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Judgment
The present Civil Revision Petition is arising out of a docket order, dated 27.09.2019 passed in C.O.S.No.22 of 2016 by the Commercial Court-cum-XIV Additional Chief Judge, City Civil Court, Hyderabad.
The facts of the case reveal that the petitioner/defendant (Bank of Baroda) is a body corporate and a Nationalised Bank having its branch at Adarsh Nagar, Hyderabad. The respondent No.1/Plaintiff No.1 is a company registered under the Companies Act has filed a civil suit claiming damages and money before the Commercial Court-cum-XIV Additional Chief Judge, City Civil Court, Hyderabad, stating that one of the former Directors of the respondent No.1/plaintiff No.1 company Sri C.V.Ranganath Chowdary allegedly committed a fraud by opening an Account in the name of M/s.Shiri Avenues Private Limited in collusion with the staff members of the Bank of Baroda, Adarsh Nagar Branch, Hyderabad and encashed a cheque by altering the payee’s name. The cheque encashed was to a tune of Rs.3,25,00,000/-(Rupees three crores and twenty five lakhs only). It has been further stated in the plaint that the respondent No.1/plaintiff No.1 company nor the other Directors were aware of the opening of such Account and a complaint was lodged by the petitioner/defendant (Bank of Baroda) with the Central Bureau of Investigation (CBI) and the CBI has initiated prosecution against Sri C.V.Ranganath Chowdary as well as the officials of Bank of Baroda.
In the plaint, it has been further stated that the petitioner/defendant (Bank of Baroda) issued a legal notice to the respondent No.1/plaintiff No.1 company stating that the account was opened at the instance of the respondent No.1/plaintiff No.1 company along with other Directors/shareholders resulting in a loss of about Rs.3,25,00,000/- (Rupees three crores and twenty five lakhs only) and therefore, the respondent No.1/plaintiff No.1 company should make the loss good. The respondent No.1/plaintiff No.1 company contended before the trial Court that without making any investigation into the fact that whether the respondent No.1/plaintiff No.1 company and respondent Nos.2 and 3/plaintiff Nos.2 and 3 (other Directors) are actually involved or not, the legal notice was issued and they were summoned by the CBI also and however, the CBI has filed a charge sheet in case No.RC-3(S)/ SCB/CBI/Chennai stating that the respondents/ plaintiffs are no way connected with the criminal case. The respondents/plaintiffs have not been charge-sheeted at all. It has also been stated that a writ petition, i.e., W.P.No.7560 of 2012 was filed by the respondent No.1/plaintiff No.1 company and the same was allowed on 22.08.2012 holding that the CBI has initiated proceedings only against Sri C.V.Ranganath Chowdary and the action of the State Bank of India, which has also initiated proceedings on account of the crime, was set aside. It has also been stated in the plaint that on account of the action of the petitioner/defendant (Bank of Baroda), the CBI interfered in the matter and therefore, the respondents/ plaintiffs have suffered heavy financial loss as the State Bank of India, from whom the respondent No.1/plaintiff No.1 was availing overdraft facility, has suspended the overdraft limit and therefore, the respondent No.1/plaintiff No.1 was forced to borrow a sum of Rs.5,00,00,000/-(Rupees five crores only) from M/s.Sriram City Union Finance Limited for completing the construction work. The CBI has also placed restrictions in respect of sae of flats, the flats could not be sold in time. The respondents/ plaintiffs have claimed damages from the petitioner/ defendant (Bank of Baroda). The following amounts have been claimed by the respondents/plaintiffs:-
I
(a)
Loss suffered on account of the slump in the real estate market in selling the 12 flats at the rate of Rs.1575/- per sft instead of Rs.2500/- per sft
Rs.1,08,00,000/-
(b)
The total liability with M/s.Sriram City Union Finance Limited, as on 19.08.2015
Rs.10,33,00,000/-
II.
