Delhi High Court Holds Private Interest-Bearing Loan Between Individuals Is Not Automatically a Commercial Dispute

The Court held that a private loan between individuals does not become a commercial dispute merely because interest was agreed or the borrower intended to use the money for a business project; the pleaded transaction must fall within the statutory definition of a commercial dispute.

Key Proposition: The commercial purpose asserted for a loan and the charging of interest do not, without the transaction falling within Section 2(1)(c) of the Commercial Courts Act, convert a personal loan between individuals into a commercial dispute.

• Commercial Courts Act, 2015 – Section 2(1)(c) – Commercial dispute – Whether a private loan with interest fell within the statutory definition – Held, no, on the pleaded facts.
• Code of Civil Procedure, 1908 – Order VII Rule 10 – Return of plaint – Whether the Commercial Court correctly returned the plaint for want of commercial jurisdiction – Held, yes.

Background / Synopsis :

• The appellants alleged that they had advanced ₹18 lakh in cash to the respondent in March 2018 for four months, at interest of 1% per month, supported by a promissory note.
• The respondent allegedly paid monthly interest for a short period but did not repay the principal. The appellants sued for recovery of principal and interest, claiming a total of ₹33,66,000.
• The ordinary civil court had earlier returned the plaint after accepting an objection that the transaction was commercial. The appellants then pursued pre-litigation mediation and filed before the Commercial Court.
• The Commercial Court returned the plaint, holding that the pleaded facts did not disclose a commercial dispute within Section 2(1)(c). The appellants challenged that order.

Issues For Consideration :

• Whether the loan transaction pleaded by the appellants constituted a commercial dispute under Section 2(1)(c) of the Commercial Courts Act.
• Whether the Commercial Court correctly returned the plaint under Order VII Rule 10 CPC.

Submissions Of Parties :

• The appellants argued that the loan was advanced to meet the respondent’s business requirement and that interest was payable; they contended that the transaction therefore fell within the commercial dispute definition.
• The respondent supported the return of the plaint and submitted that the dispute did not arise from a commercial transaction within the statutory definition.

Court's Observations & Analysis :

• The Court examined the plaint and the promissory note/receipt to identify the true nature of the transaction pleaded.
• It found that the parties’ longstanding family and business relations, the respondent’s stated intention to invest in a building project, and the promise to pay interest did not by themselves establish a transaction of the kind specified in Section 2(1)(c).
• The mere execution of a promissory note for an interest-bearing loan did not alter the essential character of the pleaded transaction.
• The Court therefore upheld the Commercial Court’s conclusion that the suit did not arise from a commercial dispute and that the plaint was liable to be returned.

Decision & Directions :

• The appeal was dismissed and the return of the plaint under Order VII Rule 10 CPC was upheld.
• The appellants were granted six weeks to file the returned plaint before the appropriate court.
• The pending application stood disposed of.

Legal Provisions Discussed & Precedents Cited :

• Commercial Courts Act, 2015 – Section 2(1)(c)(i) and (xviii): Definition of commercial dispute and relevant categories relied on by the parties.
• Commercial Courts Act, 2015 – Section 12A: Pre-institution mediation.
• Commercial Courts Act, 2015 – Section 13(1A): Appeal from specified orders of the Commercial Court.
• Code of Civil Procedure, 1908 – Order VII Rule 10: Return of plaint.
• The judgment refers to Supreme Court authority on the statutory meaning of commercial disputes and the treatment of loan transactions; the decision’s operative reasoning is based on the pleaded facts and statutory definition.

Case Details :

• Case / Party Name: Shekhar Girdhar & Anr. v. Brij Dwivedi
• Case Number(s): FAO (COMM) 23/2026 and CM APPL. 5150/2026
• Coram / Judges: Dinesh Mehta, J. and Aditi Choudhary, J. – Division Bench
• Counsel Appearances: Mr. Rakesh Patiyal, Advocate, for the appellants; Mr. Tarun Sharma, Advocate, for the respondent.

Disclaimer: This summary is an editorial aid and does not form part of the judgment. Refer to the original judgment before citing.