Full Judgment Text
FAO(OS) 374-2005 Page 1
REPORTABLE
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) NO. 374 OF 2005
th
April, 2007.
% Date of Decision : 19
M/s.Golden Peacock Overseas Ltd. .... Appellant.
Through Mr. R.S. Endlaw, Advocate.
VERSUS
M/s.Ranjit Industries & Ors .... Respondents.
Through Mr. Nakul Dewan and Mr.Abhijeet Sharma,
Mr.Vikash Singh, Mr.Pradhuman & Ms.Taruna Singh,
Advocates.
CORAM:
HON'BLE DR. JUSTICE MUKUNDAKAM SHARMA, CHIEF JUSTICE
HON'BLE MR.JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported
in the Digest ?
SANJIV KHANNA, J :
1. The present Appeal has been filed by Golden Peacock
Overseas Limited (hereinafter referred to as the appellant, for short)
FAO(OS) 374-2005 Page 2
th
September, 2005 allowing IA No.
against the Order dated 29
7437/2005 filed by M/s.Ranjit Industries and others, (hereinafter
referred to as the respondents, for short) holding that no cause of
action or part thereof had arisen within the territorial jurisdiction of
this Court. The plaint was accordingly directed to be returned to be
filed before a Court of competent jurisdiction under the provisions of
Order VII, Rule 10 of the Code of Civil Procedure, 1908 (hereinafter
referred to as the Code, for short).
2. The appellant had filed a suit for recovery of Rs.20,80,568.53 and for
injunction against the respondent. It was stated in the plaint that the
appellant had been dealing with the respondent for over 15 years and
had trained and taught it's engineers to manufacture internationally
acceptable products. It was further stated that the respondent had
agreed and given an undertaking that they shall not deal with the
overseas buyers of the appellant directly and shall not do any
business for two years after termination of business between them. It
was stated that the respondent had violated/breached their
undertaking.
FAO(OS) 374-2005 Page 3
3. Learned counsel for the appellant had drawn our attention and relied
upon paragraphs 7, 11 and 12 of the plaint. For the sake of
convenience, these paragraphs are reproduced below:-
“7. That the Plaintiff has learnt in the beginning
of the month of October, 2003 that the Defendants
have in violation of their Undertaking contained in
their letter dated 02 April, 2003 to the Plaintiff dealt
and supplied goods to M/s. D.W. Bendler, GMBH
& Company, Germany, foreign buyer of the
Plaintiff for the last over ten years, the same goods
as the Plaintiff had been sourcing from the
Defendants, for supplying to the said foreign buyer
of the value of Rs.6,21,841.15p in or about the
month of August, 2003 and of the value of
Rs.1,79,098.40p in April, 2003.
11. That the cause of action for the present suit
accrued to the Plaintiff against the Defendants in
the beginning of the month of October, 2003 when
the Plaintiff first learnt of the exports affected by
the Defendants to the overseas buyer of the
Plaintiff in the months of April and September,
2003. No part of the relief claimed in the Plaint is
barred by time.
12. 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
FAO(OS) 374-2005 Page 4
jurisdiction over the subject matter of the Suit.”
4. It is well settled that for deciding and adjudicating the question
whether a Court has territorial jurisdiction to decide a suit, the averments
made in the plaint alone have to be read as if they are true and correct.
The factual accuracy of the averments is decided after trial.
nd
April, 2003
5. Learned counsel also relied upon the letter dated 2
written by the respondent based in Jamnagar to M/s.Golden Peacock
Overseas Limited, Noida. This letter is disputed and denied by the
respondents. It is claimed that this is a forged document. Learned counsel
for the appellant, however, relied upon the following paragraph in the
nd
April, 2003 :-
alleged letter dated 2
“All our dealings with you have been with
your Registered Office at Delhi and you
have, only for our facility, appointed your
representatives at our factory premises.
Since we have given this Undertaking to
you at Delhi and the Agreement aforesaid
has been arrived at with you at Delhi,
inspite of a Clause in this regard being
contained in your Purchase Order, we
reiterate that you will be entitled to
institute all proceedings against us for
recovery/ adjustment of the aforesaid
amounts in the course (sic) at Delhi and
FAO(OS) 374-2005 Page 5
we shall not contest the jurisdiction of the
Course (sic) at Delhi.”
