Delhi High Court
Rana Sugars Limited vs Bajaj Electricals Limited on 19 July, 2017
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No. 593/2017
% Reserved on: 12th July, 2017
Pronounced on: 19th July, 2017
RANA SUGARS LIMITED ..... Appellant
Through: Mr. Ravi Gupta, Sr. Adv. with
Mr. Nikhil Rohtagi and Mr.
Shashank Khurana, Advocates.
versus
BAJAJ ELECTRICALS LIMITED ..... Respondent
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
To be referred to the Reporter or not? YES
VALMIKI J. MEHTA, J
1. This Regular First Appeal under Section 96 of the Code of
Civil Procedure, 1908 (CPC) is filed by the defendant in the suit
impugning the judgment of the trial court dated 27.3.2017 by which the
trial court has decreed the suit of the respondent/plaintiff for an amount
of Rs.45,29,582/- along with interest at 9% per annum.
2. The facts of the case are that the
respondent/plaintiff/company is engaged in the manufacturing,
marketing, sale and supply of electrical equipments and appliances for
industrial and domestic purposes. In the plaint it is pleaded that the
appellant/defendant approached the respondent/plaintiff for supply of
electrical equipments. The appellant/defendant is pleaded to have
placed purchase orders on the respondent/plaintiff which were received
by the respondent/plaintiff at New Delhi. The respondent/plaintiff
supplied the material as per the purchase orders issued by the
appellant/defendant. The material was supplied to the works/offices of
the appellant/defendant situated in different places at Uttar Pradesh.
With respect to the supplies a total of 17 invoices were raised from the
period 8.2.2007 to 30.4.2007 totaling to Rs.45,29,582/-. The
appellant/defendant had issued C-Forms acknowledging receipt and
acceptance of the material sent by the respondent/plaintiff against the
subject invoices. The respondent/plaintiff on account of non-payment
of its dues ultimately issued a legal notice dated 3.5.2008 but since the
same failed to yield any result, the subject suit came to be filed.
3. The appellant/defendant contested the suit and pleaded
that the goods were supplied after a long delay though time was the
essence of the contract and that the appellant/defendant had rightly
rejected the goods. It was pleaded in the written statement by the
appellant/defendant that in the purchase order dated 23.3.2007, six
items out of 21 items were supplied on time and the remaining items
were delayed by about three/four weeks. It is pleaded that even if the
appellant/defendant had accepted the deliveries, in terms of Clause 1 of
the purchase order dated 8.1.2007 a penalty of 1% per week had to be
paid by the respondent/plaintiff to the appellant/defendant. It is further
pleaded that the respondent/plaintiff did only 50% of the
commissioning and erection work and the appellant/defendant had to
get the commissioning and erection work done from others resulting in
huge delays and additional costs. It was pleaded that the issuance of C-
Forms by the appellant/defendant was not an admission of liability but
only indicated confirmation of the receipt of the goods. It was also
pleaded that the courts at Delhi had no territorial jurisdiction because
in terms of Clause 13 of the purchase order disputes between the
parties were subject to the jurisdiction of the Chandigarh courts alone.
4. After pleadings were complete the trial court framed the
following issues:-
"1. Whether the plaintiff is entitled to a decree in the sum of Rs.
60,24,345/- against the defendant? OPP
2. Whether the plaintff is entitled to an award pendente lite and
future interest @ 18% p.a. If so, to what effect? OPP
3. Whether this Hon‟ble Court has got territorial jurisdiction to
entertain the present suit, in view of clause 13 of the purchase order?
Onus on parties.
4. Relief."
5. As regards issue no.1 of merits of the matter, the court
below has given a finding that the goods were supplied to the
appellant/defendant as proved through the invoices Ex.P-1, Ex.P-6,
Ex.P-8 to Ex.11, Ex.P-13 to Ex.16 and Ex.P-22. The court below
further holds that the appellant/defendant had issued C-Forms vide
Ex.P-25 and thereby the appellant/defendant has admitted to the
delivery and receipt of the goods. The court below further has held
that there is no delay because the witness of the appellant/defendant
DW-1 admitted in his cross-examination that no letter of
communication has been filed by the appellant/defendant on record
whereby the appellant/defendant company has raised an
objection/grievance regarding the delay in supply of the goods in the
five purchase orders. It was also admitted by DW-1 that there is no
letter of communication on record whereby the appellant/defendant
company had raised any objection regarding non-completion of the
commissioning and erection work in all the five purchase orders.
