Pecuniary Jurisdiction Determined By Valuation Disclosed In Plaint, Not Potential Award If Suit Decreed In Plaintiff's Favour: Bombay High Court

The Bombay High Court recently clarified that the pecuniary jurisdiction of a court over a suit is determined based on the valuation of the suit as disclosed in the plaint and not on the value of the potential final relief granted in case the suit is decreed in the plaintiff's favor.

Justice Abhay Ahuja ordered the expeditious transfer of a 2001 commercial summary suit to the Bombay City Civil Court due to that court's enhanced pecuniary jurisdiction observing that the interest amount not specifically stated in the plaint cannot be included in the valuation, since it is not yet determined. It said:

“Until and unless the suit is heard and decreed, the amount of interest is undetermined. What the learned senior counsel for the Plaintiff is proposing is to value the suit on the decretal amount assuming a decree being passed in the Plaintiff's favour. In my view, that cannot be permitted being contrary to the settled principle that the pecuniary jurisdiction of the Court depends on the valuation of the Suit as disclosed in the plaint and not on the valuation of the ultimate relief as granted by the decree. There cannot be a pre-emptive valuation prior to a decree only for the purposes of retaining the matter in this Court.”

In March 2001, Rabo Bank filed a commercial summary suit for recovery of USD 1,931,627.89 along with interest against State Bank of India. In the plaint, the suit value stated at the time of filing for the purpose of determining court fees was just over Rs. 9 crores, i.e., only the principal amount (USD converted to INR at the prevalent rate).

On November 20, 2023, the state government enhanced the pecuniary jurisdiction of the Bombay City Civil Court to Rs. 10 crores. Thereafter, the Prothonotary and Senior Master of the HC issued a notice on January 22, 2023 stating that the suits below Rs. 10 crores of value, including the present suit, are likely to be transferred to the Bombay City Civil Court.

The plaintiff filed a praecipe urging the court to refrain from transferring the case and to proceed with the final hearing of the suit. As per the praecipe, the suit is valued at USD 1,931,627.89 (about Rs. 16.05 crores as of January 30, 2024) along with interest and exceeds the threshold limit set for transfer to the Bombay City Civil Court, which is Rs. 10 crores.

Further, the plaintiff claimed, that the interest calculated at 9.75 percent per annum from the date of default till date amounts to USD 4,576,555.68, bringing the total claim to USD 6,508,183.57 (about Rs. 54.10 crores), well above the pecuniary jurisdiction of the City Civil Court.

The plaintiff contended that the suit's claim amount (USD 1,931,627.89) along with accrued interest exceeded the threshold limit for transfer to City Civil Court. He argued that interest amount, computed from the date of default till the filing of the suit, must be considered in determining the suit's value for jurisdictional purposes as per Section 12(a) of the Commercial Courts Act, 2015.

The specified value of the suit, inclusive of interest computed till the date of filing of the suit is about Rs. 10.78 crores, exceeding the jurisdictional limit of the Bombay City Civil Court, he said.

The court noted that it is undisputed that at the time of initiating the suit, the plaintiff, paid the maximum court fees on a valuation of about Rs. 9 crores, as explicitly stated in the plaint. Section 8 of the Suits Valuation Act, 1887 provides that in suits where court fees are payable ad valorem (according to valuation of suit), the valuation for both court fees and jurisdiction is the same. The court noted that the exceptions in Section 8 are inapplicable to the present case.

Sections 12(1)(a) of the Commercial Courts Act provides that the specified value of the subject matter in a suit, appeal, or application is determined based on the money sought to be recovered, inclusive of interest up to the date of filing. This specified value, inclusive of interest, determines the jurisdiction of the court.

However, in the present case, interest computation hadn't been included in the pleadings or the particulars of the claim in the plaint, the court said. Without this computation, the suit's value remained at about Rs. 9 crores at the time of filing, the court held.

Thus, the court rejected the plaintiff's praecipe and directed the expeditious transfer of the suit record and proceedings to the Bombay City Civil Court.

Case no. – Commercial Summary Suit No. 1 of 2001

Case Title – Rabo Bank v. State Bank of India