Calcutta High Court
Tarapada Bhowmick vs The State Of West Bengal on 5 November, 2019
Equivalent citations: AIRONLINE 2019 CAL 709
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
Present:
The Hon'ble JUSTICE MOUSHUMI BHATTACHARYA
G.A.1093 of 2018
With
C.S.369 of 1990
Tarapada Bhowmick
Vs.
The State of West Bengal
For the Plaintiff : Mr. Reetobroto Mitra, Adv.
Mr. Sankarsan Sarkar, Adv.
Mr. Soumyajit Ghosal, Adv.
For the Defendant : Mr. Samrat Sen, Senior Adv.
Mr. Paritosh Sinha, Adv.
Mr. Salaluddin Molla, Adv.
Heard on : 05.06.2018, 13.06.2018, 21.06.2018,
18.07.2018, 31.07.2018, 01.08.2018,
14.08.2018, 16.08.2018, 17.09.2018,
26.09.2018, 18.12.2018, 28.11.2018,
21.01.2019, 12.02.2019, 26.02.2019,
07.03.2019, 10.04.2019, 17.06.2019,
08.08.2019, 26.08.2019, 17.09.2019.
Delivered on : 05.11.2019.
Moushumi Bhattacharya, J.
1. The issue which falls for adjudication in this matter is whether the nature of work undertaken by the State is a relevant factor for deciding whether a court has territorial jurisdiction to entertain a civil suit instituted by a citizen against the State.
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2. The defendant, State of West Bengal, in this application, has sought revocation of the leave granted to the plaintiff under Clause 12 of the Letters Patent, 1865, and for dismissal of the suit. The plaintiff says an enquiry into the nature of work contemplated by the State is not relevant and that the suit can be instituted wherever the State is found to carry on business under Clause 12 of the Letters Patent, 1865, on the other hand, the defendant contends that where the activity undertaken by the State is in respect of its sovereign functions, the court would have the territorial jurisdiction to entertain the suit where the cause of action arose.
3. The instant suit has been filed for recovery of the plaintiff's claims in connection with the work of civil construction for a six-bedded Primary Health Centre at Chaipat in the district of Paschim Medinipur, West Bengal. From the pleadings in the plaint filed in the suit, the undisputed facts are as follows;
(a) The contract was in relation to the civil construction of a Primary Health Centre on behalf of the State so as to enable the State to render primary healthcare services to its citizens in exercise of its duties as a Welfare State;
(b) The Primary Health Centre was to be set up at Chaipat in the district of Paschim Medinipur, West Bengal, outside the original jurisdiction of this Hon'ble Court;
(c) The Notice Inviting Tender was issued by the State from the office of the Superintending Engineer, South Circle, C.B. Directorate, PWD, Government of West Bengal having its office at 76, Dr. Sundari Mohan Avenue, Kolkata-700 014, outside the jurisdiction of this Hon'ble Court;
(d) The tenders were to be deposited and submitted by diverse bidders including the plaintiff at the office of the superintending Engineer, South Circle, C.B. Directorate, PWD, Government of West Bengal, having its office at 76, Dr. Sundari Mohan Avenue, Kolkata-700 014, outside the jurisdiction of this Hon'ble Court;
(e) That the contract was executed at 76, Dr. Sundari Mohan Avenue, Kolkata-700 014, outside the jurisdiction of this Hon'ble Court;
(f) The contract was performed by the plaintiff in Chaipat, Paschim Medinipur outside the original jurisdiction of this Hon'ble Court.
