anticipation of a speculative profit.
“Financiers”
9. The Oxford Universal Dictionary Illustrated de-fines a “Financier” as an administrator, collector or farmer of taxes or one who is skilled in levying and managing public money or as a capitalist concerned in financial operations. The definition proceeds to clarify that the objects of a financier are to secure an ample revenue.
10. The above definitions would make it clear that the dispute between the plaintiff and the defendant, which arises out of a loan given by the plaintiff to the defendant on the basis of a personal relation of familiarity, cannot be brought under the individual definitions of a transaction between either mer-chants, bankers, financiers and traders, used dis-junctively.
“Commercial Action”
11. Punjab University v. Unit Trust of India, (2015) 2 SCC 669, set out the definition of the term ‘com-mercial’ as defined in Stroud's Judicial Dictionary. Under this definition, commercial action was meant to include any cause arising out of the ordinary transactions of merchants and traders and without prejudice to the generality of the foregoing words, any cause relating to the construction of a mercan-tile document, the export or import of merchandise, affreightment, insurance, banking, mercantile agency and mercantile usage. The decision also explained that the words “commercial purpose” would cover an undertaking the object of which is to make a profit out of the undertaking.
“Mercantile documents”
12. The Delhi High Court in Kailash Devi Khanna v. DD Global Capital Ltd., 2019 SCC On-Line Del 9954 has held that all suits for recovery of monies cannot brought under Section 2(1)(c)(i) of the Act where the suit is not based on any transac-tion relating to mercantile documents. The Bombay High Court in Bharat Huddanna Shetty v. Ahuja Properties & Developers; (Interim Application (L) No. 14350 of 2021) rejected the contention that the suit should be treated as a commercial summary suit on the mandate that the transaction had oc-curred between merchants, bankers, financiers and traders and further clarified that transactions be-tween individuals where the plaintiff gives a friendly loan to a needy friend will not be seen as a transac-tion in the course of ordinary business. The Madras High Court in R. Kumar v. T.A.S. Jawahar Ayya (C.S. No. 431 of 2019) was of the view that since the plaintiffs did not transact in the capacity of financiers, the dispute was not a “commercial dis-pute” and that an ordinary transaction of the four classes of persons mentioned in 2(1)(c)(i) arising out of mercantile documents alone would fall within the definition of a commercial dispute. The Calcutta High Court in Associated Power Co. Ltd. v. Ram Taran Roy, AIR 1970 Cal 75 focused its gaze on a “mercantile document” within the meaning of the First Schedule of the City Civil Court Act, 1953 as a document between merchants and traders where the construction, interpretation and meanings of words and clauses of the mercantile documents would assume significance.
13. It should also be pointed out that the words used in sub-clause (i) of clause (c) are “ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile docu-ments ………”. The placement of the underlined words between ordinary transactions of the named persons and the mercantile documents indicates that all transactions between the specified classes of persons will not result in a “commercial dispute” where the transaction does not relate to mercantile documents. Hence, only a dispute arising out of a transaction between the named classes of persons which has been formalized by way of a mercantile document will be a “commercial dispute” under Sec-tion 2(1)(c)(i) of the 2015 Act.
14. The second part of sub-clause (i) of clause (c) “………… including enforcement and interpreta-tion of such documents;” has often missed out any assessment of whether a dispute is a “commercial dispute” under this sub-clause. Associated Power considered this aspect of the matter, namely, whether the dispute involving the construction, in-terpretation and meaning of words and clauses of the mercantile documents, could be a “commercial dispute” on this basis.
15. The case-law on the subject would indicate that a mercantile document is a document used in a transaction or in relation to a transaction between merchants, bankers, financiers and traders. In the present case, the statements in the plaint make it clear that the plaintiff lent money to the defendant by way of an oral understanding without formalising or reducing such understanding in writing. The plaint does not plead the existence of any agree-ment, much less a written agreement involving a mercantile document.
16. South City Projects (Kolkata) Ltd. v. Ideal Real Estates Pvt. Ltd.; (C.S.255 of 2019), a decision of a learned Single Judge of this court shown on behalf of the plaintiff can be referred to in respect of what would constitute a “commercial dispute” under the provisions of the 2015 Act can be distinguished from the present case since the defendant in South City Projects did not dispute that the claim in the suit was a “commercial dispute”. The plaintiff had even obtained registration under the Bengal Money-Lenders Act, 1940 in the facts of that case. The Ob-jects clause in the Memorandum of Association of the plaintiff in that case also permitted the plaintiff to lend an advance money which the court took into account and held that the transaction was, there-fore, within the scope of the business of the plaintiff.
17. Clause 14 of the Objects clause of the plaintiff-company in the present case allows the plaintiff to invest money out of the surplus funds of the plain-tiff-company in a manner as the plaintiff may deem fit. This clause cannot be construed to mean that the plaintiff is in the business of giving loans or lending money for the simple reason that a loan cannot be equated to an investment. It can even be said that a loan and an investment are antithetical and are mutually destructive in concept in the light of the expected end-result.
18. Although a point has been taken with regard to the decisions shown on behalf of the defendant as only being between individuals, it may be noted that Section 2(1)(c)(i) speaks in a language which is group-neutral, that is no distinction is made be-tween transactions between individuals and compa-nies or those between individuals and juristic enti-ties.
