Golden Peakock Overseas Limited ... vs Ranjit Industries And Ors.
2005 Latest Caselaw 1372 Del

JUDGMENT

Swatanter Kumar, J.

1. The plaintiff has filed the present suit for recovery of Rs. 20,80,568.53 and for injunction restraining the defendants from dealing in any manner or exporting any goods to the overseas buyers of the plaintiff.

2. As per the averments made in the plaint, the plaintiff is a 100% export oriented company having its works at Noida Export Processing Zone and it claims to be a highly specialised research and development cell, which works continuously to improve the existing and developing new products to cater to the quality conscious international markets. According to them their goods are universally accepted in United Kingdom, Europe, South Africa, Taiwan, Hongkong, China, Australia and U.S.A. etc. The plaintiff is also an ISO 9001 : 2000 registered company. According to the plaintiff it was dealing with the defendants for the last over 15 years and claims that the defendants have been virtually set up and developed by the plaintiff. The plaintiff used to procure the products from the defendants and dealt with its overseas customers. They lastly supplied the goods together in September'03. It is averred that in October'03, the defendants in violation of the undertaking contained in their letter dated 2nd April, 2003 started dealing with the foreign buyers of the plaintiff and made supplies after luring them over by offering lower prices, while promising the same products as that of the plaintiff. The plaintiff could only know about two such export orders and submits that the defendants needs to render the accounts in that regard. The defendants had then agreed to pay to the plaintiff, 60% of the value of exports done by them and they claim an amount of Rs. 4,80,568.35p on account of such price and Rs. 15,96,013.53 on account of damages. The plaintiff also claims interest thereupon and the relief of injunction.

3. The defendants have filed their written statement contesting the suit, besides challenging the claim of the plaintiff on merits and giving its own version in relation to the claim of the plaintiff for recovery of money. The defendants have taken a preliminary objection with regard to maintainability of the suit on the plea that this court has no territorial jurisdiction to entertain and decide the present suit as no cause of action or part thereof has arisen within the territorial jurisdiction of this court. The defendants filed an application being IA No. 7437/2005 under Order 7 Rule 10 read with Section 151 of the Code of Civil Procedure for returning of the plaint for its presentation in the court of competent jurisdiction. The main plea of the defendants is that the defendants have been carrying on the business with the plaintiff for the last 20 years and are manufacturing brass parts and supplying the same to the plaintiff. The invoices generated between the parties were initiated at Jamnagar. Goods were delivered to the plaintiff at their Noida Workshop/factory and in terms of the printed conditions on the invoices, the Courts at Jamnagar alone would have the jurisdiction to entertain and decide the disputes. Further, it is stated that all the transactions between the parties either took place between the parties at Jamnagar or at Noida, U.P. Neither any transaction nor any dealings were done by the parties in relation to the disputes raised in the present suit, at New Delhi. It is also stated that the letter dated 2nd April, 2003 is a forged letter and does not bear the signatures of defendant no.2. Plaintiff while praying for dismissal of this application submitted that in terms of the letter dated 2nd April, 2003, the defendants had agreed that the courts at Delhi alone will have the jurisdiction and furthermore that some correspondence had taken place between the parties at Delhi; and the plaintiff has its registered office at Delhi and as such on the true construction of the provisions of Section 20 of the Code of Civil Procedure, this court would have the jurisdiction to entertain and decide the present suit and in support of this submission, the plaintiff has relied upon a judgment of this Court in the case of Raunaq Int. Ltd. v. Mini Sea Foods 1983 Rajdhani Law Reporter 202.

