Life Shine Medical Services Pvt Ltd. vs Dr.Aletyjeevan Reddy

This Civil Revision Petition is filed aggrieved by the Docket Order dated 20.02.2023 in O.S.(SR).No.829 of 2023 of the Principal District and Sessions Judge at Malkajgiri, Medchal-Malkajgiri District, as being illegal and contrary to settled principles of law.

Heard learned counsel for the petitioner and perused the record.

The petitioner herein is the plaintiff in the suit filed for recovery of money.

The brief facts as enumerated in the plaint are as follows:

i. The petitioner herein is in the business of healthcare and allied activities. Having established a hospital in the name of ‘Tulasi Hospital’ in the suit scheduled property, the petitioner had leased the same to the respondents herein in the year 2018, initially for a monthly rent of Rs.52,50,000, which was to be increased to Rs.55,00,000 after 6 months. Despite having executed a written agreement on 01.05.2018, since the respondents had not cooperated in registration of the same, the petitioner and the respondents have continued in an oral lease on a monthly basis.

ii. It is the case of the petitioner that the respondents without any intimation had vacated the suit scheduled property on 30.10.2019. As on the said date the arrears of rent amounted to Rs.2,77,66,844/-. After adjusting the rental dues against the security deposit, the outstanding arrears of rent amounted to Rs.1,77,66,844.

iii. It is then pleaded that the petitioner herein had also cleared the claims of the creditors of the respondents’ amounting to Rs. 3,11,78,609/-. The instant suit is filed for recovery of the said amount paid by the petitioner herein to the creditors of the respondents.

On the suit being presented, the Court below had returned the same, vide docket order dated 20.02.2023 with a direction to present it before proper forum as the transaction between the parties is a commercial transaction under Section 2(1)(c)(vii) of the Commercial Court Act, 2015 (hereinafter referred to as ‘the Act, 2015’). Aggrieved by the same, the present revision is preferred.

It is the case of the petitioner that since there was no valid lease agreement between the parties and the relief was for recovery of money paid towards discharging the respondents’ debt, the dispute is not commercial in nature falling within the scope of Section 2(1)(c)(vii) of the Act, 2015.

In order to examine whether the dispute in the present case was commercial in nature, it is appropriate to consider Section 2(1)(c) of the Act, 2015 which defines ‘Commercial Dispute’ as under:

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;

As seen above, Section 2(1)(c)(vii) which deals with agreements relating to immovable property used exclusively in trade or commerce, does not make a distinction between oral and  written agreements. The Supreme Court in Ambalal Sarabhai Enterprises Ltd. Vs. K.S. Infraspace LLP and Ors (2020) 15 SCC 585, has held as under:

“37. A dispute relating to immovable property per se may not be a commercial dispute. But it becomes a commercial dispute, if it falls under Sub-clause (vii) of Section 2(1)(c) of the Act viz. "the agreements relating to immovable property used exclusively in trade or commerce".

The words "used exclusively in trade or commerce" are to be interpreted purposefully. The word "used" denotes "actually used" and it cannot be either "ready for use" or "likely to be used" or "to be used". It should be "actually used". Such a wide interpretation would defeat the objects of the Act and the fast-tracking procedure discussed above.”

In the facts at hand admittedly the petitioner is in the business of healthcare activities and had established a hospital in the name of ‘Tulasi Hospital’ in the suit scheduled property. When a purposive interpretation is given, by taking into consideration the business of the petitioner, their act in establishing ‘Tulasi Hospital’ and then leasing out the subject premises to run a hospital, in the view of this Court is an act done in the regular course of the petitioner’s business. Thus, the lease agreement in question relates to an immovable property which is used exclusively for trade or commerce. Further, although the respondent has failed to come forward to register the written lease agreement, the petitioner herein has agreed to let out the subject premises by way of an oral lease on monthly basis, therefore he cannot now contend that there was no valid lease deed between the parties.

In terms of the explanation to Section 2(1)(c) of the Act, 2015, a commercial dispute does not cease to be so, merely because it 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. Thus, so long as the disputes arise out of a property which is being used in trade or business, the dispute remains commercial. In the present case the petitioner claims to have cleared the debts of the respondents herein, such payments majorly relate to payment of salaries of staff members, Dialysis Payment, Pharmacy balances, Ambulance services etc., These payments admittedly relate to the hospital leased to the respondents, which is an immovable property exclusively used in trade or commerce.

Further the act of the petitioner in paying the debts of the respondents in relation to hospital equipment and machinery, indicates that such payment was made to avoid attachment of said equipment which would in-turn affect the running of the hospital. Thus, the contention that the relief of recovery of money paid towards the respondents debts is not a commercial dispute within the meaning of Section 2(1)(c)(vii) of the Act, 2015 does not find force with this Court, as the payment made by the petitioner herein is squarely covered by the explanation to Section 2(1)(c) of the Act, 2015. Therefore, in the view of this Court the disputes in the present case are commercial in nature. The observations of the High Court of Andhra Pradesh in Blue Nile Developers Private Limited Vs. Movva Chandra Sekhar and Ors 2021 SCC OnLine AP 3964, while discussing the definition of ‘commercial dispute’ are relevant as under:

‘20. Hence from the above, it is clear that the "legislature" has included the various types of commercial transactions to bring under the fold of "commercial dispute" in case of any dispute arises from any of those transactions. On a careful reading of the above said provision of the Act, it is obvious that the legislature has taken due care while incorporating the above said clauses from (i) to (xxii) in Section 2(1)(c) of the Act by avoiding the repetition of words and sentences without effecting the full fledged meaning of the same even on expansion of the said each clause.

Therefore, either giving any restrictive meaning or reading of a clause in isolation and expansion of one word only in the said clause would hamper and frustrate the meaningful definition of the said clause on it's expansion by abrogating certain category of transactions from the purview of the benefit of the above said Act which is not otherwise the intendment of the legislature in bringing out the said enactment.’

In light of the aforesaid position of law, the transactions in the present dispute are commercial in nature. Accordingly, the Civil Revision Petition is dismissed. The docket order dated 20.02.2023 passed by the Principal District & Sessions Judge at Malkajgiri, Medchal-Malkajgiri District is sustained. The petitioner is directed to present the suit before proper forum.

Consequently, miscellaneous petitions pending if any shall stand closed.