6. The statements made in the above paragraph of the alleged letter
nd
April, 2003 have not been mentioned in the plaint. Learned
dated 2
counsel for the appellant, therefore, cannot rely upon the alleged facts and
nd
April, 2003.
statements made in the alleged letter dated 2
nd
April,
7. It may also be mentioned here that the alleged letter dated 2
2003 is addressed to the appellant at its Noida address. It is not addressed
to the appellant-plaintiff at its Delhi address. However, in paragraph 12 of
the plaint as quoted above, the appellant-plaintiff has stated that the
respondent-defendant had given an undertaking not to deal with the
foreign buyers of the appellant-plaintiff at Delhi and had agreed to the
jurisdiction of the Courts in Delhi. Keeping in view the well settled principle
of law that factual averments made in the plaint at this stage have to be
accepted as correct, we proceed to decide and adjudicate whether the
Courts in Delhi have territorial jurisdiction to entertain the suit and decide
the same.
8. Section 20(c) of the Code states that every suit can be instituted in a
FAO(OS) 374-2005 Page 6
Court within the local limits of whose jurisdiction the cause of action, wholly
or in part, arises. The question, therefore, required to be answered is
whether any cause of action, wholly or partly has arisen in Delhi in view of
the averments made in the plaint that the respondent-defendant had given
an undertaking at Delhi not to deal with the foreign buyers of the appellant-
plaintiff. If giving an undertaking is an integral part of the cause of action for
filing of the suit as per the averments made in the plaint, at this stage
Courts in Delhi will have territorial jurisdiction.
9. The term “cause of action” is a compendious expression which
means every fact which is necessary for a plaintiff to prove/succeed in the
reliefs prayed for and support his right to get a judgment. “Cause of action”
means whole of the material facts necessary for the plaintiff to allege and
prove to get a judgment in his favour. The material facts or rather the
bundle of facts which give a right to the plaintiff to redress a legal injury in a
Court of law and obtain judgment in his favour constitutes “cause of
action”. However, the term “cause of action” can be given a wide/broad or
a narrow meaning. In the case of Union of India versus Adnani Exports
Limited reported in AIR 2002 SC 126 the Supreme Court held that facts
FAO(OS) 374-2005 Page 7
pleaded and which have nexus and relevance to the lis i.e. the dispute
involved in the case, constitute “cause of action” and in a given case when
a part or whole of the cause of action arises within a Court's territorial
jurisdiction the said Court would have jurisdiction to entertain the Suit. The
legislature in its wisdom has given territorial jurisdiction to Courts where the
cause of action arises or even a part thereof arises. Accrual of part of the
cause of action is sufficient. It is not necessary that the whole of the cause
of action should arise within the territorial jurisdiction of the Court.
10. In view of the law as applicable, we will now examine the averments
made in the plaint for the purpose of deciding the present Appeal. While
deciding the question, we have to also keep in mind the principle that
meaningful and not formal reading of the plaint is required. Further, as per
Order VI Rule 2 of the Code, material facts have to be stated and not
evidence. Reading of the plaint shows that the appellant-plaintiff is an
exporter. It is claimed that the appellant has been in the export trade for
15 years and it is a recognised export house. It is claimed that the
appellant has a turnover of over Rs.20 crores. It is further claimed that the
appellant has been sourcing raw materials and components from the
FAO(OS) 374-2005 Page 8
respondent-defendants for a long time. It is further claimed in para 4 of the
plaint that the appellant had obtained an undertaking from the respondent-
defendant that they shall not misuse information or particulars of its
overseas buyers and shall not directly deal with them during the
subsistence of contract and for a period of two years after ceasing of the
business with the appellant. It is further claimed that the respondent had
agreed to pay damages equal to 60% of the value of the exports done by
the respondent-defendants, for breach of the said undertaking. It is further
nd
April, 2003.
claimed that an undertaking was given in the letter dated 2
The appellant-plaintiff has stated that in breach of the said undertaking, the
respondents had supplied goods to a German buyer in the months of April,
2003 and August, 2003. The name of the said buyer is also mentioned
along with the amount of the exports made by the respondent-defendants.
