Delhi High Court
Anant Raj Industries Ltd. vs Balmer Lawrie & Co. Ltd. on 20 February, 2003
Equivalent citations: 2003IIAD(DELHI)213, AIR2003DELHI367, 103(2003)DLT169, 2003(67)DRJ566, AIR 2003 DELHI 367, (2003) 67 DRJ 566 (2003) 103 DLT 169, (2003) 103 DLT 169
Author: Vikramajit Sen
Bench: Vikramajit Sen
JUDGMENT Vikramajit Sen, J.
1. Learned counsel for the Defendant has pressed Preliminary Objection (a) recorded in the Written Statement to the effect that this Court does not possess territorial jurisdiction to entertain the Suit, since the principal office of the Defendant is not located in Delhi and since the property in respect of which storage charges have been claimed is situated in Mathura. Arguments were addressed in detail by learned counsel for the parties. By this Order, I propose to decide this question as a Preliminary Issue.
2. The prayer in the Plaint is for the passing of a Decree for Rs.52,25,210.42/- together with pendente lite and future interest at the rate of 21per cent per annum and costs. The Defendant had sold its entire unit at Mathura to the Plaintiff company for Rs.30,000,00/- by registered Sale Deed dated 25/4/1994 executed and registered at Delhi. The Plaint states that at that time difficulties in handing over peaceful vacant possession of the suit property were encountered. Possession of the unit was eventually handed over by the Defendant on 11/5/1994 but even then it failed to remove its material from the suit premises. The Plaintiff has asserted that this material is occupying 10,000 square feet of land, and it has, therefore, been deprived of the use of this space. The Plaintiff intimated the Defendant that it would claim storage charges at the rate of Rs.6/- per square feet with effect from 11/5/1994. In August, 1995, this claim for storage charges was increased to Rs.15/- per square feet. It is necessary to record that the Plaint is replete with the use of words "storage charges" . In paragraph 10 of the Plaint, it has been averred that " the Defendant did not take steps for removing the material as a result of which the Defendant has become liable to pay storage charges from 11/5/1994 till the filing of the Suit which works out to Rs.39,40,000-. Since the payment of storage charges was not made despite repeated requests and demands, therefore, the Defendant has also become liable to pay interest at the rate of 21per cent per annum with quarterly rests as on account of the illegal withhodling of the storage charges .........".
3. Paragraphs 14 and 15 of the Plaint read as under:
"14. That cause of action arose at Delhi when the MOU dated 3.1.1994 was entered into between the parties; again arose when the sale deed dated 25.3.94 was entered into at Delhi; again arose on various dates when despite having delivered possession of the unit to the plaintiff on 11.5.94 the defendant failed to remove the material and the cause of action is continuing as the defendant has failed to remove the material.
15. That the cause of action arose at Delhi, payment of storage charges were to be made at Delhi and therefore this Court has the jurisdiction to try and adjudicate upon this suit."
4. A counter claim has been raised by the Defendant in the sum of Rs.24,11,405.70/- together with pendente lite and future interest at the rate of 21per cent per annum, on which appropriate Court Fee has been paid.
5. The contention of Mr. Bhushan, learned counsel for the Defendant, is that the claim of the Plaintiff falls squarely under Section 16(e) of the C.P.C. and hence the Suit ought to have been filed in Mathura, since the property in question lies in its local limits. Mr. Harish Malhotra, learned counsel for the Plaintiff, however, relies on Section 20 of the C.P.C. on the grounds that the Defendant actually and voluntarily carries on business and/or personal works for gain in Delhi; and secondly, because the cause of action, wholly or in part, has arisen in Delhi. Mr. Malhotra has predicated his arguments on Clause xi of the Sale Deed dated 25/3/1994 which reads thus:-
"xi ) All other assets including raw material, work-in-progress, finished goods, consumable stores, spares, tools and tackles lying inside the factory premises shall remain the property of the Seller and shall be removed by the Seller before handing over possession of the Undertaking."
He, accordingly, contends that the relief of the Plaintiff is within the four corners of the Sale Deed which was executed in Delhi and for which the sale consideration was also paid at Delhi.
6. Sections 16 and 20 of the C.P.C. are re-produced for facility of reference:-
" 16. Suits to be instituted where subject-matter situate.-- Subject to the pecuniary or other limitations prescribed by any law, suits,--
(a) for the recovery of immovable property with or without rent or profits,
(b) for the partition of immovable property,
(c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property,
(d) for the determination of any other right to or interest in immovable property,
(e) for compensation for wrong to immovable property,
(f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situate:
Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.
Explanation.-- In this section " property" means property situate in [India].
......
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 the 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; or
(c) 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."
