Neither the word ‘merchant’ nor the word ‘trader’ has been defined in the Act of 2015. The ordinary meaning of such words as understood in the commercial world have to be applied more so since the provisions of the Act of 2015 deals with the commercial dispute said Justice Debangsu Basak of the Calcutta High Court in the matter South City Projects (Kolkata) Ltd vs Ideal Real Estates Pvt. Ltd [ CS 255 of 2019]
This order was given for the facts where the plaintiff has filed this action against the defendant in order to recover money lent and advanced. On May 30, 2017, the plaintiff lent and advanced Rs. 5 crores to the defendant. The defendant agreed to pay interest at the rate of 15% per year. As of March 31, 2018, the defendant issued a balance confirmation acknowledging the principal amount lent and advanced as well as the interest payable thereon. The defendant’s balance confirmation established the principal amount that the plaintiff had lent and advanced to the defendant, as well as the agreed rate of interest, which was 15% per annum. For the transaction, the defendant issued a tax deducted at the source certificate. According to the plaintiff, because the defendant was unable to repay the amount advanced despite repeated demands from the plaintiff, the parties agreed that the defendant would pay interest at a rate of 15% per annum with quarterly rests beginning October 1, 2018. According to the plaintiff, it raised and submitted invoices to the defendant for the interest component at the agreed-upon rate of 15% per annum, with quarterly rest with the defendant.
The defendant has denied that it agreed to pay interest at a rate of 15% per year with quarterly rests beginning October 1, 2018. The defendant acknowledged receipt of the sum of Rs. 5 crores as financial accommodation on the agreement and understanding that the plaintiff would be entitled to interest at the rate of 15% per annum on such loan in the affidavit filed by the defendant affirmed on December 15, 2020. The defendant has also claimed that such interest violated the provisions of the Bengal Money Lenders Act of 1940.
The defendant’s balance confirmation, dated March 31, 2018, acknowledged a sum of Rs. 5,62,87,671 to be due and payable by the defendant to the plaintiff. Such balance confirmation includes an interest component at a rate of 15% per year. According to the balance confirmation signed by the defendant, the defendant agreed to pay interest at the rate of 15% per year. The defendant had paid a total of Rs. 3 crores from April 1, 2018, until the filing of the suit, as well as Rs. 30 lakhs after the filing of the suit. As a result, after deducting Rs. 3.3 crores from the total amount of Rs. 5,62,87,671, the defendant owes the plaintiff Rs. 2,32,87,671. The defendant’s most recent payment was made on January 10, 2019. On the merits, the defendant has not revealed any defence to the claim for Rs. 2,32,87,671 plus interest at the rate of 15% per annum. As a result, it would be appropriate to enter a decree in favour of the plaintiff for Rs. 2,32,87,671 plus interest at the rate of 15% per annum from January 11, 2019, until realisation. “The plaintiff’s balance claim for interest and principal is left open to be decided at the trial of the suit.
As the compared wording in the Insolvency and Bankruptcy Code, 2016, and the Act of 2015.” In this regard, he cited 2019 volume 4 Supreme Court Cases 17 (Swiss Ribbons Private Limited v. Union of India).
Referring to 1977 volume 2 Supreme Court cases 424 Mannalal Khetan & Ors. v. Kedar Nath Khetan & Ors. learned senior advocate has also “submitted that the loan transaction is beyond the plaintiff’s Memorandum of Association and thus ultra vires the plaintiff’s objects clause.”
The disputes in the present case can be held to fall within Section 2(1)(c)(i) of the Act of 2015. As stock in trade, a real estate developer will have developed flats. While such a developer sells the flats in its inventory, it is a trader or merchant of such flats. In the ordinary course of business, one real estate developer lent and advanced money to another real estate developer. Both are free of any legal impediments that would prevent them from entering into the transaction. The facts and circumstances of each case determine whether the dispute involved in the suit is a “commercial dispute” within the meaning of the Act of 2015. In Swadha Builders Private Limited (supra), the Court transferred the suit to the Commercial Division under Section 15 of the Act of 2015. Following Ambalal Sarabhai’s (supra) decision of giving a restrictive interpretation to the words used in Section 2 (1)(c)(i) of the Act of 2015, it cannot be said that the suit does not involve a commercial dispute and is disposed of accordingly.