The Calcutta High Court has clarified that a suit for eviction and mesne profit arising from commercial tenancy, even after an eviction decree, remains a commercial dispute under the Commercial Courts Act, 2015. The failure to transfer such a suit to the Commercial Division after its constitution renders all subsequent orders void for want of jurisdiction.
Background & Facts
The Dispute
The dispute arose from a commercial tenancy agreement between Rajshri Productions Pvt. Ltd. (appellant/tenant) and T.E. Thomson and Company Ltd. (respondent/landlord). The respondent filed a suit for eviction and mesne profit in CS/257/2018, seeking possession of premises located in Kolkata where the appellant operated an office. The suit was filed prior to the enforcement of the Commercial Courts Act, 2015.
Key Facts
- The tenanted premises were used for commercial purposes: an office was operated by the appellant.
- The Commercial Courts Act, 2015 came into force on 23.10.2015.
- The Commercial Division of the Calcutta High Court was constituted on 16.07.2016.
- The suit remained pending in the Original Side (non-commercial division) despite the statutory mandate for transfer.
- The appellant surrendered possession of the premises during the pendency of the suit.
- A decree for eviction was passed on 13.12.2022, which also referred the calculation of mesne profits to a Special Referee.
- The Special Referee submitted a report on mesne profits, which was challenged by both parties through IA GA/5/2024 (by appellant) and IA GA/6/2024 (by respondent).
- The impugned judgment and decree dated 07.10.2024 was passed by the non-commercial division, determining mesne profits.
Procedural History
- 23.10.2015: Commercial Courts Act, 2015 came into force.
- 16.07.2016: Commercial Division of Calcutta High Court constituted.
- 13.12.2022: Decree for eviction and reference for mesne profit passed in CS/257/2018.
- 03.02.2023: Appeal against eviction decree dismissed.
- 2023: Special Leave Petition dismissed by Supreme Court.
- 2024: IA GA/5/2024 and IA GA/6/2024 filed challenging the Special Referee’s report on mesne profits.
- 07.10.2024: Judgment and decree passed by non-commercial division on mesne profit.
- 20.04.2026: Judgment delivered by Division Bench on appeals against the 07.10.2024 decree.
Relief Sought
The appellant sought setting aside of the 07.10.2024 decree on the ground that the non-commercial division lacked jurisdiction. The respondent sought affirmation of the decree, arguing that mesne profit claims are independent of commercial disputes.
The Legal Issue
The central question was whether a suit for eviction and mesne profit, originally filed as a commercial tenancy dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, continues to be classified as a commercial dispute even after an eviction decree has been passed, and whether jurisdiction to decide mesne profits vests exclusively in the Commercial Division.
Arguments Presented
For the Appellant
The appellant contended that the suit, being for eviction of commercial premises, fell squarely within Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which includes disputes relating to the lease or tenancy of immovable property used for commercial purposes. Since the Commercial Division was constituted on 16.07.2016, the suit was statutorily required to be transferred under Section 15. The failure to transfer rendered all subsequent proceedings, including the 07.10.2024 decree on mesne profits, null and void. Reliance was placed on the mandatory nature of Section 15 and the principle that jurisdiction is determined at the time of institution and cannot be waived by lapse of time.
For the Respondent
The respondent argued that the claim for mesne profit is an independent cause of action, not inherently tied to the tenancy agreement, and is governed solely by Order XX Rule 12 of the Code of Civil Procedure, 1908. Citing Chittoori Subbanna v. Kudappa Subbanna and Bharat Petroleum Corporation Ltd. v. ATM Constructions Pvt. Ltd., the respondent contended that mesne profit claims are not commercial disputes under the Act and thus do not require transfer to the Commercial Division. The respondent further argued that the claim for mesne profit arose post-eviction and was therefore outside the scope of the Act.
The Court's Analysis
The Court rejected the respondent’s contention that mesne profit claims are inherently non-commercial. It held that the nature of the suit is determined by its origin and subject matter at the time of institution. Since the suit was instituted for eviction of premises used for commercial purposes, it was a commercial dispute under Section 2(1)(c)(vii) from inception.
"The suit did not lose the character of involving a commercial dispute within the meaning of the Act of 2015 subsequent to the decree for eviction and mesne profit dated December 13, 2022 being passed."
The Court emphasized that Section 15 of the Act mandates automatic transfer of pending commercial suits to the Commercial Division upon its constitution. The failure to effectuate such transfer is not a procedural irregularity but a jurisdictional defect. The Court distinguished Chittoori Subbanna and Bharat Petroleum on the ground that neither case addressed the statutory transfer mandate under the Commercial Courts Act, 2015. The Supreme Court decisions dealt with maintainability of subsequent suits, not jurisdictional competence of courts under a special statute.
The Court further held that mesne profit is not a separate cause of action but a consequential relief flowing from the primary claim for possession. The reference to the Special Referee was ancillary to the original suit and therefore subject to the same jurisdictional constraints.
The Verdict
The appeal succeeded. The Calcutta High Court set aside the judgment and decree dated 07.10.2024 as void for want of jurisdiction. The Court directed the Registry to transmit the records of CS/257/2018, IA GA/5/2024, and IA GA/6/2024 to the Commercial Division. The Commercial Division shall treat the suit and applications as transferred and decide all pending matters, including the calculation of mesne profits, afresh. No costs were awarded.
What This Means For Similar Cases
Commercial Suit Character Is Fixed at Institution
- Practitioners must immediately move for transfer of any pending suit involving commercial tenancy to the Commercial Division upon its constitution, regardless of whether eviction has been decreed.
- A decree for eviction does not sever the commercial character of the suit; mesne profit remains a consequential relief under the same jurisdiction.
Jurisdictional Defects Cannot Be Waived by Lapse of Time
- Failure to transfer under Section 15 is not a curable procedural lapse but a jurisdictional nullity.
- Orders passed by non-commercial divisions in such suits are void ab initio and subject to challenge even after years.
Mesne Profit Is Not an Independent Commercial Claim
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Claims for mesne profit arising from commercial tenancy suits are not standalone commercial disputes under the Act.
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They are ancillary to the primary claim and must follow the jurisdictional path of the original suit.
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Always verify the nature of the underlying tenancy at the time of filing.
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File a transfer application under Section 15 immediately upon Commercial Division’s establishment if the suit involves commercial premises.
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Do not assume that post-eviction claims for mesne profit are exempt from the Act’s jurisdictional mandates.