4. In order to examine the merit or otherwise of this question relating to territorial jurisdiction of this court, reference to the plaint would be necessary. The facts averred in the plaint have already been referred to in some detail. In the entire plaint, there is no averment that the parties had entered into an agreement at Delhi, the performance of the contract was at Delhi, the goods were delivered at Delhi or any other event in the chain of the case of the plaintiff had materially or substantially occurred at Delhi. In order to give jurisdiction to this Court, the whole emphasis is on paragraph 12 of the plaint which reads as under:-

That the registered office of the Plaintiff is situated at Delhi. The Defendants had given the Undertaking not to deal with the foreign buyers of the Plaintiff at Delhi and had agreed to the jurisdiction of the Courts at Delhi in the matter of any such claims by the Plaintiff against the Defendants, and this Hon'ble Court has territorial jurisdiction over the subject matter of the suit.

5. In addition to the above averment, it has been stated in paragraph 7 of the plaint, that the defendants had given an Undertaking in their letter dated 2nd April, 2003 to the plaintiff for not supplying the goods to the foreign buyers of the plaintiff, and to have the disputes settled and determined in the courts at Delhi alone. Besides this averment, there is no other averment in the plaint which could have a bearing on this issue. The defendants have filed certain documents on record while denying the very writing and signatures on the letter dated 2nd April, 2003. In the documents filed, the invoices/purchase orders in relation to the business conducted between the plaintiff and defendants have been annexed. All these purchase orders and invoices show that the supplier was at Jamnagar and the goods were invoiced to the plaintiff at Noida. In the invoice dated 14th May, 2003 besides the goods being sent to Noida, it has been recorded in the printed portion of the invoice at clause 4 "in case of dispute, only JAMNAGAR Court will have jurisdiction". There are number of such invoices which have been placed on record, right from May 2003 to August, 2003. Fax messages and various other letters have been exchanged between the parties at Noida address and the Jamnagar address. It is the pleaded case of the applicant that no cause of action or any part thereof has arisen within the territorial jurisdiction of this court.

6. I have already noticed that there are no specific averments made in the plaint which can be construed at least prima facie to support the fact that any transaction between the parties had been completed or even happened within the territorial jurisdiction of this court. Though the letter dated 2nd April, 2003 has been denied by the defendants and it is stated that it is a forged letter, but even thereafter the parties have been transacting business and supplying goods abroad, as is evident from the documents filed by the defendants on record, from April'03 to August'03. But even if for the purposes of argument this plea of the defendant is taken to be not correct, even then the letter would be of no help to the plaintiff. Parties can vest jurisdiction in a court only if the court otherwise has the jurisdiction. It is a settled principle of law that no jurisdiction can be vested in a court by consent of parties if the court otherwise has no jurisdiction. The averments in the plaint itself are clear that nothing happened so as to give rise to a substantial or integral cause of action to provide territorial jurisdiction to this court. The mere fact that the plaintiff has its registered office at New Delhi, would not clothe this Court with the territorial jurisdiction and the case of Raunaq Int. Ltd. (supra) in face of the judgments of the Supreme Court, which are subsequent in point of time and are binding on this court, cannot be stated to be a correct enunciation of law. With respect, I am unable to follow the view expressed in this case.

7. In the case of Oil & Natural Gas Commission v. Utpal Kumar Basu and Ors. , the Supreme Court held as under:-

Therefore, broadly speaking, NICCO claims that a part of the cause of action arose within the jurisdiction of the advertisement in Calcutta and made representations demanding justice from Calcutta on learning about the rejection of its offer. The advertisements itself mentioned that the tenders should be submitted at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. Of course, the execution of the contract work was to be carried out at Hazira in Gujarat. Therefore, merely because it read the advertisement at Calcutta and submitted the offer from Calcutta and made representations from Calcutta would not, in our opinion, constitute facts forming an integral part of the cause of action. So also the mere fact that it sent fax messages from Calcutta and received a reply thereto at Calcutta would not constitute an integral part of the cause of action. Besides the fax message of January 15, 1993, cannot be construed as conveying rejections of the offer as that fact occurred on January 27, 1993. We are, therefore, of the opinion that even if the averments in the writ petition are taken as true, it cannot be said that a part of the cause of action arose within the jurisdiction of the Calcutta High Court.