11. From the reading of the plaint, it is apparent that the cause of action
for filing of the Suit is the violation/breach of the alleged undertaking
given by the respondent-defendants to the appellant-plaintiff. It is this
breach of the undertaking which forms part of the “cause of action”. For
the purpose of deciding an application under Order VII Rule 11 of the
FAO(OS) 374-2005 Page 9
Code before recording of the evidence, the averments made in the plaint
have to be accepted and presumed as correct. Therefore, at this stage
we have to proceed on the basis that the alleged undertaking was given
by the respondent-defendants in Delhi. If this is the position, then it is
difficult to hold, atleast at this stage, without the parties having led
evidence that no part of the cause of action has arisen in Delhi.
Undertaking has nexus with the facts pleaded, which constitute “cause of
action” and the lis, on the basis of which relief is claimed in the plaint.
12. We agree with the learned counsel for the respondent-defendants
that it is not open to the parties by a contract to confer jurisdiction on a
Court which does not possess jurisdiction to decide a dispute under the
Code. But it is equally well settled that where two or more Courts have
jurisdiction to try a suit or proceedings, parties by an agreement can
stipulate that suit/proceedings shall be instituted and decided by courts
located at one place. (Refer Hakam Singh versus Gammon (India) Ltd.
reported in (1971) 1 SCC 286) However, in view of the legal position that a
suit can be filed within the territorial jurisdiction of a Court where a part of
cause of action has arisen and in view of the averments made in the plaint
FAO(OS) 374-2005 Page 10
that the respondent-defendants had allegedly given an undertaking in
Delhi, it cannot be said at this stage that no part of the cause of action has
arisen in Delhi.
13. The judgments relied upon by the learned Single Judge duly support
the view we have taken. In Oil and Natural Gas Commission versus
Utpal Kr. Basu and others reported in (1994) 4 SCC 711, the Supreme
Court held that proceedings can be initiated in any Court at a place where
integral part of cause of action has arisen. In the said case the petitioner
had initiated proceedings at Calcutta because he had read advertisements
inviting tenders at Calcutta though the tender was submitted in New Delhi
and the decision to award or not to award tender was to be taken at Delhi.
The work was required to be carried out in Gujarat. In these circumstances
it was held that no part of cause of action had arisen in Calcutta. It was
observed
“Therefore, in determining the objection of lack of
territorial jurisdiction the court must take all the facts
pleaded in support of the cause of action into
consideration albeit without embarking upon an enquiry
as to the correctness or otherwise of the said facts. In
other words the question whether a High Court has
territorial jurisdiction to entertain a writ petition must be
FAO(OS) 374-2005 Page 11
answered on the basis of the averments made in the
petition, the truth or otherwise whereof being immaterial.
To put it differently, the question of territorial jurisdiction
must be decided on the facts pleaded in the petition.
Therefore, the question whether in the instant case the
Calcutta High Court had jurisdiction to entertain and
decide the writ petition in question even on the facts
alleged must depend upon whether the averments
made in paragraphs 5, 7, 18, 22, 26 and 43 are
sufficient in law to establish that a part of the cause of
action had arisen within the jurisdiction of the Calcutta
High Court.”
14. Similarly, in Rajasthan High Court Advocates' Association versus
Union of India and others reported in AIR 2001 SC 416 the Supreme
Court examined the expression “cause of action” and held that it had
acquired a judicially settled meaning as every fact which would be
necessary for the plaintiff to prove if traversed, in order to secure right to
judgment of the court. The Court observed that in each individual case it
will have to be determined as to where the cause of action arises. Learned
Single Judge has also referred to two decisions of the Supreme Court
Union of India versus Adani Exports Ltd (supra) and Union of India
and others versus Oswal Woollen Mills Ltd. reported in (1984) 2 SCC
646. In the said cases it has been held that registered office of the plaintiff
FAO(OS) 374-2005 Page 12
alone would not give territorial jurisdiction to the Courts within whose
jurisdiction the registered office is situated. Therefore the appellant cannot
claim right to sue the respondent at Delhi because it's registered office is in
Delhi. However, in the present case the appellant has sued the respondent
in Delhi on the basis of alleged undertaking given by the respondent to the
appellant at Delhi. It is a breach of the alleged undertaking which
constitutes an integral and important part of the cause of action for filing
the suit for recovery and damages on the basis of breach of the
undertaking. The Supreme Court in the case of Adani Exports (supra)
has reiterated the above principles in the following words :-
“17. It is seen from the above that in order to
confer jurisdiction on a High Court to entertain
a writ petition or a special civil application as
in this case, 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 from the above
judgment that each and every fact pleaded by
the respondents in their application does not
ipso facto lead to the conclusion that those
facts give rise to a cause of action within the
courtHs territorial jurisdiction unless those facts
FAO(OS) 374-2005 Page 13
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.
