High Court of KeralaSingle JudgeOriginal Petition allowed; Ext.P4 set aside; Ci...

Teliz Realtors v. JTL Projects Private Limited and Others

Case / Petition Number:O.P.(C).No.598 of 2021
Neutral Citation:2025:KER:24497

Case Details & Bench

Court
High Court of Kerala
Hon'ble Judges
  • K. Babu
Judgment Date
2025-03-24
Court Decision / Holding
The Original Petition is allowed. Ext.P4 judgment dated 07.10.2020 passed by the Subordinate Judge’s Court, Ernakulam, stands set aside. The Civil Court is directed to consider and dispose of the matter within one month from the date of production of a certified copy of the judgment. The transfer to the Commercial Court under Section 15 is set aside, and the suit remains with the Civil Court.
Final Disposition
Original Petition allowed; Ext.P4 set aside; Civil Court to dispose the matter within one month; CC transfer reversed.

Parties to the Case

Appellants / Petitioners

  • Teliz Realtors
  • Pallithottathu Easo Thomas
  • Sheila Elizabeth Thomas
  • Dr. George Mathew
  • Dr. Nirmala George Mathew

Respondents

  • JTL Projects Private Limited
  • Smt. Laly Joseph
  • V.J. Joseph

Legal Representation & Advocates

Counsels for Petitioners

  • • Thomas Abraham
  • • Anil K. Nair
  • • Merciamma Mathew
  • • Aswin P. John
  • • R. Ananthapadmanaban
  • • Thayyib Sha P.S.

Counsels for Respondents

  • • Sri. Biju Abraham

Case Synopsis & Summary

Teliz Realtors and others filed O.S. No. 380 of 2010 in the Sub Court, Ernakulam, seeking recovery of Rs. 3.61 crore from JTL Projects Pvt. Ltd. and others. The plaintiffs allege a sham joint venture, fraudulent inducement, and transfers based on false promises of a housing project, without licenses or actual construction. The trial court held the dispute involved construction and infrastructure contracts under Section 2(1)(c) of the Commercial Courts Act and transferred the case to the Commercial Court under Section 15. The petitioners challenge the transfer, contending the transaction was not a genuine joint venture and that the claim seeks embezzled money rather than a commercial dispute; therefore the Civil Court should retain jurisdiction. The respondents contend the agreement was for land purchase and villa construction, a classic construction/infrastructure contract, thus a commercial dispute and deserving CC Act treatment for speedy disposal. The High Court analyzes the object of the Act and the definition of ‘commercial dispute’ under Section 2(1)(c) (vi, xi), citing Ambalal Sarabhai Enterprises and IHHR Hospitality to emphasize strict interpretation. It ultimately finds that the suit does not fit the CC Act’s criteria and that the Section 15 transfer was improper. The petition is allowed; Ext.P4 is set aside, and the matter is to be disposed by the Civil Court within one month.

Provisions of Law Cited

Commercial Courts Act, 2015Section 2(1)(c)Section 2(c)(vi)Section 2(c)(xi)Section 15Section 15(2)Arbitration and Conciliation Act, 1996

Legal Doctrines & Maxims

  • Object of the Commercial Courts Act is speedy disposal of high-value commercial disputes
  • Strict interpretation of Section 2(1)(c) to determine what constitutes a "commercial dispute"
  • Mercantile documents concept: not all high-value money disputes are commercial unless tied to mercantile documents
  • Fraud or undue influence can negate genuine joint venture; mere label of joint venture does not make it a commercial dispute
  • Embezzlement cannot be treated as a business transaction or a transaction arising in the course of business under the CC Act

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners argued that the defendants fraudulently induced them to transfer large sums by misrepresenting a housing project; no construction licenses were obtained and no genuine project existed. The joint venture was allegedly a sham intended to embezzle money. They contended that the transaction cannot be characterized as a construction and infrastructure contract, nor as a ‘commercial dispute’ under Section 2(1)(c) of the CC Act, and hence the Civil Court should retain jurisdiction. They rely on IHHR Hospitality (Delhi) to emphasize that embezzlement cannot be treated as a business transaction and stress the need for mercantile-document-based criteria for “commercial dispute.” They urge that Section 15 transfer defeats the Act’s purpose of expeditious disposal and would amount to forum shopping, calling for the Civil Court’s exclusive remit to decide the money-claim merits.

