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The Suit shall proceed de novo on the return of plaint [Order VII Rule 10 and 10A CPC]: SC

M/S. EXL CAREERS AND ANOTHER Vs. FRANKFINN AVIATION SERVICES PRIVATE LIMITED, CIVIL APPEAL NO(s). 2904 OF 2020 (arising out of SLP (Civil) No(s). 16893 of 2018), 05th August, 2020.

The bench comprising of Hon’ble Justice R.F. Nariman, Hon’ble Justice Navin Sinha and Hon’ble Justice Indira Banerjee pronounced the judgment on the appeal which has been placed before the Court 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 before the Hon’ble apex court is that if a plaint is returned under Order VII Rule 10 and 10A of the Code of Civil Procedure   1908, 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.

Shri Manoj Swarup, learned senior counsel appearing on behalf   of   the   appellant,   submitted   that   there   is   no   conflict between the  decisions in  Joginder   Tuli  (supra) and  Modern Construction (supra) requiring consideration by a larger Bench. The latter lays down the correct law that the suit will have to proceed  de   novo  at  Delhi  and   cannot  be continued  from  the earlier stage at Gurgaon.  Joginder Tuli (supra) cannot have any precedential value not being based on consideration of the law, but having been passed more in the facts of that case.

Shri Swarup submitted that the High Court erred in not appreciating that it was not exercising transfer jurisdiction under Section 24 of the Code. The plaint could be returned at any stage of the suit under Order VII Rule 10 and 10A. The fact that the pleadings and evidence may have concluded before the Gurgaon court was inconsequential. Order XVIII Rule 15 also could not be invoked in view of the nature of jurisdiction conferred under Rule 10 for return of the plaint.   Rule 10A is only a  sequitur with regard to the procedure to be followed for the same. It cannot be interpreted as providing for continuation of the suit.  The mere use of the words ‘return the file’ are irrelevant and cannot be construed as enlarging the scope of jurisdiction under Order VII Rule 10.  The order attained finality as no appeal was preferred against the same. Significantly under Order   VII   Rule   10A   fresh   summons   had   to  issue   upon presentation   of   the   plaint   before   the   court   of   competent jurisdiction. Shri Swarup in this context referred to Order IV Rule 1 with regard to the institution of the suit by presentation of a plaint   and   issuance   of   summons   under   Order   V   Rule   1   to contend that under Rule 10A when summons are issued by the new court where the plaint is presented the proceedings go back to the inception of the suit by institution.

Shri P.S. Patwalia, learned senior counsel appearing for the respondent,  submitted that nothing precluded the High Court from directing the return of the plaint.  The Trial Court has justifiably reasoned that the order of the High Court for return of the file was based on the premise of the advanced stage of the suit for continuation of the same at Delhi, as otherwise it would be a travesty of justice if the suit was to proceed  de novo  at Delhi. The High Court correctly affirmed the same by the impugned order. The present was not a case where   the   Gurgaon   court   lacked   complete   jurisdiction.   The respondent has been non suited at Gurgaon only in view of the exclusionary clause at 16B of the franchise agreement. It shall be a question on the facts of each case, if the trial should proceed afresh or continue from the earlier stage and the matter couldnot be put in a straight jacket. The present being a case of overlapping jurisdictions it would be a travesty of justice and will cause great injustice and prejudice to the respondent if the suit is directed to proceed de novo at Delhi.  Shri Patwalia relied upon 6R.K.  Roja  vs.  U.S.  Rayudu,  (2016) 14 SCC 275 and  Oriental Insurance   Company   Ltd.   vs.   Tejparas   Associates   and Exports Pvt. Ltd., (2019) 9 SCC 435, to submit that the latter also follows Joginder Tuli (supra).

The Court stated that

We are of the considered opinion that the mere use of the words ‘return the file’ in the order dated 05.09.2017 cannot enlarge the scope of jurisdiction under Order VII Rule 10 to mean that the High Court has directed so with the intention for continuance of the suit. Firstly, that objection was expressly rejected. Secondly the order itself states that the file be returned under Order VII Rule 10 and 10A of the Code. Clearly what the High Court intended was the return of the plaint. 

It is no more res­ integra that in a dispute between parties where two or more courts may have jurisdiction, it is always open for them by agreement to confer exclusive jurisdiction by consent on one of the two courts. Clause 16B of the agreement extracted above leaves us in no doubt that the parties clearly indicated that it   was   only   the   court   at   Delhi   which   shall  have   exclusive jurisdiction with regard to any dispute concerning the franchise agreement and no other court would have jurisdiction over the same. In that view of the matter, the presentation of the plaint at Gurgaon was certainly not before a court having jurisdiction in the matter. This Court considering a similar clause restricting jurisdiction by consent in Swastik Gases (P) Ltd. vs. Indian Oil Corpn. Ltd., (2013) 9 SCC 32.

The Court held that

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 statutory scheme now becomes clear. 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.

For all these reasons, we hold that Oriental Insurance Co. (supra) does not lay down the correct law and over­rule the same.

In the peculiar facts and circumstances of the case, because the appellant did not raise the objection under clause 16B of theagreement at the very first opportunity, the first order of rejection attained finality, the objection under clause 16B was raised more as an after thought,  the second application under Order VII Rule 10 had to be preferred by the respondent, that pleadings of the parties have been completed, evidence led, and that the matter was   fixed   for   final   argument   on   03.07.2017,   we   are   of   the considered   opinion   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   our 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 in the peculiar facts and circumstances of the case nonetheless we decline to set aside the impugned order of the High Court.


CIVIL APPEAL NO(s). 2904 OF 2020
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