Oxbridge Associates Limited v. Mr Atul Kumra

6. The defendant/review petitioner has carried the matter in appeal in RFA(OS) 20/2020, which remains pending. It is the defendant’s case that the present review petition has been filed pursuant to liberty granted by the Division Bench vide order dated 13.10.2020, reproduced below:

7. In these circumstances, three issues have been argued in this review petition:

8. I have heard Mr. Rajiv Talwar, learned counsel for the defendant/review petitioner, and Mr. Jayant Mehta, learned Senior Counsel for the plaintiff [respondent in the review petition].

9. The plaintiff filed a common application being I.A. 1385/2017 for summary judgment under Order XIII-A of the CPC, and for a decree upon admission under Order XII Rule 6 of the CPC. As far as Order XIII-A of the CPC is concerned, this Court found the plaintiff’s case to be merited, and therefore, granted summary judgment as quantified in paragraph 23 of the judgment under review. However, having heard arguments on Order XII Rule 6 of CPC also, it was

1 The CC Act was originally enacted by way of an ordinance promulgated on 23.10.2015, entitled the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Ordinance, 2015. The Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015, was passed by the Parliament on 31.12.2015 with retrospective effect from 23.10.2015. By way of the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts (Amendment) Act, 2018, the name of the said act was amended to the Commercial Courts Act. considered appropriate to deal with this aspect as well. As the defendant was found to have made clear and unequivocal admissions of liability, the plaintiff was found entitled to a decree even on this basis, although for a different sum – being confined to the sums admitted by the defendant.

10. The operative direction of the Court, in paragraph 26 of the judgment under review, was for preparation of a decree in terms of paragraph 23 i.e., for the amount quantified under Order XIII-A of the CPC, as noted in the order of the Division Bench dated 13.10.2020. This is because the decree under Order XII Rule 6 of the CPC was limited to the amounts admitted by the defendants, whereas the scope of Order XIII-A of the CPC is not similarly circumscribed. B and C. Question of pecuniary jurisdiction and trial as a commercial suit:

11. These two questions are interlinked, and are, therefore, dealt with together.

12. The suit was filed on 08.10.2015, prior to the promulgation of the CC Ordinance on 23.10.2015. The plaintiff sought a decree in the sum of ₹1,55,46,586.62, alongwith pendente lite and future interest at 18% per annum. The defendant filed a written statement on 17.03.2016, and the plaintiff filed its replication on 14.12.2016. The defendant also lodged a counter-claim for recovery of ₹1,42,58,876.45/-. I.A. 1385/2017 was filed on 28.01.2017, and the defendant’s reply was filed on 17.05.2017. Hearing in the application commenced on 28.08.2019, and concluded on 05.09.2019. The application was disposed of by the judgment under review dated 21.10.2019.

13. The controversy has arisen due to the promulgation of the CC Ordinance sixteen days after the filing of the suit, and consequent notifications issued by this Court, as well as an increase in the pecuniary jurisdiction of the District Courts, even in ordinary suits.

14. Section 5(2) of the Delhi High Court Act, 1966 was amended by Section 2 of the Delhi High Court (Amendment) Act, 2015 [hereinafter, “the Amendment Act”]. The minimum pecuniary jurisdiction of this Court on the Original Side was enhanced from ₹20 lakhs to ₹2 crores. This provision was brought into force with effect from 26.10.2015[2]. Under Section 4 of the Amendment Act, the Chief Justice was empowered to transfer any pending suit or other proceedings to a District Court in view of the enhanced jurisdiction. By a notification dated 24.11.2015, all suits pending before this Court valued upto ₹1 crore were to be transferred to the District Courts, and ordinary suits [i.e., non-commercial suits] valued between ₹1 crore and ₹2 crores were also to be transferred. On 30.01.2019, the Court issued a further notification transferring commercial suits with a value below ₹2 crores filed in this Court on or after 02.05.2018 to the District Courts.

15. Keeping in mind these provisions, Mr. Talwar rightly accepted that the present suit was within the jurisdiction of this Court on the Notification No. F.No.L-19015/04/2012-Jus dated 26.10.2015, issued by the Government of India, Ministry of Law, Justice, and Company Affairs. date it was instituted, i.e. 08.10.2015. However, he submitted that the suit was never transferred to the Commercial Division of this Court, and was treated as an ordinary suit, which was liable to be transferred to the District Court by virtue of the notification dated 24.11.2015. Mr. Talwar relied upon the Division Bench judgments of this Court in Nirman Consultants Private Limited vs. NNE[3] and Brahmos Aerospace Private Limited vs.