If we apply this principle then we see that
none of the facts pleaded in para 16 of the
petition, in our opinion, falls into the category
of bundle of facts which would constitute a
cause of action giving rise to a dispute which
could confer territorial jurisdiction on the
courts at Ahmedabad.”
15. Another judgment relied upon by the learned Single Judge is New
Moga Transport Company thr. Its proprietor Krishanlal Jhanwar
versus United India Insurance Co, Ltd and others (2004) 4 SCC 677,
wherein the Supreme Court has reiterated the long standing principle that
an agreement between the parties that the dispute between them shall be
tried by a competent court having jurisdiction is valid and binding, but
parties cannot by an agreement confer jurisdiction on a court which
otherwise does not have territorial jurisdiction to deal with the matter. Patel
Roadways Ltd versus Prasad Trading Company (1991) 4 SCC 270
deals with Section 20(a) of the Code and the Explanation. It has been held
that where a defendant company has principal office and subordinate office
at different places but the cause of action has arisen at the subordinate
office, then the Courts having jurisdiction over the subordinate office are
competent to try the dispute and not the courts where the principal office of
FAO(OS) 374-2005 Page 14
the defendant is situated.
16. It is however clarified that the observations made in this Order are on
the basis of the averments made in the plaint and for the purpose of
deciding the application under Order VII, Rule 11 of the Code. These
observations and findings will not be binding on the learned Single Judge
while deciding the issue and disputes relating to territorial jurisdiction on
merits after trial.
17. In view of the above we allow the present appeal. The parties shall
th
April, 2007. In the facts and
appear before the learned Single Judge on 30
circumstances of the case there will be no order as to costs.
(SANJIV KHANNA)
JUDGE
(DR. MUKUNDAKAM SHARMA)
CHIEF JUSTICE
APRIL 19, 2007.
P
REPORTABLE
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ FAO(OS) NO. 374 OF 2005
th
April, 2007.
% Date of Decision : 19
M/s.Golden Peacock Overseas Ltd. .... Appellant.
Through Mr. R.S. Endlaw, Advocate.
VERSUS
M/s.Ranjit Industries & Ors .... Respondents.
Through Mr. Nakul Dewan and Mr.Abhijeet Sharma,
Mr.Vikash Singh, Mr.Pradhuman & Ms.Taruna Singh,
Advocates.
CORAM:
HON'BLE DR. JUSTICE MUKUNDAKAM SHARMA, CHIEF JUSTICE
HON'BLE MR.JUSTICE SANJIV KHANNA
1. Whether Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not ?
3. Whether the judgment should be reported
in the Digest ?
SANJIV KHANNA, J :
1. The present Appeal has been filed by Golden Peacock
Overseas Limited (hereinafter referred to as the appellant, for short)
FAO(OS) 374-2005 Page 2
th
September, 2005 allowing IA No.
against the Order dated 29
7437/2005 filed by M/s.Ranjit Industries and others, (hereinafter
referred to as the respondents, for short) holding that no cause of
action or part thereof had arisen within the territorial jurisdiction of
this Court. The plaint was accordingly directed to be returned to be
filed before a Court of competent jurisdiction under the provisions of
Order VII, Rule 10 of the Code of Civil Procedure, 1908 (hereinafter
referred to as the Code, for short).
2. The appellant had filed a suit for recovery of Rs.20,80,568.53 and for
injunction against the respondent. It was stated in the plaint that the
appellant had been dealing with the respondent for over 15 years and
had trained and taught it's engineers to manufacture internationally
acceptable products. It was further stated that the respondent had
agreed and given an undertaking that they shall not deal with the
overseas buyers of the appellant directly and shall not do any
business for two years after termination of business between them. It
was stated that the respondent had violated/breached their
undertaking.
