Delhi High Court

Pramod Gupta vs M/S Romesh Power Product Pvt. Ltd. ... on 26 July, 2012

Author: Reva Khetrapal

*     IN THE HIGH COURT OF DELHI AT NEW DELHI

+                     CS(OS) 243/2010

PRAMOD GUPTA                                          ..... Plaintiff
                               Through:   Mr. Niraj Kumar Singh and
                                          Mr. Deepak Rikhari,
                                          Advocates

                      versus

M/S ROMESH POWER PRODUCT PVT. LTD.
& ANR                               ..... Defendants
                 Through: Ms. Anju Jain and Mr. Hitesh
                          Sachar, Advocates

%                              Date of Decision : July 26, 2012

CORAM:
HON'BLE MS. JUSTICE REVA KHETRAPAL

                               JUDGMENT

: REVA KHETRAPAL, J.

IA No.1837/2011

1. By way of the present application bearing IA No. 1837/2011,

filed under Order VII Rule 11, the defendants seek rejection of the

suit on the ground that this Court does not have territorial jurisdiction

to entertain the same.

2. The plaintiff has filed the present suit for recovery of `

2,20,32,337/- (Rupees Two Crore Twenty Lac Thirty Two Thousand

Three Hundred and Thirty Seven Only) against the defendants which

the plaintiff claims to be due to him on account of the supply of PVC

compounds to the defendant No.1 - M/s Romesh Power Product Pvt.

Ltd. The defendant No.2 is the proprietor of the defendant No.1

Company.

3. It is the case of the defendants that the defendant no. 1 has its

office and works for gain in Jaipur, Rajasthan and no cause of action

arose within the territorial jurisdiction of this Court. It is contended

by defendants' counsel Ms. Anju Jain, Advocate that orders were

placed from the defendants' registered office at Jaipur and no

transaction was ever entered into between the parties within the

territorial jurisdiction of this Court. As regards the jurisdiction clause

contained in bills/invoices, it is denied that the defendant company

accepted the jurisdiction of Delhi Courts.

4. In support of her aforesaid contentions, Ms.Anju Jain, the

counsel for the defendants, placed reliance on the decision of the

Supreme Court rendered in Kusum Ingots and Alloys Ltd. vs. Union

of India and Anr., (2004) 6 SCC 254, and the decision of this Court

in:

(i) Carmel Overseas Ltd. vs. Sturdy Industries Ltd., 2011 (177) DLT 789; and

(ii) Golden Peacock Overseas Ltd. vs. Ranjit Industries and Ors., 2005 (2) ILR (Del) 751.

5. Per contra, Mr.Niraj Kumar Singh, the counsel for the plaintiff,

contended that the agreement to supply the goods was entered into at

Delhi, the goods were supplied from Delhi on the terms and

conditions printed on the invoices. The invoices were issued at Delhi

and payments were received at Delhi, and, as such, this Court has

territorial jurisdiction to entertain the present case. Counsel for the

plaintiff relied upon the following precedents to support his

contentions:

(i) A. B. C. Laminart Pvt. Ltd. and Anr. vs. A. P. Agencies, Salem, AIR 1989 SC 1239.

(ii) M/s. Dura-Line India Pvt. Ltd. vs. M/s. BPL Broadband Network Pvt. Ltd., AIR 2004 Delhi 186.

(iii) K. E. P. V. Venkatachalam Pillai vs. Rajaballi M.

Sajun, AIR 1935Madras 663.

(iv) Taneja Skins Co. Pvt. Ltd. vs. Bharath Skins Corporation, AIR 2002 Delhi 179.

(v) M/s. Artee Minerals vs. Kanwal Kaur and Anr., 1998 AIHC 1422 DHC.

(vi) Ujjal Talukdar vs. Netai Chand Koley, AIR 1969 Calcutta 224 (V 56 C 39).

(vii) M/s. Matanhella Brothers and Ors. Vs. M/s.

ShriMahabir Industries Pvt. Ltd., AIR 1970 Patna 91 (V 57 C 11).

(viii) M/s. KIG Systel Ltd. vs. Fujitsu ICIM Ltd., AIR 2001 Delhi 357.

6. Heard the learned counsel for the parties and perused the

judgments cited by each side. Since each case is to be decided on its

own facts, it is not proposed to go into each and every case cited

above. A reference may, however, be made to the oft-quoted

enunciation of law by the Apex Court in A. B. C. Laminart Pvt. Ltd.

