Delhi High Court
Shri Pradeep Gupta vs Haryana Financial Corporation on 17 July, 2001
Equivalent citations: 93(2001)DLT834
Author: Mukul Mudgal
Bench: Mukul Mudgal
ORDER Devinder Gupta, J.
1. The order passed on 21.9.2000 by learned Single Judge is under challenge by which learned Single Judge decided issue No.5 holding that this Court has no jurisdiction to try the suit and consequently directed the plaint to be returned for being presented in an appropriate Court having jurisdiction to try the suit.
2. Facts in brief are that on 10.4.1994 the plaintiff/appellant filed a suit seeking decree for declaration, permanent injunction and rendition of accounts against the defendant/respondent. The prayer clause reads :-
"It is, therefore, most respectfully prayed that this Hon'ble court would be pleased to pass :
(i) declaring that the claim of the defendant on the basis of guarantee dated 7.3.75 has become barred by time and hence no amount is recoverable from the plaintiff on the basis thereof L
(ii) of permanent injunction restraining the defendant, its agents, servants, employees, representatives, assigns, administrators, etc. be passed restraining them from recovering any amount from the plaintiff on the basis of guarantee dated 7.3.75.
In the alternative
(i) declaring that the bond of guarantee dated 7.3.75 was and is not a legal valid and subsisting document and the plaintiff is not a surety to the loans taken by M/s. Haryana Electro Steel Co.Ltd. from Haryana Financial Corporation under mortgage deed dated 7.3.75.
(ii) declare that interest clause 1 and 6.1 of the mortgage deed dated 7.3.75 are null and void and 6% interest simple can be charged only up to the date of winding up of the company dated 16.1.86.
(iii) of preliminary and final rendition of account against the Haryana Financial Corporation :
(iv) of mandatory injunction restraining/directing Haryana Financial Corporation not to claim any amount from the plaintiff in respect of the loans taken by M/s. Haryana Electro Steel Limited and/or to issue certificate of recovery."
3. The aforementioned reliefs were prayed, inter alia, alleging that the plaintiff is the promoter Director of M/s. Haryana Electro Steel Limited, Sonepat and also shareholder and creditor of the said company, which is under liquidation under the orders of the Punjab and Haryana High Court. In order to establish factory, the Company approached Haryana Financial Corporation for financial assistance. After negotiations, financial facility to the extent of Rs.25,00,000/- was extended. Company executed mortgage deed in favor of the Corporation. The plaintiff being the director, the Corporation forced him to execute a bond of guarantee in its (Corporation) favor. The Company faced problems at initial stage and could not pay the Installments. The Corporation, therefore, filed a petition against the company under Section 31 of the State Financial Corporation Act, 1951 int eh court of the Additional District Judge, Sonepat. The plaintiff was not imp leaded as a party to those proceedings. It is thus alleged that the Corporation chose to abandon its claim against the plaintiff though the cause of action had arisen to the defendant against the plaintiff also. Additional District Judge, Sonepat permitted the defendant to recover rupees twenty six lakhs and odd with future interest from the Company by putting the mortgaged property to sale further directing that in case the proceeds be less, the Corporation will be at liberty to recover the balance. The company as well as the Corporation went in appeal against this order. Appeal of the Company was dismissed. Appeal of the Corporation was accepted by the Punjab and Haryana High Court.
4. The plaintiff further alleged that in accordance with the procedure as laid down under Section 32 of the State Financial Corporation Act, 1951 the mortgaged property could have been subject to sale only in the manner provided therein. The Corporation did not pursue the matter diligently before the District Judge and deliberately delayed the matter. Instead of following the procedure, the Corporation chose to file a petition before Punjab and Haryana High Court seeking permission to sell the property of the company through Court Auctioneer by publication. The plaintiff has alleged that the Corporation did not follow the requisite procedure and directions of the Court in selling the property and further alleged that some orders were passed by Company Judge, legal effect of which was that the property of the Company including lands, building etc. still continue to be the properties of the company. The plaintiff after making these averments has further alleged that the bond of guarantee dated 50.3.1975 though not admitted to be legal and valid stood annulled and the plaintiff stood discharged of his obligation, inter alia on two grounds: (a) that the claim of the Corporation against the plaintiff is hopelessly time barred and (b) the Corporation has no right to recover any amount from the plaintiff since cause of action, if any, against the plaintiff arose only in 1977 when the company defaulted in making payment of the Installments and there being no subsisting cause of action against the plaintiff, the Corporation is not entitled to enforce the bond of guarantee against the plaintiff. In any case the Corporation when it took out proceedings against the company without impleading the plaintiff as a party will be deemed to have abandoned its claim against the plaintiff.
