Case analysis on Harshad Chiman Lal Modi v. DLF Universal Ltd.

*1
- Shelal Lodhi Rajput

FORUM SUPREME COURT OF INDIA (SC)

CASE NAME HARSHAD CHIMAN LAL MODI V. DLF UNIVERSAL LTD. (2005) 7 SCC 791

DECIDED ON September 26, 2005

STATUTES &  Civil Procedure Code, 1908 (Section 16 (d), 17-19 and 20) (Rule 32
PROVISION Order XXI)
 Indian Contract Act,1872 (Section 28)

APPELLANTS HARSHAD CHIMAN LAL MODI

RESPONDENT DLF UNIVERSAL LTD. AND ANOTHER

PRIME RULE SECTION 16 (D) OF CODE OF CIVIL PROCEDURE, 1908

APPLIED SECTION 28 OF INDIAN CONTRACT ACT, 1872

CORAM ARIJIT PASAYAT AND C.K. THAKKER, JJ.

* 2nd Year Student BBA LL. B, Symbiosis Law School, Pune.

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FACTS OF THE CASE

I. The appellant (Harshad Chiman) entered into a “plot buyer agreement” with respondent (DLF) for
purchase of a residential plot that was situated in Gurgaon, Haryana.
II. The agreement was entered between Harshad Chiman and DLF in Delhi. The agreement was in
the Standard Form Contract. The head office of respondent was situated in Delhi. Payment was to
be made in Delhi for the entered agreement. According to the aforesaid agreement it was
specifically provided under Clause 28 that the transaction would be subject to the jurisdiction of
Delhi High Court.
III. The appellant made the payments to respondent as per the schedule of agreement and in the said
manner that was prescribed in agreement. Every instalment was made by appellant to respondent
despite all this, the agreement was unilaterally and illegally canceled by the respondent on different
grounds.
IV. To resolve this dispute the original suit was filed in Court of Delhi by appellant for the following
reliefs:
 Declaration
 Specific Performance of the agreement
 For possession of Property
 For permanent injunction.
Defendant contended against the appellant by filing an application to amend the written statement
by contending on the jurisdiction of the Delhi Court to hear the present suit under Order 6 Rule 17
of Code of Civil Procedure. Th Court accepted the said contention of defendant on the grounds that
suit was for recovery of immovable property and the property was situated in Gurgaon, as per
Section 16 of CPC this court has no jurisdiction to entertain the case at hand.
V. Aggrieved by the said order of Delhi Court appellant filed a revision petition in Delhi High Court
which was also dismissed by the court and held the decision of Delhi Court as valid and directed
the appellant to bring the matter in the proper court that have jurisdiction to entertain the suit and
the same was transferred to District court of Delhi.
VI. Aggrieved by the order of High Court appellant filed a special leave against the said order in the
Supreme court of India. The present case was tabled by Apex court to resolve the aforesaid
question on matter of jurisdiction and prayer that is pleaded by appellant.

QUICK FACTS: TIMELINE

Dispute Arose between Appellant and Respondent on

land that is situated in Gurgaon

Suit filed by appellant in Delhi court and the court

dismissed the suit on the ground that it has no jurisdiction
to entertain the suit.

Appellant filed a civil revision petition in Delhi High

Court and that was also dismissed by High Court.

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 Now the case is tabled before Supreme court by special
leave against the aforesaid orders of courts.

II. ISSUE INVOLVED

I. Whether the Delhi Civil Court has jurisdiction to try and entertain the present suit?
The principal issues in this case was about the jurisdiction of civil court of Delhi, in other words the question
was that in which court a suit for claimed reliefs(prayer) relating to immovable property that was situated in
Gurgaon can be entertained. The appeal was filed in apex court against the order of Delhi Civil Court and
Delhi High Court.
II. Whether an Agreement conferring the jurisdiction on court can be valid.
The other important issue that is hidden behind the main issue and that can be a game changer watertight
key for the decision of principal issue is about the agreement that conferring the jurisdiction (as per Section
28 of Indian Contract Act) on Delhi court as per clause 28 of the said agreement between appellant and
respondent can it be held valid and if it is valid then consequentially the decisions of Delhi Civil Court and
Delhi High Court would be held as inappropriate and automatically the principal issue would resolve

