Introduction:

In a recent ruling, the Delhi High Court, led by Justice Swarana Kanta Sharma, dismissed a writ petition filed by Michael Builders and Developers Pvt. Ltd. (the petitioner) against St. Alphonsa Trust (the respondent). The case involved a contractual dispute concerning the construction of a medical college in Tamil Nadu, where the petitioner sought to recover outstanding payments. The court held that the petitioner’s conduct of seeking relief in multiple jurisdictions amounted to forum shopping, a misuse of legal procedures, and dismissed the petition for lack of territorial jurisdiction.

Brief Facts of the Case:

The dispute between Michael Builders and Developers Pvt. Ltd. and St. Alphonsa Trust originated from a 2013 construction contract for a medical college in Tamil Nadu. The petitioner claimed that after completing the project, worth ₹52.13 crores, the Trust failed to pay ₹20 crores. In response, the petitioner initiated arbitration proceedings before the District Court of Nagercoil, which eventually led to a settlement agreement in 2018. Under this settlement, the Trust agreed to pay ₹15.95 crores. Despite this, the petitioner later claimed that the outstanding amount had grown to ₹26 crores due to delays and additional expenses.

Following arbitration, a consent award was issued, directing the Trust to pay the agreed sum. However, the Trust defaulted on payments, leading the petitioner to file an execution petition in the District Court of Nagercoil for the attachment of the Trust’s property. The court granted the petition and ordered the attachment in January 2024. Although the Trust made partial payments, ₹13 crores remained outstanding.

Despite the ongoing dispute, the Trust secured an Essentiality Certificate from the relevant authorities to commence a nursing and medical college on the disputed property. The petitioner, feeling aggrieved, filed a writ petition before the Delhi High Court under Article 226, seeking to revoke the permissions granted for the medical college, asserting that the Trust was in default of payment obligations.

Arguments by the Petitioner:

The petitioner, represented by Mr. Mandeep Kalra and his team, argued that the Trust’s failure to fulfill its financial obligations constituted a breach of the settlement agreement and arbitral award. They contended that despite the Trust’s non-compliance, it managed to obtain permissions for operating the medical college on the disputed property. The petitioner sought the court’s intervention to revoke these permissions, alleging that the Trust was using the property without settling its outstanding dues.

The petitioner also argued that the National Medical Commission (NMC), headquartered in Delhi, played a role in granting the Trust the necessary certifications, and, therefore, the Delhi High Court had jurisdiction to entertain the matter. According to the petitioner, the presence of NMC in Delhi was a critical factor that justified filing the petition in Delhi.

Additionally, the petitioner highlighted that the Trust’s actions in obtaining the Essentiality Certificate while still being in default demonstrated an unfair advantage, and they sought relief in the form of revocation of these permissions.

Arguments by the Respondent:

The respondents, represented by Mr. T. Singhdev, argued that the petitioner had previously approached courts in Tamil Nadu and had received favorable orders, including an arbitral award and execution orders from the District Court in Nagercoil. The respondent pointed out that the petitioner had already initiated and completed proceedings in Tamil Nadu courts and, therefore, had no grounds to approach the Delhi High Court.

The respondents further argued that the petitioner’s case was a classic example of forum shopping, where the petitioner sought to move the case from one jurisdiction to another, hoping for a more favorable outcome. The respondents maintained that all the relevant facts and causes of action arose in Tamil Nadu, and any disputes related to the property should be adjudicated there.

Moreover, they contended that the National Medical Commission’s headquarters being located in Delhi did not automatically confer jurisdiction on the Delhi High Court, as the core issues of the case pertained to events and properties in Tamil Nadu.

Court’s Judgement:

Justice Swarana Kanta Sharma delivered the judgment, dismissing the petition on the grounds of forum shopping and lack of territorial jurisdiction. The court held that the petitioner had abused the legal process by attempting to bring the matter before the Delhi High Court after already pursuing the case in Tamil Nadu courts.

The court referred to the Supreme Court’s ruling in Kusum Ingots & Alloys Ltd. v. Union of India (2004) 6 SCC 254, which explains the doctrine of forum conveniens. According to this doctrine, even if a small part of the cause of action arises within a court’s territorial jurisdiction, it does not automatically mean that the court must hear the case. Instead, the court must evaluate whether it is the most appropriate forum to handle the matter. In this case, the court held that the dispute had no substantial connection to Delhi and that Tamil Nadu was the proper forum to adjudicate the matter.

The court further stated that the mere fact that the National Medical Commission is located in Delhi did not provide sufficient grounds for invoking the jurisdiction of the Delhi High Court. The petitioner’s primary dispute was with St. Alphonsa Trust, and the Trust and its property were situated in Tamil Nadu. Additionally, the orders of the arbitral tribunal and the District Court of Nagercoil were passed in Tamil Nadu, making it the appropriate forum for the resolution of the dispute.

The court also referred to the judgment in Vemparala Srikant v. General Secretary, India Bulls Centrum Flat Owners Welfare Co-Operative Society, Hyderabad, where it was held that a petition should be filed in the jurisdiction where the foundational facts of the dispute arose. The court emphasized that allowing the case to be heard in Delhi would lead to an absurd situation where parties from far-flung areas, such as Assam or Manipur, would have to travel to Delhi for relief, violating the principles of justice and convenience.

In conclusion, the Delhi High Court found that the petitioner had engaged in forum shopping by withdrawing petitions from Tamil Nadu courts and refiling similar petitions in Delhi. The court noted that such conduct was an abuse of legal process and could not be condoned. Consequently, the court dismissed the petition for lack of territorial jurisdiction and advised the petitioner to pursue the matter in the appropriate courts in Tamil Nadu.