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
ADVERTISEMENTS:
(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.
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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.
ADVERTISEMENTS:
Illustrations:
(a) A is a tradesman in Calcutta; B carries on business in Delhi. B by his agent in Calcutta buys goods of A and requests A to deliver them to the East Indian Railway Company. A delivers the goods accordingly in Calcutta. A may sue B for the price of the goods either in Calcutta, where the cause of action has arisen or in Delhi, where B carries on business.
(b) A resides at Simla, B at Calcutta and C at Delhi. A, B and C being together at Varanasi, B and C make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Varanasi, where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C resides; but in each of these cases, if the non-resident defendant objects, the suit cannot proceed without the leave of the Court.
It is apparent from the above that foreigners are not exempt from the jurisdiction of Indian Courts.
ADVERTISEMENTS:
The plaintiff sent his watch for repairs to the defendant in Bombay, asking the defendant to send an estimate of repairs. When the parcel was opened, according to the defendant, he found nothing in it. The plaintiff brought the suit for recovery of the price of watch and damages at Ujjain where he resided.
It was held that the cause of action whether in contract or tort arose entirely in Bombay and the Ujjain court had no jurisdiction. Where an order for work is sent by post and without formal acceptance the work is carried out in the district where the order is received, the whole cause of action arises in the latter district.
In so far as the suit was one in tort section 19, C.P.C. applied and as the wrong to the watch was done at Bombay where the defendant carried on business, the Ujjain court had no jurisdiction.
Cause of action:
“Cause of action” means the cause or the set of circumstances which leads up to a suit. It may compendiously be defined as being the fact or facts which establish or give rise to a right of action or the existence of which entitles a party to seek redress in a court of law.
The term connotes all congeries of facts which it is necessary for the plaintiff to prove, if traversed, in order to entitle him to a decree in the suit. It does not, however, compromise every piece of evidence which is necessary to prove each fact, but every fact which is unnecessary to be proved to entitle the plaintiff to a decree.
It is, in other words, a bundle of essential facts, which it is necessary for the plaintiff to prove before he can succeed in the suit. It is the media upon which the plaintiff asks the court to arrive at a conclusion in his favour but has no reference to the relief claimed or the defence set up. In its restricted sense, it means the immediate occasion for the action.
Where the cause of action is fraud, discovery of fraud is no part of the cause of action. The cause of action must be antecedent to the institution of the suit, and no cause of action can be founded on any allegations made in the proceedings. Every plaint must disclose a cause of action when alone the court will be able to proceed to a determination of the dispute.
Lord Esher in Read v. Brown, stated that the cause of action means
“Every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not compromise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved.” Fry L.J. observed in the same ruling.
“Everything which, if not proved, gives the defendant an immediate right to judgment must be part of the cause of action.” Lord Watson in Mt. Chand Kour v. Pratap Singh, observed.
“Now the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the ground set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the court to arrive at a conclusion in his favour”.
(Referred to with approval in Vijaya Bank, Egnore v. Kiran & Co., Madras, and State of Madras v. C.P Agencies.
By ’cause of action’ it is meant 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, a bundle of facts which it is necessary for the plaintiff to prove in order to succeed in the suit.
The Supreme Court had occasion to refer to the case of Cooke in A.K. Gupta and Sons Ltd. v. Damodar Valley Corpn., and stated thus:
“The expression ’cause of action’ in the present context does not mean ‘every fact which it is material to be proved to entitle the plaintiff to succeed’ as said in Cooke v. Gill in a different context, for if it were so, no material fact could ever be amended or added and, of course, no one would want to change or add an immaterial allegation by amendment.
The expression for the present purpose fully means, a new claim made on a new basis constituted by new facts. Such a view was taken in Robinson v. Unicos Property Corporation Ltd., and it seems to us to be the only possible view to take.
