Bench holds that Memorandum of Understanding involving immovable property used in trade falls under Commercial Courts Act, 2015; directs plaint to be returned under Order VII Rule 10 CPC for presentation before Commercial Division
In a significant judgment delivered on August 28, 2026, the Division Bench of the Calcutta High Court, comprising Justices Debangsu Basak and Aryak Dutt, clarified the jurisdictional ambit concerning suits arising out of development agreements on immovable property. The Court ruled that a Memorandum of Understanding (MoU) relating to the development of immovable property, by its very nature, constitutes a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015. Consequently, such suits fall within the exclusive jurisdiction of Commercial Courts or Commercial Divisions of High Courts.
The appeal arose from an order of the Single Judge dated July 20, 2026, which declined to grant ad interim relief to the appellant, Mr. Aloke Satnaliwala. The appellant had filed a suit based on a MoU entered in October 2020 with the respondents, including Ms. Nirmala Devi Fatehpuria, relating to the development of an immovable property. The appellant claimed recovery of Rs. 2 crores advanced under the MoU and alleged breach of contractual obligations by the respondents.
The respondents contended that the suit involved a commercial dispute and that the plaint was improperly filed in the ordinary original civil jurisdiction of the High Court instead of the Commercial Division. They relied upon the provisions of the Commercial Courts Act, 2015, particularly Section 2(1)(c)(vii) which defines a commercial dispute to include agreements relating to immovable property used exclusively in trade or commerce, and Section 2(1)(c)(xi) relating to joint venture agreements.
After examining the pleadings and the nature of the MoU, the Bench observed that a development agreement concerning immovable property inherently involves commercial exploitation of the property. Therefore, the immovable property is used exclusively in trade or commerce, attracting the definition of a commercial dispute under the Act.
Importantly, the Court distinguished suits filed prior to and after the notification of specified pecuniary value under the Commercial Courts Act. Since the suit in question was instituted after such notification, the Court held that Section 15 of the Act, which governs transfer of suits, does not apply. Instead, the proper course is to return the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908 (CPC), directing the plaintiff to present the suit before the appropriate Commercial Division.
The Court drew heavily on precedents including the Calcutta High Court’s ruling in Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd., 2021 AIR Cal 190, and the Supreme Court decision in Aase Ram v. Amit Kumar, 2025 SCC Online SC 3712, which emphasized the procedural mechanism of returning plaints for suits involving commercial disputes exceeding the specified pecuniary value.
Additionally, the Court referred to the High Court at Calcutta Commercial Courts Practice Directions, 2021, which mandates that suits involving commercial disputes above the specified value filed improperly in ordinary original civil jurisdiction must be returned on application by any party.
Ultimately, the Division Bench allowed the appellant to withdraw the plaint and refile it before the Commercial Division of the High Court. The Court clarified that it did not delve into the merits of the dispute except to determine the nature of the dispute as commercial.
This judgment reinforces the jurisdictional clarity and procedural pathway for suits involving development agreements on immovable properties and underscores the exclusive purview of Commercial Courts for such commercial disputes.
Bottom Line:
A development agreement involving an immovable property, by its nature, constitutes a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, as such agreements inherently involve the commercial exploitation of the property.
Statutory provision(s):
Commercial Courts Act, 2015 Section 2(1)(c)(vii), Section 2(1)(c)(xi), Section 15; Code of Civil Procedure, 1908 Order VII Rule 10
Aloke Satnaliwala v. Nirmala Devi Fatehpuria, (Calcutta)(DB) : Law Finder Doc Id # 2969166
