The court ruled that the High Court lacks jurisdiction to entertain writ petitions when the integral part of the cause of action arises outside its territorial limits, despite minor connections to the jurisdiction.

JUDGMENT

Purushaindra Kumar Kaurav, J.

1. The instant writ petitions are filed challenging the impugned action of the respondent-Bank of India (hereinafter `BOI.), whereby, the petitioners' accounts have been declared as `fraud' as per the Reserve Bank of India (RBI) Master Circular on the Classification and Reporting of Fraud dated 01.07.2016. This order shall decide a preliminary objection raised on behalf of the respondent-BOI on entertaining the instant writ petitions on the ground of lack of territorial jurisdiction and/or alternatively, on the ground of forum non-conveniens. The issue involved is common in both the writ petitions; hence, a combined order is being passed.

Factual Matrix

2. In W.P.(C.) 7962/2023, the petitioner is a company incorporated under the Companies Act, 1956 having its registered office at DB Central, Maulana Azad Road Rangwala Compound, Jacob Circle, Mumbai 400011. The present dispute has arisen on account of certain credit facilities being availed by the petitioner from the respondent-BOI, Mumbai branch.

3. The respondent-BOI, has its head office at Star House, C-5, G Block, Bandra Kurla Complex, Bandra (East), Mumbai 400051. A branch office of the respondent-BOI at Mumbai Large Corporate vide its sanction letter dated 25.09.2013 (`sanction letter'), sanctioned credit facilities amounting to Rs.225 Crores (`credit facilities') to the petitioner company. In terms of the Sanction Letter, the petitioner company executed several security documents vis-a-vis Term Loan Agreement dated 30.09.2013 (`term loan agreement'), Guarantee Agreements dated 30.09.2013, Hypothecation cum Loan Agreement dated 30.09.2013 (`hypothecation'), Mortgage Deed dated 15.10.2013 (`mortgage deed'), Joint Deed of Mortgage dated 28.07.2014 (`joint mortgage deed'), Supplemental Term Loan Agreement dated 30.03.2015 (`supplemental term loan').

4. Due to the non-payment of the loan, the petitioner's account was declared as a Non-Performing Asset (hereinafter `NPA') on 31.12.2015. Thereafter, numerous One Time Settlement (hereinafter `OTS') proposals were exchanged between the parties but none of them culminated in the final settlement. In the meantime, the respondent-BOI filed a complaint in Economic Offences Wing, Mumbai branch (hereinafter `EOW.) that the petitioner has committed fraud against the respondent-BOI to the tune of Rs.236.92 Crores. The EOW vide its letter dated 21.06.2022 informed the petitioner that the preliminary enquiry has been closed and no commission of cognizable offence was found. It is the contention of the petitioner that vide this letter by EOW, the petitioner came to know that their account is declared as `fraud'.

5. In W.P.(C) 10525/2023, the petitioner is a company incorporated under the Companies Act, 1956 having its registered office at the 7th Floor, Resham Bhavan, Veer Nariman Road, Churchgate Mumbai - 400020. In September 2008, the petitioner approached the respondent-BOI to avail loan, pursuant to which, on 15.11.2008, the respondent-BOI approved and sanctioned a guarantee cum term loan of Rs.425 Crores. In June 2011, the petitioner expressed its inability to repay the credit facilities in light of the uncertainty faced by the telecom sector. Thereafter, in February 2012, the respondent-BOI reviewed the credit facilities and a revised sanction letter dated 02.02.2012 was issued to the petitioner company at the then outstanding sanctioned limit of Rs.246.33 Crores.

6. Since the petitioner could not repay the loan, the respondent-BOI declared the petitioner's account as NPA. Pursuant to the said declaration, various OTS proposals were sent by the petitioner, but they did not culminate into any settlement. Thereafter, the respondent-BOI declared the petitioner's account as `fraud' in view of the RBI Master Circular on the Classification and Reporting of Fraud dated 01.07.2016.

Submissions advanced by parties

7. Learned counsel appearing on behalf of the respondent-BOI in W.P.(C) 7962/2023 and W.P.(C) 10525/20