5. In the above back ground the plaintiff alleged that the Corporation in order to conceal its gross negligence, misdeeds etc. was now trying to recover illegally the amount of more than rupees one crore from the plaintiff through the Collector, Tis Hazari as arrears of land revenue under the Haryana Public Money (Recovery of Dues) Act. The plaintiff has alleged that under this Act the Corporation has no power to recover any amount from the plaintiff and even the provisions of the said Act have not been complied with, which action of the defendant Corporation is under challenge in Civil Writ No.1278/93 filed by the plaintiff in Punjab and Haryana High Court, which is pending and in which recovery of the amount has been stayed subject to conditions. The plaintiff has further alleged that the Corporation h as been calling time and again the plaintiff at its Delhi office regarding their claim and its realisation during the year 1993 and 1994 and the amount was sought to be recovered from the plaintiff through the Collector by enforcing recovering under the provisions of the Haryana Public Money (Recovery of Dues) Act as arrears of land revenue. In paras 28, 29, 30 and 31 the plaintiff has narrated the facts giving rise to the immediate cause of action for filing the suit seeking protection as also the circumstances that why the plaintiff was approaching the Courts in Delhi for the reliefs claimed. The same read as under :-
"28. The Haryana Financial Corporation in order to conceal their gross negligence, misdeeds, illegalities and contempt is trying to recover illegally the amount of more than Rs.1 Crore from the plaintiff through the Collector, Teh. Building, Tees Hazari, Delhi as arrears of land revenue under the Haryana Public Money (Recovery of Dues) Act. This is under challenge before Punjab and Haryana High Court. It is stated that the aforesaid Recovery Act is unconstitutional. Even under teh aforesaid Act also, Haryana Financial Corporation has no power to recover any amount from the plaintiff and that is also at first instance. Even the provisions of the aforesaid Act have not been complied with and the Haryana Financial Corporation has miserably failed. Under the said Act, the amount has to be first realised from the legal and valid sale of the properties of the Company. It is stated that in accordance with the orders of the District Judge, Sonepat, the amount at the first instance has to be realised by a legal and valid sale of the properties of the Company.
29. The Haryana Financial Corporation has been calling time and again the plaintiff at their Delhi office regarding their claim and its realisation in the year 1993 and 1994. The Haryana Financial Corporation is trying to recover the money at Delhi either through their Delhi office or through Collector, Tees Hazari, Delhi. Their officers have visited the plaintiff on number of occasions and even the counsel of the plaintiff attended Haryana Financial Corporation office at New Delhi.
30. It is stated that the cause of action or part of cause of action has arisen in favor of the plaintiff and against the respondents at New Delhi/Delhi on the various dates when they have tried to recover the aforesaid amount from the plaintiff through Collector or otherwise by personal meetings at New Delhi office in the year 1993 and the cause of action is still subsisting.
31. The mortgage deed and Bond of guarantee both dated 7.3.75 have been finalised and executed at New Delhi. The Haryana Financial Corporation has a fulfledged office at No. S-97, Greater Kailash II, New Delhi from where the substantial activities and work of Haryana Financial Corporation is being carried on regularly. It is a subordinate office managed, looked after and controlled by and under the district control of the Chairman of the Haryana Financial Corporation. Number of times, the plaintiff has been called by the Chairman, Vice Chairman and other officers of the Corporation at New Delhi office regarding the aforesaid loan and the matter has been discussed in detail by them. The Collector, Tees Hazari is also at Delhi and, therefore, this Hon'ble court has jurisdiction to entertain and try this suit."