HELD (JUDGEMENT)
I. Apex court answered the issue on the same lines as it was answered by the Delhi High Court. Supreme
Court held that the Delhi Civil Court has no jurisdiction to entertain and try the present suit due to the settled
position of law under Section 16 of Code of Civil Procedure. The Supreme Court dismissed the appeal filed
by appellant since the dispute is related to the immovable property and the relief claimed by appellant was
for specific performance of an agreement and recovery of that immovable property. Supreme court held
that there is no case made out by appellant against the order passed by trial court and confirmed by the
Delhi High Court, therefore this appeal is dismissed.
II. Apex court answered this issue by referring to the landmark case of Hakam Singh v. Gammon (India)
Ltd. Supreme court in the present issue held that the agreement cannot confer a jurisdiction to a court who
is incompetent to entertain and try a suit. Supreme court refer to various cases for answering this issue as
in the case of Bahrein Petroleum Co. where the court held that neither consent nor waiver nor acquiescence
can confer jurisdiction upon a court, otherwise incompetent to try the suit. (Para 32 Page 804 (2005) 7 SCC
) Supreme court held that the agreement cannot confer the jurisdiction to Delhi court as it is incompetent to
entertain the suit as the immovable property was situated outside the territorial jurisdiction of Delhi Court.

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 III. RULES (LAWS INVOLVED)
The rules that are involved in the instant case is dynamic in nature and hon’ble Supreme Court takes into
consideration the Code of Civil Procedure, 1908 and Indian Contract Act, 1872. The grundnorm for this
case and the main reasoning lies for the decision of hon’ble supreme court comes from the rule applied
from CPC i.e. Section 16. The other rules that were applied in the instant case is Section 15 to 19 of CPC
along with Section 20, 21, 09 and Section 33 to just clarify the issue of jurisdiction and nature of decree
that comes out from court that don’t have jurisdiction to entertain the matter.
Apart from CPC the rule that was applied in the instant case is Indian Contract Act 1872, Section 28 of
the Act was applied to answer the issue aforesaid with the relevant case laws.

Code of Civil Procedure, 1908: Section 16, Proviso thereto,

Section 15 to 19 and Section 20

Indian Contract Act, 1872: Section 28

Case laws: Hakam Singh v. Gammon (India) Ltd., Bahrein

Petroleum Co., Kiran Singh v. Chaman Paswan (1995) and
New Mofussil Co. Ltd. v. Sgankelal Narayndas Mundade

IV. ANALYSIS (APPLICATION)

The case at hand is related to dispute of an immovable property that is a residential plot situated in Gurgaon,
Haryana. The issue is about the jurisdiction of Delhi Civil court to entertain the instant case and the appeal
for same was tabled before the hon’ble Supreme Court. The Supreme court answered the question by
upholding the contention of Respondent that the matter is under the ambit of Section 16 of CPC. The key
issue arose from clause 28 of the plot buyer agreement that was entered by appellant and respondent,
as this clause confers the jurisdiction to Delhi Court but the immovable property was situated at Gurgaon
so there is dispute regarding the jurisdiction to entertain the suit in a court for specific performances.
Hon’ble SC uphold the orders of the lower courts and dismissed the appeal on the ground of Section 16.
While dismissing the appeal the Supreme Court have its ratio Dcedendi that evolves mainly from Section
16 of CPC. The court said that it is a well-established and settled principle in the cases of immovable
property that is recognised by Sec 16 which states that when the actions against res or property should be
brought in the forum where that particular property is situated. A court in whose territorial jurisdiction that
particular property is situated that is cause of action of any suit, only that court has jurisdiction to entertain
and try the suit related to that res. A court has no jurisdiction over a dispute in which it cannot give an
effective judgement.
While discussing this law the court also takes exception into consideration and the exception to this is
proviso to Section 16, the proviso is based on the principle of “equity acts in personam”. The proviso
states that there is not an iota of doubt that thought court cannot grant a relief in rem in case where property
is situated outside of the jurisdiction of that court but still it can entertain the suit where relief sought can be
obtained through personal obedience of defendant. 2 In the present case the proviso has no application as
the relief sought by the appellant is for the specific performance and the matter is under the ambit of Section

