This judgment decides only the forum question: it does not decide whether the Rs 18 lakh loan is recoverable, and it does not decide the respondent's allegation that the promissory note and receipt were forged. The appellants have six weeks to present the returned plaint before the court of competent jurisdiction.
- Case
- Shekhar Girdhar & Anr. v. Brij Dwivedi
- Court
- High Court of Delhi
- Decision
- Citation
- 2026:DHC:9801-DB
- Bench
- Dinesh Mehta; Aditi Choudhary
- Judgment by
- Aditi Choudhary
- Case numbers
- FAO (COMM) 23/2026; CM APPL. 5150/2026
- Outcome
- Appeal under Section 13(1A) of the Commercial Courts Act, 2015 dismissed; Commercial Court order dated 13 December 2025 returning the plaint under Order VII Rule 10 CPC upheld; appellants given six weeks to file the returned plaint in the court of competent jurisdiction.
A friendly loan stays outside the Commercial Court
The Delhi High Court has dismissed an appeal against a Commercial Court order returning a recovery plaint, holding that a claim over a friendly loan does not become a commercial dispute merely because the borrower wanted the money for business. Disputes arising from friendly loans, even if given for furthering the business interest of the borrower alone, do not qualify as commercial disputes under Section 2(1)(c) of the Commercial Courts Act, 2015.
The appellants, two real brothers, had lent Rs 18 lakh to the respondent in March 2018. The Court upheld the Commercial Court Judge's order dated 13 December 2025 returning the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908, and gave the appellants six weeks to present the returned plaint before the court of competent jurisdiction.
Rs 18 lakh in cash, a promissory note, and interest that stopped
On the plaint's case, the appellants and the respondent had good family and business relations for a long time, and the appellants' family had often helped the respondent financially. In the second week of March 2018 the respondent came to their house, said he was investing in a building project and was short of funds, and asked for Rs 18 lakh for four months, offering interest at 1% per month because he would earn profit from the business.
On 20 March 2018 the appellants gave him Rs 18 lakh in cash at his house, and he executed a promissory note for that sum. He paid Rs 18,000 per month as interest until July 2018 and then stopped; when the four months expired, neither principal nor further interest was paid. The appellants sued for Rs 33,66,000 towards principal and interest.
Two returns of the plaint before the appeal
The recovery suit was first filed before the regular Court of District Judge-16, Central District, as CS DJ 430/2022. The respondent applied under Order VII Rule 11 CPC, saying the transaction was commercial, and that application was allowed on 6 August 2025: the plaint was returned with liberty to file afresh under the Commercial Courts Act. The appellants then took the Section 12A pre-litigation mediation route on 26 August 2025, but the respondent did not appear, and a non-starter report issued on 18 November 2025.
Before the Commercial Court, the appellants argued only Section 2(1)(c)(i). The Commercial Court Judge held that although the plaint asserted business relations, it nowhere said what business the parties were in, and the dispute did not arise from any agreement for sale of goods or provision of services, or from ordinary transactions of merchants, bankers, financiers, or traders. The plaint was returned under Order VII Rule 10 CPC, and the appellants appealed under Section 13(1A) of the 2015 Act.
The appellants' argument: a commercial borrowing on a mercantile document
The appellants argued that because the money was borrowed for a business purpose, it was a commercial borrowing, and because the promissory note was executed for that borrowing, it was a mercantile document under Section 2(1)(c)(i). They said the Commercial Court Judge had ignored the plaint's account of earlier business relations, and that the District Judge-16 had rightly relied on this Court's decision in Amanpreet Kohli v. Pankaj Dayal (2023 SCC OnLine Del 1808) when returning the plaint towards the Commercial Court.
The respondent's counsel argued that there was no cause of action because the suit rested on a forged promissory note and receipt and no loan had been availed at all, while conceding that the respondent had himself invoked Order VII Rule 11 before District Judge-16 on the footing that the dispute was a commercial dispute, and was not opposed to the appeal being allowed. The High Court did not decide the forgery allegation; it decided only the forum question.
The test: strict construction, and business on both sides
Section 2(1)(c)(i) defines a commercial dispute as a dispute arising out of ordinary transactions of merchants, bankers, financiers, and traders, such as those relating to mercantile documents, including their enforcement and interpretation. The Court applied the Supreme Court's decision in Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2020) 15 SCC 585, which requires a strict construction: only disputes that actually answer the Section 2(1)(c) definition may be entertained by Commercial Courts, because the Act provides a special procedure for a class of litigation, and admitting every high-value suit would clog the system and block genuine commercial disputes. Suits that fall outside the definition are not left remediless; they are entertained by the ordinary civil courts.
Under Section 2(1)(c)(i), the Court held, a mercantile document is a document used in a transaction, or in relation to a transaction, between merchants, bankers, financiers, and traders, and the dispute must arise from a transaction concerning the business of both sides in those capacities. Where there is a loan, it must be part of a commercial transaction, not a personal or friendly loan.
Why this loan failed the test
The plaint, the Court held, contained no averment that would qualify the dispute as commercial. District Judge-16 had erred in going solely by the vague averment of long business relations and the execution of a promissory note, without asking whether the transaction itself had a commercial flavour or fell within the appellants' business. The plaint nowhere said what business the parties were or had been in; even accepting that they had done some business together at some point, the loan could not be treated as an ordinary transaction between merchants, bankers, financiers, or traders, but was a private or personal transaction without a commercial or business purpose.
The appellants were not carrying on the business of bankers or financiers, and they lent in their personal capacity, not as merchants, bankers, financiers, or traders. Lending money even with an intent to earn interest did not make it a commercial transaction, and neither the promissory note nor the receipt, executed for an interest-bearing loan, could by itself convert the dispute into a commercial one. The decision in Amanpreet Kohli did not assist the appellants because it was distinguishable on facts.
Operative outcome
The claim for recovery does not qualify as a commercial dispute under Section 2(1)(c)(i) or any other clause of Section 2(1)(c). There was no infirmity in the Commercial Court Judge's order dated 13 December 2025 returning the plaint under Order VII Rule 10 CPC, the appeal is dismissed, the pending application stands disposed of, and the appellants have six weeks to file the returned plaint in the court of competent jurisdiction.
BANTHRY ANALYSISFor law students
Pleadings decide jurisdiction here, and that is the practical lesson. The appellants lost not because a loan can never be commercial, but because their plaint never pleaded the facts that would make it one: what business each side was in, and how this loan sat inside that business. A borrower's purpose, an interest rate, and a promissory note are all consistent with an ordinary friendly loan, so they cannot carry the jurisdictional burden alone. And note the symmetry the Court preserves: losing the Commercial Court forum is not losing the claim. The plaint is returned, not rejected on the merits, and the six-week window sends the dispute to the ordinary civil court where it always belonged.
READING PROMPTSQuestions for a closer reading
- Why does Section 2(1)(c)(i) require the transaction to concern the business of both sides, and how did the plaint fail that test here?
- What does the Supreme Court's Ambalal decision require of courts deciding whether a suit is a commercial dispute, and why is a strict construction required?
- Why did the promissory note, the interest term, and the borrower's business purpose not convert this friendly loan into a commercial dispute?