6. The defendant in the written statement raised an objection about territorial jurisdiction to entertain and try the suit. In para 6 of the preliminary objections, the defendant alleged that since recovery certificate for recovery of the balance dues as arrears of land revenue h as been issued by the Corporation at Chandigarh, any petition or any other legal proceedings challenging the issue of the said certificate would be maintainable only int eh court having jurisdiction at Chandigarh and the same does not lie in this Court. The Forum chosen by the plaintiff in challenging the recovery certificate in this Court is without territorial jurisdiction. In reply to paras 28 to 31 of the plaint by the defendant in the written statement stated as follows :-
"28. The contents of para No.28 of the plaint are admitted tot he extent that the recovery proceeding have been initiated by the present defendant Corporation against the present plaintiff for recovery of the shortfall amount of loan as arrears of land revenue as stated but the rest of the contents of this para of the plaint are wrong and the contentions put forth therein are frivolous and the allegations made therein are baseless and hence denied. Instead it is submitted that the recovery proceedings initiated by the present defendant Corporation against the present plaintiff are lawful.
29. The contents of para No.29 of the plaint are as such not disputed but it is further submitted that the action being taken by the Collector, Delhi in implantation of the recovery certificate issued by the present defendant Corporation are in exercise of their contractual and statutory rights.
30. That contents of para No.30 of the plaint are wrong and hence denied. Instead it is submitted that no cause of action accrued to the plaintiff for filing the present suit against the present defendant Corporation as the action of the defendant Corporation is lawful. It is further submitted that since the Recovery Certificate has been issued by the defendant Corporation at Chandigarh, the territorial jurisdiction, if at all any, to try the present suit is that of the Courts at Chandigarh.
31. The contents of para No.31 of the plaint are wrong and hence denied. Instead it is submitted that the territorial jurisdiction to entertain and try the present suit is that of the Courts at Chandigarh.
7. It would thus be seen from the written statements filed by the defendant that challenge to the territorial jurisdiction of the Court is on the ground that since recovery certificate has been issued by the Corporation at Chandigarh, therefore, any challenge to the said certificate or proceedings taken there under has to be in the Courts at Chandigarh.
8. The plaintiff specifically alleged in para 29 of the plaint that the Corporation was calling him time and again at Delhi regarding recovery of their claim and its realisation. Corporation has been trying to recover the money at Delhi through its Delhi office or through the Collector, Tis Hazari, Delhi. This fact has not been denied by the defendant. Rather the same has been admitted. There is specific averment made by teh plaintiff in para 31 of the plaint that the bond of guarantee dated 7.3.1975 was executed at New Delhi. The Corporation had fulfledged office at Greater Kaliash Part II, New Delhi from where substantial activities and work of Haryana Financial Corporation is being carried on regularly. This fact has not been specifically denied by the defendant in the written statement. It is in the light of this back ground that the question posed before us has to be answered.
9. Learned Single Judge after narrating in brief the averments and few facts came to teh conclusion that this Court had no territorial jurisdiction to try the suit. The reasons, which prevailed with the learned Single Judge in coming to this conclusion are that proceedings under Section 31 of the State Financial Corporation Act, 1951 were initiated at Gurgaon, the property of teh Company was sold in Gurgaon, certain proceedings in respect of the property of the Company are still pending in Punjab and Haryana High Court, the recovery certificate under the Haryana public Money Recovery Act was also issued by the Corporation at Chandigarh and even the agreement for grant of loan to the Company and guarantee bond were executed within Haryana, therefore, it was clear that no part of cause of action had accrued within the territorial jurisdiction of this Court. Learned Single Judge further held that merely because recovery certificate has been sent to the Collector, Delhi for purposes of execution will not give rise to any cause of action tot eh plaintiff/appellant to challenge the same in this Court. Having come to the conclusion that no part of cause of action accrued within the territorial jurisdiction of this court, it was held that this Court had no territorial jurisdiction to try the suit.