Any other view would make the rule futile. The words ‘new case’ have understood to mean ‘new set of facts’. This also seems to us to be a reasonable view to take. No amendment will be allowed to introduce a new set of ideas, to the prejudice of any right acquired by any party by lapse of time.”
Carries on business:
The expression “carries on business” has the connotation of permanence and of regularity to distinguish it from anisolated act or activity. The amplitude of the expression “carries on business”, cannot, however, be construed as having been restricted merely because it is used in conjunction with “personally works for gain” nor is it possible to read into the expression “carries on business”, the element of gain or of profit in the activity that is carried on.
The expression “carries on business” is much wider than what the expression in normal parlance connotes because of the ambit of a civil action within the meaning of section 9 of the Code. If under section 9 of the Code, courts have the jurisdiction to try “all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred” and if such suits may involve not only a natural person, irrespective of the relationship in which they can be sued, but also a juristic person, constitutional or other authorities and bodies, including government, it is difficult to read into the expression “carries on business”, any words of limitation on a true construction of the wide expression.
To restrict the meaning of the expression “carries on business” to what is popularly understood by business would lead to a particular anomaly. If “carries on business” is to be confined to cover commercial activity, pure and simple, it would deprive persons and authorities engaged in non-commercial activities of the benefit of being sued only where they are conducting their affairs and if the anxiety was to ensure that a suit could be filed in a place where a defendant was either because he was living there or it was the place from where he operated, there would be an unjustifiable discrimination between a person carrying on commercial activity and person carrying on non-commercial activity, which could not have been the intention of the legislature. There would, therefore, be no justification to read into the expression “carries on business”, any words of limitation either because of the conjunction in which the expression is used or otherwise from the context. Section 20 embodies a common treatment of all defendants, whether a natural person or a juristic person. There is a common treatment qua the test of cause of action so must there be a common treatment qua the presence of the defendant in a particular place, whether with reference to the residence or the activity in which he or it may be engaged.
Part of cause of action—when jurisdiction not conferred:
In a limitation action by owner of ship, the plaintiffs were foreign companies or foreigners and claimants and some defendents were foreigners. The claimants were not within jurisdiction of Bombay High Court and were not carrying on business within the jurisdiction of High Court. All claims were filed by them in U.S.A. There was no likelihood of any claim being filed in Bombay High Court. Though part of cause of action has arisen within High Court, still no jurisdiction is conferred thereby.
A Government servant filed suit for payment of pension in another State where he was not serving and no part of cause of action had arisen there. The court of another State has no jurisdiction to entertain such suit.
Where contract was executed within jurisdiction of a High Court and it was performed within the jurisdiction of that High Court, the execution of bank guarantee within the jurisdiction of another High Court does not mean that part of action arose within the jurisdiction of another High Court. Another High Court had no jurisdiction to enforce the bank guarantee.
Business:
The expression “business” has a very wide import and is understood in different senses in varying contexts. In its generic sense, “business” is any purposeful activity, any activity, directed towards some end, an activity engaged in as normal logical or inevitable and usually extending over a period of time.
It has been .used in that sense as being synonymous with “role” or “function”. While in its narrow sense, it is confined to activity of a commercial nature with a profit motivation; in its wide sense, it is used to denote conduct of his or its affairs by any person, body or authority.
While the meaning to be attributed to the expression would depend largely on the context, there is, by and large, unanimity that the expression has a very wide import and would encompass, in the words of Lindley, “almost anything which is an occupation, as distinct from a pleasure anything which is an occupation or duty which requires attention is a business”.
Suits on contract:
In suits arising out of contract the cause of action arises at the place where the contract was made, the place where the contract was to be performed or performance completed or at the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable, and the suit can be filed at the three places.
Functions performed by Government:
The Code will regulate institution and trial of any suit so long as it is a suit of a civil nature under section 9 of the Code. State action, whether of a regal or non-regal nature, may lead to disputes of a civil nature.
