Raj Kumar Shivhare vs Assistant Director Of ...
2008 Latest Caselaw 1721 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI

+    WP(C) 6527/2008 & CM Nos.12446-47/2008
#    RAJKUMAR SHIVHARE              ...Petitioner through
!                                   Mr. Mathews J. Nedumpara, Adv.
                   -versus-

$    ASSISTANT DIRECTOR OF
^    ENFORCEMENT, MUMBAI ...Respondent through
                           Mr.Sanjay Katyal, Adv.

%                         Date of Decision : 24th September, 2008
     CORAM:
*    HON‟BLE MR. JUSTICE VIKRAMAJIT SEN
     HON‟BLE MR. JUSTICE S.L. BHAYANA

     1. Whether reporters of local papers may
        be allowed to see the Order?                    Yes
     2. To be referred to the Reporter or not?          Yes
     3. Whether the Order should be
        reported in the Digest?                         Yes

VIKRAMAJIT SEN, J. (Oral)

1. This Writ Petition assails the Order dated 17.7.2008 of the

Appellate Tribunal for Foreign Exchange, Janpath, New Delhi.

The contention of the Petitioner is that the rules of natural

justice have been violated inasmuch as the Petitioner was not

permitted to cross-examine the sole witness on the basis of

whose testimony orders adverse to the interests of the

Petitioner had been passed by the Special Director of

Enforcement, Ministry of Finance, Mumbai.

2. A Preliminary Objection has been raised by learned

counsel for the Respondent to the effect that if the Petitioner is

desirous of filing a writ petition or even an Appeal, the High

Court holding territorial jurisdiction in the matter would be the

Bombay High Court where the Petitioner resides and carries on

his vocation, where the entire cause of action has arisen and

where the adjudication has taken place. Learned counsel for the

Petitioner, however, relies on the situs of the Appellate Tribunal,

Foreign Exchange being in Delhi. We are of the view that the

Preliminary Objection is well-founded.

3. The position is analogous to that of the Union

Government. The statement that the Union Government is

located throughout every part of Indian territory and hence can

be sued in any Court of the country, brooks no cavil. This does

not, however, inexorably lead to the consequence that a litigant

can pick and choose between any Court as per his caprice and

convenience. Generally speaking, some part, nay, the significant

part of the cause of action should have arisen within the

territorial sway of the Court which is chosen by the Petitioner.

Kusum Ingots and Alloys Ltd. -vs- Union of India, AIR 2004 SC

2321 clarifies the law on these lines, as is evident from the

following paragraphs thereof:-

When an order, however, is passed by a Court or Tribunal or an executive authority whether under

provisions of a statute or otherwise, a part of cause of action arises at that place. Even in a given case, when the original authority is constituted at one place and the appellate authority is constituted at another, a writ petition would be maintainable in the High Court within whose jurisdiction it is situate having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of original authority merges with that of the appellate authority.

......

We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. (See Bhagar Singh Bagga v. Dewan Jagbir Sawhany, AIR 1941 Cal 670; Mandal Jalal v. Madanlal, (1945) 49 CWN 357; Bharat Coking Coal Limited v. M/s. Jharia Talkies and Cold Storage Pvt. Ltd. (1997) CWN 122; S. S. Jain and Co. and another v. Union of India and others (1994) CHN 445; M/s. New Horizon Ltd. v. Union of India, AIR 1994 Delhi 126).

4. Various Division Benches of the Delhi High Court, inter

alia, in Suraj Woolen Mills -vs- Collector of Customs, Bombay,

2000 (123) E.L.T. 471 (Del.), Bombay Snuff Pvt. Ltd. -vs- Union

of India, 2006 (194) E.L.T. 264 (Del.) and Commissioner of

Central Excise -vs- Technological Institute of Textile, 1998 (47)

