[Advocate's Diary] Essentials of a Civil Suit: Jurisdiction, cause of action and res judicata

Advocate's Diary is a project aimed at addressing the dearth of literature on court practice and litigation advocacy. To this end, we aim to create a repository of columns on the essentials of court practice – ranging from civil suits to criminal trials, from ADR procedures to enforcement of decrees and judgments, and more.

The guest columns in the series aim to develop a conversation channel with seasoned practitioners, senior advocates, arbitrators and judges.

India's courts are characterised by a deluge of cases and a lack of timely judicial appointments. The ground situation illustrates the need to demarcate the jurisdiction of courts according to territory, monetary value of claims and subject-matter of the dispute.

When it comes to adjudication, two distinct problems arise. First, depending on where the court is situated, it will cause grave inconvenience and prejudice to litigants located far away from the court in raising their claims and filing suits in time. Second, given the court’s overloaded mandate, it will have to make judgment calls in prioritising some disputes over others. And in this exercise, it will be making value-laden assessments that will directly clash with the judiciary’s role of dispensing justice fairly and equally.

Jurisdiction, therefore, is a concept that is premised on ensuring efficiency and expedition of dispute resolution. By demarcating courts on the basis of geography, monetary value and subject matter, the civil justice system can prioritise its fundamental goals of equity-based justice and finality of adjudication. Equally, it prevents unscrupulous litigants from raising meritless claims, by providing for such suits to be dismissed on the ground of lack of jurisdiction itself.

Institution of a suit and jurisdiction - relevant provisions of the CPC

Section 9 of the Code of Civil Procedure (CPC) is the provision that demarcates the jurisdiction of courts for adjudicating civil disputes. It empowers courts to adjudicate all civil suits, with two qualifying criteria. Firstly, the suit must be of a civil nature. In effect, this qualifier restricts the court to adjudicate rights belonging to an individual or an entity’s interest over property, under contract, or in law generally, that arise out of a civil relationship. However, is some crimiinal cases, the jurisdiction of the court under Section 9 is not completely barred, if there is a dispute of a civil nature within the broader criminal action claims.

The second qualifier is in respect of suits for which the court is either explicitly or implicitly barred from taking cognizance. This qualifier arises in situations where specific statutes or rules provide for tribunals or quasi-judicial bodies under the said statute/rules to adjudicate claims, and expressly exclude the jurisdiction of civil courts. An implicit exclusion would arise in situations where a particular relief or performance can only be claimed/enforced in a specified manner, and the jurisdiction of a court exercising ordinary civil jurisdiction would be barred in such instances.

The hierarchy of civil courts is enshrined in Section 15 of the CPC, which states that every civil suit shall be instituted in the court of the lowest grade competent to try the same. The civil justice system hierarchy is usually established through state legislation. For instance, in Karnataka, the Karnataka Civil Courts Act, 1964 lays down the class and establishment of civil judges in the State, their territorial and pecuniary jurisdiction, and the powers of district judges to hear appeals from the decisions of civil judges. In Delhi, the Delhi District Courts Establishment (Appointment & Conditions of Service) Rules, 2012 provides for the hierarchy chart.

Under the broader umbrella of Section 9, the CPC provides for suits to be delineated based on subject-matter, territory and pecuniary limits. Under the CPC, subject-matter jurisdiction flows from Section 9, and is more specifically described within Section 16. In Section 16, interestingly, subject matter and territorial jurisdiction amalgamate to an extent, since the Section grants jurisdiction to the court having jurisdiction over the local limits of the area where the property is located, over suits for recovery of immovable and movable property, partition, foreclosure etc. It further provides that where the relief can be obtained through the defendant’s personal obedience, the suit can also be instituted in a jurisdiction where the defendant resides or carries on business.

Therefore, in respect of immovable property, jurisdiction is usually vested in a court which is located and exercises jurisdiction over the local limits of where the disputed property is located. Section 18 further provides that where the local limits of where the property is located are uncertain, the court which is seized of the matter can record the said uncertainty and proceed to entertain and dispose of the suit. Section 18 illustrates the legislature’s goal of attaining finality in proceedings under the CPC, and in providing quietus to a dispute instead of allowing a jurisdictional obstacle from becoming a permanent roadblock to a party seeking justice.

Where multiple courts can exercise jurisdiction over a civil suit – which often is the case for suits involving money recovery, partition suits etc – the choice of institution of the suit is left to the plaintiff, who is the dominus litis (master of the case). The doctrine of dominus litis is premised on the principle that the plaintiff of the suit is the party who benefits from a favourable order, and suffers the consequences of an adverse order equally (including the expenses arising out of it). As a result, in a case where multiple courts have jurisdiction, the plaintiff makes the choice to institute the case in a particular court, which is also recognised in section 19 of the CPC.

