Canada’s CAD 33.3-million fraud-recovery suit over funds in Indian bank accounts can proceed; Delhi HC rejects forum non conveniens plea

The Government of Canada instituted a suit seeking recovery and rendition of accounts concerning funds allegedly fraudulently obtained from the Government of Ontario and transferred from Canadian accounts to Indian bank accounts held by Defendant Nos. 1 and 2 or their family members.

Defendant No. 1 had pleaded guilty in Canada to charges relating to the Support for Families Program fraud and the Fee for Service Consultants fraud; Defendant No. 2 had likewise pleaded guilty to fraud-related offences.

The plaintiff alleged that approximately CAD 40.2 million had been transferred to Indian bank accounts, of which CAD 33,345,991 remained unrecovered.

Defendant No. 1 filed an application under Order VII Rules 10 and 11 read with Section 151 CPC seeking return or rejection of the plaint on the grounds that the suit was barred by limitation, that the Delhi High Court lacked territorial jurisdiction, that Canada was the more appropriate forum, and that the suit amounted to an abuse of process because related proceedings were pending in Canada.

1. Whether the plaint disclosed that part of the cause of action arose within the territorial jurisdiction of the Delhi High Court under Section 20 CPC, warranting return of the plaint under Order VII Rule 10 CPC?

2. Whether the suit ought to be declined on the ground of forum non conveniens, with Canada being the more appropriate forum?

3. Whether the suit was ex facie barred by limitation under Articles 4, 68 or 91(a), or otherwise under Article 113 of the Limitation Act, 1963, so as to attract rejection under Order VII Rule 11(d) CPC?

4. Whether the suit constituted an abuse of process because related civil and criminal proceedings were pending in Canada?

Under Order VII Rules 10 and 11 CPC, territorial jurisdiction and limitation are considered on a demurrer, by accepting the plaint’s averments and documents as correct and disregarding the defence at that stage.

Section 20(c) CPC permits institution of a suit where the cause of action arises wholly or partly; a cause of action comprises every fact necessary for the plaintiff to prove to obtain relief.

The doctrine of forum non conveniens does not apply to ordinary civil suits governed by the CPC where the chosen Indian court otherwise possesses jurisdiction; it is principally relevant to foreign forums, including anti-suit injunction proceedings.

Articles 68 and 91(a) of the Limitation Act apply to suits concerning specific movable property and do not govern ordinary claims for recovery of money; Article 4 concerns suits by principals against agents.

In the absence of a specific provision, Article 113 applies, prescribing three years from when the right to sue accrues.

Section 17 postpones limitation where fraud or concealment prevents discovery of the right or necessary documents, although whether reasonable diligence could have led to earlier discovery is ordinarily a question of fact.

Explanation to Section 10 CPC expressly provides that pendency of a suit in a foreign court does not preclude Indian courts from trying a suit founded on the same cause of action.

The plaint specifically pleaded that the allegedly diverted funds were transferred into bank accounts maintained with Defendant Nos. 3–10, several of which were situated in Delhi, and that the funds could be last traced within this jurisdiction.

These pleaded facts constituted part of the transaction and furnished a part of the cause of action under Section 20(c) CPC; the reliefs for rendition of accounts and repatriation were also directed against Indian banks and the RBI.

The fact that Canada was not a reciprocating territory under Section 44A CPC further supported the practical necessity of pursuing an Indian suit for recovery against assets located in India, whether on the underlying cause of action or on a Canadian judgment.

The forum non conveniens objection was rejected because the proceeding was an ordinary civil suit, not an anti-suit injunction. Once the Delhi High Court had jurisdiction under the CPC, the plaintiff, as dominus litis, could not be non-suited merely because the evidence and related proceedings were principally located in Canada.

On limitation, the Court held that Articles 4, 68 and 91(a) did not ex facie apply: there was no pleaded principal-agent relationship, and the claim concerned recovery of money rather than specific movable property.

The plaint pleaded successive discoveries and specifically asserted that the KPMG report dated 7 January 2025 supplied critical particulars necessary to comprehend the extent and movement of the fraud and to institute the present proceedings.

Whether the plaintiff could reasonably have discovered the fraud earlier, and whether the later events constituted actionable accruals, were mixed questions of fact and law that could not be determined under Order VII Rule 11 CPC.

Finally, the pendency of Canadian proceedings did not by itself render the Indian suit abusive.

The plea of forum non conveniens was unavailable in the present ordinary civil suit.

The plaint was not ex facie barred by limitation, since the applicability of Section 17 and Article 113, the date of discovery, and the accrual of the right to sue involved triable factual questions.

The allegation of abuse of process was likewise not capable of summary determination and was not established merely by the pendency of Canadian proceedings.

Accordingly, Defendant No. 1’s application under Order VII Rules 10 and 11 read with Section 151 CPC was dismissed.