Commercial Courts Must Explain Refusal To Impose Safeguards While Denying Summary Judgments In Lease Disputes: Calcutta HC

The Calcutta High Court has recently held that when a tenant continues to occupy a property by relying on a lease agreement, a Commercial Court hearing a plea for summary judgment must explain why it is not requiring safeguards such as payment or security instead of simply sending the dispute to a full trial.

Justice Hiranmay Bhattacharyya set aside a February 17, 2025 order of the Commercial Court at Rajarhat, which had rejected a summary judgment application filed by Flowers Valley Floriculture Pvt. Ltd. against Airplaza Retail Holdings Pvt Ltd in a dispute over unpaid rent and possession of commercial premises.

The High Court restored the application for fresh consideration. It also allowed both sides to place additional documents on record.

“When a person in possession of an immovable property takes the shelter under the lease deed to protect its possession, the Commercial Court, on an application for summary judgment has to assign reasons as to why conditional order as contemplated in Rule 6(b) read with Rule 7 of Order XIIIA should not be passed in a given case.”

The dispute arose from a registered lease deed signed on July 31, 2019. Under it, Flowers Valley leased commercial premises on Kazi Nazrul Islam Avenue to Airplaza for nine years starting July 1, 2019.

Airplaza paid rent till March 2020. It stopped payments from April 2020, citing Covid-19-related restrictions.

Flowers Valley later issued a notice alleging breach of the lease terms. It then filed a commercial suit seeking possession of the property, unpaid rent, mesne profits, and an injunction.

It also sought a summary judgment, asking the court to decide the dispute without a full trial.

The Commercial Court rejected that request. Flowers Valley then moved the High Court.

The High Court noted that the Commercial Court itself had observed that the rent dispute could be decided based on documents. Airplaza had also sought permission to place bank records and other documents on record.

The High Court said that in such circumstances, the Commercial Court should first have decided whether those documents could be considered instead of sending the case to a full trial.

It also said the lower court had failed to explain why oral evidence was necessary when the law allows commercial disputes to be decided on documentary material in appropriate cases.

The High Court has now directed the Commercial Court to hear the summary judgment application afresh.