Territorial jurisdiction upheld; forum non conveniens barred; limitation from fraud discovery (Art 113) | Fraud Recovery : Delhi HC

The Delhi High Court’s decision in a cross-border fraud recovery suit clarifies two pivotal points: the court’s territorial jurisdiction under the CPC and the inapplicability of the doctrine of forum non conveniens to domestic civil suits. It also refines the approach to limitation periods for fraud-related claims, emphasizing the relevance of Section 17 of the Limitation Act and Article 113.

Background & Facts

The Dispute

The plaintiff, the Government of Canada, filed a civil suit seeking recovery of funds allegedly transferred from Canadian bank accounts to Indian accounts held by the defendants, and a rendition of accounts against several Indian banks. The suit alleges that defendants Sanjay Madan (defendant 1) and his accomplices defrauded the Government of Ontario between 2011 and 2020, using two schemes - the “Support for Families Program (SFFP) Fraud” and the “Fee for Service Consultants (FFSC) Fraud”.

Key Facts

• 04.04.2023: Defendant 1 entered a guilty plea before the Ontario Superior Court of Justice, admitting fraud and kickbacks.
• 27.11.2023: Defendant 2 pleaded guilty to fraud, possession and money-laundering charges in Canada.
• April - July 2020: Over 78,000 fraudulent SFFP applications were submitted; more than 44,000 were processed, resulting in disbursements exceeding CAD 10.8 million.
• April 2020 - August 2020: Funds were transferred to Indian bank accounts of defendant 1, his wife Mrs Shalini Madan, and their sons, amounting to approximately CAD 103,000 in defendant 2’s accounts.
• 19.10.2020: Ontario Superior Court issued a worldwide Mareva injunction freezing assets of defendants 1 and 2; extended on 29.01.2021 to worldwide assets.
• 22.10-23.10.2020: Plaintiff first discovered illegal transfers when two bank statements were obtained.
• 27-28.10.2020: Further discovery of transfers via KPMG support.
• 07.12.2020: Affidavit filed in Canadian proceedings highlighting fund movement.
• 18.12.2020: Additional discovery of fraud.
• 08.01.2021: Defendant 1’s cross-examination admitted involvement in the FFSC scheme.
• 29.01.2021: Worldwide Mareva injunction reaffirmed.
• 04.04.2023: Defendant 1 entered a guilty plea in Ontario, sentenced to 10 years imprisonment.
• 27.11.2023: Defendant 2’s guilty plea accepted.
• 07.01.2025: KPMG LLP (Canada) submitted the Madan Investigation Report for India, tracing CAD 33,345,991 of unrecovered funds.
• 06.03.2025: Settlement Minutes signed by defendant 1 consenting to forfeiture of INR 65.9 crore from Indian accounts.
• 24.04.2025: Settlement approved.
• 15.05.2025: Plaintiff filed the present suit in Delhi High Court.
• 02.09.2026: Judgment delivered.

Procedural History

• 15.05.2025: Original suit filed (CS(OS) 379/2025) before Delhi High Court seeking recovery of CAD 33,345,991, rendition of accounts against defendants 3-10 (Indian banks), injunction against RBI, and interest.
• Date unspecified: Defendant 1 filed an application under Order VII Rules 10 & 11 read with Section 151 CPC seeking rejection of the plaint on grounds of limitation, lack of territorial jurisdiction, and abuse of process.
• Single Judge: Dismissed the plaint on the basis of the three grounds.
• 02.09.2026: Division Bench (Justice Vikas Mahajan) heard the appeal and delivered the present judgment.

The Parties' Positions

• Defendant 1 (Applicant): Argues (i) the reliefs are barred by limitation (Article 4, 68, 91(a) of the Schedule to the Limitation Act); (ii) the court lacks territorial jurisdiction because the cause of action arose abroad; (iii) the suit is an abuse of process as parallel proceedings are pending in Canada.
• Plaintiff (Respondent): Contends that (i) the cause of action accrued only when fraud was discovered (October 2020 onward) and further when the KPMG report was received (January 2025); (ii) the Indian banks where funds reside give the court territorial jurisdiction under Section 20(c) CPC; (iii) forum non conveniens does not apply to civil suits governed by the CPC; (iv) limitation periods should be computed under Article 113, taking into account the progressive discovery of fraud and acknowledgments under Section 18.

Relief Sought

• Plaintiff: Recovery of CAD 33,345,991 (excluding interest), rendition of accounts against defendants 3-10, injunctions against RBI, and interest on the recovered sum.
• Defendant 1: Dismissal of the plaint on the three grounds mentioned above.

The Legal Issue

What is the correct approach to (i) territorial jurisdiction of the Delhi High Court under Sections 20(a) and 20(c) of the CPC, (ii) the applicability of the doctrine of forum non conveniens to a civil suit governed by the CPC, and (iii) the computation of the limitation period for a fraud-related monetary claim under the Limitation Act, 1963?

Arguments Presented

For the Applicant (Defendant 1)

• The reliefs are time-barred under Article 4, 68 and 91(a) of the Schedule to the Limitation Act; the cause of action arose on 22-23 Oct 2020, making the suit fileable only by 18 Dec 2023, but it was filed on 15 May 2025.
• The entire cause of action arose in Canada; only incidental Indian bank accounts are involved, so the court lacks territorial jurisdiction under Section 20(c) CPC.
• The suit amounts to an abuse of process because identical issues are being litigated in Canadian criminal and civil proceedings; Section 151 CPC should be invoked to dismiss the suit.

