The Supreme Court has said that suits for the determination of any right to or interest in an immovable property would be instituted in the court within the local limits of whose jurisdiction the property is situated.

A bench of Justices Sudhanshu Dhulia and Prasanna B Varale dismissed a transfer petition filed by M/s Acme Papers Ltd on the basis of a contention that since the memorandum of understanding related to the purchase of land was signed in Kolkata, a suit filed related to property in Sehore in Madhya Pradesh should be transferred to Kolkata.

In the case, M/s Acme Papers Ltd entered into an MoU with M/s Chintaman Developers Pvt Ltd & Ors in 2022 to purchase 74.06 acres of land at Sehore for over Rs 20.69 crore.

Since the company could not obtain the necessary approvals required for selling of suit property, respondents filed a suit for specific performance of the MoU, which the petitioner now seeks to transfer to Kolkata where they have already filed a suit for declaration that the MoU stands terminated and is incapable of being acted upon. Both parties filed transfer petitions in the apex court.

The counsel for the petitioner submitted that the MoU was executed in Kolkata and the suit filed by them goes to the root of the matter, i.e., validity and enforceability of the MoU. The company contended that the respondent’s suit for specific performance would only arise if the agreement is valid so the reliefs sought by it are required to be decided first and cannot be raised as an issue before the district judge, Sehore, as it is already an issue raised by them in their suit.

The counsel for the respondent, on the contrary, submitted that the question of the existence of the MoU or the location where it was entered into has no nexus with the choice of jurisdiction. Whereas, the existence of the MoU and its specific performance are intrinsically connected and relate directly to the suit property, located in Sehore, Madhya Pradesh. Further, it was also contended that the petitioner has filed other suits in Sehore and is also appearing in a matter before the Debt Recovery Tribunal, Jabalpur, Madhya Pradesh in connection with the suit property.

The court, however, said the petitioner’s reliance on the cause of action arising in Kolkata due to the MoU being executed over there is completely erroneous in view of section 20, CPC, which provides that a suit can be initiated where the defendant resides or cause of action arises is a residuary provision only applicable to cases beyond those in Section 15 to 19, CPC. Thus, the section has no application in this case as when the subject matter of the MoU is the suit property located at Sehore.

It also pointed out that section 16, CPC, inter alia provides that suits for the determination of any other right to or interest in immovable property should be instituted in the court within the local limits of whose jurisdiction the property is situated.

The bench also noted the suit filed at Sehore, Madhya Pradesh was earlier in time. The respondent no 1 filed its suit on May 12, 2023 at Sehore and the petitioner filed its vakalatnama therein on June 28, 2023. Thereafter, on July 20, 2023 the petitioner filed its suit in Kolkata and two days later the petitioner filed its written statement in Sehore.

The court also said, section 10, CPC, inter alia mandates that no court shall proceed with the trial of any suit in which the matter in issue is also directly and substantially in issue between the parties, litigating under the same title, where such suit is pending in the same or any other court in India having jurisdiction to grant the relief claimed. It has been incorporated to avoid multiplicity of proceedings on issues which are directly and substantially in issue in the previously filed suit, it added.

Among others, the bench pointed out, since the suit property is located in Sehore, all property records and government documents would be present in the vicinity, including most witnesses. The court also noted as per the counter affidavit that the suit property is mortgaged to Bank of Baroda, through its Bhopal branch and an auction has taken place on the strength of which the Bank, as well as the auction purchasers, have been impleaded in the suit filed at Sehore.

The court, therefore, transferred the suit pending at the City Civil Court in Kolkata to the court of Principal Judge, Sehore.

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