2
Para 16.

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16(d)3 particularly. SC reiterated the well settled principle in the instant case and stated that since the
property (Immovable) was situated in Gurgaon, the Delhi court has no jurisdiction in the matter as per
Section 16 (d) of CPC. The court further explained the types of jurisdiction to bring more clarity as in the
present case the pecuniary as well as territorial jurisdiction is in issue but the former one comes only on
later stage so court didn’t take it into consideration. Court cleared some notions that was in grey in the
instant case about the jurisdictional issues and what effect does a decree have that is passed by court that
has no jurisdiction. A decree passed by court having no jurisdiction is of no effect and its decision amounts
to nothing.
Speaking judge C.K. Thakker J. Noted an interesting point in his judgement that it is not in dispute by and
between the parties that the property is situate in Haryana but the dispute is on a pertinent question that is
in which court a suit for specific performance of agreement relating to immovable property would lie? And
that was answered by them as aforementioned, further the position is discussed in consonance with the
Section 15 to 20 where they particularly focus on issue of Section 20 as this section is a residuary section
and deals with the case that is not in the purview of Section 15 to 19 but here the court is satisfied with the
ground that matter is under the ambit of Section 16(d) of CPC as the relief sought by the appellant is for
specific performance of agreement respecting immovable property to execute sale deed and to deliver
possession to him. Further court has given reference of some case laws while applying Section 16 to
present case.
Negating the contention of learned counsel on the issue of agreement that states, only Delhi court(s) has
jurisdiction in this matter. Court said that parties can confer jurisdiction to only court which have literal
jurisdiction in matter and exclusion of another court’s jurisdiction is possible in the case where two courts
have jurisdiction on same issue. Such agreement is valid, legal and enforceable as per Section 28 of Indian
Contract Act. In this case the agreement is void, illegal and unenforceable as it is conferring jurisdiction on
a court that is not having jurisdiction to entertain the present suit. To clear the reasoning and stand Supreme
Court referred to Halsbury’s Laws of England (Vol 10, para 317) to different case laws on the issue of
jurisdiction and the legality of agreement that confer jurisdiction to court.
Finally, Supreme court from the aforesaid reasoning and due to precedents held that Delhi Civil Court has
no jurisdiction and there was no case has been made out by the appellant against the order passed by trial
court and confirmed by high court, therefore this appeal is accordingly dismissed and appellant was
directed to present the suit in a competent court for the specific performances. The case is classic example
of judicial minds as how they are reading between the lines, the case on primae facie is straight one but
the contention raised by the learned counsels is something that puts judicial mind to ponder upon
unchartered territories.

V.CONCLUSION & PERSONAL OPINION

The case was of civil discourse in nature and the agreement for conferring jurisdiction is itself fundamentally
wrong due to the subject matter of the agreement i.e. immovable property. The suit is pertinent to the
enforcement of the claims by appellant in a competent court in the literal sense and not as per the
agreement that holds no good as it was conferring a jurisdiction on an incompetent court in that matter.
Some key aspects that were involved and primae facie may confuse us is regarding the jurisdictional issue
under Section 20, the same contention was put forth by the learned counsel for appellant but court clarified
the issue and didn’t take that argument in consideration while deciding the issue of jurisdiction. The case
is of great reverence for the issues related to jurisdiction of immovable property.
The ratio Dcedendi in the matter while dismissing appeal was particularly Section 16 of CPC and the already
laid precedents in different case laws especially for explaining the illegality of clause 28 of plot buyer
agreement. Court referred to Kiran Singh v. Chaman Paswan (1955) , New Mofussil Co. Ltd v. Shankerlal
Narayndas Mundade and to some other cases also. The obiter dicta or the observations that is of utmost
importance in the case at hand is listed below:
 The agreement is a standard form of contract
 The instant case is related to specific performance of a contract and possession of immovable
property.

3
“16. Suits to be instituted where subject matter situate- Subject to the pecuniary or other limitations prescribed by any law, suits-
(d) for the determination of any other right to or interest in immovable property,
shall be instituted in the court within the local limits of whose jurisdiction the property is situate:……….”

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  Agreement and other procedures related to it was commenced in Delhi but the property was
situated in Gurgaon, Haryana.
 The issue raised up in Delhi court as per the clause 28 of agreement as respondent illegally and
unilaterally cancelled the plot buyer agreement.
 Court has observed the illegality of clause 28 of agreement that confers jurisdiction on courts of
Delhi
 The court has observed that since the property is not in Delhi so the Delhi court has no jurisdiction,
this observance is too clear and a straightforward literal application of Section 16
 Court observed that no reliance can be placed on section 28 of Indian Contract Act as well as to
the Section 20 of CPC
 The court straight forwardly rejected the applicability of Rule 32 of Order XXI of CPC which relates
to execution as there is no such decree is passed in the case at hand in accordance with law since
the matter itself is of dispute of jurisdiction on the very first issue.
 A well-established principle of Section 16 was just reiterated by Supreme court in the present case
as it was lying under the purview of that principle with the help of illustration and various case laws.

The case helps us to understand not only the core concepts of CPC but it also nexus with Law of Contract
and also an iota of touch to Specific Relief Act. The case presented us a complete understanding of
Jurisdiction of courts in civil matter as all the sections are discussed at length, also here the case presented
us a new dimension of legal thinking on the issue of contract laws as in accordance with Section 28. In
CPC court uniquely explained the proviso to Section 16 as how it is an exception and can’t be fit in present
case. In all and all the case comes with great reverence and it brings us to believe in lower judiciary also
as the same things said by Supreme court and dismissed the petition.

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