Important Point
Gujarat High Court at Ahmedabad has no territorial jurisdiction under Art. 226(2) as no part of cause of action had arisen in Ahmedabad. Cause of action arose in Chennai so High Court of Madras had territorial jurisdiction to decide Special Application. The same is transferred to Madras High Court for decision according to law.

Headnote:Constitution of India—Art. 226(2)—Territorial Jurisdiction of High Court—Dispute pertains to the entitlement of respondents to the benefit of Pass Book Scheme found in paragraph 34 of Import Export Policy—The Pass Book Licence was issued at Chennai by designated authority and the transactions concerning said pass book were made from Chennai port—No part of cause of action arose in Gujarat—Petitioners having office in Ahmedabad—High Court of Gujarat entertained special application & decided on merits relying on 1984(2) SCC 646 as to territorial jurisdiction—Whether correct? (No)—Proper Course—Not to dismiss special application but to transfer it to Madras High Court for disposal in accordance with law—Appeal allowed accordingly (C.P.C. 1908—Order XIV Rule 2).
       Held : We are unable to accept this finding of the High Court. The view of the High Court that this Court in the case of Oswal Woollen (1984(2) SCC 646) had held that the existence of the registered office of a Company would ipso facto give a cause of action to the High Court within whose jurisdiction the registered office of such Company is situated, is not correct. (Para 10)
       Held further : It is seen from the above that 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. It is clear from the above judgment that each and every fact pleaded by the respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court’s territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned. If we apply this principle then we see that none of the facts pleaded in Paragraph 16 of the petition, in our opinion, fall into the category of bundle of facts which would constitute a cause of action giving rise to a dispute which could confer territorial jurisdiction on the courts at Ahmedabad. As we have noticed earlier, the fact that the respondents are carrying on the business of export and import or that they are receiving the export and import orders at Ahmedabad or that their documents and payments for exports and imports are sent/made at Ahmedabad, has no connection whatsoever with the dispute that is involved in the applications. Similarly, the fact that the credit of duty claimed in respect of exports that were made from Chennai were handled by the respondents from Ahmedabad have also no connection whatsoever with the actions of the appellants impugned in the application. The non-granting and denial of credit in the pass-book having an ultimate effect, if any, on the business of the respondents at Ahmedabad would not also, in our opinion, give rise to any such cause of action to a court at Ahmedabad to adjudicate on the actions complained against the appellants. (Paras 17 & 18)
       However held : As a matter of fact, the appellant on the entertainment of the civil application and grant of interim order, had challenged the said order on the ground of want of jurisdiction by way of a civil appeal in this Court which appeal is pending consideration by this Court, therefore, the objection having been taken at the first instance itself and the court having not proceeded to decide this question of territorial jurisdiction as contemplated under Order XIV Rule 2 CPC, we think we cannot deny relief to the appellant solely on the ground that the High Court has chosen to proceed to decide the case on merit. This being a judgment of a court having no territorial jurisdiction, the judgment has to be set aside. However, the special civil applications cannot be dismissed on this ground because it has been the contention of the appellants themselves in the objections filed by them before the High Court, that these applications ought to be transferred to the High Court at Chennai, in the interest of justice, we agree with this plea. For the reasons stated above, these appeals succeed and the same are hereby allowed. The impugned judgment is set aside. We further direct that Special Civil Application Nos. 3282/99 and 3279/99 filed by the respondents are hereby directed to be transferred to the High Court of Madras at Chennai forthwith and on receipt of the papers, we request the Chief Justice of the High Court of Madras to place them before an appropriate Bench for disposal in accordance with law. We are also of the opinion that since the parties have already undergone one round of litigation before the High Court at Ahmedabad and thereafter in these appeals before us, it is appropriate to request the High Court to dispose of these appeals as early as possible. The appeals are, accordingly, allowed. (Paras 20 & 21)

Judgement Key Points

Key Points: - The Gujarat High Court at Ahmedabad lacked territorial jurisdiction since no part of the cause of action arose there; the matter should be transferred to the Madras High Court for disposal (Paras 17-21) (!) (!) (!) (!) - Article 226(2) enables a High Court to exercise jurisdiction where the cause of action partly or wholly arises, and the court must examine the entire pleaded facts to determine nexus to the lis (Paras 15-18, 28) (!) (!) (!) (!) - The case discusses Oswal Woollen Mills and ONGC precedents to illustrate that merely having a registered office or other incidental factors do not automatically confer jurisdiction; a nexus with the lis is required (Paras 9-12, 19-21, 26-27) (!) (!) (!) (!) (!) - The Supreme Court directed that Special Civil Applications Nos. 3282/99 and 3279/99 be transferred to the High Court of Madras at Chennai and that the Ahmedabad proceedings be disposed of by the Madras Bench, with expedited handling due to prior litigation (Paras 20-21) (!) (!) - The Pass Book Scheme and Import Export Policy matter concerns entitlement to credits under the scheme, with the key jurisdictional issue central to the petition rather than merits (initial context in references 1-4) (!) (!) (!) (!)

