Development Agreement Involves Commercial Exploitation; Dispute Is Commercial: Calcutta High Court

The Calcutta High Court has held that a development agreement concerning immovable property involves commercial exploitation of the property and that a dispute arising from such an agreement can therefore be treated as a commercial dispute.

“A development agreement in respect of an immovable property by its sheer nature encompasses trade or commerce in relation to the immovable property concerned. Development Agreement per se involves commercial exploitation of an immovable property. Therefore, the concerned immovable property is used for trade or commerce within the meaning of Section 2(1)(c) of the Act of 2015. Therefore, in our view, the suit involves a commercial dispute within the meaning of Section 2(1)(c)(vii) of the Act of 2015,” a Division Bench of Justice Debangsu Basak and Justice Aryak Dutt observed.

The ruling came in a suit concerning an October 2020 Memorandum of Understanding under which an immovable property was to be developed.

The appellant claimed that ₹2 crore had been advanced through nine cheques issued between November 5 and 9, 2020. Of this, ₹50 lakh was repaid through several cheques between June 1 and 30, 2023.

The appeal arose from a July 20, 2026 order in which the Single Judge refused to grant ad-interim relief. The dispute before the Division Bench also raised a question about the forum in which the suit had to be heard.

Those opposing the suit argued that the MoU was essentially a development agreement as well as a joint venture agreement. They contended that a development agreement involving immovable property, by its nature, amounted to commercial use of that property.

The Bench examined the issue under the Commercial Courts Act, 2015. Section 2(1)(c) of the Act defines what constitutes a “commercial dispute”. Among the categories covered is a dispute arising from an agreement relating to immovable property used exclusively in trade or commerce. The provision separately covers disputes arising from joint venture agreements.

The court focused on the first category. It noted that the MoU related to immovable property and contemplated its development.

Section 2(1)(c)(vii) requires the agreement to relate to immovable property used exclusively in trade or commerce. The Bench held that, given the nature of the MoU as a development agreement, that requirement was satisfied in the present case.

The question then was what should happen to the suit. Since the Bench had found it to be a commercial dispute, it considered whether the plaint should be transferred to the Commercial Division under Section 15 of the Act or returned under Order VII Rule 10 of the Code of Civil Procedure.

Order VII Rule 10 deals with return of a plaint where it has been presented before a court that does not have jurisdiction to entertain the suit. The Bench found that provision applicable here and relied on the earlier Calcutta High Court decision in Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd.

The court also referred to Rule 9(2) of the Calcutta High Court Commercial Courts Practice Directions, 2021. The rule provides for return of a plaint where a suit involving a commercial dispute of or above the specified value is filed in the Ordinary Original Civil Jurisdiction after the relevant notification fixing the specified value.

The Bench noted that the present suit had been filed after the specified-value notification. It therefore granted the appellant's request to take return of the plaint under Order VII Rule 10 and present it before the appropriate forum, rather than transfer the suit under Section 15.

The Division Bench accordingly disposed of the appeal by permitting the return of the plaint.

For Appellant: Advocates Chayan Gupta, Satyaki Mukherjee, Mini Agarwal, Sagnik Shaw

For Respondent: Advocates Pranit Bag, Ratul Das, Rahul Poddar, Souvik Banerjee, Ayush Singhania