M/s. Acme Papers Ltd. vs. M/s. Chintaman Developers Pvt. Ltd. [Supreme Court, March 22, 2024]
Background
M/s. Acme Papers Ltd. and M/s. Chintaman Developers Pvt. Ltd. entered into a Memorandum of Understanding (MoU) on November 10, 2022, for the sale of approximately 74.06 acres of land (“suit property”) in Sehore, Madhya Pradesh, for a consideration of ₹20,69,92,000. As per the MoU, Acme Papers Ltd. was to obtain all necessary approvals and No Objection Certificates (NOCs) for the transfer. In case of delay, the MoU could be treated as cancelled, allowing the seller to deal with the property otherwise.
When Acme Papers Ltd. failed to secure the required approvals, Chintaman Developers Pvt. Ltd. filed a suit for specific performance of the MoU in Sehore, Madhya Pradesh. Subsequently, Acme Papers Ltd. filed a suit in Calcutta seeking a declaration that the MoU stood terminated and was unenforceable. Both parties filed transfer petitions before the Supreme Court, seeking to transfer the other’s suit to their preferred jurisdiction.
Legal Issues
Whether the suit for specific performance concerning immovable property should be tried at the place where the property is situated or where the MoU was executed.
Applicability of Sections 16 and 20 of the Code of Civil Procedure, 1908 (CPC) regarding jurisdiction in suits involving immovable property.
Supreme Court’s Analysis
The Supreme Court, comprising Justices Sudhanshu Dhulia and Prasanna B. Varale, held that Section 16 of the CPC is clear: suits relating to rights or interests in immovable property must be instituted in the court within whose jurisdiction the property is situated. Section 20 CPC, which allows suits to be filed where the defendant resides or the cause of action arises, is a residuary provision and only applies when Sections 15 to 19 do not.
The Court noted that the property in question was located in Sehore, Madhya Pradesh, and all relevant records and documents were maintained there. The fact that the MoU was executed in Calcutta did not override the statutory mandate of Section 16 CPC. The Court also observed that the suit in Sehore was filed first, and the subsequent suit in Calcutta was essentially an attempt to preempt the ongoing proceedings.
Judgment
The Supreme Court dismissed Acme Papers Ltd.’s transfer petition and allowed the transfer petition filed by Chintaman Developers Pvt. Ltd. As a result, the suit pending in Calcutta was transferred to the Principal Judge, Sehore, Madhya Pradesh. The Court emphasized that jurisdiction in disputes over immovable property is determined by the location of the property, not the place of execution of the contract.
Significance
This judgment reinforces the principle that disputes concerning rights in immovable property must be adjudicated by courts within the local limits where the property is situated, ensuring clarity and consistency in jurisdictional matters under the CPC.
Citation:
M/s. Acme Papers Ltd. vs. M/s. Chintaman Developers Pvt. Ltd. & Ors., Supreme Court of India, Neutral Citation: 2024 INSC 248, Judgment dated March 22, 2024.
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