20. The definition section of the 2015 Act only con-templates a “commercial dispute” and not any other form of dispute where the basis of disagreement be-tween the parties has a non-commercial cause. The gradation of disputes in Section 2(1)(c) taking into account all possible forms of agreements from which a “commercial dispute” may arise, makes it clear that the framers of the statute gave emphasis on the commercial flavour of the transaction as op-posed to agreements entered into between parties without a commercial purpose. The qualification of the person being a Merchant, Banker, Trader or Fi-nancier imparts an unimpeachable commercial flavour to the transaction and the resulting dispute. The Insolvency and Bankruptcy Code, 2016, for ex-ample, defines a dispute from a broader perspec-tive as any suit or arbitration proceedings relating to an existing debt - Section 5(6)(a). The commercial purpose would generally mean a transaction by which a person's commercial or economic interests may be advanced and would result in an economic benefit to that person. It would not include an agreement where profit-making is an incidental out-come of the transaction or may happen by accident. Although, a “hand loan”, for example, is given by a person or entity to another with the expected out-come of the principal sum being returned with inter-est, the essential commercial flavour in such a loan may be lost by reason of the informal terms under which the money is lent and advanced and the con-sequent uncertainty which may result therefrom. The requirement of fixing the transaction within the ambit of Section 2(1)(c)(i), namely, between the named classes of persons can be construed being in aid of what the Act intends to cut down, namely, unnecessary wastage of time on ascertaining whether a dispute is a commercial dispute. The ex-haustive categories of agreements in 2(1)(c)(i) - (xxii) leaves no doubt that the 2015 Act seeks to bring within its fold an inclusive range of disputes where the underlying purpose of the transaction is a commercial interest of the parties.”
(emphasis supplied)
17) Bare perusal of the term “commercial dispute” as defined under Section 2(1)(c) of the Act, 2015 makes it amply clear that the dispute between the plaintiff and the defendant, which arises out of a certain amount advanced by the plaintiff to the defendant for making a bid in the tender floated by the Water Resources Department, Jharkhand, cannot be brought under the individual definition of a transaction between either mer-chants, bankers, financiers and traders, used under the afore-said Section.
18) In the present case, there was an oral contract as no written agreement was entered into between the parties for making a bid in the tender floated by the Water Resources Department, Jharkhand and for the same, amount as aforesaid was advanced by the plaintiff to the defendant. Thus, no written document was formalized between the parties so far as to give rise to the present dispute, in that view also, the dispute present between the parties does not fall within the four corners of the definition of “commercial dispute” as provided under Section 2(1)(c) of the Act, 2015. Needless to say that all suits for recovery of monies cannot be brought under Section 2(1)(c)(i) of the Act, 2015 where the suit is not based on any transaction relating to mercantile documents.
19) Taking into consideration the elaborate judgment passed by the High Court of Calcutta in Ladymoon Towers Private Limited (supra), and the facts and circumstances of the present case, I do not find any illegality or infirmity in the order passed by the learned VIIth Additional District Judge, Ambikapur, dated 23.10.2019 in Civil Suit (B) No. 03/2019. Accordingly, WP227 No. 924 of 2019 is dismissed.
20) Now, coming to WP227/926/2019 which is filed by the petitioner/defendant against the order dated 24.10.2019, whereby his right to file written statement has been closed, complying with the provisions of Order 8 Rule 1 of the CPC. The learned court below has held that sufficient opportunities have been afforded to the defendant as per the provisions of Order 8 Rule 1 of the CPC, however the written statement has not been filed by the defendant within the prescribed time period.
21) In Kailash v. Nanhku , (2005) 4 SCC 480 it was observed therein as under:-
46. We sum up and briefly state our conclusions as under:
(v) Though Order 8 Rule 1 CPC is a part of proce-dural law and hence directory, keeping in view the need for expeditious trial of civil causes which per-suaded Parliament to enact the provision in its present form, it is held that ordinarily the time schedule contained in the provision is to be fol-lowed as a rule and departure therefrom would be by way of exception. A prayer for extension of time made by the defendant shall not be granted just as a matter of routine and merely for the asking, more so when the period of 90 days has expired. Exten-sion of time may be allowed by way of an excep-tion, for reasons to be assigned by the defendant and also be placed on record in writing, howsoever briefly, by the court on its being satisfied. Extension of time may be allowed if it is needed to be given for circumstances which are exceptional, occasioned by reasons beyond the control of the defendant and grave injustice would be occasioned if the time was not extended. Costs may be imposed and affidavit or documents in support of the grounds pleaded by the defendant for extension of time may be de-manded, depending on the facts and circumstances of a given case. (emphasis supplied)
22) Considering the fact that the time schedule contained in Order 8 Rule 1 of the CPC is to be followed as a general rule and departure therefrom would be an exception. As a matter of routine, extension of time for filing written statement cannot be granted to the defendant, however, it may be allowed in exceptional circumstances, subject to sufficient reasons assigned by the defendant. Further considering the fact that provisions are of directory nature and the plaintiff can be compensated by way of monetary compensation, therefore, learned Court below ought to have granted one more opportunity to the defendant for filing of the written statement.
23) Consequently, order passed by the learned trial Court in Civil Suit (B) No. 03/2019 dated 24.10.2019 is hereby set-aside. The defendant is granted one more opportunity to file written statement subject to payment of cost of Rs.5,000/, payable by the defendant to the plaintiff.
24) In the result, WP227 No. 924 of 2019 is dismissed, whereas, WP227 No. 926 of 2019 is allowed.