The expression, “business” has very wide import and governments also conduct business even though it is the business of government. The Union of India carries on business within the meaning of section 20, C.P.C. when it performs the various functions, whether regal or otherwise.
Construction of a building and manufacture of arms and ammunition cannot be said to be part of the traditional regal functions of the State and are obviously activities which would amount to carrying on business when done by private sector, even if one applied the doctrine of regal functions for the determination of the question.
Where contract is entered into with the Union of India in relation to the expansion of an ordnance factory and the construction of a building for the purpose of the Union could certainly be said to be carrying on business in relation to the ordnance factories.
Suits for damages for breach of contract:
In a suit for damages for breach of contract the cause of action consists of the making of the contract and of its breach and 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. Where no place of performance is prescribed by the agreement, the place where it is intended by the parties that such contract should be performed ought to supply the forum.
Contract of Sale:
A suit on account of non-delivery of goods may be brought in a court of the place where delivery and payment were to be made. Where the contract is by correspondence the place where acceptance is signified is the forum.
A contract by correspondence is made at the place where the letter of acceptance is posted; and if acceptance is by performance of a condition, the suit may be instituted at the place where the condition is performed. The cause of action for a suit by the seller for balance of accounts due from the buyer arises at the place of consignment of the goods to the railway.
The performance of a contract is part of the cause of action and a suit in respect of its breach can be filed at the place where the contract should have been performed or its performance completed.
Thus in a contract for sale of goods, the suit may be filed at the place where the goods are deliverable or the price payable. Where a buyer at Kasganj ordered dyes from a seller at Delhi, but after paying for and opening the parcel found it to contain only clay, he was entitled to sue for damages at Kasganj.
Carrier:
A suit for refund of freight for damage for short delivery and for general average account should be filed where the freight was collected or, where the goods were delivered.
Partnership suit:
A suit for accounts of dissolved partnership may be instituted either where the contract of partnership was entered into or where the business of partnership was carried on. Where partnership business was carried on at two places a suit for dissolution can be filed at either place and also at the place where partnership accounts are maintained. A suit for dissolution of partnership carried on in a foreign territory is maintainable in India if the parties are resident there.
Principal and agent:
The proper forum in the case of an ordinary agent is the place where the contract of agency was made or the place where accounts are to be rendered and payment is to made by the agent.
A suit against a commission agent lies at the place where the commission agent carries on business. A suit on commission agency contract can be filed at the place where it was made.
Pakka Arathatiyas or commission agents are to be sued where they carry on business in the absence of a contract to the contrary.
Where no place for rendering accounts is specified, it is to be ascertained from the intention of the parties.
Debtor and Creditor:
Where a place is fixed for payment of debt, the court of that place will have jurisdiction. In the absence of an stipulation a suit to recover the money borrowed may be brought at the place where the lender resides. Ordinarily, the borrower should seek the creditor.
Suit on Negotiable Instruments:
A suit on a promissory note lies at the place where it is drawn, signed and dated. The common rule that the debtor must seek his creditor does not apply to promissory notes. A suit on pronote lies at the maker’s place.
Where no cash was advanced and the loan was by way of cheque, the place where the defendant got the cheque from the plaintiff gives rise to a part of the cause of action and the plaintiff can file a suit for recovery of the loan in the court of that place.
Suit for damages for libel or defamation:
A suit for damages for libel or defamation may be brought either in the court of the place where the publication takes place or where the defendant resides. In the case of a publication in a newspaper, the libel is published wherever the paper is read.
Mesne profits:
A suit for Mesne profits is a suit for profit or benefit arising out of immovable property and the suit is governed by section 15 of the Code of Civil Procedure. It can, therefore, be instituted in the court within 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.
Sale of immovable property:
A suit for specific performance of contract of sale of immovable property is governed by section 16 of the Code of Civil Procedure and can be instituted in the court within 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.