DRJ 667(DB) have clarified that the High Court should not

exercise jurisdiction only because the Tribunal whose order is in

appeal before it, is located within its territorial boundaries. In

Seth Banarsi Dass Gupta -vs- CIT, (1978) 113 ITR 817 and Birla

Cotton & Spinning Mills Ltd. -vs- CIT, Rajasthan, (1980) 123 ITR

354 this Court declined to exercise jurisdiction because both the

assesses resided and carried on business outside Delhi. On a

reading of Article 226 (1) of the Constitution it will be palpably

clear that without the next following provision, a High Court

may not have been empowered to issue a writ or order against a

party which is not located within the ordinary territorial limits

of that High Court. The power to issue writs against any person

or Authority or government even beyond the territorial

jurisdiction of any High Court is no longer debatable. The rider

or pre-requisite to the exercise of such power is that the cause

of action must arise within the territories of that particular High

Court. It does not logically follow, however, that if a part of the

cause of action arises within the territories over which that High

Court holds sway, it must exercise that power rather than

directing the petitioner to seek his remedy in any other High

Court which is better suited to exercise jurisdiction for the

reason that the predominant, substantial or significant part of

the cause of action arises in that Court. In other words any High

Court is justified in exercising powers under Article 226 either if

the person, Authority or Government is located within its

territories or if the significant part of the cause of action

has arisen within its territories. The rationale of Section 20

of the Code of Civil Procedure would, therefore, also apply to

Article 226 (2). These considerations are aptly encapsulated in

the term forum conveniens which refers to the situs where the

legal action be most appropriately brought, considering the best

interests of the parties and the public (see Black's Law

Dictionary). The writ Court should invariably satisfy itself that

its choosing is not malafide or an example of forum shopping.

5. This question has now been authoritatively settled by the

Supreme Court in Ambica Industries -vs- Commissioner of

Central Excise, (2007) 6 SCC 769 where several of the above

quoted decisions have been reviewed. The Petitioner/Assessee

in that case carried on business at Lucknow where it was also

assessed. It approached the CESTAT, New Delhi which

exercised jurisdiction in respect of the States of Uttar Pradesh,

Maharashtra and the National Capital Territory of Delhi. The

Appeal filed in the Delhi High Court was rejected on the ground

of lack of territoriality, and the Appeal to the Supreme Court

turned out to be a sterile exercise. Their Lordships observed

that "the aggrieved person is treated to be the dominus litis, as

a result whereof, he elects to file the appeal before one or the

other High Court, the decision of the High Court shall be

binding only on the authorities which are within its jurisdiction.

It will only be of persuasive value on the authorities functioning

under a different jurisdiction. If the binding authority of a High

Court does not extend beyond its territorial jurisdiction and the

decision of one High Court would not be a binding precedent for

other High Courts or courts or tribunals outside its territorial

jurisdiction, some sort of judicial anarchy shall come into play.

An assessee, affected by an order of assessment made at

Bombay, may invoke the jurisdiction of the Allahabad High

Court to take advantage of the law laid down by it and which

might suit him and thus he would be able to successfully evade

the law laid down by the High Court at Bombay. ... It would give

rise to the issue of forum shopping. ....For example, an assessee

affected by an assessment order in Bombay may invoke the

jurisdiction of the Delhi High Court to take advantage of the law

laid down by it which may be contrary to the judgments of the

High Court of Bombay".

6. Section 35 of the Foreign Exchange Management Act,

1999 („FEMA‟ for short) enables any person aggrieved by any

decision or order of the Appellate Tribunal to file an Appeal to

the High Court. The Explanation to the Section is extremely

significant inasmuch as it prescribes that High Court means

"the High Court within the jurisdiction of which the aggrieved

party ordinarily resides or carries on business or personally

works for gain" and further clarifies that if the Appeal is filed by

the Central Government it is the residence or place of business

of the Respondent which is the relevant and determining factor.

Any lingering doubt that may remain stands dispelled by Section

35 of FEMA.

7. Therefore, on two counts this Court ought not to exercise

territorial jurisdiction - firstly, on the general principles as

culled out in Ambica Industries and secondly by virtue of

Section 35 of FEMA.

8. Writ Petition is rejected for the reason that this Court

ought not to exercise jurisdiction on the ground of lack of

territoriality. Liberty is granted to the Petitioner to approach

the appropriate High Court. There shall be no order as to costs.

VIKRAMAJIT SEN, J.

S.L.BHAYANA, J.

SEPTEMBER 24, 2008 tp