COMPENSATION u/s 143-A NI ACT NOT PAID: ACCUSED STILL ENTITLED TO CROSS EXAMINE COMPLAINANT ?

 

 

compensation u/s 143-A NI Act NOT PAID: accused still entiTled to cross examine complainant?

 

The mandate to pay compensation to the accused in cheque bouncing complaints as contained in section 143-A of Negotiable Instruments Act has travelled a distance, since its inclusion in the statute book. The circumstances under that a Magistrate can invoke the discretion of granting interim compensation up to  20% value of the cheque amount during pendency of the complaint are too well known to need any further elucidation. However, another aspect that may need further exploration is, as regards the situation of non-payment of interim compensation by the accused, despite the order passed to that effect by a competent Magistrate dealing with the trial of such cases. Whether, non-payment of interim compensation as per the order as above referred  shall disentitle the accused from cross examining the complainant witness or not is a moot point needing adequate deliberation.

Precisely, on this aspect itself, the hon’ble Supreme Court in a matter reported as Noor Mohammed Vs Khurram Pasha MANU/SC0954/2022 has analysed it and settled the legal position.

 The decision of Supreme Court was arrived at in a criminal Appeal bearing no. 1123 of 2022 emanating from the judgment of Karnataka High Court in Criminal revision Petition no. 39 of 2021.

To set out the details, the instant proceedings arose out of a Complaint Case No. 244 of 2019 instituted by the Respondent herein in respect of offence punishable under Section 138 of the Negotiable Instruments Act, 1881 (‘the Act’, for short) in the court of the Senior Civil Judge & JMFC, Nagamangala, submitting inter alia:

a) A cheque dated 25.02.2019 in the sum of Rs. 7,00,000/- was drawn by the Appellant in favour of the Respondent towards repayment of hand loan received by the Appellant from the Respondent.

b) Said cheque was presented for encashment on 01.03.2019 but was dishonoured on account of “insufficient funds”.

c) Statutory notice was issued by the Respondent to the Appellant on 12.03.2019.

d) However, the Appellant failed to repay the amount to the Respondent.

e) Consequently, the Appellant was guilty of offence punishable under Section 138 of the Act.

 

The cognisance were taken and summons were issued. The accused/ Appellant appeared before the concerned court through his counsel on 16.08.2019. The trial court on the very same date was pleased to pass order, directing the Appellant to deposit 20% of the cheque amount as interim compensation in terms of Section 143(A) of the Act within 60 days. The period so granted expired on 15.10.2019 and it was extended for another 30 days at the instance of the accused/appellant. The deposits not made, still.

At the stage of examination of witness  an application was made on behalf of the Appellant under Section 145(2) of the Act seeking permission to cross-examine the Respondent. The ld trial court, however had rejected the permission to the accused in view of his failure to deposit the interim compensation as directed and hence, the application was adjudged to be not maintainable.

Subsequently, the ld trial court vide order dated 29.11.2019  had held the accused guilty under Section 138 of the Act. The Trial Court directed the Appellant to pay fine in the sum of Rs. 7,00,000/-, in default, whereof to undergo simple imprisonment for six months. Out of the aforesaid sum, Rs. 5,000/- was to be remitted to the State while the remaining amount of Rs. 6,95,000/- was directed to be made over to the Respondent as compensation under Section 357 of the Criminal Procedure Code, 1973.

Aggrieved, the appellant/accused had preferred Criminal Appeal No. 190 of 2019 in the court of V Addl. District and Sessions Judge, Mandya. The appeal was dismissed. by its order dated 28.10.2020. The order of conviction and sentence passed by the Trial Court was thus affirmed.

Interestingly, during the course of its order, one of the points raised for consideration, was, whether the Trial Court had given sufficient opportunity to the Appellant to cross-examine the Respondent. It was observed by the Court:—

“18. It is relevant to mention here that in the present appeal also, after filing of this appeal, accused did not comply with the order of this Court dated 30.12.2019 to deposit 20% of cheque amount, hence, it discloses that the accused is reluctant in complying with the order of this Court. Under these circumstances, this Court is of the opinion that learned Magistrate has rightly refused the prayer made by accused seeking permission to cross-examine P.W.1 and proceeded to pass impugned order”

In the above backdrop, a Criminal Revision Petition No. 39 of 2021 was filed by the appellant/accused in the High Court of Karnataka. The High Court by its judgment and order dated 17.12.2021,had also dismissed  the revision petition. It was observed that the conduct of the Appellant in not depositing the interim compensation as directed, showed that he was only interested in protracting the proceedings for one reason or the other.

The appellant was now before the Supreme Court.  

The Supreme Court, in the appeal was pleased to issue notice to the Respondent vide Order dated 01.04.2022 while appellant was directed to deposit a sum of Rs. 3,50,000/- in the Registry of the Supreme Court and the amount, was accordingly deposited.

The broad aspect of the arguments canvassed on behalf of the appellant revolved around the issue that in case, the order of interim compensation, as directed in terms of Section 143A of the Act is not complied with, the amount can be recovered in terms of Sub-Section 5 of said Section 143 A, as if, it were a fine under Section 421 of the Code, but it would not be within the competence of the court to deprive an accused of his right to cross-examine a witness. It is so, because, such denial of rights resulted in great prejudice to the Appellant and thus, the judgments and orders passed by the courts below suffered from patent illegality calling for interference from the Supreme Court.

The Supreme Court before probing the matter further opted to peruse, for reference,  the provisions of section 143 A of the Negotiable Instruments Act.

 

“143 A. Power to direct interim compensation. –

(1) Notwithstanding anything contained in the Code of Criminal Procedure, 1973 (2 of 1974), the Court trying an offence under section 138 may order the drawer of the cheque to pay interim compensation to the complainant –

(a) in a summary trial or a summons case, where he pleads not guilty to the accusation made in the complaint; and

                   (b) in any other case, upon framing of charge.

(2) The interim compensation under sub-section (1) shall not exceed twenty per cent of the amount of the cheque.

(3) The interim compensation shall be paid within sixty days from the date of the order under sub-section (1), or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the drawer of the cheque.

(4) If the drawer of the cheque is acquitted, the Court shall direct the complainant to repay to the drawer the amount of interim compensation, with interest at the bank rate as published by the Reserve Bank of India, prevalent at the beginning of the relevant financial years, within sixty days from the date of the order, or within such further period not exceeding thirty days as may be directed by the Court on sufficient cause being shown by the complainant.

(5) The interim compensation payable under this section may be recovered as if it were a fine under section 421 of the Code of Criminal Procedure, 1973 (2 of 1974).

(6) The amount of fine imposed under section 138 or the amount of compensation awarded under section 357 of the Code of Criminal Procedure, 1973 (2 of 1974), shall be reduced by the amount paid or recovered as interim compensation under this section.”

It was therefore observed by the Supreme Court that the provisions of section 143 A of the Negotiable Instruments Act are self -contained, in as much as, after empowering the court to pass an order directing the accused to pay interim compensation, under Sub-Section 1 of Section 143A,  sub-section 2 comes in to the picture mandating that quantum of such interim compensation should not exceed 20 per cent of the amount of the cheque. Still further, the time line is also prescribed i.e the period within which the interim compensation must be paid is stipulated in Sub-Section 3. Yet another situation is also factored in sub-section 4 , where the drawer of the cheque is acquitted, it contemplates repayment of interim compensation along with interest as stipulated. Another additional component of the said section is contained in Sub-Section 5 of said Section 143A and that states “the interim compensation payable under this Section can be recovered as if it were a fine”.

