Commercial Disputes Under the Commercial Courts Act

Facts

FACTS:The litigation arose from a long-running business legacy of the Agarwal family that dealt in dry fruits, spices, dry vegetables and similar products under the trade name “Sindharam Sanwarmal”, established by late Mangi Lal Agarwal. Over the years, the business gained strong goodwill and reputation. After the death of key family members, the legal heirs executed a family arrangement dated 13 January 2017.

This family arrangement allotted various business establishments, particularly shop rooms and godowns used for the business, to different branches of the family. It allowed all branches to continue using the goodwill of the name “Sindharam Sanwarmal & Co.”, but included a clear covenant that no branch could run a business using this trade name within one kilometer of the two existing shop rooms at 43/44, Cotton Street, Kolkata. The plaintiff Ramji Lal Agarwal was allotted one of these shop rooms to run “Sindharam Sanwarmal & Co.” while the defendant’s father was allotted the other shop room to run “Shree Hanuman Stores.”

The present dispute began when the defendant Sourav Agarwal, instead of continuing business under the allotted trade name “Shree Hanuman Stores”, began running the same business from the same premises under the trade name “Sindharam Sanwarmal Mewawala”. The plaintiff claimed this violated the covenant against use of the trade name within 1 km of the existing shop rooms.

Procedural Details

PROCEDURAL DETAILS:The plaintiff filed CS 126 of 2023 seeking various reliefs including mandatory injunction, perpetual injunction and damages. He also filed IA No. GA 1 of 2023 seeking temporary injunction against the defendant.

The defendant filed IA No. GA 2 of 2023 seeking dismissal of the suit on the ground that the issues involved were commercial disputes under Section 2(1)(c) of the Commercial Courts Act, 2015 and therefore triable exclusively by a Commercial Court, not by the High Court in its ordinary original civil jurisdiction.

On 12 March 2025, the Trial Court dismissed the plaintiff’s injunction application GA 1 of 2023 and allowed the defendant’s application GA 2 of 2023, holding that the dispute was commercial in nature and directing return of the plaint to be filed before the appropriate Commercial Court.

• APOT 99 of 2025 – filed by the plaintiff arguing the dispute was not commercial
• APOT 95 of 2025 – filed by the defendant supporting the jurisdiction argument but objecting to findings on merits

Core Dispute

CORE DISPUTE:The core question before the High Court was whether the suit CS 126 of 2023 arose out of a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015. If it did, then the High Court exercising ordinary civil original jurisdiction had no power to entertain it, and only a designated Commercial Court could try the matter.

Detailed Judicial Reasoning

DETAILED JUDICIAL REASONING:The Court examined the family arrangement thoroughly. Although it referred to 26 immovable properties, the arrangement clearly stated that the parties were already separated in residence and mess. Therefore, the division pertained primarily to business establishments — shop rooms, godowns and other premises exclusively used in trade and commerce under the trade name “Sindharam Sanwarmal.”

The Court noted that under Clause 3, use of the name “Sindharam Sanwarmal” within one kilometer of the existing shop rooms was prohibited, and the dispute brought through the suit was entirely about violation of this covenant and use of goodwill attached to the trade name in competition.

The Court analysed whether this dispute constituted a commercial dispute. Section 2(1)(c)(vii) of the Commercial Courts Act covers “agreements relating to immovable property used exclusively in trade or commerce”, and Section 2(1)(c)(xvii) covers disputes relating to intellectual property rights including registered and unregistered trademarks.

The Trial Court had relied on Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2020) 15 SCC 585, which held that an immovable property dispute becomes a commercial dispute if the immovable property is actually used exclusively in trade or commerce. The High Court agreed with this reasoning and held that the shop rooms under the family arrangement were being used in trade and commerce exclusively. Therefore, the dispute fell squarely within Section 2(1)(c)(vii) of the Act.

Additionally, the plaint sought perpetual injunction against the defendant to restrain him from using the trade name “Sindharam Sanwarmal” or allowing third parties to use it. This brought the case also within the scope of Section 2(1)(c)(xvii), as the relief directly concerned intellectual property rights in a trade name.

In this light, the Court held that Hari Shankar Singhania v. Gaur Hari Singhania (2006) 4 SCC 658 did not restrict applicability of the Commercial Courts Act merely because the dispute arose out of a family settlement. The relevant question is not whether the origin was familial but whether the underlying dispute is commercial in nature. The present dispute involved exclusive rights of use of a trademark and goodwill in business, which are commercial matters.

The Court also addressed the defendant’s challenge in APOT 95 of 2025 that the Trial Court should not have made observations on merits after finding lack of jurisdiction. The Court clarified that once the plaint is filed before the competent Court, all issues — including limitation, binding effect of the family agreement and enforceability of covenants — will remain open and will not be prejudiced by remarks in the impugned order.

Decision

DECISION:The High Court upheld the Trial Court’s finding that all disputes raised in CS 126 of 2023 are commercial in nature and fall within Section 2(1)(c) of the Commercial Courts Act, 2015. Therefore, the High Court exercising ordinary original civil jurisdiction lacked authority to entertain the suit. The plaint must be filed before the appropriate Commercial Court.

Both appeals APOT 99 of 2025 and APOT 95 of 2025 were dismissed, with liberty to the plaintiff to present the plaint before the competent Commercial Court, where all issues will be considered afresh without being influenced by any findings of the Trial Court or High Court.

Case Details

Disclaimer

Disclaimer: The information shared here is intended to serve the public interest by offering insights and perspectives. However, readers are advised to exercise their own discretion when interpreting and applying this information. The content herein is subjective and may contain errors in perception, interpretation, and presentation.

Written By

Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi