IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI
***
C.M.A. No.1040 of 2011
Between:
Margadarsi Chit Fund Private Limited, Hyderabad
…. Petitioner
And
1. Posam Subramanyam Reddy and Four others.
….Respondents.
Date of Order pronounced on : 15.03.2023
HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA
1. Whether Reporters of Local newspapers : Yes/No
may be allowed to see the judgments?
2.Whether the copies of judgment may be marked: Yes/No
to Law Reporters/Journals:
3.Whether the Lordship wishes to see the fair copy : Yes/No
of the Judgment?
_______________________________________
VENKATA JYOTHIRMAI PRATAPA, J
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*HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA
+ C.M.A No.1040 of 2011..
% 15.03.2023
# Margadarsi Chit Fund Private Limited, Hyderabad
…. Petitioner
And
1. Posam Subramanyam Reddy and four others.
….Respondents.
! Counsel for the Petitioner : Sri P. Durga Prasad,
Counsel for the Respondents: Sri K. Suresh Kumar Reddy.
<Gist :
>Head Note:
? Cases referred:
1) (2017) 2 ALD 360 (DB)
2) (1971) 3 SCR 314
3) (2005) 7 SCC 791.
4) Halsbury’s Laws of England, (4th Edition), Reissue,
Vol.10, Para 317,
5) AIR 1999 HP 104
6) AIR 1978 Kerala 209.
7) AIR 2002 Kant. 252.
8) 2022 SCC Online Del 633
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HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA
C.M.A.No.1040 of 2011
JUDGMENT:-
This Civil Miscellaneous Appeal is filed under Order 43 Rule 1
of the Code of Civil Procedure, 1908 (for short “C.P.C.”)
impugning the Order dated 09.08.2011 in O.S.No.603 of 2009
on the file of the learned Principal Senior Civil Judge, Tirupati,
wherein the plaint is returned to present before the proper Court
within seven (7) days from the date of the order holding that the
Court has no jurisdiction to entertain the suit.
Reference of parties in the appeal:
1. The Appellant herein was the Plaintiff and the Respondent
Nos., 1 to 5 herein were the Defendant Nos., 1 to 5 before the
trial Court. For the sake of convenience and understanding, the
parties are referred to as they were arrayed before the learned
trial Court.
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Case of the Plaintiff:
2. The case of the plaintiff in brief is that the Defendant
No.1, is a member of the chit of the Plaintiff’s company, being
highest bidder availed an amount of Rs.40,00,000/- agreeing to
forego an amount of Rs.14,00,000/- out of the chit value. As on
the date of the payment of prize amount, the Defendant No.1
paid Rs.8,00,000/-. He furnished Defendant Nos.,2 to 5 as
guarantors for the future liability of Rs.32,00,000/- and executed
an Agreement of Guarantee on 24.05.2007. All the defendants
executed promissory notes as a collateral security. Defendant
No.1 created mortgage by way of deposit of title deeds relating
to the schedule property in favour of the plaintiff’s company as a
security. Having paid 31 installments, the Defendant No.1
committed default in payment of the remaining installments.
Hence, for recovery of the amount, a suit has been filed seeking
a preliminary decree against the mortgaged property of the
Defendant No.1 and for a personal decree against all the
defendants.
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Version of the Defendant Nos. 1 to 5:
3. The Defendant Nos., 1 to 3 and 5 were set ex parte as
they did not choose to contest the matter. The Defendant No.4
filed Written Statement denying the suit transaction. He also
stated that he never executed Agreement of Guarantee in favour
of the plaintiff’s company relating to the suit debt, that the suit
property is not properly valued and the suit is barred by
limitation.
Finding of the trial Court:
4. During the trial, on behalf of the plaintiff, P.Ws. 1 to 3
were examined and Ex.A-1 to Ex.A-17 were marked. The 4th
Defendant was examined as D.W.1.
4.1. At this juncture, the learned counsel for Defendant
No.4 raised an issue that the Court has no jurisdiction to
entertain the suit since the Defendant No.1 joined as a member
of the chit company at Eluru on 06.01.2007 and the Clause 14 of
the Agreement of Guarantee/Ex.A-4 shows that any dispute
arising out of the guarantee bond shall be subjected to the
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jurisdiction of the Court at Eluru only. Furthermore, PW.1
admitted about Clause 14 of Ex.A.4 in his cross examination.
4.2. The learned trial Judge framed a preliminary issue
on the point as to whether the Court has jurisdiction to entertain
the suit. While answering the same, the learned trial Judge was
convinced with the argument of the learned counsel for the
Defendant No.4 and accordingly, returned the plaint for
presentation before the proper Court within 7 days.