It was observed that the expression interim compensation is one which is “payable under this Section” and would thus take within its sweep the interim compensation directed to be paid under Sub-Section 1 of said Section 143A.

 

As per the Supreme Court, the remedy, for failure to pay interim compensation, as directed by the court is clearly provided for by the Legislature. The method and modality of recovery of interim compensation is also clearly discerning. It is well known principle that if a statute prescribes a method or modality for exercise of power, by necessary implication, the other methods of performance are not acceptable. While relying on the decision of the Privy Council in Nazir Ahmad v. King Emperor AIR 1936 Privy Council 253 (2), a Bench of three Judges of Supreme Court made following observations in State of Uttar Pradesh v. Singhara Singh  AIR 1964 SC 358.

 

“7. In Nazir Ahmed case, 63 Ind App 372; (AIR 1936 PC 253 (2)) the Judicial Committee observed that the principle applied in Taylor v. Taylor [(1875) 1 Ch D 426, 431] to a court, namely, that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all and that other methods of performance are necessarily forbidden, applied to judicial officers making a record under Section 164 and, therefore, held that the Magistrate could not give oral evidence of the confession made to him which he had purported to record under Section 164 of the Code. It was said that otherwise all the precautions and safeguards laid down in Sections 164 and 364, both of which had to be read together, would become of such trifling value as to be almost idle and that “it would be an unnatural construction to hold that any other procedure was permitted than that which is laid down with such minute particularity in the sections themselves”.

 

“8. The rule adopted in Taylor v. Taylor [(1875) 1 Ch D 426, 431] is well recognised and is founded on sound principle. Its result is that if a statute has conferred a power to do an act and has laid down the method in which that power has to be exercised, it necessarily prohibits the doing of the act in any other manner than that which has been prescribed. The principle behind the rule is that if this were not so, the statutory provision might as well not have been enacted. A Magistrate, therefore, cannot in the course of investigation record a confession except in the manner laid down in Section 164. The power to record the confession had obviously been given so that the confession might be proved by the record of it made in the manner laid down. If proof of the confession by other means was permissible, the whole provision of Section 164 including the safeguards contained in it for the protection of accused persons would be rendered nugatory. The section, therefore, by conferring on Magistrates the power to record statements or confessions, by necessary implication, prohibited a Magistrate from giving oral evidence of the statements or confessions made to him.”

         

In J.N. Ganatra v. Morvi Municipalit (1996) 9 SCC 495, exercise of power of dismissal having not been done in conformity of the Act, the same was set aside. It was stated:—

“4. We have heard the learned counsel for the parties. We are of the view that the High Court fell into patent error in reaching the conclusion that the dismissal of the appellant from service, in utter violation of Rule 35 of the Rules, was an “act done in pursuance or execution or intended execution of this Act …”. It is no doubt correct that the General Board of the Municipality had the power under the Act to dismiss the appellant but the said power could only be exercised in the manner indicated by Rule 35 of the Rules. Admittedly the power of dismissal has not been exercised the way it was required to be done under the Act. It is settled proposition of law that a power under a statute has to be exercised in accordance with the provisions of the statute and in no other manner. In view of the categoric finding given by the High Court to the effect that the order of dismissal was on the face of it illegal and void, we have no hesitation in holding that the dismissal of the appellant was not an act done in pursuance or execution or intended execution of the Act. The order of dismissal being patently and grossly in violation of the plain provisions of the Rules. It cannot be treated to have been passed under the Act.”

         

In Commissioner of Income Tax, Mumbai v. Anjum M.H. Ghaswal  (2002)1 SCC 633  a Constitution Bench of this Court stated the normal rule of construction in such cases as under:—

“27. Then it is to be seen that the Act requires the Board to exercise the power under Section 119 in a particular manner i.e. by way of issuance of orders, instructions and directions. These orders, instructions and directions are meant to be issued to other income tax authorities for proper administration of the Act. The Commission while exercising its quasi-judicial power of arriving at a settlement under Section 245-D cannot have the administrative power of issuing directions to other income tax authorities. It is a normal rule of construction that when a statute vests certain power in an authority to be exercised in a particular manner then the said authority has to exercise it only in the manner provided in the statute itself. If that be so, since the Commission cannot exercise the power of relaxation found in Section 119(2)(a) in the manner provided therein it cannot invoke that power under Section 119(2)(a) to exercise the same in its judicial proceedings by following a procedure contrary to that provided in sub-section (2) of Section 119.”

The Supreme Court has therefore, while taking note of section 143-A and its sub-sections has observed in Noor Mohammed Vs Khurram Pasha (Supra) in the light of above, and held as under:

“18. The concerned provision nowhere contemplates that an accused who had failed to deposit interim compensation could be fastened with any other disability including denial of right to cross-examine the witnesses examined on behalf of the complainant. Any such order foreclosing the right would not be within the powers conferred upon the court and would, as a matter of fact, go well beyond the permissible exercise of power”.

19. Since the right to cross-examine the respondent was denied to the Appellant, the decisions rendered by the courts below suffer from an inherent infirmity and illegality. Therefore, we have no hesitation in allowing this appeal and setting aside the decisions of all three courts with further direction that Complaint Case No. 244 of 2019 shall stand restored to the file of the Trial Court. The Trial Court is directed to permit the Appellant to cross-examine the Respondent and then take the proceedings to a logical conclusion. With these observations the appeal is allowed”.

The Supreme Court was thus pleased to direct that 20% of the cheque amount namely Rs. 1,40,000/- must be deposited by the Appellant as interim compensation. The Registry was further directed to make over a sum of Rs. 1,40,000/- to the Trial Court i.e. Senior Civil Judge & JMFC, Nagamangala, Karnataka. The amount was ordered to be kept in deposit in Complaint Case No. 244 of 2019 and shall abide by such orders as the Trial Court may deem appropriate to pass. Rest of the amount along with accrued interest, if any, was ordered to be returned to the Appellant.

The Supreme Court has therefore without touching upon the merit of the case has clearly observed that when section 143 A along with its sub-sections are self- contained, the part of the section, therefore,  should not be read in  isolation and holistic view has to be taken. The section 143 A of Negotiable Instruments Act does not in any manner indicate that non -payment of the interim compensation shall disentitle the accused from cross examining complainant witness. The recovery of the interim compensation and its mode and manner is well elucidated in the said section and sub-sections itself. The essence of trial is fair opportunity to parties and according no opportunity to cross examine shall vitiate the very process of trial and therefore, the accused cannot be denied right to cross examine the complainant witness for a fair trial , if no amount of interim compensation could be paid.  

                                -------

                        Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com

Cancellation of gift deed by a senior citizen: No fetter attached

 

Cancellation of gift deed by a senior citizen: No fetter attAched

The usual mode of conveyance of immoveable properties are by way of a registered sale deed, though, even by way of registered agreement to sale and general power of attorney also the transfer of property is sought to be conveyed, though, such transfer by way of agreement to sale or general power of attorney has its own inbuilt limitation. Yet another mode of transaction/transfer is by way of gift deed, however, the same shall be permitted only due to love and affection and no consideration is involved in such transfer by way of gift deed and therefore, ad valorem stamp duty on the consideration are not envisaged in such cases, though, stamp duty on the value attributed to the property sought to be gifted shall be payable. The process of registration and refusal of the same finds mention in the Registration Act 1908 as contained in section 71-77 of Part XII of the said Act and on such refusal the provisions of appeal before the District Magistrate and even civil courts are contemplated. In the Specific Relief Act 1963, for instance, suit for seeking cancellation of a registered instrument could be filed u/s 31 of Specific Relief Act, 1963.