Similarly, it was also admitted by DW-1 that the appellant/defendant
never issued any letter putting forward its alleged stand of supply of
defective goods. DW-1 further admitted that the appellant/defendant
has not paid the amount of 80% of the cost of the goods supplied and
that the appellant/defendant had duly issued the C-Forms. The court
below has then referred to Section 42 of the Sale of Goods Act, 1930
and as per which provision if no complaint is raised with respect to the
goods for a reasonable period of time, goods which are sold are
deemed to be accepted. On merits the respondent/plaintiff was thus
held entitled to the suit amount.
6. I completely agree with the findings and conclusions
arrived at by the trial court and in fact no arguments have been urged
on behalf of the appellant/defendant before this Court to in any manner
question or endeavor to dislodge the findings and conclusions of the
trial court. The relevant findings and conclusions of the trial court are
contained in paras 26 to 28 of the impugned judgment dated 27.3.2017,
and the same read as under:-
"26. PW-1 has testified through his evidence that the goods were
supplied to the defendant through invoices Ex.P-1, Ex. P-6, Ex. P-8, Ex. P-
9, Ex. P-10, Ex. P-11, Ex. P-13, Ex. P-14, Ex. P-15, Ex. P-16 and Ex.P-22.
The defendant has issued C-forms in respect of the abovesaid invoices
through Ex. P-25 meaning thereby that the defendant has admitted the
delivery and receipt of the goods supplied through the abovesaid invoices.
27. The defence taken by the defendant that the goods were not only
defective but goods were not delivered within time and DW-1 has testified
that only six items out of 21 in the purchase order dated 23.03.2006 were
delivered in time and the remaining were delayed about 3-4 weeks. DW-1
has further testified that plaintiff did only 50% of the commissioning and
erection as against the cent percent which plaintiff was supposed to be done,
as per clause-8 of the purchase order dated 08.01.2007 and plaintiff further
failed to furnish the performance bank guarantee, as per clause-3 of this
purchase order. Therefore, 10% amount is to be deducted by the defendant.
DW-1 has admitted in his cross-examination that he cannot say which 15
items in the purchase order dated 23.03.2007 were supplied late and he did
not having any knowledge when the alleged 15 items were alleged to be
delivered. DW-1 further admitted that he cannot tell exact date when the
goods were required to be supplied and were actually supplied in all the five
purchase orders placed by the defendant to the plaintiff. DW-1 has also
admitted that there is no letter/communication on the record whereby the
defendant company raised any objection/grievance regarding the alleged
delay in supply of the goods in all the five purchase orders. DW-1 further
admitted that there is no letter/communication on record whereby the
defendant company raised any objection regarding alleged non-compilation
of commissioning and erection in all the five purchase orders and defendant
has never issued any letter putting forward its grouse for alleged defective
goods supplied by the plaintiff. DW-1 admitted that the plaintiff company
supplied the goods against the five purchase orders issued by the defendant
after raising 17 invoices. DW-1 has also admitted that defendant has not
paid the amount of 80% of the cost of the goods supplied and defendant
issued C-forms.
28. Admittedly, the defendant has not filed any document on record
showing complaints in the goods supplied by the plaintiff. It may be noted
that the defendant has never issued any notice under section-42 of Sales of
Goods Act, as per which once after a reasonable period of time, the buyer
did not complaint about the goods but in fact, utilized the goods, the buyer
as a defendant be prevented from raising any objection as to the quality of
goods. Therefore, the goods are deemed to have been accepted by the
defendant. The defendant was served with the legal notice issued by the
plaintiff and defendant did not respond to the same. The defendant has
never pointed-out that the goods were defective even at the time when the
C-form was supplied by defendant to the plaintiff. Therefore, the version of
the defendant appears to be improbable because had the goods been
defective, the defendant would not have issued C-Form to the plaintiff.
