Bank Of Baroda vs Jailaxmi Road Services Pvt. Ltd. & ...
2001 Latest Caselaw 587 Del

ORDER

Arun Kumar, J.

1. This appeal is directed against the judgment of learned single Judge dated 7th October 1994 whereby it was held that this court has no territorial jurisdiction with respect to certain consignment subject matter of the suit.

2. Briefly the facts are that the plaintiff/appellant had filed a suit for recovery of Rs. 12,63,989.42p. against the respondents/defendants. Defendants No. 1 is a public carrier having its head office at Bombay and various branch offices all over the country including one at Delhi. The plaintiff bank had granted credit facilities to defendant No.2. One of the credit facilities was opening of Letters of Credit in favor of some of the manufacturers/suppliers of goods to defendant No. 2. In pursuance of Letters of Credit the respective manufacture/supplier used to send goods through defendant No. 1, an approved carrier. It is further the case of the plaintiff that defendant No. 1 was bound to deliver the goods to the beneficiary, i.e. defendant No. 2 only against production of original Lorry Receipts. The Lorry Receipts were first to be give to the plaintiff bank who would present the same to defendant No. 2 for retiring the documents against payments. Only thereafter it would be entitled to delivery of the goods. The case of the plaintiff against defendant No. 1 is based on the fact that the consignments covered by special Lorry Receipts could be delivered only to the consignee at the order of the consignee bank whose name was mentioned in the Lorry Receipts. According to the plaintiff, defendants No. 1 released/delivered the goods without the consent of the consignee bank. Defendant No. 2 did not make the payment of the goods covered under the inland letters of the goods covered under the inland letters of the credit facility. The plaintiff filed the suit for recovery on account of failure of defendant No. 2 to clear its dues based on the credit facilities allowed to be principal borrower. According to the plaintiff defendant No. 1 facilitated delivery of goods to defendant No. 2 without following the prescribed procedure and therefore was liable for the amount due to the plaintiff. For purposes of deciding the present appeal further details are not necessary.

3. The defendants filed their written statements. Defendant No. 1, the public carrier took a preliminary objection that this court had no territorial jurisdiction to try the suit in view of the fact that its principal place of business was Bombay and no cause of action had arisen against the said defendant at Delhi. consignment was to be delivered at Delhi with respect to which alone the learned single Judge held that this court had jurisdiction.

4. On the pleadings of the parties various issues were framed. The issue regarding territorial jurisdiction of the court was treated as a preliminary issue and was decided byu the learned single Judge by the impugned judgment. The issue is an under:-

Whether this court had no territorial jurisdiction to entertain the present suit against defendant No. 1 as alleged in para No. 1 of the written statement filed by defendant No. 1 (Preliminary Objections)? OPD

5. Besides pleading that neither defendant No. 1 was a resident of Delhi nor it carried on business or worked for gain at Delhi as well as that no cause of action had arisen at Delhi, it was urged on behalf of defendant No. 1 that the Lorry Receipts contained an ouster clause to the effect that in case of disputes only Bombay Courts had jurisdiction. However, neither the learned single Judge nor the learned counsel for the parties while arguing the present appeal laid any reliance on this aspect , i.e. the ouster clause. The case was argued only on the basis of section 20 of the Code of Civil Procedure. The said section is reproduced as under for purposes of ready reference:-

"20, Other suits to be instituted where defendants resides or cause of action arises.-

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 y works for gain; or

(b) any 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, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

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

6. Sub-clause (a) of section 20 deals with cases where the defendant or each of defendants where there are more than one actually and voluntarily resides or carries on business or personally works for gain within the jurisdiction of the court where the suit is instituted. Sub-clause (c) refers to cause of action, i.e. court within whose jurisdiction the cause of action for the suit arises wholly or in part. According to defendant No. 1 the case does not fall under either of these clauses. Sub-clause (b) deals with a situation where there are more than one defendants and any one of them either actually and voluntarily resides or carries on business or personally works for gain within the territorial jurisdiction of the court where the suit is filed while the others do not. thus sub-clause (b) comes into play when only one of the defendant satisfies sub-clause (a) and others do not, i.e. a case some of the defendants clearly and undisputedly fall under clause (a) but defendant No. 1/object or does not fall under clause (a).

