Collaboration agreement based on property transfer, not construction contract, not a commercial dispute.

The Plaintiff, Dr. K. K. Shrivastava, filed an application (I.A. 13055/2025) under Order XIIIA of the CPC in a suit arising from a Collaboration Agreement dated May 9, 2018, with Defendant No. 1, Star Infratech Private Limited, and Defendant Nos. 2 & 3.

This agreement concerned the re-development and re-construction of a 500 sq. yard property located at E-7, East of Kailash, New Delhi.

Under the Collaboration Agreement, the Defendants (Developers) were to bear the entire cost of construction and development, and the Plaintiff (Owner) was not to invest any amount.

Upon completion, the property was to be divided, with the Owner receiving the entire basement, ground floor, second floor, and third floor, along with 77.5% undivided rights in the land.

The Developer was to receive the entire first floor, 25% of the stilt area, and 22.5% undivided rights in the land, in addition to paying the Plaintiff Rs. 75,00,000 as proportionate cost for land and existing building.

The Developers were also authorized to sell, transfer, and dispose of their allocated share (the entire first floor with related portions and rights).

The Plaintiff's suit alleges that the Defendants failed to complete the re-construction and re-development as per the agreement, handing over the property in an incomplete state.

The Defendants contended that the suit is not a commercial suit.

Whether the present suit, arising out of a Collaboration Agreement for re-development and re-construction of a residential property, constitutes a commercial dispute under the Commercial Courts Act, 2015.

The court considered the Commercial Courts Act, 2015, specifically Sections 2(1)(c)(vi) and 2(1)(c)(vii), which define "commercial dispute" to include "construction and infrastructure contracts, including tenders" and "agreements relating to immovable property used exclusively in trade or commerce".

It referred to the Supreme Court's interpretation in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP [(2020) 15 SCC 585], which held that for a dispute relating to immovable property to be commercial, the property must be "actually used" exclusively in trade or commerce, not merely "ready for use" or "likely to be used".

The court also relied on the Division Bench's ruling in Asif Ali Khan v. Manoj Kumar [2024 SCC OnLine Del 2083], which held that an agreement for sale and purchase of an immovable property, even if connected to a collaboration agreement for redevelopment, is not a construction contract and hence may not be a commercial dispute if the property is residential.

The Court initially noted the Plaintiff's reliance on Raj Kumar Gupta v. Jagan Nath Bajaj [2022 SCC OnLine Del 2995], where a co-ordinate bench held a similar collaboration agreement to be a commercial dispute under Section 2(1)(c)(vi) and (xi) of the CC Act, emphasizing that construction was the core of the agreement.

However, the Court sided with the Defendant's reliance on Ambalal Sarabhai Enterprises Ltd., which emphasized a strict and purposive interpretation of "exclusively used in trade or commerce" for immovable property disputes.

Crucially, the Court found that the Division Bench's judgment in Asif Ali Khan v. Manoj Kumar was binding.

In Asif Ali Khan, it was held that an "Agreement to Sell" arising from a Collaboration Agreement, where portions of the property are sold, is primarily a contract for sale and purchase of immovable property, not a construction contract, especially if the property is residential.

Applying this to the present case, the Collaboration Agreement, which effectively resulted in the Developer becoming the owner of the entire first floor of the residential property to be sold, took on the character of an an agreement to sell.

Unlike a pure contractor agreement where the owner bears all expenses, here the Developer was effectively purchasing a share of the property through their investment in construction.

Therefore, the dispute was not considered a "construction contract" in the strict sense that would qualify it as a commercial dispute under the CC Act.

The Court further noted that Raj Kumar Gupta was implicitly overruled by Asif Ali Khan.

This is because the Collaboration Agreement, where the Developer acquires a share (the entire first floor) of the property after construction, assumes the character of an Agreement to Sell, rather than a mere construction contract.

Consequently, the application I.A. 13055/2025 filed by the Plaintiff under Order XIIIA of CPC was dismissed as the suit could not be treated as a commercial suit.