This article is written by R. Sai Aravind.

Introduction

Suits after institution in a court lose the jurisdiction due to various reasons. The court without proper jurisdiction cannot try the suit anymore. So, the suit has to be sent to the court of competent jurisdiction. In such a case the options available are Order VII Rule 10 and Section 24(5) of Code of Civil Procedure, 1908 (hereinafter referred to as “CPC”). 

According to Order VII Rule 10, a Plaint can be returned to a court of competent jurisdiction at any stage of the case if there is a defect in the jurisdiction. Whereas, Section 24(5) empowers the District Court and High Court to transfer any case due to lack of jurisdiction. When these two provisions are juxtaposed, we find nothing in common except the cause. There are also no guidelines under CPC stating which has to be applied when.

The research seeks to analyse the function of both the provisions and the condition in which they are applied. This is primarily done by analysing various judicial pronouncements. 

Order VII Rule 10- Return of Plaint 

When a plaint is returned under Order VII Rule 10 for the defect in jurisdiction, the suit returned cannot be continued and it should be filed as a fresh suit in the new court i.e. a de novo trial. So, whatever the stage the suit might be in if there is a lack of jurisdiction and the plaint is returned, the suit has to be tried from the beginning. The Supreme Court in ONGC Ltd. V Modern Construction & Company (hereinafter referred to as “Modern Construction case”) held that when a plaint filed in a proper court after getting back from the wrong court, it cannot be a continuation of the suit and the suit must be considered to commence when a plaint is filed in the proper court. It also added that the Plaintiff is entitled to exclude the period before the previous court given Section 14 of the Limitation Act and can also seek an adjustment in the court fee paid. 

Before this, in the case of Joginder Tuli v S.L. Bhatia, the Supreme Court gave a contrasting opinion. Where the amendment of plaint increased the value of the suit and pecuniary jurisdiction was lost. The High Court on the revision of the order to return the plaint under Order VII Rule 10 directed to proceed the case from where it stood transferred instead of a de novo trial. The order of the High Court was upheld by the Supreme Court on the ground that the case is past the stage of presentation of evidence by the parties. 

Further, the Supreme Court in the case of Oriental Insurance Co. v Tejparas Associates and Exports Pvt. Ltd. interpreted Rule 10A of Order VII. Rule 10A and 10B were added to Order VII by the Civil Procedure (Amendment) Act, 1976. Rule 10A empowers the court of the first instance which orders the return of plaint, to fix the date for the appearance of both the parties in the new court with jurisdiction. It was held that before the amendment, the matter is disconnected from the court after the return of plaint is ordered. But based on the amendment, the court opined that Rule 10A allows the court to fix a date of appearance before the court of competent jurisdiction. Due to which it was held that the plaint returned cannot be found as the fresh filing of the suit and there is a continuation. The court also relied on Joginder Tuli v S.L. Bhatia to arrive at this conclusion.

However, the three-judge bench of the Supreme Court in M/s. EXL Careers and Anr. v Frankfinn Aviation Services Private Ltd., the Supreme Court overruled both Oriental Insurance Co. v Tejparas Associates and Exports Pvt. Ltd. and Joginder Tuli v S.L. Bhatia. Regarding the former, it was held that Rule 10A is added only to obviate the necessity of serving the summons on the defendants after the plaint is returned to a court of competent jurisdiction. By which it is implied that the rule has nothing to do with the previous court and the suit has to commence de novo. On the latter case, the court finds it to pronounce a wrong law since it has referred none of the precedence in the subject.

On analysing all these, the Supreme Court holds Modern Construction case as the one to state the correct position of law. Despite these propositions, the court upheld the order of the High Court which rejected a de novo trial. By which the suit is transferred and continued in the competent court instead of a de novo trial. The court also holds the order of High Court as not sustainable under the law laid down in Modern Construction case. But on considering the facts of the case where evidence was furnished by both the parties and the matter was fixed for final hearing, the Supreme Court through its power under Article 148, sustained the order and did not allow the trail to be conducted De novo. 

So, it is well-settled that a plaint returned under Order VII Rule 10 for defect of jurisdiction cannot be continued and has to be tried as a de novo trial only. 