7. In my considered view, the Preliminary Objection as to the lack of territorial jurisdiction of this Court has merit. As has already been observed, a holistic and meaningful reading of the Plaint can only lead to the conclusion that the claim in the Plaint is for storage charges only. This claim essentially corresponds to the genre of ' wrongs to immovable properties ' and amounts to trespass upon land. Although possession of the unit had been handed over to the Plaintiff by the Defendant, it had failed for various reasons, none of which are relevant for the determination of the point in Issue, to remove its material from the land, allegedly measuring 10,000 sq. ft. , as a result of which the Plaintiff could not fully enjoy the usufruct of the land which it had paid valuable consideration for. One of the primary obligations of the Defendant, after it had agreed to sell the unit, was to hand over peaceful vacant possession of the land to the Plaintiff. This is a right recognised by common law. It would be relevant to pose the query whether independent of any stipulation or clause in the Sale Deed the claim for storage charges could be decreed. In my view, the answer should unequivocally be in the affirmative. What then is the construction that can be fairly and legitimately given to Clause xi of the Sale Deed, relied upon by the Plaintiff. As I see it, it is not stated that if complete and peaceful possession of the land is not handed over, the Plaintiff shall be entitled to claim damages, and that too at the rates claimed in the Plaint. What the Clause appears to protect is the right of the Defendant of ownership of the items mentioned in that Clause and its right to remove these items, even in the face of the Sale Deed. It puts to rest any controversy of the entitlement of the Plaintiff to material which may be lying on the land of the Defendant, which had been conveyed to it by the Sale Deed. Therefore, the contention of Mr. Malhotra that it is the enforcement of the Sale Deed that has been articulated in the Plaint cannot be accepted.
8. The Plaintiff's claim indubitably falls within the confines of Section 16(e) of the C.P.C. There is a watershed between the decisions of various High Courts pertaining to whether disputes regarding the specific performance of a contract for the sale of immovable property should be brought only in the Court holding sway over the land in question. This is because the Proviso to Section 16 envisages that if compensation for wrong to immovable property held by or on behalf of the defendant is raised, and the relief can be entirely obtained through the Defendant's personal obedience, the action can lie in the Court within the local limits on whose jurisdiction the Defendant carries on business. The precedents have taken into consideration the fact that in suits for specific performance, the relief claimed by the Plaintiff can be fully complied with by the execution by the Defendant of the Sale Deed in favor of the Plaintiff. The present case does not fall in this category. Furthermore, the immovable property in question is held by the Plaintiff and not by or for and on behalf of the Defendant. The Proviso to Section 16, therefore, does not apply to the facts of the present case.
9. The opinion of the Hon'ble Supreme Court in ABC Laminart vs. A.P. Agencies, is topically instructive. The parties had entered into a supply contract in Madras, one of the terms of which was that if any dispute arose out of that sale it " shall be subject to Kaira jurisdiction". A suit for recovery of money came to be filed in Salem instead, and the Trial Court returned the plaint for presentation in the proper Court. The Apex Court opined that a clause envisaging a complete ouster of the jurisdiction of all the Courts ordinarily possessing jurisdiction would be void as being contrary to public policy or if the agreed venue had no connection with the contract. However, the Court pronounced that there was no legal irregularity in the parties to a contract agreeing to a venue which is one amongst several others ordinarily possessing territorial jurisdiction. Their Lordships thereafter clarified that the phrase 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". On facts, it was opined that the clause did not completely and conclusively oust the jurisdiction of every Court other than Kaira, such as Salem. Applying these observations, apart from the factum of the contract having been entered into at Delhi, even if it is assumed that clause(xi) of the Sale Deed contained the obligation which is sought to be enforced in the suit, that aspect of performance if not all of it, was to be initiated and completed in Mathura. In view of the pronouncement in ABC Laminart(supra) Delhi would not possess territorial jurisdiction, since no part of the cause of action that flows from the contract, of which the Plaintiff is aggrieved and in respect of which it allegedly sustained damages occurred in Delhi. In the context of Section 20 of the C.P.C. and the controversy before me, the Hon'ble court recorded these observations:-
"15. 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 occurred. 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. Ordinarily, 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 cause of the action disappears. The above are some of the connecting factors."