For ready reference, the provisions of Section 31 of Specific Relief Act 1963 is reproduced as under:

31. When cancellation may be ordered-

(1) Any person against whom a written instrument is void or voidable , and who has reasonable apprehension that such instrument, if left outstanding may cause him serious injury, may sue to have it adjudged void or voidable, and the court may, in its discretion, so adjudge it and order it to be delivered up and cancelled.

(2) If the instrument has been registered under the Indian Registration Act, 1908, the court shall also send a copy of its decree to the officer in whose office the instrument has been so registered; and such officer shall note on the copy of the instrument contained in his books the fact of its cancellation.

The purpose for the present discussion has a very dimension, though. It is to elucidate, as to what are the circumstances, when, order of cancellation of gift deed could be passed. Yet another dimension of discussion, shall be as regards the situation, if no mention of circumstances or conditions are prescribed in the gift deed, when a gift deed , though executed, could be cancelled. The moot point is whether a gift deed could be cancelled, for violation of any condition attached thereto, and still further, assuming that there are no such condition or conditions, yet, whether the transferor/donor, could still, cancel the gift deed for lack of care from the donee, shall be the pith and substance of the present discussion.  

Another pertinent aspect in this context is that if a gift deed is executed by Senior citizen in favour of their sons/daughters/other close relatives, because of love and affection, while assuming that in the twilight zone of their lives, they will be treated with reciprocal care and affection, but it has been observed that such expectations does not often resonate with the donee, once, the gift deed is executed in their favour. It is also observed that the done, strenuously contest the claim of care or lack of it for seeking cancellation of gift deed by the senior citizen. It has often been observed that such cases are contested/resisted aggressively, on a premise, that the condition of care was not stipulated in the gift deed, hence, the gift deed cannot be cancelled. The law that has evolved over the years, in a broad canvas, renders a gift deed liable to be cancelled, if the condition of care is stipulated in the gift deed and lack of care may render the gift deed to cancellation. However, parents/senior citizen often fails to mention any such clause or condition in the gift deed for a typical and inherent belief in their sons/daughter/relatives and the donee use to exploit such situations to a hilt, with a typical nonchalance. The donor finds themselves shattered.  What is significant in this context is that, whether the lack of mentioning of conditions of care in already executed gift deed, shall in itself, should disentitle a senior citizen from seeking cancellation of a gift deed? The very basis of gift deed has the foundation of love and affection and care i.e reciprocal care, then, why should failure of mentioning such conditions should disentitle a senior citizen/parent from cancelling a gift deed. In other words, why their belief in their near and dear one i.e donee should not be treated as sacrosanct, and why lack of care, irrespective of the conditions mentioned in gift deed should not entitle a senior citizen to seek cancellation of a gift deed. The law seem to have been settled now, taking note of such predicament of senior citizens. The said aspect shall be deliberated at length herein. Though, the contents of The Maintenance and Welfare of Parents and Senior Citizens Act, 2007 (MOPSCA) is enacted to cater to the need of ailing parents, senior citizen, but in case of execution of gift deed, due to the lack of the stipulations of care in such gift deed, the senior citizen in the past, often found themselves to be in the receiving end, while seeking cancellation of a gift deed due to lack of acre. It is more so intriguing, as the parents inherently in a belief on sons/daughters or close relatives, does not contemplate, putting such clause/condition of care as an integral  condition to a gift deed. As has been noticed over the years, the faith in their off springs/close relatives has generally been belied. The MOPSCA, though, have addressed the concerns of senior citizens, but, it appears, only partially.

Taking note of such inadequacies, the hon’ble Division bench of Delhi High Court in a very recent judgment captioned as SMT VARINDER KAUR  Vs SMT. DALJIT KAUR & ORS  bearing no. LPA 587/2025 has comprehensively dealt with the issue so that dusts is settled, fully and finally in this regard.

In Smt Varinder Kaur (Supra) an application under Section 23 of the MOPSCA  was preferred by respondent no.1 for seeking cancellation of the gift deed executed by respondent no.1 in favour of the appellant on a premise that Section 23 of the MOPSCA  vests necessary power in the Tribunal to declare any transfer by way of gift or otherwise, of a property void, in case the Senior Citizen has transferred such property after pronouncement of the MOPSCA, subject to the condition that the transferee shall provide basic amenities and physical needs to the transferor, and such transferee refuses or fails to provide such amenities and physical needs. The tribunal, in the present case, on the application preferred by respondent no.1, had refused to grant the prayer to respondent no.1 seeking cancellation of the deed by declaring it to be void. However, the Tribunal directed the appellant not to take any rent and also directed the S.H.O concerned, Police Station Janakpuri, to depute a Beat Officer to visit the premises twice in a month to ensure the safety and security of respondent no.1. According to the tribunal, the respondent no.1 failed to prove the conditions, which would lead to cancellation of the gift deed; rather, prayer for cancellation was made on the ground of fraud and cheating and hence the relief of cancellation of gift deed was declined.

A statutory appeal under Section 16 of the MOPSCA  was preferred before the District Magistrate, who, was pleased to allow the appeal, while, setting aside the order of the Tribunal and had further directed the Sub-Registrar to cancel the gift deed in question.

A writ petition was preferred by the appellant, before the Delhi High Court, against the order of District Magistrate. The ld Single Judge of Delhi High Court was pleased to dismiss the writ petition and therefore, the LPA in question was filed by the appellant before the Division bench of Delhi High Court.

CONTENTIONS OF APPELLANT BEFORE DIVISON BENCH

(i) The order passed by the appellate authority under Section 16 of the MOPSCA is not tenable for the reason that gift deed in question could have been declared to be void, only, if it was executed with the condition that the appellant shall provide basic amenities and basic physical needs to the respondent no.1 and further that the transferee refuses or fails to provide such amenities and physical needs.

(ii) No such case, which can be said to be covered by Section 23 of the MOPSCA was pleaded by respondent no.1, and therefore, in the absence of any such pleadings, the findings recorded by the learned Single Judge as also by the DM were erroneous.

(iii) In order to attract the provisions of Section 23 of MOPSCA, in an application seeking declaration of a transfer deed/gift deed as void, it is necessary that that the document concerned should have been executed subject to the condition that the transferee will provide basic amenities and physical needs to the transferor and that apart, the applicant has to prove that the transferee/donee had either refused or failed to provide such amenities and physical needs to the senior citizen.

(iv) No such document in the above reference i.e., the gift deed, was executed with any such condition, nor respondent no.1 could prove that the appellant had ever refused to provide basic amenities and basic physical needs to her.

                                      LAW

(i) The Hon‟ble Supreme Court in the case of Sudesh Chhikara v. Ramti Devi, 2022 SCC OnLine SC 1684, has held that in absence of any pleading that the deed was executed subject to condition that the transferee would provide the basic amenities and basic physical needs, no such order for cancelling the deed or declaring the same to be void could be passed. While effecting transfer, subject to a condition of providing the basic amenities and basic physical needs to the transferor-senior citizen shall be a sine qua non for the applicability of sub-section(1) of section 23 and in absence of any such pleading, the powers under Section 23 by the Tribunal could not be exercised. Paragraph 13 to 15 of Sudesh Chhikara (supra), are extracted herein below:-

"13. If both the aforesaid conditions are satisfied, by a legal fiction, the transfer shall be deemed to have been made by fraud or coercion or undue influence. Such a transfer then becomes voidable at the instance of the transferor and the Maintenance Tribunal gets jurisdiction to declare the transfer as void”.

