Interim relief must await ruling on limitation issue

By Kanika Sharma, Bharucha & Partners
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In a recent judgment, Bombay High Court has, after a thorough interpretation of section 9A of the Code of Civil Procedure, 1908, (inserted by the Maharashtra Amendment Act, 1977), held that a party would be entitled to raise a preliminary issue of jurisdiction under section 9A of the code on the ground that a suit is barred by limitation, notwithstanding that the entire suit is not barred by the law of limitation.

In 2008, a suit was filed by Nusli Neville Wadia (NNW) against Ferani Hotels and others, seeking a declaration that a development agreement entered into between NNW and Ferani stood validly terminated.

A single judge disposed of a notice of motion for interim relief in the suit in 2010, refusing to grant any such relief. The judge further ordered that the preliminary issue of limitation raised by Ferani under section 9A be framed after disposal of the notice of motion.

Cross appeals were preferred by Ferani and NNW against the order.

Arguments

Ferani contended that the suit filed by NNW was ex facie barred by limitation and the single judge erred in refusing to frame a preliminary issue of limitation before disposing of the notice of motion. Reliance was placed on the decisions in Royal Palms and Mukund Ltd, which mandate that once raised, a preliminary issue ought to be framed under section 9A before the notice of motion can be decided.

Kanika Sharma Bharucha & Partners
Kanika Sharma
Bharucha & Partners

NNW argued that the entire suit was not barred by limitation as part of the suit was within the period of limitation. NNW further stated that an objection under section 9A must be capable of disposing of the entirety of the suit if it is upheld. Therefore, the section 9A objection could not be sustained in the case.

NNW also stressed that a defendant could misuse section 9A by deliberately raising frivolous objections to avoid the consequences of a suit. It was therefore urged that section 9A did not oust the authority of the court to consider whether the objection to jurisdiction is justified.

Ruling of the court

After a thorough analysis of the genesis and development of section 9A, the court held that the provisions of section 9A were mandatory. It was stated that once raised, preliminary issues of jurisdiction had to be framed by the court before hearing any application for interim relief. Such an objection could not be adjourned to the hearing of the suit.

However, the court stated that the possibility of abuse of section 9A by unscrupulous defendants made it necessary to allow the trial judge “a modicum of discretion” in dealing with an application to raise a preliminary issue under section 9A. It was therefore held that it would be within the jurisdiction of the trial judge to consider whether the objection to jurisdiction was bona fide or frivolous. The court however cautioned that such enquiry should be minimal, since a comprehensive adjudication would effectively defeat the provisions of section 9A.

Dealing NNW’s second argument – that section 9A must be capable of disposing of the entirety of the suit, if upheld – the court stated that such a restriction was not contained in the plain terms of section 9A. It was held that the object of the legislature was to preclude a plaintiff from obtaining interlocutory relief on the basis of a claim which falls outside the jurisdiction of the court. Such a rationale, it was held, would apply even to situations where a part of the cause of action is outside the jurisdiction, though the rest falls within.

Consequences

This judgment has been hailed for its cogent interpretation of section 9A, which has reiterated that the provisions of section 9A, being mandatory, cannot be rendered otiose on frivolous grounds.

At the same time, the court has ruled out the possibility of a defendant misusing the provisions of section 9A by holding that the trial judge ought to conduct a “minimal enquiry” to ensure that the objection is bona fide.

A special leave petition against this decision has been preferred by NNW to the Supreme Court.

News alert

The original jurisdiction of Bombay High Court been saved. Under the Bombay City Civil Court (Amendment) Act, 2012, the high court has retained its original jurisdiction in respect of suits which exceed ₹10 million (US$180,000).

With effect from 1 September, suits not exceeding ₹10 million in value are to be lodged with Bombay City Civil Court. Further, all suits not exceeding ₹10 million in value and pending with Bombay High Court as of 30 September will be transferred to the city civil court.

This, however, does not apply to admiralty, testamentary, Parsi and intellectual property rights suits.

Kanika Sharma is an integral part of the litigation team at Bharucha & Partners.

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