Contentions of Respondents

The respondents maintained that the transaction was a joint venture for land acquisition and villa construction, a construction and infrastructure contract, and therefore a ‘commercial dispute’ under Section 2(1)(c). They argued for CC Court jurisdiction to ensure swift resolution of high-value disputes and cited the trial court’s reasoning and authorities recognizing joint ventures and related transfers as commercial disputes. They urged strict interpretation of the CC Act to avert clogging of the system and to preserve investors’ confidence; they relied on various authorities to illustrate the broad yet targeted scope of Section 2(1)(c).

Cited Precedents (10)

Case NameCitationTreatmentExplanation
IHHR Hospitality (Andhra) Pvt Ltd. v. Mrs. Seema Swami & Ors.2022 SCC OnLine Del 3635PositiveUsed to support that a recovery of embezzled money cannot be termed a ‘business transaction’ or a transaction arising in the course of business.
Kailash Devi Khanna v. DD Global Capital Ltd.2019 SCC OnLine Del 9954PositiveCited for the proposition that not all money suits fall under CC Act; mercantile documents criteria is essential.
Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP(2020) 15 SCC 585PositiveSC emphasized that CC Act should not be invoked for every high-value suit; strict interpretation is required.
Lady Moon Towers Pvt. Ltd v. Mahindra Investment Advisors Pvt. Ltd.—PositiveCited to illustrate that the definition of ‘commercial dispute’ has a wide import but must be applied to true commercial disputes under Sec. 15.
Ayyasamy A. v. A. Paramasivam and Others2016 (10) SCC 386Mentioned OnlyAnnexed judgment; referenced generally in the background of dispute resolution principles.
Curtis v. Oldfield1925 Tax Cas 319PositiveUsed to discuss trade loss vs. business transaction in context of embezzlement and financial loss.
Ramaswami Chettiar and others v. Commissioner of Income Tax1930 Mad 225PositiveCited for principle that theft/misappropriation cannot be treated as money lost in the ordinary course of business.
Bharat Huddanna Shetty v. Ahuja Properties & Developers2021 SCC OnLine Bom 13984Mentioned OnlyCited to illustrate caution that a dispute cannot be treated as commercial solely due to merchant status.
R. Kumar v. T.A.S Jawahar Ayya2020 SCC Online Madras 28051Mentioned OnlyCited as authority on not converting non-financier disputes into ‘commercial disputes’.
Derry v. Peek(1889) and App. Cas. 337Mentioned OnlyCited in context of general doctrine on embezzlement and losses; not central to the decision.

