Thursday, 6 August 2020

Supreme Court: Court to conduct suit de novo after return of plaint

 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.

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO(s). 2904 OF 2020

M/S. EXL CAREERS  Vs  FRANKFINN AVIATION SERVICES  PRIVATE LIMITED 

NAVIN SINHA, J.
Dated:August 05, 2020



Leave granted.
2. The present appeal has been placed before us 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 we are required to answer is that 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. The order of reference also leaves it open
for consideration if the conduct of the appellant disentitles it to
any relief notwithstanding the decision on the issue of law.
3. The respondent filed a suit for recovery against the
appellant arising out of a franchise agreement dated 24.03.2004,
before the Civil Judge (Sr. Division) at Gurgaon. In view of the
exclusion clause in the agreement, the plaint was returned
holding that the court at Gurgaon lacked territorial jurisdiction
and that the court at Delhi alone had jurisdiction in the matter.
The High Court by the impugned order dated 13.03.2018 has
held 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, the appellant preferred the present appeal.
Further proceedings were stayed on 13.07.2018 culminating in
the order of reference.
4. 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.
5. 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. The suit was filed on 06.01.2011. The
appellant had preferred the objection under Order VII Rule 10
promptly on 26.08.2011. 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 High
Court in the first revisional order dated 05.09.2017 had rejected
the objection with regard to the advanced stage at which the suit

was at Gurgaon. 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.
6. In support of his submission that the suit has necessarily to
proceed de novo on return of the plaint, he relied upon Ramdutt
Ramkissen Dass vs. E.D. Sassoon & Co., AIR 1929 PC 103;
Amar Chand Inani vs. The Union of India, (1973) 1 SCC 115;
Harshad Chimanlal Modi (II) vs. DLF Universal Ltd., (2006) 1
SCC 364 and Hasham Abbas Sayyad vs. Usman Abbas
Sayyad, (2007) 2 SCC 355, to submit that the institution of the

suit at Gurgaon being coram non judice the suit had necessarily
to commence de novo at Delhi.
7. Shri P.S. Patwalia, learned senior counsel appearing for the
respondent, submitted that the special leave petition suffers from
suppression of material facts. Had the materials placed in the
counter affidavit been brought to the attention of the court
perhaps the special leave petition may not have been entertained.
The appellant in his first objection did not raise the ground under
the exclusion clause 16B of the agreement but limited it to the
grounds that no business was carried on at Gurgaon and that
defendant no.2 did not reside there also. The first order of
rejection dated 12.03.2015 has not been annexed to the appeal.
Thereafter jurisdiction was framed as a preliminary issue which
was again decided in favour of the respondent on 06.09.2016.
The revision by the appellant having been allowed by the High
Court on 05.09.2017, it did not take any steps for having the
plaint retuned to the respondent. It was left for the respondent to
file a fresh application under Order VII Rule 10 praying for
transfer of the entire judicial file from Gurgaon to Delhi
considering the advanced stage of the suit which was allowed by

the Civil Judge and affirmed in the impugned order by the High
Court.
8. Shri Patwalia next submitted that the High Court on
05.09.2017 had consciously directed for return of the file.
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 could
not 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

R.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).
9. We have considered the submission on behalf of the parties
and considered the materials on record. The franchise agreement
was executed between the parties at New Delhi on 24.03.2004 for
running courses in Aviation, Hospitality and travel Management
at Meerut in accordance with the prescriptions and standards of
the respondent. Clause 16B of the agreement stipulated as
follows:
“B. JURISDICTION
Only Courts in Delhi shall have exclusive
jurisdiction to settle all disputes and
differences arising out of the AGREEMENT,
whether during its term or after expiry/earlier
termination thereof.”
10. The respondent on 06.01.2011 instituted a suit before the
Civil Judge (Sr. Division) at Gurgaon against the appellant for
recovery of Rs.23,11,190/.
The appellant filed an application
under Order VII Rule 10 CPC on 26.08.2011 contending that the
Gurgaon court had no territorial jurisdiction as it did not carry

