Construction + Infrastructure + Tender = Commercial Dispute Under Section 2(1)(c)(vi): Calcutta High Court Declares Suit Not Maintainable Before Ordinary Civil Court

“Development agreements are commercial when construction, infrastructure, and tender process are all involved — Commercial Court alone has jurisdiction” –  In a significant ruling Calcutta High Court (Appellate Side), comprising Justice Sabyasachi Bhattacharyya and Justice Supratim Bhattacharya, dismissed two appeals filed by Ashok Saraf and Others challenging trial court orders that refused interim injunctions in a money suit involving a real estate development project. The bench declared that the entire dispute falls within the definition of a “commercial dispute” under Section 2(1)(c)(vi) of the Commercial Courts Act, 2015, and hence, the trial court lacked subject-matter jurisdiction.

The High Court directed the trial court to return the plaint under Order VII Rule 10 CPC for presentation before the appropriate Commercial Court, holding unequivocally:

“The MOU clearly comes within the definition of a ‘commercial dispute’ under sub-clause (vi) of Section 2(1)(c) of the Commercial Courts Act, since all the ingredients — construction, infrastructure, and tender — are satisfied.” [Para 66]

“Dispute Not Commercial Just Because Land May Be Used Commercially in Future – Actual Use Required”: Sub-clause (vii) Rejected

The appellants had argued that since the land was vacant at the time of entering into the MOU, the dispute did not fall under the scope of a “commercial dispute”. They relied on Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2020) 15 SCC 585, to argue that sub-clause (vii) of Section 2(1)(c), which refers to immovable property “used exclusively in trade or commerce”, is not attracted unless there is actual use in commerce at the time of the agreement.

The High Court agreed with this limited proposition:

“Future use or contemplated use for commercial purposes cannot bring the dispute under sub-clause (vii) — applicability of sub-clause (vii) of Section 2(1)(c) of the CC Act cannot but be ruled out.” [Para 44]

However, the bench clarified that this had no bearing on the wider applicability of sub-clause (vi), which it found fully applicable on facts.

“Joint Venture Requires Shared Profits and Control — Mere Supervision Is Not Enough”

The Court carefully rejected the contention that the MOU constituted a joint venture, which would have attracted sub-clause (xi) of Section 2(1)(c). Relying on the Supreme Court’s decision in Faqir Chand Gulati v. Uppal Agencies (2008) 10 SCC 345, the Court held:

“Although there is an express agreement and a common purpose, the sharing of profits and losses and equal control are missing. The respondent is merely a name-lender, enabling the appellants to use its goodwill.” [Para 48]

“In the absence of any sharing of profits and/or control over the project by the respondent, the MOU cannot be construed to be a ‘joint venture’.” [Para 54]

“Development Agreement With Commercial Intent Brings Dispute Under Section 2(1)(c)(vi)”

Crucially, the Court held that even if the MOU was not a pure construction agreement, its very nature as a development agreement with commercial objectives placed it squarely within sub-clause (vi), which covers “construction and infrastructure contracts, including tenders”.

Rejecting the appellants’ argument that a “development agreement” fell outside the ambit of commercial disputes, the Court clarified:

“It is not necessary that both parties have a commercial interest or share profits. It would suffice if the transaction is commercial even from the viewpoint of one of the parties.” [Para 64]

“The distinction between construction agreements and development agreements is an erroneous yardstick under the CC Act.” [Para 65]

The bench reasoned that the MOU resulted from a tender and involved construction of buildings, sewerage, drainage, roads, and other infrastructure. Therefore, the dispute was commercial in nature, regardless of whether it resembled a pure construction contract or not.

“Trial Court Had No Jurisdiction to Entertain the Suit” – Order for Return of Plaint Under Order VII Rule 10

Because the suit was filed in an ordinary civil court after the commencement of the Commercial Courts Act, 2015, the Court held that the trial court had no jurisdiction:

“The learned Trial Judge, being an ordinary civil court and not a designated commercial court, did not have jurisdiction to entertain the suit or pass any orders therein.” [Para 67]

As a result, the High Court ordered the plaint to be returned under Order VII Rule 10 CPC for presentation before the appropriate Commercial Court:

“The learned Trial Judge shall return the plaint to the plaintiffs/appellants to be presented before the appropriate Commercial Court... within a fortnight.” [Para 80]

“Injunction to Restrain Monetary Claims Is Barred by Section 41(b) of Specific Relief Act” – No Interim Relief Possible

On merits, the Court also examined the trial court’s refusal to grant ad interim injunctions, finding no infirmity. The plaintiffs had sought to restrain ADDA from enforcing penalty clauses under the MOU, including through demand notices and project interference.

However, the Court held: “The ad interim order sought is directly contradictory to Section 41(b) of the Specific Relief Act, 1963, since it restrains the defendant from making any claim on the basis of the MOU, including monetary claims.” [Para 71]

Further, the Court noted that the plaintiffs were essentially seeking specific performance of the MOU in a suit based on monetary reliefs, without amending their plaint to include such relief.

“In the garb of an injunction, a relief of specific performance cannot be obtained at this stage.” [Para 75]

The two injunction orders passed by the trial court on May 17, 2025 and June 9, 2025 were affirmed, and both appeals dismissed.

Suit Must Be Tried in Commercial Court; Interim Injunctions Rightly Denied

The Calcutta High Court’s judgment establishes a clear precedent on the scope and interpretation of “commercial disputes” under the Commercial Courts Act, 2015. It affirms that:

• Construction contracts arising from a tender process and involving infrastructure obligations are “commercial disputes” under Section 2(1)(c)(vi);

• Ordinary civil courts lack jurisdiction to try such disputes;

• Interim injunctions to restrain monetary claims are barred under Section 41(b) of the Specific Relief Act, 1963.

Date of Decision: 10th November 2025