The Gujarat High Court (Ahmedabad Bench) has held that a defendant who fails to raise an objection to territorial jurisdiction at the earliest opportunity at first instance, and at or before settlement of issues, is precluded from raising it for the first time at the appellate stage under Section 21(1) of the Code of Civil Procedure. The Court explained that the Code of Civil Procedure draws a clear distinction between inherent lack of jurisdiction, which renders a decree void, and lack of territorial or pecuniary jurisdiction, which renders a decree only voidable and challengeable in appeal only if the conditions of Section 21 are satisfied.
Moving ahead, the Court emphasised that a mere change of forum is not ‘prejudice’ within the meaning of Section 21 of the Code, and the prejudice contemplated must be something other than the suit being heard in a different forum, and the burden lies on the objector to demonstrate actual failure of justice on the merits. A jurisdiction clause confined to disputes arising out of the ‘interpretation or implementation’ of the contract does not cover a suit for recovery of money advanced under that contract, and Section 20(c) of the Code permits filing where the cause of action, wholly or in part, arises.
A Single Judge Bench of Justice J. C. Doshi observed that under Section 21(1) of the Code of Civil Procedure, an objection as to the place of suing shall not be allowed by any appellate or revisional court unless such objection was taken in the court of first instance at the earliest possible opportunity, and in all cases where issues are settled, at or before such settlement, and unless there has been a consequent failure of justice. The Court drew a settled distinction between an inherent lack of jurisdiction, which may render a decree void, and an objection to territorial or pecuniary jurisdiction, which does not automatically render a decree void but is at best voidable, challengeable in appeal only if the conditions of Section 21 are satisfied.
Referring to Sneh Lata Goel v. Pushplata [(2019) 3 SCC 594], the Bench held that an objection to territorial jurisdiction does not travel to the root of or to the inherent lack of jurisdiction of a civil court to entertain the suit, and that the policy of the legislature has been to treat objections to territorial and pecuniary jurisdiction as technical and not open to consideration by an appellate court unless there has been prejudice on the merits. The Court further held that a mere change of forum is not ‘prejudice’ within the meaning of Section 21 of the Code, and that the prejudice contemplated must be something other than the appeal or suit being heard in a different forum. The Court further followed Vasudev Dhanjibhai Modi v. Rajabhai Abdul Rehman [1970 1 SCC 670], to hold that an executing court cannot go behind the decree, and that an objection to territorial jurisdiction cannot be raised in execution proceedings.
On the merits of Clause 18, the Court held that the present suit being one for recovery of money advanced by the plaintiff to the defendant is not a dispute of the kind covered by Clause 18, which speaks of disputes arising out of interpretation or implementation of the contract, and that under Section 20(c) of the Code, since the amount was paid by the plaintiff to the defendant at Porbandar, the Civil Court at Porbandar also had jurisdiction to try and decide the suit.
Briefly, the proprietor of Maruti Enterprise, a film distributor operating from Dhoraji and Porbandar, filed a civil suit for recovery of Rs. 10 lakhs against Shivani Films, a partnership firm represented by its partner Mr. Jitubhai K. Shah, in connection with a film distribution contract dated 25th March 2003, for the release of the Hindi feature film ‘Ek Hindustani’ in the Saurashtra region. Pursuant to the contract, the plaintiff paid Rs. 10 lakhs in advance to the defendant in four instalments of Rs. 2.50 lakhs each, for which receipts were issued. Despite repeated requests, the defendant did not hand over the film reels, and on 9th February 2006, the defendant met the plaintiff at Dreamland Cinema office, Porbandar, and informed him that the film would not be given to him.
The plaintiff thereupon claimed the return of the advance, which led to a confrontation between the parties, a criminal complaint, and ultimately the filing of the civil suit for recovery with interest at 18% per annum. The defendant initially failed to appear, had its right to file a written statement closed, and later restored it, filing the written statement. In the written statement, the defendant raised, among other things, a general objection that the Civil Court at Porbandar had no territorial jurisdiction to entertain the suit. The plaintiff led documentary and oral evidence at trial, while the defendant led no evidence. The Principal Senior Civil Judge, Porbandar, partly decreed the suit, directing the defendant to pay Rs. 10 lakhs together with running interest at 6% from the date of filing till realization.