4. The contention of Mr. Samrat Sen, learned Senior Counsel appearing for the defendant/applicant is that the pleading and the documents annexed to the plaint would show that no part of the plaintiff's cause of action has arisen within the local limits of the ordinary original civil jurisdiction of this court. According to counsel, "State" can neither "dwell" nor "personally work for gain" which means that the relevant question is whether the State (defendant) can be said to have carried on business within the original jurisdiction of this court at the time of commencement of the suit. Counsel submits that the only ground for invoking the jurisdiction of this court by obtaining leave under Clause 12 of the Letters Patent is that the State had its Principal Seat of governance at Writers' Building within the original jurisdiction of this court. Counsel contends that this may have far-reaching consequences since every civil suit would then be filed against the State wherever the State can be shown to have an administrative office. According to him, since the Government has administrative offices in most territorial units of the State and, by implication, has territorial omnipresence, litigants would be at liberty to choose their courts regardless of the situs of the cause of action. Counsel disputes the very basis of the plaintiff's contention that the seat of governance of the State (at Writers' Building) automatically means that the State "carries on business" at Writers' Building in the context of the contract which forms the subject-matter of the suit. Counsel submits that the "business" of governing the State is not contemplated in Clause 12 of the Letters Patent and would only mean contracts related to commercial or business activity undertaken by the State. Counsel seeks to draw a distinction between activities of a commercial nature and those undertaken as an extension of the sovereign functions of the State. Counsel relies on several decisions to buttress this point, namely, that it is the nature of the activity which would determine whether a State can be sued where it allegedly carries on business. The decisions relied on counsel appearing for the defendant are;
• Doya Narain Tewary Vs. The Secretary of State for India in Council: (1886) ILR Cal 256 (DB) • Rodricks Vs. Secretary of State for India: (1912) ILR 40 Cal 308 (DB) • R.J. Wyllie & Co. Vs. Secy. of State: AIR (1930) Lahore 818 • Union of India Vs. Shri Ladulal Jain: AIR (1963) SC 1681 • Binani Bros. (P) Ltd. Vs. Union of India: (1975) SCC Online Del 50 & ILR (1975) 2 Del 196 (DB) • Associated Commercial Engineers Vs. State: AIR (1979) MP 96 (DB) • Gupta Sanitary Stores Vs. Union of India: AIR (1985) Del 122 & ILR (1985) 1 Del 169 (FB) • Prahlad Rai Dalmia Vs. Union of India: AIR (1986) Del 76 (DB) • Bakhtawar Singh Bal Kishan Vs. Union of India: (1988) 2 SCC 293. • Union of India Vs. Electronic Controls & Instrument Engineers: 1997 SCC Online Del 685 & (1997) 2 Arb LR 691 (DB) • Steel Authority of India Ltd. Vs. Dinesh Kumar Jaiswal: 2002 (1) CLJ 366 (DB)
5. Mr. Sen submits that the above decisions would make it clear that it was essential for the plaintiff to specifically plead whether the nature of the activity forming the subject-matter of the contract was in the nature of a commercial or a business venture which would entitle the plaintiff to invoke the jurisdiction of this court on the basis that the seat of the government is within the original jurisdiction of this court. According to him, the plaintiff has not made any such averment and the records would show that the contract contemplated was in exercise of the sovereign functions of the State since it involved providing healthcare services to the citizens. The situs of the cause of action, as pleaded in the plaint, occurred outside the jurisdiction of this court and, therefore, this court would be denuded of its power to entertain the suit. Mr. Sen further submits that since the plaintiff has chosen not to file an affidavit-in-opposition, the assertion of the defendant with regard to the nature of the contract remains uncontroverted. Counsel places emphasis on the nature of the contract in the decisions cited where the courts held that jurisdiction must be invoked on the basis of the situs of the cause of action on the basis of the suit of governance of the State.
6. The second point urged by Mr. Sen appearing for the defendant is whether delay or participation in the proceedings on the part of the defendant can operate as an impediment in raising the issue of the court's jurisdiction to entertain the suit. Counsel raises two issues, namely, the plaintiff had participated in the interlocutory proceedings in the suit and that there has been an inordinate delay (of twenty-eight years) in the defendant urging the issue of jurisdiction.
7. Mr. Sen also seeks to limit the application of Section 21 of the CPC (that an objection to jurisdiction has to be taken at the very threshold) to suits where leave has been obtained under Clause 12 of the Letters Patent. Counsel relies on Maharaja Bahadur Guru Mohadev Asram Prosad Sahi of Hathwa Vs. Hastin gs Evelyn Beal reported in 40 CWN 65 and Raja Setrucherla Ramabhadra Raju Vs. Maharaja of Jeypore 46 IA 151 reported in 51 Ind. Cas. 185 as instances where it was held that section 21 has no application where this court has no jurisdiction to hear the matter. Reliance is also placed on Manindra Chandra Nandy Vs. Lal Mohan Ray reported in AIR 1929 Cal 358 and Kiran Singh Vs. Chaman Paswan reported in AIR 1954 SC 340, a decision of a stellar bench of four distinguished judges of the Supreme Court, for the proposition that a defect of jurisdiction strikes at the very authority of the court to pass a decree and cannot be cured by consent of parties. Counsel relies on Jnan Chand Chugh Vs. Jugal Kishore Agarwal reported in AIR 1960 Cal 331, which held that if a court has no jurisdiction, its judgment is not merely voidable, but void. Relying on the aforesaid decision, counsel urges that there cannot be any waiver of jurisdiction nor can the plea of jurisdiction by a defendant be defeated on the ground of acquiescence or participation in the interlocutory proceedings.
