Commercial Courts Act Applies Only to Properties Exclusively Used for Trade: MP High Court

Commercial Courts Act Applies Only to Properties Exclusively Used for Trade: MP High Court: Gwalior, Madhya Pradesh – June 30, 2025 – In a significant clarification on the jurisdiction of Commercial Courts, the Madhya Pradesh High Court has ruled that for a dispute involving immovable property to fall under the Commercial Courts Act, 2015, the property must be “actually used” and “exclusively used” for the purpose of trade and commerce. This interpretation aims to uphold the Act’s objective of speedy resolution for genuine high-value commercial disputes, preventing its misuse in cases that do not strictly qualify.

A bench of Justice G.S. Ahluwalia emphasized that a dispute relating to immovable property per se may not be a commercial dispute. However, it becomes one if it specifically falls under sub-clause (vii) of Section 2(1)(c) of the Commercial Courts Act, which refers to “agreements relating to immovable property used exclusively in trade or commerce.”

Justice Ahluwalia elaborated on the interpretation of the phrase “used exclusively in trade or commerce,” stating, “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’.” This purposive interpretation is crucial to ensure that only genuine commercial matters are fast-tracked, without burdening the specialized commercial courts with disputes that do not meet the stringent criteria.

Brief Facts of the Case

The High Court was hearing a revision plea challenging a civil court’s order that had dismissed the petitioner’s application under Order 7 Rule 11 of the Civil Procedure Code (CPC), seeking the rejection of the respondent’s plaint.

The respondent, a landlord, had filed a civil suit seeking the eviction of the petitioner, a tenant, from a shop (the suit premises). The petitioner argued that since he was conducting business from the shop, the matter qualified as a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act. On this ground, the petitioner contended that the landlord’s plaint should be rejected, as the civil court allegedly lacked the jurisdiction to adjudicate the matter.

Conversely, the respondent-landlord argued that merely using a property for business does not automatically render an eviction suit a commercial dispute. He sought eviction under Section 12 of the MP Accommodation Control Act and relied on precedents to assert that routine landlord-tenant disputes, even those involving commercial premises, do not inherently qualify as commercial disputes under the Commercial Courts Act.

Findings of the High Court

The Court delved into the definition and scope of commercial disputes under Section 2(1)(c) of the Act, noting its provision for “agreements relating to immovable property used exclusively in trade or commerce.” However, the bench clarified that to determine whether a dispute is commercial, a “conjoined reading” of Sections 2(1)(c)(vii), 2(1)(i), and 12 of the Act is necessary. Thus, only appeals, suits, or applications related to commercial disputes of a specified value are to be tried by commercial courts.

Relying on the Supreme Court’s decision in Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP, the High Court reiterated that only disputes that clearly meet the definition under Section 2(1)(c) should be tried in commercial courts. A strict and purposive interpretation of the Act was deemed essential to ensure that the objective of speedy resolution for genuine high-value commercial matters is not diluted.

The Court emphasized that a liberal interpretation of the provisions would defeat the very purpose behind the constitution of Commercial Divisions of Courts, which is to fast-track and speedily resolve commercial disputes. “The object shall be fulfilled only if the provisions of the Act are interpreted in a narrow sense and not hampered by the usual procedural delays plaguing our traditional legal system,” the bench stated.

Further relying on the Supreme Court’s interpretation, the High Court stressed that the term “used exclusively in trade and commerce” must be interpreted as “actually used”—not “likely to be used” or “intended to be used.” Therefore, if the use of the property for trade is merely incidental or unsubstantiated at the time the agreement was executed, the commercial court cannot assume jurisdiction.

“Merely because suit shop is being used for running business, the question of eviction from said suit shop would not become commercial dispute,” the court held.

In the specific case before it, the Court found that there was nothing on record to demonstrate that at the time the agreement to sell was executed in 2012, the property was being exclusively used in trade and commerce so as to bring the dispute within the ambit of sub-clause (vii) of Section 2(1)(c) of the Commercial Courts Act.

“Merely because the property is likely to be used in relation to trade and commerce, the same cannot be the ground to attract the jurisdiction of the Commercial Court,” the court added.

Consequently, the High Court dismissed the revision plea, concluding that the trial court had not committed any mistake by rejecting the application filed under Order 7 Rule 11 CPC. This ruling provides crucial clarity for litigants and legal practitioners on the precise conditions under which disputes involving immovable property qualify for adjudication under the Commercial Courts Act.

For Petitioner: Advocate Prakash Chandra Chandil.
For Respondent: Advocate Sameer Kumar Shrivastava.

Case Title: Mohit Sadana v Vijay Kumar Goyal.
Case Number: Civil Revision No. 169 of 2024.