SUPREME COURT HOLDS SUIT TO START AFRESH ON THE RETURN OF A PLAINT

In a recent Judgment passed by the Special Bench of three Judges, the #SupremeCourt of India decided upon whether a #Suit should start afresh in case of return of #Plaint. In the matter of M/S. Exl Careers and Another v. Frankfinn Aviation Services Private Limited CA/2904/2020, decided on 05.08.2020, the Parties had entered into a #FranchiseAgreement and agreed that in the event of any dispute Parties would move to the Courts in #Delhi.

In the said matter, when differences arose between the Petitioner and the Respondents, despite this clause in the Franchise Agreement, the Petitioners Exl Careers and Another filed a Plaint in the Court at Gurgaon. The matter proceeded and was at the stage of #evidence when the Respondents, Frankfinn Aviation Services Pvt Ltd decided to move an Application for return of Plaint under Order 7 Rule 10 and 10A (#CPC) submitting that the #Gurgaon Court did not have jurisdiction in view of clause 16B of the Franchise Agreement.

The Gurgaon District Court after hearing Parties where the present Petitioner pleaded that as the case had reached the advanced stage, it could not start a fresh and the said case should be transferred to the court having jurisdiction at Delhi. This was allowed by the Civil Judge Gurgaon. The Civil Judge Gurgaon also noted in the said Order that the said transfer was a result of the Revision Petition filed by the Appellants where they had sought for a #denovo #trial of the Suit for recovery.

The Delhi High Court was of the view that that the suit at Delhi shall proceed from the stage at which it was pending at Gurgaon before return of the plaint and not de novo. Aggrieved by the Order dated 13.03.2018, the Appellant preferred the present Appeal. Further proceedings were stayed on 13.07.2018 culminating in the order of reference.

The Appeal before the Supreme Court was on a reference by a two Judge Bench opining a perceived conflict between two Division Bench decisions in Joginder Tuli vs. S.L. Bhatia, (1997) 1 SCC 502 and Oil and Natural Gas Corporation Ltd. vs. Modern Construction & Co., (2014) 1 SCC 648. The question of law that was required to be answered by the Supreme Court is that if a plaint is returned under Order VII Rule 10 and 10A CPC for presentation in the court, in which it should have been instituted, whether the suit shall proceed de novo or will it continue from the stage where it was pending before the court at the time of returning of the plaint. The order of reference also sought the opinion of the Supreme Court on whether the conduct of the Appellant disentitles it to any relief notwithstanding the decision on the issue of law.

The Supreme Court observed that Order VII Rule 10-A CPC, as the notes on clauses, indicates was inserted for the following reason:

“New Rule 10-A is being inserted to obviate the necessity of serving summonses on the defendants where the return of plaint is made after the appearance of the defendant in the suit.”

The language of Order VII Rule 10-A CPC is in marked contrast to the language of Section 24(2) and Section 25(3) of the CPC. The statutory scheme is clear post the Amendment. In cases dealing with transfer of proceedings from a Court having jurisdiction to another Court, the discretion vested in the Court by Sections 24(2) and 25(3) of the CPC either to retry the proceedings or proceed from the point at which such proceeding was transferred or withdrawn, is in marked contrast to the scheme under Order VII Rule 10 read with Rule 10-A of the CPC, where no such discretion is given and the proceeding has to commence de novo.

The Supreme Court while addressing the reference of the High Court answered as follows:

In Joginder Tuli (supra) the Original Court lost jurisdiction by reason of the amendment of the plaint. The Trial Court directed it to be returned for presentation before the District Court. The Supreme Court observed as follows:

“5. … Normally, when the plaint is directed to be returned for presentation to the proper court perhaps it has to start from the beginning but in this case, since the evidence was already adduced by the parties, the matter was tried accordingly. The High Court had directed to proceed from that stage at which the suit stood transferred. We find no illegality in the order passed by the High Court warranting interference.”

To our mind, the observations are very clear that the suit has to proceed afresh before the proper court. The directions came to be made more in the peculiar facts of the case in exercise of the discretionary jurisdiction under Article 136 of the Constitution. We may also notice that it does not take into consideration any earlier judgments including Amar Chand Inani vs. The Union of India (supra) by a Bench of three Honourable Judges. There is no discussion of the law either and therefore it has no precedential value as laying down any law.

16. Modern Construction (supra), referred to the consistent position in law by reference to Ramdutt Ramkissen Dass vs. E.D. Sassoon & Co., Amar Chand Inani vs. The Union of India, Hanamanthappa vs. Chandrashekharappa, (1997) 9 SCC 688, Harshad Chimanlal Modi (II) (supra) and after also noticing Joginder Tuli (supra), arrived at the conclusion as follows:

“17. Thus, in view of the above, the law on the issue can be summarised to the effect that if the court where the suit is instituted, is of the view that it has no jurisdiction, the plaint is to be returned in view of the provisions of Order 7 Rule 10 CPC and the plaintiff can present it before the court having competent jurisdiction. In such a factual matrix, the plaintiff is entitled to exclude the period during which he prosecuted the case before the court having no jurisdiction in view of the provisions of Section 14 of the Limitation Act, and may also seek adjustment of court fee paid in that court. However, after presentation before the court of competent jurisdiction, the plaint is to be considered as a fresh plaint and the trial is to be conducted de novo even if it stood concluded before the court having no competence to try the same.” Joginder Tuli (supra) was also noticed in Harshad Chimanlal Modi (II) (supra) but distinguished on its own facts.

17. We find no contradiction in the law as laid down in Modern Construction (supra) pronounced after consideration of the law and precedents requiring reconsideration in view of any conflict with Joginder Tuli (supra). Modern Construction (supra) lays down the correct law. We answer the reference accordingly.

18. We regret our inability to concur with Oriental Insurance Company Ltd. (supra), relied upon by Mr. Patwalia, that in pursuance of the amendment dated 01.02.1977 by reason of insertion of Rule 10A to Order VII, it cannot be said that under all circumstances the return of a plaint for presentation before the appropriate court shall be considered as a fresh filing, distinguishing it from Amar Chand Inani (supra). The attention of the Court does not appear to have been invited to Modern Construction (supra) and the plethora of precedents post the amendment.”

The Supreme Court after hearing both sides was of the opinion that as the Appellant did not raise the objection under clause 16B of the Agreement at the very first opportunity,the first Order of rejection, has become final and the consequent objection of jurisdiction was raised only as an after-thought. It therefore held, that despite the aforesaid law discussed in Joginder Tuli vs. S.L. Bhatia, (1997) 1 SCC 502 and Oil and Natural Gas Corporation Ltd. vs. Modern Construction & Co., (2014) 1 SCC 648, the fact that the pleadings have been completed, evidence led, and that the matter was fixed for final argument on 03.07.2017, the Court concluded that despite having concluded that the Impugned Order is not sustainable in view of the law laid down in the Modern Construction (supra), in exercise of its discretionary jurisdiction under Article 136 of the Constitution and in order to do complete and substantial justice between the Parties under Article 142 of the Constitution the Impugned Order of the High Court dated 13.03.2018 is upheld and the matter cannot be tried de novo.

Sushila Ram

Chief Consultant

The Indian Lawyer