Therefore, plaintiff has proved that it has supplied the goods to the
defendant but defendant has paid the amount of Rs.45,29,582/-. So far as
pre-suit interest on the said amount to the tune of Rs.14,94,762/- is
concerned, the plaintiff has not proved on record any agreement between the
parties for such contractual interest. Therefore, the plaintiff is not entitled to
pre-suit interest. In this regard, reliance is placed upon Zile Singh Vs.
Mangloo Ram Bansal judgment passed by HHC in RSA No.195/2004 in
which in paras no.15 and 18, it has been observed as under:-
"15. The provisions contained in the Interest Act, 1978 are almost
similar to the provisions contained in the Interest Act, 1839. While
considering the question of payability of interest for the period prior to
the date of filing of the suit, the Privy Council in the decision reported
as Bengal Nagpur Railway Co. Ltd. v. Ruttanji Ramji and Ors. AIR
1938 Privy Council 67 observed as under:-"...The crucial question
however is whether the Court has authority to allow interest for the
period prior to institution of the suit; and the solution of this question
depends, not upon the Civil Procedure Code, but upon substantive law.
Now, interest for the period prior to the date of the suit may be
awarded, if there is an agreement for the payment of interest at a fixed
rate, or it is payable by the usage of trade having the force of law, or
under the provision of any substantive law entitling the plaintiff to
recover interest, as for instance, under Section 80, Negotiable
Instruments Act, 1881, the Court may award interest at the rate of 6 per
cent per annum, when no rate of interest is specified in the promissory
note or bill of exchange. There is in the present case neither usage nor
any contract express or implied to justify the award of interest. Nor is
interest payable by virtue of any provision of the law governing the
case. Under the Interest Act, 32 of 1839, the Court may allow interest to
the plaintiff, if the amount claimed is a sum certain which is payable at
a certain time by virtue of a written instrument.
18. There is no dispute that in the present case there is no written
instrument under which the debt is payable at a certain time. The
plaintiff has also not averred in the plaint that there was any agreement
with the defendants regarding payment of interest or there is any usage
having the force of law regarding payment of interest. In the absence
of any proof of agreement, either express or implied, or usage having
the force of law regarding payability of interest, and in the absence of
any written instrument, the claim of interest can be sustained only if it
is proved that a written notice of demand to that effect has been
issued."
But the plaintiff is certainly entitled to the interest @ 9% p.a. from the date
of filing of the present suit till realization on the said amount of
Rs.45,29,582/-. Accordingly, both these issues are decided in favour of the
plaintiff and against the defendant." (underlining added)
7. It is therefore clear that the court below has rightly
decreed the suit for recovery of monies on account of goods supplied
to the appellant/defendant but not paid for by the appellant/defendant.
8. The only issue argued on behalf of the appellant/defendant
before this Court was that the courts at Delhi had no territorial
jurisdiction. It is argued that admittedly there is a Clause 13 in the
purchase orders and as per which the courts at Chandigarh had
exclusive jurisdiction. Accordingly, it is argued that the trial court at
Delhi had illegally passed the impugned judgment decreeing the suit
for recovery of money.
9.(i) Learned senior counsel for the appellant/defendant to
argue that courts at Delhi had no territorial jurisdiction has referred to
this Court the provision of Section 20 CPC with its Explanation and
has also cited para 6 the judgment delivered by this Court in the case of
Bigtree Entertainment Pvt. Ltd. Vs. Saturday Sunday Media Internet
and Ors. 226 (2016) DLT 497 to argue that this Court has held in
terms of para 6 of the judgment in the case of Bigtree Entertainment
Pvt. Ltd. (supra) that the suit cannot be filed as against a company
even if a cause of action arises at Delhi if the defendant company did
not have a branch office at Delhi. Para 6 of the judgment in the case of
Bigtree Entertainment Pvt. Ltd. (supra) which is relied upon reads as
under:-
"6. A reference to para 12 of the judgment in Patel Roadways Limited's
case (supra), especially the italics portion as given by the Supreme Court
itself, shows that the Supreme Court has held that where the suit is filed
against a company, carrying on business by a company can only be along
with existence of a head office or a registered office or a principal office or a
branch office at the place when the cause of action arises. Putting it in other
words, arising of cause of action, when a plaintiff or a defendant (as
discussed below) is a company, has to be taken not independently of arising
of cause of action in itself as sufficient but carrying on of business has to be
taken alongwith the existence of a principal office or a head office or a
registered office or a branch office of the company which is either a plaintiff
or a defendant in the suit, and which legal position cannot be in doubt on
account of the categorical language contained in para 12 of the judgment in
the case of Patel Roadways Limited, Bombay (supra)."