8. Mr. Reetobroto Mitra, learned counsel appearing for the plaintiff puts forward a simple argument in defence to the demurrer; that the defendant carries on business at Writers' Building, B.B.D. Bag, Kolkata- 700001, which is within the jurisdiction of this court. Hence, the condition under Clause 12 of the Letters Patent, namely, that if the cause of action has 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 this 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, the court, in exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try and determine such suit (substantially in the language of the Clause 12) has been satisfied. According to counsel, the point of consideration is whether the State of West Bengal can carry on business at Writers' Building, Kolkata, which is within the jurisdiction of this court. Counsel relies on Articles 298 and 299 of the Constitution of India, which provide that the Union or the State can carry on any trade or business including the making of contracts for any purpose, which are distinct from its sovereign power. Counsel relies on Union of India Vs. Kamal Kumar Goswami reported in AIR 1974 Calcutta 231, where it was held that this court had jurisdiction to receive, try and determine a suit against the Union of India under Clause 12 of the Letters Patent, if the Union of India carries on any business within its jurisdiction at the time of commencement of a suit regardless of where the cause of action relating to such suit has arisen. In that case, the Division Bench, supported the view taken in Union of India Vs. Ladulal Jain reported in AIR 1963 SC 1681, which held that the Government of India carried on business in its Railway undertakings and the concerned court had jurisdiction to try the suit against the Union of India as the Head Office of that Railway undertaking was situated within the territorial limit of that court. Counsel relies on Ladulal Jain for the aforesaid proposition and contends that the real test for determining whether the persons aggrieved can approach the writ court under Article 226 of the Constitution or whether the aggrieved person has to institute a civil action by filing a Civil Suit against the State is whether the State is exercising its sovereign function or purely a commercial function and that a Civil Suit is the appropriate remedy for the latter. Counsel relies on the celebrated decision of Life Insurance Corporation of India Vs. Escorts Ltd. reported in AIR 1986 SC 1370, where the crossing over by a State or an instrumentality of the State from public law domain to a private law field was explained by the Supreme Court in the following manner:-
".............When the State or an instrumentality of the State ventures into the corporate world and purchases the shares of a company, it assumes to itself the ordinary role of a shareholder, and dons the robes of a shareholder, with all the rights available to such a shareholder. There is no reason why the State as a shareholder should be expected to state its reasons when it seeks to change the management, by a resolution of the Company, like any other shareholder."
Counsel contends that there is no longer any compartmentalization of the functions of the State as "sovereign" and "non-sovereign" and the modern system of jurisprudence does not support the attribution of sovereign power or functions on a State. Counsel relies on N. Nagendra Rao Vs. State of A.P. reported in (1994) 6 SCC 205, where the Supreme Court drew a distinction between the executive function of a State being sovereign in nature where the State is answerable for such actions in courts of law and other functions from which the State cannot claim any immunity. Counsel relies on Agricultural Produce Market Committee Vs. Ashok Harikuni and another reported in (2000) 8 Supreme Court Cases 61, where it was held that all functions of the State cannot be construed as Sovereign and that the sovereign functions would broadly cover taxation, police power, legislative function, internal and external security and maintenance of law and order. Counsel submits that as opposed to the sovereign functions enumerated in Agricultural Produce, in the instant case, the State had floated a tender for the contract where the plaintiff as the successful bidder had been awarded the contract. The contract was purely commercial in nature and did not involve the State exercising its sovereign function in the nature of a welfare action as has been argued on behalf of the defendant. Since the contracts were purely commercial in nature, leave had been prayed for and obtained under Clause 12 of the Letters Patent since the defendant was carrying on business at Writers' Building, within the jurisdiction of this court at the time of commencement of the suit.
9. Counsel submits that after institution of the suit, several interlocutory applications were filed which were contested by the defendant thereby acceding to the jurisdiction of this court. In this connection, counsel alludes to a joint- measurement being taken of the work done by the plaintiff in respect of the subject contract in the presence of the defendant's representatives and that Receivers were appointed by orders of court which showed that the defendant by its own action has waived and acquiesced to the jurisdiction of this court. Counsel makes repeated references to the intervening period of twenty eight years from the date of institution of the suit until the making of the present application for revocation of leave. In this context, reliance is placed on Chittaranjan Mukherji Vs. Barhoo Mahto reported in AIR 1953 SC 472, where a Bench of Chief Justice Kania, Justice Patanjali Sastri and Justice S.R. Das found that the respondent in that case had not only acquiesced to the steps taken by the appellant to carry forward the progress of the suit incurring considerable expenses but "made use of the existence of the suit" (in the words of Justice Clough of the learned First Court in that case).
