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IN THE HIGH COURT OF DELHI AT NEW DELHI
Amit Bansal, J.
Arora Tools Pvt Ltd - Appellant
Versus
Vardex Toolings Private Limited & Ors. - Respondents
CS(Comm) 521 of 2020 & I.A. 11083 of 2020 (O-XXXIX R-1 & 2 of CPC)
Decided On : 22-11-2022
Territorial Jurisdiction - Commercial Suit - Order VII Rule 10 & 11(a)&(d) of CPC - [CS(COMM) 521/2020] - [Order VII Rule 10, Order VII Rule 11(a), Order VII Rule 11(d) of CPC] - The court dismissed the applications seeking return/rejection of the plaint based on lack of territorial jurisdiction, as the cause of action was not based on invoices or purchase orders but on the distributorship relationship between the parties. The court held that the plaint cannot be returned or rejected based on the averments made in the plaint and the documents filed along with the plaint.
Fact of the Case:
The plaintiff filed a commercial suit against the defendants seeking reconciliation of accounts and damages on account of loss caused to the plaintiff. The defendants sought rejection of the suit based on lack of territorial jurisdiction and no cause of action against them. The plaintiff claimed to be wrongfully removed as a distributor and appointed new distributors.
Finding of the Court:
The court found that the cause of action was not based on invoices or purchase orders but on the distributorship relationship between the parties. It held that the defendants no.3 to 6 were neither necessary nor proper parties to the suit and ordered their deletion from the array of parties.
Issues: Territorial jurisdiction, cause of action, privity of contract, impleadment of parties
Ratio Decidendi: The cause of action for filing the suit was not based on invoices or purchase orders but on the distributorship relationship between the parties. The court invoked provisions of Order I Rule 10(2) of the CPC to delete defendants no.3 to 6 from the array of parties.
Final Decision: The court dismissed the applications seeking return/rejection of the plaint and ordered the deletion of defendants no.3 to 6 from the array of parties.
JUDGMENT
Amit Bansal, J. - I.A. 25/2022(Of Defendant No.1 U/O-VII R-10 & 11(a)&(d) of CPC) & I.A. 26/2022(of defendant no.2 u/O-VII R-10 & 11(a)&(d) of CPC)
1. These applications seek return/rejection of the plaint on the grounds that (i) this Court lacks territorial jurisdiction to entertain the present suit; and, (ii) no cause of action has been made out against the defendants in the plaint.
2. Notices in these applications were issued on 12th April, 2022. Despite opportunity being granted by the Court, no reply has been filed on behalf of the plaintiff.
3. The present suit was filed as a commercial suit against the defendants seeking, inter alia, reconciliation of accounts and damages on account of loss caused to the plaintiff. In the plaint, it has been pleaded by the plaintiff that the plaintiff was appointed as a distributor for the National Capital Region (NCR) by the defendants no.1 and 2 in respect of their products in the year 2006. The plaintiff used to issue purchase orders on the defendant no.1 and in turn, the defendant no.1 supplied goods to the plaintiff for onward sale.
4. Defendant no.1 is an Indian subsidiary of a company based in Israel. Defendant no.2 operates in India through the defendant no.1. As a distributor, the plaintiff was entitled to commission on sale as well as turnover discount from the defendant no.1. Plaintiff continued to be a distributor of the defendants no.1 and 2 till the end of 2019, when disputes arose between the parties on account of the amount of turnover discount payable to the plaintiff.
5. In the present applications, the defendants no.1 and 2, have primarily sought rejection of the suit on the ground of lack of territorial jurisdiction. Reliance is placed on the invoices raised by the plaintiff on the defendant no.1 (page 232 of the documents filed with the plaint) to show that the same was subject to Haryana jurisdiction only. It is further submitted that the various purchase orders were issued by the plaintiff to the defendant no.1 from Gurgaon. Accordingly, it is submitted that this Court does not have the territorial jurisdiction to adjudicate the present suit.
6. Per contra, counsel for the plaintiff submits that the cause of action for filing the present suit is not based on the invoices raised by the parties but on the relationship of distributorship between the plaintiff and the defendants. Reliance is placed on the certificate of distributorship issued by the defendants no.1 and 2 in favour of the plaintiff, wherein it has been stated that the plaintiff has been appointed as 'authorised channel partner for the distribution of VARGUS products in National Capital Region' (page 6 to 7 of the documents filed with the plaint). Reliance is also placed on the demand notice dated 17th August, 2020 issued by the defendant no.1 to the plaintiff, wherein the address of the registered office of the plaintiff is shown as Delhi.
7. I shall now proceed to deal with the rival contentions of the parties.
8. A perusal of the plaint reveals that the cause of action for filing the present suit is not based on invoices or purchase orders raised by either party. The cause of action is primarily based on the plaintiff being appointed as the distributor for the NCR by the defendants no.1 and 2 in respect of the products of the defendants no.1 and 2. The case of the plaintiff is that the plaintiff had developed the market for the goods of the defendants in North India and the plaintiff had wrongly removed it as a distributor and appointed the defendants no.3 to 6 as the new distributors. Hence, damages have been claimed in the suit. The certificate filed by the plaintiff, which is signed by the officials of the defendants no.1 and 2, clearly shows that the plaintiff was the distributor of the defendants' goods in the NCR. Further, the demand notice sent to the plaintiff by the defendant no.1 also records the address of the plaintiff in Delhi.
9. In view of my findings above that the present sui
The cause of action for a commercial suit may not be based on invoices or purchase orders but on the underlying relationship between the parties, and the court may invoke provisions of CPC to delete ....
The cause of action for the suit arose from the distributorship relationship, not solely from invoices, thus establishing jurisdiction in the High Court despite arguments to the contrary.
A plaintiff must establish a valid cause of action within territorial jurisdiction; mere presence of a franchise and unsupported claims do not suffice for jurisdiction or exclusive rights.
Point of Law : Recover of amount - Jurisdiction - Section 20 clearly provides that a court within whose local limits the cause of action, “wholly or in part”, arises, would have territorial jurisdict....
The jurisdiction of courts in civil matters is determined by the location of payments made, as established under Section 20 of the CPC.
The court's jurisdiction to entertain a suit is determined by accepting all statements in the plaint to be true, without evaluating their merits.
Territorial jurisdiction in trademark infringement suits can be established based on alleged marketing actions in the jurisdiction, upheld by assuming the truth of the plaint's claims pending trial.
Territorial jurisdiction in trademark infringement cases requires proof of actual sales in the jurisdiction, not mere trap transactions, supported by relevant documentation.
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