FAO(OS) 374-2005 Page 3
3. Learned counsel for the appellant had drawn our attention and relied
upon paragraphs 7, 11 and 12 of the plaint. For the sake of
convenience, these paragraphs are reproduced below:-
“7. That the Plaintiff has learnt in the beginning
of the month of October, 2003 that the Defendants
have in violation of their Undertaking contained in
their letter dated 02 April, 2003 to the Plaintiff dealt
and supplied goods to M/s. D.W. Bendler, GMBH
& Company, Germany, foreign buyer of the
Plaintiff for the last over ten years, the same goods
as the Plaintiff had been sourcing from the
Defendants, for supplying to the said foreign buyer
of the value of Rs.6,21,841.15p in or about the
month of August, 2003 and of the value of
Rs.1,79,098.40p in April, 2003.
11. That the cause of action for the present suit
accrued to the Plaintiff against the Defendants in
the beginning of the month of October, 2003 when
the Plaintiff first learnt of the exports affected by
the Defendants to the overseas buyer of the
Plaintiff in the months of April and September,
2003. No part of the relief claimed in the Plaint is
barred by time.
12. 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
FAO(OS) 374-2005 Page 4
jurisdiction over the subject matter of the Suit.”
4. It is well settled that for deciding and adjudicating the question
whether a Court has territorial jurisdiction to decide a suit, the averments
made in the plaint alone have to be read as if they are true and correct.
The factual accuracy of the averments is decided after trial.
nd
April, 2003
5. Learned counsel also relied upon the letter dated 2
written by the respondent based in Jamnagar to M/s.Golden Peacock
Overseas Limited, Noida. This letter is disputed and denied by the
respondents. It is claimed that this is a forged document. Learned counsel
for the appellant, however, relied upon the following paragraph in the
nd
April, 2003 :-
alleged letter dated 2
“All our dealings with you have been with
your Registered Office at Delhi and you
have, only for our facility, appointed your
representatives at our factory premises.
Since we have given this Undertaking to
you at Delhi and the Agreement aforesaid
has been arrived at with you at Delhi,
inspite of a Clause in this regard being
contained in your Purchase Order, we
reiterate that you will be entitled to
institute all proceedings against us for
recovery/ adjustment of the aforesaid
amounts in the course (sic) at Delhi and
FAO(OS) 374-2005 Page 5
we shall not contest the jurisdiction of the
Course (sic) at Delhi.”
6. The statements made in the above paragraph of the alleged letter
nd
April, 2003 have not been mentioned in the plaint. Learned
dated 2
counsel for the appellant, therefore, cannot rely upon the alleged facts and
nd
April, 2003.
statements made in the alleged letter dated 2
nd
April,
7. It may also be mentioned here that the alleged letter dated 2
2003 is addressed to the appellant at its Noida address. It is not addressed
to the appellant-plaintiff at its Delhi address. However, in paragraph 12 of
the plaint as quoted above, the appellant-plaintiff has stated that the
respondent-defendant had given an undertaking not to deal with the
foreign buyers of the appellant-plaintiff at Delhi and had agreed to the
jurisdiction of the Courts in Delhi. Keeping in view the well settled principle
of law that factual averments made in the plaint at this stage have to be
accepted as correct, we proceed to decide and adjudicate whether the
Courts in Delhi have territorial jurisdiction to entertain the suit and decide
the same.
8. Section 20(c) of the Code states that every suit can be instituted in a
FAO(OS) 374-2005 Page 6
Court within the local limits of whose jurisdiction the cause of action, wholly
or in part, arises. The question, therefore, required to be answered is
whether any cause of action, wholly or partly has arisen in Delhi in view of
the averments made in the plaint that the respondent-defendant had given
an undertaking at Delhi not to deal with the foreign buyers of the appellant-
plaintiff. If giving an undertaking is an integral part of the cause of action for
filing of the suit as per the averments made in the plaint, at this stage
Courts in Delhi will have territorial jurisdiction.
9. The term “cause of action” is a compendious expression which
means every fact which is necessary for a plaintiff to prove/succeed in the
reliefs prayed for and support his right to get a judgment. “Cause of action”
means whole of the material facts necessary for the plaintiff to allege and
prove to get a judgment in his favour. The material facts or rather the
bundle of facts which give a right to the plaintiff to redress a legal injury in a
Court of law and obtain judgment in his favour constitutes “cause of
action”. However, the term “cause of action” can be given a wide/broad or
a narrow meaning. In the case of Union of India versus Adnani Exports
Limited reported in AIR 2002 SC 126 the Supreme Court held that facts
FAO(OS) 374-2005 Page 7
pleaded and which have nexus and relevance to the lis i.e. the dispute
involved in the case, constitute “cause of action” and in a given case when
a part or whole of the cause of action arises within a Court's territorial
jurisdiction the said Court would have jurisdiction to entertain the Suit. The
legislature in its wisdom has given territorial jurisdiction to Courts where the
cause of action arises or even a part thereof arises. Accrual of part of the
cause of action is sufficient. It is not necessary that the whole of the cause
of action should arise within the territorial jurisdiction of the Court.
