Market Value Determines Specified Value In Commercial Property Disputes: Calcutta High Court

The Calcutta High Court on 22 June held that in commercial disputes arising from construction and infrastructure contracts involving immovable property, the “specified value” under the Commercial Courts Act must be determined solely on the market value of the property.

A Division Bench of Justices Sabyasachi Bhattacharyya and Supratim Bhattacharya clarified that valuation cannot depend on the nature of the relief claimed in the suit and dismissed appeals filed by landowners against developer Sambriddhi Real Estate Pvt Ltd. It observed:

“Hence, the determinant of 'specified value' under the CC Act is the market value of the immovable property in respect of which, or a right wherein, relief has been sought in a suit. Thus, whatever relief is sought in a suit relating to an immovable property or to a right therein, the 'specified value' would be determined by the market value of the immovable property.”

The dispute arose from two registered development agreements and powers of attorney executed on 10 February 2016 between landowners and developer Sambriddhi Real Estate Pvt Ltd. The landowners alleged delay in completion of housing projects and filed title suits seeking cancellation of the agreements.

The Trial Court, by order dated 17 May 2024, returned the plaints after holding that the disputes were commercial in nature. This order led to the present appeals before the High Court.

The Division Bench held that a development agreement does not lose its character as a construction and infrastructure contract merely because it also creates proprietary rights in favour of the developer. It observed that such disputes continue to fall within the ambit of “commercial disputes” under the Commercial Courts Act. The judges noted:

“Thus, this issue is decided against the appellants. We come to the conclusion that a development agreement, essentially for construction and infrastructure, does not lose such character merely because in addition to such component, other rights are created in favour of the developer.”

On the issue of specified value, the Court held that the market value of the immovable property alone governs the determination. It noted that the properties were valued at Rs. 34.65 lakh and Rs. 5.28 crore respectively, both exceeding the statutory pecuniary threshold and therefore falling within the jurisdiction of the Commercial Court.

It rejected the landowners' contention that refiling the plaints could result in limitation issues. It observed that any delay was attributable to the plaintiffs themselves, who failed to cure defects relating to court fees despite repeated opportunities.

It also declined the request to transfer the suits instead of returning the plaints. It held that Section 15 of the Commercial Courts Act permits transfer only of matters pending when the Act came into force and does not extend to suits instituted thereafter before ordinary civil courts.

Accordingly, the High Court upheld the Trial Court's order, vacated interim protections, and dismissed both appeals.

For Appellants: Anindya Mitra, Sr. Advocate, Advocates Soumya Roychowdhury, Sharanya Chatterjee, Satyam Mukherjee, Awani Kumar Roy, Surajit Biswas, Ankita Roy, Suhbhajit Barman, Ojasvi Gupta, Kaustav Misra, Arijeet Bera

For Respondents: Anirban Roy, Debjit Basu, Advocates