10. Learned counsel for the defendant/applicant distinguishes Ladulal Jain on the basis that the Supreme Court in that case noticed that prior to the State taking over the running of the Railways, the business of running of Railways was carried on by private companies which meant that the nature of the activity did not change even after the same was taken over by the Government,. Counsel draws supports for such contention in Bakhtawar Singh Bal Kishan Vs. Union of India reported in (1988) 2 SCC 293 and Gupta Sanitary Stores Vs. Union of India reported in AIR (1985) Del 122. Counsel distinguishes Union of India Vs. Kamal Kumar Goswami reported in AIR 1974 Calcutta 231 also on that basis. According to counsel, the issue in Life Insurance Corporation of India Vs. Escorts Ltd. reported in AIR 1986 SC 1370 was whether the High court while exercising writ jurisdiction under Article 226 ought to interfere with contractual obligation and the court held that if the contractual obligations partake of a public law character then the court may intervene in exercise of its constitutional writ jurisdiction. Counsel submits that the issue under consideration in N. Nagendra Rao was whether the State is vicariously liable for the negligence of its officers in the discharge of their statutory duties where the Supreme Court held that sovereign immunity, as a defence, is not available where the State is involved in commercial or private undertaking as it is not available where officers of the State are guilty of interfering with the life and liberty of a citizen in a manner not warranted by law. According to counsel, the issue of sovereign immunity is not under consideration as the State does not dispute that its contractual obligations are subject to judicial review. The only question is with regard to the territorial jurisdiction of the court in which such action can be initiated by the citizen. Arguing to counsel, the activity undertaken by the State is in exercise of its duty as a welfare State is distinct from commercial or business ventures and in the case of the farmer, the court where the cause of action arose would have the territorial jurisdiction to entertain the Civil Suit.
11. I have heard learned counsel appearing for the parties and carefully considered the decisions relied upon. The controversy in the demurrer application filed by the defendant for revoking the leave granted to the plaintiff under Clause 12 of the Letters Patent is premised on the contention that the State cannot be said to be "carrying on business" when the contract in question is an extension of the sovereign function of the State. The defendant contends that leave under Clause 12 could not have been granted to the plaintiff for instituting the suit solely for the reason that the defendant State of West Bengal had its principal seat of governance at Writers' Building, Kolkata-1 within the original jurisdiction of this court on the date of institution of the suit. The defendant's case is that the cause of action pleaded in the plaint has not arisen within the original jurisdiction of this court. The point for adjudication arises from the presumption that leave under Clause 12 of the Letters Patent, 1865, may be granted by the High Court of Judicature at Fort William in Bengal, in the exercise of its ordinary original civil jurisdiction, and the court shall be empowered to receive, try and determine suits (other than those relating to land and other immovable property) if (a) the cause of action shall have arisen in part within the local limits of the ordinary original civil jurisdiction of this court, the presumption being that if the cause of action arises wholly within the local limits of the jurisdiction of this court, then no such leave is required and (b) if the defendant at the time of commencement of the suit shall (i) dwell or (ii) carry on business or (iii) personally work for gain within such limits. Since it is not the case of any of the parties that the State can either dwell or personally work for gain, the question is whether the State, in the facts and circumstances of the present case, can be said to "carry on business" at the time of commencement of the suit within the original jurisdiction of this court.
12. The case made out in the plaint relates to a contract entered into between the plaintiff and the defendant (State of West Bengal) following the plaintiff participating in a tender for construction of a primary Health Centre at Chiapat, Midnapore. Disputes arose between the parties with the plaintiff contending that the actual cost of construction exceeded the estimate for cost of work in the tender because of the inaccessibility of the site. The plaintiff further contended that the plaintiff was prevented from completing the work within the time by reason of the defendant's approach of the terms of the contract. The plaintiff claimed a sum of Rs.5,18,240/- including the balance outstanding from the defendant, refund of security deposit and refund of amounts paid towards materials for the construction. The pleading in paragraph 35 of the plaint is as follows;
"In as much as the defendant had and has its principal seat and office at Writers' Building within the aforesaid jurisdiction as stated in paragraph 4 herein and in as much as work was carried out and the contract was executed as mentioned in various paragraphs of the plaint outside the jurisdiction aforesaid the plaintiff prays leave under Clause 12 of the Letters Patent."
13. The contention of the defendant that the leave is liable to be revoked by reason of the fact that the State cannot be said to "carry on business" at Writers' Building, has to be tested on the nature of the contract which forms the subject matter of the suit. For understanding the relevance of delving into the nature of the work which the contract envisaged and the role of the defendant State in the performance of the said contract, an overview of the decisions cited should briefly be mentioned. The case law relied on by learned counsel for the defendant proceeds on the basis that there is a fundamental distinction between the sovereign functions of a State and transactions/enterprises to which a State is a party but which involves a commercial angle. The approach of the courts in elevating certain functions of the State as emanating from a "Sovereign" can be found from Doya Narain Tewary Vs. The Secretary of State for India in Council [(1886) ILR 14 Cal 256]; Rodricks Vs. Secretary of State for India; [(1913) ILR 40 Cal 308], R.J. Wyllie and Co. Vs. Secretary of State [AIR 1930 Lah 818]; Binani Borthers (P) Ltd. Vs. Union of India [ILR 1975 II Delhi 196]; Gupta Sanitary Stores Vs Union of India [AIR 1985 Delhi 122]; (confirming Binani Brothers); M/s Bakhtawar Singh Bal Kishan Vs. Union of India [(1988) 2 SCC 293]; Kiran Singh Vs. Chanam Paswan [AIR 1954 SC 340], where it was held that the expression "carry on business" cannot apply to the State or the Government of India as the business of governing the country is not "business within the meaning of the Letters Patent" (Doya Narain Tewary). This view was reinstated in Rodricks, R.J. Wyllie and Binani Brothers. In Gupta Sanitary Stores, a three-Judge bench of the Delhi High Court, while examining whether "carries on business" within the meaning of Section 20 of The Code of Civil Procedure, 1908 can apply to the Union of India proceeded further to hold that the mode of business as contemplated under Section 20 is that it is commercial in character and that sovereign functions of the State are outside the purview of "business". A departure in this approach was made in Union of India Vs. Ladulal Jain reported in AIR (1963) SC 1681 where the Supreme Court rejected the argument that running of Railways ceases to be a business when it is run by the Government and held that the nature of the activity defines its character and the fact as to who runs the business and with what motive cannot affect the nature of the activity. The Supreme Court further opined that profit element is not a necessary ingredient for carrying on business and held that the Union of India carries on the business of running Railways and can be sued in a court of the Subordinate Judge of Gauhati within whose territorial jurisdiction the Head-quarters of one of the Railways run by the Union is situated.