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Extracted Judgment Text

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O.P.(C).No.598 of 2021 ..1.. ``` 2025:KER:24497 ``` **==> picture [58 x 58] intentionally omitted <==** ## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR.JUSTICE K. BABU`** ``` MONDAY, THE 24[TH] DAY OF MARCH 2025 / 3RD CHAITHRA, 1947 ``` ``` OP(C) NO. 598 OF 2021 ``` ``` AGAINST THE ORDER/JUDGMENT DATED IN OS NO.380 OF 2010 OF ASSISTANT SESSIONS COURT/II ADDITIONAL SUB COURT,ERNAKULAM ``` ## **`PETITIONER/S:`** - **`1 TELIZ REALTORS HAVING IT'S OFFICE AT NO.26- M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM, REP.BY ITS MANAGING PARTNER PALLITHOTTATHU EASO THOMAS`** - **`2 PALLITHOTTATHU EASO THOMAS @ P.E.THOMAS AGED 62 YEARS S/O.P.T.EASO, RESIDING AT MGN 26, M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM`** - **`3 SHEILA ELIZEBETH THOMAS AGED 61 YEARS W/O.PALLITHOTTATHUEASO THOMAS, RESIDING AT MGN 26, M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM`** - **`4 DR. GEORGE MATHEW, AGED 65 YEARS`** - **`S/O.LATE REV. A.C.MATHEW, HOUSE NO.6, GREEN VALLEY VILLAS, VAZHAKKALA, B.M.C. P.O., ERNAKULAM DISTRICT NOW AT 40, BROAD FIELDS AVENUE, EDGWARE, MIDDLESEX, UNITED KINGDOM`** ``` 2025:KER:24497 ``` O.P.(C).No.598 of 2021 ..2.. **==> picture [58 x 58] intentionally omitted <==** ``` REP.BY HIS POWER OF ATTORNEY HOLDER PALLITHOTTATHU EASO THOMAS @ P.E.THOMAS, AGED 62 YEARS, S/O.P.T.EASO, RESIDING AT MGN 26, M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM ``` ``` 5DR. NIRMALA GEORGE MATHEW AGED 64 YEARS ``` ``` W/O.DR. GEORGE MATHEW, HOUSE NO.6, GREEN VALLEY VILLAS, VAZHAKKALA, B.M.C. P.O., ERNAKULAM DISTRICT NOW AT 40, BROAD FIELDS AVENUE, EDGWARE, MIDDLESEX, UNITED KINGDOM REP.BY HIS POWER OF ATTORNEY HOLDER PALLITHOTTATHU EASO THOMAS @ P.E.THOMAS, AGED 62 YEARS, S/O.P.T.EASO, RESIDING AT MGN 26, M.G.NAGAR, PEROORKADA, THIRUVANANTHAPURAM ``` ``` BY ADVS. THOMAS ABRAHAM ANIL K.NAIR MERCIAMMA MATHEW ASWIN.P.JOHN R.ANANTHAPADMANABAN THAYYIB SHA P.S. ``` ## **`RESPONDENT/S:`** - **`1 JTL PROJECTS PRIVATE LIMITED 33/2346-B, GEETHANJALI ROAD, VYTILA (P.O.), ERNAKULAM KOCHI, REP.BY ITS MANAGING DIRECTOR MRS. LALY JOSEPH.`** ``` 2SMT. LALY JOSEPH AGED 46 YEARS W/O.J.JOSEPH, MANAGING DIRECTOR M/S. JTL PROJECTS PRIVATE LIMITED RESIDING AT 33/2346-B, GEETHANJALI ROAD, VYTILA (P.O.), ERNAKULAM KOCHI ``` O.P.(C).No.598 of 2021 ..3.. **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` ``` 19 ``` ``` 3V.J.JOSEPH AGED 48 YEARS S/O.JOSE, RESIDING AT C.C.NO. 33/2346-B, GEETHANJALI ROAD, VYTILA (P.O.), ERNAKULAM KOCHI 19 ``` ``` BY ADV SRI.BIJU ABRAHAM ``` ``` THIS OP (CIVIL) HAVING COME UP FOR ADMISSION ON 24.03.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` O.P.(C).No.598 of 2021 ..4.. **==> picture [58 x 58] intentionally omitted <==** **==> picture [85 x 8] intentionally omitted <==** **----- Start of picture text -----**<br> 2025:KER:24497<br>**----- End of picture text -----**<br> **“C.R.”** ## **K.BABU, J.** ------------------------------------- ## **O.P.(C).No.598 of 2021** ---------------------------------------Dated this the 24[th] day of March, 2025 ## **JUDGMENT** The petitioners, plaintiffs in a suit for recovery of money, challenge Ext.P4 judgment of the trial Court transferring the suit to the Commercial Court under Section 15 of the Commercial Courts Act. Respondents are the defendants. The plaintiffs instituted O.S.No.380 of 2010 before the Subordinate Judge’s Court, Ernakulam, seeking recovery of Rs.3,61,73,477/-. Plaintiff No.1 is M/s Teliz Realtors, a partnership firm, having its office at Thiruvananthapuram represented by its Managing Partner. Defendant No.1 is M/s JTL Projects Pvt. Ltd. Ernakulam, represented by its Managing Director. O.P.(C).No.598 of 2021 **==> picture [20 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` 2. The plaintiffs pleaded that defendant Nos. 2 and 3 formed a sham company and defrauded the plaintiffs by giving false promises and obtained hefty amounts. Defendant Nos. 2 and 3 declared through published materials that the intention behind the company was to make a housing project. According to the plaintiffs, the defendants, with fraudulent and dishonest intention to deceive them, made the plaintiffs to transfer large sums of money to their accounts. The plaintiffs pleaded that the defendants, while receiving the amount, fully knew that the same were being received without the intention to make or commence any project. According to the plaintiffs, while receiving money and promising to transfer landed properties, the defendants even furnished false survey numbers and offered to transfer properties over which they had no right. In those transactions, the plaintiffs and the defendants entered into an agreement, O.P.