10. In view of the law as applicable, we will now examine the averments
made in the plaint for the purpose of deciding the present Appeal. While
deciding the question, we have to also keep in mind the principle that
meaningful and not formal reading of the plaint is required. Further, as per
Order VI Rule 2 of the Code, material facts have to be stated and not
evidence. Reading of the plaint shows that the appellant-plaintiff is an
exporter. It is claimed that the appellant has been in the export trade for
15 years and it is a recognised export house. It is claimed that the
appellant has a turnover of over Rs.20 crores. It is further claimed that the
appellant has been sourcing raw materials and components from the
FAO(OS) 374-2005 Page 8
respondent-defendants for a long time. It is further claimed in para 4 of the
plaint that the appellant had obtained an undertaking from the respondent-
defendant that they shall not misuse information or particulars of its
overseas buyers and shall not directly deal with them during the
subsistence of contract and for a period of two years after ceasing of the
business with the appellant. It is further claimed that the respondent had
agreed to pay damages equal to 60% of the value of the exports done by
the respondent-defendants, for breach of the said undertaking. It is further
nd
April, 2003.
claimed that an undertaking was given in the letter dated 2
The appellant-plaintiff has stated that in breach of the said undertaking, the
respondents had supplied goods to a German buyer in the months of April,
2003 and August, 2003. The name of the said buyer is also mentioned
along with the amount of the exports made by the respondent-defendants.
11. From the reading of the plaint, it is apparent that the cause of action
for filing of the Suit is the violation/breach of the alleged undertaking
given by the respondent-defendants to the appellant-plaintiff. It is this
breach of the undertaking which forms part of the “cause of action”. For
the purpose of deciding an application under Order VII Rule 11 of the
FAO(OS) 374-2005 Page 9
Code before recording of the evidence, the averments made in the plaint
have to be accepted and presumed as correct. Therefore, at this stage
we have to proceed on the basis that the alleged undertaking was given
by the respondent-defendants in Delhi. If this is the position, then it is
difficult to hold, atleast at this stage, without the parties having led
evidence that no part of the cause of action has arisen in Delhi.
Undertaking has nexus with the facts pleaded, which constitute “cause of
action” and the lis, on the basis of which relief is claimed in the plaint.
12. We agree with the learned counsel for the respondent-defendants
that it is not open to the parties by a contract to confer jurisdiction on a
Court which does not possess jurisdiction to decide a dispute under the
Code. But it is equally well settled that where two or more Courts have
jurisdiction to try a suit or proceedings, parties by an agreement can
stipulate that suit/proceedings shall be instituted and decided by courts
located at one place. (Refer Hakam Singh versus Gammon (India) Ltd.
reported in (1971) 1 SCC 286) However, in view of the legal position that a
suit can be filed within the territorial jurisdiction of a Court where a part of
cause of action has arisen and in view of the averments made in the plaint
FAO(OS) 374-2005 Page 10
that the respondent-defendants had allegedly given an undertaking in
Delhi, it cannot be said at this stage that no part of the cause of action has
arisen in Delhi.
13. The judgments relied upon by the learned Single Judge duly support
the view we have taken. In Oil and Natural Gas Commission versus
Utpal Kr. Basu and others reported in (1994) 4 SCC 711, the Supreme
Court held that proceedings can be initiated in any Court at a place where
integral part of cause of action has arisen. In the said case the petitioner
had initiated proceedings at Calcutta because he had read advertisements
inviting tenders at Calcutta though the tender was submitted in New Delhi
and the decision to award or not to award tender was to be taken at Delhi.
