Whether a suit  initiated as a commercial suit is maintainable under the Act of 2015 has to be tested by going through the provisions of the Commercial Courts, Commercial Division And Commercial Appellate Division Of High Courts Act, 2015 (hereinafter addressed as the Commercial Courts Act / Act of 2015), especially Section 2 (1) (c) which states:-

(c)      “commercial dispute” means a dispute arising out of––

(i) ordinary transactions of merchants, bankers, financiers and traders such as those relating to mercantile documents, including enforcement and interpretation of such documents;

(ii) export or import of merchandise or services;

(iii) issues relating to admiralty and maritime law;

(iv) transactions relating to aircraft, aircraft engines, aircraft equipment and helicopters, including sales, leasing and financing of the same;

(v) carriage of goods;

(vi) construction and infrastructure contracts, including tenders;

(vii) agreements relating to immovable property used exclusively in trade or commerce;

(viii) franchising agreements;

(ix) distribution and licensing agreements;

(x) management and consultancy agreements;

(xi) joint venture agreements;

(xii) shareholders agreements;

(xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services;

(xiv) mercantile agency and mercantile usage;

(xv) partnership agreements;

(xvi) technology development agreements;

(xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits;

(xviii) agreements for sale of goods or provision of services;

(xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum;

(xx) insurance and re-insurance;

(xxi) contracts of agency relating to any of the above; and

(xxii) such other commercial disputes as may be notified by the Central Government.

The legislature has provided only 21 different types of transactions, all of which pertain to either contracts or agreements carrying an inherent nature of a commercial transaction and while reading all the said 21 types of transactions alongside any suit, one can apparently find that none of the said 21 transactions relates to any ‘Sale’ or ‘Conveyance’ of any kind of movable goods or immovable property.

Any suit filed under this Act of 2015 has to specifically declare the type of transaction is it applicable to, so as to invoke the jurisdiction of a Commercial Court. If all of the conditions for sale is complied with, then a dispute arising subsequent to such a ‘Sale’ cannot attract the jurisdiction of the Commercial Court, even if the dispute is arising out of a commercial transaction, though conveyed.

A simple reading of Section 4 of the Sale of Goods Act, 1930 alongside any such suit clarifies that an agreement to sell is a contract pure and simple, whereas a sale is a contract plus a conveyance. By an agreement to sell, a jus in personam is created, by a sale a jus in rem also is transferred. In a case where there has been no breach of any conditions of any agreement of sale, the act of offer and acceptance is complete, the act for inspection of goods to be delivered is exercised, consideration in full is paid and the goods in question is delivered to the purchaser and compliance under section 2(4) of the Sale of Goods Act, 1930 is also performed, any dispute pertaining to such a conveyance in the future cannot attract the jurisdiction of the Commercial Court. In other words, if there remains no element of any kind of ‘Agreement to be performed’, the provisions of the Commercial Courts Act cannot be invoked and a suit cannot be filed.

The Commercial Courts Act, expressedly does not give any scope for any claims by way of suits where a ‘Sale’ is completed, it only gives scope for a claimant to institute a claim if there is any dispute arising out of an ‘agreement’. The Commercial Courts Act impliedly bars any kind of institution of claims subsequent to a ‘Sale’ where the consideration for the goods purchased is paid to the seller and where the possession and ownership is transferred to a purchaser.

Even otherwise, even if there is a dispute arising out of a Contract or Agreement, before Sale is effected, unless the transaction / subject matter is of Commercial Nature i.e. for trade and business, and intended to be Commercial at the time of agreement and sale, only then, such a dispute can be instituted under the Act of 2015.

Rachna Roy

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