14. In Binani Bros (P) Ltd. Vs. Union of India reported in ILR (1975) II Del 196, the Delhi High Court held that the expression 'carries on business' or 'personally works for gain' does not refer to the functions carried on by the Union of India in discharge of its executive powers conferred by Article 298 of the Constitution and distinguished Ladulal Jain on facts by holding that there was nothing on record to show that the Director of Supplies and Disposals carried on business in New Delhi. The question in Binani was whether the Union of India carried on business or worked for gain through the Director of Supplies and Disposals, New Delhi to confer jurisdiction on the courts at Delhi. In Associated Commercial Engineers Vs. State reported in AIR 1979 MP 96, a Division Bench of the of Madhya Pradesh High Court was of the view that construction of a dam by the Government will not amount to carrying on business. The Court placed reliance on Ladulal Jain but found that the plaintiff could not show any material to the effect that the construction of the project was a 'business proposition'. In Bakhtawar Singh Bal Kishan Vs. Union of India reported in (1988) 2 SCC 293, the Supreme Court agreed with the reasoning of Binani Bros. and distinguished Ladulal Jain as not being applicable to the facts of that case. The Supreme Court proceeded on the basis that the construction of an ordnance factory for the military engineering service of the Armed Forces is a part of the sovereign activity of the State since it was undertaken by the Central Government for ensuring the security of India. This decision therefore marked a departure from the reasoning of Ladulal Jain which held that the business of running of the Railways is in the nature of the commercial enterprise by a State and not an extension of the executive duty in the governance of the State.
15. A similar view was held in Prahlad Rai Dalmia vs. Union of India by a Division Bench of the Delhi High Court which distinguished Ladulal Jain on the ground that unlike the railways, rationing of food is a sovereign function. In Gupta Sanitary Stores, a Full Bench of the Delhi High Court sought to explain the ratio of Ladulal Jain in the light of railways being run by private companies and individuals before being taken over by the State which contributed to the railways retaining the character of a business enterprise. The Court drew a distinction between carrying on business as essentially having a commercial flavour as opposed to the sovereign functions of a State. In the conclusions arrived at, the Delhi High Court agreed with the view taken in Binani Bros. and formulated the test to be an enquiry into the nature and purpose of the activity. The view taken was if the activity is commercial in character, the suit can be filed at the principal place of business or principal office and also at the place where the cause of action arises wholly or in part. Where the business is not of a commercial nature, the suit must be filed against the Government at the place where the cause of action arises wholly or in part.
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16. The issue as to the requirement of an objection to the place of suing being taken at the earliest possible opportunity, Maharaja Bahadur Guru Mohadev Asram Prosad Sahi of Hathwa Vs. Hastings Evelyn Beal reported in 40 CWN 65, has been shown which held that if the conditions of Clause 12 of the Letters Patent were not satisfied, this court would have no jurisdiction hence could not apply Section 21 of the CPC. In other words (and in the words used by Chief Justice Harold Derbyshire), "..............if this court has no jurisdiction under the Letters Patent, Section 21 of the Code of Civil Procedure cannot give it jurisdiction". In Kiran Singh Vs. Chaman Paswan reported in AIR 1954 SC 340, the Supreme Court was of the view that a decree passed by a court without jurisdiction is a nullity and its invalidity can be set up whenever and wherever it is sought to be relied upon even at the stage of execution or in collateral proceedings. In the words of the Supreme Court, "a defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties".
