The Code of Civil Procedure, 1908 (CPC) represents the cornerstone of civil litigation in India, providing comprehensive procedural guidelines that govern the conduct of civil proceedings across the nation. Among its numerous provisions, Order XVII Rule 2 addresses a critical procedural aspect: the course of action available to courts when parties fail to appear on adjourned hearing dates. This provision, though seemingly straightforward, has been subject to varied interpretations by courts, leading to confusion regarding its proper application and the distinction between the main rule and its explanation.

The Supreme Court of India, in the landmark judgment of Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd. [1], delivered on August 16, 2023, provided much-needed clarity on the interpretation and application of Order XVII Rule 2 CPC. This judgment, pronounced by a bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah, has significant implications for civil litigation practice and underscores the judiciary’s commitment to ensuring procedural fairness and substantive justice.

Understanding the Legal Nuances and the Supreme Court’s Observations in YP Lele vs Maharashtra State Electricity Distribution Company Ltd.

Understanding Order XVII Rule 2 of the Code of Civil Procedure, 1908

The Statutory Framework

Order XVII of the Code of Civil Procedure, 1908, deals with adjournments in civil proceedings. Rule 2 of this Order specifically addresses situations where parties fail to appear on days fixed for hearing after adjournment. The provision reads as follows:

“Where, on any day to which the hearing of the suit is adjourned, the parties or any of them fail to appear, the Court may proceed to dispose of the suit in one of the modes directed in that behalf by Order IX or make such other order as it thinks fit.”

The Explanation to Order XVII Rule 2 further provides: “Where the evidence or a substantial portion of the evidence of any party has already been recorded and such party fails to appear on any day to which the hearing of the suit is adjourned, the Court may, in its discretion, proceed with the case as if such party were present.” [2]

This dual structure of the provision—the main rule and the explanation—creates a nuanced framework that requires careful interpretation. The main rule grants courts broad discretion to proceed with the suit when parties fail to appear, allowing them to adopt procedures outlined in Order IX or take other appropriate action. The explanation, however, addresses a more specific scenario where a party has already led evidence or substantial evidence and subsequently fails to appear.

The Distinction Between the Main Rule and the Explanation

The Supreme Court in Y.P. Lele’s case emphasized the fundamental distinction between the main rule and its explanation. The Court observed that under the main provision of Order XVII Rule 2, courts may proceed to pass orders when any party is absent or when both parties are absent. This general provision applies regardless of whether evidence has been recorded or not, giving courts the flexibility to dispose of the suit in accordance with Order IX or make any other appropriate order.

The explanation, conversely, is confined to a specific circumstance. It applies exclusively to situations where a party has already led evidence or substantial evidence and thereafter fails to appear. In such cases, the court may proceed with the case as if that party were present, effectively deeming their presence for the purpose of concluding the proceedings. The Court clarified that the phrases “any party” and “such party” used in the explanation refer specifically to the party that has led evidence or substantial evidence. This interpretation prevents the misapplication of the explanation to parties who have not yet presented their evidence.

The Case of Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd.: Factual Matrix and Procedural History

Background of the Litigation

The case originated from Special Civil Suit No. 125 of 1988, filed by the Maharashtra State Electricity Board (MSEB) in the Court of Civil Judge, Senior Division at Sangli. The suit sought recovery of Rs. 1,42,85,177.47 with interest at 18% per annum from Miraj Electric Supply Co. Ltd. (defendant no. 1) and its five directors (defendant nos. 2 to 6), including Y.P. Lele who was defendant no. 5. The defendants appeared and filed their written statements, and the plaintiff’s evidence was being led when a critical procedural development occurred.

The counsel representing the defendants, Shri M.B. Karmarkar, withdrew his vakalatnama through a written request marked as Exhibit 112. Significantly, he had not cross-examined any of the plaintiff’s witnesses before withdrawing. On December 4, 2004, the Trial Court directed that the suit proceed under Order XVII Rule 2 CPC against the defendants. The Trial Court subsequently recorded the plaintiff’s evidence and, through judgment dated January 29, 2005, decreed the suit ex parte with costs. The operative portion of the judgment explicitly mentioned that the suit was “decreed ex parte.”

Setting Aside the Ex Parte Decree

Upon becoming aware of the ex parte decree, the defendants filed an application under Order IX Rule 13 CPC on September 21, 2006, seeking to set aside the decree. This application was accompanied by an application for condonation of delay under Section 5 of the Limitation Act, 1963. The Trial Court, through its order dated September 20, 2010, condoned the delay, finding the explanation satisfactory, and imposed costs of Rs. 3,000 on the defendants. Subsequently, on September 30, 2014, the Trial Court allowed the application under Order IX Rule 13 CPC, set aside the ex parte decree dated January 29, 2005, imposed a fine of Rs. 1,000, and restored the Special Civil Suit No. 125 of 1988 to its original number.

High Court Intervention and the Controversy

Aggrieved by the Trial Court’s order setting aside the ex parte decree, the plaintiff MSEB filed a writ petition before the Bombay High Court under Articles 226 and 227 of the Constitution. The learned Single Judge of the High Court, through judgment dated June 27, 2018, allowed the writ petition and set aside the Trial Court’s order dated September 30, 2014. Consequently, the ex parte decree was maintained. The High Court’s reasoning was based on the application of the explanation to Order XVII Rule 2 CPC, holding that since the explanation applied, an application under Order IX Rule 13 CPC would not be maintainable.

This interpretation by the High Court became the central point of controversy that eventually reached the Supreme Court. Y.P. Lele, as defendant no. 5, challenged this order before the Supreme Court, arguing that the High Court had committed a grave error in applying the explanation to Order XVII Rule 2 CPC when the circumstances did not warrant such application.

Supreme Court’s Analysis and Legal Reasoning

Examination of Order XVII Rule 2 and Order IX

The Supreme Court undertook a detailed examination of Order XVII Rule 2 CPC and its relationship with Order IX. The Court noted that when the defendants did not appear on December 4, 2004, and their counsel had withdrawn his vakalatnama, the Trial Court directed the suit to proceed under Order XVII Rule 2 CPC. The effect of this order was that the Trial Court could proceed to dispose of the suit in one of the modes directed by Order IX CPC.

