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Issues: (i) Whether the suit could be maintained in Delhi on the basis of territorial jurisdiction under Section 20(c) of the Code of Civil Procedure, 1908. (ii) Whether the suit was barred by the jurisdictional scheme under the Insolvency and Bankruptcy Code, 2016 in view of the pending corporate insolvency resolution process.
Issue (i): Whether the suit could be maintained in Delhi on the basis of territorial jurisdiction under Section 20(c) of the Code of Civil Procedure, 1908.
Analysis: Territorial jurisdiction depends on where the cause of action, wholly or in part, arose. The impugned assignment deed was executed outside Delhi and had no real nexus with Delhi merely because the plaintiff came to know of it when it was filed before the appellate insolvency forum. Knowledge of a document, without more, does not create a part of the cause of action. The settlement agreement relied upon by the plaintiff had already been considered in insolvency proceedings and could not be used to anchor Delhi jurisdiction for a separate challenge to the assignment deed.
Conclusion: The objection to territorial jurisdiction was upheld against the plaintiff.
Issue (ii): Whether the suit was barred by the jurisdictional scheme under the Insolvency and Bankruptcy Code, 2016 in view of the pending corporate insolvency resolution process.
Analysis: Once the corporate debtor was in corporate insolvency resolution process, questions relating to claims, rights arising out of the debt, and matters connected with the insolvency process fell within the domain of the Adjudicating Authority under the Insolvency and Bankruptcy Code, 2016. Sections 63 and 231 bar civil court jurisdiction in respect of matters where the Adjudicating Authority or the Appellate Authority has jurisdiction, and Section 60 vests wide authority in the National Company Law Tribunal over questions of law and fact arising out of or in relation to insolvency resolution proceedings. The reliefs sought in the suit were in substance connected with the insolvency dispute and could not be tried by a civil court.
Conclusion: The suit was held to be barred by the Insolvency and Bankruptcy Code, 2016.
Final Conclusion: The plaint was returned as the civil court lacked jurisdiction to entertain the suit, leaving the plaintiff to pursue remedies before the competent forum.
Ratio Decidendi: A civil suit challenging an assignment connected with an ongoing insolvency resolution process is not maintainable where no part of the cause of action arises within the forum's territory and the dispute falls within the exclusive jurisdictional domain of the insolvency adjudicatory mechanism.
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