Court Can't Return Plaint Based On Defendant's Suit In Another Court Sans Explicitly Recording Lack Of Jurisdiction: Bombay HC

The Bombay High Court recently held that the trial court cannot return a plaint merely on the ground that the defendant's suit is pending in another court and it would be desirable to try both suits together.

Justice Sandeep V Marne set aside an order of the District Court, Kolhapur returning a plaint so that it could be filed in another court without explicitly giving a finding that the District Court, Kolhapur lacked the jurisdiction to entertain the case.

“Except the observations in para-14 to the effect that the suit cannot be tried parallelly before the District Court at Kolhapur in view of pendency of Defendant's suit at Ahmedabad, the District Court has not recorded any specific finding that it lacked jurisdiction to try or entertain Plaintiff's suit and has proceeded to return the plaint for being prosecuted before the Court at Ahmedabad. This is yet another glaring error committed by the District Court…The order passed by the District Court directing return of the plaint is thus clearly unsustainable..., the course of action adopted by the learned District Judge appears to be unusual and alien to law.”, the court held.

The court allowed an appeal against an order dated July 25, 2018, passed by District Judge, Kolhapur in an application for rejection of a Plaint under Order 7 Rule 11 of the CPC. The District Court, while refusing to reject the plaint, had instead returned it under Order 7 Rule 10.

Plaintiff Shreem Electric Ltd. is involved in manufacturing and supplying Turn Key Projects for power stations, with operations based in Jaisingpur, District Kolhapur. The defendant, Transformers and Rectifiers India Ltd., engaged in power distribution and manufacturing transformers and had a dispute with the Plaintiff over alleged refusal to fulfil obligations arising from purchase orders.

The Plaintiff initiated a Commercial Suit before the District Court, Kolhapur seeking specific performance of purchase orders from the Defendant. The Defendant filed an application seeking the rejection of the plaint under Order 7 Rule 11, contending the absence of a cause of action and lack of territorial jurisdiction. Simultaneously, the Plaintiff applied for a temporary injunction under Order 39 Rules 1 and 2.

The District Court, in a common order dated July 25, 2018, rejected both applications.

Despite rejecting the Defendant's application for rejection of the plaint, the District Judge proceeded to return the plaint in a separate order on the same day, so that the suit could be filed in the Civil Court at Ahmedabad. This order as well as an order dated February 28, 2019, rejecting the application for review of this order, was challenged in the present appeal by the plaintiff.

Advocate Sameer Pandit for the Appellant argued that the order was inherently erroneous, emphasizing that the District Court could not return the plaint under Order 7 Rule 10 while deciding the rejection application under Order 7 Rule 11. He highlighted the absence of a specific finding on the District Court's jurisdiction to entertain the suit.

Advocate Yuvraj Narvankar for the Respondent asserted that the return of the plaint ensured that the same court decided disputes arising from the same contract. He argued that the District Court at Kolhapur lacked jurisdiction to entertain the suit and, instead of outright rejection, returning the plaint was a fair and proper approach.

The court noted the unusual and questionable procedural aspects adopted by the District Court. The District Judge's simultaneous consideration of applications for rejection of the plaint and temporary injunction was deemed erroneous, but as the rejection of the injunction was not a focus of the present appeal, the high court decided not to delve into this aspect.

The court noted that there is no absolute law preventing a court from ordering the return of the plaint without a defendant's application for the same. If a court finds it lacks jurisdiction to hear a suit, it can still order the return of the plaint, the court said.

However, in this case, the District Court explicitly concluded that a valid cause of action existed for filing the suit, the court noted. The critical error, according to the court, lay in the District Court's failure to explicitly state a lack of jurisdiction to try or entertain the suit.

The court clarified that the issue of jurisdiction of the District Court, Kolhapur to entertain the suit was not addressed in the present appeal, keeping the contentions of both parties open.

Consequently, the court set aside the order directing the return of the plaint and the order rejecting the review application. The court directed the commercial suit to be restored on the file of the District Judge, Kolhapur.

Advocates Sameer Pandit, Sarrah Khambati, Mihir Govande i/by. Wadia Ghandy and Co., represented the Appellant.

Advocate Yuvraj Narvankar represented the Respondent.

Case no. – Appeal From Order (St) No. 14843 of 2019

Case Title – Shreem Electric Limited v. Transformers and Rectifers India Ltd. and Ors.