Supreme Court clarifies procedure for revoking leave to file a suit: Isha Distribution House Pvt. Ltd. vs. Aditya Birla Nuvo Ltd. (2019)

Introduction

Date of the Judgment: 07 March 2019

Citation: (2019) INSC 207

Judges: Abhay Manohar Sapre, J. and Dinesh Maheshwari, J.

When can a court revoke the permission it granted to file a civil suit? The Supreme Court of India recently addressed this procedural question, specifically focusing on the appropriate stage for challenging a court’s territorial jurisdiction. This case revolves around whether a challenge to a court’s jurisdiction should be made through an application to revoke leave or as part of the written statement in a civil suit. The judgment was delivered by a two-judge bench of Justices Abhay Manohar Sapre and Dinesh Maheshwari, with Justice Sapre authoring the opinion.

Case Background

Isha Distribution House Pvt. Ltd. (the appellant), filed a civil suit against Aditya Birla Nuvo Ltd. & Anr. (the respondents) in the High Court at Calcutta. The suit sought a declaration that the termination of two agreements, dated 11 July 2007 and 21 May 2008, by the respondents was wrongful. The appellant also sought damages and an injunction. The appellant had obtained leave from the court to file the suit as required under Clause 12 of the Letters Patent Act, 1865.

The respondents challenged the suit by filing an application seeking revocation of the leave granted to the appellant. They argued that the cause of action arose in Bangalore, not within the territorial jurisdiction of the Calcutta High Court. The Single Judge of the High Court revoked the leave, which was upheld by the Division Bench. The appellant then appealed to the Supreme Court.

Timeline:

Course of Proceedings

The appellant filed a civil suit in the High Court at Calcutta and was granted leave to proceed under Clause 12 of the Letters Patent Act, 1865 by the Single Judge on 18 March 2016. The respondents then filed an application seeking revocation of this leave, arguing that the Calcutta High Court lacked territorial jurisdiction. The Single Judge allowed the respondents’ application and revoked the leave on 28 July 2016. The appellant appealed to the Division Bench of the High Court, which dismissed the appeal, upholding the Single Judge’s decision. The appellant then filed a Special Leave Petition in the Supreme Court.

Legal Framework

The case revolves around Clause 12 of the Letters Patent Act, 1865, which governs the jurisdiction of the High Court in civil suits. This clause requires a plaintiff to obtain leave from the court to file a suit if the cause of action arises outside the court’s territorial jurisdiction. The core issue is not about the merits of the case but about the procedure for challenging the court’s jurisdiction after leave has been granted. The Supreme Court also considered the provisions of Order 14 of the Code of Civil Procedure, 1908, which deals with the framing of issues in a suit.

Clause 12 of the Letters Patent Act, 1865 states:

“…the High Court in the exercise of its ordinary original civil jurisdiction shall be empowered to receive, try, and determine suits of every description, if, in the case of suits for land or other immovable property, such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or in case the leave of the court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court…”

Arguments

Appellant’s Submissions:

• The appellant argued that the High Court should not have entertained the application for revocation of leave.
• They contended that the issue of territorial jurisdiction should have been raised by the respondents in their written statement and decided as a preliminary issue.
• The appellant relied on the principle that complex questions of jurisdiction should not be decided through an application for revocation of leave but should be part of the substantive defense.

Respondents’ Submissions:

• The respondents argued that since no part of the cause of action arose within the territorial jurisdiction of the Calcutta High Court, the leave granted should be revoked.
• They contended that the suit was not maintainable in the Calcutta High Court due to lack of territorial jurisdiction.

The appellant argued that the issue of jurisdiction is a mixed question of law and fact and must be decided after the filing of the written statement by the respondent. The respondents argued that the court should not allow the suit to continue when it is clear that the court has no territorial jurisdiction.

Issues Framed by the Supreme Court

The Supreme Court framed the following issue for consideration:

1. Whether the High Court (Single Judge and Division Bench) was justified in allowing the respondents’ (defendants’) application and thereby was justified in revoking the leave granted to the appellant (plaintiff) by order dated 18.03.2016.

Treatment of the Issue by the Court

Authorities

The Supreme Court relied on the following authorities:

• Secretary of State vs. Golabrai Paliram (AIR 1932 Calcutta 146) – High Court at Calcutta: The court cited this case to emphasize that questions of difficulty and importance should not be dealt with by an application to revoke leave under Clause 12 of the Letters Patent Act, 1865.
• Indian Mineral & Chemicals Co. & Ors. vs. Deutsche Bank [(2004) 12 SCC 376] – Supreme Court of India: This case was cited to affirm the principle laid down in Secretary of State vs. Golabrai Paliram, stating that the proper way to plead to the jurisdiction of the court is to take the plea in the written statement.
• Order 14 of the Code of Civil Procedure, 1908: This order deals with the framing of issues in a suit, which the court stated should be followed to decide the issue of jurisdiction.

Judgment

What weighed in the mind of the Court?

The Supreme Court was primarily concerned with the correct procedure for addressing the issue of territorial jurisdiction. The Court emphasized that jurisdictional issues are often a mix of law and fact and should be addressed through a proper trial after the filing of a written statement. The Court was also influenced by the precedent set in Secretary of State vs. Golabrai Paliram, which was affirmed in Indian Mineral & Chemicals Co. & Ors. vs. Deutsche Bank. The court’s reasoning focused on ensuring that all parties have a fair opportunity to present their case, and that complex issues are not decided prematurely.

The Supreme Court emphasized that “Normally it is well settled that the proper way to plead to the jurisdiction of the court is to take the plea in the written statement and as a substantive part of the defence. Except in the clearest cases that should be the course.”

The Court further stated, “In our opinion, a plea of territorial jurisdiction is essentially a mixed question of law and fact.”

The Court also observed, “An issue of such nature, in our view, cannot be tried by filing an application for revocation of leave.”

Key Takeaways

• Challenges to a court’s territorial jurisdiction should generally be made through a written statement, not through an application for revocation of leave.
• The court should not entertain an application for revocation of leave unless the lack of jurisdiction is clear.
• The issue of territorial jurisdiction is a mixed question of law and fact and should be decided after the filing of a written statement.
• This judgment reinforces the importance of adhering to established legal procedures.
• The Supreme Court has clarified that the issue of territorial jurisdiction should be raised as a substantive part of the defense and not through an application for revocation of leave.

Directions

The Supreme Court set aside the orders of the Single Judge and the Division Bench of the High Court. The Court dismissed the respondents’ application for revocation of leave and granted them liberty to file their written statement. The case was remanded to the Single Judge of the High Court, who was directed to frame appropriate issues and decide the case on its merits.

Development of Law

The ratio decidendi of this case is that the issue of territorial jurisdiction, unless it is a very clear case, should be raised in the written statement and not through an application for revocation of leave. This judgment reaffirms the legal principle established in Secretary of State vs. Golabrai Paliram and affirmed by the Supreme Court in Indian Mineral & Chemicals Co. & Ors. vs. Deutsche Bank. There is no change in the previous position of law, but a reaffirmation of the correct procedure to be followed.

Conclusion

The Supreme Court allowed the appeals, setting aside the impugned orders of the Calcutta High Court. The Court held that the issue of territorial jurisdiction should be raised in the written statement and not through an application for revocation of leave. The case was remanded to the Single Judge for fresh consideration in accordance with the directions given by the Supreme Court.