The Court observed that under Order IX Rule 6, where summons are duly served and the defendant does not appear when the suit is called for hearing, the court may make an order that the suit be heard ex parte. [3] This was precisely the procedure adopted by the Trial Court in the present case. After the plaintiff’s evidence was concluded and the defendants continued to remain absent, the Trial Court decreed the suit ex parte through its judgment dated January 29, 2005, with the operative portion explicitly stating that the suit was “decreed ex parte.”

Critical Interpretation of the Explanation

The Supreme Court’s most significant contribution in this judgment lies in its interpretation of the explanation to Order XVII Rule 2. The Court emphasized that the explanation comes into operation only in specific circumstances. It stated that where the evidence or substantial portion of evidence of any party has already been recorded and such party fails to appear on any adjourned date, the court may proceed with the case as if such party were present.

The Court identified two critical phrases in the explanation: “any party” and “such party.” According to the Court’s interpretation, “any party” refers to the party which has led evidence or substantial evidence, and “such party” refers to that very party which has led evidence or substantial evidence. This interpretation establishes a clear requirement: the explanation applies only when a party has already presented evidence or substantial evidence and then fails to appear.

In the present case, the Court found that the suit was at the stage of the plaintiff’s evidence, as evident from the order dated December 4, 2004. The defendants’ evidence had not even commenced, and the defendants’ counsel had not cross-examined the plaintiff’s witnesses. Therefore, the explanation could have been invoked only if the plaintiff, after adducing evidence or substantial evidence, had failed to appear. Since the defendants had not led any evidence at all, the explanation could not be invoked against them. [4]

Error in High Court’s Application

The Supreme Court held that the High Court committed an error in applying the explanation to Order XVII Rule 2 CPC and, based on that misapplication, holding that an application under Order IX Rule 13 CPC would not be maintainable. The Court emphasized that the presence of the defendants could not be deemed to be recorded at the time of disposal of the suit because they had not led any evidence. The High Court’s interpretation effectively created a procedural barrier that prevented the defendants from seeking relief under Order IX Rule 13, which allows parties to apply for setting aside ex parte decrees.

Procedural Fairness and Natural Justice

The Supreme Court also addressed broader principles of procedural fairness and natural justice. The Court noted that once the counsel had withdrawn his vakalatnama, the Trial Court should have, in the normal course, issued notice to the defendants to engage another counsel. The failure to do so before proceeding ex parte constituted a procedural error. This observation underscores the importance of ensuring that parties have adequate opportunity to be represented in proceedings, particularly in matters involving substantial claims.

Furthermore, the Court held that once the Trial Court, in its wisdom and discretion, had allowed the application under Order IX Rule 13 CPC, the High Court should have refrained from interfering with an order that advanced the cause of justice by affording opportunities to both parties so that the suit could be decided on merits. This reflects the judicial philosophy that substantive justice should not be sacrificed at the altar of procedural technicalities, particularly when a lower court’s decision promotes fairness and the resolution of disputes on their merits.

Order IX Rule 13: Setting Aside Ex Parte Decrees

Statutory Provisions and Purpose

Order IX Rule 13 of the Code of Civil Procedure, 1908, provides a remedy for defendants against whom ex parte decrees have been passed. The provision states: “In any case in which a decree is passed ex-parte against a defendant, he may apply to the Court by which the decree was passed for an order to set it aside; and if he satisfies the Court that the summons was not duly served, or that he was prevented by any sufficient cause from appearing when the suit was called on for hearing, the Court shall make an order setting aside the decree as against him upon such terms as to costs, payment into Court or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit.” [5]

This provision serves as an important safeguard against the harsh consequences of ex parte proceedings. It recognizes that parties may be unable to appear for legitimate reasons and provides them an opportunity to have the matter decided on merits. The provision requires the applicant to satisfy the court either that summons was not duly served or that they were prevented by sufficient cause from appearing.

Application in Y.P. Lele’s Case

In the present case, the defendants filed an application under Order IX Rule 13 CPC after becoming aware of the ex parte decree. The Trial Court, after examining the matter and condoning the delay, found merit in the application and set aside the ex parte decree. This decision was consistent with the principles underlying Order IX Rule 13, which favors deciding matters on merits rather than on technicalities.

The Supreme Court upheld this approach, holding that the Trial Court’s decision to set aside the ex parte decree advanced the cause of justice by affording opportunities to both parties for the suit to be decided on merits. The Court’s reasoning emphasizes that courts should exercise their discretion under Order IX Rule 13 to promote substantive justice, particularly when procedural irregularities have occurred.

Interplay Between Order IX and Order XVII

Complementary Procedural Mechanisms

The Supreme Court’s judgment in Y.P. Lele’s case clarifies the relationship between Order IX and Order XVII of the CPC. Both orders deal with situations involving non-appearance of parties, but they operate in different contexts and provide different remedies. Order IX specifically deals with appearances, non-appearances, and the consequences thereof, including provisions for ex parte proceedings and setting aside ex parte decrees. Order XVII, on the other hand, deals with adjournments and the procedure to be followed when parties fail to appear on adjourned dates.

Order XVII Rule 2 expressly refers to Order IX, stating that the court may proceed to dispose of the suit “in one of the modes directed in that behalf by Order IX.” This creates a direct linkage between the two orders. When a party fails to appear on an adjourned date under Order XVII Rule 2, the court may adopt procedures specified in Order IX, such as proceeding ex parte under Order IX Rule 6.

Harmonious Construction

The Supreme Court’s interpretation promotes a harmonious construction of these provisions. The Court recognized that when proceedings are conducted under Order XVII Rule 2 (main rule) leading to an ex parte decree, the remedy under Order IX Rule 13 remains available to the party against whom the decree has been passed. This ensures that procedural safeguards are not circumvented by misapplication of the explanation to Order XVII Rule 2.

The Court’s reasoning prevents a situation where parties who have not led evidence are deprived of remedies under Order IX Rule 13 merely because proceedings were formally conducted under Order XVII Rule 2. This interpretation maintains the balance between judicial efficiency and the rights of parties to have their matters adjudicated on merits.

Implications for Civil Litigation Practice

Clarity on Application of Explanation

The judgment provides much-needed clarity to practicing lawyers and courts regarding when the explanation to Order XVII Rule 2 can be invoked. Courts must now carefully examine whether a party has led evidence or substantial evidence before applying the explanation. This prevents the misuse of the explanation as a tool to deny parties the opportunity to contest matters on merits.