“14. When a senior citizen parts with his or her property by executing a gift or a release or otherwise in favour of his or her near and dear ones, a condition of looking after the senior citizen is not necessarily attached to it. On the contrary, very often, such transfers are made out of love and affection without any expectation in return. Therefore, when it is alleged that the conditions mentioned in sub-section (1) of Section 23 are attached to a transfer, existence of such conditions must be established before the Tribunal”.

“15. Careful perusal of the petition under Section 23 filed by respondent no. 1 shows that it is not even pleaded that the release deed was executed subject to a condition that the transferees (the daughters of respondent no. 1) would provide the basic amenities and basic physical needs to respondent no. 1. Even in the impugned order dated 22nd May 2018 passed by the Maintenance Tribunal, no such finding has been recorded. It seems that oral evidence was not adduced by the parties. As can be seen from the impugned judgment of the Tribunal, immediately after a reply was filed by the appellant that the petition was fixed for arguments. Effecting transfer subject to a condition of providing the basic amenities and basic physical needs to the transferor - senior citizen is sine qua non for applicability of sub- section (1) of Section 23. In the present case, as stated earlier, it is not even pleaded by respondent no. 1 that the release deed was executed subject to such a condition.”

(ii)    In Kanai Lal Sur vs Paramnidhi Sadhukhan, 1957 SCC OnLine SC 8, it is held that primary rule of construction is that the intention of the Legislature must be found in the words used by the Legislature itself and further that if the words used are capable of one construction only then it would not be open to the courts to adopt any other hypothetical construction on the ground that such hypothetical construction is more consistent with the alleged object and policy of the Act.

(iii)   In Kirshna Texport & Capital Markets ltd. V. Ilaa. Agrawal & ors (2015) 6 S.C.R. 284, it is held that the language of a statute is unambiguous and admits only one meaning, the question of construction of a statute does not arise for the reason that the statute speaks for itself.

(iv)     In Grasim Industries Ltd. v. Collector of Customs, (2002) 4 SCC 297 | (2002) 2 SCR 945, it is similarly held that in case in a statute, if the words are clear without any obscurity, there is no scope for the Court to take upon itself the task of amending or altering the statutory provision.

(v)      In Thomson Press (India) Ltd. v. Nanak Builders & Investors (P) Ltd., (2013) 5 SCC 397 | (2013) 2SCR 74,

(vi)     In The Church of Christ Charitable Trust & amp; Educational Charitable Society, Represented by its Chairman v. M/s Ponniamman Educational Trust B, Represented by its Chairperson/ Managing Trustee (2012) 6 SCR 404.  

The sum and substance of the argument of appellant that in the absence of pleadings to the effect, that, the deed in question was executed, subject to the condition, that the transferee shall provide basic amenities and physical needs of the transferor and such transferee refuses or fails to provide such amenities and physical needs, provisions of Section 23(1) of the Senior Citizens Act (MOPSCA), cannot be put to service for the declaration of the deed as void. As no such case was pleaded by the respondent no.1 in her application made under Section 23; rather, the cancellation of the gift deed was sought on the ground that the gift deed was executed under pressure and cheating, as is apparent from a perusal of the application moved by respondent no.1 before the Maintenance Tribunal, hence, the grounds urged by respondent no.1 in her application moved under Section 23(1) of the Senior Citizens Act, are not the grounds available to the Maintenance Tribunal to declare the deed as void, and therefore, the order passed by the Tribunal on the application of respondent no.1 did not suffer from any illegality or error, which has, therefore, been erroneously set aside by the appellate authority, i.e. the DM and the ld single judge failed to take note of such error in the order of the District Magistrate.

CONTENTIONS OF THE RESPONDENT

(i) There was enough material available on record to conclude that the conditions for exercise of powers under Section 23(1) of the Senior Citizens Act (MOPSCA )and that warranted granting of the prayer made by respondent no.1 before the Tribunal and Tribunal failed to act in accordance with law.

(ii) It was clearly stated therein that immediately after execution of the gift deed, the attitude and behaviour of the appellant altogether got changed and respondent no.1 even started receiving threats that she may be killed by confining her in a room forcibly and further that the appellant shall neither maintain her nor allow her to meet her daughters.

(iii) A letter was submitted by respondent no.1 before the Presiding Officer of the Tribunal, wherein it was clearly stated that the appellant after execution of the gift deed had not provided any clothes neither the undergarments nor personal articles and the medicines. It was also stated by respondent no.1 that her son, i.e. the husband of the appellant had not even given her dentures and further that whenever such articles are demanded by her, the appellant told her that all these articles may be obtained by her from the police where she had lodged complaints. It was also stated that she is a patient of high blood pressure, heart disease and diabetes, however for the last two and a half months she had not been provided with the requisite medicines.

(iv) In yet another letter addressed by respondent no.1 to the Presiding Officer of the Tribunal it was stated by her clearly that after getting the gift deed executed, the appellant has made her life a hell, who has been misbehaving continuously and further that even the dentures, medicines and medical prescriptions have not been given to her. It was also stated that her jewellery, cash, papers of other properties, health card, identity card, cheque book, etc., have been stolen and even the amount of Rs.70,000/- from the HDFC Bank Account of respondent no.1 was also withdrawn.

(v) In yet another letter submitted by respondent no.1 to the Presiding Officer of the Tribunal it was clearly stated that before execution of the gift deed ,those who had made big promises of taking her care have rendered her helpless and homeless.

According to the respondent no.1, there was enough material placed by her before the Tribunal which proved and established the pre-conditions under Section 23 of the MOPSCA for declaration of the gift deed as void and therefore, the appellate authority, i.e. the DM has rightly passed the order of cancellation of the gift deed.

RELIANCE

(i) Nitin Rajendra Gupta v. Collector, 2024 SCC OnLine Bom 1031;

(ii) Mohamed Dayan v. The District Collector & Ors, WP No. 28190 of 2022 ( Madras High Court).

It is no gainsaying that any gift deed is naturally and obviously executed primarily on account of love and affection, showered by the transferee on the transferor and, therefore, in execution of the gift deed itself, it is implicit that its execution is with the condition that the transferee shall provide the amenities and basic physical needs to the transferor, especially in a situation where the transferor is an old aged mother-in-law of about 88 years of age of the transferee, who is her daughter-in-law. Moreover, in essence, execution of the gift deed is not a commercial transaction and that there is sufficient material available on record which establishes not only existence of the condition that the daughter-in-law shall provide basic amenities and basic physical needs to the mother-in-law but also that the appellant completely failed and denied to provide such amenities and physical needs, and therefore the DM while reversing the order passed by the Tribunal cannot be said to have erred on any count.

In SMT VARINDER KAUR (Supra), it is held by the division bench of Delhi High Court that:

“30. If we examine the facts of the instant case in the light of the legal principles as discussed above, the settled legal position which emerges is that for attracting the provisions of Section 23(1) of the Senior Citizens Act, the deed in question need not expressly contain a condition that transferee shall provide the basic amenities and basic physical needs to the transferor, especially in the context of execution of a gift deed”.

