M/S EXL Careers & Anr. Vs. Frankfinn Aviation Services Pvt. Ltd.

By – Priyanshi Bhatia

In the Supreme Court of India

NAME OF THE CASEM/S EXL Careers & Anr. Vs. Frankfinn Aviation Services Pvt. Ltd.
CITATIONCivil Appeal No. 2904 of 2020
DATE OF THE CASE5th August 2020
APPELLANT(S)M/S EXL Careers and Another
RESPONDENT(S)Frankfinn Aviation Services Private Limited
BENCH/JUDGEJustice R.F. Nariman, Navin Sinha and Indira Banerjee
CONSTITUTION INVOLVEDConstitution of India
IMPORTANT SECTIONS/ARTICLESOrder VII, Rule 10 & 10A of the Code of Civil Procedure, 1908 and Section 24(5) of CPC, 1908.

ABSTRACT

The case of M/S EXL Careers & Anr. Vs. Frankfinn Aviation Services Pvt. Ltd. dated 5 August 2020, revolved around an extremely crucial question of law regarding the return of plaint in case of incompetent territorial jurisdiction. Referring to previous judgements, the Supreme Court held that under Order 7, Rule 10 &10A of the Code of Civil Procedure, 1908, when a plant is returned and is presented before an appropriate court, the proceeding shall begin as de novo.

INTRODUCTION

The Honourable bench of the Supreme Court incorporating of three judges i.e. Justice Rohinton Fali Nariman, Justice Ms Indira Banerjee and Justice Mr Navin Sinha witnessed a civil appeal in the case of M/S EXL Careers and Another Vs. Frankfinn Aviation Services Pvt. Ltd. and ruled that if and when a plant is returned under Order VII Rule 10 & 10A of CPC, 1908, the suit shall proceed afresh and not resume from the point where it was pending previously.

BACKGROUND OF THE CASE

Suits lose their jurisdiction once they are filed in a court for a range of factors. The suit can no longer be presented in a court that is not of appropriate jurisdiction. As a result, the lawsuit must be filed in a competent court. Order 7 Rule Ten and Section 24(5) of the CPC[1] are the options accessible in this situation. If there exists a problem in the jurisdiction, a Plaint can be transferred to a court of appropriate jurisdiction at any time during the case, as per Order 7 Rule 10. Section 24(5), on the other hand, gives the District Court and the High Court the authority to move any case due to a lack of authority. When these two clauses are juxtaposed, the only thing similar between them is the cause. In addition, there are no guidelines in the CPC that specify which should be used when. A three-judge bench in M/s. EXL Careers and Anr. v Frankfinn Aviation Services Private Ltd. rejected Oriental Insurance Co. v Tejparas Associates and Exports Pvt. Ltd. and Joginder Tuli v, S.L. Bhatia, in M/s. EXL Careers and Anr. v Frankfinn Aviation Services Private Ltd. It was determined in the first case that Rule 10A was adopted only to obviate the requirement to serve the summoning on the respondents after the plaint was brought to a competent jurisdiction. This means that the rule has nothing to do about the previous court’s decision and that the matter must be reopened. In the latter case, the court finds that the court erred by failing to refer to any judgment on the subject.

FACTS OF THE CASE

  • The Respondent i.e. Frankfinn Aviation Services Private Limited pressed charges against the petitioner and filed a suit for compensation of money with regard to a Franchise Agreement signed between the two. The case was presented before a civil judge in Gurgaon.
  • In return, the appellant demanded for a return of plaint under section 7, Rule 10 of CPC on the basis of the fact that the appellant did not have his residence, nor his business in the mentioned jurisdiction i.e. Gurgaon. However, the request for the return of the plaint was rejected.
  •  The Franchise Agreement signed between the two parties also mentioned a clause 16B that revolved around the jurisdiction to settle any dispute. However, the appellant did not object under the clause 16B of the agreement.
  • Petitioner then requested a petition before the Delhi High Court. Due to the exclusion clause of 16B, the plaint was returned for wanting territorial jurisdiction with the Gurgaon court.
  • Petitioner then filed a revised petition before the Delhi High Court for de novo hearing of the suit, i.e. proceeding of the suit from the beginning and not from where it was previously left. However, the Delhi High court held that “the suit at Delhi shall resume from the stage at where it was pending at the Gurgaon court and not de novo.
  • Petitioner then filed a Special Leave Petition before the three bench judge of Supreme Court drawing reference by a Division Bench- opining a discern dispute amongst two Division Bench decisions in the cases of Joginder Tuli vs. S.L. Bhatia and Oil and Natural Gas Corporation Ltd. vs. Modern Construction and Co.

ISSUES

The issue presented before the court in the given case was as follows:

If and when a plant is returned under Order VII Rule 10 & 10A of the CPC OF 1908, whether the suit will be proceeded as de novo or will it resume from the stage where it was pending before the court at the time when the plaint was returned?

