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2021 (9) TMI 1475 - HC - Indian LawsSeeking rejection of the plaint under Order VII Rule 11 of the Code of Civil Procedure, 1908 - It is submitted by the appellant that the relevant suit was filed before the Commercial Division in this High Court came to be established and, upon the Commercial Division being established, the suit was transferred from the ordinary Original Side to the Commercial Division in accordance with the said Act. HELD THAT - It is possible that the source of the power is provided in a particular statute but the exercise thereof is under the general procedure in accordance with the Code. Again, the power to pass the order may be traced to the mandate in a particular statute though the manner of exercise of that power may not be stipulated in such statute. At any rate, even Order XLIII Rule 1 of the Code indicates the nature of the order which is appellable in certain cases and, in other cases, the order made in exercise of an authority conferred by the Code itself. The difference between the wording of, for example, subrules (a), (c) and (d) of Order XLIII Rule 1 of the Code, on the one hand, and sub-rules (f), (q), (r) and (s) of Order XLIII Rule 1 of the Code, on the other hand, is telling. While every order passed under the relevant provisions indicated in sub-rules (f), (q), (r) and (s) of Order XLIII Rule 1 of the Code is appellable, only those of a particular kind as indicated in sub-rules (a), (c) and (d) of Order XLIII Rule 1 of the Code are appellable. The obvious inference that is to be drawn is that it is the nature of the order that determines whether it would be appellable or not. There is no doubt, as the plaintiff suggests, that the trial court completely failed to construe the nature of the suit that the plaintiff herein instituted before the Bombay High Court. It is also evident that the trial court misread Section 35 of the Act of 2013 in holding that a suit under such provision should be filed against the company AND every other individual whom the plaintiff claims to be responsible for the reports made in the prospectus. The finding in such regard is clearly exceptionable. On a plain reading of the provision, it is apparent that the liability of the company and the several other persons indicated in Section 35(1) of the Act of 2013 are joint and several - the fact that DHFL was not a party to this suit was of little consequence and the trial court erred in founding its opinion on such flawed and irrelevant consideration. Since insolvency proceedings had been commenced against DHFL by the time the suit was instituted, DHFL could not have been impleaded as a party by virtue of Section 14 of the Code of 2016 and the punishment attracted under Section 74(2) thereof for violation of such provision. The perception by the trial court that it would be convenient for the two suits to be tried together betrays the failure to appreciate the nature of the two actions. The Bombay suit was filed under Order XXXVII of the Code as a summary action founded on the contract between the plaintiff and DHFL qua the repayment of the amount invested by way of debentures. It is trite law that a claim in damages founded on the fraudulent conduct of the defendant or defendants can scarcely be instituted under Order XXXVII of the Code. There is an averment in the plaint to the effect that the quantum of damages that may be realised in course of the present action may be adjusted against any realisation pertaining to the debentures made by the plaintiff elsewhere. That, in essence, is a legal requirement, or else, the doctrine of unjust enrichment would apply. It does not appear that the nature of the plaintiff's claim in the present action may have been fully comprehended by the trial court. The plaintiff had made a substantial investment in debentures which the plaintiff later discovered that the plaintiff may have been induced into making on the basis of the false statements and dishonest representations contained in the prospectus relating to such issue. As a consequence, the plaintiff initiated an action for recovery of the money from the concerned company itself and, subsequently, instituted the present suit for the loss and damage that the plaintiff suffered as a result of the perceived fraudulent and dishonest representations of the defendants herein. Surely, if the entire amount due to the plaintiff under the contract with DHFL was recovered by the plaintiff in the Bombay suit, the plaintiff would not be entitled to any penny in the present suit, notwithstanding the fraudulent conduct of the defendants, since the plaintiff would have recovered its investment and would not have suffered any loss or damage as a result. The principle of comity of courts may not have been a relevant consideration since the natures of the two actions were completely different. There could also be no doubt that some of the defendants were within the jurisdiction of this court at the time of the institution of this suit and Clause 12 of the Letters Patent makes no distinction as to whether the place where the defendant carries on business has any nexus with the transaction which is subject-matter of the suit - On the basis of the averments made in the plaint, it cannot be said that no part of the plaintiff's cause of action had arisen within the jurisdiction of this court. Though Section 19 of the Code may not be applied to this court since the entirety of the jurisdiction of this court to receive a suit is found in Clause 12 of the Letters Patent, the place where the loss is suffered may be a part of the cause of action. For a company, as the plaintiff herein, the loss is ultimately suffered at the registered office which is within jurisdiction. The judgment and order impugned dated April 29, 2021 cannot be sustained.