 

In Urmila Dixit v. Sunil Sharan Dixit, (2025) 2 SCC 787, has inter alia, held that the relief available to Senior Citizens under Section 23 of the MOPSCA is intrinsically linked with the statement of object and reasons of the MOPSCA that elderly citizens in our country in some cases are not being looked after and further that it is directly in furtherance of the objectives of the Senior Citizens Act (MOPSCA )which empowers senior citizens to secure their rights promptly when they transfer a property subject to condition of being maintained by the transferee. Paragraphs 23 to 25 of the Urmila Dixit (supra) passed by the Hon‟ble Supreme Court are relevant to be quoted here which read thus:-

“23. The appellant has submitted before us that such an undertaking stands grossly unfulfilled, and in her petition under Section 23, it has been averred that there is a breakdown of peaceful relations inter se the parties. In such a situation, the two conditions mentioned in Sudesh [Sudesh Chhikara v. Ramti Devi, (2024) 14 SCC 225 : 2022 SCC OnLine SC 1684] must be appropriately interpreted to further the beneficial nature of the legislation and not strictly which would render otiose the intent of the legislature. Therefore, the Single Judge of the High Court and the tribunals below had rightly held the gift deed to be cancelled since the conditions for the well-being of the senior citizens were not complied with. We are unable to agree with the view taken by the Division Bench, because it takes a strict view of a beneficial legislation.

24. Before parting with the case at hand, we must clarify the observations made vide the impugned order [Sunil Sharan Dixit v. Urmila Dixit, 2022 SCC OnLine MP 3776] qua the competency of the Tribunal to hand over possession of the property. In S. Vanitha [S. Vanitha v. Commr., (2021) 15 SCC 730] , this Court observed that Tribunals under the Act may order eviction if it is necessary and expedient to ensure the protection of the senior citizen. Therefore, it cannot be said that the Tribunals constituted under the Act, while exercising jurisdiction under Section 23, cannot order possession to be transferred. This would defeat the purpose and object of the Act, which is to provide speedy, simple and inexpensive remedies for the elderly. 25. Another observation of the High Court that must be clarified, is Section 23 being a stand-alone provision of the Act. In our considered view, the relief available to senior citizens under Section 23 is intrinsically linked with the Statement of Objects and Reasons of the Act, that elderly citizens of our country, in some cases, are not being looked after. It is directly in furtherance of the objectives of the Act and empowers senior citizens to secure their rights promptly when they transfer a property subject to the condition of being maintained by the transferee.”

Paragraphs no.40 to 42 of the judgment in the case of Mohamed Dayan (supra) are also extracted herein below: -

“40. "Love and Affection" is an implied condition in the context of Section 23(1) of the Act, and therefore, there need not be any express condition in the Settlement Deed for the purpose of maintaining the senior citizen. Refusal of maintenance after executing the Settlement Deed or Gift Deed, is the ground for invoking the deemed ground of fraud or coercion or undue influence. When the deeming clause has been incorporated under the provisions of Section 23(1) of the Act, 'Love and Affection' to be construed as the consideration for executing the Gift or Settlement Deed. Thus, the condition need not be expressly made in the document and the love and affection, which resulted in execution of the Deed by the senior citizen is to be construed as a condition for the purpose of invoking the deeming clause for declaring the document as fraud or coercion or undue influence”.

“41. The entire purpose and object of the Senior Citizens Act, is to consider the human conduct towards them. When the human conduct is indifferent towards senior citizen and their security and dignity are not protected, then the provisions of the Act, is to be pressed into service to safeguard the security and dignity of senior citizen. Therefore, the purposive interpretation of the provisions are of paramount importance and Section 23 of the Act, cannot be mis-utilised for the purpose of rejecting the complaint filed by the senior citizen on the ground that there is no express condition for maintaining the senior citizen. Even in the absence of any express condition in the document, "Love and Affection" being the consideration for execution of Gift or Settlement Deed, such love and affection becomes a deeming consideration and any violation is a ground to invoke Section 23(1) of the Act. Thus, there is no infirmity in respect of the order passed by the second respondent in the present case.”

“42. The human conduct in the context of the senior citizen Act, is to be understood considering the relationship between the senior citizen and the beneficiaries of the Gift or Settlement Deed. Mostly the parents are executing the document in favour of their children. Since they may not be in a position to maintain the property at their old-age and more-so, they are intending to visibly express their love and affection towards their children by settling their properties. In some cases, the parents during their old-age are settling their property in order to avoid conflict between their children and to ensure that all children get equal share. If at all the parents decide to settle the property in favour of a son or daughter, then they are doing so, only with love and affection and with a fond hope that they will be taken care of by the son or daughter during their old-age. Thus, love and affection, being the consideration and implied condition, within the meaning of Section 23(1) of the Act. The subsequent non-maintenance of senior citizen would attract Section 23(1) of the Act and the Authorities in such circumstances are empowered to declare the document as null and void.”

 

In Smt Varinder Kaur (Supra) has held as under:

“31. Though, Section 122 of the Transfer of Property Act, 1882 defines “gift” to mean a the transfer of certain existing moveable or immovable property made voluntarily and without consideration, by one person called the donor, to another called the donee and accepted by or on behalf of the donee, however, in the context of a gift deed executed by a senior citizen in favour of his or her son or daughter or even daughter in law, it is not difficult to conclude that it is the love and affection and care in the old age which impels such citizens to execute gift deed”.

“35. In the instant case apart from several averments in the application, respondent no.1 had placed before the Tribunal various other applications and letters which go on to prove that the gift deed in question was executed by respondent no.1 with such hope that in her old age the appellant shall provide her basic amenities and basic physical needs. The material brought on record by respondent no.1 before the Tribunal also prove that appellant completely failed to provide such care, amenities and physical needs to respondent no.1. The hand written letters submitted by respondent no.1 before the Tribunal narrating the situation in which the gift deed was executed and how the appellant immediately after execution of the gift deed started ignoring the basic amenities and basic physical needs of respondent no.1 and neglected her completely, clearly establish the pre-conditions for exercise of power by the Tribunal under Section 23 of the Act. The appellate authority, i.e. the DM while passing the order dated 26.07.2023, on the appeal preferred by respondent no.1 under Section 16 of the Senior Citizens Act has discussed the material available on record and has, in our considered opinion rightly concluded that the deeming clause as contained in Section 23(1) of the Senior Citizens Act is to be invoked for cancelling the gift deed in question”.