The submission of the learned counsel for NICCO based on Section 21 of the Code of Civil Procedure that even if this Court comes to the conclusion that the High Court of Calcutta had no jurisdiction, this Court should, in the absence of proof of prejudice, refuse to interfere with the decision of the High Court unless it is otherwise found to be erroneous. While the spirit of Section 21 of the Code of Civil Procedure may support such a submission, we are afraid, the discretion cannot be used in favor of a party which deliberately invokes the jurisdiction of a Court which has no jurisdiction whatsoever for ulterior motives. That would only encourage such type of litigation. The object underlying the provisions in Section 21 is not to encourage ;such litigants but to avoid harassment to litigants who had bonafide and in good faith commenced proceedings in a court which is later found to be wanting in jurisdiction. In the instant case, we are convinced, beyond doubt, that NICCO did not act bona fide in moving the Calcutta High Court and, therefore, the submission based on Section 21 must fail.

8. Even in the case of Rajasthan High Court Advocates Association v. Union of India and Ors. AIR 2001 Supreme Court 416, the Supreme Court held as under:-

The expression 'cause of action' has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right of the immediate occasion for the action. In the wider sense it means the necessary conditions for the maintenance of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in 'cause of action.' It has to be let to be determined in each individual case as to where the cause of action arises.

9. In the light of the above enunciated principles it is clear that merely because some incidental correspondence was sent to Delhi, which has no material or substantial bearing and integral cause of action in favor of the plaintiff, would not vest this court with the territorial jurisdiction to entertain and decide the present suit. The plaint of the plaintiff is silent in regard to all material and required averments. The letter dated 2nd April, 2003 besides being a matter of substantial controversy is inconsequential, for helping the court in determining such an issue. As no cause of action, much less a substantial or integral cause of action had arisen within the territorial jurisdiction of this court, the parties by consent cannot confer jurisdiction, as otherwise this court has no jurisdiction to entertain and decide the present suit. The attempt of the plaintiff to invoke the jurisdiction of this court apparently is a deliberate attempt to invoke the jurisdiction of the court where none was vested in the court. The provisions of Section 20 of the Code of Civil Procedure can be invoked where the defendant or defendants reside or carries on the business. The residence or carrying on of business by the plaintiff per se would not vest territorial jurisdiction in the court, as residence of the plaintiff could not be a determining factor in this regard. The Supreme Court in the case of New Moga Transport Co., through its Proprietor Krishanlal Jhanwar v. United India Insurance Co. Ltd. and Ors. , while rejecting such a plea raised by the plaintiff held as under:-

By a long series of decisions it has been held that where two courts or more have jurisdiction under CPC to try a suit or proceedings, an agreement between the parties that the dispute between them shall be tried in any one of such courts is not contrary to public policy and in no way contravenes Section 28 of the Indian Contract Act, 1872. Therefore, if on the facts of a given case more than one court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two courts. But by an agreement parties cannot confer jurisdiction on a court which otherwise does not have jurisdiction to deal with a matter.

10. Still in another case titled as Patel Roadways Limited, Bombay v. Prasad Trading Company , the Supreme Court while commenting upon Section 20(a) Explanation held that where the defendant company has a principal office as well as a subordinate office at different places and the cause of action had arisen at the subordinate office, that Court alone will have the jurisdiction and not where the principal office of the defendant is situated.

11. In the case of Union of India v. Adani Exports Ltd. AIR 2002 Supreme Court 126, the Supreme Court while explaining the principle laid down by that Court in the case of Union of India and Ors. v. Oswal Woollen Mills Ltd. explained the scope of territorial jurisdiction and held as under:-

We are unable to accept this finding of the High Court. The view of the High Court that this Court in the case of Oswal Woollen (supra) had held that the existence of the registered office of a Company would ipso facto give a cause of action to the High Court within whose jurisdiction the registered office of such a Company is situated, is not correct. As a matter of fact, in the case of Oswal Woollen (supra), the question of territorial jurisdiction in the sense with which we are concerned now, did not arise at all. In that case, the observations of the Court were as follows:

