Gratuitous Oral Licenses for Commercial Properties Constitute Commercial Disputes Requiring Transfer Under Section 24 CPC

The appellant (plaintiff) filed a suit for recovery of possession, damages, and permanent injunction regarding a commercial/industrial shed in Okhla, New Delhi.

The plaintiff alleged he had permitted his elder brother (the respondent/defendant) to use the premises for the defendant's partnership business on a permissive, gratuitous basis.

The defendant sought return of the plaint under Order VII Rule 10 CPC, arguing that since the property was used for trade, the dispute was "commercial" under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015.

The Trial Court allowed the application, holding the suit to be a commercial suit and ordered the return of the plaint.

The appellant challenged this, contending that a gratuitous license lacks the "commercial flavour" required by the Act.

Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which defines commercial disputes arising from agreements relating to immovable property used in trade/commerce.

Ambalal Sarabhai Enterprise Ltd. v. K.S. Infraspace LLP, emphasizing that "used exclusively in trade" refers to actual current use.

Prabhudas Damodar Kotecha v. Manhabala Jeram Damodar, which clarifies that a license under Section 52 of the Indian Easements Act does not require monetary consideration.

Section 24 of the CPC regarding the High Court's power to transfer suits to subordinate courts to preserve proceedings, following the precedent in Namita Gupta v. Suraj Holdings Ltd.

Prospective application of the mandatory pre-suit mediation rule (Section 12-A) as per Patil Automation (P) Ltd. v. Rakheja Engineers (P) Ltd.

The Court observed that for a dispute to be commercial under Section 2(1)(c)(vii), the property must be actually used for trade.

In this case, the plaint itself admitted the property was an industrial shed used by the defendant for business activities.

The Court reasoned that the absence of a license fee (gratuitous use) does not strip the arrangement of its "commercial character," as the nature of the activity (business) and the property (industrial shed) define the dispute's classification.

Instead of upholding the return of the plaint—which would nullify all proceedings since 2017—the Court favored the use of Section 24 CPC.

It reasoned that since the suit was filed in 2017 (pre-dating the mandatory strictness of Section 12-A), transferring the suit rather than returning the plaint would serve the interests of justice by proceeding from the current stage rather than requiring a de novo filing.

The Court set aside the Trial Court's order to return the plaint.

Exercising powers under Section 24 CPC, the Court directed the transfer of the suit to the concerned Principal District and Sessions Judge (Commercial) to proceed from the current stage.