TaxTMI 
TaxTMI 
2025 (12) TMI 827
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....ts Act, 2015 (hereinafter "CC Act"), thereby requiring the suit to be instituted exclusively before the Commercial Court and rendering it non-maintainable before this Court; (ii) Consequently, that the suit is barred for want of compliance with the mandatory pre-institution mediation contemplated under Section 12A of the CC Act; and (iii) that the jurisdiction of the Civil court is expressly ousted under Section 430 of the Companies Act, 2013 (hereinafter "Companies Act"). 2. The suit relates to an Employment Agreement dated 08.09.2016 executed between plaintiff No. 1, a private limited company engaged in digital marketing and related services, and the defendant, who originally served as its Managing Director and later as a non-executive director. The plaintiffs allege, the defendant committed various breaches of his contractual and fiduciary obligations, including unilaterally increasing his own remuneration and failing to ensure statutory and secretarial compliances that fell within his area of responsibility. These issues were allegedly discovered between late 2022 and early 2023, leading to his redesignation and eventual resignation from the position of Man....
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....t arrangement arises "in connection with the transactions contemplated by the SSSA" establishing the inalienability of the two documents. Thus, any attempt by the plaintiffs to enforce Document 43 necessarily results in enforcement of the SSSA itself. Applying the principle recognised in catena of judgments, where two agreements are executed as part of a composite transaction, arise from one another, and are intended to operate together, they must be read conjointly and cannot be artificially separated. Accordingly, the present dispute is, in substance, a shareholders' agreement dispute and squarely qualifies as a "commercial dispute" under Section 2(c)(xii) of the CC Act. Consequently, by virtue of Section 6 of the CC Act, the jurisdiction of this Court is barred and the plaint is liable to be rejected under Order VII Rule 11(d) CPC. 5.3 Consequently, the suit is also barred for non-compliance with mandatory pre-institution mediation under Section 12A of the CC Act. 5.4 It is further submitted that the suit is barred under Section 430 of the Companies Act. The plaintiffs' own pleadings reveal that the defendant's alleged actions pertain to his role as a director and sharehol....
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....ed all "Existing Agreements," including the SSSA. The Employment Agreement, however, was not terminated and continues to govern the relationship between the parties. While a template of the Employment Agreement was appended as a condition precedent to the SSSA, the Employment Agreement is an independent, stand-alone contract with its own terms, remedies and enforcement mechanism. 6.3 A recital referencing the SSSA does not merge the Employment Agreement into the SSSA nor converts an employment dispute into a commercial dispute. Courts have consistently held that employment disputes are not commercial disputes, including in Chanda Kochhar v. ICICI Bank Ltd. (2021) 14 SCC 643, Sanjay Kumar v. Elior India WP. No. 2584 OF 2023, and Ekanek Networks Pvt. Ltd. v. Aditya Mertia 2024 SCC OnLine Del 8302, and, therefore, the present suit does not fall under Section 2(c)(xii). The plaintiffs submit that the suit arises out of breaches of employment obligations, confidentiality covenants, non-compete clauses and fiduciary duties, none of which attract the CC Act. 6.4 Moreover, it is reiterated that termination of the SSSA has no bearing on the Employment Agreement, which is a separate ag....
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....matter of various pronouncements, it is imperative to note that at this stage, while deciding an application under Order VII Rule 11 CPC, the Court is required to examine only the averments made in the plaint. The scope of such an application is limited solely to determine whether, on the basis of the plaint as it stands, and on a comprehensive reading thereof a cause of action is disclosed or if the suit is barred by any law. No reference can be made to the written statement or any defence raised, as the assessment must be confined strictly to the pleadings of the plaintiffs. 8. This Court in Meena Vohra v. Master Hosts (P) Ltd. 2025 SCC OnLine Del 1758 discussed the said position, emphasizing that the objective of Order VII Rule 11 CPC is to prevent irresponsible or frivolous lawsuits from proceeding. The Court observed that this provision offers an independent remedy to the defendant to question the maintainability of a suit, irrespective of the merits of the case. Relying on the Supreme Court's reasoning in Sopan Sukhdeo Sable v. Assistant Charity Commissioner, (2004) 3 SCC 137 it reiterated that when a suit appears to be an abuse of the court's process, the court is duty-bo....
