The Delhi High Court has held that it can execute a decree arising from a commercial suit even if the amount sought to be recovered is below its ₹2 crore pecuniary jurisdiction threshold, provided the original suit was within its jurisdiction [Ozone SPA Vs Co-incept]
Justice Subramonium Prasad held that a court does not lose its jurisdiction to execute a decree merely because the decretal amount falls below its pecuniary threshold.
"The contention that alteration in pecuniary limit of the court which passed the decree would also take away the power of such Court to execute the said decree cannot be accepted," the Court observed.
The ruling came in an execution petition filed by Ozone Spa Private Limited against Co-Incept Hospitality Private Limited and others, seeking enforcement of a ₹1.19 crore decree passed in July 2018.
The dispute arose from a franchise agreement executed in December 2013, under which Co-Incept Hospitality was permitted to operate a gym, spa and salon under the Ozone brand at Rajouri Garden in Delhi.
Following disputes over royalty payments, Ozone Spa filed a commercial suit seeking recovery of ₹2.53 crore and a permanent injunction.
The parties subsequently entered into a settlement agreement in July 2018, based on which the High Court passed a consent decree.
Ozone Spa later alleged that the judgment debtors breached the settlement by failing to issue post-dated cheques, defaulting on royalty payments and closing the outlet without notice.
One of the judgment debtors challenged the maintainability of the execution petition, arguing that the ₹1.19 crore sought to be recovered was below the ₹2 crore threshold applicable to the High Court's Commercial Division.
The High Court rejected the objection. It relied on Sections 37 and 38 of the Code of Civil Procedure (CPC), which permit a decree to be executed by the court that passed it or by another court to which it is transferred.
The Court also referred to earlier Delhi High Court decisions holding that changes in pecuniary jurisdiction do not automatically deprive a court of its power to execute decrees already passed by it.
The Court further clarified that Sections 37 and 38 of the CPC apply to decrees passed under the Commercial Courts Act.
"This Court has the jurisdiction to entertain Suits which are above Rs.2 crores and only this Court can execute a decree in a Suit which was filed in this Court for a value more than Rs.2 crores but the decretal amount is less than Rs.2 crores," the Court held.
Accordingly, it rejected the challenge to maintainability and listed the execution petition before the roster bench on October 14.
Advocate Rajesh Mahindru represented Ozone Spa.
Advocates Amit George, Sanjela Gupta, Kunal Kher, Rupam Jha and Manju Gautam represented judgment debtors.
[Read Judgment]