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High Court Of Delhi
HINDUSTAN METAL WORKS - Appellant
Versus
KULDEEP SINGH - Respondent
Suit 165-A of 1978
Decided On : 05/14/1985
ARBITRATION ACT - JURISDICTION - UNION OF INDIA - SUITS AGAINST UNION OF INDIA - PLACE OF SUIT - HEADQUARTERS OF RAILWAY - PRINCIPAL PLACE OF BUSINESS - INTERPRETATION OF SECTIONS 20 AND 80 OF THE CODE OF CIVIL PROCEDURE.
Fact of the Case:
The petitioner filed an application under Section 20 of the Arbitration Act to file the arbitration agreement and to refer the dispute to arbitration. The railways took the preliminary objection to the jurisdiction of the court on the ground that the Divisional office in Lucknow, within which the work was to be performed was outside the territorial jurisdiction of Delhi courts and the agreement was also arrived at outside the jurisdiction of this Court.
Finding of the Court:
The court held that the Union of India does not reside in Delhi nor can it as such be taken to be carrying on business at Delhi irrespective of where the principal office of management of a particular commercial business is situate. The court further held that the jurisdiction to entertain the application must be where the headquarters of the Western Railways is situate, namely Bombay.
Issues: 1. Whether all suits against the Union of India can be instituted at Delhi irrespective of the nature of the cause of action, on the ground that the Union of India resides at Delhi, or carries on business at Delhi? 2. Whether such suits can also be instituted at all the places in India because the Union of India resides there, or carries on business there? 3. Whether there is a difference in the jurisdiction of the Court, depending on whether the contract in question is for constructing or, providing material to be used in business by the Government, or buildings or materials to be used for purely sovereign purposes by the State? 4. In the matter of construction work for railways, such as quarters, stations, or railway lines, etc. , is the contract to be treated as a sovereign contract and does this have any bearing on the jurisdiction of the Court, particularly this Court to deal with the matter?
Ratio Decidendi: The court relied on the case of Union of India v. Sri Ladulal Jain, wherein it was held that the Union of India carries on business of running Railways and case be sued in a Court within whose territorial jurisdiction the headquarters of that of the Railways run by the Union of India is situate. The court also relied on the case of M/s. Gupta Sanitary Stores v. Union of India and another, wherein it was held that where the State carries on business the suit can be instituted at the place of general superintendence and management.
Final Decision: The court answered the questions referred to it as follows: 1. Answer to question No. 1 is that the Union of India does not reside in Delhi nor can it as such be taken to be carrying on business at Delhi irrespective of where the principal office of management of a particular commercial business is situate. 2. Answer to question No. 2 is in the negative because of what has been stated in answer to question No. 1. 3. In answer to question No. 3, any contracts for construction of building to be used while carrying on business by the government, the jurisdiction is to be treated in a different manner then when Government acts and builds for its soverign purpose This distinction has been pointed out in Gupta s case already. 4. In the matter of construction works for railways as in the present reference there is no distinction between building quarters or running railways because building quarters, stations etc. , is incidental and ancillary of the main business of running railways and would be covered in the overall purpose of running the railways.
1. Can all suits against the Union of India be instituted at Delhi irrespective of the nature of the cause of action, on the ground that the Union of India resides at Delhi, or carries on business at Delhi ? 2. Can such suits also be instituted at all the places in India because the Union of India resides there, or carries on business there ? 3. Is there a difference in the jurisdiction of the Court, depending on whether the contract in question is for constructing or, providing material to be used in business by the Government, or buildings or materials to be used for purely sovereign purposes by the State ? 4. In the matter of construction work for railways, such as quarters, stations, or railway lines, etc. , is the contract to be treated as a sovereign contract and does this have any bearing on the jurisdiction of the Court, particularly this Court to deal with the matter ?
( 2 ) IN response to the invitation to tender issued from the Divisional Superintendent Office, Lucknow the plaintiff submitted his tender which was for white washing and annual repairs of the staff quarters in various places, all within the operational jurisdiction of Divisional Superintendent, Lucknow.
( 3 ) DISPUTES having arisen the petitioner filed an application under Section 20 of the Arbitration Act to file the arbitration agreement and to refer the dispute to arbitration. The railways took the preliminary objection to the jurisdiction of this Court on the ground that Divisional office in Lucknow, within which the work was to be performed was outside the territorial jurisdiction of Delhi courts and the agreement was also arrived at outside the jurisdiction of this Court. The matter was initially heard by D. K. Kapur, J. who by his order of 6th February, 1979 referred the matter to the Division Bench, which again referred it to Full Bench. That is how the matter is before us.
( 4 ) IT is by now well settled that the Union of India does not voluntarily reside or personally works for gain Union of India and another v. Sri Ladulal Jain1. Mr. Sharma does not dispute that no cause of action arose in Delhi and, therefore, it is not on the basis of this that he claims jurisdiction of this Court. His contention is that the defendant Northern Railways has its headquarters in Delhi and, therefore, it is open to him to bring the suit in Delhi Courts. For that he relies on Union of India v. Sri Ladulal Jain (Supra); wherein in para 16 it has been held that the Union of India carries on business of running Railways and case be sued in a Court within whose territorial jurisdiction the headquarters of that of the Railways run by the Union of India is situate. It is well known that Union of India is carrying on business of running various Railways and that each Railways has ils own separate headquarters. Lucknow falls within Northern Railways but the headquarters of Northern Railways is in Delhi. These facts are not in dispute. Ladu Lal s case was followed in the case of M/s. Gupta Sanitary Stores v. Union of India and another2 to which two of us Chadha, J. and G. C. Jain, J. were parties. In that case the questions that were referred to the Full Bench were whether the Union of India carries on business within the meaning of Section 20 of the Arbitration Act and second whether the Delhi Courts have jurisdiction to entertain an application under Sections 14 and 17 against Union of India not on the ground of cause of action but solely on the ground that Union of India has its central seat of power at new Delhi. The summary of the conclusions of the Full Bench is given in para 54. The Full Bench held that where the State carries on business the suit can be instituted at the place of general superintendence and management. The expression business means commercial business and not duties and functions of s
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