Thompson Press (India) Ltd. vs U.P. State Road Transport ...
2000 Latest Caselaw 323 Del

ORDER

J.B. Goel, J.

1. This is a petition under Section 20 of the Arbitration Act, 1940 (for short "the Act") filed by M/s. Thompson Press (India) Ltd. (hereinafter called the petitioner) against U.P. State Road Transport Corporation, Lucknow (hereinafter called the respondent).

2. The case of petitioner is that in pursuance to the tenders invited by the respondent for the printing and supply of 'Blank Ticket Books', the petitioner 's tender offer dated 20.10.1994 (Annexure B-1) was accepted by the respondent vide their letter dated 15.12.1994 (Annexure B) on the terms and conditions mentioned therein. An agreement (Copy at Annexure A) is also alleged to have been entered into on 5.4.1995. In pursuance of this contract, the petitioner had supplied the requisite number of blank ticket books as and when ordered by the respondent. The petitioner had submitted their bills for payment for the price thereof but the respondent unreasonably withheld and delayed the payments for a long time in spite of repeated letters of demand and at last the respondent had admitted liability to pay only Rs. 14,10,898/- and after long delay paid only Rs. 13,78,447/- on 26.5.1997. Balance amount, security amount of Rs. 3,52,000/- and interest 21% per annum is payable by the respondent which they have refused to pay. Petitioner has also claimed damages. The petitioner had issued various letters and notice of demand but to no effect. There is an arbitration agreement contained in clause 21 of the agreement for resolving the disputes through arbitration. The petitioner has accordingly filed this petition under Section 20 of the Act for appointment of an arbitrator.

3. The territorial jurisdiction of this Court has been invoked on various grounds as mentioned in para 30 of the petition. In reply, respondent has disputed the claim of the petitioner and it is alleged that the petitioner had committed breach of the terms of the contract. It is alleged that there are no disputes, differences or claims which needs adjudication by any Court or by the Arbitrator. Territorial jurisdiction of this Court is disputed on the ground that cause of action wholly arose at Lucknow and not at Delhi, where the respondent's head office is situated. Learned counsel for the respondent has strongly contested the territorial jurisdiction of this Court.

4. The following issue thus arises before proceeding further on merit:-

"Whether this Court has got territorial jurisdiction?"

5. Learned counsel for the petitioner has contended that this Court has jurisdiction on the following grounds:-

1. Part of cause of action arose at Delhi inasmuch as the tender was published in Delhi;

2. The orders were placed in Delhi;

3. Some payments were made in Delhi;

4. Under condition of the sale mentioned in the bills, disputes were subject to the jurisdiction of Delhi Courts;

5. The respondent has an office in Delhi and doing business for gain.

Whereas learned counsel for the respondent has contended that the respondent had invited quotations from Lucknow, the tender was accepted at Lucknow; payments were to be made at Lucknow, goods were to be supplied and actually delivered at Lucknow and no cause of action or part of cause of action has arisen at Delhi. Delhi office of the respondent was not concerned and had not contributed anything in the transaction, as such this Court has got no territorial jurisdiction.

6. Section 2(c) of the Act defines a Court as a 'Civil Court' having jurisdiction to decide the question forming the subject matter of the reference if the same had been the subject of a suit. In the case of claims arising out of contract, Section 20 of CPC enacts the rule as to the territorial jurisdiction of the Court. Hence the teritorial jurisdiction in respect of a proceeding under the Act will be governed by Section 20 CPC.

7. A Court gets jurisdiction under Section 20 CPC if-

1. The defendant resides or carries on business or personally works for gain within the local limits of its jurisdiction; or

2. The cause of action arises, wholly or in part, within such limits.

Under the Explanation to Section 20 CPC, a corporation is deemed to carry on business at its sole or principal office and if it has a subordinate office at any place, then it will be deemed to carry on business at such place also, in respect of any cause of action arising at such place.

8. To decide the question of jurisdiction of a Court to entertain a suit based upon a contract regarding purchase of goods, three points arise for consideration:-

1. The place of contract;

2. The delivery of the goods; and

3. The payment for the goods.

9. In deciding the questions as to where the contract is made, Section 4 of the Contract Act has to be taken into consideration. A contract is made where an offer of one party is accepted by the other party.

Thus, the place where offer of the petitioner was received and its acceptance posted is the place where the contract is made.