FIIT JEE Limited & Another[4] to submit that transfer of the suit to the Commercial Division was imperative for the suit to be treated as a commercial suit, and also for it to attract the rigours of the CC Act, including the applicability of Order XIII-A of the CPC.

16. Mr. Mehta, on the other hand, relied upon the judgment of this Court in Micromax Informatics Ltd. vs. Vijay Jain[5], to submit that the failure to register a suit as a commercial suit is only a ministerial omission, which does not denude the suit of its character as a commercial suit. Further he submitted that, even if a suit is below the minimum pecuniary jurisdiction of a Court, it does not vitiate the decree, as the Court does not lack inherent jurisdiction to hear a suit below its pecuniary jurisdiction. He pointed out that the questions of jurisdiction and applicability of the CC Act were not raised by the defendant in his written statement or in his reply to the application- I.A. 1385/2017, and have been agitated for the first time in the present review petition, filed two years after the judgment under review.

17. Mr. Mehta also relied upon the judgment of a Full Bench of this Court in Subhashini Malik vs. S.K. Gandhi[6], and the judgment of a Division Bench of this Court in Satyanarain Khandelwal vs. Prem Arora[7], to submit that the suit was properly entertained in this Court.

18. From the aforesaid submissions, it appears that the principal question which requires determination is whether the suit could have been treated as a commercial suit, though it was not transferred to the Commercial Division. If this question is decided in the affirmative, then the institution of the suit was a valid institution, it was not liable to be transferred to the District Courts under the applicable notifications, and the invocation of Order XIII-A of the CPC can also not be doubted.

19. The three judgments of the Division Bench, cited by learned counsel for the parties, are all on the question of applicability of Section 13 of the CC Act, which provides for the circumstances in which an appeal may lie from the decrees and orders of a Commercial Court. In Micromax[8], an appeal was rejected on the ground of maintainability even though the suit had not been transferred to the Commercial Division, holding that non-registration of the suit was only a ministerial omission. The judgments in Brahmos Aerospace[9] (to which I was a party) and Nirman Consultants10, were also on the (2016) 233 DLT 83.

Supra (note 5). Supra (note 4). Supra (note 3). question as to whether the right to an appellate remedy vested in the appellant could be ousted by Section 13 of the CC Act.

20. In the present case, we are not faced with this question. It may be noted that Mr. Talwar did not dispute that, in the present case, the subject matter of the suit placed it within the definition of a “Commercial Dispute” under Section 2(1)(c) of the CC Act. The arguments regarding vested right of appeal are wholly distinct from the question of whether the suit court could invoke provisions relating to commercial disputes in the adjudication of a suit which answered to that definition, even though it had not been so numbered.

21. This question has been answered in two orders relied upon by Mr. Mehta. In Gulf DTH FZ LLC vs. Dishtv India Limited11, a coordinate Bench held that a suit which satisfies the definition of a commercial dispute would be a commercial suit, regardless of whether it was numbered as a commercial suit or not12.

22. Section 15 of the CC Act, applicable to suits which were already pending when the CC Act came into force, has been considered by a co-ordinate Bench in Telefonaktiebolaget L.M. Ericsson vs. Lava International Limited13. The question before the Court was whether time for completion of pleadings could be

The order dated 30.08.2016 was carried in three different appeals being FAO(OS) 271/2016, RFA(OS) 70/2016 and RFA(OS) 71/2016 [later renumbered as FAO(OS) Nos. 25-26/2019]. In FAO(OS) 271/2016, the injunction granted by the order dated 30.08.2016 was upheld. FAO(OS) 71/2016 concerns rejection of the plaint, and remains pending. The appeal against the order dated 30.08.2016, to the extent that it deals with the applicability of the CC Act, remains pending in FAO(OS) 70/216.

extended beyond the maximum limit provided for in the CC Act. Relying upon the proviso to Section 15(4) of the CC Ordinance, the Court came to the conclusion that a discretion was retained with regard to extension of time for completing pleadings in suits which had already been instituted prior to the CC Act coming into force. The judgment itself recognizes that the provisions of the CC Act would otherwise be applicable but an exemption is provided under this provision in the following terms:

23. On the consideration of the aforesaid judgments, I am of the view that transfer of a suit to the Commercial Division and numbering thereof as a commercial suit cannot be dispositive of the substantiative rights and obligations of the parties and the jurisdiction of the Court. The provisions of Order XIII-A of the CPC, with which we are concerned, are a measure in aid of the statutory objective of expeditious disposal of commercial suits. When the subject matter of the suit is admittedly a commercial dispute, I do not find any error apparent on the face of the record in the exercise of jurisdiction under Order XIII-A of the CPC, even in the absence of the administrative task of transfer of the suit to the Commercial Division or renumbering of the suit.

