M/S Exl Careers vs Frankfinn Aviation Services Pvt. Ltd.

REPORTABLE IN THE SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO(s). 2904 OF 2020 (arising out of SLP (Civil) No(s). 16893 of 2018)

M/S. EXL CAREERS AND ANOTHER ...APPELLANT(S)

VERSUS FRANKFINN AVIATION SERVICES PRIVATE LIMITED ..RESPONDENT(S)

JUDGMENT

NAVIN SINHA, J.

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 Signature Not Verified 1908, (hereinafter called as “the Code”) for Digitally signed by INDU MARWAH Date: 2020.08.05

presentation in the court in which it should have been instituted, 18:49:35 IST Reason:

whether the suit shall proceed de novo or will it continue from 1 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 2 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 3 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

4 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

5 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

6 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

7 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

8 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

9 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: 10

“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.

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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

12 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.”

13 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.

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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 sub-

rule (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.

16 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 17 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

18 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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