Madhya Pradesh High Court
Krishidhan Sees Private Limited vs Punjab National Bank (Erstwhile United ... on 1 September, 2025
Author: Pranay Verma
Bench: Pranay Verma
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IN THE HIGH COURT OF MADHYA PRADESH
AT INDORE
BEFORE
HON'BLE SHRI JUSTICE PRANAY VERMA
ON THE 1 st OF SEPTEMBER, 2025
WRIT PETITION No. 1770 of 2023
KRISHIDHAN SEES PRIVATE LIMITED AND OTHERS
Versus
PUNJAB NATIONAL BANK (ERSTWHILE UNITED BANK OF INDIA)
AND OTHERS
Appearance:
Shri Manish Nair - Advocate for the petitioners.
Shri Shrey Raj Saxena - Advocate for respondent No.1.
ORDER
(Reserved on 25.08.2025)
(Delivered on 01.09.2025)
This petition under Article 226 of the Constitution of India has been
preferred by the petitioners challenging the action of respondent No.1
whereby it has declared the accounts of petitioner No.1 Krishidhan Seeds
Private Limited as fraud.
2. An application challenging maintainability of the petition on the
ground of lack of territorial jurisdiction of this Court has been filed on behalf
of respondent No.1 on the ground that alleged cause of action of declaration
of account of the petitioners as fraud by respondent No.1 arose in Pune,
Maharashtra which is within the territorial jurisdiction of the High Court of
Bombay. The loan account was sanctioned by the bank at Pune, Maharashtra,
the properties which were kept as security while granting the loan are
situated in the State of Maharashtra and the account of the petitioners was
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declared as fraud by the bank by its branch at Pune, Maharashtra. The entire
cause of action has hence arisen at Pune and no cause of action whatsoever
has arisen at Indore. Reliance has been placed by learned counsel for
respondent No.1 upon the decision of the Apex Court in State of Rajasthan
and other and versus M/s Swaika Properties and another (1985) 3 SCC 217,
Lieutenant Colonel Khajoor Singh versus Union of India and another AIR
1961 SC 532 and National Textile Corporation Limited and others versus
Haribox Swalram and others (2204) 9 SCC 786.
3. Learned counsel for the petitioners has submitted that this Court
very much has the territorial jurisdiction to entertain and decide this petition.
The petitioners have their registered office at Indore and conduct their
business from Indore which comes under the domain of the registrar of
companies at Gwalior, Madhya Pradesh. The OTS proposal submitted by
petitioners clearly reflects the address of the registered office of their
company being at Indore. The communications between petitioners and
respondent No.1 took place from petitioner's registered office at Indore. The
impugned notices and actions were served upon the petitioners at Indore and
were replied by the petitioners from Indore. As per the provisions of
Companies Act, 2013 also this Court has the jurisdiction to entertain the
present petition. Reliance has been placed by him on the decision of the
Apex Court in Stridewell Leather (P) Ltd. Ors. Vs. Bhankerepur Simbhaoli
Beverage (P) Ltd & Ors. 1994 (1) SCC 34, Om Prakash Srivastave vs. Union
Of India & Ors. 2006 (6) SCC 207 and Ambica Industries vs. Commissioner
of Cerntal Excise, (2007) 6 SCC 769.
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7. I have considered the submissions of the learned counsel for the
parties and have perused the record.
8. The issue as to place of filing of a writ petition in context of the
cause of action has been the subject matter of consideration by the Apex
Court from time to time. It has been held that each and every fact as have
been pleaded in the writ petition do 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 disputes involved in the case, do not give rise to a
cause of action so as to confer territorial jurisdiction on the Court concerned.
Service of notice at the head office of the company would not confer
territorial jurisdiction. Jurisdiction cannot be assumed on the ground that the
petitioner resides in or carries on business from a registered office at a
particular place. The correspondence being received at a particular place and
being responded to from there also does not confer territorial jurisdiction
since the same is not an integral part of the cause of action. This law has
been summarise by the Apex Court in the case of Haribos Swalram (supra)
in which it has been held as under:
"10. Under clause (2) of Article 226 of the Constitution, the High Court is
empowered to issue writs, orders or directions to any Government, authority or
person exercising jurisdiction in relation to the territories within which the cause
of action, wholly or in part, arises for the exercise of such power, notwithstanding
that the seat of such Government or authority or the residence of such person is
not within those territories. Cause of action as understood in the civil proceedings
means every fact which, if traversed, would be necessary for the plaintiff to prove
in order to support his right to a judgment of the court. To put it in a different way,
it is the bundle of facts which taken with the law applicable to them, gives the
plaintiff a right to relief against the defendant. In Union of India v. Adani Exports
Ltd. [(2002) 1 SCC 567 : AIR 2002 SC 126] in the context of clause (2) of Article
226 of the Constitution, it has been explained that each and every fact pleaded in
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the writ petition 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 dispute involved in the case,
do not give rise to a cause of action so as to confer territorial jurisdiction on the
court concerned. A similar question was examined in State of Rajasthan v. Swaika
Properties [(1985) 3 SCC 217 : AIR 1985 SC 1289] . Here certain properties
belonging to a company which had its registered office in Calcutta were sought to
be acquired in Jaipur and a notice under Section 52 of the Rajasthan Urban
Improvement Act was served upon the company at Calcutta. The question which
arose for consideration was whether the service of notice at the head office of the
company at Calcutta could give rise to a cause of action within the State of West
Bengal to enable the Calcutta High Court to exercise jurisdiction in a matter where
challenge to acquisition proceedings conducted in Jaipur was made. It was held
that the entire cause of action culminating in the acquisition of the land under
Section 152 of the Rajasthan Act arose within the territorial jurisdiction of the
Rajasthan High Court and it was not necessary for the company to plead the
service of notice upon them at Calcutta for grant of appropriate writ, order or
direction under Article 226 of the Constitution for quashing the notice issued by
the Rajasthan Government under Section 52 of the Act. It was thus held that the
Calcutta High Court had no jurisdiction to entertain the writ petition.