Before we delve into the concept of cause of action, and how different courts exercise jurisdiction based on where the cause of action arose, we will end this section of the column by covering the area of pecuniary jurisdiction. Section 6 of the CPC further recognises the priority of State legislation in this regard by stating that nothing in the Code shall grant jurisdiction to courts over claims which exceed its pecuniary jurisdiction. It also gets a nod in Section 16 of the CPC, which qualifies subject-matter jurisdiction under the Section with the court’s pecuniary limits to adjudicate such suits. While the right to value a claim is the prerogative of the plaintiff, the Supreme Court in Tara Devi v. Thakur Radha Krishna Maharaj has held that such a right is not absolute, and the valuation of the suit should not be absolute or arbitrary to deny a court jurisdiction which it validly has under the CPC.

Courts of small causes are also established in different states for suits which have a low monetary value. For instance, under the Karnataka Small Cause Courts Act ,1964, the pecuniary limit for a court of small causes in Bangalore is ₹2 lakh, whereas it is ₹1 lakh for other areas in the State. In Delhi, under the Provincial Small Cause Courts (Delhi Amendment) Act, 1995, the pecuniary limit for a court of small causes under Section 15 is ₹5,000.

Cause of action and res judicata

Section 20 CPC introduces the concept of cause of action. A cause of action in respect of a suit is essentially its raison d’etre – the factual circumstances which led to the dispute arising between the parties. Section 20(c) provides jurisdiction to the court which is located in the local limits of where the cause of action, “wholly or in part”, arises. The phrase “wholly or in part” is an important qualifier. The Supreme Court, in South East Asia Shipping v. Nav Bharat Enterprises, has held that cause of action is essentially a bundle of facts which led to the genesis of the dispute, and to the plaintiff obtaining a right in law to approach the court for legal redress. The cause of action, therefore, necessarily includes an act of the defendant, in the absence of which the suit itself could not possibly exist. Mentioning the cause of action in pleadings is also a non-derogable prerequisite under the CPC, with Order II Rule 2 and Order VII Rule 1.

A cause of action can, by its very nature, arise in different places. More so, it can arise as a result of the actions of multiple parties. In such situations, Section 20(a) and (b) follows from the doctrine of dominus litis and allows for courts in the jurisdiction of the place where any of the defendants either resides, carries on business or works for gain to adjudicate such suits. However, a defendant is also empowered to seek transfer of such a suit to a separate court (which also exercises jurisdiction as per section 20) after it receives notice and before the settlement of issues.

As can be seen from the provisions and powers of the court described above, the CPC is premised on ensuring that the civil justice system does not cause prejudice to either party in instituting or defending against valid and determinable civil claims. And in this endeavour, the recognition of the principle of res judicata under Section 11 of the CPC becomes key. While Section 21 of the CPC allows for parties to raise jurisdictional objections which are to be decided by the court of first instance at the earliest possible opportunity, res judicata is attracted in a situation when a party, which has raised and contested the same claims in a previous suit – and has lost – raises such claims against the same parties in a different suit. Res judicata prevents litigants from reagitating lost claims in law, and preventing re-adjudication of disputes to which the appropriate jurisdictional court has already applied its mind to, and decided the claims finally.

The Supreme Court in Isher Singh v. Sarwan Singh held that once the requirements under Section 11 of the CPC are met, and it can be assessed that the matter in both suits was directly and substantially the same based on a reading of the pleadings, issues and the court’s final judgment, the bar under Section 11 would squarely apply.

Changes brought by the Commercial Courts Act 2015

After the introduction of the Commercial Courts Act in 2015, a number of important changes have taken place in the institution of civil suits under the CPC. For instance, in terms of subject-matter jurisdiction, the Commercial Courts Act defines ‘commercial disputes’ in Section 2(1)(c) of the Act, over which commercial courts exercise exclusive jurisdiction. Section 2(1)(c) covers a broad range of disputes, ranging from ordinary transactions between merchants and bankers to franchising and partnership agreements, and over any other dispute which is notified by the Central government.

The Act also specifies the pecuniary jurisdiction for commercial courts, which is set at a minimum value of ₹3 lakh under Section 2(2)(i) – which defines the term ‘specified value’ of a commercial dispute – and Section 3(1). The Act provides for determination of the ‘specified value’ under Section 12, to ensure the fair and accurate valuation of the commercial suit’s value.

Lastly, depending on whether the High Court of the State where the Act is being applied exercises ordinary original civil jurisdiction, the Commercial Courts Act has established separate hierarchical commercial court systems. Such courts, like the Delhi High Court, have a Commercial Division and a Commercial Appellate Division.

For High Courts that do not exercise such jurisdiction (such as Karnataka), the Commercial Courts are set up at the civil/district judge level, with the district court and High Court having Commercial Appellate Divisions.

Tanvi Dubey is an independent practitioner at the Supreme Court of India, with a diverse practice ranging from civil, commercial and constitutional disputes to service matters before the Supreme Court and other fora in Delhi.

Sumit Chatterjee is a civil and commercial dispute resolution lawyer at Arista Chambers, practicing before the Karnataka High Court, trial courts and a wide array of tribunals in Bangalore.