(C).No.598 of 2021 **==> picture [20 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` which, according to the plaintiffs, was caused by undue influence, fraud, and misrepresentation. The plaintiffs pleaded that though the defendants represented that they intended to engage in construction and infrastructure activities, they had not even obtained any licence to do so and falsely induced the plaintiffs to transfer amounts, making them believe that the construction project would be established. Though both the plaintiffs and defendants entered into an agreement, it cannot be termed as a joint venture agreement in the sense that the defendants never intended to honour the terms in the agreement. 3. The defendants resisted the pleadings in the plaint, _inter alia_ , contending that the transaction alleged is a commercial dispute. The question of maintainability of the suit before the Civil Court was sought to be decided as a preliminary issue. The trial Court held that O.P.(C).No.598 of 2021 **==> picture [20 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` the transactions pleaded in the plaint fall under Sections 2(c)(vi) and 2(c)(xi) of the Commercial Courts Act. 4. I have heard the learned counsel for the petitioners and the learned counsel for the respondents. 5. The learned counsel for the petitioners submitted that the defendants fraudulently induced the plaintiffs to transfer money, highlighting properties over which they have no right or ownership. The learned counsel submitted that a fraudulent document resembling the ingredients of a ‘joint venture’ was created at the instance of the defendants, which never came into effect. The learned counsel submitted that no construction was ever done. Therefore, the transaction would not come within the ambit of ‘a construction and infrastructure contract’ as defined in Section 2(c)(vi) of the Commercial Courts Act. The learned counsel submitted that this is a case in which the defendants embezzled large sums of O.P.(C).No.598 of 2021 **==> picture [20 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` money from the plaintiffs by playing fraud. The learned counsel relied on _**IHHR Hospitality (Andhra) Pvt Ltd. v. Mrs. Seema Swami & Ors.**_ [2022 SCC OnLine Del 3635]. 6. The learned counsel for the respondents submitted that the pleadings in the plaint revealed that the transactionS alleged come under ‘Construction and Infrastructure Contracts’ based on a joint venture agreement. Therefore, the Commercial Court alone has the jurisdiction to consider the matter. 7. The object of the Commercial Courts Act is to provide means and ways for expeditious disposal of commercial disputes. If commercial disputes take a long time to resolve, the foreign investors will also be detracted and will avoid investments in India. So also, within our country, the usual delay in the disposal of O.P.(C).No.598 of 2021 **==> picture [20 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` commercial disputes in the Courts of law has adversely affected the economy. 8. The Statement of Objects and Reasons to the Commercial Courts Act, 2015, provides for the speedy disposal of high-value commercial disputes so as to create a positive image in the minds of the investor world about the independent and responsive Indian Legal System. Section 2(1)(c) of the Commercial Courts Act defines ‘commercial dispute’ and provides a special procedure for the classes of litigations coming under it. 9. The word ‘commercial dispute’ is of wide import. However, every commercial dispute cannot be considered as a commercial dispute necessitating invocation of Section 15 of the Act unless such disputes come within the purview of the definition of ‘commercial dispute as provided in Section 2(1)(c) of the Act. In _**Lady Moon Towers Pvt. Ltd v. Mahindra Investment**_ O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` _**Advisors Pvt. Ltd**_ [2021 SCC Online Cal 4240 : MANUI/WB/0547/2021], the Calcutta High Court observed that the definition in Section 2(1)(c) of the Act contemplates a “commercial dispute” and not any other form of dispute where the basis of disagreement between the parties has a non-commercial cause. The Calcutta High Court held that the framers of the Statute emphasised the commercial flavour of the transaction as opposed to agreements between the parties without a commercial purpose. A commercial purpose would generally mean a transaction by which a person’s commercial or economic interests may be advanced and would result in an economic benefit to that person. It would not include an agreement where profit-making is an incidental outcome of the transaction or may happen by accident. The Calcutta High Court further observed that in terms of Section 2(1)(c) ordinary transactions of O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` merchants, bankers, financiers and traders such as those relating to “mercantile documents”, imply ordinary transactions of the named persons and the “mercantile documents” and which indicates that all transactions between the specified classes of persons will not result in a commercial dispute where the transaction does not relate to mercantile documents. 