Karnataka High Court Refers Residential JDA Dispute Issue To Larger Bench

The Karnataka High Court has referred important questions regarding the interpretation of Section 2(1)(c)(vi) of the Commercial Courts Act, 2015 to a larger bench, observing that disputes arising from residential Joint Development Agreements (JDAs) may not automatically qualify as "commercial disputes."

Justice Tara Vitasta Ganju was hearing a petition arising from a residential apartment development project in Bengaluru. The dispute concerned a JDA executed between individual landowners and a developer for construction of residential apartments, under which the developer was entitled to 60% of the built-up area while the owners retained 40%.

The Court observed that the property involved was residential in nature and there was no material showing that it was used exclusively for trade or commerce.

Therefore, Section 2(1)(c)(vii) of the Commercial Courts Act was not attracted. The Court further held that the agreement did not satisfy the requirements of a "joint venture" under Section 2(1)(c)(xi), as there was no shared management, joint control, or mutual liability between the parties.

Noting conflicting decisions of coordinate benches, the Court referred two questions to a larger bench: whether residential JDAs can be treated as "construction and infrastructure contracts" under Section 2(1)(c)(vi), and whether the phrase should be interpreted as a single composite expression or as separate categories of "construction" and "infrastructure" contracts.

Case: D. Arun Reddy & Anr. v. Late Muni Reddy (Represented by Legal Heirs) & Ors..