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Forum Shopping Mall


NOVEMBER 01, 2023

By Vijay Kumar

WELCOME to the great shopping mall – the FORUM SHOPPING MALL

Forum shopping is defined as a litigant's attempt "to have his action tried in a particular court or jurisdiction where he feels he will receive the most favourable judgment.

Forum shopping is not exactly a new phenomenon. It started somewhere in 1842 in   Swift v. Tyson , when Mr. Swift decided to sue Mr. Tyson in federal court instead of New York State court in order to gain a strategic advantage.

In an article, ‘Forum Shopping – what's wrong with it', US Professor Richard Malay wrote,

I was a trial lawyer before joining academia, fighting every inch of the way to prevail for my client. Shopping for the best forum available was simply the first step in achieving that objective. Hence, I was appalled to read time and time again that forum shopping was something that a respectful, responsible lawyer was not to do. Compelled to find out the reason, I was confronted with a good amount of rhetoric which simply proclaimed, almost ipse dixit that forum shopping was wrong, without the slightest explanation as to why. Pursuing beyond these undocumented declarations,I learned that, like cholesterol and trolls , forum shopping can be good, and forum shopping can be bad.

In NEERAJ JHANJHI vs Commissioner, CCE, Kanpur, 2009-TIOL-2325-CESTAT-DEL the CESTAT, Principal Bench at New Delhi confirmed a penalty of Rs. 10,00,000 imposed by the Commissioner in a drawback case. Against this order, Neeraj Jhanjhi could file an appeal in the Allahabad High Court, but he chose to file a writ in the Delhi High Court. The writ was allowed to be converted into an appeal. The Delhi High Court on 5.1.2012 ordered:

1. Vide order dated 9-11-2009 the present writ petition was converted as an appeal under the Customs Act.

2. The order-in-original, i.e., first order, which was made the subject matter of challenge before the CESTAT was passed by the Commissioner of Customs, Kanpur.  

3. By order dated 22-9-2010 the Division Bench then hearing the matter, had raised the issue of territorial jurisdiction. In the case of Suresh Desai & Associates v. Commissioner of Income Tax, it has been held that the appellate jurisdiction depends upon the location/place of the authority which had passed the order-in-original.  

4. Counsel for the appellant seeks permission to withdraw the present appeal with liberty to approach the jurisdictional High Court.

5. This writ petition was initially entertained and a conditional stay order was passed, which has continued. Even after the order dated 22-9-2010, the appeal has remained pending and various orders/directions have been issued, including direction to the respondent to file a copy of the enquiry report in respect of the customs officials involved.  

6. It does appear that the appellant in the present case had bonafidely filed the appeal in this Court and has been pressing the same, as the Tribunal is located in Delhi.  

7. The present appeal is dismissed as withdrawn with liberty as prayed for.

Then, they approached the Allahabad High Court in appeal with a delay of 697 days. The High Court observed, (2012-TIOL-1234-HC-ALL-CUS)

1. In the present case, the appellant was assisted and had the services of the counsels, who are expert in the central excise and customs cases.

2. They first filed a writ petition, and then without converting it into appeal obtained an interim order.

3. They kept on getting the matter adjourned and thereafter in spite of specific objection taken, citing the relevant case law, which is well known, took time to study the matter.

4. Thereafter, they took more than one year and three months, to study the matter to withdraw the appeal.

5. They took a chance, which apparently looking to the facts in this case appears to be the practice of the counsels appearing in such matters at Delhi High Court and succeeded in getting interim orders.

6. The Supreme Court has strongly deprecated such practice of forum shopping .

7. In this case also there is no pleading that the writ petition and thereafter appeal was filed in Delhi High Court, under bona fide belief that it had jurisdiction to hear the appeal and that the appellant was pursuing the remedies in wrong court with due diligence.

and dismissed the appeal which took them to the Supreme Court. The supreme Court observed, (NEERAJ JHANJI Vs COMMISSIONER OF CUSTOMS & CENTRAL EXCISE - 2013-TIOL-36-SC-CUS)

The very filing of writ petition by the petitioner in Delhi High Court against the order in original passed by the Commissioner of Customs, Kanpur indicates that the petitioner took chance in approaching the High Court at Delhi which had no territorial jurisdiction in the matter. We are satisfied that filing of the writ petition or for that appeal before Delhi High Court was not at all   bona fide . We are in agreement with the observations made by the Allahabad High Court in the impugned order. The Allahabad High Court has rightly dismissed the petitioner's application of condonation of delay and consequently the appeal as time barred.  

