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Steel Authority Of India Ltd. v. Dinesh Kumar Jaiswal .
Factual and Procedural Background
This appeal challenges an order dated 15.3.1993, whereby the learned Single Judge dismissed an application seeking dismissal of a suit on the ground that the Court lacked jurisdiction to receive, try, and determine the suit. The suit was filed for recovery of damages against Steel Authority of India Limited (SAIL), which conducts business within the Ordinary Original Civil Jurisdiction of this Court. The plaintiff invoked jurisdiction based on the defendant having an office within this jurisdiction at No. 6, Ganesh Chandra Avenue, Calcutta. The defendant contested jurisdiction on the basis that all relevant transactions and breaches occurred in Durgapur, not at the Calcutta office.
Legal Issues Presented
- Whether the Court has jurisdiction to entertain a suit for damages against a corporation that carries on business within its Ordinary Original Civil Jurisdiction, notwithstanding that the cause of action arose elsewhere.
- Whether the presence of a subordinate office of the defendant within the Court's jurisdiction confers jurisdiction for the suit.
- Whether provisions of Sections 16, 17, and 20 of the Code of Civil Procedure apply to the Court's Ordinary Original Civil Jurisdiction under Clause 12 of the Letters Patent.
- Whether the principle applicable to suits against the State regarding jurisdiction based on cause of action applies similarly to suits against corporations.
Arguments of the Parties
Appellant's Arguments
- The defendant's office within the Court's jurisdiction at Calcutta never dealt with or had occasion to deal with the transaction or contract breach complained of.
- All aspects of the contract including tender invitation, submission, negotiation, acceptance, sale orders, payments, material delivery, and release orders occurred at Durgapur.
- The cause of action did not arise within the Court's jurisdiction; hence, the suit cannot be maintained solely because the defendant has an office within the jurisdiction.
- Reliance on ABC Laminart Private Ltd. v. A.P Agencies to argue that a suit for breach of contract lies only where the contract was made or to be performed, and mere presence of an office does not confer jurisdiction.
- Reliance on Patel Roadways Limited v. Prasad Trading Company to argue that a corporation's subordinate office location defines where it carries on business, implying jurisdiction should be at Durgapur, not Calcutta.
Respondent's Arguments
The opinion does not contain a detailed account of the respondent's legal arguments.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| ABC Laminart Private Ltd. v. A.P Agencies, Salem (1989) 2 SCC 163 : AIR 1989 SC 1239 | Defines where cause of action arises in contract disputes; suit lies where contract was made or to be performed. | The Court held this precedent was inapplicable as it did not address suits against corporations carrying on business within jurisdiction. |
| Patel Roadways Limited v. Prasad Trading Company (1991) 4 SCC 270 : AIR 1992 SC 1514 | Interprets Section 20 CPC to deem a corporation carrying business where its subordinate office is situated. | The Court rejected its applicability, noting Sections 16, 17, and 20 CPC do not apply to this Court's Ordinary Original Civil Jurisdiction. |
| Muttra Electrical Supply v. Gopal Saran Kulasresthi, 59 CWN 419 | Explains absolute jurisdiction of the Court under Clause 12 of Letters Patent, including when defendant carries on business within jurisdiction. | The Court relied on this to affirm jurisdiction if defendant carries on business within the Court's territorial limits. |
| Food Corporation Of India v. Evdomen Corporation (1999) 2 SCC 446 | Confirms Sections 16, 17, and 20 CPC do not apply to High Courts exercising original civil jurisdiction under Letters Patent; jurisdiction based on business presence. | The Court applied this to hold that business presence within jurisdiction confers jurisdiction irrespective of cause of action location. |
| Calcutta Motor Cycle Co. v. Union Of India, AIR 1953 Cal 1 | Establishes that suits against the State must be filed where cause of action arises, not merely where the State is present. | The Court distinguished this principle as not applicable to corporations, only to the State. |
Court's Reasoning and Analysis
The Court analyzed the jurisdictional issue by first considering whether the cause of action arose within its territorial limits. It acknowledged the appellant's reliance on contract law principles to restrict jurisdiction to places where contracts were made or breached but found these inapplicable to suits against corporations carrying on business within the Court's jurisdiction.
The Court emphasized that Sections 16, 17, and 20 of the Code of Civil Procedure do not apply to this Court's Ordinary Original Civil Jurisdiction, which is governed by Clause 12 of the Letters Patent. This Clause confers absolute jurisdiction where the defendant dwells, carries on business, or personally works for gain within the jurisdiction, regardless of where the cause of action arose.