Importance of Proper Representation

The Supreme Court’s observation that the Trial Court should have issued notice to defendants to engage another counsel after their previous counsel withdrew the vakalatnama has important practical implications. It establishes a procedural safeguard ensuring that parties are not prejudiced by the withdrawal of their legal representation. Courts must now be more vigilant in ensuring that parties have adequate opportunity to arrange for representation before proceeding with substantive hearings.

Promoting Merits-Based Adjudication

The judgment reinforces the principle that courts should favor deciding matters on merits rather than disposing of them on technical grounds. The Supreme Court’s approval of the Trial Court’s decision to set aside the ex parte decree sends a clear message that procedural irregularities should not result in substantive injustice. This approach encourages courts to exercise their discretion under provisions like Order IX Rule 13 in favor of allowing parties to present their cases.

Limiting Writ Court Interference

The judgment also provides guidance on the scope of interference by High Courts exercising writ jurisdiction under Articles 226 and 227 of the Constitution. The Supreme Court held that when a Trial Court has exercised its discretion in a manner that advances justice, writ courts should refrain from interfering. This promotes judicial discipline and prevents higher courts from substituting their discretion for that of trial courts in matters involving exercise of procedural powers.

Principles of Natural Justice and Fair Trial

Constitutional Mandate for Fair Proceedings

The judgment in Y.P. Lele’s case resonates with constitutional principles of natural justice and the right to fair trial. Article 14 of the Constitution of India guarantees equality before law, and Article 21 protects the right to life and personal liberty, which has been interpreted to include the right to fair trial. [6] These constitutional guarantees require that procedural laws be interpreted and applied in a manner that ensures parties have adequate opportunity to present their cases.

The Supreme Court’s emphasis on procedural fairness in this case reflects these constitutional values. By holding that the Trial Court should have issued notice to defendants after their counsel withdrew, and by upholding the decision to set aside the ex parte decree, the Court ensured that the defendants’ right to fair trial was protected.

Audi Alteram Partem (Hear the Other Side)

The principle of audi alteram partem, a fundamental rule of natural justice, requires that no person should be condemned unheard. This principle permeates the Supreme Court’s reasoning in Y.P. Lele’s case. The Court’s interpretation of Order XVII Rule 2 and its approval of setting aside the ex parte decree both serve to protect parties’ right to be heard.

The Court’s observation that the explanation to Order XVII Rule 2 cannot be applied to parties who have not led evidence ensures that such parties retain their right to contest the matter by presenting their defense. Similarly, the availability of remedy under Order IX Rule 13 provides a mechanism for parties to exercise their right to be heard when they have been unable to appear for legitimate reasons.

Comparative Analysis with Precedents

Evolution of Judicial Interpretation

The interpretation of Order XVII Rule 2 has evolved through various judicial pronouncements. Courts have grappled with the question of when the explanation applies and how it interacts with other procedural provisions. The judgment in Y.P. Lele’s case represents a significant contribution to this evolving jurisprudence by providing clear parameters for application of the explanation.

Earlier decisions had sometimes conflated the main rule with the explanation, leading to confusion about when each provision applies. The Supreme Court’s clear delineation of the two components of Order XVII Rule 2 addresses this confusion and provides a framework for consistent application across courts.

Emphasis on Substantive Justice

The judgment aligns with the Supreme Court’s broader jurisprudence emphasizing substantive justice over procedural technicalities. In numerous decisions, the apex court has held that the object of procedural law is to advance justice, not to defeat it. [7] The decision in Y.P. Lele’s case exemplifies this approach by holding that courts should interpret procedural provisions in a manner that promotes merits-based adjudication.

Practical Guidelines Emerging from the Judgment

For Trial Courts

Trial courts must carefully distinguish between the main rule and the explanation to Order XVII Rule 2. Before applying the explanation, courts must verify that the party in question has already led evidence or substantial evidence. If evidence has not been led, the main rule applies, and the court may proceed under Order IX or make other appropriate orders.

When a party’s counsel withdraws vakalatnama, trial courts should issue notice to the party to engage another counsel before proceeding with substantive hearings. This ensures compliance with principles of natural justice and prevents procedural irregularities that may later be challenged.

For Legal Practitioners

Lawyers must be aware of the distinction between proceedings under the main rule and the explanation of Order XVII Rule 2. When challenging ex parte decrees, practitioners should carefully examine whether the explanation was properly invoked and whether their clients had led evidence before the decree was passed. If evidence had not been led, arguments can be made that Order IX Rule 13 provides an available remedy.

When withdrawing as counsel, lawyers should consider the timing and ensure that clients have adequate notice and opportunity to arrange alternative representation. This professional responsibility aligns with the ethical obligations of the legal profession.

For Appellate and Writ Courts

Higher courts should exercise restraint in interfering with trial court orders that promote merits-based adjudication. When a trial court has exercised discretion to set aside an ex parte decree in furtherance of justice, appellate and writ courts should generally uphold such decisions unless there is clear error of law or jurisdictional defect.

Courts exercising writ jurisdiction must carefully examine whether the provisions of Order XVII Rule 2 have been correctly applied before setting aside orders of trial courts. Misapplication of the explanation should not be allowed to defeat parties’ rights under Order IX Rule 13.

Conclusion

The Supreme Court’s judgment in Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd. represents a landmark contribution to the interpretation of procedural law in India. By clearly distinguishing between the main rule and the explanation to Order XVII Rule 2 CPC, the Court has resolved ambiguities that had led to inconsistent application across courts.

The judgment’s emphasis on procedural fairness, natural justice, and merits-based adjudication reflects core principles of the Indian judicial system. By holding that the explanation applies only when a party has led evidence or substantial evidence, the Court has ensured that parties are not deprived of their right to contest matters merely because of procedural technicalities or misapplication of legal provisions.

The decision also reinforces important procedural safeguards, such as the requirement that courts ensure parties have adequate representation before proceeding with substantive hearings. The Supreme Court’s approval of the Trial Court’s decision to set aside the ex parte decree demonstrates the judiciary’s commitment to substantive justice over procedural rigidity.

For legal practitioners, this judgment provides clear guidance on the application of Order XVII Rule 2 and its interplay with Order IX. It underscores the importance of understanding procedural nuances and ensuring that clients’ rights to fair trial and natural justice are protected throughout civil proceedings.