4.3. After the said return, the learned counsel for the
Plaintiff represented the plaint stating that the suit is based on
mortgage and the suit property is situated within the jurisdiction
of the Court and all the Defendants are also residing within the
jurisdiction of the said Court, hence the conferment of the
jurisdiction in the Chit Agreement of Guarantee will not override
the general law i.e., the Code of Civil Procedure. The learned
trial Judge returned the said representation reiterating the stand
taken in the order impugned stating that the Order dated
09.08.2011 holds good and the plaintiff is at liberty to file
revision against the said Order.
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Grounds of appeal:
5. Feeling aggrieved and dissatisfied with the impugned
order, the plaintiff carried the matter in this appeal on the
following grounds:
i) The impugned Order is in variance to the very spirit and
object of the provisions of Section 16 (c) of the CPC.
ii) The suit is based on a mortgage and the property is
situated within the jurisdiction of the Court and
furthermore, all the defendants are residing within the
jurisdiction of the trial Court.
iii)The trial Court has every jurisdiction to entertain the suit
based on mortgage.
iv)The agreement between the parties shall always be subject
to a statute.
v)The reasons assigned by the trial Court are neither
sustainable nor tenable in the eye of law.
6. Heard both the counsel. Perused the material available on
record.
Point/s for Determination:
7. Questions emerging for determination in this appeal are:
i) Whether the trial Court at Tirupati has got
jurisdiction to entertain a mortgage suit despite when the
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parties conferred jurisdiction to the Court at Eluru, vide
Agreement of Guarantee?
ii) Whether the impugned order is sustainable under
law or does it warrant interference of this Court in the
appeal?
Arguments advanced at the bar:
8. Contentions of the Appellant/Plaintiff:
8.1. Learned counsel for the appellant in elaboration to what
was stated in the Grounds of Appeal, would primarily submit that
the suit is filed for sale of mortgage property. Second,
undoubtedly the chit transaction took place at Eluru, the
Guarantee Agreement also discloses that in case of any dispute,
the Court at Eluru only has got jurisdiction, however that cannot
preclude the court from exercising jurisdiction at Tirupati. Third,
the agreement between the parties cannot be override the
general law i.e., Section 16 (c) of CPC and the parties cannot
confer jurisdiction on Courts which do not have such jurisdiction.
8.2. Reliance was placed on the decision of the Hon’ble
Division Bench of the High Court of Andhra Pradesh in M/s
Sushee Ventures Private Limited v Rahul Agarwal and
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others1
, wherein a petition u/s. 9 of the Arbitration and
Conciliation Act, 1996 was filed in District Court at Rangareddy. In
its factual matrix, the subject matter of the petition was situated
in Medak District and the Development agreement-cum-GPA was
executed in Hyderabad. While negating the contention that the
parties are at liberty and convenience in conferring exclusive
jurisdiction upon such a Court, the Division Bench held that if the
Court does not have jurisdiction inherently to deal with the
matter, the parties cannot confer jurisdiction upon it by
agreement. At paragraph No.23, the Hon’ble Division Bench has
held as under;
“…Convenience of the parties cannot be
determinative of the jurisdiction of a Court. If
such an argument is accepted, it would be open to a
litigant to confer exclusive jurisdiction upon a Court
without reference or regard to territorial and pecuniary
jurisdiction also.”
9. Contention of the Respondent/D-4
9.1. Refuting the above arguments, the learned counsel for the
respondent submitted that as per Section 20 of the C.P.C., Eluru
Court has alone got jurisdiction. Second, once when the parties
1
(2017) 2 ALD 360 (DB)
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agreed to have exclusive jurisdiction of Eluru Court in case of any
dispute, they cannot contend that the Court at Tirupati has got
jurisdiction.
Legal Analysis and Findings:
10. In the light of rival contentions and arguments advanced,
it apt to refer the legal position and judicial precedents on the
point under consideration. Sections 15 to 25 of the C.P.C. deal
with the aspect of place of suing in respect of suits. Section 16
embodies the principle of territorial jurisdiction in respect to the
suits in the nature of clauses (a) to (f), by conferring the
jurisdiction to the court within whose local limits, the property is
situate. In specific to the context, Section 16(c) refers to the suits
for foreclosure, sale or redemption in the case of a mortgage of
or charge upon immovable property. For the sake of quick
reference, it is appurtenant to extract Section 16 (c) of C.P.C.,
which reads as follows;
“Section 16. Suits to be instituted where
subject-matter situateSubject to the pecuniary or other limitations
prescribed by any law, suits—
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(c) for foreclosure, sale, or redemption in the
case of a mortgage of or charge upon
immovable property,
…shall be instituted in the Court within the local
limits of whose jurisdiction the property is
situate:
Provided that a suit to obtain relief respecting, or
compensation for wrong to, immovable property held
by or on behalf of the defendant may, where the
relief sought can be entirely obtained through his
personal obedience, be instituted either in the Court
within the local limits of whose jurisdiction the
property is situate, or in the Court within the local
limits of whose jurisdiction the defendant actually and
voluntarily resides, or carries on business, or
personally works for gain.”