Relying on precedent, the Court held that if the defendant carries on business within its jurisdiction, the Court's jurisdiction is absolute and cannot be renounced or assumed otherwise. The Court further distinguished the principle applicable to suits against the State, where jurisdiction is limited to the place of cause of action, noting no similar restriction applies to corporations.
Consequently, the Court found that the presence of the defendant's office within its jurisdiction sufficed to confer jurisdiction to entertain the suit, rendering the appellant's objection unsustainable.
Holding and Implications
The appeal is dismissed.
The Court held that it has jurisdiction to entertain the suit against the defendant corporation because the defendant carries on business within the Court's Ordinary Original Civil Jurisdiction. The location of the cause of action is immaterial in such circumstances. This decision directly affects the parties by upholding the Court's jurisdiction but does not establish any new precedent beyond reaffirming existing principles regarding jurisdiction under Clause 12 of the Letters Patent.
Gupta, J.:— This appeal is directed against an order dated 15.3.1993 by which an application, for dismissal of the suit on the ground that this Court has no jurisdiction to receive, try and determine the suit, was dismissed by the learned Single Judge of this Court.
2. The suit is a suit for recovery of damages against Steel Authority of India (SAIL in short) which carries on business within the Ordinary Original Civil Jurisdiction of this Court. It is on this basis that the jurisdiction of this Court has been invoked. Mr. Chatterjee learned Advocate appearing in support of the appeal has contended that the office of the defendant situate within the jurisdiction of this Court has never dealt with nor had any occasion to deal with any part or portion of the transaction between the parties. No demand for payment of any amount was or could be made by the plaintiff at No. 6, Ganesh Chandra Avenue, Calcutta which is the office of the defendant within the Ordinary Original Civil Jurisdiction of this Court. He submits that the tender was invited at Durgapur. The tender was submitted by the plaintiff at Durgapur. Negotiations between the parties to the suit took place at Durgapur. Letter of acceptance was issued from Durgapur. The sale orders issued at Durgapur. The plaintiff at Durgapur deposited all amounts. All materials were lifted from Durgapur. Materials which according to the plaintiff, could not be lifted due to the alleged breach of the contract by the defendant were lying at Durgapur. All release orders in favour of the plaintiff were issued from Durgapur. The defendant's office at No. 6, Ganesh Chandra Avenue, Calcutta, on the basis of which the plaintiff has invoked jurisdiction for the purpose of filing the suit, had nothing to do with the contract breach whereof is complained in the suit. The sum and substance of the submission of Mr. Chatterjee is that no part of the cause of action of the plaintiff arose within the jurisdiction of this Court. The plaintiff, he submits, cannot maintain the present suit against the defendant only because the defendant has one of its offices within the Ordinary Original Civil Jurisdiction of this Court. He has drawn our attention to the case of (1) ABC Laminart Private Ltd. v. A.P Agencies, Salem reported in (1989) 2 SCC 163 : AIR 1989 SC 1239. He has placed reliance on Paragraph-15 which for convenience is reproduced hereinbelow:—
“In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occured. The making of the contract is part of the cause of action. A suit on a contract therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But, making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarly, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a Court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have (been) performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of the cause of action disappears. The above are some of the connecting factors.”
3. In the above case Their Lordships were considering as to where does a cause of action arise in controversies relating to contract. Their Lordships in that case were considering the question as to whether any part of the cause of action arose within the jurisdiction of Kaira so that the parties could have conferred execusive jurisdiction on the Courts at Kaira. Their Lordships, in our view, were not considering a question as to whether a suit for damages against a Corporation can be filed in a Court within whose jurisdiction admittedly it carries on business as is the case here. Therefore, in our view, this judgment cited by the learned Counsel does not lend any assistance in deciding the present issue before us.
4. Mr. Chatterjee has next placed reliance on the case of (2) Patel Roadways Limited, Bombay v. Prasad Trading Company. reported in (1991) 4 SCC 270 : AIR 1992 SC 1514 where Their Lordships held construing Section 20 of Code of Civil Procedure that if cause of action against a Corporation arises where the Corporation has a subordinate office the Corporation shall be deemed to carry on business at that place where the subordinate office is situate. On the basis of this reasoning Mr. Chatterjee wanted us to hold that the defendant in this case should be deemed to carry on business at Durgapur and not at Calcutta.