The work was required to be carried out in Gujarat. In these circumstances
it was held that no part of cause of action had arisen in Calcutta. It was
observed
“Therefore, in determining the objection of lack of
territorial jurisdiction the court must take all the facts
pleaded in support of the cause of action into
consideration albeit without embarking upon an enquiry
as to the correctness or otherwise of the said facts. In
other words the question whether a High Court has
territorial jurisdiction to entertain a writ petition must be
FAO(OS) 374-2005 Page 11
answered on the basis of the averments made in the
petition, the truth or otherwise whereof being immaterial.
To put it differently, the question of territorial jurisdiction
must be decided on the facts pleaded in the petition.
Therefore, the question whether in the instant case the
Calcutta High Court had jurisdiction to entertain and
decide the writ petition in question even on the facts
alleged must depend upon whether the averments
made in paragraphs 5, 7, 18, 22, 26 and 43 are
sufficient in law to establish that a part of the cause of
action had arisen within the jurisdiction of the Calcutta
High Court.”
14. Similarly, in Rajasthan High Court Advocates' Association versus
Union of India and others reported in AIR 2001 SC 416 the Supreme
Court examined the expression “cause of action” and held that it had
acquired a judicially settled meaning as every fact which would be
necessary for the plaintiff to prove if traversed, in order to secure right to
judgment of the court. The Court observed that in each individual case it
will have to be determined as to where the cause of action arises. Learned
Single Judge has also referred to two decisions of the Supreme Court
Union of India versus Adani Exports Ltd (supra) and Union of India
and others versus Oswal Woollen Mills Ltd. reported in (1984) 2 SCC
646. In the said cases it has been held that registered office of the plaintiff
FAO(OS) 374-2005 Page 12
alone would not give territorial jurisdiction to the Courts within whose
jurisdiction the registered office is situated. Therefore the appellant cannot
claim right to sue the respondent at Delhi because it's registered office is in
Delhi. However, in the present case the appellant has sued the respondent
in Delhi on the basis of alleged undertaking given by the respondent to the
appellant at Delhi. It is a breach of the alleged undertaking which
constitutes an integral and important part of the cause of action for filing
the suit for recovery and damages on the basis of breach of the
undertaking. The Supreme Court in the case of Adani Exports (supra)
has reiterated the above principles in the following words :-
“17. It is seen from the above that in order to
confer jurisdiction on a High Court to entertain
a writ petition or a special civil application as
in this case, 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 from the above
judgment that each and every fact pleaded by
the respondents in their application does not
ipso facto lead to the conclusion that those
facts give rise to a cause of action within the
courtHs territorial jurisdiction unless those facts
FAO(OS) 374-2005 Page 13
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.
If we apply this principle then we see that
none of the facts pleaded in para 16 of the
petition, in our opinion, falls into the category
of bundle of facts which would constitute a
cause of action giving rise to a dispute which
could confer territorial jurisdiction on the
courts at Ahmedabad.”
15. Another judgment relied upon by the learned Single Judge is New
Moga Transport Company thr. Its proprietor Krishanlal Jhanwar
versus United India Insurance Co, Ltd and others (2004) 4 SCC 677,
wherein the Supreme Court has reiterated the long standing principle that
an agreement between the parties that the dispute between them shall be
tried by a competent court having jurisdiction is valid and binding, but
parties cannot by an agreement confer jurisdiction on a court which
otherwise does not have territorial jurisdiction to deal with the matter. Patel
Roadways Ltd versus Prasad Trading Company (1991) 4 SCC 270
deals with Section 20(a) of the Code and the Explanation. It has been held
that where a defendant company has principal office and subordinate office
at different places but the cause of action has arisen at the subordinate
office, then the Courts having jurisdiction over the subordinate office are
competent to try the dispute and not the courts where the principal office of
FAO(OS) 374-2005 Page 14
the defendant is situated.
16. It is however clarified that the observations made in this Order are on
the basis of the averments made in the plaint and for the purpose of
deciding the application under Order VII, Rule 11 of the Code. These
observations and findings will not be binding on the learned Single Judge
while deciding the issue and disputes relating to territorial jurisdiction on
merits after trial.
17. In view of the above we allow the present appeal. The parties shall
th
April, 2007. In the facts and
appear before the learned Single Judge on 30
circumstances of the case there will be no order as to costs.
(SANJIV KHANNA)
JUDGE
(DR. MUKUNDAKAM SHARMA)
CHIEF JUSTICE
APRIL 19, 2007.
P