(supra) with regard to the jurisdiction of Courts in cases such as the

present one:

"11. The jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors.

12. A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action

can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.

13. Under section 20(c) of the Code of Civil Procedure subject to the limitation stated theretofore, every suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part arises. It may be remembered that earlier section 7 of Act 7of 1888 added Explanation III as under:

"Explanation III. - In suits arising out of contract the cause of action arises within the meaning of this section at any of the following places, namely:- (1) the place where the contract was made;

(2) the place where the contract was to be performed or performance thereof completed;

(3) the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable."

14. The above Explanation III has now been omitted but nevertheless it may serve a guide. There must be a connecting factor.

15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where

repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors."

7. In the aforesaid backdrop, a look now at the relevant paragraph

of the plaint setting out the basis of jurisdiction of this Court, which

para is reproduced hereunder:

"13. That the plaintiff works for gains in Delhi, his manufacturing unit is situated in Delhi. Agreement to supply the goods was made at Delhi and the goods were supplied from the Godown of the plaintiff situated in Delhi and as per agreement the parties accepted the jurisdiction of Delhi Court in case of any dispute, as terms and condition of the business printed on the bills/invoices. As such cause of action to file the present suit arose at Delhi. Hence this Hon'ble court has jurisdiction to entertain, try and adjudicate the present suit."

8. The plaintiff in para 13 of the plaint has pleaded that the

agreement to supply the goods was made at Delhi and the goods were

supplied from the godown of the plaintiff situated in Delhi. The

plaintiff has filed a large number of invoices issued by it in respect of

goods sold to the defendant No.1, Exhibits P2 to P33 and P38 to P78.

One of the conditions contained in the said invoices reads, "Our

responsibilities ceases the moment the goods leave our godown".

There are also on record a large number of bills, filed by the

defendants themselves, by various carriers showing that the goods

were consigned by the plaintiff from Delhi to be delivered to the

defendant No.1 in Jaipur. Clearly, the goods in the present case were

handed over to the carrier at Delhi and were deliverable to the

defendant No.1 without the plaintiff having reserved any right of

disposal of those goods. This fact has not been controverted by the

defendant No.1. The property in the goods handed over by the

plaintiff to the carrier thus passed to the defendant No.1 the moment

the goods were handed over to the carrier for delivery to the

defendant No.1.

9. In the above context, reference may be made to Section 23 of

the Sale of Goods Act, 1930, which for the facility of reference, is

reproduced hereunder:

             "23. Sale of      unascertained   goods     and
             appropriation.-

(1) Where there is a contract for the sale of unascertained or future goods by description and goods of that description and in a deliverable state are unconditionally appropriated to the contract, either by the

seller with the assent of the buyer or by the buyer with the assent of the seller, the property in the goods thereupon passes to the buyer.

Such assent may be expressed or implied, and may be given either before or after the appropriation is made.

(2) Delivery to carrier. Where, in pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract."

10. Section 39 (1) of the Sale of Goods Act, 1930 which is also

relevant for determining the territorial jurisdiction of the Court

provides:

"(1) Where, in pursuance of a contract of sale, the seller is authorised or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer."

11. In view of the above, in my considered opinion, the goods in

the present case were being delivered at Delhi i.e. the contract was

being performed at Delhi. The performance of the contract being a

part of the cause of action, the courts at Delhi have jurisdiction to

entertain the present suit. The rejection of the plaint for want of

territorial jurisdiction is, thus, not warranted in the present case.

12. Even otherwise, it is trite that an application under Order VII

Rule 11 Code of Civil Procedure is by way of demurrer. For the

purpose of deciding and adjudicating such an application, the

averments made in the plaint have to be read as true and correct and

the factual accuracy of the plaintiff's assertions cannot be tested while

deciding such an application. In the present case, the plaintiff asserts

that the agreement to supply the goods was made at Delhi, the

contract was performed at Delhi in that the goods were supplied from

the godown of the plaintiff situated in Delhi to the defendants and the

defendants had accepted the jurisdiction of the Delhi Courts in case of

any dispute as per the terms and conditions printed on the

bill/invoices. It is well settled that in a suit for price of goods sold

and delivered, which, in effect, is also a suit for breach of contract on

the part of the defendant, the cause of action within the meaning of

Section 20(c) of the Code of Civil Procedure arises at the following

places:-

(i) The place where the contract was made.

(ii) The place where the contract was to be performed which

in such a contract would mean the place where the goods

were delivered to the purchaser.