10. In pursuance of the quotations invited by the respondent, petitioner had submitted their tender/offer. It is not the case of the petitioner that the tenders were invited by Delhi office, nor that the tender offer was made by the petitioner at the Delhi office or the acceptance was made by Delhi office of the respondent. On the other hand, the case is that the respondent had invited quotations and petitioner had submitted tender which was accepted by respondent. Respondent is a corporation having its principal/head office at Lucknow. Letter dated 15.12.1994 (Annexure "B") filed by the petitioner is the letter of acceptance of the quotation/offer of the petitioner issued by the responden from its Lucknow Office. It is also not the case of the petitioner that the contract between the parties was made at Delhi. Under clause 17 of the agreement (Annexure "A") relied by the petitioner, the petitioner was required to deposit security in the shape of Call Deposit/Fixed Deposit certificates of a nationalised bank duly pledged in the name of the Secretary of the respondent at Lucknow. It is thus clear that the tender was issued from, tender offer was received and accepted at Lucknow. The contract was thus made at Lucknow. Simply because the offer may have originated from the Delhi office of the petitioner would not be a relevant consideration for determining the place of contract.

11. As per clause 4 of the agreement (Annexure "A") relied by the petitioner, the deliveries of the printed BT books were to be made by the petitioner at the headquarters office of Uttar Pradesh State Road Transport Corporation, Parivahan Bhawan, Tehri Kothi, Lucknow at their own risk and cost; under clause 13 of this agreement, all charges, such as packing, sales tax, forwarding, transportation were to be borne by petitioner and under clause 14, the delivery was to be accepted after being checked and verified at the office of the Corporation and receipt therefore to the issued by the Asstt.Manager (Tickets) and the petitioner was to be responsible for any loss or shortage of the books found at the time of checking. It is clear from these terms that the delivery was to be made at Lucknow.

12. Bills for payment were to be presented at and the payment thereof was payable at Lucknow. It is not shown by any document that the payment was to be made at Delhi. Simply because the petitioner is located at Delhi and some payments were received by them at Delhi, that in itself will not confer any jurisdiction on this Court.

The petitioner has also taken the plea that it is mentioned in the bills of the supplies that the Delhi Court alone would have jurisdiction. This circumstance will not confer jurisdiction on Delhi Court as this was not the terms agreed in the agreement between the parties. It is well established that the place where the cause of action arises in respect of any contract must be determined with reference to the terms of the original contract itself and not by any subsequent unilateral act of any party.

13. Thus, all the three conditions, i.e., the place of contract, the place of delivery of goods and payment to be made, took place at Lucknow . If there is any default in making payment, breach of contract or any dispute or difference arising out of this contract, only the Lucknow Courts will have territorial jurisdiction to entertain and decide the dispute.

14. Learned counsel for the petitioner has also emphasised that a branch office of the respondent is situate at Delhi and this gives jurisdiction to this Court. As already noticed, it is not the case of the petitioner that the tender was invited by or was submitted to or was accepted by the Delhi office. Section 20 CPC, except the illustrations, reads as under:-

"20. Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) * * * * * * *

(c) the cause of action, wholly or in part, arises.

Explanation: A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

15. Clauses(a) and (b) of Section 20 inter alia refer to a Court within the local limits of whose jurisdiction the defendant "carries on business" and clause (c) on the other hand refers to a Court within the local limits of whose jurisdiction, the cause of action wholly or in part arises but defendant may not be carrying on business there. The scope of Explanation to Section 20 CPC which applies to a corporation has been explained in M/s. Patel Roadways Ltd. Vs. M/s. Prasad Trading Company where it has been observed that this Explanation is in two parts dis-juncted by the word "or". The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event, the Court within whose jurisdiction the sole or principal office of the defendant is situated will also have jurisdiction even though no cause of action may arise there as it will be deemed to carry on business at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has principal office at one place and has also a subordinate office at another place. If the case falls within this letter part, it is not the Court within whose jurisdiction the principal office of defendant is situated but the Court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office".

16. In other words, under this Explanation, a suit can be filed against a Corporation where its subordinate office is situated only in respect of a cause of action arising at the place where it has its subordinate office. In the present case, no part of cause of action has arisen at Delhi but at Lucknow. As such, the Explanation would not be available to confer jurisdiction on this Court simply because the respondent corporation has a branch office in Delhi.

17. This Court thus has no territorial jurisdiction to entertain and try this petition.

This petition be, therefore, returned to the petitioner for being presented before a Court of competent jurisdiction.

Petitioner shall pay costs of these proceedings to the respondent assessed at Rs.5,000/-.