(ii) Reliance is also placed on behalf of the appellant/defendant on
the judgment of the Supreme Court in the case of Patel Roadways
Limited, Bombay Vs. Prasad Trading Company (1991) 4 SCC 270.
10. On behalf of the appellant/defendant, it is urged by relying
upon the affidavit of evidence filed on behalf of DW-1 Sh. Sanjeev
Sharma and which states that the principal office of the
appellant/defendant company is situated at Chandigarh and that there is
no cross-examination of this part of the deposition of DW-1 with
respect to the appellant/defendant company having its principal office
at Chandigarh, and accordingly it is argued that once parties have
agreed to the exclusive jurisdiction of the courts at Chandigarh, where
the principal office of the appellant/defendant company is situated, the
courts at Delhi would not have territorial jurisdiction.
11. The provision of Section 20 CPC with its Explanation is
reproduced below:-
"20. Other suits to be instituted where defendants reside 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 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.
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."
12. It is seen that the provision of Section 20 CPC allows
filing of a suit against a defendant under two broad heads. The first
broad head is with regard to arising of whole or part of cause of action
and where a contract is entered into between the parties then cause of
action arises wholly or in part where the contract is executed or where
performance under the contract has to be done or where payment is
made or is to be made under the contract and at such three places the
courts would have territorial jurisdiction to decide the disputes arising
between the parties to the contract. The first broad head is the subject
matter of sub-section (c) of Section 20 CPC. The second broad head of
Section 20 CPC is that a suit can be filed against a defendant where the
defendant resides and/or voluntarily works for gain and/or carries on
business. The second broad head allows filing of a suit even if cause
of action has not accrued at the place where the defendant resides
and/or works for gain and/or carries on business. The second broad
head is the subject matter of sub-sections (a) and (b) of Section 20
CPC.
13. Patel Roadways (supra) judgment, it is seen, interprets
and lays down the ratio, when dealing with sub-sections (a) and (b) of
Section 20 CPC and the Explanation to Section 20 CPC holding that
the suit has to be filed as against a company either where the
sole/principal office is situated or if the defendant company has a
branch office then at the courts where the branch office is situated
provided a cause of action has accrued where the branch office is
situated i.e the ratio of the judgment in the case of Patel Roadways
(supra) is that mere existence of a principal office/head office would
not entitle a company to be sued at the place where the principal
office/head office is situated once it is found that where the cause of
action has arisen the defendant company has a branch office. The
relevant paras of Patel Roadways (supra) case are paras 9 to 13 and 15
and which read as under:-
"9. Clauses (a) and (b) of Section 20 inter alia refer to a court within the
local limits of whose jurisdiction the defendant inter alia "carries on
business". 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. It has
not been urged before us on behalf of the appellant that the cause of action
wholly or in part arose in Bombay. Consequently Clause (c) is not attracted
to the facts of these cases. What has been urged with the aid of the
Explanation to Section 20 of the Code is that since the appellant has its
principal office in Bombay it shall be deemed to carry on business at
Bombay and consequently the courts at Bombay will also have jurisdiction.
On a plain reading of the Explanation to Section 20 of the Code we find an
apparent fallacy in the aforesaid argument. The Explanation is in two parts,
one before the word "or" occurring between the words "office in India" and
the words "in respect of" and the other thereafter. The Explanation applies to
a defendant which is a corporation which term, as seen above, would include
even a company such as the appellant in the instant case. 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 courts within whose jurisdiction
the sole or principal office of the defendant is situate will also have
jurisdiction inasmuch as even if the defendant may not be actually carrying
on business at that place, 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 a principal office at one place and has also a subordinate office
at another place. The words "at such place" occurring at the end of the
Explanation and the word "or" referred to above which is disjunctive clearly
suggest that if the case falls within the latter part of the Explanation it is not
the Court within whose jurisdiction the principal office of the defendant is
situate 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".