Issues Involved:
1. Scope of appeals under the Commercial Courts Act, 2015. 2. Maintainability of appeals against specific orders. 3. Applicability of the Commercial Courts Act to suits filed before its establishment. 4. Interpretation of "judgment or order" in Section 13 of the Act. 5. Jurisdiction and forum non conveniens in commercial disputes. Detailed Analysis: 1. Scope of Appeals under the Commercial Courts Act, 2015: The judgment extensively discusses the extent to which appeals are permitted under the Commercial Courts Act, 2015. The court highlights that the Act aims to expedite the resolution of commercial disputes and attract foreign investments by reforming the judicial process. The appeal provision in Section 13 was scrutinized, noting that it was intended to restrict the scope of appeals to ensure speedy resolution. The court acknowledges the confusion caused by the wording of the appeal provisions and emphasizes the need for a precise and unambiguous interpretation to avoid unnecessary delays. 2. Maintainability of Appeals Against Specific Orders: The court analyzed the maintainability of various appeals under Section 13 of the Act. It was determined that appeals against orders returning the plaint (Order XLIII Rule 1(a) of the Code) and injunction orders (Order XLIII Rule 1(r) of the Code) are maintainable. However, appeals against orders refusing to reject the plaint under Order VII Rule 11 or refusing to strike off a defendant under Order I Rule 10 are not maintainable. The court emphasized that the appeal provision in the Act restricts appeals to specific orders enumerated in Order XLIII of the Code and Section 37 of the Arbitration and Conciliation Act, 1996. 3. Applicability of the Commercial Courts Act to Suits Filed Before Its Establishment: The court addressed the issue of whether the appeal provision in the Act applies to suits filed before the establishment of the Commercial Division. It was held that the right of appeal is substantive and inheres at the time of commencement of the lis. Therefore, suits filed before the establishment of the Commercial Division would be governed by the rights that subsisted prior to its establishment. The court cited the judgment in Rubinetterie Bresciane Bonomi Spa, which followed the principle recognized in Colonial Sugar Refining Co. Ltd and other cases. 4. Interpretation of "Judgment or Order" in Section 13 of the Act: The court interpreted the expression "judgment or order" in Section 13 of the Act. It was held that the word "judgment" should not be interpreted in the context of Clause 15 of the Letters Patent, which applies to intra-court appeals in Chartered High Courts. Instead, the expression should be understood in the context of the Act, which aims to restrict the scope of appeals. The court concluded that the proviso to Section 13(1) and (1A) implies that no appeal would lie from any order other than those enumerated in Order XLIII of the Code and Section 37 of the Arbitration and Conciliation Act, 1996. 5. Jurisdiction and Forum Non Conveniens in Commercial Disputes: The court examined the issue of jurisdiction and forum non conveniens in commercial disputes. It was held that the plaintiff, as dominus litis, has the right to choose the forum, and the choice should be respected unless an overwhelming case of inconvenience is made out. The court found that the trial court erred in returning the plaint for it to be filed in another court based on vague and general grounds of inconvenience. The court emphasized that the principle of comity of courts and the plaintiff's choice of forum should be given due consideration. Conclusion: The court dismissed several appeals as not maintainable, including those against orders refusing to reject the plaint and refusing to strike off a defendant. Appeals against orders returning the plaint and injunction orders were found to be maintainable. The court set aside the judgment and order that returned the plaint in one of the suits, allowing the plaintiff to pursue the action in the chosen forum. The court also modified the duration of the injunction in another case and emphasized the need for a precise and unambiguous interpretation of the appeal provisions in the Commercial Courts Act, 2015.
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