5. This submission of Mr. Chatterjee cannot be accepted for the reason that under Section 120 of Code of Civil Procedure provisions contained in Sections 16, 17 and 20 of the Code of Civil Procedure do not apply to this Court in the exercise of its Ordinary Original Civil Jurisdiction. Institution of a suit in this Court is governed by Clause 12 of the Letters Patent which provides as follows:—
“12 Original jurisdiction as to suits—And we do further ordain, that the said High Court of Judicature at Fort William in Bengal, in the exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try, and determine suits of every description, if, in the case of suits for land or other immovable property, such land or property shall be situated, or in all other cases if the cause of action shall have arisen, either wholly, or, in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court, or if the defendant at the time of the commencement of the suit shall dwell, or carry on business, or personally work for gain within such limits, except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Calcutta, in which the debt or damage, or value of the property sued for, does not exceed one hundred rupees.”
6. Construing Clause 12 of the Letters Patent it has been held in (3) Muttra Electrical Supply v. Gopal Saran Kulasresthi reported in 59 CWN 419 that there are cases of absolute jurisdiction which the Court can neither assume nor can the Court renounce. The cases of absolute jurisdiction are discussed in the following paragraph:—
“A close scrutiny of this clause, therefore, reveals that there are certain total and absolute jurisdiction of this Court. They are where the whole of the land or immovable property is situate within its jurisdiction when the suit is for such land or immovable property. That is also the case where the whole of the cause of action arises within the jurisdiction of the Court in suits other than suits for land and immovable property. Also that is the case in such cases where the defendant at the time of the institution of the suit dwells or carries on business or personally works for gain within the jurisdiction of this Court irrespective of the fact where the cause of action arises. These three are the categories of total and absolute jurisdiction of the Court under the grant of power in Clause 12 of the Letters Patent. No question of the litigant having to take the leave of the Court arises in these three cases. So long as the litigant satisfies the test laid down in these three cases his right to institute the suit in this Court is absolute and unfettered. The Court can neither assume nor renounce such jurisdiction.”
7. If the plaintiff can show that the defendant carries on business within the jurisdiction of this Court, then where did the cause of action arise is wholly besides the point. In this respect a recent judgment of the Supreme Court in the case of (4) Food Corporation Of India v. Evdomen Corporation reported in (1999) 2 SCC 446 may be referred to where Their Lordships were concerned with Clause 12 of the Letters Patent of the Bombay High Court which is the same as that of this Court. An identical question was raised in that case which Their Lordships negative on the ground that the defendant was carrying on business within the jurisdiction of the Bombay High Court. The relevant portion of the judgment may be quoted which is as follows:—
“However, under Section 120 of the Civil Procedure Code, Sections 16, 17 and 20 of the Civil Procedure Code do not apply to a High Court in the exercise of its original civil jurisdiction. Jurisdiction of the Bombay High Court to entertain a suit under its ordinary original civil jurisdiction is determined by Clause 12 of the Letters Patent of the Bombay High Court. Under Clause 12 of the Letters Patent, a place where the defendant, or each of the defendants where there are more than one, at the commencement of the suit, carry on business would be a place where the Court would have jurisdiction. Therefore, under Clause 12 of the Letters Patent of the Bombay High Court, the Bombay High Court would have jurisdiction over the subject-matter of the dispute in the present case because the appellant does carry on business in Bombay.”
8. The aforesaid judgment of the Supreme Court provides complete answer to the point raised in this appeal. From the decided cases it appears that a distinction has in fact been made where the defendant is the State. It has been held that where the defendant is the State suit cannot be filed at any place except where the cause of action arises. In the case of (5) Calcutta Motor Cycle Co.…Plaintiff; v. Union Of India…Defendant., reported in AIR 1953 Cal 1 the aforesaid view was taken following an old case on the basis of the following reasoning:—
“……………………. And what is the position of the Government? The Government of India is represented in this city which is its principal seat by the Governor-General or in his absence by the President in Council and throughout its extensive territories by its various officers, civil and military, in every grade of official rank. It may, therefore, be said to be present everywhere and be constructively dwelling in each and every place at the same time. But, it cannot be allowed that this universal dwelling can give a plaintiff the right to elect the forum in which to sue the Government or to give every Court of Justice in India the concurrent jurisdiction in all cases against the Government. Such a rule will be one-sided in its operation and would place the Government at a disadvantage which in the case of a private individual would amount to an evil of the greatest magnitude.”
9. No such decided case has been brought to our notice in relation to a Corporation. We are therefore, of the view that the objection as regards the jurisdiction of this Court to entertain the suit for damages cannot be sustained and the appeal is therefore bound to fail.
10. The appeal is therefore dismissed. There will be no order as to costs.
11. Mathur, C.J: I agree.
12. Later—The prayer for stay of operation of this judgment is considered and rejected. Xerox certified copy of this judgment be supplied to the parties expeditiously.
13. Mathur, C.J
14. Gupta, J.
15. S.K.G
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