Cause of action arises where goods are supplied, establishing territorial jurisdiction under Section 20(c) of CPC.

The plaintiff (respondent), a manufacturer based in Umargam, District Valsad, filed a suit for recovery of Rs. 4,19,200/- against the defendant (appellant), a company based in Sachin, Surat.

The claim arose from two invoices (Nos. 518 and 533) for nickel screens dated February and March 1999.

The defendant paid part of the amount but defaulted on the remainder, subsequently claiming that the goods supplied were of inferior quality and that the Valsad Court lacked territorial jurisdiction since the defendant resided in Surat.

The Trial Court initially rejected the plaint for lack of jurisdiction, but the High Court, in a previous application (SCA No. 11387 of 2005), directed the Trial Court to decide the jurisdictional issue alongside the merits.

The Trial Court ultimately decreed the suit in favor of the plaintiff.

1. Whether the Civil Court at Valsad lacked territorial jurisdiction to try the suit because the defendant resides and carries on business in Surat.

2. Whether the defendant was liable to pay the outstanding dues despite the defense of inferior quality goods.

Section 20 of the Code of Civil Procedure, 1908 (CPC), specifically Section 20(c), which provides that a suit may be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises.

Section 21 of the CPC regarding objections to jurisdiction, which requires a showing of "consequent failure of justice" or prejudice to the party raising the objection.

The court found that the defendant failed to demonstrate any prejudice suffered by conducting the proceedings in Valsad rather than Surat.

Regarding territorial jurisdiction, the court noted that the invoices (Exh. 81 and 82) were issued from Valsad and the goods were supplied from there, thus a part of the cause of action arose in Valsad under Section 20(c) CPC.

The jurisdiction clause in the invoices, which the defendant accepted, extended to "all Courts of Gujarat," covering Valsad.

On the merits, the court dismissed the "inferior quality" defense as an afterthought, noting the defendant had made substantial part-payments after delivery without raising any quality objections at that time.

The High Court dismissed the appeal and upheld the Trial Court's judgment and decree; the defendant was ordered to pay the outstanding amount of Rs. 4,19,200/- with interest as originally decreed, and record and proceedings were ordered to be sent back to the Trial Court.