A contract’s place of formation constitutes part of the cause of action under Section 20(c) CPC.

Plaintiff Narender Rana @ Bittu Rana, proprietor of M/s Rana Jewellery Empire at Bhuntar, Kullu, alleged that the defendants, who operated NL Jewels at Jalandhar, induced him to join a gold “Kitty Scheme” during their interaction at his business premises in Bhuntar.

Between 19 March 2022 and 26 June 2023, the plaintiff deposited 2,823.05 grams of gold with the defendants; 1,803.05 grams were subsequently returned, leaving 1,020 grams allegedly outstanding.

After the defendants allegedly failed to return the balance gold, the plaintiff served a legal notice dated 4 October 2023 and instituted Civil Suit No. 1 of 2024 before the Additional District Judge, Kullu, seeking mandatory injunction for return of the gold or, alternatively, recovery of ₹65,28,000 with interest.

The defendants moved an application under Order VII Rule 10 CPC, contending that no part of the cause of action arose within Kullu and that the suit ought to be returned for presentation before the competent court.

The trial Court dismissed the application on 6 November 2025, leading to the present petition under Article 227 of the Constitution.

1. Whether, on the averments in the plaint, any part of the cause of action arose within the territorial jurisdiction of the Court at Kullu under Section 20(c) CPC.

2. Whether the trial Court erred in dismissing the defendants’ application under Order VII Rule 10 CPC, warranting interference under Article 227 of the Constitution.

Order VII Rule 10 CPC requires return of a plaint for presentation before the proper court where the court lacks territorial jurisdiction; it does not contemplate dismissal of the suit on that ground.

Section 20(c) CPC permits institution of a suit where the cause of action wholly or partly arises. “Cause of action” comprises every material fact which the plaintiff must establish to obtain relief and is independent of the defence raised by the defendant.

Relying on Muhammad Hafiz v. Muhammad Zakariya, 1922 Privy Council 23, and A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, (1989) 2 SCC 163, the Court held that, in contractual matters, relevant connecting factors may include the place where the contract was made, was to be performed, or where payment was to be made.

The Court also applied the limited supervisory jurisdiction under Article 227, as explained in K. Valarmathi v. Kumaresan, 2025 INSC 606, and Nandi Infrastructure Corridor Enterprises Ltd. v. B. Gurappa Naidu, 2026 INSC 434: interference is justified only in cases of jurisdictional error, gross abuse, or failure to exercise jurisdiction, and not for mere errors of fact or law.

The Court confined the jurisdictional inquiry to the plaint averments and did not consider the defendants’ probable defence.

The plaint specifically alleged that the defendants approached the plaintiff at his shop in Bhuntar, made representations regarding the Kitty Scheme, and that the parties’ oral agreement was concluded there.

Since formation of the contract is a component of the cause of action in a contractual dispute, the alleged conclusion of the agreement at Bhuntar constituted at least part of the cause of action under Section 20(c) CPC.

The fact that the defendants conducted their business at Jalandhar did not, by itself, exclude the territorial jurisdiction of the Kullu Court.

Consequently, the trial Court’s dismissal of the Order VII Rule 10 application did not reflect any unwarranted assumption or misuse of jurisdiction, and no ground for interference under Article 227 was established.

The trial Court was therefore competent to entertain the suit, and its order dated 6 November 2025 dismissing the defendants’ application under Order VII Rule 10 CPC was upheld.

The petition under Article 227 was dismissed, with pending applications also disposed of; the Court clarified that its observations were confined to territorial jurisdiction and would not affect the merits of the suit.