Shreem Electric Limited v. Transformers and Rectifiers India Ltd.

1. It must be observed at the very outset that the District Court has passed a rather an unusual order, which is subject matter of challenge in the present appeal. While deciding applications fled by the Defendant seeking rejection of Plaint under Order 7 Rule 11 of the Code of Civil Procedure (Code) and by Plaintif seeking temporary injunction, the District Court has proceeded to return the plaint, invoking the provisions of Order 7 Rule 10. It has not recorded any reasons for returning the plaint but has returned the Plaint ‘in view of’ order rejecting application for rejection of plaint.

2. To examine the correctness of the order, it would be necessary to frst condone the delay in fling the appeal. For the reasons stated in Civil Application No. 1223 of 2019, which is opposed by the learned counsel for the respondent, the delay in fling the appeal stands condoned.

3. Admit. With consent of the learned counsel appearing for parties, the same is called out for hearing.

4. The challenge in the present Appeal is to the common Order dated 25 July 2018 passed by the District Judge-1 Kolhapur passed below Exhibit-1 returning Plaint under Order 7 Neeta Sawant 3/11 AO(ST)-14843-2019 Rule 10 of the Code for being presented before appropriate Court. Also challenged is the order dated 28 February 2019 rejecting the application seeking review of the Order dated 25 July 2018.

5. The Plaintif has instituted Commercial Suit No. 4 of 2017 before the District Court, Kolhapur, seeking specifc performance of purchase orders on the part of the Defendant by way of restoration of services, guarantees, warranties, supply of necessary spare parts, removal of defects and keeping of power transformers in working condition during guarantee and warranty period. Plaintif has also sought monetary compensation along with interest.

6. In the suit, Plaintif also fled application for temporary injunction under the provisions of Order 39 Rules 1 and 2 of the Code. The Defendant appeared in the suit and fled application at Exhibit- 26 seeking rejection of Plaint under the provisions of Order-7, Rule 11 of the Code on the ground of absence of cause of action and lack of territorial jurisdiction. The application was opposed by the plaintif by fling afdavit in reply.

7. The District Court heard Defendant’s application at Exhibit-26 under Order 7 Rule 11 seeking rejection of plaint and Plaintif’s application at Exhibit-6 together and proceeded to pass common order dated 25 July 2018, rejecting both the applications. However, while holding that the plaint cannot be rejected under the provisions of Order 7 Rule 11, the District Court has made certain observations in para-14 of its order as to why the plaint needs to be returned for being fled in the Court at Ahmedabad. Neeta Sawant 4/11 AO(ST)-14843-2019 After rejecting Defendant’s application at Exhibit-26 for rejection of the plaint under Order 7 Rule 11, the District Court proceeded to pass a separate order on application at Exhibit-1 directing that in view of Order passed below Exhibit-26 and Exhibit-6, the plaint be returned to the Plaintif as per Order 7, Rule 10 for being presented before the appropriate Court.

8. Plaintif carries on business of manufacturing and supply of Turn Key Projects for establishing power stations for government/semi government companies, State Electricity boards, railways etc. It has its ofce and factory at Jaisingpur, District- Kolhapur. That Defendant carries on the business of developing power distribution and manufacturing furnace and special Transformers. Plaintif had placed various purchase orders with the Defendant for supply of transformers Disputes have arisen between the Plaintif and Defendant over Defendant’s alleged refusal to perform obligations arising out of purchase orders by servicing and maintaining the transformers during guarantee and warranty period. Plaintif apparently wanted to invoke the bank guarantee furnished by the Defendant for non performance of the obligations under the Purchase Order. Defendant therefore lodged Commercial Suit No. 95 of 2017 in the Civil Court at Ahmedabad seeking a declaration that invocation of bank guarantee by the Plaintif was invalid unlawful and bad in law and seeking perpetual injunction against the plaintif. In the suit, Plaintif fled application at Exhibit-6 for temporary injunction. Defendant appeared in the suit and fled application at Exhibit-26 seeking rejection of plaint under the provisions of Order 7 Rule 11 of the Code of Civil Procedure. The application was opposed by the Neeta Sawant 5/11 AO(ST)-14843-2019 Plaintif by fling reply. The District Judge proceeded to hear both, Plaintif’s application at Exhibit-6 and Defendant’s application at Exhibit-26 and passed common order dated 25 July 2018. It has rejected Plaintif’s application at Exhibit-6 for temporary injunction. Similarly, it has also rejected Defendant’s application at Exhibit-26 seeking rejection of plaint under the provisions of Order 7 Rule 11 of the Code. The plaintif fled Misc. Application No. 309 of 2018 seeking review of the order dated 25 July 2018. The District Court has proceeded to reject the application for review by order dated 28 February 2019. This is how both the Orders dated 25 July 2018 passed below Exhibit-1 and Order dated 25 February 2019 rejecting review application are subject matter of challenge in the present appeal.