Ultimately, the judgment serves as a reminder that procedural law exists to facilitate justice, not to create barriers to it. The Supreme Court’s interpretation ensures that the Code of Civil Procedure, 1908, continues to serve its fundamental purpose of providing a fair, efficient, and just framework for resolving civil disputes in India.

References

[1] Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd., Civil Appeal No. 5155 of 2023, Supreme Court of India (2023). Available at: https://www.livelaw.in/supreme-court/order-xvii-rule-2-cpc-court-can-proceed-only-against-an-absent-party-whose-evidence-has-been-substantially-recorded-supreme-court-235397 

[2] The Code of Civil Procedure, 1908, Order XVII Rule 2. Available at: https://www.indiacode.nic.in/handle/123456789/2191 

[3] The Code of Civil Procedure, 1908, Order IX Rule 6. Available at: https://www.indiacode.nic.in/handle/123456789/2191 

[4] Y.P. Lele v. Maharashtra State Electricity Distribution Company Ltd., Para 19-20, Supreme Court of India (2023). Available at: https://www.advocatekhoj.com/library/judgments/announcement.php?WID=16693 

[5] The Code of Civil Procedure, 1908, Order IX Rule 13. Available at: https://www.indiacode.nic.in/handle/123456789/2191 

[6] Maneka Gandhi v. Union of India, AIR 1978 SC 597. 

[7] Sangram Singh v. Election Tribunal, AIR 1955 SC 425. 

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Introduction

The Indian legal system operates on the foundational principle of “ubi jus ibi remedium,” which translates to “where there is a right, there is a remedy.” This maxim forms the bedrock of the Code of Civil Procedure, 1908, ensuring that every legal right violated receives appropriate compensation. The concept of mesne profits emerges directly from this principle, providing a remedy to rightful owners whose property has been wrongfully possessed by another. When ownership rights are infringed, natural justice demands that the aggrieved party receives adequate compensation for the period during which they were deprived of their property’s enjoyment and benefits.

Understanding mesne profits requires a clear distinction between ownership and possession. Ownership represents the absolute right of an individual to possess, use, enjoy, transfer, or even destroy property as they deem fit. Possession, on the other hand, serves as prima facie evidence of ownership and is protected by law unless another person establishes a superior title. When wrongful possession occurs, the law intervenes to protect the rightful owner’s interests and ensures that the wrongful possessor compensates for any benefits derived during the period of illegal occupation. This compensation mechanism, known as mesne profits, prevents unjust enrichment and upholds the sanctity of property rights.

Legal Definition and Statutory Provision

The Code of Civil Procedure, 1908 provides a comprehensive definition of mesne profits. According to Section 2(12) of the Code of Civil Procedure, 1908, mesne profits are defined as “those profits which the person in wrongful possession of such property actually received or might with ordinary diligence have received therefrom, together with interest on such profits, but shall not include profits due to improvements made by the person in wrongful possession.” [1]

This statutory definition establishes several critical components. First, mesne profits encompass both actual profits received by the wrongful possessor and potential profits that could have been obtained through reasonable diligence. Second, interest on these profits forms an integral part of the compensation. Third, the definition explicitly excludes any value added through improvements made by the wrongful possessor, ensuring they cannot claim credit for enhancing the property they illegally occupied.

The definition reflects a balanced approach, recognizing that the rightful owner deserves compensation not just for actual losses but also for opportunities foregone due to the wrongful possession. The inclusion of “ordinary diligence” as a standard ensures that calculations remain fair and reasonable, neither penalizing the wrongful possessor excessively nor allowing them to escape liability by claiming they derived no benefit from the property.

Circumstances Warranting Mesne Profits

Mesne profits become relevant in situations involving unlawful occupation or wrongful possession by someone lacking legitimate title. The rightful owner possesses dual remedies: filing a suit to recover possession and claiming damages for the wrongful possession period. Courts recognize several specific scenarios where mesne profits can be claimed.

A trespasser who occupies property without any legal right whatsoever can be held liable for mesne profits. Similarly, a mortgagor who continues possessing property after a foreclosure or redemption decree has been passed against them must compensate the decree holder. Tenants who refuse to vacate premises despite receiving proper notice to quit become liable for mesne profits. Additionally, anyone against whom a possession decree has been passed but who continues occupying the property must pay mesne profits to the rightful owner. [2]

The underlying principle across these situations remains consistent: no person should benefit from wrongful possession of another’s property. The remedy serves both compensatory and deterrent purposes, ensuring that rightful owners receive adequate compensation while discouraging illegal occupation.

Assessment and Calculation Framework

Determining mesne profits involves a nuanced analysis that varies with each case’s specific circumstances. The fundamental test for ascertaining mesne profits focuses not on what the plaintiff lost but rather on what the defendant gained or could have reasonably gained through ordinary diligence during the wrongful possession. This approach ensures that compensation reflects the actual benefit derived from the property rather than speculative losses.

The Calcutta High Court provided valuable guidance on assessment methodology in Casyab Pvt. Ltd. v. Central Bank of India, stating that “in assessing the mesne profits, in absence of definite and conclusive evidence, some guesswork may be applied on the basis of the available materials and the evidence on record in finally determining the mesne profits.” The court emphasized that no uniform standard pattern exists for assessment, and courts must consider comparative factors including the property’s nature, location, road accessibility, available facilities, age, and condition, alongside characteristics of similar premises in the surrounding area. [3]

Courts consider multiple factors when determining appropriate mesne profit amounts. The market rental value of the property during the wrongful possession period serves as a primary consideration. Any actual income derived from the property, whether through rental, commercial use, or agricultural production, must be accounted for. The duration of wrongful possession directly impacts the total compensation. Courts also examine the nature and condition of the property, its location and accessibility, prevailing market rates for similar properties, and any documentary evidence regarding rental agreements or property valuations in the vicinity.

Procedural Requirements and Pleading

Obtaining mesne profits requires strict adherence to procedural requirements. The plaintiff bears the responsibility of explicitly pleading and praying for mesne profits in their plaint. Without specific pleading and prayer, courts lack jurisdiction to award mesne profits, regardless of how meritorious the claim might be. This requirement ensures defendants receive adequate notice of claims against them and can prepare appropriate defenses.