17. In Manindra Chandra Nandy Vs. Lal Mohan Roy reported in AIR 1929 Cal 358, held, inter alia, that if Section 16 is not to be applied to the Original Side, then any other section which appears to be incidental or ancillary thereto cannot also be made applicable. In Achut Anant Pai Vs. Governor General-in-Council reported in AIR 1955 Cal 331, it was held that since leave under Clause 12 of the Letters Patent is the very foundation of the jurisdiction, the question of waiver of objection to jurisdiction in cases instituted under Clause 12, cannot arise at all. The court however found that different considerations will arise in cases governed by Section 20 of the CPC where Section 21 is attracted. In Jnan Chand Chugh Vs. Jugal Kishore Agarwal and Ors. reported in AIR 1960 Cal 331, the Calcutta High Court relying upon Rajalakshmi Dassee Vs. Katyayani Dassee reported in ILR 38 Cal 639, held, inter alia, that if a court assumes to act where it has no jurisdiction, "its adjudications are all utterly void and have no effect either as an estoppel or otherwise".
18. The Supreme Court decided three points in Kamal Kumar Goswami (AIR 1974 Cal 231) following the ratio of Ladulal Jain. First, that Doya Narain Tewary was no longer good law as being contrary to the decision of Ladulal Jain and second, if the court has jurisdiction over a private individual carrying on business within the court's jurisdiction at the commencement of the action under Clause 12 of the Letters Patent, then it cannot be said that the court ceases to have jurisdiction over the Government when the Government carries on business within the jurisdiction of the court. The third point was that if the Union of India carries on business within the jurisdiction of a court, the determination of the situs of the cause of action becomes wholly irrelevant as that court shall have jurisdiction over the Union of India. The blurring of distinction between the line historically drawn by the courts between the sovereign and non-sovereign functions of the State was pronounced in Agricultural Produce Market Committee where the Supreme Court held that the categorization of "sovereign" would depend on the nature of power and the manner of its exercise. The court expressed the view that ".............defence of the country, raising armed forces, making peace of war, foreign affairs, power to acquire and retain territory may be approved to be 'sovereign' since these are not amenable to the jurisdiction of ordinary civil courts". The other functions of the State including welfare activity of the State were not construed as sovereign exercise of power which would show that "..........every Governmental function need not be 'sovereign'. The Supreme Court proceeded to decide the issue in the following manner;
"32. So, sovereign function in the new sense may have very wide ramification but essentially sovereign functions are primary inalienable functions which only the State could exercise. Thus, various functions of the State, may be ramifications of "sovereignty" but they all cannot be construed as primary inalienable functions. Broadly, it is taxation, eminent domain and police power which covers its field. It may cover its legislative functions, administration of law, eminent domain, maintenance of law and order, internal and external security, grant of pardon. So the dichotomy between sovereign and non-sovereign function could be found by finding which of the functions of the State could be undertaken by any private person or body; the one which could be undertaken cannot be sovereign function. In a given case even on subjects on which the State has the monopoly may also be non- sovereign in nature. Mere dealing in subject of monopoly of the State would not make any such enterprise sovereign in nature."
19. The historical weightage given to the term "sovereignty" and "sovereign immunity" was whittled down in N. Nagendra Rao & Co. Vs. State of Uttar Pradesh [(1994)6 SCC 205], where the Supreme Court held that the concept of sovereignty had a theoretical context in power vesting in a person or body which is supreme. It was further held that the distinction between sovereign and non- sovereign powers were irrelevant both before and after the Constitution came into force. The court proceeded to opine that "sovereignty" had its social context in the monarchy being vested with legislative, executive and judicial powers and quoted the English Political Theorist and Economist Harold Laski ".........that sovereignty was the supreme coercive power and it was by possession of sovereignty that the State was disgruntled from all other forms of human association".
After tracing the historical approach to the position of a sovereign, the Supreme Court concluded that the dilution and disappearance of the concept of sovereignty can be traced to the growth of the outlook that "sovereignty vests in the people" and that "the old and archaic concept of sovereignty thus does not survive". The most significant pronouncement of the Supreme Court in N. Nagendra Rao is that the distinction between sovereign or non-sovereign power does not exist and that everything depends on the nature of power and manner of its exercise. The view of the Supreme Court expressed in the following words is required to be set out;
"any watertight compartmentalization of the functions of the State as sovereign and non-sovereign or governmental and non-governmental is not sound. It is contrary to the modern prejudicial thinking" and "the demarcating line between sovereign and non-sovereign powers for which no rational basis survives has largely disappeared".
20. In the judgment of Justice Chinnapa Reddy in the celebrated case of LIC Vs. Escorts [(AIR) 1986 SC 137], the impossibility of drawing the line between sovereign and other actions of the State was reiterated as also demarcating the frontiers of public law domain and private law field. The court reiterated that the question must be decided in each case with reference to the particular action together with other relevant circumstances. Tethering the State to the ground, as it were, was complete when the court equated the State with an ordinary shareholder with all the rights available to a shareholder.
