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Excel Dealcomm Pvt. Ltd. v. Asset Reconstruction Company (India) Ltd. & Ors.

Civil Appeal · Neutral citation not assigned (Civil Appeal No. 3272 of 2015)Decided 1 Apr 2015
Civil Appeal No. 3272 of 2015
Justice M.Y. Eqbal · Justice Pinaki Chandra Ghose

Background

Asset Reconstruction Company (India) Ltd. (ARCIL), which had taken over a defaulting borrower's mortgaged Maharashtra property under the SARFAESI Act, allegedly agreed in a 2007 Private Treaty Agreement to sell the property to Excel Dealcomm for Rs. 7.5 crore, but ARCIL's board did not approve the deal and it fell through. Excel sued ARCIL in the Calcutta High Court for specific performance, seeking a court-ordered sale certificate for the property. A single judge allowed the suit to proceed in Calcutta, but a Division Bench of the same High Court reversed that, holding the agreement wasn't a concluded contract and the suit could not continue there. Excel appealed to the Supreme Court.

Decision Breakdown

The Supreme Court held that although Excel's prayer did not explicitly ask for "possession," the relief it sought, a sale certificate under the SARFAESI Rules, inherently requires handing over possession of the property, making this legally a "suit for land" under Clause 12 of the Calcutta High Court's Letters Patent. Since the property was located in Maharashtra, Calcutta's jurisdiction over a suit for land was excluded. The Court also held that the parties' agreement contained a clause giving exclusive jurisdiction to the courts of Mumbai, which further ousted Calcutta's jurisdiction and need not be read narrowly. On these two findings, the Court held the Calcutta High Court correctly declined jurisdiction and dismissed Excel's appeal, leaving Excel free to pursue its claim in the proper forum (Mumbai).

Lesson Learnt

A lawsuit seeking a remedy that necessarily involves transferring possession of property (even if "possession" isn't stated outright in the prayer) is treated as a "suit for land" that must be filed where the property is located, and a jurisdiction clause in a contract naming a specific city's courts will generally be enforced as the parties' clear intention, overriding a plaintiff's choice of a different, more convenient court.

Official source (sci.gov.in)View Judgment (PDF)

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