Calcutta High Court Sets Aside Eviction Decree Against Indian Oil As Commercial Dispute Was Heard In Non-Commercial Division

The Calcutta High Court has recently set aside an eviction decree passed against Indian Oil Corporation Limited, holding that a suit for eviction from property leased for running a petrol pump remained a commercial dispute under the Commercial Courts Act, 2015 and therefore could not have been filed in the non-commercial division of the Court.

A division bench of Justice Debangsu Basak and Justice Md. Shabbar Rashidi held that the requirements of Section 2(1)(c)(vii) of the Act were satisfied, observing, “In our view therefore, all three ingredients of Section 2 (1) (c) (vii) of the Act of 2015 stand satisfied in the facts and circumstances of the present case. Commercial disputes have arisen, between the parties to the suit, in respect of two several lease deeds, relating to the suit properties, which are used presently in commerce. The plaintiffs have pleaded that, the appellant is selling oil and lubricants from the suit premise which establishes its commercial user. The plaintiffs did not seek urgent interim relief in the suit. Suit was instituted after coming into effect of the Act of 2015.”

The court held that the eviction suit had been filed in the non-commercial division and without complying with the mandatory pre-institution mediation under Section 12A of the Act, and therefore the decree had been passed by a court lacking jurisdiction. The decree was set aside and the suit was dismissed.

The dispute arose from two registered lease deeds dated September 10, 2008, under which Jayanta Krishna Datta and another leased two properties to Indian Oil Corporation Limited for operating a petrol pump and selling oil and lubricants. The lease expired on August 2, 2018. After negotiations for renewal failed, the owners filed an eviction suit in 2019 before the non-commercial division of the High Court. A Single Judge passed a decree for eviction on February 17, 2023.

Indian Oil Corporation argued that the dispute was a commercial dispute since the lease related to immovable property used exclusively for trade and commerce, and therefore the suit should have been filed before the Commercial Division. The owners argued that after expiry of the lease the company became a tenant at sufferance, and the eviction was based only on a statutory right arising from unauthorised occupation.

Rejecting this, the bench held that the right to seek eviction arose out of the lease deeds and did not lose its commercial character merely because the lease had expired. The Court observed, “the expired contract of lease is a crucial piece of evidence in order to establish the corresponding statutory right of the landlord to seek eviction.”

The court further held that once the dispute falls within the Commercial Courts Act, compliance with Section 12A is mandatory where no urgent interim relief is sought and said, “None of the parties to the lis can waive the mandatory provision of pre-institution mediation so long the plaintiff does not seek urgent interim relief.”

Since the suit had been filed in a court lacking jurisdiction and without complying with Section 12A, the bench allowed the appeal, set aside the decree dated February 17, 2023, and dismissed the eviction suit.