10. Learned counsel for the Plaintiff contended that since issue as regards jurisdiction of court was treated as a preliminary issue without permitting the parties to lead their respective evidence, the question primarily has to be decided on the basis of the averment made in the plaint or in any case with reference to the pleadings only. He contended that the plaintiff had specifically urged that the bond of guarantee had been finalised and executed at Delhi and the amount was being recovered from the plaintiff by the Corporation through its office located at Delhi through the Collector stationed at Delhi where there was threat to the plaintiff of being arrested, therefore, definitely part of cause of action had arisen to the plaintiff to seek, if not, at least a decree for injunction. The Corporation had its subordinate office at Delhi and the Corporation will be deemed to be carrying on its business from Delhi where part of cause of action has arisen. Relying upon clause (c) of Section 20 of the Code of Civil Procedure, he urged that this Court has jurisdiction of entertain and try the suit.
11. Mr. Talwar appearing for the respondent has tried to support the order urging that Section 20 of the Code has to be read with Section 4 of the Revenue Recovery Act. Remedy of a person against whom certificate is issued would be first to deposit the amount and then file a suit for recovery of the amount so deposited by him in case such person would like to challenge the legality and validity of the certificate. Such a suit can only be filed in a Court having jurisdiction over a place where office of Collector is located, who issued the certificate and not in a Court where a certificate is sought to be enforced. Even if Section 20 is taken up independently, it is a case in which no part of cause of action can be said to have arisen to the plaintiff in Delhi. He has referred to the prayer clause of the plaint and urged that there is no challenge to the recovery certificate on the ground that it has been obtained by fraud or that the person issuing had no jurisdiction to do so. Since there was no cause of action, which can be said to have arisen to the plaintiff within the jurisdiction of this Court, there is no reason that why a well reasoned order of learned Single Judge be interfered with in this appeal.
12. We have considered the respective submissions made at the bar. Section 20 of the Code reads :-
"20. Other suits to be instituted where defendants reside or cause of action arises- Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the Commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of teh court is given or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid acquiesce in such institution;
(c) or the cause of action, wholly or in part, arises.
Explanation:- A corporation shall be deemed to carry on business at its sole or principal office in India or in respect of any cause of action arising at any place where it has also a subordinate office, at such place."
13. Rules contained in Section 20 of the Code of Civil Procedure deal with territorial jurisdiction of Courts in respects of all suits other than those relating to immovable property or for recovery of movable property. The plaintiff, as noticed above, in paras 29, 30 and 31 of the plaint has lad a foundation for filing suit in this Court alleging that mortgage deed and bond of guarantee were finalised and executed at New Delhi from where substantial activities and work of Corporation is being carried on regularly. The plaintiff was called by the Chairman, Vice Chairman and other officers of the Corporation at New Delhi office regarding the loan and matters were discussed and finally the defendant Corporation was trying to recover money from the plaintiff at Delhi either through their Delhi office or through the Collector. Tis Hazari, Delhi. Thus according tot eh plaintiff, the cause of action wholly or in part for filing the suit has arisen in Delhi.
14. The cause of action referred to in Section 20 in the cause of action, which gives occasion to and forms the foundation of the suit. The expression "cause of action" really means the fact or combination of facts, which gives rise to a right of action, the right of suing before a Judge for the realisation of the relief arising out of the infringement of the right. The expression is some times used to include the facts, which constitute the right and its infringement. Some times it is used only to mean the circumstances forming the infringement of the right or the immediate occasion for the action. The Supreme Court in A.B.C.Laminart Pvt. Ltd. and another v. A.P.Agencies, Salem held that cause of action means 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 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 can possibly accrue. It is not limited to the actual infringement of the right used on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Every thing which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defense which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.
15. Under clause (c) of Section 20 of the Code subject to limitations contained in Sections 15 to 19 of the Code, every suit is required to be instituted in a Court within whose jurisdiction the cause of action wholly or in part arose.