Explanation.—In this section “property” means
property situate in India.
11. Furthermore, Section 20 of the C.P.C. provides that other
suits shall be instituted where the defendants reside or the
cause of action arises. The opening words “subject to the
limitations aforesaid” as used in the Section 20 indicate the
legislative intent of covering those cases that do not fall
expressly under Sections 15 to 19 of the C.P.C. While so, the
commencing words in Section 16 “Subject to the pecuniary or
other limitations prescribed by any law, suits” would indicate
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that once a suit is governed by Section 16 (c), as in the context
of the present case, it has an overriding effect over Section 20.
12.Coming to the precedential law, the Hon’ble Apex Court
and the Hon’ble High Courts have time and again reiterated the
law relating to “Choice of Court by Contracts” or “Exclusive
Jurisdiction Clauses.” In Hakam Singh v. Gammon (India)
Ltd., 2 wherein the contract for construction work was deemed
to have been entered in Bombay and by virtue of one of its
clauses, Bombay courts were alone to adjudicate upon disputes,
a question arose before the Hon’ble Supreme Court as to
whether Bombay court “alone” had jurisdiction. While
juxtaposing the provisions of the C.P.C and the Indian Contract
Act, 1872, the Apex Court held that it is not left to the discretion
of the parties to confer jurisdiction by their agreement on a
court that does not possess the same under the C.P.C. whereas,
in a situation where the C.P.C. itself confers jurisdiction to two
or more courts, the parties are free to agree within those joints
by their agreement and such agreements would not contravene
the Section 28 of the Indian Contract Act, 1872.
2
(1971) 3 SCR 314.
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13.The principle laid down in Hakam Singh (supra) has
been reiterated time and again and in Harshad Chiman Lal
Modi v. DLF Universal Ltd. And Another, 3
the Hon’ble Apex
Court had an occasion to deal with a suit for specific
performance seeking execution and delivery i.e., a case falling
under Section 16(d). Citing Halsbury’s Laws of England,4
the
Hon’ble Apex Court observed at para 31 as follows;
“317. Consent and Waiver- Where, by reason of any
limitation imposed by statute, charter or commission, a
court is without jurisdiction to entertain any particular
claim or matter, neither the acquiescence nor the express
consent of the parties can confer jurisdiction upon the
court, nor can consent give a court jurisdiction if a
condition which goes to the jurisdiction has not been
performed or fulfilled. Where the court has jurisdiction
over the particular subject matter of the claim or the
particular parties and the only objection is whether, in the
circumstances of the case, the court ought to exercise
jurisdiction, the parties may agree to give jurisdiction in
their particular case; or a defendant by entering an
appearance without protest, or by taking steps in the
proceedings, may waive his right to object to the court
taking cognizance of the proceedings. No appearance or
answer, however, can give jurisdiction to a limited court,
nor can a private individual impose on a judge the
jurisdiction or duty to adjudicate on a matter. A statute
limiting the jurisdiction of a court may contain provisions
enabling the parties to extend the jurisdiction by consent.”
3
(2005) 7 SCC 791
4 Halsbury’s Laws of England, (4th Edition), Reissue, Vol.10, Para 317
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The Hon’ble Apex Court held that Section 20 being a
residuary provision cannot override a case that squarely fits in
the category of Section 16. While interpreting the proviso
attached to Section 16, the Hon’ble Apex Court observed that it
could come into operation only when the relief sought could be
obtained entirely by the personal obedience of the defendant.
14. The Hon’ble High Courts have also interpreted the legal
position on this subject at various instances. To cite a few;
14.1. The Hon’ble High Court of Himachal Pradesh in
Central Bank of India v Eleena Fasteners (P) Limited
and others5 was posed with a similar situation. A suit under
Order 34 of C.P.C. was filed by the plaintiff bank before the
High Court on its original side. Cash credit facility was availed
by creating equitable mortgage in respect of immovable
property situate at Jagadari at Haryana. An objection was
raised in the light of Section 16(c) of the C.P.C. The High Court
while accepting the said objection held that in view of explicit
and mandatory provisions, a suit for foreclosure or sale of such
5 AIR 1999 HP 104
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mortgage property could be instituted only before court at
Jagadari at Haryana.