24. Once it is held that the suit was a commercial suit after the promulgation of the CC Ordinance, it was liable to be tried in this Court as it was not covered by the notifications dated 24.11.2015 and 30.01.2019. It may be mentioned that, having regard to the judgment of the Division Bench in Satyanarain Khandelwal14, Mr. Talwar, in the course of his arguments, did not press the submission that the suit ought to have been transferred to the District Court pursuant to the subsequent enhancement of its pecuniary jurisdiction to ₹2 crores, even for commercial suits.

25. Further, even if the suit fell within the pecuniary jurisdiction of the District Court, I am of the view that its adjudication by this Court would not constitute a ground for review. The Full Bench decision of this Court in Subhashini Malik15 makes it clear that this Court does not become functus officio the moment there is an amendment in its pecuniary jurisdiction, and that of the District Courts16. Rajiv Sahai Supra (note 7). Supra (note 6).

16 Ibid (per Sanjiv Khanna, J., paragraphs 166-168) (The majority decision of the Full Bench is contained in concurring judgments delivered by Sanjiv Khanna, J. and Rajiv Sahai Endlaw, J.) Endlaw, J., in paragraph 18 of the said judgment, held inter alia as follows: “18. Having bestowed our consideration on the matter, we are of the view that even after coming into force of the Amendment Act and the Office Order dated 24 November, 2015 supra, this Court can entertain and hear application for amendment of plaint in a suit which in terms of the aforesaid Office Order has been administratively ordered to be transferred to the subordinate Courts and where this Court finds (applying the principles of amendment) the amendment enhancing the valuation of the suit for the purposes of pecuniary jurisdiction to be necessary for purpose of determining the real question in controversy, this court has jurisdiction to allow the said amendment. Our reasons for holding so are as under: xxxx xxxx xxxx (J). Notice may next be taken of the difference between minimum pecuniary jurisdiction of a Court and maximum pecuniary jurisdiction of the Court. While a Court is said to be not having jurisdiction to try a suit above its maximum pecuniary jurisdiction, the converse is not true. A Court cannot be said to be not having jurisdiction over suits below its minimum pecuniary jurisdiction. Reference in this regard can be made to V. Ramamirtham v. Rama Film Service AIR 1951 Madras 93 (FB) where it was held in the lead judgment that while Section 15 of the CPC enjoins the institution of a suit in the Court of the lowest grade competent to try it, it does not oust the jurisdiction of the Court of a higher grade; even if the Court of a higher grade tries and disposes of a suit which could have been instituted in a Court of a lower grade, the decision rendered is not without jurisdiction and is not a nullity. Viswanatha Sastri, J. in his concurring opinion observed that the object of Section 15 CPC is only to prevent superior Courts being flooded or overcrowded with suits triable by Courts of inferior grade and it merely regulates procedure and not jurisdiction. It was further held that a Court of superior grade does not act without jurisdiction in trying a suit which under Section 15 might and ought, by reason of its valuation, to have been tried by an inferior Court. A Full Bench of the High Court of Andhra Pradesh also in Kesavarapu Venkateswarlu v. Sardharala Satyanarayana AIR 1957 Andhra Pradesh 49 held that Section 15 CPC lays down a rule of procedure and not of jurisdiction of the superior Court. This Court also in Taran Jeet Kaur v. G.S. Bhatia 2009 (108) DRJ 89 has taken the same view. (L). Notice may further be taken of Section 21 of the CPC, subsection (2) whereof provides that no objection as to the competence of a Court with reference to the pecuniary limits of its jurisdiction shall be allowed by any Appellate or Revisional Court unless such objection was taken in the Court of first instance at the earliest possible opportunity, before settlement of issues and unless there has been a consequent failure of justice and which suggests that the outcome of a suit above the minimum pecuniary jurisdiction of a Court also cannot be said to be a nullity or without jurisdiction, unless there has been a “consequent failure of justice”. Supreme Court in Kiran Singh v. Chaman Paswan AIR 1954 SC 340 was concerned with a situation where the appeal was heard by the District Court instead of by the High Court. The argument, that the right of appeal was a valuable one and that deprivation of the right to have the appeal heard by the High Court constituted prejudice, was held to be based on a misconception. It was held that the right of appeal though is a substantive right and its deprivation is a serious prejudice but no prejudice had been caused because in hearing of the appeal by the District Court, the right of appeal had been enlarged, with the right of second appeal to the High Court which was otherwise not available also becoming available. It was further held that the prejudice must be something other than the appeal being heard in a different forum. It was yet further held that prejudice in Section 11 of the Suits Valuation Act, 1887 with which the Supreme Court was concerned in that case does not include errors in findings on question of fact and that prejudice on the merits must be directly attributable to valuation and an error in a finding of fact reached on a consideration of the evidence cannot possibly be said to have been caused by valuation. Mere errors in the conclusions on the point for determination were held to be not amounting to prejudice. Giving instances of prejudice, it was observed that if there is no proper hearing that had resulted in injustice or if the procedure followed in that Court is different or the right of appeal arising therefrom is different, can a case for prejudice be made out. (M). The law thus makes a distinction between a case of lack of inherent jurisdiction and a case of lack of pecuniary jurisdiction. While a decree passed by the Court lacking pecuniary jurisdiction does not automatically become void; at the most becomes voidable in the sense that it can be appealed on limited grounds, a decree passed by a Court with lack of inherent jurisdiction becomes null and void in law and its validity can be set up whenever it is sought to be enforced or relied upon, even at the stage of execution or even in collateral proceedings. xxxx xxxx xxxx”17

