Order 8

Order Details: COPY OF ORDER
Pdf Text: IN THE COURT OF SAKSHI SEJWAL, DISTRICT JUDGE 05,
NEW DELHI DISTRICT, PATIALA HOUSE COURTS,
NEW DELHI
CNR NO.: DLND01-002446-2025
CS 158/25
SUNNY BUDHIRAJA Vs. M/S STAN
PROFESSIONALS PVT LIMITED
25.09.2026
ORDER ON APPLICATION U/O VII RULE 10 CPC
The Defendant has filed a composite application under Order VII
Rule 10 and Order VII Rule 11 CPC seeking return of the plaint
and rejection of the plaint, respectively.
The court, through this order, will dispose off the application
under Order VII Rule 10 of the Code of Civil Procedure, 1908
(“CPC”) filed by the Defendant raising the issue of (lack of)
territorial jurisdiction of this court to entertain the present suit.
Application – Grounds
1. As regards the application under Order VII Rule 10 CPC,
the Defendant argues that this court lacks territorial
jurisdiction owing to the jurisdiction clause contained in the
appointment letter of the Plaintiff as per which employment
related disputes are to be adjudicated (purportedly)
exclusively by the courts at Mohali.
2. It is further his case that the Plaintiff attended meetings with
the Defendant in Mohali, on various occasions.
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3. Thus, the courts in Mohali have the jurisdiction to entertain
the present matter.
Reply – Grounds
4. In its reply, specifically to the grounds taken in the
application under Order VII Rule 10 CPC, the Plaintiff has
submitted that the terms of the appointment letter including,
the jurisdiction clause are a matter of record.
5. The Plaintiff further argues that the exclusive jurisdiction
clause is not applicable to the present suit as: (a) suit of the
Plaintiff cannot be solely considered to be a dispute in terms
of the employment contract; and (b) the suit has been
instituted by the Plaintiff after his resignation from the
Defendant company and therefore, as on date, no employee-
employer relationship subsists between the parties.
Arguments – Parties
6. Defendant sought to rely upon the judgement of the Hon’ble
Supreme Court of India in
Rakesh Kumar Verma versus
HDFC Bank Limited1 in support of its arguments and
contentions, whilst the Plaintiff sought to rely upon the
judgement of the Hon’ble High Court of Delhi in
Vishal
Gupta versus L&T Finance Limited2 however,
acknowledging that the same has been overruled by the
subsequent judgement of the Hon’ble Supreme Court of
1 2025 INSC 473
2 2009, SCC OnLine Delhi 2806
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India in
Rakesh Kumar Verma versus HDFC Bank Limited
(supra).
Legal Position
7. Prior to adverting to the merits of the present application, it
would be apposite to lay down certain fundamental legal
principles governing Order VII Rule 10 CPC and Section 20
CPC (as are relevant for the purposes of deciding the
present application).
Order VII Rule 10 CPC
(a) At the time of deciding the issue of territorial
jurisdiction (or lack of it) / an application under Order
VII Rule 10 CPC, the court is only required to consider
the plaint and the attendant documents.
(b) The court will decide the issue of territorial jurisdiction
at the threshold stage by assuming the averments in the
plaint to be correct.
(c) Defence, if any, cannot be considered at this stage.
Section 20 CPC
(d) In case of a company, plaintiff can file the suit either
where the defendant company carries on business, or
where the cause of action (wholly or in part) arises.
(e) In order to ascertain the place of business of the
defendant company, the following deeming fiction as
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contained in the Explanation to Section 20 CPC and as
legally interpreted by the Hon’ble Supreme Court of
India in
Patel Roadways Limited, Bombay versus
Prasad Trading Company3, has to be applied:
(i)
if it has a sole office – then such sole office will
be deemed to be the place from where it is said
to carry on its business;
(ii)
if it has a principal office and subordinate
office(s) but the cause of action has not arisen at
any of the subordinate office(s) - then such
principal office will be deemed to be the place
from where it is said to carry on its business;
(iii)
if it has a principal office and subordinate
office(s) but the cause of action has arisen at a
subordinate office - then such subordinate office
will be deemed to be the place from where it is
said to carry on its business (and not the
principal office); and
(iv) It has been held in
Patel Roadways Limited,
Bombay versus Prasad Trading Company
(supra) in paragraph 8 of the judgement that
“
8. ……………………….Thus the
Explanation provides an alternative locus for
3 (1991) 4 SCC 270
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the corporation's place of busi- ness, not an
additional one.”