16. In Jawahar Singh v. E.D.Sassoon & Co. AIR 1926 Lahore 277 the question of jurisdiction in a case where decree had been obtained by the defendants M/s.E.D.Sassoon & Co. for certain sum of money from the Court of Additional Judicial Commissioner, Karachi was considered. The decree was transmitted for execution to Senior Subordinate Judge, Amritsar and a suit was filed by the plaintiff Jawahar Singh for declaration that the decree is inoperative as it was obtained by fraud, and for injunction restraining the defendants from executing the decree against the property located in Amritsar. The question for determination was whether the Amritsar Court had jurisdiction to entertain the suit. It was held that cause of action int eh said case consisted of two parts, one of which arose at Karachi where the decree, which was sought to be impeached as fraudulent was passed and the other at Amritsar where the property of the plaintiff was attached. Relying upon the ratio of the decision in Banke Behari Lal v. Pokhi Ram (1902) 25 Allahabad 48; Jawahri v. Neki Ram (1915) 37 Allahabad 189; Khushali Ram v. Gokul Chand (1917) 39 Allahabad 607 and Kedar Nath Mukerjee v. Prosonna Kumar Chatterjee (1900) 5 Calcutta Weekly Notes 559 it was held that if the suit had been solely for setting aside the decree obtained at Karachi, the Amritsar Court would not have been competent to entertain the suit. The only cause of action in that case would have been the obtaining of the decree by fraud and as cause of action arose in Karachi, no Court other than the Karachi Court would have been competent to try and decide the suit. Considering the allegations made in the plaint, it was held that the plaintiff was claiming twin reliefs; (a) a declaration that the decree is inoperative on the ground of fraud: and (b) an injunction for the protection of his property against attachment and sale in execution of the decree. The Bench held that the second prayer cannot be ignored for teh purpose of determining the jurisdiction of the Court for which part of cause of action arose at Amritsar. Therefore, the suit was held cognizable at Amritsar. The ratio of decision of Lahore High Court in Jawahar Singh's case (supra) was approved in a subsequent Division Bench of the same Court in Tohar Mal Uttam Chand v. James Finlay & Co. Ltd., Amritsar A.I.R. 1927 Lahore 778.
17. In Khushali Ram's case (supra) decided by Division Bench of Allahabad High Court, it was held that the obtaining of a decree by fraud and putting of decree in execution furnished two separate and distinct causes of action, being two distinct wrongs. Therefore, part of the cause of action would definitely arise at a place where the decree is sought to be executed. In Firm Danaji Jasraj v. Firm Puran Lal Bolind Prasad A.I.R. 1928 Oudh 88 relying upon the ratio of the decision of Division Bench of Allahabad High Court in Jawahri's case (supra) it was held that the place where decree was sought to be executed will have jurisdiction to entertain a suit for declaration that decree had been obtained by fraud, willful mis-statement and suppression and cannot be executed though the decree might have been obtained from a Court having no jurisdiction at that place. We fully agree with the view expressed in the aforementioned decisions.
18. Facts in the instant case are not in dispute. Specific allegations made, and as noticed by us above, by the plaintiff in paras 29 to 31 of the plaint have not been specifically denied by the respondent. Thus the principle embodied in Rule 5 of Order 8 C.P.C. that every allegation of fact in the plaint, if not, denied in the written statement, shall be taken to be admitted by the defendant will have to be applied. The Supreme Court in Lohia Properties (P) Ltd. Tinsukia, Dibrugarh Assam v. Atmaram Kumar held that Rule 5 of Order 8 CPC says that any allegation of fact must either be denied specifically or by a necessary implication or there should be at least a statement that the fact is not admitted, which is not the position in the instant case. Thus on the admitted position the certificate of recovery is sought to be enforced against the plaintiff and against his properties located in Delhi, therefore, the cause of action, which gave rise to an occasion and formed the foundation of suit definitely arose within the territorial limits of Delhi. For self same reason this Court has jurisdiction to entertain and decide teh suit. The impugned order as such is liable to be set aside.
19. Consequently, the appeal is allowed. The impugned order is set aside. Learned Single Judge will now proceed to decide the suit in accordance with law.
20. The objection raised on behalf of the defendant/respondent as regards Section 4 of the Revenue Recovery Act read with the provisions of Haryana Public Moneys (Recovery of Dues) Act, 1979 is as regards maintainability of the suit of the plaintiff, which is not yet for consideration before us. This question will have to be examined by learned Single Judge on its own merits.