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SUPREME COURT OF INDIA
SANJIV KHANNA, DIPANKAR DATTA, JJ.
Arcadia Shipping Ltd. – Appellant
Versus
Tata Steel Limited And Others - Respondents
Civil Appeal No. of 2024(Arising Out Of Special Leave Petition (Civil) No. 8488 Of 2024)
Decided on : 16-04-2024
Territorial Jurisdiction - Code of Civil Procedure, 1908 - Section 20(c), Order I Rule 3, Order I Rule 7
Fact of the Case:
The case involved a dispute over the shipment of goods from India to Ethiopia, where the defendant companies took contradictory stands regarding payment and delivery of the goods. The plaintiff claimed that the High Court at Delhi possessed territorial jurisdiction to decide the suit.
Finding of the Court:
The Single Judge of the High Court at Delhi found that the goods were released without authorization and held Arcadia liable for the loss suffered by the plaintiff. However, the Single Judge directed the return of the plaint on the question of territorial jurisdiction. The Division Bench of the High Court at Delhi allowed an appeal against the Single Judge's decision.
Issues: The main issue was whether the High Court at Delhi had territorial jurisdiction to decide the suit, and whether the cause of action arose in part at Delhi.
Ratio Decidendi: The court held that the cause of action arose in part at Delhi, and the plaintiff was within its rights to enjoin all the defendants under a single suit. The court also emphasized that a question of territorial jurisdiction should ordinarily be decided at the outset.
Final Decision: The Division Bench of the High Court was right in setting aside the finding recorded by the Single Judge regarding territorial jurisdiction. The present civil appeal was dismissed.
ORDER :
SANJIV KHANNA, J.
Leave granted.
2. This order gives reasons and decides a question of territorial jurisdiction under the Code of Civil Procedure, 19081[For short, “Code.”].
3. We begin by briefly referring to the facts of the case and pleadings in the plaint - Suit No. 458/2000:
o The defendant nos. 1-4 are, TYO Trading Enterprises3[For short, “TYO Trading”.] (respondent no.2 before this Court), Commercial Bank of Ethiopia4[For short, “Bank of Ethiopia”.] (respondent no. 3 before this Court), Arcadia Shipping Limited5[For short, “Arcadia”.] (appellant before this Court) and M.G. Trading Worldwide Pvt Ltd6[For short, “M.G. Trading”.] (respondent no. 4 before this Court).
o Bhushan Steel was, inter alia, a manufacturer of galvanized steel corrugated sheets.
o TYO Trading was a company based in Ethiopia that had instructed its agent, M.G. Trading, to place certain supply orders for galvanized steel corrugated sheets with Bhushan Steel.
o Accordingly, M.G. Trading placed orders with Bhushan Steel, at Delhi, for the supply of 400 MT of galvanized steel corrugated sheets.
o TYO Trading had initially opened the Letter of Credit in favour of its agent M.G. Trading.
o Subsequently, the Letter of Credit was transferred in the name of Bhushan Steel, pursuant to which, the material was dispatched by Bhushan Steel, as per the supply orders.
o The material was loaded by the shippers, Arcadia, in their vessel - Winco Pioneer, from a port in Mumbai, India to a port in Djibouti, Ethiopia.
o Arcadia undertook the shipment vide two bills of lading -(i) Bill of Lading No. DJB-06 for 200 MT of galvanized steel corrugated sheets and (ii) Bill of Lading No. DJB-07 for 198 MT of galvanized steel corrugated sheets.
o The freight charges for shipping were prepaid by Bhushan Steel to Arcadia.
o Arcadia was directed to deliver the goods to the order of the Bank of Ethiopia, to whom documents had been submitted by Bhushan Steel through their bankers, Punjab National Bank8[For short, “PNB”.]. The documents were to be negotiated under the Letter of Credit.
o PNB had sent the said documents to the Bank of Ethiopia for making the payments. All formalities for encashing the Letter of Credit had been completed by Bhushan Steel.
o However, Bank of Ethiopia refused to encash the Letter of Credit on the grounds of discrepancies.
o Vide fax message dated 25.08.1999, Bhushan Steel was informed by Arcadia that both the shipments had been released to the consignee, TYO Trading, as they had duly presented a Bill of Lading, endorsed by Bank of Ethiopia.
o Vide letter dated 07.09.1998, TYO Trading informed Bhushan Steel, through M.G. Trading, that they had made the payment, which would be released by the Bank of Ethiopia.
o The payment was not received by Bhushan Steel. The material was delivered and could not be shipped back to Bhushan Steel.
o Thus, the defendants had taken a contradictory stand. While TYO Trading had stated that they had paid for the goods, the Bank of Ethiopia had refused to honour the Letter of Credit. Arcadia had stated that the material had been released to TYO Trading upon presentation of the Bill of Lading which was duly endorsed by the Bank of Ethiopia. Further, PNB had returned the original documents, including the Bill of Ladings to Bhushan Steel stating that they had received them without any encashment of the Letter of Credit by the Bank of Ethiopia.
o Paragraphs 22 and 29 of the plaint read as under:
“22. That thus the fact remains that the payment of the said bill of lading has not been paid to the plaintiff and is still liable to be paid to the plaintiff and the plaintiff is fully entitled for an amount of US$ 2,76,510 which is the liability of defendant no.l and 2 in the event of goods rightly being released by defendant no. 3 after obtaining duly endorsed bill of lading from defe
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