What therefore clearly emerges from the above, is that, firstly, if there are conditions laid down in a registered gift deed that the donee shall take good care of the donor, and if the donor is aggrieved due to lack of care, despite the conditions, in the gift deed, the senior citizen can approach the appropriate authority for seeking cancellation of registered gift deed and it can be cancelled. Another aspect shall also have to be looked into i.e even if, no specific conditions are laid down in  a gift deed, whether due to lack of due care a gift deed could be cancelled on an application by transferor/senior citizen? The answer to the above is “Yes” in as much as the aforesaid judicial precedents have clearly indicated that it is inbuilt in gift deed, that the transferee/donee shall have implicit mandate to take due care of the transferor. It cannot be inferred, that for want of such a clause in the gift deed, on the premise of lack of due care, a senior citizen cannot seek cancellation of gift deed. That will defeat the very purpose and object of a gift deed. What clearly follows, thus, is that, the love and affection is the cornerstone of a gift deed and even if no specific clause of care to be taken, as a condition is prescribed in the gift deed, even then, the transferee/donee cannot claim to be oblivious to the due care of the transferor. There is no longer any ambiguity, therefore, now, a senior citizen can approach appropriate authority for seeking cancellation of gift deed, if the done is not taking due care of him/them, even when no such conditions are laid down in the gift deed. The law has evolved that very basis of execution of a gift deed shall invariably be love and affection towards donee. A parent/ senior citizen while executing a gift deed shall have inherent and intrinsic faith and belief in their son/daughter or close relative as a donee, however, interest of a parent/senior citizen cannot be allowed to be relegated to suffer peril  and cannot be allowed to be defeated, merely, because, no such clauses are there in the gift deed. A parent while executing a gift deed, due to the love and affection towards their son/daughter or close relative shall have innate faith in them and shall never even contemplate to think that no care shall be taken by such donee, however, as now a days it is found that there has been abdication of solemn responsibility towards parents and in case of such abdication/ dereliction of a solemn responsibility, a donee cannot be allowed to reap benefit without adhering to solemn obligation. In essence, therefore, a senior citizen shall be entitled to get the gift deed cancelled, even when there are no such condition of due care in the gift deed. There is no quarrel as regards proposition in law that While exercising the powers under Section 23(1) of the Senior Citizens Act on an application moved by a senior citizen seeking declaration that the deed is void, the Tribunal is expected to look into all the relevant material and not only the bare contents of the application so made.

                                       -------

                             Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com

 

DISPUTE relating to lease of immoveable property: Whether a commercial dispute?

 

DISPUTE relating to lease of immoveable property: Whether a commercial dispute?

The applicability of Section 106 of Transfer of Property Act 1882( In short “TPA”)  in a suit under the Commercial Courts Act (CCA) 2015, has often been a topic of discussion and doubts are expressed of its applicability in matters related to lease and eviction suit in respect of immoveable properties. It is endeavoured to deal with the issue on the basis of judicial precedents vis a vis the provisions of CCA. In order to appreciate the matter further, a recent judgment pronounced by Calcutta High Court shall be worthy of reference and analysis. The case reported as T.E. Thomson & Company Limited vs Swarnalata Chopra Nee Kapur & Anr 2024 SCC Online Cal 8985. Why it is so, shall be evident in as much as in view of divergence of opinion between two Hon'ble Judges on the scope of the Commercial Courts Act 2015 to try and decide an eviction suit on expiry of the lease period, the following questions have been referred to the division bench for a decision on the following issues:

(a) Whether after issuance of notice under Section 106 of the Transfer of Property Act, 1882, the defendant or the parties cannot rely on the agreement/lease deed as the case may be?

(b) Whether only on the basis of the case initiated under Section 106 of the Transfer of Property Act, 1882, it can be said that Court cannot look into the agreement between the parties and thus, the suit cannot be treated as commercial suit in terms of Section 2 (1)(c) (vii) of the Commercial Courts Act, 2015?

(c) Whether if the Explanation Clause of Section 2 (1) (c) of the Commercial Courts Act, 2015 taken into consideration along with the Section 106 of the Transfer of Property Act, 1882, the suit can be treated as commercial suit in terms of the lease agreement/rent agreement entered between the parties?

        JURISDICTION OF COMMERCIAL COURTS

Before proceeding further, it is apt to delve into the Section 6 of the Commercial Courts Act, 2015 (in short "CC Act” or the Act of 2015") reads as follows:

"6. Jurisdiction of Commercial Court.--The Commercial Court shall have jurisdiction to try all suits and applications relating to a commercial dispute of a Specified Value arising out of the entire territory of the State over which it has been vested territorial jurisdiction."

The expression 'relating to' mentioned in Section 6 is of wide import. In order to decide whether a suit involves a commercial dispute, we may have to refer to a definition of 'commercial dispute' as given in Section 2 (1) (c)  of the Act of 2015.

It was felt that in order to effectively decide the issues , it is imperative to take into consideration the phrase 'arising out of' and 'relating to' immovable property used exclusively in trade or commerce. The said two phrases are of wide amplitude and should receive a purposive interpretation in the light of the object of the CC Act. In order to be familiar with the judicial interpretation of such phrases, whenever such phrases had come up, for consideration, the following judgment shall be of relevance:

i) Mansukhlala Dhanraj Jain & Ors Vs Eknath Vithal Ogale AIR 1955 SC 661

ii) State of Orissa vs. State of A.P, SCC 665 2006 (9) SCC 591  (paragraphs 11, 14 to 16)

In order to ascertain the commercial nature of the suit, what is to be taken note of is the fact that the disputes of immoveable properties should be 'arising out of' and 'relating to' the said immovable property, used exclusively in trade or commerce. It is felt that the said two phrases are of wide amplitude and hence should receive a purposive interpretation in the light of the object of the Commercial Courts Act. The above cited judgments are reflective of that.

As regards the explanation to  Section 2(1)(c), that brings out the legislative intent and the said explanation makes it clear that a commercial dispute could also involve an action for recovery of immovable property, amongst others, as mentioned in the explanation.

In The Bengal Immunity Company Limited Vs State of Bihar & Ors AIR 1955 SC 661 the scope and width of an explanation in interpreting a section has been analysed. It is held that the section 106 of the Transfer of Property Act only lays down a rule of construction of the lease agreement. The lease is  created by Section 105 of the Transfer of Property Act. The duration of a lease depending upon the nature of the lease and mode of its termination are what is stated in Section 106. 

                PRE-REQUISITES OF A COMMERCIAL DISPUTES

The lease agreement is required to be considered for deciding the nature and character of the jural relationship of the landlord and tenant for the purpose of ascertaining whether the lease is for manufacturing or agricultural purpose upon which the validity of notice under Section 106 of the Transfer of Property Act is required to be decided. The court cannot ignore the lease agreement, while deciding a suit filed after issuance of a notice under Section 106 of the Transfer of Property Act, 1882. No doubt, for seeking recovery of immovable property a civil suit is required to be filed and procedure entailing in Code of Civil Procedure shall have to be followed.

It was thus held that that to fall within a realm of commercial disputes, relating to an immovable property, used exclusively for trade or commerce, it has to be of a specified value as mentioned in the Commercial Courts Act and there are Four (4) basic test for ascertaining the same, if the dispute falls within the ambit of Commercial Courts Act . The tests are as under:

(i) it should be a dispute arising out of an agreement relating to immovable property,

(ii) the immovable property is used exclusively in trade or commerce;

(iii) the dispute shall be a specified value and

(iv) it has arisen within the jurisdiction of the Commercial Court established in the state.

                Section 106 of TPA and suit based on that

The first ingredient of the suits which stares in the face is that the suits are based on the statutory right conferred by Section 106 of the Transfer of Property  Act. The cause of action in each of the suits clearly arises by virtue of the rights conferred by the said section. A "dispute" can only be determined by the cause of action of the suit and not the preceding backdrop. Even if Section 106 of the Transfer of Property Act, deals with termination of the jural relationship of lessor and lessee, pre-supposing a prior lease agreement, the bundle of facts comprising the cause of action of the suit is the sole determinant of the "dispute" involved in the suit.