Having regard to the fact that the registered office of the Company is at Ludhiana and the principal respondents against whom the primary relief is sought are at New Delhi, one would have expected the writ petition to be filed either in the High Court of Punjab and Haryana or in the Delhi High Court. The writ petitioners, however, have chosen the Calcutta High Court as the forum perhaps because one of the interlocutory relief which is sought is in respect of a consignment of beef tallow which has arrived at the Calcutta Port. ...We do not desire to probe further into the question whether the writ petition was filed by design or accident in the Calcutta High Court when the office of the Company is in the State of Punjab and all the principal respondents are in Delhi.

It is in that context of noticing the motive of the parties concerned in that case in choosing a forum, the above observation as to the place of the registered office of the Company was incidentally made in the judgment. Having perused the judgment in Oswal's case (supra), we are of the opinion that judgment is no authority to decide as to the requirement of law in regard to establishing the territorial jurisdiction of a court. We must say in all fairness, Mr. Desai, learned senior counsel, has not placed any reliance on this judgment nor on the basis of the finding of the High Court in this case in regard to its territorial jurisdiction. He, however, contends that from the facts narrated in the civil applications, more so in Paragraph 16 of the application, it is crystal clear that a substantial part of the cause of action has arisen within the jurisdiction of the High Court of Ahamedabad.

12. As is clear in this very case, while explaining the principle that registered office of a company within the territorial jurisdiction of the court would not ipso facto give a cause of action to that Court, the Court also reiterated the principle that the entire facts pleaded would determine the cause of action and not merely the happening of an inconsequential event that would determine the cause of action, and held as under:-

In order to confer jurisdiction on a High Court to entertain a writ petiton or a special civil application, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the Court to decide a dispute which has, at least in-part, arisen within its jurisdiction. It is clear that each and every fact pleaded in the application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the Court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned.

13. Even in the case of ONGC (supra), the Court emphasized the importance of determining the territorial jurisdiction of a court relatable to all the events giving rise to the said cause of action, and in forming of such an opinion it was held that it should constitute of the facts forming an integral part of the cause of action and merely that of facts so received would not clothe the court with territorial jurisdiction. The above principle of law was noticed in one of the recent judgment of this court in the case of The Federation of Motorsports Clubs of India v. Motorsports Association of India and Anr., CS(OS) No. 804/2002 decided on August 25, held as under:-

It is a settled principle of law that for determination of an application under Order 7 Rule 10 and 11 of the CPC, the applicant has to take the facts as stated in the plaint, to be correct and then alone argue that the plaint is liable to be returned or rejected, keeping in mind the provisions of Order 7 Rule 10 and 11 of the CPC. The case as averred in the plaint, can be concisely stated that the plaintiff is the only recognised federation by the Government of India and is entitled to hold such sports and shows and for that reason, resultantly the suit of the defendant for injunction should be decreed. The only two defendants in the plaint are Motorsports Association of India, 41-42, Marine Lines, Liberty Building, Mumbai and Mr. Nazir Hoosein, who is stated to be the office bearer of that association, sued at the same address. The entire plaint does not state any facts as to how and what cause of action or part thereof has arisen and how, within the territorial jurisdiction of this court? In the lengthy plaint, running into 25 pages, there is no pleading much less proper pleadings which in law could be termed as a plaint disclosing a cause of action of the events which happened within the territorial jurisdiction of this Court. Obviously, cause of action has to be construed on the basis of the bundle of facts as averred in the plaint. The plaintiff is claiming a relief against the two defendants who as per the own showing of the plaintiff, are residents of Mumbai, and having their registered office at Mumbai and are carrying on their activities from that office. Union of India is not a party to the suit and in fact, no relief is claimed against Union of India . The learned counsel appearing for the plaintiff fairly stated that they have no claim against the Union of India and they do not intend to claim any relief as they are already a recognised body by the concerned Department of the Government of India.

