A friendly loan does not become a commercial dispute merely because the borrower wants to invest in a business, agrees to pay interest and signs a promissory note. The Delhi High Court has upheld the return of a recovery plaint, holding that the transaction must concern the parties’ business in the statutory capacities of merchants, bankers, financiers or traders.
New Delhi: The Delhi High Court has dismissed an appeal seeking to place a dispute over an alleged Rs.18 lakh friendly loan before a Commercial Court, holding that the borrower’s business purpose alone did not turn the lenders’ personal transaction into a commercial one [Shekhar Girdhar & Anr. v. Brij Dwivedi].
A Division Bench of Justice Dinesh Mehta and Justice Dr. Aditi Choudhary delivered the reportable judgment on November 4, 2026. It upheld the Commercial Court’s decision to return the plaint under Order VII Rule 10 of the Code of Civil Procedure and gave the appellants six weeks to present it before the competent court.
A recovery suit sent from one forum to another
According to the plaint, the two appellants, who are brothers, had longstanding family and business relations with the respondent. They alleged that he sought Rs.18 lakh in March 2018 to invest in a building project and offered interest at 1% per month. They said the money was advanced in cash against a promissory note, but repayment and interest subsequently remained unpaid. Their suit sought Rs.33.66 lakh towards principal and interest.
The suit was initially brought before an ordinary District Court. On the respondent’s application, that court returned the plaint in August 2025 on the footing that the dispute was commercial. After an unsuccessful attempt to initiate pre-litigation mediation, the appellants approached the Commercial Court. That court also returned the plaint in December 2025, finding that it did not disclose a commercial dispute.
What the parties argued
The appellants argued that the respondent’s proposed use of the money made it commercial borrowing and that the promissory note was therefore a mercantile document under Section 2(1)(c)(i) of the Commercial Courts Act, 2015. They also relied on the parties’ earlier business relations.
The respondent denied taking the loan and alleged that the promissory note and receipt were forged. His counsel nevertheless acknowledged having sought return of the plaint on the commercial-jurisdiction ground earlier and did not oppose the appeal being allowed. These competing allegations about the debt and documents were not resolved by the High Court’s jurisdictional ruling.
Business purpose must emerge from the transaction
Applying Ambalal Sarabhai Enterprises Limited v. K.S. Infraspace LLP, (2020) 15 SCC 585, the Bench said the statutory definition of a commercial dispute must be construed strictly. In paragraph 8, it explained that, for Section 2(1)(c)(i), the dispute must arise from a transaction concerning the business of both sides as merchants, bankers, financiers or traders. A personal or friendly loan does not meet that test merely because money is lent.
The Court found that the plaint did not even identify the business in which the parties were engaged. A general assertion of past business relations and the execution of a promissory note could not substitute for examining the character of this particular transaction.
In paragraph 12, the Bench held:
“Disputes arising from friendly loans, even if given for furthering the business interest of the borrower alone, like in the present case, would not qualify as a commercial dispute.”
The appellants had lent in their personal capacity and were not carrying on the business of bankers or financiers, the Court noted. An intention to earn interest did not make this transaction commercial. Nor did the promissory note or receipt, by itself, alter its character.
Appeal dismissed; recovery claim can go to the competent court
The Bench held that the recovery claim did not fall under Section 2(1)(c)(i), or any other clause of Section 2(1)(c), and dismissed the appeal. The six-week period granted in paragraph 14 allows the returned plaint to be filed in the court with jurisdiction. The judgment decides the proper forum; it neither awards the claimed money nor rejects the debt claim on its merits.
Case Title: Shekhar Girdhar & Anr. v. Brij Dwivedi
Case Number: FAO (COMM) 23/2026; CM APPL. 5150/2026
Court: High Court of Delhi
Bench: Justice Dinesh Mehta and Justice Dr. Aditi Choudhary
Neutral Citation: 2026:DHC:9801-DB
Date of Judgment: November 4, 2026
Outcome: Appeal dismissed; return of plaint upheld, with six weeks to file before the competent court.