10. Here we may point out that the view which we take finds support
from a circumstance which, in our opinion, is relevant. Section 20 of the
Code before its amendment by the CPC (Amendment) Act, 1976 had two
Explanations being Explanations I and II. By the Amendment Act
Explanation I was omitted and Explanation II was renumbered as the present
Explanation. Explanation I so omitted read as hereunder:
"Explanation I: Where a person has a permanent dwelling at one place
and also temporary residence at another place, he shall be deemed to
reside at both places in respect of any cause of action arising at the place
where he has such temporary residence."
11. This Explanation dealt with the case of place of residence of the
defendant and provided with regard to a person having a permanent dwelling
at one place and also temporary at another place that such person shall be
deemed to reside at both places in respect of any cause of action arising at
the place where he has such temporary residence. The language used in
Explanation II on the other hand which is the present Explanation was
entirely different. Had the intention been that if a corporation had its
principal office at one place and a subordinate office at another place and the
cause of action arose at the place where it had its subordinate office it shall
be deemed to be carrying on business at both places the language used in
Explanation II would have been identical to that of Explanation I which was
dealing with a case of a person having a permanent dwelling at one place and
also temporary residence at another place. The marked difference in the
language of the two Explanations clearly supports the view which we have
taken with regard to the interpretation of the present Explanation to Section
20 of the Code which was Explanation II earlier as indicated above.
12. We would also like to add that the interpretation sought to be
placed by the appellant on the provision in question renders the explanation
totally redundant. If the intention of the legislature was, as is said on their
behalf, that a suit against a corporation could be instituted either at the place
of its sole or principal office (whether or not the corporation carries on
business at that place) or at any other place where the cause of action arises,
the provisions of Clauses (a), (b) and (c) together with the first part of the
Explanation would have completely achieved the purpose. Indeed the effect
would have been wider. The suit could have been instituted at the place of
the principal office because of the situation of such office (whether or not
any actual business was carried on there). Alternatively, a suit could have
been instituted at the place where the cause of action arose under Clause (c)
(irrespective of whether the corporation had a subordinate office in such
place or not). This was, therefore, not the purpose of the Explanation. The
Explanation is really an Explanation to Clause (a). It is in the nature of a
clarification on the scope of Clause (a) viz. as to where the corporation
can be said to carry on business. This, it is clarified, will be the place
where the principal office is situated (whether or not any business
actually is carried on there) or the place where a business is carried on
giving rise to a cause of action (even though the principal office of the
corporation is not located there) so long as there is a subordinate office of
the corporation situated at such place. The linking together of the place
where the cause of action arises with the place where a subordinate
office is located clearly shows that the intention of the legislature was
that, in the case of a corporation, for the purposes of Clause (a), the
location of the subordinate office, within the local limits of which a cause
of action arises, is to be the relevant place for the filing of a suit and not
the principal place of business. If the intention was that the location of the
sole or principal office as well as the location of the subordinate office
(within the limits of which a cause of action arises) are to be deemed to be
places where the corporation is deemed to be carrying on business, the
disjunctive "or" will not be there. Instead, the second part of the Explanation,
would have read "and, in respect of any cause of action arising at any place
where it has a subordinate office, also at such place".
13. As far as we can see the interpretation which we have placed on this
section does not create any practical or undue difficulties or disadvantage
either to the plaintiff or a defendant corporation. It is true that, normally,
under Clauses (a) to (c), the plaintiff has a choice of forum and cannot be
compelled to go to the place of residence or business of the corporation and
can file a suit at a place where the cause of action arises. If a corporation
desires to be protected from being dragged into litigation at some place
merely because a cause of action arises there it can save itself from such a
situation by an exclusion clause as has been done in the present case. The
clear intendment of the Explanation, however, is that, where the
corporation has a subordinate office in the place where the cause of
action arises, it cannot be heard to say that it cannot be sued there
because it does not carry on business at that place. It would be a great
hardship if, in spite of the corporation having a subordinate office at the
place where the cause of action arises (with which in all probability the
plaintiff has had dealings), such plaintiff is to be compelled to travel to the
place where the corporation has its principal place. That place should be
convenient to the plaintiff; and since the corporation has an office at such
place, it will also be under no disadvantage. Thus the Explanation provides
an alternative locus for the corporation's place of business, not an additional
one.