10. In _**Kailash Devi Khanna vs. DD Global Capital Ltd.**_ [2019 SCC OnLine Del 9954] the Delhi High Court held that all suits for recovery of monies cannot be brought under Section 2 of the Act where the suit is not based on any transaction relating to mercantile documents. In _**Bharat Huddanna Shetty vs. Ahuja Properties & Developers**_ [2021 SCC OnLine Bom 13984] the Bombay High Court held that the dispute in a suit cannot be treated as a commercial dispute simply on the mandate that the transaction had occurred between O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` merchants, bankers, financiers and traders. In _**R. Kumar vs. T.A.S Jawahar Ayya**_ [2020 SCC Onlinr Madras 28051 : MANU/TN/4159/2020] the Madras High Court held that where the plaintiffs did not transact in the capacity of financiers, the dispute was not a "commercial dispute". 11. In _**Ambalal Sarabhai Enterprises Ltd. vs. K.S. Infraspace LLP and another**_ [(2020) 15 SCC 585], the Supreme Court observed thus:- “13.…….Having taken note of the submission we feel that the very purpose for which the CC Act of 2015 has been enacted would be defeated if every other suit merely because it is filed before the Commercial Court is entertained. This is for the reason that the suits which are not actually relating to commercial dispute but being filed merely because of the high value and with the intention of seeking early disposal would only clog the system and block the way for the genuine commercial disputes which may have to be entertained by the Commercial Courts as intended by the lawmakers. In commercial disputes as defined a special procedure is provided for a class of litigation and a strict procedure will have to be followed to entertain only that class of litigation in that O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` jurisdiction. If the same is strictly interpreted it is not as if those excluded will be non-suited without any remedy. The excluded class of litigation will in any event be entertained in the ordinary civil courts wherein the remedy has always existed.“ {Emphasis supplied] ## 12. The relevant findings in the impugned order reads thus:- “9.In this case, the basic document to which the dispute arose is the joint venture agreement between the plaintiffs 1 to 3 and the defendants. The above referred provisions under the commercial Court Acts clearly shows that, the dispute arise out of a joint venture agreement is a commercial dispute u/s. 2(c) (xi). The said joint venture agreement was for the purchase of land and construction connected to a villa project, hence it is also a commercial dispute under section 2(c)(vi) of the Commercial Court Act. The plaintiff had invested money based on the above joint venture agreement dated 15.6.2007. Though the plaintiffs have alleged fraud against the defendants, he filed the suit for recovery of money which was invested by them to fulfill the joint venture agreement. The joint venture agreement was for the purpose of the purchase of immovable properties and the construction and development of JTL Villa project. O.P.(C).No.598 of 2021 ``` 2025:KER:24497 ``` **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** So, it is crystal clear that the dispute arose in this case is comes u/s.2(c) (vi) and 2 (c) (xi) and explanation 'a' of the Commercial Disputes Act. Hence this Court has no jurisdiction, and the case is to be transferred u/s.15 of the Commercial Disputes Act. As per Section 15 (2) of the Commercial Court Act "All suits and applications including applications under the Arbitration and Conciliation Act, 1996, relating to a commercial dispute of a Specified Value pending in any Civil Court in any District or area in respect of which a commercial court has been constituted, shall be transferred to such commercial court." Though the suit is of the year 2010, and the Act is come into effect in the year 2015, it is applicable to all the pending cases at the time when the Act came into force. Hence this case is also comes under the purview of Section 15. So, this case is transferred to commercial court (Principal Sub Court, Ernakulam). Office of the Court is directed to transmit all the records of the case with duly indexed list to that Court forthwith. Parties are directed to appear before that court on 02.11.2020.” (Sic) 13. It is advantageous to extract Section 2(c)(vi) and 2(c)(xi) of the Act. ## **2...Definitions** O.P.