On account of lodging complaint against the Plaintiff No.1 to 3, they suffered several mental agony and hardship and plaintiff No.1 suffered injury of reputation in the market. Taking into consideration, the turnover of the company and the personal reputation of Plaintiff No.2 and 3, a sum of Rs.1.00 crore is claimed towards loss of reputation, injury and hardship suffered.
Rs.1,00,00,000/-
TOTAL
Rs.12,41,00,000/-
Thus, in short, the whole case of the respondents/plaintiffs is that on account of the complaint lodged by the petitioner/defendant (Bank of Baroda) with the CBI, they have suffered loss in business, they were interrogated by the CBI and finally, the CBI has given them clean chit and therefore, the loss, which they have suffered, should be recovered from the petitioner/ defendant (Bank of Baroda).
The trial Court, by docket order, dated 27.09.2019, has held that as it is a commercial dispute, it has the jurisdiction to entertain the suit and the aforesaid order reads as under:-
“Perused the record. As far the plaintiffs are concerned, it is a commercial dispute since it falls under Section 2(C)(1)(a) of the Commercial Court Act, 2015 as the transaction of Bank (ordinary banking transaction) and hence, this court has got jurisdiction to entertain the suit. ... ...”.
The petitioner/defendant (Bank of Baroda), being aggrieved by the aforesaid docket order passed by the trial Court, has filed the present Civil Revision Petition stating that the dispute between the petitioner/defendant (Bank of Baroda) and the respondents/plaintiffs is not at all the commercial dispute and the sole question before this Court is whether the dispute is a commercial dispute or not?
The Commercial Courts Act, 2015 was enacted for speedy disposal of high value commercial disputes keeping in view the 188th Report as well as the 253rd Report of Law Commission of India. Section 2(1)(c) of the Commercial Courts Act, 2015 defines ‘commercial dispute’ as under:-
“2 Definitions:- (1) In this Act, unless the context otherwise requires,-
(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 service;
(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 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;
(c) ...
(d) “Commercial Division” means the Commercial Division in a High Court constituted under sub-section (1) of Section 4;
(e) “District Judge” shall have the same meaning as assigned to it in clause (a) of Article 236 of the Constitution of India;
(f) “document” means any matter expressed or described upon any substance by means of letters, figures or marks, or electronic means, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter;
(g) “notification” means a notification published in the Official Gazette and the expression “notify” with its cognate meanings and grammatical variations shall be construed accordingly;
(h) “Schedule” means the Schedule appended to the Act;
(i) “Specified Value”, in relation to a commercial dispute, shall mean the value of the subject-matter in respect of a suit as determined in accordance with Section 12 shall not be less than three lakh rupees or such higher value, as may be notified by the Central Government”.
This Court has carefully gone through the aforesaid definition and the dispute in the present relates to claime of damages on account of the act of Bank of Baroda in approaching the CBI, which has allegedly resulted in business loss to the respondents/plaintiffs. The dispute is not at all arising out of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents and it does not fall under the definition clause ‘commercial dispute’. This Court fails to understand as to how the dispute in the present case between the parties falls within the meaning of ‘commercial dispute’ as defined under Section 2(1)(c) of the Commercial Courts Act, 2015 and the Commercial Court is proceeding ahead in the matter. The respondents/plaintiffs are claiming damages for the loss of business goodwill and for other business losses and by no stretch of imagination, in the peculiar facts and circumstances of the case, the commercial suit is maintainable.
In the considered opinion of this Court, the docket order, dated 27.09.2019, passed by the Commercial Court-cum-XXIV Additional Chief Judge, City Civil Court, Hyderabad, deserves to be set aside and is accordingly set aside. However, the respondents/plaintiffs shall certainly be at liberty to approach the court having jurisdiction in the matter and certainly not before a commercial court.
With the aforesaid observations, the Civil Revision Petition stands allowed.
Miscellaneous petitions, if any pending, shall stand dismissed. There shall be no order as to costs.