02 July 2024 Dispute with investor/shareholder >> Business & Commercial Law  

In a recent judicial decision, the scope of what constitutes a 'commercial dispute' under the Commercial Courts Act, 2015 (CC Act) came under scrutiny, as a Delhi court deliberated on whether a dispute over unpaid legal fees qualifies as falling within its purview.

The case, titled "Mandeep Kalra v. Atmastco Ltd. & Ors.", involved a petitioner-defendant company contesting a civil suit filed by the respondent-plaintiff, seeking recovery of legal and professional fees totaling Rs. 18,56,511. The petitioner argued that the dispute should be tried under the CC Act, asserting that the agreement for legal services constituted an 'agreement for provision of services' under Section 2(1)(c)(xviii) of the Act.

The crux of the petitioner's contention was that despite legal services traditionally being viewed as non-commercial activities, the nature of the agreement and the services provided should categorize the dispute as commercial. They sought to dismiss the suit under Order VII Rule 11 of the Code of Civil Procedure, claiming the trial court lacked jurisdiction as the matter should be adjudicated by a Commercial Court.

However, the learned trial court dismissed the petitioner's application, citing various legal precedents and interpretations. It underscored that legal services, provided by advocates who are fiduciaries and officers of the court, do not fit within the definition of commercial activities as envisioned by the CC Act. The court highlighted the fiduciary duties, professional independence, and the specialized nature of legal practice, distinguishing it from typical commercial transactions involving goods or services.

Drawing on established case law and statutory interpretation, the court emphasized that a liberal interpretation of 'services' under the CC Act could undermine its primary objective of expeditiously resolving high-value commercial disputes. It stressed that while the Act aims to streamline the resolution of commercial disputes, disputes over legal fees between advocates and clients inherently do not fall within its ambit.

The judgment reaffirmed that the purpose of the CC Act is to address disputes arising from commercial contracts and transactions, which legal services agreements do not traditionally encompass. It concluded that interpreting legal services as 'commercial' for the purposes of the Act would stretch its statutory intent beyond recognition.

In essence, the court's decision in "Mandeep Kalra v. Atmastco Ltd. & Ors." serves as a reminder of the nuanced application of statutory definitions in legal contexts. It underscores the unique characteristics of legal professions and their distinct place within the broader scope of commercial law. By upholding the trial court's decision, the judiciary reaffirmed its commitment to maintaining clarity and consistency in the interpretation of laws governing commercial disputes.

  COMMERCIAL COURTS ACT, 2015    Code of Civil Procedure, 1908