9. Mr. Pandit, the learned counsel appearing for the Appellant would submit that the order passed by the learned District Judge is ex-facie erroneous, as the learned Judge could not have returned the plaint under the provisions of Order 7 Rule 10 of the Code while deciding the application for rejection of the plaint under Order 7 Rule 11. That observations made while rejecting Defendant’s application for rejection of plaint could not be used for passing a separate unreasoned order on plaint at Exhibit-1 by ordering return of the same under Order 7 Rule 10 of the Code. That the impugned order passed on plaint at Exhibit-1 is unreasoned and cryptic. He would submit that even the order dated 25 July 2018 nowhere records that the District Court does not have jurisdiction to entertain the suit. That in absence of any specifc fnding about lack of jurisdiction of the District Court, Kolhapur to try and entertain the suit, the plaint could not have Neeta Sawant 6/11 AO(ST)-14843-2019 been returned. He would submit that the procedure adopted by the learned District Judge is unknown to law and despite inviting the attention of the learned Judge to the error apparent on the face of the record, the learned judge has refused to correct the same by rejecting the review application. Mr. Pandit would take me through the averments in the plaint as well as the terms and conditions of the purchase order to demonstrate that the District Court, Kolhapur has necessary jurisdiction to try and entertain Plaintif’s suit. He would submit that parties agreed under the purchase order that the cause of action in relation to any dispute under the contract shall be deemed to have arisen within the jurisdiction of appropriate Court having jurisdiction over Jaisingpur. That therefore the Court at Ahmedabad does not have jurisdiction to entertain the Defendant’s suit relating to disputes arising out of the purchase orders. In support of this contention, Mr. Pandit would rely upon judgment of the Apex court in A.B.C. Laminart Pvt. Ltd and Anr. V /s. A.P. Agencies, Sales (1989) 2 SCC

163.

10. Per-contra, Mr. Narvankar, the learned counsel appearing for Respondent No.1 would oppose the Appeal and support the order passed by the District Court. He would submit that the District Court has adopted correct course of action by directing the Plaintif to lodge the plaint in the Court at Ahmedabad which is already seized of a separate suit fled by the Defendant arising out of same contract. That the order of the District Court would ensure that the same Court decides the disputes between the parties arising out of the same contract. That therefore no palpable error can be traced in the approach of Neeta Sawant 7/11 AO(ST)-14843-2019 the District Court which is fair and proper in the facts and circumstances of the present case. He would further submit that the District Court at Kolhapur does not have jurisdiction to try and entertain plaintif’s suit. That instead of rejecting the plaint altogether, the District Court has returned the plaint for being presented before the Court at Ahmedabad. That in such circumstances, it cannot be stated that any patent error is committed by the learned District Judge in returning the plaint. He would pray for dismissal of the appeal.

11. Rival contentions of the parties now fall for my consideration.

12. As observed in the opening paragraphs of the judgment, the course of action adopted by the learned District Judge appears to be unusual and alien to law. The Defendant fled application seeking rejection of the plaint under Order 7 Rule 11 of the Code. The learned District Judge proceeded to hear and decide Defendant’s application along with Plaintif’s application for temporary injunction. This is the frst error on the part of the District Judge. It is incomprehensible as to how an application for temporary injunction can be decided together with an application seeking rejection of plaint under Order 7 Rule 11. It is not a case where the District Judge has rejected the plaint and has therefore found it unnecessary to decide Plaintif’s application for temporary injunction fled under the provisions of Order 39 Rules 1 and 2. The District Court has rejected Defendant’s application for rejection of plaint and in the same order has devoted one paragraph for arriving at the conclusion that the plaintif is not Neeta Sawant 8/11 AO(ST)-14843-2019 entitled to grant of any temporary injunction. This course of action adopted by the District Court appears to be strange and unknown to law. Be that as it may, since rejection of prayer for temporary injunction is not really pressed in the present appeal this Court need not delve any deeper into the correctness of the approach of the District Court in deciding and rejecting Plaintif’s application for temporary injunction together with Defendant’s application for rejection of plaint.

13. As observed above, Defendant’s application for rejection of Plaint under Order 7 Rule 11 has been rejected by a reasoned Order dated 25 July 2018. No separate application was fled by the Defendant seeking return of plaint under Order 7 Rule 10. It must be observed here that there is no absolute proposition of law that the Court cannot order return of plaint under Order 7 Rule 11 of the Code in absence of any application by the Defendant. In an appropriate case where a Court comes to a conclusion that it does not have jurisdiction to try and entertain the suit, it can order return of plaint.

14. However, in the present case that District Court was essentially dealing with Defendant’s prayer for rejection of plaint under Order 7 Rule 11. It has arrived at a conclusion that there is cause of action for fling the suit and has proceeded to reject the Defendant’s application. While rejecting Defendant’s application, the Court has made following observations in para 14 of the order Which reads thus: Neeta Sawant 9/11 AO(ST)-14843-2019