M/S EXL Careers & Anr Versus Frankfinn Aviation Services Private Limited

Court / Forum : Civil Appeal No. 2904 of 2020 (Arising out of SLP(Civil)No. 16893/2018)
Court/Forum : Supreme Court of India
Coram : Justice Mr. Rohinton Fali Nariman, Justice Mr. Navin Sinha and Justice Ms. Indira Banerjee
Subject : Continuation of Suit after plaint is returned under Order VII Rule 10 and 10A of the Code of Civil Procedure, 1908.
Date of Decision : August 5, 2020

Brief Facts Proceedings before the Trial Court

• The plaintiff filed a suit for recovery before the Civil Judge (Sr. Division) at Gurgaon arising out of a Franchise Agreement dated March 24, 2004 (“Agreement”) entered into between the parties at Delhi for opening 1 of 3 Institute for Training as a franchise of defendant No.1 for running courses in aviation, hospitality and travel management at Meerut.
• The plaintiff was claiming territorial jurisdiction on the basis that Defendant No.2 resides at Gurgaon.
• However, as per Clause 16B of the Agreement, the parties agreed to confer exclusive territorial jurisdiction in the Courts at Delhi.
• Thereafter, the defendant filed an application under Order VII Rule 10 CPC, 1908 seeking return of the plaint for want of jurisdiction on the ground that the cause of action arose at Meerut and no cause of action arose at Gurgaon and further the defendants did not reside at Gurgaon.
• Parties led evidence on the preliminary issue and the trial court vide order dated September 6, 2016 decided that the jurisdiction lies in Delhi instead of Gurugram and accordingly, the Suit was returned under Order VII Rule 10 and 10 A.
• Accordingly, the Suit was dismissed.

• A revision was filed by the Plaintiff against the order of the Trial Court, Gurugram dated September 6, 2016.
• Vide order dated September 5, 2017, the Hon’ble High Court allowed the revision petition filed by the Plaintiff and directed the Court of Gurugram to return the file in accordance with the provisions of Order 7, Rule 10 and 10-A of the CPC, 1908 finding that the Court at Gurugram was not having any territorial jurisdiction.
• It was held that the suit shall proceed at Delhi from the stage at which it was pending at Gurgaon before return of the plaint and not de novo.

• Aggrieved by the order of the High Court dated September 5, 2017 another revision petition was filed before the High Court, however, the High Court upheld the order dated September 5, 2017 and held that the suit shall proceed at Delhi from the stage at which it was pending at Gurgaon before return of the plaint and not de novo.
• Hence the Petition.

Issues

1. If a plaint is returned under Order VII Rule 10 and 10A of the Code of Civil Procedure 1908, (hereinafter called as “the Code”) 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 ?
2. A conflict arose between two Division Bench decisions in Joginder Tuli v. S.L. Bhatia [(1997) 1 SCC 502] and Oil and Natural Gas Corporation Ltd. v. Modern Construction & Co. [(2014) 1 SCC 648].

Decision

• The Hon’ble Supreme Court after hearing the reference by a two Judge Bench opined that there is a perceived conflict between two Division Bench decisions in Joginder Tuli v. S.L. Bhatia, and Oil and Natural Gas Corporation Ltd. v. Modern Construction & Co. The relevant portions of the concerned judgement have been produced for reference as follows:
• Joginder Tuli verdict

  “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.”

• Modern Constructions verdict

  “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.”

• The Hon’ble Supreme Court noticed that the observations in Joginder Tuli’s verdict held that the suit has to proceed afresh before the proper court and that 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. On the other hand, it was observed that, the verdict of Modern Construction was pronounced after consideration of the law and precedents.
• Therefore, the same did not require reconsideration in view of any conflict with Joginder Tuli Verdict and hence, lays down the correct law.
• 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) 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 where no such discretion is given and the proceeding has to commence de novo.
• The discretion vested in the Court, by Sections 24(2) and 25(3) of the Code, to proceed from the point at which such proceeding was transferred or withdrawn, is absent in the scheme under Order VII Rule 10 where no such discretion is given and the proceeding has to commence de novo.
• The language used in Order VII Rule 10 and 10A is in contrast with the language used in Sections 24(2) and 25(3), which deal with transfer and withdrawal of suits. When a suit is transferred from one competent court to another, the discretion lies with the court to either start the proceedings afresh or proceed from where the previous court left off. (Para 20)
• However, when it comes presentation of a plaint before a competent court after being returned from a court lacking jurisdiction, the language makes it amply clear that the suit has to be tried de novo, the three-judge Bench held. (Para 21)
• Therefore, the Hon’ble Supreme Court concluded that the Modern Construction judgment does not need reconsideration and the law remains clear that when a plaint is presented before a court of competent jurisdiction after being returned under Order VII Rule 10 or 10A, the proceedings have to commence afresh cannot be continued from the earlier stage.