A solitary transaction of advancing a loan does not fall within the definition of "Commercial Dispute" under the Commercial Courts Act.

A Commercial Summary Suit was filed in the Bombay City Civil Court for recovery of a friendly loan. The Defendant in the suit took out a Notice of Motion under Order 7 Rule 10 (1) of the CPC praying for return of the plaint to the Plaintiff on the basis that in the Plaint, the Plaintiff had admitted that the suit transaction was a friendly loan and therefore did not fall within the purview of Commercial Dispute contemplated under the Commercial Courts Act, 2015.

The Notice of Motion was dismissed by the Trial Court holding that the Plaintiff acted as a Financier and there is a transaction of loan between the parties and accordingly, the suit transaction fell within the definition of Commercial Dispute as per the Commercial Courts Act.

The Order of the Trial Court was challenged by the Defendant in a Writ Petition before the Hon'ble Bombay High Court. The Hon'ble Bombay High Court set aside the Order of the Trial Court and directed that the plaint be permitted for presentation to the appropriate court not being a "Commercial Dispute". While allowing the Writ Petition, the Hon'ble Bombay High Court held that the Impugned Order which took the view that the transaction of advancing an amount as a friendly loan is commercial in nature is an erroneous finding as a solitary transaction of advancing loan, on friendly terms, unlike a commercial lending with the prevailing market rate, would fall short of ordinary transaction of a financier, banker1.

  1. Writ Petition No.8393 of 2021 dated 6th December, 2021. (M/s Glasswood Realty P Ltd. Vs. Chandravilas Kothari).

By - Chaitanyaa Bhandarkar