The Supreme Court clarified this procedural necessity in Ganapati Madhav Sawant (Dead) through his LRs v. Dattur Madhav Sawant, examining the application of Order XX Rule 12 of the Code of Civil Procedure. Order XX Rule 12 empowers courts to direct inquiries into rent or mesne profits when suits seek recovery of immovable property possession along with rent or mesne profits. However, the Court emphasized that this power is not discretionary and can only be exercised when plaintiffs specifically pray for such inquiry. The Court observed that “the plaintiff had not prayed for an inquiry relating to mesne profit in terms of Order XX Rule 12 CPC and in the absence of any specific prayer for any inquiry into that aspect, the same could not have been granted.” [4]

This ruling established that mere entitlement to mesne profits proves insufficient; plaintiffs must actively seek this remedy through proper pleading. The requirement protects defendants from surprise claims and maintains procedural fairness in civil litigation.

Evidentiary Burden and Standards

Evidence plays a crucial role in mesne profit claims, with courts requiring substantial proof before awarding compensation. The burden of proof rests squarely on the plaintiff who asserts entitlement to mesne profits. Plaintiffs must adduce evidence demonstrating both the fact of wrongful possession and the quantum of profits derived or derivable from such possession.

The Madras High Court addressed evidentiary requirements comprehensively in Ramakka v. Nagesam, holding that the burden of proof lies upon the plaintiff and that plaintiffs must adduce evidence supporting their claims. The court stated categorically that “if the plaintiffs adduce no evidence to show the same, it is impossible for the Court to determine the amount and the claim fails due to absence of evidence.” [5]

However, the evidentiary burden operates dynamically during proceedings. While the initial burden rests on the plaintiff as a matter of law, the onus shifts between parties depending on the weight of evidence adduced. Presumptions and circumstantial evidence can shift the onus from one party to another. Specifically, the onus of proving amounts actually received from the property lies on the defendant, as this information falls within their peculiar knowledge. This allocation reflects practical considerations, recognizing that wrongful possessors have direct knowledge of income generated from properties they occupied.

When both parties present evidence, courts assess mesne profits based on the totality of evidence presented. Courts may accept estimates and reasonable calculations even without conclusive proof, provided sufficient material exists to make informed determinations. This flexibility ensures that technical evidentiary gaps do not prevent deserving plaintiffs from receiving appropriate compensation.

Distinction Between Rent and Mesne Profits

Understanding the distinction between rent and mesne profits proves essential for proper legal analysis. Rent represents payment made by a lawful tenant pursuant to a contractual agreement with the property owner. The relationship between landlord and tenant is governed by contract law and relevant tenancy legislation, with rent serving as consideration for the lawful use and occupation of property.

Mesne profits, conversely, constitute compensation awarded for unlawful possession where no legitimate contractual relationship exists. While rent flows from agreement and lawful occupation, mesne profits arise from wrongful possession and court determination. The calculation methodologies also differ: rent follows agreed terms, whereas mesne profits are judicially determined based on property value, market rates, and actual or potential income.

This distinction carries practical significance. Landlords can claim mesne profits from tenants who refuse to vacate after lease termination, as the nature of possession transforms from lawful to wrongful upon proper termination. Similarly, co-owners in partition suits may be ordered to pay mesne profits to other co-owners if they exclusively possessed jointly owned property without consent.

Limitation Period and Interest

Temporal limitations govern mesne profit claims under the Limitation Act, 1963. The limitation period for claiming mesne profits is three years from the date when the rightful owner’s claim arises. This period typically commences when wrongful possession begins or when the plaintiff’s right to claim becomes enforceable. [6]

Courts frequently grant interest on mesne profits at reasonable rates to compensate for delayed payment. Interest serves two purposes: compensating the rightful owner for being deprived of funds they should have received earlier, and discouraging defendants from prolonging litigation to delay payment. The interest rate varies based on judicial discretion, considering factors like prevailing market rates and the nature of the case.

Inquiry Proceedings Under Order XX Rule 12

When uncertainty exists regarding the quantum of mesne profits, plaintiffs may request courts to conduct formal inquiries. Order XX Rule 12 of the Code of Civil Procedure provides the framework for such inquiries. The provision states that where suits seek recovery of immovable property possession along with rent or mesne profits, courts may pass decrees directing inquiries into rent or mesne profits. [7]

During inquiry proceedings, courts examine evidence from both parties, consider expert testimony regarding property valuations, review comparable rental rates in the area, and assess any documentary evidence of income derived from the property. The inquiry mechanism ensures that mesne profit determinations rest on solid evidentiary foundations rather than speculation.

Plaintiffs must specifically pray for such inquiries in their pleadings. Courts cannot suo moto order inquiries without proper pleading, as established in the Ganapati Madhav Sawant case. This requirement maintains procedural propriety and ensures defendants receive adequate notice.

Tax Implications

Mesne profits carry tax implications that both plaintiffs and defendants must consider. Generally, mesne profits constitute income under the Income Tax Act, 1961, and may be subject to taxation. For recipients, mesne profits typically qualify as income from house property or other sources, depending on circumstances. The tax treatment depends on whether the recipient regularly derives income from property or receives mesne profits as a one-time payment. [8]

Wrongful possessors who derived actual income from properties during illegal occupation may face tax liabilities on such income, regardless of subsequent mesne profit payments. These tax considerations add complexity to mesne profit calculations and settlement negotiations.

Practical Considerations and Strategic Implications

Property owners seeking mesne profits should maintain comprehensive documentation of their property’s value, rental rates for comparable properties, and any attempts to recover possession. Engaging property valuation experts early can strengthen claims. Plaintiffs should clearly plead for mesne profits in their original plaints rather than seeking amendments later, as amendments may face opposition and cause delays.

Defendants facing mesne profit claims should document any improvements made to properties and gather evidence regarding actual income derived. While improvements typically do not reduce mesne profit liability, they may be relevant in other contexts. Defendants should consider settlement possibilities, as prolonged litigation increases interest burdens and legal costs.

Conclusion

Mesne profits represent a vital remedy in Indian property law, ensuring that wrongful possessors do not unjustly benefit from illegal occupation while compensating rightful owners for their losses. The legal framework, established through statutory provisions and refined through judicial interpretation, balances multiple considerations: compensating aggrieved property owners, preventing unjust enrichment, maintaining procedural fairness, and ensuring determinations rest on adequate evidence.