14.2. The Hon’ble High Court of Kerala in Mrs. Rosy
Joseph v. Union Bank of India,
6 also dealt with a similar
question. The Bank filed a suit for recovery of money by the
sale of immovable property based on a mortgage by deposit of
title deeds. The properties mortgaged were situated at Cochin,
whereas the suit was filed at Ernakulam. In that view of the
matter, the Court held that once a suit is directly governed by
Section 16 (c) of C.P.C., the provisions contained in Section 20
of C.P.C. cannot be called for aid and it is not permissible to
institute the suit in any Court other than the one within the
local limits of whose jurisdiction the mortgaged properties are
situated.
14.3. The Hon’ble High Court of Karnataka in Shree
Shanthi Homes Pvt. Ltd. v CREF Finance Ltd., Calcutta7
was posed with a like question. The suit for foreclosure was
filed at Bangalore as the mortgaged properties are situated at
Bangalore. The Memorandum of Understanding between the
6 AIR 1978 Kerala 209
7 AIR 2002 Kant. 252
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parties conferred jurisdiction before the Court at Bombay. In
that view of the matter the High Court of Karnataka opined that
Section 16 of C.P.C. has overriding effect on Section 20. The
Hon’ble Court also observed that in case any relief is granted to
the plaintiff, it has to be eked out from the properties situated
at Bangalore.
14.4. The Hon’ble Delhi High Court in Aanchal Mittal
and others v Ankur Shukla8 held that when a court lacks
inherent jurisdiction, parties cannot by their agreement confer
the same.
15. In the backdrop of the legal position and authorities
referred to supra, the argument of the learned counsel for the
respondent falls to ground. The learned trial Judge lost sight of
Section 16 (c) of the C.P.C, which clearly indicates that the suit
relating to foreclosure, sale, redemption etc., connecting to the
mortgage of immovable property, the Court within the
jurisdiction of which the property is situated only got
jurisdiction.
82022 SCC OnLine Del 633
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16. The learned trial Judge erred in concluding that the Court
has no jurisdiction under the impression that the parties
conferred jurisdiction only to Eluru Court. The suit being a
mortgage suit, in view of the express and clear provision of
Section 16 (c), must be entertained before the Court in whose
jurisdiction the property is situated. Section 16 (c) has an
overriding effect on the residuary provision as contained in
Section 20. Coming to the facts of the present case, no doubt
the chit transaction took place at Eluru and Clause No.15 of the
Agreement of the Guarantee discloses that in case of any
dispute, the Court at Eluru only has got jurisdiction, but the fact
remains that the suit property is situated within the jurisdiction
of the Court at Tirupati.
17. Convenience and liberty of the parties cannot be
stretched to an extent of conferring jurisdiction to a court that
inherently lacks jurisdiction to adjudicate upon a matter. Any
agreement entered between the parties should confirm with the
scheme of jurisdiction as envisaged under the C.P.C. and the
choice is ought to be made, if available, within the joints as
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may be permissible by the Code. Any deviance to this settled
legal position would hit such agreements, for being violative of
Sections 23 and 28 of the Indian Contract Act, 1872 besides
being contrary to the scheme of jurisdiction under C.P.C.
18. In the light of the aforementioned premises, this Court is
of the view that the Order impugned brooks interference in
appeal.
\
19. Accordingly, the Civil Miscellaneous Appeal is allowed
with costs.
19.1. Having regard to the fact that the suit was
instituted in 2009, it is necessary that it should be given an
expeditious disposal. The learned Principal Senior Civil Judge,
Tirupati is directed to take the suit on file forthwith and
dispose of the suit within a period of three (03) months from
the date of receipt of a copy of this Order.
19.2. In case, if the plaint is returned to the plaintiff, the
plaintiff is at liberty to submit the plaint within a period of one
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(01) week from the date of receipt of a copy of this Order
before the learned Principal Senior Civil Judge, Tirupati.
Miscellaneous petitions pending, if any, shall stand closed.
VENKATA JYOTHIRMAI PRATAPA, J
Date : 15.03.2023
Note: LR copy be marked.
eha
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HON’BLE SMT. JUSTICE VENKATA JYOTHIRMAI PRATAPA
C.M.A.No.1040 of 2011
Date : 15.03.2023
eha
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