21. The above cases show that not only has the demarcation between sovereign and non-sovereign functions emanating from a State disappeared with reference to judicial scrutiny of State action but further that the nature of the power and the manner of its exercise will have to be seen in the context of the particular facts of each case. The facts in the present case, as pleaded in the plaint (the dismissal of which is being sought in the present application), involves the plaintiff, an individual, who upon successfully participating in a tender floated by the defendant, State of West Bengal, entered into contract with the defendant for construction of a dispensary building and primary Health Centre at Chaipat, Midnapore. The plaintiff claims breach of the terms of the contract by the defendant which led to the plaintiff being prevented from completing the work within the stipulated time and incurring additional costs causing loss and damage to the plaintiff. The subject-matter of the plaint and the relief claimed therein is therefore the transaction between the contractor plaintiff and the State. Although, the end product of the contract happens to be a dispensary building, the subject-matter and the suit is a transaction between two contracting parties simpliciter. The nature of the project, namely, construction of a dispensary building/primary Health Centre cannot, in the view of this court, transform the nature of the dealing into more than what it simply is; or in other words, elevate the role of the defendant State to that of a sovereign exercising its functions for public welfare. The situation may have been different if the defendant State had taken the work of construction of a public Healthcare Centre upon itself and been responsible for the actual execution of the work. By selecting the plaintiff as the successful bidder for the proposed project, the State donned the robes of a contracting party who is equally bound by the terms of the contract as that of the private individual/plaintiff. The entire argument made on behalf of the defendant proceeds on the basis that where the activity undertaken by the State is in exercise of its sovereign functions, as distinguished from commercial ventures, the court where the cause of action arose would have the territorial jurisdiction to entertain the civil suit instituted by a plaintiff. There are two answers to this argument. First, the statements made in the plaint do not reflect that the State entered into the contract with the plaintiff in aid of any sovereign or welfare functions and second, there is also no evidence from the pleadings that the dispensary building was a non-commercial enterprise. Further, to an individual, who has entered into the transaction involving valuable consideration for performance of work under the terms of a contract, the dealing is imbued with the flavour of a commercial venture. It would matter little to the individual whether the contracting party at the other end is the State of West Bengal, the Union of India or any instrumentality of the State declaring the work concerned to be an expression of its sovereign function. At this point, it may be useful to re- visit Kamal Kumar Goswami where the Supreme Court held that a court under Clause 12 of the Letters Patent has jurisdiction to receive, try and determine a suit against the Union of India if the Union of India carries on business within its jurisdiction at the time of commencement of a suit against it irrespective of the question as to where the cause of action relating to such a suit has arisen.
22. Two decisions cited by learned counsel for the defendant needs particular mention. The first is of a Division Bench of this court:-
Steel Authority of India V. Dinesh Kumar Jaiswal, which was placed for the reference made by the court to a view expressed in an earlier decision wherein it was held that just because the Government can be said to be present everywhere and be consequently dwelling in each and every place at the same time, a plaintiff cannot have the right to elect the forum in which to sue the Government. The aforesaid decision was however concerned with the application of Section 20 of The Code of Civil Procedure to matters governed by Clause 12 of the Letters Patent and the primary point of adjudication was the proper place of suing when the defendant Corporation had one of its offices within the ordinary original civil jurisdiction of this court. The point with regard to what would be the correct position if the State was the defendant was an incidental observation made by the Division Bench. The next decision is Gupta Sanitary Stores V. Union of India of a three member Bench of the Delhi High Court which considered the scope of the expression "business" as used in Section 20 of the CPC. The Court explained the scope of Ladulal Jain in the context of the running of railways which had been held to be a business in the case of Ladulal Jain. After examining various decisions, it was held that if the activity concerned is in the nature of a commercial venture, the suit against the Union of India can be instituted at the place of central management and control of that business and that a plaintiff can institute the suit against the Union of India at the principal seat of the Government. The Court further reinforced that "carries on business" under Section 20 of the CPC is clearly business in a commercial sense and envisages a defendant carrying on a commercial enterprise. In fact, in that decision, the passage relied on by the Division Bench of this Court in Steel Authority of India was quoted (Wels C. In Cubit Sparhall Rundle V. Secretary of State in Council, (1862) 1 Hyde 37) for the proposition that universal dwelling of a Government cannot give a plaintiff the right to elect its forum. The ratio of that decision was that "if an individual defendant cannot be sued anywhere the plaintiff likes, likewise the Government cannot be sued anywhere a plaintiff likes, it can be sued at its principal place of business or headquarters if it is engaged in a commercial venture".
The conclusions summarised by the court in paragraph 54 of that decision reiterates that the headquarters are the principal office where the centre of control exists and further that the expression "business" means commercial business and not the duties or functions of a sovereign character. The court also concluded that whether the State has carrying on business is a pure question of fact.
