Karnataka High Court: While considering the instant revision petition challenging the rejection of appellants’ (hereinafter defendants) application under Order VII Rule 10 of the Code of Civil Procedure code, 1908 (CPC) by the City Civil Judge, the Bench of R. Devdas, J.*, took strict note of the City Civil Judge relying on non-existent judgments rendered by the Supreme Court to pass the impugned order and said that this act of the Civil Judge would require further probe and appropriate action in accordance with law. Therefore, the Court directed that the instant order be placed before the Chief Justice of Karnataka High Court for further action against the Civil Judge.
The counsel for the defendants submitted before the Court that the plaintiffs availed various loans from the defendants, who are non-banking finance companies. On default, in repayment of the loans, defendant No1 issued a detailed acceleration notice dated 25-03-2022 to plaintiff No.1 and thereafter defendant No.1 invoked the pledge agreement by invocation notice dated 28-09-2024 and sought for transfer of the shares. The 1st plaintiff filed a commercial suit before the Commercial Court, Bengaluru, seeking permanent injunction restraining the defendants from enforcing or acting upon the invocation notices dated 28-09-2024 and from undertaking any further proceedings related to the transfer or encumbrance of the pledged shares of plaintiffs 1 and 2 herein.
However, the plaintiffs therein filed a memo seeking to withdraw the suit as not pressed, while seeking liberty to file a fresh suit on the same cause of action. However, instead of filing a fresh suit before the commercial court, the plaintiffs filed a suit before the City Civil Court, Bengaluru with similar prayers as was sought before the Commercial Court.
The defendants entered appearance in the suit before the City Civil Court and filed an interlocutory application under Order VII Rule 10 of the CPC on the ground that the City Civil Court lacked jurisdiction to hear the suit, since the subject matter of the suit was evidently a commercial dispute and therefore such a suit could be tried only by the Commercial Court.
Rejecting the defendants’ application the City Civil Judge placed reliance on 2 cases that were apparently decided by the Supreme Court.
Counsel for the defendants stated that on careful search, it was found that no such decision is rendered by the Supreme Court and that the Civil Judge seems to have cited a non-existent decision to back the impugned judgment.
Perusing the facts of the case, the Court opined that application filed by the defendants to return the plaint, should have been allowed because the plaintiffs who had earlier filed a Commercial Suit, did not seek leave of the Court while withdrawing the same, to present the suit before the civil court. Secondly, the plaintiffs are admittedly aggrieved of the demand notices issued by the defendants and such demand notices were issued only to some of the plaintiffs. Therefore, only those plaintiffs to whom demand notices were issued are aggrieved and they were entitled to seek relief at the hands of the competent court. Such of the plaintiffs could not have included some other entities to whom the defendants had not issued notices, to seek redressal of their grievance.
The Court further said that it is unacceptable that the entities who had earlier filed a Commercial Suit, would withdraw the suit, without liberty and thereafter filed a suit before the civil court impleading some other entities to whom admittedly notices were not issued by the defendants. “This is an ingenious method adopted by the plaintiffs seeking to maintain a suit before a court which had no jurisdiction”.
Furthermore, the act of the City Civil Judge in citing non-existent Supreme Court cases to back his order was deemed to be disturbing enough by the Court to require further probe into the matter.
Therefore, the instant revision petition and the defendants’ interlocutory application under Order VII Rule 10 of the CPC were allowed. However, having regard to the express provisions contained in Order VII Rule 10A of the CPC, the matter was remitted to the learned 9th Addl. City Civil and Sessions Judge, Bengaluru, only to enable the plaintiffs to file an application in terms of Rule 10A (2) of Order VII of the CPC.
[Sammaan Capital Limited v. Mantri Infrastructure Pvt. Ltd., 2025 SCC OnLine Kar 7, decided on 24-3-2025]
*Order by Justice R. Devdas
Advocates who appeared in this case :
Appellants (defendants): SRI. PRABHULING K NAVADGI., SR. COUNSEL A/W SRI. CHINTAN CHINNAPPA M., ADVOCATE
Respondents (plaintiffs): SRI. SHYAM SUNDAR M.S., SR. COUNSEL A/W SRI. B.K.S. SANJAY., ADVOCATE FOR R1 TO R9