What follows is that while dealing with a suit, filed after issuance of a notice, issued under Section 106 of the Transfer of Property Act, the Court has to look into the contract between the parties, as the provisions of Section 106 relating to tenure and termination of the lease apply only subject to contract between the parties. Therefore, the contract between the parties has to be looked into and if it is a contract relating to immovable property used exclusively in trade or commerce, any dispute arising therefrom would be a commercial dispute. 

The Commercial Courts Act 2015 does not specify the disputes, arising out of agreements, relating to immovable property used exclusively in trade or commerce which would qualify as a 'commercial dispute' defined in Section 2(1) (c) of the Act. The Legislature has thus not limited the disputes to forfeiture for violation of any of the clauses of the lease agreements or specific performance of the agreements or renewal clauses and has in fact, widened the scope of disputes by the Explanation. In the Explanation of Section 2 (1) (c) it is mentioned that "A commercial dispute shall not cease to be a commercial dispute merely because - (a) it also involves action for recovery of immovable property or for realization of moneys out of immovable property given as security or involves any other reliefs pertaining to immovable property".

The judgment rendered by a single judge of Calcutta High Court in Deepak Polymers Private Limited Vs Anchor Investments Private Limited  2021 SCC OnLine Cal 4323 , though, related to a suit for possession of a property, let out for commercial purpose, still, Calcutta High Court had observed that if a suit is filed for recovery of possession, in respect of immovable property, on the ground of forfeiture for contravention of any of the terms and conditions of the agreement, it could be said to be a dispute "arising out of" such agreement. However, observing that, the dispute therein had arisen out of refusal by the defendants to comply with the notice issued by the lessor under Section 106 of the Transfer of Property Act, 1882, which was based on a statutory right, independent and irrespective of any clause of the lease agreements. Thus, it was held that such suit would squarely arise out of a statutory right conferred by Section 106 of the Transfer of Property Act, having no direct nexus with the lease agreements in respect of the immovable properties concerned. Resultantly, it was held that the precondition of the applicability of Section 2(1) (c) (vii), that is, the emanation of the dispute out of the lease agreement, was not satisfied.

What is of pertinence that in the case of Deepak Polymers (Supra), the Hon'ble Judge has not considered the Explanation Clause of Section 2(1)(c) of the Commercial Courts Act, 2015 and scope, purports and effect of Section 106 of the Transfer of Property Act, 1882. A bare perusal of Section 2 (1) (c) of the Commercial Courts Act would show that the Legislature intended to define certain jural relationships/transactions as commercial and the disputes arising out of such jural relationships/transactions as commercial disputes. The purpose of such classification is to set up an exclusive and dedicated Court system with a special codified law in the form of the Act of 2015 to receive, try and determine commercial disputes. The classification of the dispute is on the basis of the jural relationship between the parties out of which the dispute emanates and not the statue under which it is to be decided. A fortiori, a commercial dispute would not cease to be a commercial dispute merely because it is to be decided by application of any particular law. Accepting the contention of the defendants would lead to an absurd situation where all specified disputes would cease to be commercial disputes merely because the determination of the merits thereof is to be done on the basis of a particular statute.

Therefore, the judgment rendered in Deepak Polymers (Supra) is not correct.

SECTION 2(1) (c)(vii) Analysed

It is worthwhile to further refer, the definition clause of CC Act 2015.

2. Definitions.--(1) In this Act, unless the context otherwise requires,--

.....

(c) "Commercial Dispute" means a dispute arising out of __ ..... (emphasis supplied) 

The above referred clause (c) defines the "commercial dispute" in the Act to mean a dispute arising out of different sub-clauses. What is therefore explicit is that expression "arising out of" in the context of clause (vii) refers to an agreement in relation to an immoveable property. Moreover, the expressions "arising out of" and "in relation to immoveable property" have to be given their natural and general contours. These are wide and expansive expressions and cannot be given a narrow and restricted meaning. The expressions shall have to include all matters relating to all agreements in connection with immoveable properties. The immoveable property should, of course, form the dominant purpose of the agreement out of which the dispute arises. Yet another dimension to be looked into is that in clause (vii) relates to immoveable property, i.e., the property should be used exclusively in trade or commerce. Obviously, the natural meaning or so to say, grammatical meaning of clause (vii) is that all disputes arising out of agreements relating to immoveable property, in case the immoveable property is exclusively used for trade and commerce and that should in itself qualify as a commercial dispute. The immoveable property must be used exclusively for trade or business and it is not material, whether renting of immoveable property was the trade or business activity carried on by the landlord. Use of the property as for trade and business is determinative.

What clearly emerges therefore is that a dispute relating to immovable property per se, may not be a commercial dispute, but, it becomes a commercial dispute, if it falls under sub-clause (vii) of Section 2 (1) (c) of the Commercial Courts Act 2015, if the agreements relating to immovable property used exclusively in trade or commerce". The words "used exclusively in trade or commerce" are to be interpreted purposefully. The word "used" denotes "actually used" and it cannot be either "ready for use" or "likely to be used" or "to be used". It should be "actually used".

In a suit in relation to an immovable property, the discussion is confined to sub- clause (vii) of Section 2 (1) (c) of the Act of 2015. The said sub-clause (vii) of 2 (1)(c) reads as follows:-

"2(1)(c)(vii)- agreements relating to immovable property used exclusively in trade or commerce".

As per the Section 6 of  the aforesaid clause of the Act of 2015 jurisdiction shall be conferred on the Commercial Court to decide a dispute arising out of an agreement relating to immovable property used exclusively in trade or commerce. The expressions "relating to" and "arising out of" are of wide import and considered to be same and similar to the expression "concerned with" or "connected with" the dispute, as would appear from the decision of the Hon'ble Supreme Court in Mansukhlal Dhanraj Jain (Supra) where in paragraphs 11, 14 to 16 the scope and ambit of these expressions were considered.

In Manish Kumar v Union of India & Anr, 2021(5)SCC 1 in which the Hon’ble Supreme Court while referring to S. Sundaram Pillai v V.R. Pattabiraman, 1985 (1)SCC 591 has in paragraph 297 expanded the scope of explanation by, inter alia, observing “if, in effect, in a particular case, an explanation does widen the terms of the main provision it would become the duty of the court to give effect to the will of the legislature.”

The purpose of an explanation is to harmonize and clear up any ambiguity and apart from its orthodox function to explain the meaning and effect of the main provision to which it is an explanation and to clear up any doubt or ambiguity, it needs to be construed according to its plain language and not on any a priori consideration. Paragraph 53 from the judgment in S.Sundaram Pillai 1985 (1)SCC 591  has been emphasized and reiterated in which the Court observed thus-

“53. Thus, from a conspectus of the authorities referred to above, it is manifest that the object of an Explanation to a statutory provision is—

“(a) to explain the meaning and intendment of the Act itself,

(b) where there is any obscurity or vagueness in the main enactment, to clarify the same so as to make it consistent with the dominant object which it seems to subserve,

(c) to provide an additional support to the dominant object of the Act in order to make it meaningful and purposeful,

(d) an Explanation cannot in any way interfere with or change the enactment or any part thereof but where some gap is left which is relevant for the purpose of the Explanation, in order to suppress the mischief and advance the object of the Act it can help or assist the Court in interpreting the true purport and intendment of the enactment, and

(e) it cannot, however, take away a statutory right with which any person under a statute has been clothed or set at naught the working of an Act by becoming an hindrance in the interpretation of the same.”