What is the territorial jurisdiction of the Gujarat High Court under Article 226(2) in relation to the Pass Book Scheme and whether the case should be transferred to Madras High Court?

What is the correct test for establishing territorial jurisdiction for writ petitions under Article 226(2) and CPC Order XIV Rule 2, based on the facts pleaded in support of the cause of action?

What are the appellate court’s directions regarding transfer of Special Civil Applications to the High Court of Madras and the handling of proceedings in the Ahmedabad High Court?

Judgment

Santosh Hegde, J.—These civil appeals are preferred by the Union of India and Others challenging the judgment and order of the High Court of Gujarat at Ahmedabad made in Special Civil Application Nos. 3282/99 and 3279/99 wherein the High Court allowed the said civil applications and granted the relief as prayed for by the petitioner therein.

2. Though in these appeals, principal contention involved pertains to the entitlement of the respondents herein to the benefit of the Pass Book Scheme found in paragraph 54 of the Import Export Policy introduced by the appellants herein w.e.f. 1st April, 1995 in relation to certain credits to be given on export of Shrimps, the appellant firstly challenges before us the territorial jurisdiction of the High Court of Gujarat at Ahmedabad to entertain the civil applications and grant relief in favour of the respondents.

3. Mr. Mukul Rohtagi, learned Additional Solicitor General of India and Mr. Jaideep Gupta, learned counsel appearing for the appellants, contended that the High Court at Ahmedabad did not have the territorial jurisdiction to entertain the special civil applications since no part of the cause of action based on which the applications were filed arose within the territorial jurisdiction of the High Court at Ahmedabad. They contended that though this ground was specifically urged, the High Court wrongly placing reliance on a judgment of this Court in the case of Union of India & Ors. v. Oswal Woollen Mills Ltd. & Ors. (1984(2) SCC 646) rejected the said objection of the appellants and granted the relief which, of course, the appellants content even on merits is not liable to be granted. They contend that since the question of jurisdiction in this case goes to the root of the matter, this issue should be first decided and if it is held in favour of the appellants, then ipso facto the judgment under appeal is liable to be set aside as having been delivered by a court of no jurisdiction.

4. Per contra, Mr. Ashok Desai, learned senior counsel appearing for the respondents, contended that it is incorrect to say that no part to the cause of action arose within the territorial jurisdiction of the High Court at Ahmedabad. According to the learned counsel, a substantial part of the cause of action has arisen within the territorial jurisdiction of the High Court at Ahmedabad, hence, the judgment in question cannot be invalidated on this preliminary ground. He placed strong reliance on the judgment of this Court in the case of Navinchandra N. Majithia vs. State of Maharashtra & Ors. (2000(7) SCC 640).

5. Having considered the arguments addressed on behalf of the parties and having perused the records, we are of the considered opinion that the question of jurisdiction should be first decided by us before going into the merits of the case in hand. As a matter of fact, we feel it would have been more appropriate on the facts of these cases if the High Court had proceeded under Order XIV Rule 2 of Civil Procedure Code by deciding the question of jurisdiction as a preliminary issue first instead of deciding the case on merit.

6. For deciding the above issue, it is necessary to first notice the contentions raised in the special civil applications to establish the territorial jurisdiction of the High Court. Contentions regarding the cause of action and the territorial jurisdiction of the High Court are pleaded in the applications at para 16 which read thus:

“The petitioners carry on business of export and import from Ahmedabad. The orders for export and import are placed from and executed from Ahmedabad. The documents and payments for export and imports are sent/made at Ahmedabad. The credit of duty claimed in respect of exports were handled from Ahmedabad since export orders were received at Ahmedabad and payments also received at Ahmedabad. The non-granting and denial of utilisation of the credit in the said Pass Book shall effect the business of the Petitioners at Ahmedabad. Respondent Nos. 1

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2001 Supreme(SC) 1518

What is the territorial jurisdiction of the Gujarat High Court under Article 226(2) in relation to the Pass Book Scheme and whether the case should be transferred to Madras High Court?

What is the correct test for establishing territorial jurisdiction for writ petitions under Article 226(2) and CPC Order XIV Rule 2, based on the facts pleaded in support of the cause of action?

What are the appellate court’s directions regarding transfer of Special Civil Applications to the High Court of Madras and the handling of proceedings in the Ahmedabad High Court?

Cases Referred (3)