(C).No.598 of 2021 ..15.. **==> picture [58 x 58] intentionally omitted <==** **==> picture [85 x 8] intentionally omitted <==** **----- Start of picture text -----**<br> 2025:KER:24497<br>**----- End of picture text -----**<br> ## **xxxx** - (c) "commercial dispute" means a dispute arising out ofxxx (vi) construction and infrastructure contracts, including tenders; xxxx - (xi) joint venture agreements; 14. The trial Court held that since the dispute arose out of a joint venture agreement and that it relates to a construction and infrastructure contract, the dispute comes under the definition of ‘commercial dispute’ under the commercial Courts Act. The learned author in Corpus Juris Secundum Volume 48A Page 391 explains the ‘joint venture’ as follows:- “A joint venture refers to an association of persons with intent by way of contract to engage in and carry out a business venture for joint profit for which they combine their property, money, effects, skill, knowledge etc. “ O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` 15. A joint venture highlights the intention of the participating persons to join together without any vitiating elements to participate in the joint business. The question is when one person induces another with malafide intention by way of undue influence and fraud making him believe that he has an intention to commence a joint business will take in the colour of joint venture. The intention of the parties to genuinely participate in the business joint activity is a necessary ingredient to form it a joint venture. When one of the parties plays fraud on another without any intention to commence any business to embezzle money from another and make the other join in an agreement which is sham in nature, it cannot have the colour of a joint venture. In the present case, the defendants never intended to commence any joint venture business. As per the pleadings in the plaint, their only intention was to embezzle money from the plaintiffs. O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` 16. Therefore, at any rate, based on the pleadings, it cannot be concluded that there was a joint venture agreement between the plaintiffs and defendants to bring it within the meaning of joint venture agreement in Section 2(c)(xi). The trial Court further held that the contract entered into between the parties relates to construction and infrastructure contracts. The specific case of the plaintiffs is that the defendants never intended to engage in any construction activity. They even showed the properties over which they have no right as their properties so as to induce the plaintiffs to deliver money on the belief that the defendants intended to start a construction project. Therefore, going by the pleadings, it cannot be said that the agreement between the parties is a construction and infrastructure contract. 17. In _**IHHR Hospitality (Andhra) Pvt Ltd.**_ (Supra), the Delhi High Court considered a similar O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` question and held that if the plaintiff seeks recovery of money which the defendant allegedly embezzled cannot be termed as a “business transaction” or a “transaction arising in the course of business”. 18. In _**Curtis v. Oldfied Ltd.**_ [(1925) 9 Tax Case 319], the question came before the Court was whether a loss on account of embezzlement can be considered as a loss during the trade. In that case, the Court held that when a defalcation or embezzlement happens, it can be treated as a trade loss when such diversion of money is done unauthorisedly by an employee and he takes it out of the ambit of the trade income. The Court held that if, owing to the negligence or dishonesty of any subordinate, some of the receipts of the business do not find their way or some of the bills are not collected or some such similar acts are performed, which may be an expense connected with or arising out of the trade, it would be a “trade O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` income” in its true sense. However, where the earnings of a company are duly credited to the accounts of the company and thereafter, the assets/money of the company are taken out by somebody dehors the trade by its position, it cannot be said that any loss which so occurs can be termed as “a trade loss” or arising “in the course of business”. 