The Madhya Pradesh High Court has clarified that the mere fact of a cheque being issued for payment in a sale of goods transaction does not, by itself, transform a recovery suit into a commercial dispute under the Commercial Courts Act, 2015. This ruling reinforces the need for strict adherence to statutory definitions when determining jurisdictional competence.
Background & Facts
The Dispute
The petitioner, Madanlal, sought transfer of a civil suit filed by Satish Kumar for recovery of Rs. 96,58,000 under Order 37 Rule 1 of the Code of Civil Procedure, 1908. The suit arose from the sale of sugar, for which three cheques were issued and subsequently dishonoured. The petitioner contended that this transaction fell squarely within the definition of a "commercial dispute" under Section 2(1)(c)(xviii) of the Commercial Courts Act, 2015, and therefore required adjudication by a designated Commercial Court.
Procedural History
- 2018: Original suit filed by plaintiff before XIX Civil Judge, Senior Division, Indore
- 2025: Petitioner filed application under Order VII Rule 10 r/w Section 151 CPC seeking transfer to Commercial Court
- 27 October 2025: Civil Judge dismissed the transfer application, holding the dispute did not qualify as commercial
- January 2026: Petitioner filed Writ Petition under Article 227 challenging the dismissal
Relief Sought
The petitioner sought quashing of the order dismissing the transfer application and directed the case to be transferred to the Commercial Court on the ground that the transaction involved sale of goods and thus fell within the statutory definition of a commercial dispute.
The Legal Issue
The central question was whether a suit for recovery of money arising from dishonoured cheques issued in connection with the sale of goods qualifies as a "commercial dispute" under Section 2(1)(c)(xviii) of the Commercial Courts Act, 2015, solely on the basis of the nature of the underlying transaction.
Arguments Presented
For the Petitioner
Counsel for the petitioner relied on the plain language of Section 2(1)(c)(xviii), which defines "commercial dispute" to include disputes arising out of "agreements for sale of goods or provision of services." She argued that the sale of sugar constituted a commercial transaction, and the issuance and dishonour of cheques were incidental to that transaction. She cited M/s. R.K. Industries v. M/s. S.K. Enterprises to support the proposition that any dispute rooted in commercial activity, even if framed as a money recovery suit, must be heard by a Commercial Court.
For the Respondent
The respondent contended that the nature of the suit, not the underlying transaction, determines jurisdiction. The suit was filed under Order 37 Rule 1 CPC, which governs summary suits for recovery of debts or liquidated demands, and does not involve complex commercial terms, contractual interpretation, or trade practices. The respondent emphasized that the legislature intended Commercial Courts to handle disputes involving intricate commercial arrangements, not routine debt recovery via cheque dishonour.
The Court's Analysis
The Court undertook a textual and purposive interpretation of Section 2(1)(c)(xviii). It acknowledged that while the sale of sugar was indeed a commercial activity, the suit itself was not a dispute arising from the terms of the agreement, its performance, breach, or interpretation. Instead, it was a straightforward claim for recovery of a liquidated sum based on a financial instrument - the cheque.
"The dispute before this Court is not about the terms of sale, quality of goods, delivery, or commercial obligations. It is a claim for recovery of a fixed amount due on a dishonoured cheque, which is a debt recovery proceeding under Order 37 CPC."
The Court distinguished between the underlying commercial transaction and the procedural mechanism used to enforce a monetary claim. It noted that Parliament, in enacting the Commercial Courts Act, intended to create specialized forums for complex commercial litigation - not to convert every debt recovery suit involving a cheque into a commercial dispute. The Court further observed that Order 37 CPC already provides an expedited remedy for liquidated claims, and extending Commercial Court jurisdiction to such cases would undermine the legislative intent behind both statutes.
The Verdict
The petitioner’s petition was dismissed. The Court held that a suit for recovery of a liquidated amount under Order 37 Rule 1 CPC, arising from dishonoured cheques issued in connection with the sale of goods, does not constitute a "commercial dispute" under Section 2(1)(c)(xviii) of the Commercial Courts Act, 2015. The Civil Judge’s dismissal of the transfer application was upheld as legally correct.
What This Means For Similar Cases
Suit Type Determines Jurisdiction, Not Underlying Transaction
- Practitioners must assess the nature of the relief sought, not merely the origin of the debt, to determine whether a case qualifies as commercial
- A suit under Order 37 CPC for cheque dishonour recovery remains a civil suit, even if the debt arose from a commercial sale
- Applications for transfer under Order VII Rule 10 CPC must be evaluated on the pleadings and relief claimed, not on the commercial nature of the transaction
Commercial Courts Are Not Default Forums for Debt Recovery
- The judgment reinforces that Section 2(1)(c)(xviii) does not automatically capture all transactions involving goods or services
- Lawyers should avoid filing transfer applications in routine cheque bounce cases under the guise of commercial dispute
- Where the claim is for a fixed sum with no contractual interpretation or commercial complexity, jurisdiction lies with the Civil Court
Procedural Choice Has Jurisdictional Consequences
- Choosing Order 37 CPC for recovery signals an intent to pursue a summary remedy, which excludes Commercial Court jurisdiction
- Parties seeking commercial dispute adjudication must frame suits to reflect commercial complexity - e.g., breach of warranty, non-delivery, quality disputes - not mere non-payment
- Future litigants should consider filing under Section 138 NI Act for cheque dishonour and reserve commercial court jurisdiction for disputes involving contractual interpretation or trade practices
