SUPREME COURT HOLDS THAT JURISDICTION OF SUIT IS DECIDED BY LOCATION OF IMMOVABLE PROPERTY

A two Judge Bench of the Supreme Court comprising of Justice Sudhanshu Dhulia and Justice Prasanna B. Varale passed a Judgement dated 22.03.2024 in M/s ACME Papers Ltd. V. M/s. Chintaman Developers Pvt. Ltd. & Ors. Transfer Petition (Civil) No.2664 of 2023 and Transfer Petition (Civil) No (s).499 of 2024 wherein the Supreme Court examined the jurisdictional aspect of civil litigation concerning immovable property. The Hon’ble Court considered the applicability of Sections 16 and 20 of the Code of Civil Procedure 1908 (CPC) in deciding the competent court with appropriate jurisdiction in a dispute over a land purchase.

Facts

M/s ACME Papers Ltd. (Petitioner) sought the transfer of a Suit filed by M/s. Chintaman Developers Pvt. Ltd. (Respondent No. 1) for specific performance of a Memorandum of Understanding (MoU) from Sehore, Madhya Pradesh to Calcutta, West Bengal. The Parties had entered into a MoU on 10.11.2022 whereby Respondent No.1 had agreed to purchase land (Suit Property) for a consideration of Rs.20,69,92,000/- (Twenty Crore, Sixty-Nine Lakhs, and Ninety-Two Thousand Rupees) from the Petitioner.

It was also agreed that the Petitioner would obtain all necessary approvals/no objection certificates (“NOCs”) for the transfer of Suit Property and in case of unprecedented delay in obtaining the same, the Petitioner would be at liberty to deal with the Suit Property by treating the MoU as cancelled and/or terminated.

The Petitioner was unable to obtain necessary approvals/NOCs to sell the property, therefore, the Respondents filed a Suit for specific performance RCS No.128/A/2023 of the MoU. The Petitioner, then sought to transfer the case filed by the Respondents to Calcutta.

On the other hand, the Petitioner filed a Title Suit TS No.1346 of 2023 in Calcutta claiming that the MoU was terminated and cannot be acted upon, thus leading to filing of such transfer petitions by both the parties.

Counsel for the Petitioner submitted that the MoU was executed in Calcutta and the Suit filed by them goes to the root of the matter, i.e., validity and enforceability of the MoU. It was contended that the Respondent’s Suit for Specific Performance would only arise if the Agreement/MoU is valid.

On the contrary, the Respondent No.1 contended that question of the existence of the MoU or the location where it was entered into had no nexus with the choice of jurisdiction. Whereas, the existence of the MoU and its specific performance are intrinsically connected and relate directly to the Suit Property, which is located in Sehore, Madhya Pradesh.

Issues

Whether the jurisdiction concerning immovable property will be decided on the basis of place of execution of Agreement or within the local limits of whose jurisdiction the property is situated?

Supreme Court’s Decision

The Supreme Court thoroughly examined the principles of jurisdiction under the CPC. The Hon’ble Court took consideration of the fact that the Suit Property was situated in Sehore, Madhya Pradesh and relied on Section 16 of CPC (Suits to be instituted where subject-matter situate) which provides that suits for the determination of any other right to or interest in immovable property shall be instituted in the Court within the local limits of whose jurisdiction the property is situate.

The Apex Court held that the Petitioner’s reliance on the cause of action arising in Calcutta due to the MoU being executed at Calcutta is completely erroneous in view of Section 20, CPC (Other suits to be instituted where defendants reside or cause of action arises), which provides that a suit can be initiated where the Defendant resides or cause of action arises and is a residuary provision only applicable to cases beyond those in Section 15 to 19 of CPC.

Also, on perusal of the materials placed before the Apex Court, it was witnessed that the Respondent No.1 filed its Suit dated 12.05.2023 at Sehore, Madhya Pradesh initially and the Petitioner filed its Suit later in Calcutta dated 20.07.2023.

The Apex Court relied on the judgement of Gupte Cardiac Care Centre and Hospital v. Olympic Pharma Care (P) Ltd., (2004) 6 SCC 756 wherein the Supreme Court relied on Section 10 of CPC (Stay of Suit) and held that-

“5. The suit at Nashik has been instituted first in point of time. By reference to Section 10 CPC, the trial of the suit at Delhi, being the latter suit, shall be liable to be stayed. For the exercise of its discretionary jurisdiction under Section 25 of the Code of Civil Procedure, 1908 the only consideration which is relevant is “expediency for ends of justice”. The court will have regard to and respect for the rule enacted in Section 10 of the Code. Of course, the considerations such as which is the place where most of the 6 evidence is available, convenience of the parties and witnesses, which one of the two places is more convenient to access and attend and so on are also the factors to be kept in view and may in an appropriate case persuade this Court to direct a transfer of case in departure from the rule underlying Section 10 of the Code. All would depend on the facts and circumstances of a given case.”

Conclusion

The Supreme Court dismissed the Transfer Petition filed by the Petitioner on the grounds that the initial suit was filed in Sehore, Madhya Pradesh. Moreover, the Apex Court emphasized on Section 10 of CPC which inter alia mandates that no Court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue between the parties, litigating under the same title within India. Moreover, the Transfer Petition (Civil) No. 499 of 2024 filed by the Respondent herein was allowed and hence TS No.1346 of 2023 pending before the City Civil Court at Calcutta, West Bengal was hereby transferred to the Court of Principle Judge, Sehore, Madhya Pradesh.

 

ARJAV JAIN

ASSOCIATE

THE INDIAN LAWYER

 

Editor’s Comments

In all matters pertaining to immovable property, it is settled law that the Court within whose jurisdiction the property is situated is the court that will have the territorial jurisdiction to try and decide the matter. Any reliance on any other provision of law will not be accepted if the suit pertains to immovable property.

 

SUSHILA RAM VARMA

CHIEF CONSULTANT

THE INDIAN LAWYER & ALLIED SERVICES