Whether Loan Suit Is Commercial Dispute Must Be Decided At Trial: Calcutta HC [Read Order]

Kolkata: The Commercial Division of the Calcutta High Court has dismissed an application seeking rejection of a plaint filed by a lender for recovery of an advanced sum with interest, holding that whether the underlying transaction qualifies as a commercial dispute and whether the suit is barred under the Bengal Money-Lenders Act, 1940 are triable issues requiring a fact-finding enquiry, and cannot be decided summarily at the threshold.

Justice Aniruddha Roy was hearing an application filed by the defendant, Ashoka Hawai and Shoes Pvt Ltd, seeking rejection of the plaint filed by Divij Mercantiles Private Limited on two grounds: first, that the suit was not a commercial suit within the meaning of Sub-section (c) read with Sub-section (f) to Section 2 of the Commercial Courts Act, 2015; and second, that the suit was barred under the provisions of the Bengal Money-Lenders Act, 1940. The plaint's case was that the plaintiff had advanced Rs.65,00,000/- to the defendant between January and September 2020, repayable with interest at 12% per annum, of which the defendant had paid only a part before defaulting, prompting the plaintiff to issue a legal notice and file the suit for recovery of principal along with interest.

Counsel for the defendant submitted that the plaint disclosed no mercantile document or written agreement in support of the transaction and made no averment bringing it within the definition of a commercial dispute, relying on Prime Hitech Textiles LLP v. Manish Kumar and Meena Vohra v. Master Hosts Pvt. Ltd. and Others. On the Bengal Money-Lenders Act plea, it was submitted that in the absence of any averment that the plaintiff held a valid money-lending certificate, the suit was barred by law, relying on orders of the Supreme Court in Raj Kumar Santoshi v. Prashant Malik, and contending that such suits ought to be nipped in the bud.

Counsel for the plaintiff submitted that the definitions of "commercial dispute" and "document" under Sub-sections (c) and (f) to Section 2 of the Commercial Courts Act were exhaustive and illustrative, not confined to written contracts, and that whether the documents relied upon in the plaint were mercantile in nature was a triable issue requiring a detailed fact-finding enquiry, relying on Strong Towers Private Limited v. Karnani Constructions and Others and other Calcutta High Court decisions. On the money-lending issue, it was submitted that Section 13(3) of the Bengal Money-Lenders Act permitted a lender to cure any defect by paying a penalty before the plaint could be rejected, relying on Dutta Vinimay Private Limited v. Dinesh Singh.

Examining the averments in the plaint, the Court found that the definition of commercial dispute under Section 2(c) of the Commercial Courts Act did not require a written contract but referred to mercantile documents, and that whether the documents disclosed in the plaint were of such a nature required ascertainment through trial rather than summary rejection. 

The Court held that Order VII Rule 11 CPC was not a mandate to reject every arguable plaint, observing that “plaintiff cannot be non-suited, at the threshold, in a summary manner so loosely and hastily if an arguable and a triable case is pleaded in the plaint.”

On the Bengal Money-Lenders Act plea, the Court reiterated its earlier view in Dutta Vinimay Private Limited that since the statute itself provided a curing mechanism under Section 13(3), a lender ought to be granted an opportunity before the plaint could be rejected on that ground. The Court distinguished Raj Kumar Santoshi as arising from a criminal proceeding rather than a challenge to maintainability of a civil suit, and distinguished Prime Hitech Textiles LLP and Meena Vohra as cases where an unimpeachable case for rejection had been made out on the facts, unlike the present suit, which required a properly constituted trial.

The Court accordingly held that the plaint would stand for trial, with liberty to the defendant to raise all points of maintainability, including under the Commercial Courts Act and the Bengal Money-Lenders Act, during the trial itself, clarifying that it had not expressed any opinion on the merits of either issue or on the pending application concerning the defendant's written statement. 

The application seeking rejection of the plaint was accordingly dismissed, without any order as to costs, with the remaining applications to be listed separately.

Appearances:

For the Plaintiff: Mr. Jishnu Chowdhury, Senior Advocate, with Mr. Hemant Tiwari and Mr. Shantanu Mishra, Advocates.

For the Defendant: Mr. V.V.V. Sastry and Ms. Khushi Gupta, Advocates.

Case Title: Divij Mercantiles Private Limited v. Ashoka Hawai and Shoes Pvt Ltd, CS-COM/354/2024 [Old Case No. CS/41/2022], with IA No. GA/1/2022, GA-COM/7/2024 and GA-COM/11/2025

[Read Order]