Successful mesne profit claims require careful attention to procedural requirements, particularly explicit pleading and prayer in the plaint, and substantial evidence supporting both wrongful possession and profit calculations. Courts enjoy flexibility in assessment, allowing reasonable estimates when conclusive evidence proves unavailable, while maintaining rigorous evidentiary standards to prevent frivolous claims.

The dynamic nature of evidentiary burdens, the distinction from rent, the availability of inquiry procedures, and tax implications all contribute to the complexity of mesne profit litigation. Understanding these nuances proves essential for both property owners seeking compensation and defendants facing claims. As property disputes continue proliferating in India’s evolving real estate landscape, mesne profits remain an indispensable tool for vindicating property rights and ensuring justice for rightful owners.

References

[1] Code of Civil Procedure, 1908, Section 2(12). https://legislative.gov.in/sites/default/files/A1908-05.pdf 

[2] Mulla, D. F., & Arora, A. (2020). The Code of Civil Procedure (19th ed.). LexisNexis. https://www.scconline.com/ 

[3] Casyab Pvt. Ltd. v. Central Bank of India, (2013) 1 Cal HN 476. https://www.casemine.com/ 

[4] Ganapati Madhav Sawant (Dead) through his LRs v. Dattur Madhav Sawant, (2021) 7 SCC 246. https://main.sci.gov.in/ 

[5] Ramakka v. Nagesam, AIR 1963 Mad 254. https://indiankanoon.org/ 

[6] Limitation Act, 1963, Schedule – Article 113. https://legislative.gov.in/sites/default/files/A1963-36.pdf 

[7] Code of Civil Procedure, 1908, Order XX Rule 12. https://legislative.gov.in/sites/default/files/A1908-05.pdf 

[8] Income Tax Act, 1961, Section 56. https://incometaxindia.gov.in/pages/acts/income-tax-act.aspx 

[9] Bare Act: The Code of Civil Procedure, 1908 (As amended by Act 46 of 1999). https://www.indiacode.nic.in/ 

Published and Authorized by Rutvik Desai

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Introduction to Civil Dispute Resolution Framework

When individuals or entities find themselves unable to resolve disputes through mutual understanding, the civil court system provides an institutional mechanism for adjudication. The process of approaching a court by filing a suit is technically termed as the institution of suit, which initiates formal legal proceedings. The Indian civil justice system operates through a carefully structured hierarchy where each court possesses distinct jurisdictional authority based on both territorial boundaries and the monetary value of disputes. As part of this framework, the principles governing territorial jurisdiction under CPC play a crucial role in determining the appropriate forum for filing a suit. The framework governing these jurisdictional principles is primarily codified in the Civil Procedure Code, 1908, which remains the cornerstone legislation regulating civil litigation in India.[1]

The Hierarchy structure of civil courts ensures that cases are heard at appropriate judicial levels, preventing overburdening of higher courts while maintaining accessibility to justice at grassroots levels. This system divides courts into two broad categories: courts of first instance, where cases are initially filed and heard, and appellate courts, which review decisions made by lower courts. The Code establishes clear parameters regarding where suits must be filed, taking into account factors such as the location of property, residence of parties, and the place where the cause of action arose.

The Hierarchy Structure of Civil Courts

The Indian civil court system follows a three-tier hierarchy structure with the Supreme Court of India positioned at the apex, followed by High Courts at the state level, and subordinate courts operating at district and sub-district levels. The Supreme Court, established on January 28, 1950, exercises appellate, original, and advisory jurisdiction over civil matters of national importance. It comprises the Chief Justice of India and currently 33 other judges appointed by the President.[2] All courts throughout India are bound by Supreme Court decisions under Article 141 of the Constitution, which mandates that the law declared by the Supreme Court shall be binding on all courts within the territory of India.

High Courts function as the principal judicial authority at the state level, with 25 High Courts currently operational across India. These courts exercise supervisory jurisdiction over all subordinate courts within their territorial limits and possess both original and appellate jurisdiction. High Courts hear appeals from district courts and can issue writs for enforcement of fundamental rights under Articles 226 and 227 of the Constitution. Below the High Courts, the subordinate court system comprises District Courts, which are the highest courts at the district level. District Judges preside over these courts, handling significant civil disputes including property matters, contract breaches, and matrimonial issues. The District Court structure further includes Sub-Judge Courts, which typically handle matters where the subject matter value exceeds one lakh rupees, and Munsif Courts, which represent the lowest tier and handle suits within specified pecuniary limits.[3]

Fundamental Principle of Court Competency

Section 15 of the Civil Procedure Code establishes the foundational principle that “every suit shall be instituted in the Court of the lowest grade competent to try it.” This provision ensures efficient distribution of judicial workload by requiring plaintiffs to approach the appropriate level of court based on the nature and value of their claim. The rationale behind this requirement is to prevent higher courts from being burdened with matters that can be adequately addressed by courts of lower grade, thereby preserving judicial resources for complex or high-value disputes requiring senior judicial consideration.[4]

The competency of a court to try a suit depends on two critical factors: pecuniary jurisdiction, which refers to the monetary limits within which a court can entertain cases, and territorial jurisdiction, which defines the geographical area over which a court exercises authority. While pecuniary limits vary from state to state based on local legislation, territorial jurisdiction follows uniform principles laid down in the CPC. The Supreme Court in Kiran Singh v. Chaman Paswan observed that jurisdiction under Section 15 is determined by the plaintiff’s valuation stated in the plaint, not the amount for which a decree is ultimately passed, emphasizing that plaintiffs have the right to determine the value of relief sought, which should not be considered arbitrary unless manifestly unreasonable.

Territorial Jurisdiction Under CPC for Immovable Property Disputes

Section 16 of the Civil Procedure Code embodies the well-established maxim that actions concerning immovable property must be brought in the forum where such property is situated. This provision applies to six specific categories of suits: recovery of immovable property with or without rent or profits, partition of immovable property, foreclosure, sale or redemption in cases involving mortgages or charges upon immovable property, determination of any other right to or interest in immovable property, compensation for wrongs to immovable property, and recovery of immovable property under distraint or attachment. The underlying principle recognizes that courts should exercise jurisdiction over property located within their territorial boundaries to ensure effective enforcement of decrees and practical adjudication of property rights.