8. Since the present application under Order VII Rule 10 CPC
hinges upon the so called ‘exclusive jurisdiction clause’
contained in the appointment letter of the Plaintiff, it would
also be apposite to discuss the law / settled legal principles
as regards legality / validity of exclusive jurisdiction clauses
particularly, in respect of a contract of employment.
(a) Exclusive jurisdiction clauses whereby parties
contractually agree to agitate / litigate their disputes
before the court of a particular jurisdiction, are not per
se invalid / unenforceable.
(b) However, by way of an exclusive jurisdiction clause,
the parties cannot by way of contract, confer
jurisdiction upon a court which lacks it as the same
would be violative of Section 23 of the Indian Contract
Act, 1872. Similarly, the parties cannot by way of
contract, foreclose the right of a party absolutely to
seek legal recourse, as the same would be violative of
Section 28 of the Indian Contract Act, 1872.
(c) The Hon’ble High Court of Delhi in
Vishal Gupta
versus L&T Finance Limited (supra) held that when it
comes to ‘ouster of jurisdiction’ clause / exclusive
jurisdiction clause, commercial contract and contract of
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employment have to be seen from different lenses.
Whilst in a commercial contract, an ouster / exclusive
jurisdiction clause may not be opposed to public policy
however, in case of a contract of employment, such a
clause may well be opposed to public policy.
(d) The said judgement of the Hon’ble High Court of
Delhi in
Vishal Gupta versus L&T Finance Limited
(supra), has been overruled by the Hon’ble Supreme
Court of India in
Rakesh Kumar Verma versus HDFC
Bank Limited (supra). Relevant extracts of the
judgements are set out herein-below:
“
14. A few years later came the decision in A.B.C.
Laminart Pvt. Ltd. v. A.P. Agencies, Salem16. This
Court held that:
21. From the foregoing decisions it can be
reasonably deduced that where such an ouster
clause occurs, it is pertinent to see whether
there is ouster of jurisdiction of other courts.
When the clause is clear, unambiguous and
specific accepted notions of contract would
bind the parties and unless the absence of ad
idem can be shown, the other courts should
avoid exercising jurisdiction. As regards
construction of the ouster clause when words
like “alone”, “only”, “exclusive” and the like
have been used there may be no difficulty.
Even without such words in appropriate cases
the maxim “expressio unius est exclusio
alterius” — expression of one is the exclusion
of another — may be applied. What is an
appropriate case shall depend on the facts of
the case. In such a case mention of one thing
may imply exclusion of another. When
certain jurisdiction is specified in a contract
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an intention to exclude all others from its
operation may in such cases be inferred. It
has therefore to be properly construed.
17. The issue as to how an exclusive jurisdiction
clause has to be read and understood is, thus, no
longer res-integra.
18. A bare perusal of the above decisions leads to
the conclusion that for an exclusive jurisdiction
clause to be valid, it should be (a) in consonance
with Section 28 of the Contract Act, i.e., it should
not absolutely restrict any party from initiating legal
proceedings pertaining to the contract, (b) the Court
that has been given exclusive jurisdiction must be
competent to have such jurisdiction in the first
place, i.e., a Court not having jurisdiction as per the
statutory regime cannot be bestowed jurisdiction by
means of a contract and, finally, (c) the parties must
either impliedly or explicitly confer jurisdiction on a
specific set of courts. These three limbs/criteria
have to be mandatorily fulfilled.
22. Nowadays, the private sector employs
individuals pan-India for providing services to reach
people in the last mile. Therefore, it may not be
possible for all employers in the private sector to
contest suits at far-off places from the registered
office. This seems to be the overwhelming reason
why exclusion clauses are inserted. Rakesh and
Deepti having accepted the terms and conditions of
the appointment letter/employment agreement and
acted upon its terms by joining their respective
posts, they could not have possibly avoided the
contract on a second thought that a term contained
therein may not be beneficial for them at a
subsequent stage.
23. As long as an employment contract does not
offend the provisions of any applicable legislation,
such as the Contract Act or the CPC, ordinarily,
there should be no reason to interfere. It cannot but
be gainsaid that the scope of interference, in such
matters, is quite narrow.
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24. The contention on behalf of Rakesh and Deepti
that the decisions referred to above would not be
applicable in the case of a service contract has not
really impressed us. A contract – be it commercial,
insurance, sales, service, etc. – is after all a contract.
It is a legally binding agreement, regardless of the
parties involved or their inter se strengths. To make
a distinction for employment contracts on the
specious ground that a mighty lion and a timid
rabbit are the contracting parties would violate the
principle of equality, in the sense that rights and
liabilities would not be dependent on the parties’
status, power or influence. Contracts should be
treated equally, without bias or distinction. The fact
that one party is more powerful or influential (the
mighty lion) and the other more vulnerable (the
timid rabbit) does not justify making exceptions or
distinctions in the application of contractual
principles.
