Functional Convenience Of A Party In Commercial Litigations Cannot Be A Ground To Transfer Case U/s 25 CPC: Supreme Court

The Supreme Court observed that functional convenience of one of the parties in commercial litigations cannot be a ground to transfer under Section 25 of Code of Civil Procedure.

A petitioner seeking transfer of a case involving business-related disputes from one jurisdiction to another will have to establish some grave difficulty or prejudice in prosecuting or defending the case in a forum otherwise having power to adjudicate the cause, Justice Aniruddha Bose observed.

In this case, the petitioner company sought transfer of a subsequent suit instituted by the respondents against them in the Court of Civil Judge, Senior Division, Pune to the Commercial Court, Ahmedabad.

The court noted that the petitioners' case is largely founded on the claim of having approached a judicial forum before the respondents did and both the suits emanate from the same set of facts with the same set of parties.

"The petitioners are not asserting that the Court at Pune lacks jurisdiction to entertain, try and determine the suit instituted by the respondents. There may also be some overlapping issues involved in both the suits. But that factor alone, in my opinion, does not confer right on the petitioners to bring the suit of the respondents to the jurisdiction of their choice where they have already instituted a suit, albeit for an independent set of reliefs. There is no bar in the Code of Civil Procedure (the Code) in institution of two different suits in two Courts by the same set of parties on same set of facts. The party having approached the Court first however has the right to apply before the Court in which the subsequent suit is instituted for stay of the latter proceeding, as stipulated in Section 10 of the Code, if the matters in issue in both the suits are directly and substantially the same. The factor which needs consideration while examining a plea for transfer in a petition under Section 25 of the code is whether allowing such petition would be expedient in the ends of justice or not. This Court has to consider the prayer for transfer with an element of equity. These factors, by themselves cannot be the ground for invoking the provisions of Section 25 of the Code.", the judge said.

Regarding the submission that the senior management executives of the petitioners arraigned as defendants are foreign national running business operations in Ahmedabad and they are more familiar and accustomed to Ahmedabad, the bench observed:

"Functional convenience of one of the parties in commercial litigations cannot determine exercise of jurisdiction of this Court under Section 25 of the Code. The yardstick applied in entertaining transfer petition of an estranged homemaker having no independent income to bring a matrimonial action instituted by the husband to a Court within whose jurisdiction she has taken shelter in her parental home cannot be followed in commercial disputes. A petitioner seeking transfer of a case involving business-related disputes from one jurisdiction to another will have to establish some grave difficulty or prejudice in prosecuting or defending the case in a forum otherwise having power to adjudicate the cause. No such case of outstanding prejudice has been made out by the petitioners. What has been submitted is that the senior management executives of the petitioners arraigned as defendants are foreign national running business operations in Ahmedabad and they are more familiar and accustomed to Ahmedabad. This is not good enough reason, and transfer of the second suit cannot be directed to accommodate them. I am not satisfied that an order for transfer as prayed for in this petition, is expedient for the ends of justice."

Case: Fumo Chem Pvt. Ltd. vs. Raj Process Equipments And Systems Pvt. Ltd. [Transfer Petition(s)(Civil) No(s). 755/2021]

Coram: Justice Aniruddha Bose

Citation: LL 2021 SC 216  

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