Summary Judgment In Commercial Suits Doesn't Require Defendant's Admissions Of Material Facts: Calcutta HC

The Calcutta High Court has held that a Commercial Court can grant summary judgment without requiring admissions of material facts by the defendant, unlike a judgment on admissions, which is founded on such admissions.

A division bench of Justices Debangsu Basak and Md. Shabbar Rashidi made the observation while dismissing an appeal filed by Xclusive Inn Pvt Ltd against a decree directing its eviction from commercial premises.

"Scope and area of operation of Order XII Rule 6 and Order XIIIA of the Code of Civil Procedure, 1908 are different. While Order XII Rule 6 is available to every suit filed under Section 9 of the Code of Civil Procedure, 1908, Order XIIIA applies only to suits involving commercial disputes within the meaning of the Act of 2015 and tried by a Commercial Court or a Commercial Division. However, it has no application in a suit under Order XXXVII of the Code of Civil Procedure, 1908 filed before the Commercial Court or the Commercial Division. Order XIIIA of the Code of Civil Procedure, 1908 is, however, not shackled by the requirement of an admission for it to be invoked, as in Order XII Rule 6 scenario.", the court ruled.

The dispute arose from lease and maintenance agreements executed on April 17, 2008 for premises used to operate a hotel, restaurant and bar. The agreements expired on March 16, 2018. Xclusive Inn nevertheless continued to occupy the property.

The property owners later instituted a commercial suit seeking eviction, recovery of arrears of licence fees and mesne profits. In July 2023, the Commercial Court passed a summary decree directing eviction. Xclusive Inn challenged that decree before the high court.

Before the division bench, Xclusive Inn argued that the suit did not qualify as a commercial dispute. It also contended that no notice under Section 106 of the Transfer of Property Act had been issued and that a decree could not have been passed in the absence of admissions.

The high court rejected those submissions. It noted that the suit was valued at more than ₹30 lakh and that the Commercial Court's territorial jurisdiction was undisputed.

The court found that the dispute arose from written lease and maintenance agreements relating to commercially used property. Since the suit also sought recovery of licence fees and mesne profits, it involved a commercial dispute under the Commercial Courts Act.

The bench noted that both sides accepted executing the agreements and that they had expired on March 16, 2018.

Their disagreement was confined to the legal consequences of events after the expiry of those agreements.

The court also rejected Xclusive Inn's contention that it had become a tenant by holding over. It held that even if a fresh tenancy had arisen after March 16, 2018, it continued to be governed by the Transfer of Property Act. That, the court held, did not prevent the grant of summary eviction.

"That new tenancy is also governed by the Transfer of Property Act, 1882 and is not afforded any protection from eviction under the West Bengal Premises Tenancy Act, 1997. The plea of holding over subsequent to March 16, 2018 by the appellants also does not impede a decree for eviction under Order XIIIA of the Code of Civil Procedure, 1908 as the appellants are liable to be evicted under the Transfer of Property Act, 1882, even in such a scenario.", the court ruled.

Addressing the argument that the tenancy had not been validly terminated, the court relied on Supreme Court precedent holding that the institution of an eviction suit itself amounts to a notice to quit where the tenancy is governed by the Transfer of Property Act.

Rejecting the challenge, the court held that a separate notice under Section 106 of the Transfer of Property Act was unnecessary, as the filing of the eviction suit itself amounted to a notice to quit.

The bench also clarified that summary judgment under Order XIII-A is distinct from a judgment on admissions. While the latter is based on admissions by the defendant, the former turns on whether the defendant has any real prospect of successfully defending the claim or whether there is any reason for the matter to proceed to trial.

For Appellants: Senior Advocate Aniruddha Chatterjee Advocates Sounak Bhattacharya, Sounak Mondal, A. Halder, Anirban Saha Roy, Bipasha Bhattacharyya

For Respondents: Anirban Roy, Ashim Kumar Roy, Debjit Basu, Mrinmoy Mukherjee