The Delhi High Court has asserted that a simple recovery of salary or terminal benefits by an employee from a private employer does not fall within the categories of “merchants, bankers, financiers and traders” or other specified commercial transactions.
The legal principle upon which the assertion is based is that when a Commercial Court finds that it lacks jurisdiction over a matter because the dispute is not a “commercial dispute” as defined by the Commercial Courts Act, 2015, the court is mandated by Order VII Rule 10 of the CPC to return the plaint for presentation to the proper court.
Dismissing the suit in such a circumstance is a procedural error, as a lack of jurisdiction over the subject matter is a question of forum, not a substantive failure of the cause of action, added the Court.
The Division Bench comprising Justice Anil Kshetarpal and Justice Amit Mahajan clarified the distinction between “dismissal of a suit” and “return of a plaint”, and explained that a dismissal is a final adjudication on the merits or on a legal bar (like res judicata). Whereas, a return of a plaint under Order VII Rule 10 of the CPC is a procedural mechanism for when a court determines it is not the correct forum.
The Bench acknowledged the Supreme Court’s ruling in EXL Careers v. Franklin Aviation Services [(2020) 12 SCC 667], which mandates that de novo (new) proceedings must occur upon the return of a plaint. However, taking a pragmatic view and with the consent of the parties’ counsel, the Bench suggested that the competent court could utilise the pleadings and evidence already produced, since a full trial with cross-examination had already been conducted.
Accordingly, the Bench restored the suit filed by the Appellant to its original position, and directed the Commercial Court to return the plaint to the Appellant as per Order VII Rule 10A of the CPC, providing a date for the parties to appear before the appropriate court of competent jurisdiction.
With the consent of the parties, the competent court may utilise the pleadings and evidence already on record from the Commercial Court proceedings to avoid a full de novo trial, concluded the Bench.
Briefly, Appellant was an employee of Gannon Dunkerley and Co. Ltd. (Respondent) for over 27 years, having joined as a Junior Engineer on 31.08.1992 and rising to the position of Deputy General Manager (Civil). On 06.02.2020, the Respondent summarily terminated the Appellant’s employment while he was on sanctioned leave for his son’s wedding. Following the termination, the Appellant claimed a total outstanding amount of Rs. 4.10 Lakh from the Respondent. This amount comprised dues for salary in lieu of notice, encashment of earned leave, pending travel expenses, and a laptop security deposit.
After the Respondent failed to settle the dues despite legal notices, the Appellant filed a recovery suit before the Commercial Court, which dismissed the suit, holding that the dispute, being a service-related matter, did not qualify as a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015.
Appearances:
Advocate Rajeev Kumar Rai, for the Appellant
Advocates Vaibhav Tyagi and Kartikeya Misra, for the Respondent
