Supreme Court: Suits Shall Proceed De Novo on Return of Plaint Under Order VII Rules 10 & 10A

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The case arose as a reference by a two-Judge Bench. They perceived conflict between two decisions of 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. A question of law is involved in the said case. In a plaint returned under Order VII Rules 10 & 10A of CPC for presentation in a court of proper jurisdiction, whether the suit shall proceed de novo or continue from stage pending in earlier court.

Brief Facts of the Case

The appellant and the respondent entered into a franchise agreement. Clause 16B of the agreement contained an exclusion clause. It excluded the jurisdiction of the courts at Gurgaon. The respondent filed a suit for recovery against the appellant at Gurgaon. The plaint was returned for lack of jurisdiction under Order VII Rules 10 and 10A. The High Court further held that the suit shall proceed at the stage pending at Gurgaon. Aggrieved by this, the appellant filed an appeal.

Appellant’s Arguments

It has been submitted that there is no conflict between the decisions. The decision in Modern Construction case denotes the correct law. Therein, the Court observed that the suit proceeds de novo. Moreover, the Joginder case is merely passed on facts of that case. Hence, no precedential value.

Additionally, pleading and evidence have been concluded before the Gurgaon court is inconsequential. Rule 10A is only a sequitur. It cannot be considered as providing for the continuation of the suit. The ‘return the file’ appearing in Order VII Rule 10 does not enlarge the scope of jurisdiction.

Respondent’s Arguments

Per contra, it was contended that the appellant had not raised this in the first objection. Considering the advance stage, the suit was in, the Civil Judge allowed it. This was affirmed by the High Court. Not allowing the continuation of the suit would be a travesty of justice. Furthermore, it is a question of fact to start the suit afresh. Especially when the present case is of overlapping jurisdiction.

Court’s View

The Court observed that in a dispute two or more court may have jurisdiction. However, by an agreement, the jurisdiction of a court may be excluded. In the present case, Clause 16B indicated that Delhi courts have exclusive jurisdiction. The Court referenced to Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 SCC 32. Therein, the Court accepted the exclusive jurisdiction clause. Thereafter, the Court referred State of West Bengal v. Associated Contractors, (2015) 1 SCC 32. Therein, the Court held that presentation of the plaint in court contrary to the exclusion clause is not proper presentation.

The Court then considered the judgment in the Joginder case. It observed that the decision in the case was akin to the facts of that case. The Court exercised discretionary jurisdiction under Article 139. The Court observed that in Modern Construction case the Court considered earlier decisions. Therein, it concluded:

“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 to conclude before the court having no competence to try the same.”

The Court concluded that there is no contradiction in law in the above cases. The Court referred to Section 24(2) and Section 25(3) regarding the transfer of the case. the Court observed that it is in stark contrast to Order VII Rules 10 & 10A. Unlike Sections 24(2) and 25(3), Order VII Rules 10 & 10A does not stipulate any discretion. Discretion to continue proceedings. The Court then referenced to its discretionary jurisdiction under Article 136. It referred to Karam Kapahi v. Lal Chand Public Charitable Trust, (2010) 4 SCC 753. Wherein, it was observed that the jurisdiction of the Court under Article 136 is plenary and residuary. There is only one limitation under Article 136. Limitation of wisdom and sense of justice of the Judges.

Court’s Decision

In the present case, the Court observed that the objection raised was an afterthought. The Court concluded that the order of the High Court is not sustainable in light of Modern Construction case. However, in the exercise of discretionary jurisdiction under Article 136 of the Constitution declined to set aside the High Court order. Therefore, the suit could be continued and no need for de novo proceedings.


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