On the basis of above, it may clearly appear that the Court may not be required to go beyond the interpretation to an explanation as offered in S.Sundaram Pillai (Supra)   beyond (a), (b) and (c) and if the court is of the opinion that some gap in an enactment is left, sub-clause (d) can also be taken into consideration as it would advance the object of the Act. The cause of action in the suit is not merely the notice under Section 106 of the Transfer of Property Act. The decision of the Hon’ble Division Bench of the Delhi High Court in Jagmohan Behl Vs. State Bank of Indore 1 2017 SCC OnLine Del 10706 has correctly interpreted the explanation clause along with Section 2(1)(c)(vii) in arriving at a finding that the suit is a commercial suit and to be adjudicated under the Commercial Courts Act and in this regard reliance has been place upon paragraphs 9 to 13 of the said decision.

Section 2 (1) (c) defines a "commercial dispute" which may revolve to means "a dispute arising out of" a class of mattes mentioned therein. A dispute in simple terms would mean a controversy - something which has been questioned. It is not the same thing as a cause of action or a mere incurring of a liability. A dispute may mean an argumentative contention and difference of opinion. It can be a dispute of law as well as of fact. It can be a conflict of claims or rights; an assertion of a right, claim, or demand on one side, met by contrary claims or allegations on the other.

Undoubtedly, though, a dispute of a commercial nature arises out of an agreement and is resolved with reference to such an agreement with the possible exception where the issue arises as to whether there is a concluded contract. The dispute cannot arise in vacuum. The construction of the lease agreement is essential to understand the validity of the notice under Section 106 of the TPA. Hence one cannot disregard the agreement even when it is determined under Section106  of the TPA as settled by the catena of decision of the Hon'ble Supreme Court few of which we have referred earlier. There is a saying that  "no one is wiser then a statute". In the context of the relevance of the explanation in interpreting Section 2 (1) (c) (vii) of the Commercial Court Act. In harmonising the section with the explanation it is imperative to understand the legislative intent.

A commercial dispute is thus determined under Section 2 (1) (c)(vi) of the Act of 2015. Explanation clarifies that a dispute shall not cease to be a commercial dispute, merely because this is an action for recovery of possession of immoveable property. It is clear that whereas right to file a suit is governed by the Code of Civil Procedure, 1908 as contained in section 26 of CPC.  The suit is to be filed in accordance with the Rules of procedure contained in the Schedule of the Code of Civil Procedure.

                Deepak Polymer- An Anomaly

It is necessary for the plaintiff to prove that there exists a monthly tenancy or a lease for manufacturing or agricultural purpose and in spite of service of notice as contemplated under section 106 which is variable depending upon the nature of the agreement and duration of the lease the defendant had refused to vacate the premises in question. It was by reason of the failure of the defendant to deliver possession after the expiration of the notice period which could be 15 days in case of monthly tenancy or 6 months’ notice in case of manufacturing or agricultural lease that the plaintiff had filed the suit for recovery of possession. The proof of valid notice would presuppose a jural relationship between the parties. The judgment reported as Deepak Polymers Private Limited vs Anchor Investments Private Limited, 2021 SCC OnLine Cal 4323 is sub-silentio on the scope, purport and effect of the explanation to Section 2(1)(c) which expressly provides that a suit for recovery of possession of a property used exclusively for trade and commerce is a commercial dispute. The observation of single judge to the effect that suits squarely arising out of a statutory right conferred by Section 106 of the Transfer of Property Act would have no direct nexus with the lease agreement and hence for enforcement of such statutory right the Commercial Courts Act would have no manner of application and such suit is required to be heard as a non-commercial suit did not pass muster.

To elucidate it further, in Deepak Polymers (supra) it was held that suits based on statutory rights conferred under Section 106 of the TPA cannot be considered to be a “commercial dispute” within the meaning of the Commercial Courts Act 2015. The cause of action in each of such suits arises by way of rights conferred by Section 106 of the TPA. However, the division bench of Calcutta High Court in T.E. Thomson (Supra) has held otherwise.  

So far as section 106 of TPA is concerned, it is a substantive piece of legislation, but, it cannot by itself be construed as a standalone provision for the purpose of deciding the mutual rights of the parties. It only stipulates the procedure to be followed in case of termination of the lease. It can be safely inferred, thus, that it does not provide a remedy. The Code of Civil Procedure, though, on the other hand contains the remedy , in as much as, CPC read with the schedule has details and specifics carved out for this purpose. The Commercial Courts Act, 2015 , though, have carved out few disputes and classified them as commercial disputes to be exclusively decided by the Commercial Division subject to the fulfilling the requirement of specified value, but the remedy shall have to be undertaken, as stated, as per the provisions of Code of Civil Procedure.

 

The Division bench in TE Thomson (Supra) has thus concluded as under:

Q. (a) Whether after issuance of notice under Section 106 of the Transfer of Property Act, 1882, the defendant or the parties cannot rely on the agreement/lease deed as the case may be?

Answer- The lease agreement is to be looked into and considered for deciding the nature and character of jural relationship of landlord and tenant between the parties, that is to say, whether the lease agreement is for manufacturing or agricultural purpose, upon which will depend validity of notice under Section 106 of T P Act. The answer is in the negative.

Q.(b) Whether only on the basis of the case initiated under Section 106 of the Transfer of Property Act, 1882, it can be said that Court cannot look into the agreement between the parties and thus, the suit cannot be treated as commercial suit in terms of Section 2(1)(c) (vii)  of the Commercial Courts Act, 2015?

Answer - This question is included by necessary implication in question (a) and is answered in the negative.

(c) Whether if the Explanation Clause of Section 2 (1) (c) of the Commercial Courts Act, 2015 taken into consideration along with the Section 106 of the, 1882, the suit can be treated as commercial suit in terms of the lease agreement/rent agreement entered between the parties?

Answer- Yes. Explanation clause is an integral part and parcel of the Section 2(1) (c) (vii) of the said Act and has to be taken into consideration for deciding whether it is a commercial dispute or not. Explanation is very relevant because it reflects legislative intent that a commercial dispute will not cease to be commercial dispute, even if recovery of immoveable property is claimed, which will not change the character of a dispute if it has been held to be commercial dispute under Section 2(1) (c) (vii) of the said Act.

On the basis of aforesaid discussion, the proposition in law is settled, to the effect, that any disputes arising out of section 106 of Transfer of Property Act, if it falls within the trap of Section 2 (1) (c) (vii) of Commercial Courts Act, the same shall be a commercial suit. It was so, as the explanation appended to the provision even if taken in face value, shall categorically suggest as much. It cannot be said that as section 106 of TPA relates to statutory notice and suit for eviction or possession, therefore, cannot fall within the trap of Commercial Courts Act for that reason. The judgment rendered in Deepak Polymers (Supra) is also held to be not correct, since , it was held therein that any suit based on section 106 of TPA shall not be a commercial dispute. The contents of section 106 of TPA shall, no doubt, be relevant with a view to ascertain the terms of the lease agreement, but, it does not imply by any stretch of imagination, that the cause of action, arising out of that shall not fall within the meaning of Commercial Courts Act, 2015, even if it has trap of commercial cases. What would follow, therefore is that, if a dispute is of a commercial nature, and is otherwise, in sync with Section 2(1) (c) (vii) inclusive of explanation of the said Act and attached thereto, the dispute shall be treated as commercial dispute and commercial suit shall be maintainable.          

                                        -----

Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com