A third-party settlement of decretal dues retains the commercial character of the underlying sale-of-goods dispute.

M. Walters & Company obtained a decree in 2008 against Mrs. Gloria E. Mehra for unpaid dues arising from a sale-of-goods transaction and later commenced execution proceedings.

During execution, Rajashi Developers Private Limited—nominated as purchaser of property belonging to Mrs. Mehra—entered into a settlement with the plaintiffs.

Rajashi agreed to pay ₹55 lakh towards full and final settlement of the decretal dues, while the plaintiffs undertook to withdraw the execution proceeding.

After the plaintiffs acted on that arrangement and the execution proceeding was dismissed as withdrawn, they alleged that Rajashi failed to complete the agreed payment and brought the present suit.

Whether a claim for payment under a settlement with a party to the original transaction, where the settlement expressly addresses decretal dues arising from a sale-of-goods dispute, constitutes a commercial dispute under Section 2(1)(c)(xviii) of the Commercial Courts Act, 2015

Whether Rajashi’s status as a non-party to the original sale-of-goods transaction, or the settlement’s creation of a new contractual obligation, severed the present claim from the underlying commercial dispute

Section 2(1)(c)(xviii) of the Commercial Courts Act, 2015 includes disputes arising out of agreements for the sale of goods or provision of services; the Court assessed the substance and source of the dispute rather than treating the form of the relief or the parties’ business status as determinative

Section 62 of the Indian Contract Act, 1872 concerns novation through substitution of an existing contract; the Court distinguished that situation from a later agreement made to resolve a liability already adjudicated by decree

Modern Roadways Corporation v. Simplex Infrastructures Limited, 2026 SCC OnLine Cal 3822, supported examining a settlement alongside the underlying commercial transaction.

D.M. Corporation Pvt. Ltd. v. State of Maharashtra, 2018 SCC OnLine Bom 1112, supported looking to the real nature of the dispute and relief.

The Court distinguished Durgapur Ispat Udyog Pvt. Ltd. v. Central Bank of India, 2025 SCC OnLine Cal 2084, and Prime Hitech Textile LLP v. Manish Kumar, 2022 SCC OnLine Cal 2326, and treated Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd., 2021 SCC OnLine Cal 1457, and Patil Automation Pvt. Ltd. v. Rakheja Engineers Pvt. Ltd., (2022) 10 SCC 1, as concerning procedural consequences rather than the substantive classification at issue

The Court found that the underlying suit concerned unpaid consideration for goods and had resulted in a decree that was being enforced through execution.

Rajashi’s settlement expressly identified the ₹55 lakh as payment towards those decretal dues, and the plaintiffs’ withdrawal of execution was the reciprocal performance contemplated by the agreement.

Although Rajashi assumed a new contractual obligation and was not a party to the original transaction, the Court held that the obligation’s purpose and subject matter remained directly connected to the adjudicated sale-of-goods dispute.

The claim therefore was not commercial merely because it sought money; its commercial character arose from the settlement’s express connection to the earlier dispute

It directed the Registrar, Original Side, to take steps within a fortnight to convert the suit’s nomenclature and assign it a commercial-suit number; the matter was listed for 17 November 2026.

The applications were disposed of with no order as to costs.