7. As per sub-clause(b) the plaintiff can seek leave of the court to proceed against the non-resident defendant. Obviously the object of this provision is to save the plaintiff from being driven to different courts when the cause of action for the suit arises out of the same transaction and some of the defendants are located at one place while the others are spread over different parts of the country. Requiring a plaintiff to approach different courts in different part of the country for a cause of action arising from same transaction will be unfair and unjust. Besides harassment and multiplicity of proceedings, it may give rise to conflicting judgments. Therefore, prudence demands that such a suit be tried in one court and the defendants who are outside the jurisdiction of the court be sued with the leave of the court. In the present case the plaintiff had sought leave of the Civil Procedure.

8. The learned single Judge rejected the application of the plaintiff under section 20(b), C.P.C. unfortunately overlooking the fact that various sub-clauses in section 20 are in the alternative or mutually exclusive. At the end of each clause word 'or' has been used in the section and are there to be read disjunctively which means that the clauses are in the alternative and all of them taken together need not be satisfied. It cannot be disputed that defendant No. 1 is a necessary and proper party in the suit because the plaintiff has made allegations against defendant No. 1 and has based part of its cause of action in the suit against it.

9. On the main question in controversy the learned single Judge observed as under:-

"Before permission can be granted under Section 20(b) C.P.C. we have to necessary that the defendants must have their place of business at Delhi but also the cause of action must arise at Delhi. In this case, in view of the submissions made which I am going to discuss hereinafter, it can be said that no cause of action accrued at Delhi except against Exhibit p. 6. Relying on the observation of the Supreme Court in the case of M/s Patel Roadways Ltd. As quoted above, it is clear that the Defendant No. 1 can be sued even where it has its branch office. But then the plaintiff has to satisfy that cause of action also accrued at Delhi or the contract was entered into at Delhi In the words of the Supreme Court "The linking together of the place where the case of action arises with the place were a subordinated office is located clearly shows that the intention of the legislature was that, in the case of a Corporation, for the purposes of Clauses (a), the location of the subordinate office, within the local limits of which a cause of action arises, it to be the relevant place for the filing of a suit and not the principal place of business." Therefore, it is not sufficient for the Plaintiff to point out that Defendant No. 1 has branch office at Delhi or other Defendants reside at Delhi hence this Court has jurisdiction. Plaintiff was also required to prove that cause of action accrued at Delhi. But from the narration of facts stated above the only irresistible conclusion which can be drawn is that no cause of action accrued at Delhi qua exhibits P.1 and P.5 and P7 to P.12."

10. A careful consideration of Section 20 in our view does not support the conclusion reached by the learned single Judge. To determine territorial jurisdiction of a court it would be sufficient that the defendants reside or carry on business or personally work for gain within its territory. If in a given case where there are more than one defendants and some satisfy sub-clause (a) while others do not, sub-clause (b) has to be resorted to. The plaintiff in such a case can seek permission of the court in which the suit has been instituted to proceed against the defendants who reside, carry on business or work for gain outside the territorial jurisdiction of the court. Thus Sub-clause (b) is a supplement to sub-clause (a). The other alternative when the requirements set out under sub-clauses (a) and (b) are not satisfied is that a court would still have jurisdiction to try a suit if the cause of action for the suit or part of the suit or part of cause of action of the suit arises within its jurisdiction as per sub-clause (c). It follows that sub-clause(a)b and sub-clause (c). It follows that sub-clause (a) and sub-clause (c) of section 20, C.P.C. are in the alternative and it is not necessary that both the sub-clauses must be satisfied as observed by the learned single Judge in the passage quoted above. Therefore, the impugned judgment on the question of territorial jurisdiction of this court while deciding issue No. 1 of the suit cannot be sustained. in our view sub-clause (b) of section 20, CPC is clearly attracted in the facts of the case. The application of the plaintiff under section 20(b), CPC was dismissed by the leaned single Judge solely on account of the fact the fact that the plaintiff did not satisfy both clauses, i.e., sub-clauses (a) and (c) which is our view is not correct. The impugned judgment of the learned single Judge on issue No. 1 regarding territorial jurisdiction of the plaintiff under section 20(b) CPC on merits in accordance with law.

11. The appeal is allowed with no order as to costs.