Madras High Court Division Bench Upholds Ouster of Civil Court Jurisdiction in App Developers' Suit Against Google 's Payment Policies

Chennai: In a significant ruling concerning the intersection of civil law, competition law, and payment systems regulation, the Madras High Court Division Bench, presided over by Chief Justice Sanjay V. Gangapurwala , has dismissed appeals filed by app developers challenging Google 's payment policies on the Play Store. The court upheld the Single Judge's decision to reject the plaints under Order VII Rule 11(d) of the Code of Civil Procedure, 1908, finding the civil suits barred by the provisions of the Competition Act, 2002 and the Payment and Settlement Systems Act, 2007.

The case involved app developers, including People Interactive (I) Pvt. Ltd. (Shaadi) and Matrimony , who had filed suits seeking declarations that Google 's payment terms, policies related to service fees, and the implementation of Google Play Billing System (GPBS)/User Choice Billing (UCB) were illegal and unenforceable. They also challenged certain clauses of the Developer Distribution Agreement (DDA) as unconscionable and sought consequential permanent injunctions.

The defendants, various Google entities, moved applications for rejection of the plaints, arguing that the suit was barred by Section 61 of the Competition Act, 2002 and impliedly barred by the PSS Act, 2007.

Arguments Presented:

The appellants/plaintiffs argued that the PSS Act, 2007 is not a complete code and the Reserve Bank of India (RBI) lacks the full adjudicatory powers of a civil court (like granting injunctions, compensation, detailed procedure). They contended that violations of the PSS Act and the Indian Contract Act, 1872 (ICA) constituted pre-existing common law rights or concurrent remedies, not exclusively falling under the special statutes. Relying on Section 62 of the Competition Act (which states its provisions are in addition to other laws), they asserted that civil court jurisdiction was not ousted. They further argued that the Competition Commission of India (CCI) cannot adjudicate PSS Act/ICA violations or act as a price regulator, and that a plaint containing multiple causes of action, some not covered by a statutory bar, cannot be rejected in part.

The respondents/defendants countered that the plaints were primarily based on allegations of abuse of dominant position, issues explicitly falling under the purview of the Competition Act, 2002. They cited Section 61 of the Act as an express bar to civil court jurisdiction for matters the CCI is empowered to determine. They argued that the Competition Act is a complete code for competition issues, and the PSS Act, 2007, with the RBI as the expert regulator and its dispute resolution mechanisms (Section 24, Ombudsman Scheme), constitutes a complete code impliedly barring civil court jurisdiction over payment system violations. They contended that allowing civil suits on these matters would lead to conflicting decisions with expert regulators and facilitate forum shopping, especially given that some plaintiffs had already approached the CCI on similar grounds. The defendants also argued the ICA claims were intrinsically linked to alleged dominance, which only the CCI could assess.

Separately, Google filed a cross-objection challenging the Single Judge's finding that the exclusive jurisdiction clause in the DDA (Clause 16.8), designating courts in Santa Clara , California , was unenforceable.

Court's Analysis and Findings:

The Division Bench first addressed the cross-objection regarding the California jurisdiction clause. The court upheld the Single Judge's finding, ruling that Clause 16.8, which restricts jurisdiction exclusively to foreign courts, amounts to an agreement in restraint of legal proceedings under Section 28 of the ICA, 1872, and is thus unenforceable.

Turning to the core issue of civil court jurisdiction, the Bench reiterated the principle that civil courts have jurisdiction unless expressly or impliedly barred by law, applying the seven principles laid down by the Supreme Court in Dhulabhai etc. vs. State of Madhya Pradesh .

Examining the Competition Act, 2002 , the court found that Section 61 expressly bars civil courts from entertaining suits over matters the CCI is empowered to determine. It analyzed the extensive powers of the CCI under the Act, including inquiring into abuse of dominant position (Section 4), modifying agreements (Section 27), issuing interim directions (Section 33), and noted that the Act provides a detailed procedure for inquiry, evidence, and enforcement, making it a complete code for competition matters. The court reconciled Section 61 and Section 62 (additional remedy) by stating that Section 62 cannot negate the express ouster in Section 61 where the CCI has the power to act, relying on the Supreme Court's interpretation in Gujarat Urja Vikas Nigam Ltd. vs. Essar Power Ltd. The Bench noted that the plaintiffs' case heavily relied on the CCI's prior findings against Google 's dominant position and practices, bringing the dispute squarely within the CCI's domain.

Regarding the Payment and Settlement Systems Act, 2007 , the court found that while there is no express bar, the Act's scheme leads to an implied bar on civil court jurisdiction for alleged violations of the PSS Act. It highlighted the RBI's role as the expert regulator with comprehensive powers (Sections 10, 17, 18) to regulate payment systems, issue directions, and take preventive action. The court emphasized the dispute resolution mechanism under Section 24 of the PSS Act, where disputes between system participants and system providers shall be referred to the RBI, whose decision has finality under Section 24(4). Applying the Dhulabhai test, the court concluded that the PSS Act creates specific rights and obligations (like the T+1 settlement period alleged by plaintiffs) and provides an adequate machinery for their enforcement by an expert body, thus impliedly barring civil suits alleging such violations. The court also noted that the plaintiffs themselves had acknowledged the RBI's powers and some had even complained to the RBI.

The court also considered the argument that a plaint cannot be rejected in part under Order VII Rule 11(d). While acknowledging this principle, the Bench held that reading the plaints in their entirety, the core allegations (regarding unconscionable terms under ICA or pricing issues) were inextricably linked to the alleged abuse of dominant position or violations of payment system regulations, which fall within the exclusive or primary jurisdiction of the CCI and RBI, respectively.

The Bench observed that the dispute was not new to the CCI, which had already examined Google 's dominant position and billing terms. Therefore, any further challenges based on the same premise ought to be pursued before the authorities constituted under the special statutes.

Conclusion:

Finding no error in the Single Judge's decision, the Madras High Court Division Bench dismissed the appeals and cross-objections. The court held that the civil suits were barred because the issues raised concerning alleged abuse of dominant position fall under the express bar of Section 61 of the Competition Act, 2002, and the allegations of violation of the PSS Act, 2007, fall under the implied bar due to the comprehensive regulatory and dispute resolution mechanism provided by that Act and the RBI.

The interim protection previously granted to the appellants has been extended for a period of three weeks to allow them to explore further legal remedies.