25. We may also emphasize that unequal bargaining
power is not unique to contracts of personal service.
In many areas, such as business, commerce, or real
estate, contracts may involve parties with dissimilar
levels of strength, resources or negotiating power.
As and by way of illustration, we can cite instances
where big builders sub-contract a part of the
development work entrusted to them to sub-
contractors. Such contracts too involve the mighty
lion and, though not a timid rabbit, but a weak lamb.
Based on the status of the parties, the latter cannot
escape from the consequences if the former seeks to
enforce a condition in the contract which the latter
perceives is oppressive or the latter, refusing to
perform any of its obligations considering it as
onerous faces a law suit for breach of contract.
26. Law treats all contracts with equal respect and
unless a contract is proved to suffer from any of the
vitiating factors, the terms and conditions have to be
enforced regardless of the relative strengths and
weakness of the parties.
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27. Thus, we are unable to approve the law laid
down in Vishal Gupta (supra).
28. Upon a perusal of the service contract and the
exclusive jurisdiction clause under consideration in
the instant appeals, we are convinced that the Patna
High Court has offered a sound legal opinion with
reference to the facts at hand while the Delhi High
Court has erred in dismissing the civil revisional
application placing entire reliance on the decision in
Vishal Gupta (supra). All the three applicable
mandatory criteria to hold that the clause is valid
have been fulfilled in the instant appeals. We
propose to assign brief reasons for each of the
applicable limbs.
29. First, Section 28 of the Contract Act does not
bar exclusive jurisdiction clauses. What has been
barred is the absolute restriction of any party from
approaching a legal forum. The right to legal
adjudication cannot be taken away from any party
through contract but can be relegated to a set of
Courts for the ease of the parties. In the present
dispute, the clause does not take away the right of
the employee to pursue a legal claim but only
restricts the employee to pursue those claims before
the courts in Mumbai alone.
30. Secondly, the Court must already have
jurisdiction to entertain such a legal claim. This
limb pertains to the fact that a contract cannot
confer jurisdiction on a court that did not have such
a jurisdiction in the first place. The explanation to
Section 20 of the CPC is essential to decide this
issue. In the instant case, considering that the
decision to employ Rakesh and Deepti were taken in
Mumbai, the appointment letter in favour of Rakesh
was issued from Mumbai, the employment
agreement was dispatched from Mumbai, the
decision to terminate the services of Rakesh and
Deepti were taken in Mumbai and the letters of
termination were dispatched from Mumbai, we are
convinced that the courts in Mumbai do have
jurisdiction.
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31. Lastly, the clause in the contract has clearly and
explicitly barred the jurisdiction of all other courts
by using the word “exclusive”. A profitable
reference may be made to the extract of ABC
Laminart (supra) reproduced above.”
(e) Thus, what falls from the judgement of the Hon’ble
Supreme Court of India in
Rakesh Kumar Verma
versus HDFC Bank Limited (supra) can be succinctly
summarized as follows:
(i) An exclusive jurisdiction clause, be it in a
commercial contract or a contract for employment
(or any other contract for that matter), applies
equally to both, and no differentiation between the
two can be made simply on the basis of the nature
of contract. Irrespective of the nature of the
underlying contract, an exclusive jurisdiction
clause is valid as long as it complies with the
statutory requirements of the Indian Contract Act,
1872 and CPC.
(ii) In order for an exclusive jurisdiction clause to be
valid, the following three essential requirements
must be met:
(A) It should comply with the provisions of
Section 28 of the Indian Contract Act, 1872
by not placing an absolute restriction on a
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party to seek legal recourse (“First
Requirement”);
(B) The Court upon which exclusive jurisdiction
has been conferred must be competent to
have such jurisdiction in the first place.
Examination under the explanation to
Section 20 CPC is essential for the
determination of this aspect (“Second
Requirement”); and
(C) Exclusivity of the chosen court must be
either explicitly or impliedly evident from
the contract (“Third Requirement”).
Analysis
9. From a reading of the plaint (and its attendant documents),
the following facts emerge:
Defendant
(Carrying on Business)
Cause of Action
Registered
Office
Subordinate
Office
Mohali, Punjab Ferozeshah Road,
Mandi House,
New Delhi
(a) Plaintiff was employed
at the Delhi Office.
(b) As per the appointment
letter, Plaintiff’s place
of posting was initially
at Delhi and he was
liable to pan India
transfer.
(c) The appointment letter
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was issued on a
letterhead containing
details of the registered
office.