26. As mentioned above, during the course of hearing, the defendant did not raise any objection to jurisdiction or with regard to maintainability of the application under Order XIII-A of the CPC. In addition to the judgment in Subhashini Malik18, Mr. Mehta cited the judgment of the Supreme Court in Sneh Lata Goel vs. Pushplata & Others19, to submit that this objection should, therefore, not be entertained in review. In Sneh Lata Goel20, the Supreme Court was concerned with Section 21 of the CPC, which provides as follows:

Emphasis supplied. Supra (note 6).

Ibid. While interpreting Section 21(1) of the CPC, the Court held that an objection regarding territorial jurisdiction does not travel to the root of the matter, or to the inherent lack of jurisdiction of the civil court, and therefore, must be raised at the first opportunity. Even then, the objection may be entertained by an appellate or a revisional court only if it occasions a consequent failure of justice. The Court relied upon the earlier judgment in Kiran Singh & Others vs. Chaman Paswan & Others21, where also an objection as to valuation under Section 11 of the Suits Valuation Act, 1887, was held to be inadmissible at the appellate/revisional stage.

27. In the present case, the objection is to pecuniary jurisdiction, which is dealt with in Section 21(2) of the CPC. Section 21(2) of the CPC is pari materia with Section 21(1) thereof, and the principles laid down by the Supreme Court in Sneh Lata Goel22 would squarely apply. Although Mr. Talwar submitted that the treatment of the suit as a commercial suit is, in fact, an aspect of “subject matter jurisdiction” which can be raised at any stage, I am unable to agree. Even according to the defendant, this Court is vested with jurisdiction to hear suits of exactly the same subject matter. The defendant’s objection, therefore, does not raise any question of inherent lack of jurisdiction over the subject matter of the dispute, and ought to have been raised at the first instance. (1955) 1 SCR 117. Supra (note 19).

28. In view of the aforesaid discussion, I find that (a) the suit was properly instituted in this Court on the date filed; (b) the subject matter of the suit answered to the definition of a “Commercial Dispute” within the meaning of CC Act; and (c) the suit was, therefore, not liable to be transferred to the District Court, either under the notification dated 24.11.2015, or under the notification dated 30.01.2019. In any event, no objection as to pecuniary jurisdiction or as to jurisdiction was taken at the first opportunity, and the matter is not one which raised a question of subject matter jurisdiction. The question can, therefore, not be agitated in review. Further, it being the admitted position that the subject matter of the suit falls within the definition of “Commercial Disputes” under the CC Act, I am of the view that invocation of Order XIII-A of the CPC does not demonstrate any error on the face of the record, even if the suit had not been transferred to the Commercial Division, or renumbered as a commercial suit. Conclusion:

29. Consequently, I am of the view that there is no error apparent on the face of the record calling for review of the judgment dated 21.10.2019.

30. The review petition is, therefore, dismissed.

31. All pending applications also stand disposed of.