23. The approach of the courts, as evident from the above decisions points to a direction different from what is being urged on behalf of the defendant in the present case. In Ladulal Jain, the Supreme Court held that the Union of India which carries on the business of running railways can be sued in the court of the subordinate judge of Gauhati within whose territorial jurisdiction the headquarters of one of the railways run by the Union is situated. The decisions explaining the scope of Ladulal Jain in the context of business ventures of the State, as distinct from its sovereign functions, reinforces the view that a plaintiff cannot take advantage of the territorial omnipresence of the Government by electing the forum in which to sue the Government. The rationale behind the said view was to discourage a plaintiff from placing the Government at a disadvantage which may or may not "amount to an evil of the greatest magnitude"
(the words of Wels C. In Cubit Sparhall Rundle). The reason for this approach was that a plaintiff should not drag the Government from its principal place of business or headquarters to a forum where the Government has a subordinate office. The focus has always been on the seat of power where the Government was carrying on a commercial activity and not any other place which may be convenient to the plaintiff. It has clearly been held in the various decisions that if it is a commercial activity, the Government can be sued at the place of central management and control of that business. The decisions cited by counsel have also reiterated that a court must look into the nature of the particular business and that the facts may vary from case to case. In the facts of the present case, this court cannot proceed on a presumption that construction of a primary health centre must necessarily have its origins in or be an extension of the sovereign functions of the defendant State of West Bengal, in the absence of any statement made in the plaint to that effect. It may also be said that in the present day, there are several hospitals/medical centres which are being managed and run by the Government purely as commercial ventures both in and outside Calcutta. The facts would have assumed a different character had the plaintiff sued the defendant State in a remote corner of West Bengal taking advantage of the territorial omnipresence of the State Government. Writers' Building, at the time of institution of the suit, was undeniably the seat of and the nerve centre of control and administration of the Government in the State of West Bengal. Since it has already been held that the nature of the transaction entered into between the plaintiff and the defendant partakes of a commercial flavour, the argument of counsel for the defendant, however attractive and industrious, must be seen in the back drop of the decisions where it has been held that the situs of the cause of action in determining the place of suing would be relevant only in cases where the State was exercising its sovereign functions.
24. The next question is whether the delay of 28 years on the part of the defendant in filing the present application for revocation of leave granted to the plaintiff in 1990 can operate against the defendant for granting the relief it seeks, namely revocation of leave and dismissal of the suit. The decisions relied on by counsel for the defendant including Kiran Singh vs. Chaman Paswan reported in AIR 1954 SC 340 and Jnan Chand Chugh vs. Jugal Kishore Agarwal reported in AIR 1990 Cal 331 on the principle that a decree passed by a court without jurisdiction is a nullity and its invalidity can be set up whenever the decree is sought to be enforced, cannot be called to question. The aforesaid decisions would however apply only if the defendant succeeds at the threshold of the plaintiff not being entitled to the leave granted under Clause 12 of the Letters Patent in 1990. On the other hand, the decision of the Supreme Court in Chittaranjan Mukherji Vs. Barhroo Mahto reported in AIR 1953 SC 472 would be relevant as in that case, the participation of the defendant (and its acquiescence) was found to militate against the ground for revocation. The defendant has admittedly contested interlocutory applications filed in the suit including in a joint measurement taken of the work done by the plaintiff and receivers were appointed by orders of court. The aforesaid conduct therefore ill-behoves the defendant to taking an objection to jurisdiction after a silence of 28 years. The reliance placed on Maharaja Bahadur Guru MohadevAsramProsadSahi of Hathwa v Hastings Evelyn Beal reported in 40 CWN 65, AchutAnant Pal v Governor- General -in Council reported in AIR 1955 Cal 331 and Manindra Chandra Nandy v Lal Mohan Ray reported in AIR 1929 Cal 358 on section 21 of the CPC not being applicable in cases where jurisdiction is founded on Clause 12 of the Letters Patent can only be seen as a buffer for the inexplicable delay on the part of the defendant in contesting the issue of jurisdiction. This Court is of the view that whether the defendant is entitled to question the court's jurisdiction to entertain the suit in the context of the defendant's acquiescence and participation is an issue relevant for the grant or refusal of relief and is thus secondary to the question of whether this Court has the power to entertain the suit under Clause 12 of the Letters Patent.
25. In view of the above discussion, this Court finds no reason for granting the reliefs prayed for in the application of the defendant for revoking the leave granted under Clause 12 of the Letters Patent or for dismissing the suit for want of jurisdiction.
26. G.A. No. 1093 of 2018 is accordingly dismissed without any order as to costs.
27. C.S. No. 369 of 1990 will appear in the monthly list of December, 2019 before the Regular Bench.
Urgent Photostat certified copy of this Judgment, if applied for, be supplied to the parties upon compliance of all requisite formalities.
(MOUSHUMI BHATTACHARYA, J.)