ARGUMENTS FROM THE PLAINTIFF’S SIDE

  • The plaintiff  contended that the Delhi High Court demanded return of the entire case and file because the Gurgaon court had overlapping authority over the case which was almost close to its final hearing and it would be unjustifiable to start the case afresh.
  • The plaintiff also quoted the case of Oriental Insurance wherein, Joginder Tuli was relied upon, to differentiate Amar Chand Inani vs. The Union of India. The argument here was that Rule 10A  was subsequently added through an amendment in 1977 and it is unfair to say that under any situation, the return of plaint for hearing before the relevant court must be treated as fresh filing.
  • The defendant 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 in Gurgaon and that he did not reside there also.

ARGUMENTS FROM THE DEFENDANT’S SIDE

  • The defendant contended that there was no dispute between the ONGC and Joginder Tuli since the latter decision was given precisely in the facts of the case.
  • The defendant argued relying upon a number of previous judgements to demonstrate that a suit must essentially proceed as de novo after the return of a plaint, regardless of the stage where the suit was previously at.
  • HC erred- the case wasn’t of exercising transfer jurisdiction u/s 24, CPC.
  • Return of plaint can be at any stage(u/O 7, R 10 & 10A)- possibility of conclusion of Evidence & pleadings at Gurgaon Court- inconsequential.

RELATED PROVISIONS

  • Order VII Rule 10- Return of Plaint

Under Order 7 Rule of 10 of CPC, 1908, when a plant is returned due to problems related to the jurisdiction, the suit will not resume from where it was left off and shall proceed as de novo i.e., if there is a lack of jurisdiction, the suit shall be filed as a new suit in the appropriate court and the hearing shall start afresh.

Later, Rule 10A and 10B were further added to Order VII through the Civil Procedure Amendment Act, 1976. Rule 10A authorizes the court to determine a date for the presentation of the suit before the court of appropriate jurisdiction.

  • Section 24(5)- Transfer of Suit

The Civil Procedure Amendment Act, 1976 also added clause (5) in Section 24. Under Section 24(5), a lawsuit can be handed over from a court that does not have competent jurisdiction. The High Court and the District Court have the authority to hand over a suit from a court that lacks territorial jurisdiction to a court with appropriate jurisdiction.

JUDGEMENT

  1. It is more res integera 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 court. In the present case Clause 16B of the agreement conferred exclusive jurisdiction on court at Delhi.
  1. In the case of Joginder Tuli:
  • The observations are very clear that the Suit has to proceed afresh before the proper Court.
  •  The direction came to be made more in the peculiar facts of the case in exercise of the discretionary jurisdiction u/a 136 of the Constitution.
  •  Also, it does not take into consideration any earlier precedents. There is no discussion of the law either and therefore it has no presidential value as laying down any law.
  1. Modern construction Case:
  2. It refers to the consistent position in law, it took into consideration relevant precedents, including the case of Joginder Tuli,
  3.  It arrived at the conclusion the following conclusion: “(…) if the court where the suit is presented, is of the opinion that it does not have appropriate jurisdiction, the plaint will be returned in regard with the provisions of Order 7 Rule 10 CPC (…) after presenting the suit before the court of appropriate jurisdiction, the plaint will be regarded as new and the trial will be proceeded as  de novo even if the hearing had come to a conclusion in the court that did not have competent territorial jurisdiction.”
  1. The Court found no discrepancy in the law as stated in Modern Construction and Joginder Tuli. Modern Construction (supra) laid down the accurate law.
  • It was held that:

transfer of a suit u/s 24, CPC was entirely different from a return of plaint. In transfer, both the transferor and the transferee court have jurisdiction to hear the matter. The transferee court has the discretion to either try the proceedings again or resume from the point at which such proceeding contrast to the scheme under Order VII Rule 10 read with Rule 10-A where no such choice is offered and the suit has to initiate as de novo.

  • In the peculiar facts and circumstances of the case, because the petitioner did not raise the objection under clause 16B of the agreement [exclusion of jurisdiction at Gurgaon Court] at the very first opportunity, the first order of rejection attained finality.
  • The objection was raised 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, the Court held that:
  • it was 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
  •  in exercise of its discretionary jurisdiction u/a 136 of the Constitution and in order to do complete and substantial justice between the parties u/a 142 of the Constitution, in the peculiar facts and situations of the case, the Court declined to set aside the impugned order of the High Court date.

CONCLUSION

A pertinent question of law: “when a suit is restored due to lack of territorial jurisdiction, will the proceeding start as de novo or continue from the point it was left before?” was made to the Honourable Supreme Court which was further transferred to an Upper Bench to come to a conclusion. The Honourable Bench very carefully analysed the question of law by referring to previous judgements and held that the proceeding shall commence as de novo.