T.E. Thomson & Company Limited vs Swarnalata Chopra Nee Kapur & Anr

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The Calcutta High Court (Commercial Appellate Division) was called upon to decide a reference made by a Single Judge on account of divergence of opinion on whether an eviction suit filed after issuance of a notice under Section 106 of the Transfer of Property Act, 1882 upon expiry of lease period can be treated as a 'commercial dispute' under the Commercial Courts Act, 2015. The Court, assisted by an Amicus Curiae, examined the scope of Section 2(1)(c)(vii) read with its Explanation and held that a suit for recovery of immovable property arising out of a lease agreement does not cease to be a commercial dispute merely because the claim is premised on termination under Section 106 of the Transfer of Property Act.

The Court laid down four cumulative tests to determine jurisdiction of the Commercial Court: (i) the dispute must arise out of an agreement relating to immovable property; (ii) the immovable property must be used exclusively in trade or commerce; (iii) the dispute must be of a specified value; and (iv) it must have arisen within the territorial jurisdiction of the Commercial Court. The Court further held that even in a suit initiated by a Section 106 notice, the court is bound to examine the underlying lease agreement to determine the jural relationship between the parties and validity of the notice, and thus the lease agreement cannot be ignored.

Answering the three referred questions, the Court held: (a) that parties are not precluded from relying on the agreement/lease deed merely because a notice under Section 106 of the Transfer of Property Act has been issued; (b) that a suit initiated on the basis of Section 106 does not prevent the court from looking into the agreement between the parties and therefore the suit can still be treated as a commercial suit under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015; and (c) that reading the Explanation to Section 2(1)(c) along with Section 106, the suit can be treated as a commercial suit in terms of the lease or rent agreement entered between the parties.

Catchwords: Commercial Courts Act 2015 commercial dispute Section 2(1)(c)(vii) immovable property used exclusively in trade or commerce Transfer of Property Act 1882 Section 106 notice of termination of lease eviction suit lease agreement jural relationship specified value jurisdiction of Commercial Court purposive interpretation Explanation clause reference by single judge divergence of opinion