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....ce; (viii) franchising agreements; (ix) distribution and licensing agreements; (x) management and consultancy agreements; (xi) joint venture agreements; (xii) shareholders agreements; (xiii) subscription and investment agreements pertaining to the services industry including outsourcing services and financial services; (xiv) mercantile agency and mercantile usage; (xv) partnership agreements; (xvi) technology development agreements; (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits; (xviii) agreements for sale of goods or provision of services; (xix) exploitation of oil and gas reserves or other natural resources including electromagnetic spectrum; (xx) insurance and re-insurance; (xxi) contracts of agency relating to any of the above; and (xxii) such other commercial disputes as may be notified by the Central Government. Explanation.--A commercial dispute shall not cease to be a commercial dispute me....
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....This position has been affirmed by various High Courts. In Ekanek Networks Pvt. Ltd., this Court considered whether breaches of an employment agreement containing detailed terms on remuneration, non-compete, non-solicitation, confidentiality, IP assignment, and termination could be treated as a "commercial dispute" under Section 2(1)(c)(xviii) of the CC Act. The Court held that the expression "provision of services" in the said clause must be accorded a strictly commercial connotation, and cannot be conflated with a contract of service, which is inherently a personal service relationship governed by the employer's control, supervision, and disciplinary authority. Relying on Bar of Indian Lawyers v. D.K. Gandhi 2019 SCC Online SC 2365 and Ambalal Sarabhai Enterprises Ltd. v. K.S. Infraspace LLP (2020) 15 SCC 585, the Court underscored that the Commercial Courts Act is intended to streamline adjudication of genuine mercantile and commercial disputes, and that importing ordinary employer-employee disputes into this framework would subvert the very objective of the statute. 16. Moreover, in Elior India Food Services LLP, the Karnataka High Court emphatically rejected the attempt to ....
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....Borrowski v. Heinrich Fiedler Perforiertechnik GmbH 1994 CanLII 9026 (AB QB) held categorically that an employment contract is not a commercial legal relationship, even if the employer is engaged in international trade. The House of Lords in Johnson v. Unisys Ltd 2001 2 All ER 801. reiterated that employment contracts create personal service obligations that are not commercial agreements. Similarly, the Ontario Supreme Court in Ross v. Christian & Timbers Inc. (2022) O.J. No. 1609 held that labour and employment contracts are not intended to fall within the scope of commercial agreements. 19. Thus, any dispute relating to an employment agreement cannot be treated to be a commercial dispute within the purview of Section 2(1)(c) of the CC Act. 20. Turning to the facts of the present dispute, the core allegations clearly arise out of the Employment Agreement dated 08.09.2016 and the defendant's statutory fiduciary duties as a director under Section 166 of the Companies Act, 2013. The allegations include unauthorized self-approved salary hikes, failure to ensure statutory secretarial compliances, misuse of confidential information post-resignation, joining a direct competitor (Ic....
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.... as an employee and executive of the Company in a competent and professional manner. 2.4 The Executive further agrees that during the Employment Period, he/she shall not render commercial or professional services of whatsoever nature to any Person or organization, whether or not for pecuniary gain, without the prior written consent of the Company, and that he/she will not directly or indirectly engage in any Business that is competitive in any manner with the Business of the Company. 2.5 The Executive agrees to abide by the rules, regulations, personnel policies and other policies of the Company and any change thereof, which may be adopted by the Company from time to time. 2.6 The Executive agrees that he/she shall not participate in any activity that constitutes an actual or potential conflict of interest with his/her employment with the Company at any time during the Employment Period." 23. It is evident that the arrangement lacks any commercial element. It remains, in essence, a private agreement between the parties and cannot be stretched to give it the character of a shareholders' agreement. 24. The defendant also relies on the "inseparable agr....
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....r VII Rule 11 of the CPC. It is settled law that where multiple, distinct causes of action exist and even a single relief survives scrutiny, the plaint must proceed to trial in its entirety. The above proposition of law is reiterated by the Supreme Court in its recent decision in Central Bank of India v. Prabha Jain, which held as follows: "23. Even if we would have been persuaded to take the view that the third relief is barred by Section 17(3) of the SARFAESI Act, still the plaint must survive because there cannot be a partial rejection of the plaint under Order 7 Rule 11CPC. Hence, even if one relief survives, the plaint cannot be rejected under Order 7 Rule 11CPC. In the case on hand, the first and second reliefs as prayed for are clearly not barred by Section 34 of the SARFAESI Act and are within the civil court's jurisdiction. Hence, the plaint cannot be rejected under Order 7 Rule 11CPC. 24. If the civil court is of the view that one relief (say relief A) is not barred by law but is of the view that relief B is barred by law, the civil court must not make any observations to the effect that relief B is barred by law and must leave that issue undecided i....