The Calcutta High Court has clarified that an oral agreement for the commercial use of immovable property constitutes a commercial dispute under the Commercial Courts Act, 2015, irrespective of the absence of a written contract. This ruling resolves a critical ambiguity in jurisdictional thresholds for commercial suits involving tenancy arrangements.
Background & Facts
The Dispute
The respondent, T.E. Thomson and Company Limited, filed a suit for eviction of the appellant, Musical Films Private Limited, from premises located in Kolkata. The premises were used by the appellant as an office space. The respondent claimed that the appellant had been occupying the property under a tenancy arrangement and had defaulted on rent payments. The suit was valued at over Rs. 20 lakhs, exceeding the pecuniary jurisdiction threshold for commercial suits under the Commercial Courts Act, 2015.
Key Facts
- The respondent issued rent receipts to the appellant for monthly payments, which were acknowledged and accepted.
- No written lease deed or formal agreement was executed between the parties.
- The suit was filed on 07.01.2019 in the non-commercial civil court.
- The specified value for commercial suits in West Bengal was notified on 15.11.2018, setting the threshold at Rs. 10 lakhs.
- The rent receipts constituted the sole evidence of the tenancy arrangement.
- The appellant contested jurisdiction, arguing that the absence of a written agreement excluded the suit from the ambit of the Commercial Courts Act, 2015.
Procedural History
- 07.01.2019: Suit filed by respondent in the original side of the Calcutta High Court (non-commercial division).
- 03.12.2025: Single Judge allowed IA GA/7/2025 and directed return of the plaint for presentation before the Commercial Division.
- 19.01.2026: Typographical errors in the impugned order were corrected.
- 02.04.2026: Appeal filed by appellant (APOT/53/2026) was dismissed for default.
- 10.04.2026: Application for recall of dismissal (IA GA/2/2026) was allowed; appeal restored and heard on the same day.
Relief Sought
The appellant sought reversal of the order directing return of the plaint, arguing that the suit did not qualify as a commercial dispute due to the absence of a written agreement. The respondent sought affirmation of the order and transfer of the suit to the Commercial Division.
The Legal Issue
The central question was whether an oral agreement for commercial tenancy, evidenced only by rent receipts, qualifies as a "commercial dispute" under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, and whether the suit must be returned to the plaintiff for filing in the appropriate forum.
Arguments Presented
For the Appellant
The appellant’s senior counsel argued that Section 2(1)(c)(vii) requires a written agreement concerning immovable property used in trade or commerce. She relied on Auto Fuel & Services v. Amalgamated Fuels Limited (2026:CHC-OS:84-DB) to contend that suits lacking written documentation must be dismissed outright, not merely returned. She further argued that the trial judge erred in not dismissing the suit for lack of jurisdiction, rather than directing return of the plaint.
For the Respondent
The respondent’s senior counsel contended that Section 2(1)(c)(vii) does not distinguish between written and oral agreements. He cited Laxmi Polyfab Pvt. Ltd. v. Eden Realty Ventures Pvt. Ltd. (AIR 2021 CAL 190) to show that rent receipts constitute a valid tenancy agreement. He further relied on Patil Automation Private Limited v. Rakheja Engineers Private Limited (2022) 10 SCC 1 to argue that the period from 23.10.2015 to 11.12.2020 was a grace period during which non-compliance with Section 12A did not bar adjudication. Since the suit was filed on 07.01.2019, it fell squarely within this period, and return of the plaint was the correct remedy.
The Court's Analysis
The Court examined the language of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which defines a commercial dispute to include "any agreement relating to immovable property used in trade or commerce." The Court emphasized that the provision does not contain the words "written" or "documented," and therefore, the legislature did not intend to exclude oral agreements.
"The rent receipts issued by the plaintiff and accepted by the defendant constitute a clear, enforceable agreement of tenancy. To hold otherwise would be to elevate form over substance and defeat the purpose of the Act."
The Court distinguished Auto Fuel & Services on the ground that the suit in that case was filed in 2022, after the grace period under Laxmi Polyfab had expired. In contrast, the present suit was filed on 07.01.2019, squarely within the period identified in paragraph 59 of Laxmi Polyfab, during which non-compliance with pre-institution mediation under Section 12A was excused.
The Court further held that the remedy of return of plaint under Section 12A is not a dismissal on merits but a procedural correction to ensure proper forum. The trial judge correctly applied this principle. The Court also noted that the suit involved a commercial use of immovable property, with a value exceeding the statutory threshold, thereby satisfying the objective of the Act to expedite commercial disputes.
The Verdict
The appeal was dismissed. The Court upheld the order dated 03.12.2025 directing return of the plaint for presentation before the Commercial Division. No costs were awarded. The suit shall be presented afresh in the Commercial Division within 30 days from the date of this judgment.
What This Means For Similar Cases
Oral Agreements Are Sufficient for Commercial Jurisdiction
- Practitioners must now treat rent receipts, payment ledgers, and consistent conduct as valid evidence of commercial tenancy agreements under Section 2(1)(c)(vii).
- The absence of a written lease deed will no longer be a ground to challenge jurisdiction in commercial suits.
Timing of Filing Determines Remedial Approach
- Suits filed between 23.10.2015 and 11.12.2020 are protected from dismissal under Section 12A; return of plaint remains the appropriate remedy.
- After 11.12.2020, failure to comply with pre-institution mediation may lead to outright dismissal, not mere return.
Procedural Compliance Is Non-Negotiable
- Courts will not entertain jurisdictional objections based on formality if the substance of a commercial dispute is evident.
- Lawyers must verify the filing date of suits against the Laxmi Polyfab timeline to determine whether return of plaint or dismissal applies.