xxxxx xxxxx xxxxx
15. In this view of the matter since in the instant two cases Clause (c) is
not attracted to confer jurisdiction on courts at Bombay and the appellant has
admittedly its subordinate offices at the respective places where the goods in
these two cases were delivered to it for purpose of transport the courts at
Bombay had no jurisdiction at all to entertain the suits filed by the
respondents and the parties could not confer jurisdiction on the courts at
Bombay by an agreement. Accordingly no exception can be taken to the
findings in this behalf recorded by the trial court and the High Court in these
two cases." (emphasis added)
14.(i) The interpretation by the Supreme Court of the provision
of the Explanation to Section 20 CPC in the judgment in the case of
Patel Roadways (supra) and in the later judgment in the case of Indian
Performing Rights Society Limited Vs. Sanjay Dalia and Another
(2015) 10 SCC 161, while dealing with sub-sections (a) and (b) of
Section 20 CPC and not with sub-section (c) thereof, is on the issue
only of filing of a suit with respect to existence of a branch of a
company (and thus the residence of a defendant company) and thus
carrying on through the branch the business by the defendant company
and/or working for gain by the defendant company where it is found
that the suit is filed where the cause of action accrues wholly or in part
and where the branch office is also situated. Neither in Patel
Roadways case (supra) nor in Sanjay Dalia's case (supra) Supreme
Court has held that the suit against a company cannot be filed even
where the cause of action has arisen wholly or in part, unless and until
there is additionally also a branch where the cause of action arises.
Arising of the cause of action wholly or in part, under sub-section (c)
of Section 20 CPC, is not to be linked to the existence of the branch
office of the defendant company. As already stated above in the
judgment in the case of Patel Roadways (supra), there is the
expression „or‟ appearing between sub-sections (b) and (c) of Section
20 CPC, and that the provision of Explanation to Section 20 CPC is
only relatable to sub-sections (a) and (b) of Section 20 CPC and not to
sub-section (c) of Section 20 CPC.
(ii) The first six lines of para 9 (especially the sixth line) of the
judgment of Patel Roadways case (supra) makes it clear that the
Supreme Court in the said case was not dealing with a case which fell
under sub-section (c) of Section 20 CPC i.e filing of suit under sub-
section (c) is independent of sub-sections (a) and (b) thereof.
15. I cannot agree with the arguments urged on behalf of the
appellant/defendant that even if a suit is filed on the basis of arising of
whole or a part of cause of action then the suit cannot be filed even if
cause of action has accrued within the territorial jurisdiction of the
court which tries the suit, merely because as argued by the
appellant/defendant that the defendant company does not have a branch
office at Delhi where the cause of action arises. The ratio of the
judgment of the Supreme Court in the case of Patel Roadways (supra)
when dealing with sub-sections (a) and (b) of Section 20 CPC is that
the suit cannot be filed against a defendant company at the place where
the sole office or principal office is situated if it is found that the
defendant company has a branch office where the cause of action has
arisen. The Supreme Court in the case of Patel Roadways (supra) was
not concerned with the position of law as would prevail when a suit is
filed only with reference to sub-section (c) of Section 20 CPC and this
judgment has not laid down the ratio that a suit cannot be filed against
the defendant company within the jurisdiction of the court, when the
cause of action has arisen within the jurisdiction of that court, unless
and until there also is found to exist a branch office of the defendant
company at the place where part or whole of cause of action has arisen.