(d) As per the pay slip for
the month of June
2024, location of the
Plaintiff is Delhi.
(e) The pay slip for the
month of June 2024
was issued on a
letterhead containing
details of the registered
office.
(f) Resignation email
(dated July 3, 2024)
was addressed to one
Mr. Madan Chauhan,
Head – Audit &
Consulting (it is
unclear whether he was
based out of the
Mohali Office).
(g) There is no email /
communication /
formal letter of
acceptance of the
resignation. In terms of
the plaint, Plaintiff was
relieved from services
on July 3, 2024.
10. Now, applying the settled law to the facts of the present
case:
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(a) The First Requirement of
Rakesh Kumar Verma versus
HDFC Bank Limited (supra) stands fulfilled as Clause
9(l) of the appointment letter does not create an
absolute bar on the ability of the employee to seek
legal recourse in case of a dispute.
(b) The Second Requirement would necessarily require an
examination of the place where, in the facts and
circumstances of this particular case, the cause of
action (or a substantial part thereof) has arisen. As is
the settled legal principle, for examining the same, the
court cannot traverse beyond the plaint and the
attendant documents, and the averments made in the
plaint are to be taken at face value.
(i) From a reading of the plaint (and the annexed
documents), it is clear that the Plaintiff’s place of
posting from his initial induction till resignation
was at the Delhi Office.
(ii) Besides a casual mention of the details of the
registered office of the Defendant in the
appointment letter and on the pay slip, no
substantial nexus to Mohali can be inferred from
the plaint.
(iii) The plaint is otherwise silent on any notable
nexus to Mohali.
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(iv) Unlike in
Rakesh Kumar Verma versus HDFC
Bank Limited (supra), where on the facts and
circumstances of that case, it was held that
eventhough the employees were employed at a
different location from the head office of the
company, since the decision to employ, dispatch
of appointment letters, decision to terminate
employment, dispatch of termination letters, all
took place from Mumbai, hence, it was held that
courts in Mumbai do have jurisdiction. However,
none of these facts, even at a prima facie level,
can be inferred from a reading of the plaint – the
resignation email was addressed to one Mr.
Madan Chauhan, Head – Audit & Consulting (it is
unclear whether he was based out of the Mohali
Office). Infact, the plaint and the annexed
documents including, the salary slip for the month
of June 2024 reveal that employment of the
Plaintiff throughout his tenure was in the Delhi
Office – no fact has been brought out in the plaint
which could lead this court to conclude that a
substantial part of the cause of action arose in
Mohali. Mere presence of the registered office of
the Defendant in Mohali would not be sufficient
unless, the requirements under Section 20(a)
and/or Section 20(c) CPC are met.
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(v) In view of the above, in terms of Section 20(a)
read with Explanation of CPC, the cause of action
having arisen at the Delhi Office (and no part of
the same having been averred to have arisen at the
place of registered office), the Delhi Office will
be deemed to be the place from where the
defendant company can be said to carry on its
business. Whether Mohali court is, at all a court
of competent jurisdiction, would again require an
assessment of whether any part of cause of action
can be said to have arisen in Mohali therefore,
vesting Mohali courts with territorial jurisdiction
under Section 20(c) CPC. As has already been
elaborated above, there is nothing averred in the
plaint, nor anything is evident from the documents
annexed to the plaint that any part of the cause of
action arose in Mohali. In the absence of such a
finding, in the facts and circumstances of this
case, it cannot be said that the courts in Mohali
have territorial jurisdiction to entertain the present
matter in terms of Section 20(c) CPC.
(h) Since, the court in Mohali is not a court of competent
jurisdiction in terms of either Section 20(a) or Section
20(c) CPC, therefore, a jurisdiction clause in the
appointment letter vesting Mohali courts with
jurisdiction squarely falls foul of the Second
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Requirement of
Rakesh Kumar Verma versus HDFC
Bank Limited (supra).
(i) Since the Second Requirement itself does not stand
satisfied, there is no requirement to examine the third
limb of
Rakesh Kumar Verma versus HDFC Bank
Limited (supra) i.e., the Third Requirement.
11. Since courts in Mohali do not have competent jurisdiction in
the first place, parties cannot, by way of contract, confer
(exclusive) jurisdiction on such courts to deal with the
present dispute, and any such clause is invalid. It will be the
courts in Delhi which have the territorial jurisdiction to
entertain the present suit in terms of Section 20 CPC.
Decision
12. The application under Order VII Rule 10 CPC stands
disposed off as dismissed / not allowed.
(Sakshi Sejwal)
District Judge-05/New Delhi District
Patiala House Courts/New Delhi/25.09.2026
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