De Novo trial to be conducted of a plaint returned under Order VII Rule 10 and 10A of CPC

Supreme Court: Answering a reference the 3-judge bench of RF Nariman, Navin Sinha and Indira Banerjee, JJ has held that if a plaint is returned under Order VII Rule 10 and 10A of CPC, for presentation in the court in which it should have been instituted, the plaint is to be considered as a fresh plaint and the trial is to be conducted de novo.

The Court was hearing the reference by a two Judge Bench opining a perceived conflict between two Division Bench decisions in Joginder Tuli v. S.L. Bhatia, (1997) 1 SCC 502 and Oil and Natural Gas Corporation Ltd. v. Modern Construction & Co., (2014) 1 SCC 648.

Joginder Tuli verdict

“Normally, when the plaint is directed to be returned for presentation to the proper court perhaps it has to   start   from   the beginning but in this case, since the evidence was already adduced by the parties, the matter was tried accordingly. The High Court had directed to proceed from that stage at which the suit stood transferred. We find no illegality in the order passed by the High Court warranting interference.”

Modern Constructions verdict

“If the court where the suit is instituted, is of the view that it has no jurisdiction, the plaint is to be returned in view of the provisions of Order 7 Rule 10 CPC and the plaintiff can present it before the court having competent jurisdiction. In such a factual matrix, the plaintiff is entitled to exclude the period during which he prosecuted the case before the court having no jurisdiction in view of the provisions of Section 14 of the Limitation Act, and may also seek adjustment of court fee paid in that court. However, after presentation before the court of competent jurisdiction, the plaint is to be considered as a fresh plaint and the trial is to be conducted de novo even if it stood concluded before the court having no competence to try the same.”

Issue referred

If a plaint is returned under Order VII Rule 10 and 10A of CPC, for presentation in the court in which it should have been instituted, whether the suit shall proceed de novo or will it continue from the stage where it was pending before the court at the time of returning of the plaint?

Larger Bench’s answer to reference

The Court noticed that the observations in Joginder Tuli verdict are very clear that the suit has to proceed afresh before the proper court and that the directions came to be made more in the peculiar facts of the case in exercise of the discretionary jurisdiction under Article 136 of the Constitution. Further, it does not take into consideration any earlier judgments and there is no discussion of the law either. Hence, it has no precedential value as laying down any law.

The Modern Construction verdict, on the hand, was pronounced after consideration of the law and precedents requiring reconsideration in view of any conflict with Joginder Tuli Verdict and hence, lays down the correct law.

The Court also overruled the ruling in Oriental Insurance Company Ltd. v. Tejparas Associates and Exports Pvt. Ltd., (2019) 9 SCC 435, wherein it was held that in pursuance of the amendment dated 01­02­1977 by reason of insertion of Rule 10A to Order VII, it cannot be said that under all circumstances the return of a plaint for presentation before the appropriate court shall be considered as a fresh filing.

Explaining the statutory scheme, the Court noticed that the language of Order VII Rule 10-A is in marked contrast to the language of Section 24(2) and Section 25(3) of CPC. In cases dealing with transfer of proceedings from a Court having jurisdiction to another Court, the discretion vested in the Court by Sections 24(2) and 25(3) either to retry the proceedings or proceed from the point at which such proceeding was transferred or withdrawn, is in marked contrast to the scheme under Order VII Rule 10 read with Rule 10-A where no such discretion is given and the proceeding has to commence de novo.

The Court, hence, held that Oriental Insurance Co. does not lay down the correct law.

[EXL Careers v. Frankfinn Aviation Services Pvt. Ltd.,  2020 SCC OnLine SC 621 , decided on 05.08.2020]

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