11. The question of jurisdiction was considered in considerable detail in Oil and
Natural Gas Commission v. Utpal Kumar Basu [(1994) 4 SCC 711] and it was
held that merely because the writ petitioner submitted the tender and made
representations from Calcutta in response to an advertisement inviting tenders
which were to be considered at New Delhi and the work was to be performed in
Hazira (Gujarat) and also received replies to the fax messages at Calcutta, could
not constitute facts forming an integral part of cause of action. It was further held
that the High Court could not assume jurisdiction on the ground that the writ
petitioner resides in or carries on business from a registered office in the State of
West Bengal.
12. In the present case, the textile mills are situate in Bombay and the supply of
cloth was to be made by them ex-factory at Bombay. According to the writ
petitioners, the money was paid to the mills at Bombay. The learned Single Judge
after a detailed discussion of the matter held that the Calcutta High Court had no
jurisdiction to entertain the writ petition. The Division Bench has reversed this
finding on the ground that concluded contract had come into existence which
could be cancelled only after giving an opportunity of hearing and consequently,
the question of revocation of the contract at its Calcutta address would constitute
a cause of action. In our opinion, the view taken by the Division Bench is wholly
erroneous in law. It was nowhere pleaded in the writ petition that the appellant
herein had initiated any action under Section 11 of the Act by issuing any notice to
the writ petitioner for cancellation of the contract. In fact, it is stated in para 18 of
the petition that the Central Government did not follow the procedure prescribed
in Section 11 for cancellation of contract. Regarding the jurisdiction of the
Calcutta High Court, the relevant statement was made in para 73 of the writ
petition wherein it was stated as under:
"73. Your petitioner carries on business and maintains all accounts at the
aforesaid place of business within the jurisdiction. Your petitioner states that by
reason of the aforesaid, your petitioners have suffered loss and damage at its said
place of business within the jurisdiction. All notices and correspondences referred
to hereinabove addressed to your petitioner has been received by your petitioner at
your petitioner's place of business within the jurisdiction. In the circumstances,
this Hon'ble Court has the jurisdiction to entertain the present application."
12.1. As discussed earlier, the mere fact that the writ petitioner carries on business
at Calcutta or that the reply to the correspondence made by it was received at
Calcutta is not an integral part of the cause of action and, therefore, the Calcutta
High Court had no jurisdiction to entertain the writ petition and the view to the
contrary taken by the Division Bench cannot be sustained. In view of the above
finding, the writ petition is liable to be dismissed. However, in order to avoid any
further harassment to the parties and to put an end to the litigation, we would
examine the matter on merits as well."
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9. In the present case, the action of declaring the account of the
petitioners' company as fraud has been taken at Pune in Maharashtra. The
loan account was sanctioned at Pune and the properties which were kept as
security while granting loan are situated in the State of Maharashtra. The
account has been declared fraud by the branch of respondent No.1 bank
at Maharashtra . Only for the reason that the registered office of petitioners is
at Indore or that correspondences from the bank were received and replied to
from Indore would by itself not confer any jurisdiction upon this Court. The
proceedings instituted before the National Company Law Tribunal, Indore
Bench would also not be determinative of the matter since the same have
been instituted in respect of proceedings which have no nexus with the
present dispute. They are under the Insolvency and Bankruptsy Code, 2016
and not under the Companies Act. The facts pleaded in the petition do not
show that they give rise to cause of action to the petitioners within the
territorial jurisdiction of this Court since they are not such which have a
nexus or relevance with the lis i.e. the disputes involved in the petition.
10. Though reliance has been placed by learned counsel for the
petitioners upon the definition of "Court" as contained under Section 2 (29)
of the Companies Act where under Court means the High Court having
jurisdiction in relation to the place at which the registered office of the
company concerned is situated to contend that since the registered office of
petitioner's company is situated at Indore, this Court would have the
territorial jurisdiction to entertain this petition but it is to be noted that the
said definition is given under the Companies Act. The present proceedings
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which have been taken against the petitioners are in respect of declaration of
their account as fraud under the Reserve Bank of India (Frauds classification
and reporting by commercial banks and select FIs) Directions, 2016. These
directions have been issued in exercise of power conferred by Section 35 A
of the Banking Regulation Act, 1949 and have not been issued under the
provisions of Companies Act, 2013 hence in respect of these proceedings the
definition of Court as given under the Companies Act cannot be imported.
The Act, 1949 is in addition to the Companies Act and is not in derogation to
the same. Under this Act the definition of Court has not been given hence the
definition of Court as given under the Companies Act does not come to the
rescue to the petitioners. Proceedings taken under the Act, 1949 cannot be
said to be proceedings taken under the Companies Act. The judgments relied
upon by the learned counsel for the petitioners are primarily in respect of the
meaning of cause of action regarding which there is no dispute but the same
are not of any assistance for determining the dispute as raised.
11. Thus, in view of the aforesaid discussion, in my opinion, this
Court does not have the territorial jurisdiction to entertain this petition. The
same accordingly deserves to be and is hereby dismissed. The petitioners
shall however, at liberty to prefer a fresh petition before the Court of
competent jurisdiction.
(PRANAY VERMA)
JUDGE
jyoti
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