The proviso to Section 16 creates a limited exception based on the equitable maxim “equity acts in personam,” allowing suits to be filed either where the property is situated or where the defendant resides, carries on business, or personally works for gain, provided the relief sought can be entirely obtained through the defendant’s personal obedience. This exception historically originated from English Chancery Courts’ practice of enforcing judgments through personal processes such as arrest or attachment of the defendant’s property. However, courts have consistently held that this proviso cannot be interpreted to enlarge the scope of the main provision and applies only when the suit falls within one of the categories specified in Section 16 and the relief can be completely obtained through personal compliance.[5]

Landmark Judicial Interpretation: The Harshad Chiman Lal Modi Case

The Supreme Court’s decision in Harshad Chiman Lal Modi v. DLF Universal Ltd. (2005) 7 SCC 791 provides authoritative guidance on jurisdictional principles governing suits relating to immovable property. In this case, the appellant entered into a plot buyer agreement with DLF Universal Limited for purchasing residential property situated in Gurgaon, Haryana. Although the agreement was executed in Delhi, payments were made in Delhi, and the agreement contained a clause conferring jurisdiction on the Delhi High Court, the Supreme Court held that the Delhi court lacked jurisdiction to entertain the suit. The Court emphasized that Section 16 establishes a mandatory rule that suits for specific performance of agreements relating to immovable property must be instituted where the property is located, regardless of where the contract was executed or where the parties reside.[6]

The Court observed that Section 16 of CPC recognizes the fundamental principle that a court within whose territorial jurisdiction immovable property is not situated has no power to deal with and decide rights or interests in such property. Furthermore, the Court held that where suits are governed by Section 16, contractual clauses conferring jurisdiction on particular courts cannot override the statutory mandate. Section 20, which allows parties to agree on jurisdiction, applies only where two or more courts have concurrent jurisdiction, not in situations where Section 16 exclusively determines the competent forum. This landmark judgment reinforces the primacy of the situs of immovable property in determining territorial jurisdiction and clarifies that parties cannot confer jurisdiction upon courts that lack it under law through private agreements.

Jurisdiction for Property Situated Across Multiple Districts

Section 17 of the Civil Procedure Code addresses situations where immovable property subject to dispute is situated within the jurisdiction of different courts. This provision allows a suit to be instituted in any court within whose local limits any portion of the property is situated. However, a critical proviso requires that the entire claim must be cognizable by the chosen court in terms of pecuniary jurisdiction. This means that while territorial jurisdiction can be satisfied by the presence of any portion of the property within a court’s limits, the court must possess adequate pecuniary jurisdiction to handle the total value of the subject matter in dispute.

For illustration, if four brothers seek partition of ancestral property located across three districts, and the total property value exceeds the pecuniary limit of courts in one district, the suit cannot be filed there despite a portion of the property being situated within that jurisdiction. The plaintiff must approach a court that satisfies both requirements: having territorial jurisdiction over at least a portion of the property and possessing pecuniary jurisdiction over the entire property value. This provision balances convenience for plaintiffs with ensuring that cases are heard by courts with appropriate jurisdictional capacity.

Suits Relating to Wrongs Against Persons and Movable Property

Section 19 of the Civil Procedure Code governs territorial jurisdiction for suits seeking compensation for wrongs to persons or movable property, encompassing tortious liability claims such as negligence, nuisance, defamation, trespass, and personal injury arising from accidents. This provision grants plaintiffs an option to file suits either where the wrong was committed or where the defendant resides, carries on business, or personally works for gain. The flexibility provided under this section recognizes that in tort cases, both the place where the wrongful act occurred and the defendant’s location have legitimate connections to the dispute, and plaintiffs should have the choice to pursue remedies in the more convenient or strategically advantageous forum.[7]

Courts have interpreted this provision to ensure that the cause of action genuinely has territorial connection with the chosen forum. The determination of where a wrong was committed depends on factual circumstances of each case. For instance, in cases involving vehicular accidents, the place where the accident occurred would typically constitute the place where the wrong was committed. Similarly, in defamation cases, both the place where defamatory material was published and where it was received may constitute relevant territorial connections. The option provided under Section 19 is subject to pecuniary jurisdiction requirements, ensuring that the chosen court has authority to award the quantum of damages claimed.

General Jurisdictional Principles Under Section 20

Section 20 of the Civil Procedure Code functions as a residuary provision covering all suits not specifically addressed by Sections 16 through 19. The Supreme Court in Harshad Chiman Lal Modi v. DLF Universal Ltd. confirmed that Section 20 leaves no room for doubt that it is a residuary provision applicable only to cases falling outside the scope of preceding sections. Under Section 20 of CPC, suits can be instituted in courts within whose territorial jurisdiction the defendant actually and voluntarily resides, carries on business, or personally works for gain at the time of commencement of the suit, or where the cause of action, wholly or in part, arises.[8]

The concept of cause of action holds particular significance under Section 20. Cause of action is defined as every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support the right to judgment. The Supreme Court in Oil and Natural Gas Commission v. Utpal Kumar Basu explained that cause of action constitutes the bundle of essential facts integral to a claim, as determined by averments made in the plaint. Importantly, cause of action may arise at multiple locations, and Section 20(c) explicitly permits suit institution where cause of action arises wholly or in part. However, the facts relied upon must genuinely constitute part of the cause of action and not be merely incidental or insignificant circumstances.

When multiple defendants reside in different jurisdictions, Section 20 presents specific considerations. The general rule requires filing separate suits where each defendant resides, which often proves impractical and expensive. As an alternative, plaintiffs may file a single suit where any one defendant resides, provided either the court grants leave for such institution or the other defendants who do not reside within that jurisdiction acquiesce to such institution. The most practical approach typically involves filing suit where the cause of action arose, as this allows joinder of all defendants regardless of their respective residences. The Explanation to Section 20 clarifies that corporations are deemed to carry on business at their sole or principal office in India, or with respect to causes of action arising at locations with subordinate offices, at such places.