on any business within its jurisdiction and neither was it a
resident, requiring the plaint to be returned to the respondent.
No objection was raised under clause 16B of the agreement. The
Civil Judge, Gurgaon on 12.03.2015 rejected the objection
opining that it could not be decided summarily and was required
to be framed as a preliminary issue. The appellant then filed its
written statement and the respondent its replication. Issues in
the suit were framed on 01.10.2015 inadvertently ignoring the
earlier order leading to framing of the preliminary issue on
01.10.2015 with regard to jurisdiction. The appellant offers no
explanation why the objection under clause 16B of the agreement
was not raised in its application dated 26.08.2011 under Order
VII Rule 10 CPC.
11. The Civil Judge Gurgaon by his order dated 06.09.2016
rejected the argument with regard to exclusive jurisdiction at
Delhi under clause 16B of the Agreement. The High Court in
revision on 05.09.2017 set aside the order of the Civil Judge
dated 6.9.2016 holding that in view of clause 16B of the
franchise agreement, the Gurgaon court lacked territorial
jurisdiction directing return of the file. The submission of the

respondent with regard to the advanced stage of the suit at
Gurgaon was rejected. Prior thereto, the suit had made
substantive progress as in the meantime evidence of the parties
had been closed and the matter has been fixed for final argument
on 01.06.2017. 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.
12. Thereafter it was left for the respondent who moved an
application on 11.10.2017 before the Civil Judge at Gurgaon that
in the peculiar facts of the case, the advanced stage at which the
proceedings were at Gurgaon, it would be in the interest of
justice that the entire judicial file be transferred to the court
having jurisdiction at Delhi, which was allowed by the Civil Judge
Gurgaon on 14.02.2018 noticing that the High Court in revision
had directed for transfer of the file. In the fresh revision preferred

by the respondent against the order, the High Court by the
impugned order dated 13.03.2018 declined to interfere and
rejected the contention of the appellant for a de novo trial at
Delhi. We have referred to the facts of the case with brevity to
notice the conduct of the parties and all other relevant aspects to
be kept in mind while passing final orders.
13. It is no more resintegra
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, observed as follows:

“32. ….It is a fact that whilst providing for
jurisdiction clause in the agreement the words
like “alone”, “only”, “exclusive” or “exclusive
jurisdiction” have not been used but this, in
our view, is not decisive and does not make
any material difference. The intention of the
parties—by having Clause 18 in the agreement
—is clear and unambiguous that the courts at
Kolkata shall have jurisdiction which means
that the courts at Kolkata alone shall have
jurisdiction. It is so because for construction of
jurisdiction clause, like Clause 18 in the
agreement, the maxim expressio unius est
exclusio alterius comes into play as there is
nothing to indicate to the contrary. This legal
maxim means that expression of one is the
exclusion of another. By making a provision
that the agreement is subject to the
jurisdiction of the courts at Kolkata, the
parties have impliedly excluded the jurisdiction
of other courts. Where the contract specifies
the jurisdiction of the courts at a particular
place and such courts have jurisdiction to deal
with the matter, we think that an inference
may be drawn that parties intended to exclude
all other courts. A clause like this is not hit by
Section 23 of the Contract Act at all. Such
clause is neither forbidden by law nor it is
against the public policy. It does not offend
Section 28 of the Contract Act in any manner.”
14. This was reiterated in State of West Bengal vs.
Associated Contractors, (2015) 1 SCC 32, holding that
presentation of the plaint in a court contrary to the exclusion
clause could not be said to be proper presentation before the
court having jurisdiction in the matter.

15. That brings us to the order of the reference to be answered
by us. 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. This 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 01021977
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.

