Commercial Courts Act, 2015 — S.13(1-A) — Appeal against interlocutory order — Maintainability
Appeal against order granting interim injunction under Order XXXIX Rules 1 & 2 CPC in a commercial suit — Maintainable under S.13(1-A) of Commercial Courts Act.
[Para 1]
Civil Procedure Code, 1908 — Order XXXIX Rules 1 & 2 — Interim injunction — Jurisdiction — Foundational error
Interim injunction granted by Commercial Court founded on prima facie assumption of territorial jurisdiction — Where court lacks jurisdiction, interim orders unsustainable — Injunction liable to be set aside.
[Paras 9–10, 12]
Contract — Exclusive jurisdiction clause — Effect — Courts having jurisdiction
Where more than one court has jurisdiction, parties may validly agree to confer exclusive jurisdiction on one of such courts — Such clause neither hit by Ss.23 nor 28 of Contract Act — Courts other than chosen forum excluded.
[Paras 7–8]
Contract — Construction of expressions “arising out of” / “in connection with”
Expressions “arising out of” and “in connection with” to be construed in widest amplitude — If adjudication requires recourse to contract terms, dispute covered by such expressions — Claims directly and inextricably connected with contract fall within scope.
[Paras 4–6]
Commercial disputes — Debenture Trust Deed — Exclusive jurisdiction
Suit seeking declarations and injunctions relating to rights, securities, assignments and obligations under Debenture Trust Deed — Adjudication necessarily requires examination of Debenture Trust Deed — Dispute “arises out of or in connection with” DTD — Exclusive jurisdiction clause applies.
[Paras 5–7]
Territorial jurisdiction — Part cause of action — Effect of exclusive jurisdiction clause
Even if part of cause of action arises within territorial jurisdiction of another court, exclusive jurisdiction clause conferring jurisdiction on a competent court prevails — Other courts excluded.
[Paras 7–9]
Non-signatory parties — Claiming through signatory — Bound by jurisdiction clause
Defendant knowing and claiming rights through party to Debenture Trust Deed — Cannot escape exclusive jurisdiction clause merely because not formal signatory — Jurisdiction objection upheld.
[Para 8]
Return of plaint — Consequence of lack of jurisdiction
Where court lacks territorial jurisdiction in view of exclusive jurisdiction clause — Proper course is return of plaint — Interim orders cannot survive.
[Paras 9–10]
ANALYSIS OF LAW AND FACTS
1. Nature of Proceedings
The appeal was filed under Section 13(1-A) of the Commercial Courts Act, 2015 challenging an order of the Commercial Court, Bengaluru granting interim injunction in a commercial suit concerning debentures and securities governed by a Debenture Trust Deed (DTD).
[Paras 1–2]
2. Core Issue
Whether the Commercial Court at Bengaluru had territorial jurisdiction to entertain the suit and grant interim relief, despite an exclusive jurisdiction clause in the Debenture Trust Deed conferring jurisdiction on courts at Mumbai.
[Paras 3, 7, 9]
3. Jurisdiction Clause in the Debenture Trust Deed
Clause 72 of the DTD expressly provided that courts and tribunals at Mumbai shall have exclusive jurisdiction in respect of disputes arising out of or in connection with the debenture documents.
[Para 3]
4. Interpretation of “Arising out of” / “In connection with”
Relying extensively on Renusagar Power Co. Ltd. v. General Electric Co. and allied precedents, the Court reiterated that:
the expressions must receive widest construction, and
the test is whether recourse to the contract is necessary to decide the dispute.
[Paras 4–6]
5. Nature of Reliefs Claimed
The reliefs sought included declarations regarding validity of assignment deeds, discharge of securities, and injunctions restraining exercise of rights under the DTD. The Court held that all such reliefs necessarily required examination of the DTD.
[Paras 5–6]
6. Effect of Part Cause of Action at Bengaluru
Although the Commercial Court held that part of cause of action arose in Bengaluru (receipt of communications, issuance of debentures), the Division Bench held that:
Mumbai courts were also competent, and
once parties chose Mumbai courts exclusively, jurisdiction of all other courts stood excluded.
[Paras 7–9]
7. Non-signatory Defendant
The finding of the Commercial Court that defendant No.3 was not a party to the DTD was rejected. The High Court held that defendant No.3 was claiming rights through a party to the DTD and could not assert independent jurisdiction.
[Para 8]
8. Validity of Interim Orders
Since the assumption of jurisdiction by the Commercial Court was prima facie erroneous, all interim orders founded on such assumption were held to be unsustainable.
[Paras 9–10]
9. Consequential Relief
On instructions, the plaintiffs sought liberty to move for return of plaint. The Division Bench allowed the appeal, set aside the interim order, and left all issues on merits open.
[Paras 9–12]
Ratio Decidendi
Where a commercial contract contains a valid exclusive jurisdiction clause, and adjudication of the suit requires recourse to the contract, the dispute arises out of or in connection with the contract, thereby excluding jurisdiction of all other courts—even if part of the cause of action arises elsewhere. Any interim orders passed by a court lacking such jurisdiction are unsustainable.
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