The Calcutta High Court has clarified that disputes arising from the expiry and renewal of leases over immovable property used exclusively for commercial purposes fall squarely within the definition of commercial disputes under the Commercial Courts Act, 2015. This ruling reinforces the statutory intent to channel high-value property-related commercial conflicts into specialized forums, impacting how litigants structure claims involving leased commercial premises.
Background & Facts
The Dispute
The appellant, Ashis Biswas, filed a civil suit seeking damages for unauthorized occupation of commercial property by the respondent, Punjab National Bank, following the expiry of an initial lease. The property, located in Kolkata, comprised the entire ground floor (2375 sq.ft.), the entire mezzanine and first floor (1455 sq.ft.), and an ATM room with a generator room (162 sq.ft.). The bank had been leasing the entire premises for its branch operations.
Key Facts
- The initial lease deed was executed for a term of 10 to 5 years, with an option to renew for a further 5 years
- The initial lease expired on March 31, 2014
- After expiry, the bank continued to occupy the entire property without a new lease
- On June 17, 2015, the bank accepted an offer from the appellant for lease renewal
- Negotiations continued for over two years
- A new lease deed was executed on December 21, 2017, covering only a portion of the original premises
- The bank vacated and handed over possession of the remaining portion to the appellant on July 31, 2017
- The appellant claimed rent for the period from April 1, 2014 to December 21, 2017, totaling Rs.29,63,946/-, inclusive of interest and adjustments for two payments received
Procedural History
- March 31, 2014: Initial lease expired
- June 17, 2015: Bank accepted renewal offer via letter
- December 21, 2017: New lease executed for partial premises
- July 31, 2017: Possession of non-retained portion returned to appellant
- 2019: Suit filed in the Original Side of Calcutta High Court (CS/234/2019)
- January 2024: Appellant filed IA No.GA/4/2024 seeking to resist return of plaint
- November 25, 2025: Single Judge returned plaint under Order VII Rule 10 CPC, holding dispute was commercial
- February 2026: Appeal filed as APO/8/2026
- April 8, 2026: Division Bench heard arguments and delivered judgment
Relief Sought
The appellant sought a decree for Rs.29,63,946/- as damages for unauthorized occupation from April 1, 2014 to December 21, 2017, along with interest from March 15, 2018 to October 15, 2019, and continuation of proceedings in the High Court’s Original Side.
The Legal Issue
The central question was whether a dispute arising from the expiry of a lease over immovable property exclusively used for banking commerce qualifies as a commercial dispute under Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, thereby mandating its presentation before a Commercial Court.
Arguments Presented
For the Appellant
The appellant’s counsel contended that the suit was a simple claim for damages for wrongful occupation after lease expiry, akin to a trespass or nuisance claim, and not rooted in a commercial transaction. Reliance was placed on Auto Fuels & Services v. Amalgamated Fuels Ltd. to argue that while the property was commercial, the dispute did not arise from a commercial agreement but from post-expiry possession. It was submitted that the claim was essentially for mesne profits, a civil remedy, and not a commercial dispute as defined.
For the Respondent
The respondent bank argued that the dispute arose directly from a lease agreement concerning immovable property used exclusively for commercial purposes. The claim for rent during the period of unauthorized occupation was a direct consequence of the contractual relationship under the lease deed. The bank relied on the three-part test from Auto Fuels & Services to demonstrate that all conditions under Section 2(1)(c)(vii) were satisfied.
The Court's Analysis
The Court undertook a detailed examination of Section 2(1)(c)(vii) of the Commercial Courts Act, 2015, which defines a commercial dispute as one arising out of an agreement relating to immovable property exclusively used for trade or commerce. The Court applied the three-pronged test laid down in Auto Fuels & Services: (i) dispute must arise out of an agreement; (ii) must relate to immovable property; and (iii) the property must be exclusively used for trade or commerce.
"In order for a dispute between the parties to fall within the meaning of a commercial dispute as defined under Section 2(1)(c)(vii) of the Act of 2015, such dispute must arise out of an agreement concerning an immovable property used presently for trade or commerce."
The Court found that all three conditions were met. The dispute originated from the lease agreement, which governed the use of the property for banking operations. The claim for rent during the period after expiry was not an independent tort but a direct consequence of the contractual relationship. The fact that the bank continued to occupy the property without a new lease did not transform the nature of the dispute from commercial to civil. The Court emphasized that the foundational basis of the claim was the lease agreement, and the claim for damages was a contractual remedy.
The Court also rejected the appellant’s argument that the dispute was merely about mesne profits. It held that mesne profits claimed in the context of a commercial lease, where the property was used for banking, could not be divorced from the commercial nature of the underlying agreement. The Court noted that the initial lease deed itself contained clauses regulating tenancy, further anchoring the dispute in contractual obligations.
The Verdict
The appeal was dismissed. The Court upheld the Single Judge’s order returning the plaint under Order VII Rule 10 CPC to be presented before the Commercial Court. The appellant was granted an extension of two weeks from the date of judgment to obtain the return of the plaint, along with the court fees paid. No costs were awarded.
What This Means For Similar Cases
Lease Disputes Are Commercial by Nature When Property Is Used for Trade
- Practitioners must now treat any claim for rent, damages, or mesne profits arising from a commercial lease as falling under the Commercial Courts Act, regardless of whether the claim is framed as trespass or breach of contract
- The mere fact that the lease has expired does not remove the commercial character of the dispute if the claim stems from the contractual relationship
- Courts will look at the nature of the property’s use at the time of the dispute, not just the nature of the remedy sought
Procedural Strategy Must Align with Statutory Classification
- Lawyers filing suits involving commercial leases must file in the Commercial Court from the outset to avoid return of plaint under Order VII Rule 10 CPC
- Failure to do so may result in delay, additional court fees, and procedural setbacks
- Applications for interim relief in civil courts for such disputes are likely to be rejected on jurisdictional grounds
Documentation of Lease Terms Is Critical
- Lease deeds must be carefully reviewed to determine whether they contain clauses regulating tenancy, renewal, or occupation post-expiry
- Even if the lease has expired, the existence of such clauses reinforces the argument that the dispute arises from an agreement
- Oral negotiations or letters of intent may be admissible to establish the commercial nexus, but the original lease remains the primary anchor for jurisdiction
