Suit For Specific Performance Of Agreement To Sell Shops Used For Business Is Commercial Dispute: Rajasthan High Court

The Rajasthan High Court has recently held that a suit seeking specific performance of an agreement to sell shops that were already being used for business cannot be tried by a regular civil court and must be placed before a Commercial Court.

Justice Sanjeet Purohit, while dismissing an appeal against a trial court order, made it clear that once a dispute falls within the Commercial Courts Act, the civil court lacks jurisdiction to try the suit.

The Court held, “When facts establish that the suit property is being used for trade and business purposes at the time of the dispute, the jurisdiction of regular Civil Court is strictly ousted. Moreover, it also becomes clear that when a commercial dispute is filed in a civil court, the suit must be returned in exercise of the powers under Order 7 Rule 10 CPC”

The dispute concerned two shops in Bikaner from which the appellants (proposed buyers) had been running their business for more than ten years. They were tenants of the shops when they entered into an agreement to sell with the owners in February 2024.

An advance amount was paid, and the agreement required the sale deed to be executed within six months. When that did not happen, the appellants issued a legal notice and then filed a civil suit seeking specific performance of the agreement.

The respondents (owners) objected at the outset through an application, arguing that the shops were admittedly being used for trade and commerce and that any dispute arising from an agreement relating to such property was a commercial dispute under the Commercial Courts Act.

The proposed buyers responded that the nature of the relief sought, specific performance, did not by itself make the dispute commercial merely because the property was being used for business.

The High Court rejected that submission, pointing out that the proposed buyers themselves had admitted in the plaint that they were using the shops for their trade for more than a decade, including when the agreement was signed.

The Court recorded, “A perusal of the record shows that appellants have admitted in the plaint that they have been using the suit premises for the purposes of their trade and commerce for the last more than 10 years.”

Holding that this admission squarely attracted the statutory definition, the Court observed, “There remains no doubt that the dispute concerning the specific performance of the agreement relating to sale of the suit premises is a commercial dispute and must be adjudicated by competent Commercial Court.”

Finding no error in the trial court's decision to return the plaint for presentation before the Commercial Court, the High Court dismissed the appeal and upheld the order.

For Appellants: Advocate Rakesh Kumar Chota

For Respondents: Advocate Tabish Samdani