19. Order VII Rule 10-A, as the notes on clauses, indicates was
inserted by the Code of Civil Procedure (Amendment) Act, 1976 (with
effect from 01.02.1977) for the 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.”
Also, under sub-rule (3) all that the Court returning the plaint can do,
notwithstanding that it has no jurisdiction to try the suit is:
“10A. Power of Court to fix a date of appearance in the
Court where plaint is to be filed after its return.
xxx xxx xxx
(3) Where an application is made by the plaintiff under subrule
(2), the Court shall, before returning the plaint and
notwithstanding that the order for return of plaint was made
by it on the ground that it has no jurisdiction to try the suit,

(a) fix a date for the appearance of the parties in the Court
in which the plaint is proposed to be presented, and
(b) give to the plaintiff and to the defendant notice of such
date for appearance.”
20. The language of Order VII Rule 10-A is in marked contrast to the
language of Section 24(2) and Section 25(3) of the Code of Civil
Procedure which read as under:
“24. General power of transfer and withdrawal.
15

xxx xxx xxx
(2) Where any suit or proceeding has been transferred or
withdrawn under sub-section (1), the Court which is
thereafter to try or dispose of such suit or proceeding may,
subject to any special directions in the case of an order of
transfer, either retry it or proceed from the point at which it
was transferred or withdrawn.
25. Power of Supreme Court to transfer suits, etc.
xxx xxx xxx
(3) The Court to which such suit, appeal or other
proceeding is transferred shall, subject to any special
directions in the order of transfer, either retry it or proceed
from the stage at which it was transferred to it.”
21. 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.
22. For all these reasons, we hold that Oriental Insurance Co.
(supra) does not lay down the correct law and overrule
the same.

R.K. Roja (supra) has no direct relevance to the controversy at
hand.
23. That brings us to a question with regard to the nature of the
order to be passed in the facts and circumstances of the present
case. In Penu Balakrishna Iyer vs. Ariya M. Ramaswami
Iyer, AIR 1965 SC 195, this court observed as follows:
“7. …The question as to whether the jurisdiction of
this Court under Article 136 should be exercised or
not, and if yes, on what terms and conditions, is a
matter which this Court has to decide on the facts
of each case.”
24. In Balraj Taneja v. Sunil Madan, (1999) 8 SCC 396 it was
observed as follows :“
47….It is true that the jurisdiction under Article
136 of the Constitution is a discretionary
jurisdiction and notwithstanding that a judgment
may not be wholly correct or in accordance with
law, this Court is not bound to interfere in exercise
of its discretionary jurisdiction….”
25. In ONGC Ltd. vs. Sendhabhai Vastram Patel, (2005) 6
SCC 454, it was observed:
“23. It is now well settled that the High Courts
and the Supreme Court while exercising their
equity jurisdiction under Articles 226 and 32 of
the Constitution as also Article 136 thereof may
not exercise the same in appropriate cases. While
exercising such jurisdiction, the superior courts
in India may not strike down even a wrong order

only because it would be lawful to do so. A
discretionary relief may be refused to be
extended to the appellant in a given case
although the Court may find the same to be
justified in law.”
26. The nature of jurisdiction under Article 136 of the
Constitution was again considered in ShinEtsu
Chemical Co.
Ltd. (2) vs. Vindhya Telelinks Ltd., (2009) 14 SCC 16. In
Karam Kapahi vs. Lal Chand Public Charitable Trust, (2010)
4 SCC 753, it was observed as follows:
“65. The jurisdiction of this Court under Article
136 of the Constitution is basically one of
conscience. The jurisdiction is plenary and
residuary in nature. It is unfettered and not
confined within definite bounds. Discretion to be
exercised here is subject to only one limitation
and that is the wisdom and sense of justice of
the Judges (see Kunhayammed vs. State of
Kerala, (2000) 6 SCC 359). This jurisdiction has
to be exercised only in suitable cases and very
sparingly as opined by the Constitution Bench of
this Court in Pritam Singh vs. State, AIR 1950 SC
169…”
27. In the peculiar facts and circumstances of the case, because
the appellant did not raise the objection under clause 16B of the
agreement at the very first opportunity, the first order of rejection
attained finality, the objection under clause 16B was raised more
as an afterthought,
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 dated 13.03.2018.
28. The appeal stands disposed of.
………………………..J.
(R.F. Nariman)
………………………..J.
(Navin Sinha)
………………………..J.
(Indira Banerjee)
New Delhi,
August 05, 2020

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