14. In terms of the provisions of Section 16, 17 and 20 of the Code, a suit shall be instituted in the Court within the local limits of whose jurisdiction the property, subject matter of the suit, the defendant/defendants reside or where a cause of action wholly or in part arises within the jurisdiction of that court. The cause of action necessarily must constitute of certain facts which in law would give rise to an actionable wrong. No facts have been averred in the plaint as to what activities were being carried out in Delhi by defendant no.1 which directly or indirectly infringed the rights of the plaintiff, so as to give rise to a 'cause of action as known in law'. The learned counsel appearing for the plaintiff made a reference to the averments made in paragraph 42 of the plaint to the effect that "the suit raises inter alia issues relating to recognition by Government of India which are activities taking place in Delhi. Consequently, the cause of action arises entirely and/or at least a substantial part thereof, at New Delhi in as much as defendant no.1 while exercising the authority as the purported ASN in India has in fact written letters pertaining to granting and cancellation of permits in respect of Motor Sports in Delhi and providing its expertise pertaining to Motor sports to persons situated in and operating from Delhi.

15. These averments are obviously incapable of conferring any territorial jurisdiction on this court, ex facie. If the statement of the plaintiff as argued, though not pleaded, that defendant no.1 has its registered office at Mumbai and carrying on activities all over India, then the court has to see where the substantial cause of action has arisen, and not merely an incidental activity of the other party. It will be too far-fetched to argue that on such averments court all over India would get jurisdiction, particularly in absence of any specific averment relating to an act infringing the rights of the plaintiff. The plaint in this regard, is certainly vague, indefinite and on its cumulative reading, is incapable of giving any territorial jurisdiction to this court. Whether the plaintiff is the only association recognised by the Government of India, is a fact which can be proved or disproved by leading cogent evidence from the concerned Department of the Government of India. The Government of India, as already noticed, is not a party to the present suit and in any case would neither be a proper nor a necessary party, as no relief is being claimed against Government of India in the present suit, and rightly so, in view of the judgment of the Bombay High Court and pendency of the writ petition between the parties before this Court. Mere averments of certain facts in relation to exercise of power by another authority or a Department of the State by itself would not make that Department a necessary or a proper party to the suit.

16. While applying the above well accepted cannone controlling the application of the provisions of Order 7 Rule 11, which are paramateria applicable to an application under Order 7 Rule 10, the arguments raised on behalf of the plaintiff that the registered office of the company alone or even read with letter dated 2nd April, 2003 would give complete territorial jurisdiction to this Court on the basis of the judgment of this Court in the case of Raunaq Int. Ltd. (supra) is without merit and cannot be accepted.

17. The jurisdiction of the Court to return the plaint can be invoked at any stage of the suit and in the event the application is accepted, the Court would grant liberty to the petitioner to present the suit before the Court of proper jurisdiction. The directions of the Court in exercise of this jurisdiction under Order 7 Rule 10 are governed by Rule 10 (a).

18. The lack of definite pleadings in regard to the facts which would constitute substantial or integral cause of action, so as to vest the court with territorial jurisdiction in face of the averments made in the application supported by documents, and in light of the law afore-referred, it is not possible to hold that this court has the territorial jurisdiction to entertain and decide the present suit. No cause of action or part thereof has arisen in the territorial jurisdiction of this court on the plain and simple reading of the plaint.

19. In view of the above discussion, the application IA No. 7437/2005 is allowed, while holding that 'No Cause of Action' or part thereof has arisen within the territorial jurisdiction of this court. The plaint of the plaintiff is ordered to be returned for presentation before the court of competent jurisdiction under the provisions of Order 7 Rule 10 of the Code of Civil Procedure and the date of pronouncement of the order shall be the date of intimation to the plaintiff in this regard.

20. Accordingly, I.A. No. 7437/2005 and IA No. 11060/2003 (U/O 39 R 1and 2) stand disposed of in the above terms.