Calcutta High Court Says Municipal Tax Dispute Over Office Space Is Commercial Dispute

The Calcutta High Court has upheld the transfer of a civil suit over municipal tax liability arising from a property conveyance dispute to its Commercial Division. The court held that the dispute qualified as a commercial dispute because the immovable property was being used as office space when the suit was filed.

A division bench of Justice Debangsu Basak and Justice Md. Shabbar Rashidi ruled, “As on the date of filing of the suit, the immovable property was used as office space,” and held that this satisfied the requirement for treating the dispute as a commercial one.

Dalhousie Properties Limited had challenged a single judge's order directing the transfer of CS/53/2010 to the Commercial Division. It argued that the dispute over alleged municipal tax liability was not commercial in nature.

The company also contended that parts of the property were lying vacant and relied on the Supreme Court's ruling in Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP to argue for a strict interpretation of the law.

Rejecting the contention, the bench noted that the suit arose from a deed of conveyance executed in 2003 concerning portions of interconnected buildings with existing tenancies. The court noted that the schedules described the tenancies as office spaces and that the tenants were companies.

The court also found that the suit met the pecuniary threshold for transfer, since its valuation exceeded Rs.10 lakh.

Finding no error in the single judge's decision, the bench directed the transfer of the suit records and all connected pending applications to the Commercial Division for further proceedings.