For the Respondent (Plaintiff)

• The cause of action accrued only when the fraud was discovered, which is a progressive process; the latest discovery (KPMG report) occurred on 07 Jan 2025, resetting the limitation clock under Section 17 of the Limitation Act.
• The Indian bank accounts where the funds are lodged give the court jurisdiction under Section 20(c) CPC; the plaintiff’s claim is for disgorgement of money held in India, a cause of action that wholly or partly arose within the court’s territorial limits.
• Forum non conveniens applies only to foreign forums; it cannot be invoked to defeat a domestic civil suit under the CPC, and Section 151 CPC does not empower the court to apply the doctrine to a civil suit.
• Articles 68 and 91(a) relate only to specific movable property, not to monetary claims; the appropriate limitation provision is the residuary Article 113, which starts when the right to sue accrues - here, the latest discovery date.

The Court's Analysis

The bench began by reiterating the settled rule that an objection to territorial jurisdiction under Order VII Rule 10 CPC must be decided on the basis of the averments in the plaint, assuming them to be true. It examined the factual matrix and held that the plaintiff’s claim is for the recovery of funds that are presently held in Indian bank accounts (defendants 3-10). Accordingly, a “cause of action” - the right to demand the return of those specific monies - has arisen within the local limits of the Delhi court, satisfying Section 20(c) CPC.

"It must be stated that it is a settled proposition of law that the objection as to territorial jurisdiction in an application under Order 7 Rule 10 CPC has to be appreciated by way of demurrer, which means that it has to be seen taking all the averments made in the plaint on its face value."

The court then turned to the doctrine of forum non conveniens. Citing its own earlier decisions and the Supreme Court’s pronouncements, it observed that the doctrine is a principle of admiralty law applicable to foreign forums and has no statutory basis in the CPC for domestic civil suits. The bench emphasized that Section 151 CPC does not confer power to invoke forum non conveniens in a civil suit, and that the doctrine can only be raised in the context of anti-suit injunctions against foreign courts or in writ jurisdiction under Article 226.

"The principle of forum non conveniens does not apply to civil suits in India which are governed by the said Code, there being no provision under the Code for the same and recourse to Section 151, CPC is not permissible for application of the principle of forum non conveniens to domestic forums."

Regarding limitation, the court distinguished between Articles 68/91(a) (which pertain to specific movable property) and the present monetary claim. It held that Article 113, the residuary clause, governs the suit. The bench adopted the Supreme Court’s interpretation that for Article 113 the limitation period runs from the date “when the right to sue accrues”, i.e., the last date on which a cause of action arose. The plaintiff had pleaded multiple dates of accrual, the latest being 07 Jan 2025 (receipt of the KPMG report) and 24 Apr 2025 (settlement approval). The court concluded that the limitation period had not yet expired, especially because the plaintiff relied on Section 17 of the Limitation Act, which postpones the commencement of limitation until the fraud is discovered with reasonable diligence.

The bench also rejected the abuse-of-process argument, noting that the Canadian proceedings are criminal in nature and the restitution order does not preclude a separate civil action in India for the disgorgement of the remaining funds. The explanation to Section 10 CPC expressly states that pendency of a foreign suit does not bar a domestic suit on the same cause of action.

In sum, the court set aside the single judge’s order rejecting the plaint, held that the Delhi High Court has territorial jurisdiction, that forum non conveniens is inapplicable, and that the limitation defence does not bar the suit.

The Verdict

The Division Bench set aside the order of the learned Single Judge dated 02 September 2026, remanded the matter for trial, and held that:

1. The Delhi High Court has territorial jurisdiction under Section 20(c) CPC.
2. The doctrine of forum non conveniens cannot be invoked in a civil suit governed by the CPC.
3. The limitation period is governed by Article 113 of the Limitation Act, 1963, with the clock starting from the latest date of discovery (07 January 2025), therefore the suit is not time-barred. The plaint is allowed to proceed; no monetary award or specific injunction is granted at this stage.

What This Means For Similar Cases

Territorial Jurisdiction Must Be Established on the Plaint’s Allegations

• Courts will assess jurisdiction by assuming the plaint’s factual averments are true.
• Presence of the disputed assets or accounts within the court’s local limits satisfies Section 20(c) CPC, even if the underlying fraud occurred abroad.

Forum Non Conveniens Is Restricted to Foreign Forums

• The doctrine cannot be used to dismiss a domestic civil suit under the CPC.
• Anti-suit injunctions may be sought only against foreign courts; Section 151 CPC does not empower a domestic court to invoke forum non conveniens.

Limitation for Fraud Claims Follows Article 113 and Section 17

• Monetary claims are not covered by Articles 68 or 91(a); the residuary Article 113 applies.
• When fraud is concealed, Section 17 postpones the limitation clock until discovery with reasonable diligence.
• Courts will consider the “last date” of cause of action for Article 113, allowing progressive discovery to extend the limitation period.

Practitioners should:

• Draft plaints that clearly identify the location of the assets to establish jurisdiction.
• Avoid relying on forum non conveniens to defeat a suit governed by the CPC.
• Cite Section 17 and Article 113 when arguing against limitation bars in fraud-related monetary claims.