Court Rejects Defendant's Pleas on Territorial Jurisdiction, Limitation Bar, and Abuse of Process; Affirms that Doctrine of Forum Non Conveniens Does Not Apply to Civil Suits Under CPC
In a significant judgment dated September 2, 2026, the Delhi High Court, presided over by Justice Vikas Mahajan, ruled in favor of the Government of Canada in a civil suit seeking recovery of millions of Canadian dollars fraudulently transferred from Canadian bank accounts to Indian bank accounts. The suit targets defendant Sanjay Madan and others, including several Indian banks, for rendition of accounts and recovery of illicit funds.
The suit stems from criminal proceedings in Ontario, Canada, where defendant no.1 Sanjay Madan pleaded guilty to defrauding the Government of Ontario of millions of dollars through fraudulent schemes-the "Support for Families Program (SFFP) Fraud" and the "Fee for Service Consultants (FFSC) Fraud"-between 2011 and 2020. These schemes involved submitting fraudulent applications and receiving secret kickbacks, with proceeds transferred to Indian bank accounts held by Madan, his wife, and associates.
The Government of Canada filed the suit in Delhi to recover approximately CAD 33.3 million held in Indian banks, asserting that the Delhi High Court has territorial jurisdiction as part of the cause of action arose in Delhi, where the illicit funds are deposited. Defendant no.1 challenged the suit on three main grounds: lack of territorial jurisdiction, limitation bar, and abuse of process owing to parallel proceedings in Canada. He also urged application of the doctrine of forum non conveniens, arguing Canada as the more appropriate forum.
The Court rejected these contentions after a detailed analysis of law and facts. On territorial jurisdiction, the Court emphasized that under Section 20(c) of the Civil Procedure Code (CPC), a suit may be instituted where any part of the cause of action arises. It found that since the Indian bank accounts holding the alleged illicit funds are located in Delhi, a substantial part of the cause of action indeed arose within the Court's territorial limits. The Court also noted that several defendants, including Indian banks and the Reserve Bank of India, operate within Delhi's jurisdiction, further supporting the Court's jurisdiction.
Regarding the plea of forum non conveniens, the Court clarified that this doctrine does not apply to civil suits governed by the CPC. It stressed that while the doctrine may be relevant for foreign forums or in writ jurisdiction under Article 226 of the Constitution, it cannot be invoked to deny jurisdiction when the Court is otherwise competent to try the suit. The plaintiff, as the dominus litis (master of the litigation), has the prerogative to choose the forum where jurisdiction exists.
On the limitation issue, the Court accepted the plaintiff's contention that the fraud was discovered progressively over several years, culminating in a forensic report by KPMG LLP (Canada) dated January 7, 2025, which provided critical evidence linking the Canadian fraud to Indian bank accounts. Applying Section 17 of the Limitation Act, 1963, the Court held that limitation begins to run only when the fraud is discovered or could have been discovered with reasonable diligence. Since the suit was filed within four months of the forensic report, it was not barred by limitation. The Court further held that the suit falls under the residuary Article 113 of the Limitation Act since it involves recovery of money rather than specific movable property.
The Court also dismissed the abuse of process plea, observing that the pendency of similar proceedings in Canada does not bar Indian courts from trying the suit founded on the same cause of action, as explicitly provided by the Explanation to Section 10 CPC. The judgment distinguished between criminal restitution proceedings in Canada and the civil recovery proceedings in India, emphasizing that the Indian courts are the appropriate forum to order rendition of accounts and repatriation of funds held in Indian banks.
The judgment relied on numerous precedents, including the Supreme Court's rulings in Pallav Sheth v. Custodian and K.K. Modi v. K.N. Modi, and various decisions of the Delhi High Court, to affirm principles on territorial jurisdiction, limitation, and the doctrine of forum non conveniens.
In sum, the Delhi High Court's ruling empowers the Government of Canada to pursue recovery of the fraudulently transferred funds within India, underscoring the jurisdictional competence of Indian courts over foreign-linked financial frauds involving Indian entities and assets.
Bottom Line:
Suit filed by Government of Canada seeking recovery of fraudulently transferred funds and rendition of accounts against defendants including Indian banks - Held, Delhi High Court has territorial jurisdiction to entertain the suit, as part of the cause of action arose in Delhi where bank accounts holding alleged illicit funds are located - Doctrine of forum non conveniens does not apply to civil suits governed by CPC - Suit not barred by limitation as fraud discovered progressively, with final forensic report dated 07.01.2025 providing critical evidence.
Statutory provision(s):
Civil Procedure Code, 1908 Sections 10, 20, Order VII Rules 10 & 11, Section 151; Limitation Act, 1963 Sections 17, 18; Articles 4, 68, 91(a), 113; Section 44A CPC (reciprocating territory provision)
Government of Canada v. Sanjay Madan, (Delhi) : Law Finder Doc Id # 2971969
