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South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. And Others
Factual and Procedural Background
The respondents filed a suit on the original side of the Delhi High Court seeking a perpetual injunction to restrain the appellant from enforcing a bank guarantee dated 16 July 1977. A learned Single Judge held that no part of the cause of action arose in Delhi and directed that the plaint be returned for presentation to the proper court. On appeal, a Division Bench reversed that order, reasoning that the guarantee had been executed in Delhi and payments were to be made there, thereby conferring jurisdiction on the Delhi High Court. The appellant obtained special leave to appeal to the Supreme Court, resulting in the present decision.
Legal Issues Presented
- Whether any part of the cause of action arose in Delhi so as to confer jurisdiction on the Delhi High Court under Section 20 of the Code of Civil Procedure.
Arguments of the Parties
Respondents' Arguments
- Relied on A.B.C Laminart (P) Ltd. v. A.P. Agencies (1989 2 SCC 163) to contend that execution of the bank guarantee and the contemplated payments in Delhi constituted part of the cause of action, thereby vesting jurisdiction in the Delhi High Court.
Appellant's Arguments
- Emphasised that the underlying contract was executed in Bombay and that all performance obligations—including shipment of livestock—were to be carried out from Bombay/Kandla to overseas destinations, leaving no material part of the cause of action within Delhi.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| A.B.C Laminart (P) Ltd. v. A.P. Agencies (1989 2 SCC 163) | Principle that a court can assume jurisdiction if any part of the cause of action arises within its territorial limits. | The Court distinguished the precedent, holding that mere execution of a bank guarantee in Delhi, without more, did not create a substantive cause of action where the underlying contract and its performance were centred in Bombay. |
Court's Reasoning and Analysis
The Supreme Court reiterated that a “cause of action” is a bundle of facts the plaintiff must prove to obtain relief, which must include at least one act of the defendant giving rise to the complaint. It noted the admitted facts: (i) the contract was executed in Bombay; (ii) performance—including shipment of livestock—was to occur from Bombay/Kandla; and (iii) the bank guarantee, though executed in Delhi, was transmitted to Bombay solely to secure performance under the Bombay contract. The Court reasoned that execution of the guarantee in Delhi was a collateral act that did not, by itself, give rise to the respondents’ substantive claim. Consequently, no integral part of the cause of action arose in Delhi. The Court therefore rejected the Division Bench’s reliance on A.B.C Laminart, holding that the precedent did not alter the fundamental requirement that the cause of action be tied to the defendant’s actionable conduct within the forum.
Holding and Implications
Appeal Allowed. The Supreme Court set aside the Division Bench’s order and restored the learned Single Judge’s direction to return the plaint for presentation to the proper court.
Implications: The respondents must re-file the suit before a court having territorial jurisdiction—presumably in Bombay. The decision reinforces that ancillary acts such as execution of a bank guarantee, absent a substantive nexus to the dispute, do not confer jurisdiction under Section 20 of the Civil Procedure Code. No new legal principle was created beyond applying settled law on cause of action.
Order
1. This appeal by special leave arises from the order of the Division Bench of the Delhi High Court made on 19-2-1980 in FAO (OS) No. 56 of 1979. The respondents had filed a suit on the original side of the Delhi High Court for perpetual injunction against the appellant from enforcing bank guarantee dated 16-7-1977. The learned Single Judge held that no part of the cause of action had arisen within the jurisdiction of the High Court and, therefore, the Court lacked jurisdiction to entertain the suit. On appeal, the Division Bench concluded that since the bank guarantee was executed in Delhi and payments were to be made in Delhi, the High Court has jurisdiction to try the suit and the direction of the learned Single Judge to return the plaint for presentation to the proper court was not correct in law. Thus this appeal by special leave.
2. The only controversy is whether the Delhi High Court has jurisdiction to entertain the suit. It is an admitted position that the contract was executed in Bombay. It is also an admitted position that the performance of obligations and liabilities under the contract was required to be done in Bombay inasmuch as cargo of livestock was to be transported in the ship from Kandla to Damman or Jeddah. It is also an admitted position that in furtherance of the execution of the contract at Bombay, the respondents had executed the bank guarantee at Delhi and had transmitted it to Bombay for performance of the contract. The question, therefore, is whether any part of the cause of action had arisen in Delhi. The learned counsel for the respondents had relied upon a judgment of this Court in A.B.C Laminart (P) Ltd. v. A.P Agencies (1989) 2 SCC 163 to contend that since part of the cause of action had arisen in Delhi, the High Court on the original side has jurisdiction to entertain the suit. We are unable to accept the contention.
3. It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e, within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained.
4. We, therefore, hold that the learned Single Judge was right in his conclusion that no part of the cause of action had arisen within the jurisdiction on the original side of the High Court of Delhi and direct to return the plaint for presentation to the proper court.
5. The appeal is accordingly allowed. The order of the Division Bench is set aside and that of the learned Single Judge is restored. No costs.
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