I have not found any such ratio or observations of the Supreme Court
in the case of Patel Roadways (supra) which holds and observes to be
that the suit against a defendant which is a company cannot be filed at
the place though the whole or part of the cause of action has arisen
merely because the defendant company does not have a branch office
where the cause of action has arisen. It is not necessary that besides
arising of the cause of action the defendant company must also have
the branch office where the cause of action arises. In fact, the
argument urged on behalf of the appellant/defendant is completely
destructive of the expression "or‟ which appears between sub-section
(b) and sub-section (c) of Section 20 CPC, and it is seen that existence
of the word „or‟ shows that a suit is filed against the defendant either
where the cause of action arises wholly or in part or where the
defendant resides and/or carries on business and/or works for gain i.e
qua a company existence of a branch office from where the business of
the company would be carried on. The Explanation given in Section
20 CPC as regards Corporations is only that a suit cannot be filed
against a corporation at its sole or principal office if the cause of action
arises wholly or in part at a place where there is a branch office, and in
which case the suit has to be filed where the branch office exists and
on account of arising of cause of action where the branch office is
situated.
16. The observations of this Court in the case of Bigtree
(supra) has necessarily to be read in the context of the facts of that
case only and which were with respect to interpretation of expression
carrying on business appearing in Section 134 of the Trade Marks Act,
1999 i.e expressions as found in sub-sections (a) and (b) of Section 20
CPC, and it was held that carrying on of business qua a company is
relatable to the existence of a principal or branch office of a company
and that there cannot be carrying on of a business by a company (i.e its
residence) without there existing a branch or principal office. Section
134 of the Trade Marks Act provides an exception to the general law
contained in Section 20 CPC and which provides that a suit can only be
filed where the defendant resides and/or works for gain and/or carries
on business, and as per the exception contained in Section 134 of the
Trade Marks Act, a suit can be filed by a plaintiff company at a place
where it resides/carries on business i.e it has a branch/principal office
although the defendant does not reside in the territorial jurisdiction of
the court where the suit is filed and although also that whole or part of
the cause of action does not arise within the jurisdiction of the court
where the suit is filed i.e the suit can be filed only and simply on the
basis of existence of the branch/principal office of the plaintiff
company and hence the plaintiff company residing or carrying on
business or working for gain. The judgment in the case of Bigtree
(supra) was concerned with expressions found in sub-sections (a) and
(b) of Section 20 CPC and this judgment in no manner deals with
disjunction between sub-sections (a) and (b) of Section 20 CPC on one
hand with sub-section (c) of Section 20 CPC on the other hand and the
factum of disjunction existing on account of expression "or" appearing
in between sub-section (b) and sub-section (c) of Section 20 CPC. The
ratio in the case of Bigtree (supra) was clearly confined to entitling
filing of a suit, in terms of sub-sections (a) and (b) of Section 20 CPC
and not sub-section (c) of Section 20 CPC thereof, i.e a case where the
plaintiff is a company or defendant is a company, and on the basis of
the residence or carrying on business or working for gain by the
company having a branch/principal office existence of territorial
jurisdiction is asserted, without further requirement of whole or part of
the cause of action arising at the place where the suit is filed. The vice
versa is not true nor decided in the case of Bigtree (supra) (because
that case was not covering territorial jurisdiction as per sub-section (c)
of Section 20 CPC) that if the cause of action arises at the place where
the suit is filed against a defendant company, then, additionally there
must exist branch/principal office where the cause of action has arisen
i.e it cannot be argued that the suit could not have been filed at that
court although the cause of action has arisen there wholly or in part and
simply because the plaintiff company or defendant company does not
have a branch office where the cause of action has accrued wholly or in
part. It is settled law that ratio of a case is facts dependant vide Padma
Sundara Rao (Dead) and Others Vs. State of T.N. and Others (2002)
3 SCC 533 wherein the Supreme Court has clearly laid down that ratio
of a case is facts dependant and change of even a single fact can make
difference between the ratios of the two cases.
17. (i) Accordingly, it is held that the issue of linking of
residence (existence of branch/principal office) of a plaintiff or
defendant company with respect to a cause of action is where the suit is
filed by or against a company, under sub-sections (a) and (b) of Section
20 CPC, on the basis of the residence and/or carrying on business
and/or working for gain on account of having a branch/principal office
and the linking of the cause of action to the residence of the company
(i.e the existence of a branch office of the company) is not required
where a suit is filed in a court where cause of action arises wholly or in
part being a suit under sub-section (c) of Section 20 CPC.