Section 24(5)- Transfer of Suit

The same Civil Procedure (Amendment) Act, 1976 which added Rule 10A and 10B to Order VII, added Clause (5) to Section 24. According to Section 24(5), a suit or proceeding may be transferred under this Section from a Court which has no jurisdiction to try it. The High Court and District Court has this power to transfer any suit or proceeding before a subordinate court lacking jurisdiction to a court with competent jurisdiction. 

The Delhi High Court in Pushpa Kapal v Shiv Kumargives the reason behind the enactment of Section 24(5) of CPC. In which the trial court ordered for return of plaint under Order VII Rule 10 due to lack of pecuniary jurisdiction. By which the suit has to start de novo where the evidence has been adduced by the parties already. So, an application under Section 24(5) read with Section 151 of CPC was filed before High Court asking transfer of proceeding from where it stood before. This application was allowed and the suit was transferred. The court held that sub Section 5 of Section 24 was enacted to obviate any harassment to the parties and enhance expeditious disposal of trails. Before the application under Section 24(5), the suit was transferred to be filed as fresh suit even after the presentation of evidence. Therefore Section 24(5) empowers High Court and District Court to do away with such mischiefs. 

A similar scenario soon after the enactment of the provision can be seen in Rail Chand v Atal Chand where the suit was pending in a court of incompetent jurisdiction for ten years. By Section 24(5), the suit was transferred to a court of competent jurisdiction instead of being returned. 

Regarding its relation with Order VII Rule 10, the Delhi High Court urges a harmonious and constructive application of both the provisions. In Aviat Chemicals v Magna Laboratory, the Delhi High Court answered in affirmative regarding six transfer petitions under Section 24 of CPC. In which the amendment of plaint has led to the loss of pecuniary jurisdiction and there was a permanent injunction in force passed against the defendant. Since the court ended up lacking jurisdiction, there was a risk of such injunction passed becoming invalid if the plaint is ordered to return. Such an invalidation would defeat the purpose of the suit. So, the plaintiff moved an application under Section 24(5) seeking a transfer. For which the defendant defended by upholding Order VII Rule 10 as the relevant provision for lack of jurisdiction and sought a de novo trial.

The court in this matter emphasised the intention of the statute which is to do substantial justice and decide the suits expeditiously. It was found that a de novo trial under Order VII Rule 10 in matters which has past the certain stage and has been pending for years, would only frustrate the justice more. The court held that Section 24(5) and Order VII Rule 10 as two courses of action available and that has to be applied to the facts of a case keeping in view the elements of prejudice, adherence to the law of procedure, equity and attainment of ends of justice. The court stressed on an action which would cause no prejudice to the parties. Therefore, the court ordered the transfer of the suits under Section 24(5) in the interest of justice on the condition that no prejudice is caused to the respondents on such transfer. 

Conclusion

The overt difference we can infer from these interpretations is that a plaint returned under Order VII Rule 10 for lack of jurisdiction has to be filed as a fresh suit whereas a suit transferred under Section 24(5) can be proceeded from the point where it stood transferred. A Plaint is returned by the court of the first instance which lacks jurisdiction but a suit can be transferred only by a District Court or High Court. 

So, this brings us to the ultimate question- what decides return or transfer of a suit? Usually, these provisions operate on the domain where such application is brought. But in cases like Aviat Chemicals v Magna Laboratory, the court had the option to go either with return or transfer of suit. That is when the court gave importance to justice and expeditious disposal of the trail. The injunction granted by the court would get nullified and case conducted over the years will become void if the case has to start all over again. Such a stand can also be seen in M/s. EXL Careers and Anr. v Frankfinn Aviation Services Private Ltd. where the Supreme Court in the interest of justice allowed the order transferring the suit despite holding the order to be invalid under Order VII Rule 10. It is pertinent to note that there was no transfer application filed in that case.

Change in jurisdiction happens due to inevitable reasons. Such a situation need not lead to a travesty of justice. On perusal of cases where a transfer is made under Section 24(5), it can be seen that cases which were pending in incompetent court for a long time or cases past important stages are transferred to prevent harassment of the parties and encourage expeditious disposal of the trail. This is how transfer under Section 24(5) differs from the return of plaint under Order VII Rule 10. Section 24(5) is a beneficial provision on this front. Order VII Rule 10 may provide for the return of plaint at any stage of the case, but it has to be understood that it is a primal statute dealing with lack of jurisdiction before the addition of Section 24(5). Such return of plaint is suitable for lack of jurisdiction in cases which haven’t made any significant progress.