Bombay High Court: In a writ petition challenging the impugned order wherein the 4th Joint Civil Judge, Senior Division (‘Civil Court’), citing lack of jurisdiction, referred the matter to the Principal District Judge (‘PDJ’) for transferring the suit to the Commercial Court by invoking Sections 24 and 25 of Code of Civil Procedure, 1908 (‘CPC’), a Single Judge Bench of R. M. Joshi, J., allowed the petition, holding that the only option available for the Court was to pass order of return of the plaint that too after complying Rule 10A of Order VII of CPC and not to refer the matter to PDJ for invocation of Section 24 of CPC. Accordingly, the Court set aside the impugned order and remanded the case to Civil Court.
Background
Petitioner 1 was a company conducting the business of manufacturing, trading, importing, exporting, and distributing organic chemical products. Petitioner 2 was a research and development-based company engaged in innovations in bioscience for pharmaceutical and superfoods, energy storage devices and batteries, etc. Petitioner 2 agreed to provide the requisite technology with respect to petitioner 1’s business. In 2013, the two companies entered into a Memorandum of Understanding (‘MoU’) for developing and commercialising a range of products.
Disputes arose between the parties, and they filed company petitions against each other before the National Company Law Tribunal. Respondent 2 initiated further legal action by filing a civil suit before the Civil Court.
The Civil Court, while deciding an application for a temporary injunction, concluded that the subject matter of the suit was a commercial dispute as per Section 2(c)(xii) of the Commercial Courts Act, 2015 (‘the Act’). Holding such a lack of jurisdiction, the Civil court referred the matter to the PDJ for transferring the suit to the Commercial Court. Accordingly, the PDJ transferred the said suit to the District Judge. Aggrieved, the present petition was filed.
Issue
Whether in the event the Court finds no jurisdiction to entertain the subject matter, has to follow the provision of return of plaint under Order VII Rule 10 of CPC, or an order can be sought from the District Judge by invoking Sections 24 and 25 of CPC.
Analysis and Decision
The Court, upon perusal of Order VII Rule 10 of CPC, stated that the provision clearly indicated that subject to provisions of Rule 10-A, a suit can be returned at any stage of the suit to be presented to the Court in which it should have been instituted. Rule 10-A provides for the procedure to be followed for the return of the plaint. Therefore, the Court stated that the procedure prescribed under Rule 10-A had to be mandatorily followed once a Court forms an opinion that a plaint should be returned. Even before the actual order of return of the plaint is passed, the Court needs to record its reasons to enable the plaintiff to take further steps as contemplated by Rule 10A. The Court noted that in the present case, no such procedure was followed. The Court stated that, it is open for the plaintiff to file an appeal against the order of rejection of plaint. By non-compliance with the order and by seeking direction for transfer of proceedings by referring the matter to the PDJ, a plaintiff was practically denied the right to file an appeal against such an order.
The Court stated that a plain reading of Section 24 of CPC indicated that the power to transfer any proceedings from a subordinate Court to another Court was vested in a District Judge (Principal District Judge). However, this power could not be held to be a substitute for passing the order of return of plaint. The Court further stated that the question of invoking powers under Order VII Rule 10 of CPC and exercise of power under Section 24 of CPC by the District Judge would arise in different circumstances altogether. Section 24 of CPC cannot be invoked when the proceeding is filed in the Court not having jurisdiction over the subject matter of the suit, and in such eventuality, invocation of Order VII Rule 10 is imperative.
The Court added that there would be different situations that may occur before the transferee Court in both cases. In case of transfer of proceeding under Section 24(2) of CPC, depending upon directions issued by the District Judge, the transferee Court may or may not proceed from the point at which it is transferred or withdrawn, whereas an altogether different procedure is contemplated in case of an order of return of plaint under Order VII Rule 10 of CPC. In this regard, the Court referred to EXL Careers v. Frankfinn Aviation Services (P) Ltd (2020) 12 SCC 667, wherein the Supreme Court held that on return of the plaint, the trial should be conducted de novo and not from the stage at which the order of return of the plaint has been passed.
Regarding the contention that Section 15(5) of CPC enables the transfer of the proceedings that are filed after enforcement of the Act, the Court stated that the Section dealt with pending suits or applications and it could not be allowed to be claimed that this procedure would apply to the suits or applications filed after the enforcement of the Act. By no stretch of the imagination, this provision could be considered a power to transfer the proceeding/suit filed after enforcement of the Act. The Court added that any such proceeding filed before a Court other than the Commercial Court would be without jurisdiction,and only Order VII Rule 10 could be the appropriate provision available for return of plaint. In any case, power under Sections 24 and 25 of CPC cannot be exercised for transfer of such proceeding pending in the Court having no jurisdiction.
Thus, the Court held that when any Civil Court holds that it lacks jurisdiction over the subject matter of the suit or application, it had to pass an order under Order VII Rule 10 of CPC for the return of plaint and procedure of transfer of proceeding under Section 24 of CPC could not be invoked.
Accordingly, the Court held that in the present case, the only option available for the Court was to pass an order of return of the plaint after complying with Rule 10A of Order VII of CPC and not to refer the matter to PDJ for invocation of Section 24 of CPC.
Holding the aforesaid, the Court set aside the impugned order and remanded the case to the Civil Court for passing an appropriate order per the law.
[AJ Organica Pvt. Ltd. v. State of Maharashtra, 2025 SCC OnLine Bom 640, decided on 10-03-2025]
Advocates who appeared in this case:
For the petitioners: R. R. Totala, Advait Raorane, S. V. Lohiya, Nasetali Rizvi
For the respondent: AGP S. N. Kendre, Jamshed Master, and S. V. Deshmukh