Waiver and Objections to Jurisdiction

Section 21 of the CPC recognizes that objections regarding territorial or pecuniary jurisdiction may be waived by parties. This provision reflects the principle that such jurisdictional defects are not fatal to the validity of proceedings if parties do not raise timely objections. However, objections to territorial and pecuniary jurisdiction must be taken at the earliest possible opportunity and in any case before or at the time of settlement of issues. The rationale behind permitting waiver is to protect honest litigants from harassment based on technical jurisdictional grounds after substantial proceedings have occurred in good faith. The Supreme Court has emphasized that once a case has been tried on merits and judgment rendered, it should not be subject to reversal solely on technical jurisdictional grounds unless failure of justice has occurred.[9]

In contrast, subject matter jurisdiction relates to the inherent authority of a court to hear particular types of cases and cannot be conferred by consent or waived by parties. Where a court lacks subject matter jurisdiction, any order passed would be a nullity regardless of parties’ conduct or passage of time. The distinction between subject matter jurisdiction and territorial or pecuniary jurisdiction has significant practical implications. Courts have held that neither acquiescence nor express consent of parties can confer jurisdiction upon a court if statutory limitations bar its authority to entertain particular claims. This principle ensures that the statutory scheme governing distribution of judicial business is not undermined by private agreements or procedural defaults.

Critical Considerations in Determining Place of Suing

Several overarching principles emerge from the statutory provisions and judicial interpretations governing territorial jurisdiction under CPC. First, the place of residence of the plaintiff is uniformly immaterial across all categories of suits. Plaintiffs cannot file suits exclusively based on their own residence or convenience, as this would enable potential abuse through forum shopping and harassment of defendants. The Code consistently requires either connection to the property location, defendant’s residence, or place where cause of action arose. Second, where uncertainty exists regarding local limits of jurisdiction, Section 18 provides that suits may be instituted in any court having jurisdiction over the matter if the location is alleged to be uncertain, or alternatively, in the court under whose jurisdiction the defendant resides or business is carried on.

Third, facts pleaded in the plaint must have genuine relevance to the dispute to establish cause of action for jurisdictional purposes. Courts have held that facts having no bearing on the actual dispute do not confer territorial jurisdiction. The Union of India v. Adani Exports Ltd. judgment clarified that facts pleaded must have relevance to the lis or controversy involved in the case to constitute part of cause of action. Finally, exclusive jurisdiction clauses in agreements may be given effect only when they relate to situations where multiple courts have concurrent jurisdiction under the Code. Such clauses cannot override mandatory provisions like Section 16, which exclusively determines competent forums for certain categories of disputes regardless of contractual stipulations.

Practical Application and Strategic Considerations

Understanding jurisdictional principles has significant practical implications for litigants and legal practitioners. When contemplating institution of suit, plaintiffs must carefully analyze the nature of the dispute to determine which provision of the Code applies. For property-related disputes falling under Section 16, the location of immovable property conclusively determines jurisdiction, leaving no room for alternative forums regardless of other connections to different jurisdictions. Where multiple defendants are involved and reside in different locations, strategic decisions must be made regarding whether to pursue multiple suits in different jurisdictions or to consolidate claims by filing where cause of action arose or where one defendant resides with appropriate permissions.

The timing of jurisdictional objections also carries strategic significance. Defendants wishing to challenge territorial or pecuniary jurisdiction must do so promptly, typically in the written statement or before settlement of issues. Delayed objections may be deemed waived, precluding later challenges even if the court lacked proper jurisdiction initially. Conversely, plaintiffs must ensure that chosen forums possess all required jurisdictional elements to avoid dismissals after substantial time and resources have been invested in litigation. The Harshad Chiman Lal Modi case illustrates the consequences of jurisdictional errors, where despite eight years of proceedings and completion of evidence, the suit was ordered to be returned for presentation to the proper court, requiring the litigation to restart entirely in the correct jurisdiction.

Conclusion

The Civil Procedure Code (CPC) establishes a carefully calibrated framework governing territorial jurisdiction and court hierarchy designed to ensure efficient administration of justice while maintaining accessibility and fairness. The Hierarchy structure, spanning from the Supreme Court to subordinate courts at district and sub-district levels, provides multiple tiers of adjudication while preserving appellate remedies. Jurisdictional provisions contained in Sections 15 through 21 create clear rules determining proper forums for different categories of civil disputes, balancing considerations of convenience, connection to the dispute, and effective enforcement of judicial decrees. Judicial interpretations, particularly landmark decisions like Harshad Chiman Lal Modi v. DLF Universal Ltd., have clarified ambiguities and reinforced the primacy of statutory mandates over contractual arrangements in jurisdictional matters. Mastery of these principles remains essential for legal practitioners and litigants seeking to navigate the civil justice system effectively and avoid costly procedural errors that may derail substantive claims. As the civil court system continues to evolve through legislative amendments and judicial interpretations, these foundational jurisdictional principles remain vital to ensuring orderly, efficient, and accessible civil dispute resolution throughout India.

References

[1] Drishti Judiciary. “Territorial Jurisdiction under Civil Procedure Code, 1908.” Available at: https://www.drishtijudiciary.com/ttp-code-of-civil-procedure/territorial-jurisdiction-under-civil-procedure-code-1908

[2] Lexology. “Hierarchy of Courts in India.” (June 27, 2022). Available at: https://www.lexology.com/library/detail.aspx?g=49df79a8-4bd4-42a3-b68e-3a753a4eb849

[3] Animal Legal & Historical Center. “Introduction to the Indian Judicial System.” Available at: https://www.animallaw.info/article/introduction-indian-judicial-system

[4] The Law Codes. “Objections to Jurisdiction.” (May 25, 2025). Available at: https://thelawcodes.com/article/objections-to-jurisdiction/

[5] Legalstix Law School. “Territorial Jurisdiction under the Code of Civil Procedure (CPC).” Available at: https://legalstixlawschool.com/blog/Territorial-Jurisdiction-under-the-Code-of-Civil-Procedure-(CPC)

[6] Indian Kanoon. “Harshad Chiman Lal Modi vs. DLF Universal and Anr.” (2005) 7 SCC 791. Available at: https://indiankanoon.org/doc/1916513/

[7] Law Bhoomi. “Place of Suing in CPC.” (May 9, 2025). Available at: https://lawbhoomi.com/place-of-suing-in-cpc/

[8] CaseMine. “Analysis of Section 20(c) CPC.” (April 7, 2025). Available at: https://www.casemine.com/in/column/analysis-of-section-20(c)-cpc/view

[9] iPleaders. “Place of suing under the Code of Civil Procedure, 1908: an insight through case laws.” (November 22, 2021). Available at: https://blog.ipleaders.in/place-of-suing-under-the-code-of-civil-procedure-1908-an-insight-through-case-laws/

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