Special leave petition is dismissed with cost which we quantify at Rs. 25,000/-.

In Chetak Construction Ltd vs Om Prakash on 20 April 1998, the Supreme Court held,

We certainly, cannot approve of any attempt on the part of any litigant to go forum shopping. A litigant cannot be permitted ‘choice' of the ‘forum' and every attempt at "forum shopping" must be crushed with a heavy hand.

In Union of India vs Cipla on 21 October 2016, the Supreme Court listed several examples of forum shopping:

1. A classic example of forum shopping is when a litigant approaches one Court for relief but does not get the desired relief and then approaches another Court for the same relief. This occurred in Rajiv Bhatia v. Govt. of NCT of Delhi . The respondent-mother of a young child had filed a petition for a writ of habeas corpus in the Rajasthan High Court and apparently did not get the required relief from that Court. She then filed a petition in the Delhi High Court also for a writ of habeas corpus and obtained the necessary relief.

2. In Arathi Bandi v. Bandi Jagadrakshaka Rao, the Court noted that jurisdiction in a Court is not attracted by the operation or creation of fortuitous circumstances. In that case, circumstances were created by one of the parties to the dispute to confer jurisdiction on a particular High Court. This was frowned upon by the Court that to allow the assumption of jurisdiction in created circumstances would only result in encouraging forum shopping.

3. In World Tanker Carrier Corporation v SNP Shipping Services , it was observed that the respondent/plaintiff had made a deliberate attempt to bring the cause of action namely a collision between two vessels on the high seas within the jurisdiction of the Bombay High Court. Bringing one of the vessels to Bombay to confer jurisdiction on the Bombay High Court had the character of forum shopping rather than anything else.

4. Another form of forum shopping is taking advantage of a view held by a particular High Court in contrast to a different view held by another High Court. In Ambica Industries v. Commissioner of Central Excise the assessee was from Lucknow. It challenged an order passed by the CESTAT located in Delhi before the Delhi High Court. The Delhi High Court did not entertain the proceedings initiated by the assessee for want of territorial jurisdiction. Dismissing the assessee's appeal the Court gave the example of an assessee affected by an assessment order in Bombay invoking the jurisdiction of the Delhi High Court to take advantage of the law laid down by the Delhi High Court or an assessee affected by an order of assessment made at Bombay invoking the jurisdiction of the Allahabad High Court to take advantage of the law laid down by it and consequently evade the law laid down by the Bombay High Court. It was said that this could not be allowed and circumstances such as this would lead to some sort of judicial anarchy.

5. In Jagmohan Bahl v State (NCT of Delhi) it was held that successive bail applications filed by a litigant ought to be heard by the same learned judge, otherwise an unscrupulous litigant would go on filing bail applications before different judges until a favourable order is obtained. Unless this practice was nipped in the bud, it would encourage unscrupulous litigants and encourage them to entertain the idea that they can indulge in forum shopping, which has no sanction in law and certainly no sanctity.

6. Another category of forum shopping is approaching different Courts for the same relief by making a minor change in the prayer clause of the petition. In Udyami Evam Khadi Gramodyog Welfare Sanstha v. State of Uttar Pradesh it was noticed that four writ applications were filed by a litigant and although the prayers were apparently different, the core issue in each petition centred round the recovery of the amount advanced by the bank. Similarly, substituting some petitioners for others with a view to confer jurisdiction on a particular Court would also amount to forum shopping by that group of petitioners.

7. In Supreme Court Advocates on Record Association v. Union of India (Recusal Matter) Justice Khehar noticed yet another form of forum shopping where a litigant makes allegations of a perceived conflict of interest against a judge requiring the judge to recuse from the proceedings so that the matter could be transferred to another judge.

Government in the mall :

Sometimes you will find even the government shopping in the forum mall. Against some CESTAT orders, the appeal lies to the Supreme Court and against some, the High Court.

This is a major dilemma faced by many Commissioners when they don't accept an order of the Tribunal and decide to appeal.

Should they go to the High Court or Supreme Court?

If they decide to go to the Supreme Court, they have to send detailed reports to the Board within 15 days and ensure that the appeal is filed within two months. If they want to go to the High Court, they are free to do so and they have six months' time. So normally they choose this easy route. Of course, most of these cases are lost on the ground of wrong court, but they can still take a chance.

And recently, the Chief Justice of India proclaimed,

I will not permit forum shopping as the CJI.

A message to the bar, you have a tough CJI and such practices will not be allowed.

Until Next week