Suit standing trees:
Trees standing on land are immovable property and therefore the suit must be instituted in the court within whose local jurisdiction the land is situate, unless the relief can be entirely obtained through the personal obedience of the defendant when it can be brought either in the court within whose jurisdiction the property is situate or in the court within whose jurisdiction the defendant resides or carries on business or personally works for gain.
Husband and wife:
The cause of action in a suit for restitution of conjugal rights is the breach of marital obligation on the part of either party. The suit may be brought either where the husband or the wife resides, but if the wife has never lived at the husband’s house, the suit must be brought in the court of the place where the wife resides.
A suit for breach of contract of betrothal has to be filed where the breach took place. A suit for dower lies in a court within whose jurisdiction the marriage and divorce took place.
Suit on torts:
A suit for a tort may be brought either where the wrong was committed or where the tortfeasor resides or carries on business.
Copyright:
A suit for infringement of copyright lies at the place, where the defendant resides or the infringement of copyright has taken place.
Infringement of Trade Mark:
A suit for damages for infringement of a trade mark may be brought in the court of the place where the defendant resides or in the court of the place where the defendant publishes advertisements constituting infringement of the trade mark.
Suit for malicious prosecution:
In a suit for malicious prosecution and arrest, the cause of action arises at the place where the person is arrested.
Custody of ward:
A suit by a guardian for the custody of his ward may be brought in the court of the place from where the ward was removed or at the place to which the ward was removed.
Corporation:
A corporation is 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. The suit can, therefore, be brought at the principle place of business, generally the registered office, or, where there are subordinate or branch offices, the suit can be brought in the court where the subordinate office is situate in respect of a cause of action arising there. Where neither of the two conditions are satisfied and the company changed its office from Lahore to Delhi, the court at Delhi has no jurisdiction to try the suit against the company.
Insurance Contract:
In case of agents who are merely authorised to take proposals and pass on to the head office of the insurance company, no cause of action arises at the place where the agent gets the proposals. The offer and acceptance are made only at the place of the head office where accrues the cause of action.
In the case of an insurance policy payable at death the place of the death of the assured is a place where the cause of action arises and gives jurisdiction to the court of that place. In the case of a suit on a fire or burglary insurance, a part of the cause of action arises at the place where the fire occurs or at the place where the burglary takes place.
Rejection of plaint for want of jurisdiction not proper:
Where suit for infringement of copyright and injunction was filed and interim injunction was granted. On appeal, it was found that issue of territorial jurisdiction had not been raised by the defendants in its memorandum of appeal.
No application for rejection by way of demurrer. Held, that Court could not go beyond facts stated in plaint and Court examining written statement and rejecting suit for want of jurisdiction was not proper.
Territorial jurisdiction:
The existence of registered office of a company within territorial jurisdiction of Court would not ipso facto give a cause of action to that Court within jurisdiction where the registered office of the company is situated. In order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application as in this case, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the court to decide a dispute which has, at least in part, arisen within its jurisdiction.
Territorial jurisdiction for recovery proceedings:
Where Courts at place ‘L’ had limited jurisdiction as per agreement between the parties. Recovery proceedings were initiated on the basis of recovery certificate issued by Collector at place ‘L’. Writ petition to quash the same was filed in Delhi High Court. Held, that as part of cause of action had arisen outside the jurisdiction of Delhi High Court and due to exclusion of jurisdiction in any other Court than Court at place ‘L’, Delhi High Court would not have jurisdiction to entertain such writ petition.
Bank guarantees—Cause of action—Jurisdiction of Court:
Where no specific place was fixed for making payment. Bank guarantee stating that payment shall be made to Finance Secretary to Government of Sikkim. Part of cause of action arose at Gangtok (Sikkim). Part of contract was performable at Gangtok as required by Section 49 of Contract Act. Held, that the District Judge (East and North) at Gangtok had jurisdiction to entertain suit for recovery on the basis of bank guarantee.