19. In _**Ramaswami Chettiar and others v. Commissioner of Income Tax**_ [1930 SCC Online Mad 225], the Madras High Court considered the question of whether theft of money can be termed as money lost in the course of business. The Court held that to establish a loss, two conditions must be satisfied: (1) it must be a loss on the part of the stock and trade in the business, and (2) it must be a loss on such a kind as is incidental to the business. In that case, the company was in the business of lending money but money had been lost through theft. O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` The Court held that theft of money cannot be termed as money lost in the course of business and as incidental to it; therefore, any such loss on account of theft cannot be considered to be in the ordinary course of business transaction. 20. Applying the principles referred to above, the acts of the defendants were not in the nature of commercial transaction but in the nature of fraudulent transactions. The pleadings in the plaint go to show that the suit is for recovery of the amounts which were allegedly embezzled by the defendants, which cannot be termed as a business transaction or a transaction arising out of a commercial dispute as defined in Section 2(1)(c) of the Commercial Courts Act. Therefore, the Civil Court has jurisdiction to deal with the matter. The judgment transferring the suit under Section 15(2) of the Commercial Courts Act is liable to be set aside. O.P.(C).No.598 of 2021 **==> picture [26 x 9] intentionally omitted <==** **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` 21. In the result, the Original Petition is allowed. Ext.P4 judgment dated 07.10.2020 passed by the Subordinate Judge’s Court, Ernakulam, stands set aside. It is submitted that the evidence in the case is over and the case is posted for arguments. The transfer was effected at the time when the case was posted for arguments. Therefore, there will be a direction to the Trial Court to consider and dispose of the matter within a period of one month from the date of production of a certified copy of the judgment. Sd/- **K.BABU, JUDGE** kkj O.P.(C).No.598 of 2021 ..22.. **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` ## **`APPENDIX OF OP(C) 598/2021`** ``` PETITIONER EXHIBITS ``` ``` EXHIBIT P9 ``` ``` A TRUE COPY OF IA NO.1957 OF 2012 SEEKING DIRECTION TO ANSWER THE INTERROGATORIES IN OS NO.380 OF 2010 ALONG WITH INTERROGATORIES ``` - **`EXHIBIT P10 THE TRUE COPY OF THE FIR NO.987 OF 2015 OF HILL PALACE POLICE STATION`** - **`EXHIBIT P11`** - **`THE TRUE COPY OF THE JUDGMENT DATED 20/02/2024 IN CRL.REV.PET NO.1217 OF 2023`** - **`EXHIBIT P12 THE TRUE COPY OF THE JUDGMENT DATED 02/09/2024 IN CRL.RC NO.2 OF 2024`** - **`Annexure 1 True copy of the judgment (2021) KHC 6296, Janakiammal R. and Others v. S. K. Kumarasamy (deceased)`** - **`Annexure 2 True copy of the decision of the Hon’ble Delhi High Court in IHHR Hospitality Pvt. Ltd. vs Mrs. Seema Swami and Others`** - **`Annexure 3 True copy of the judgment of the Hon’ble Supreme Court in Ayyasamy A. v. A. Paramasivam and Others reported in 2016 (10) SCC 386`** - **`Annexure 4 The relevant pages of Rule laid down by the House of Lords in Derry v. Peek reported in (1889), App.Ca.337.`** - **`EXHIBIT P7`** ``` THE TRUE COPY OF THE SALE AGREEMENT ``` ``` 2025:KER:24497 ``` O.P.(C).No.598 of 2021 ..23.. **==> picture [58 x 58] intentionally omitted <==** ``` EXECUTED BY THE 2ND DEFENDANT IN FAVOUR OF 2ND AND 3RD PLAINTIFFS TO SELL 1 ACRE OF PROPERTY COMPRISED IN SY NO.707 AND 294/1 OF THEKKUMBAGAM VILLAGE. ``` ``` EXHIBIT P1THE TRUE COPY OF THE AMENDED PLAINT IN O.S.NO.380/2010 ``` - **`EXHIBIT P8 THE TRUE COPY OF THE AFFIDAVIT IN ANSWER TO THE INTERROGATORIES FILED BY THE 2ND DEFENDANT IN IA 1957 OF 2012 IN OS 380/2010`** - **`EXHIBIT P2 THE TRUE COPY OF THE AMENDED WRITTEN STATEMENT FILED ON BEHALF OF THE DEFENDANTS 1 AND 3`** - **`EXHIBIT P2 (A) THE TRUE COPY OF THE AMENDED WRITTEN STATEMENT FILED BY THE 2ND DEFENDANT.`** - **`EXHIBIT P2 (B) THE TRUE COPY OF THE AMENDED WRITTEN STATEMENT FILED BY THE DEFENDANTS.`** - **`EXHIBIT P3 THE TRUE COPY OF THE ORDERS DATED 9.3.2015 AND 31.3.2015 IN C.P.44/2011`** - **`EXHIBIT P4 THE TRUE COPY OF THE JUDGMENT DATED 7.10.2020 IN O.S.NO.380 OF 2010 OF THE 2ND ADDITIONAL SUB COURT, ERNAKULAM.`** - **`EXHIBIT P5 THE COPY OF THE MEMORANDUM OF AGREEMENT DATED 15.6.2007`** ``` EXHIBIT P6THE TRUE COPY OF THE SALE AGREEMENT DATED 10.9.2008 EXECUTED BY THE 2ND DEFENDANT ON 10.9.2008 IN FAVOUR OF THE 4TH AND 5TH PLAINTIFFS AGREEING TO ``` O.P.(C).No.598 of 2021 ..24.. **==> picture [58 x 58] intentionally omitted <==** ``` 2025:KER:24497 ``` ``` SELL LANDED PROPERTIES HAVING AN EXTENT OF 30 CENTS COMPRISED IN SURVEY NO.707 OF THEKKUMBAGAM VILLAGE. ```