10. In my view, the decision of the Hon'ble Supreme Court in M/s. Patel Roadways Limited vs. M/s. Prasad Trading Company, is more directly applicable to the controversy which has arisen in this case. The Bench comprised of three learned judges and the decision was authored by his Lordship, N.D. Ojha. Section 20 of the C.P.C. was in focus. It was observed that the words " at such place" occurring at the end of the Explanation and the word " or" which is a disjunctive word suggests that if the case falls within the latter part of the Explanation, it is not the Court within whose jurisdiction the principal office of the defendant is situate but the Court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction " in respect of any cause of action arising at any place where it has also a subordinate office". The Apex Court observed as follows:
" Indeed the effect would have been wider. The suit could have been instituted at the place of the principal office because of the situation of such office (whether or not any actual business was carried on there). Alternatively, a suit could have been instituted at the place where the cause of action arose under clause (c) (irrespective of whether the corporation had a subordinate office in such place or not). This was, therefore, not the purpose of the Explanation. The Explanation is really an explanation to clause(a). It is in the nature of a clarification on the scope of clause(a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the principal office is situated(whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corporation situated at such place. The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause(a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office(within the limits of which a cause of action arises) are to be deemed to be placed where the corporation is deemed to be carrying on business, the disjunctive " or" will not be there. Instead, the second part of the Explanation would have read " and, in respect of any cause of action arising at any place where it has a subordinate office also at such place.""
When this decision is applied to the facts of the present case, it will appear that it may have been proper for the Plaintiff to file a Suit in Calcutta where the principal office of the Defendant is located. It could also have been filed in Delhi where a subordinate office is located, provided the cause of action of which the Plaintiff is aggrieved, has had arisen in Delhi. I am of the view that despite the fact that the contract might have been entered into at Delhi and money is paid in Delhi, the cause of action on which the Suit is predicated was unrelated to the agreement. Had the entire sale consideration not been paid, a Suit for recovery of price would be maintainable between the present parties at Delhi. In our case, the cause of action was directly related to the immovable property in the erstwhile ownership of the Defendant, but owned at the material time by the Plaintiff. On an application of the ratio of Patel Roadways, there is no scope for Delhi Court to exercise jurisdiction.
11. A single Judge of this Court has in Kamla Chopra vs. L.I.C. of India , found it irrelevant that the repudiation of the liability under an insurance policy took place in Delhi. Avadh Behari, J. held that the Suit that involved the question of liability under the policy issued at Kanpur and Varanasi could have been filed either at Kanpur or Varanasi where the policies were issued or at Bombay where L.I.C. has its principal office. The repudiation of liability at Delhi was found not to provide the cause of action and since Delhi was not the principal office, it lacked territorial jurisdiction. Mr. Bhushan, learned counsel for the Defendant has also drawn my attention to the decision of the Hon'ble Supreme Court in South East Asia Shipping Co. Ltd. vs. Nav Bharat Enterprises Pvt. Ltd., . The Bench followed ABC Laminart's case. The admitted position was that the performance of the obligations and liabilities under the contract was to be done in Bombay. The Court found it wholly irrelevant that the bank guarantee was executed at Delhi and transmitted for performance to Bombay and confirmed the view of the Division Bench that Delhi Courts did not have jurisdiction. Mr. Bhushan has also relied on the decision in Singamsetti Ramarao vs. The Union of India, in which a Single Judge was of the view that the enforcement of a railway receipt, unlike a negotiable instrument did not constitute the part of cause of action in a suit for compensation for loss of goods booked for transport with the Railways.
12. In this conspectus, I am unable to agree with Mr. Malhotra, learned counsel for the Plaintiff, that Section 16(e) does not apply to the facts of the case. A reading of the Plaint leads to one conclusion only, viz. that it was for damages relating to immovable property in Mathura. Section 20 of the C.P.C. also is of no avail to the Plaintiff. The mere factum of the execution of the Sale Deed and payment of the sale consideration being in Delhi, does not comprise any part of cause of action relating to the claim for damages to immovable property raised in this Suit. Even if Section 16(e) is assumed not to have any applicability to the facts of the case, Delhi Courts do not possess territorial jurisdiction because the Defendant does not have its principal office in this city. The fact that it has a subordinate office in Delhi, seems to me to be of little consequences, since no part of cause of action voiced in the Plaint has arisen in Delhi.
13. It may be relevant to take note of the fact that the Defendant has filed a Counter-claim in these proceedings, predicated on the loss of the material lying in the subject land at Mathura. It is necessary to draw the distinction between the two claims inasmuch as the defendant's claims relates wholly to movable property, in contra-distinction to the Plaintiff's claims which deals only with damages pertaining to immovable property. Therefore, Section 19 & 20 of the C.P.C. would apply to the Defendant's Counter-claim. However, this Court would also possess territorial jurisdiction for the reason that the Plaintiff, who is the Defendant vis-a-vis the counter claim, has a principal office in Delhi. I had posed the question to learned counsel for the parties as to whether the retention of the Counter-claim in Delhi would have any bearing on the transfer of the Plaintiff's claim to Mathura. Mr. Malhotra's reaction was in the negative.
14. In these circumstances, the Plaint is ordered to be returned to the Plaintiff with liberty to present it in the appropriate Court within sixty days from today.