(ii) The sum and substance and the net effect as regards the legal
position is that linking of a branch office to a cause of action is where a
suit is filed by or against a company invoking sub-section (a) or (b) of
Section 20 CPC and there is no requirement of mandatory linking
existence of a branch office of a company with the cause of action
when the suit is filed against a company invoking sub-section (c) of
Section 20 CPC. Where plaintiff invokes sub-section (c) of Section 20
CPC against the defendant which is a company, then for existence of
territorial jurisdiction arising of whole or part of cause of action at a
place is enough and it is not required that even if whole or part of cause
of action has arisen against a defendant company then at such place a
branch office of a defendant company must also exist for territorial
jurisdiction to exist.
18. In the facts of the case, it is seen that the
appellant/defendant has only made a self-serving statement through
DW-1 of having a principal office at Chandigarh but no documentary
evidence whatsoever has been filed by the appellant/defendant to show
that it has a principal office at Chandigarh. The statement made in the
examination-in-chief has been controverted by the respondent/plaintiff
by putting a general suggestion that the deposition in the examination-
in-chief is false. In my opinion, it is not required that for each and
every averment of the plaint and each and every averment of the
written statement, when a witness of the plaintiff is being cross-
examined, each aspect has to be specifically put, and depending upon
the facts of each case it is enough even if there is general suggestion at
the end of cross-examination of the false deposition by the witness
given as per his examination-in-chief. This is all the more so with
respect to technical issues of territorial jurisdiction of the Court once
otherwise on merits the respondent/plaintiff is found entitled to the suit
amount on account of the appellant/defendant having received goods
purchased from the respondent/plaintiff. Accordingly I hold that the
appellant/defendant had failed to discharge his onus of proof of it
having a principal office at Chandigarh inasmuch as oral statement is
not discharge of onus of proof of existence of a principal office of the
appellant/defendant company at Chandigarh.
19. Learned senior counsel for the appellant/defendant then
argued that as per the issue framed the onus was put on both the
parties, and therefore, onus was upon the respondent/plaintiff to show
that the appellant/defendant company did not have a branch office at
Chandigarh, however, it is seen that the issue framed by the trial court
being issue no.3 as regards the territorial jurisdiction of courts at Delhi,
that onus was on the parties, and what it means is really that the main
onus has to be upon the appellant/defendant which pleads existence of
its principal office at Chandigarh. It is only after the
appellant/defendant has discharged its onus and proved to the
satisfaction of the civil court that it has a principal office at Chandigarh
would then the onus shift upon the respondent/plaintiff to show
otherwise, and as already held above oral self-serving statements
cannot be taken as discharge of onus of proof. In law even if a
defendant in a case is ex-parte yet the court always calls upon the
plaintiff to lead such evidence which will satisfy the judicial
conscience of the civil court for discharging the onus of proof which is
upon the plaintiff. I therefore hold that the court below has rightly held
that Courts at Delhi had territorial jurisdiction.
20. At this stage, it is required to be noted that there is no
dispute that part of cause of action arises at Delhi because the
appellant/defendant placed purchase orders upon the
respondent/plaintiff at Delhi. The purchase orders placed upon the
respondent/plaintiff were in the nature of the offers of the
appellant/defendant to purchase the goods from the respondent/plaintiff
and it is only when the offer is accepted at Delhi that the contract is
entered into. Since the offer was given to the respondent/plaintiff at
Delhi, acceptance will be at Delhi, and therefore contract is executed at
Delhi and once contract is executed at Delhi, part of cause of action
arises at Delhi and hence Delhi courts had territorial jurisdiction vide
A.B.C. Laminart (P) Ltd. Vs. A.P. Agencies, Salem (1989) 2 SCC
163.
21. In view of the above discussion, I do not find any merit in
the appeal, more so because it is only a technical desperate attempt to
somehow or the other avoid payment of liability by the
appellant/defendant company towards the respondent/plaintiff although
the appellant/defendant company has received goods of a huge amount
of over Rs.42 lacs from the respondent/plaintiff.
22. Appeal is accordingly dismissed, leaving the parties to
bear their own costs.
JULY 19, 2017 VALMIKI J. MEHTA, J
