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IN THE HIGH COURT OF DELHI
Amit Bansal, J.
Arora Tools Pvt. Ltd. - Appellant
Versus
Vardex Toolings Private Limited - Respondent
CS(COMM) 521 of 2020 & I.A. 11083 of 2020(O-XXXIX R-1 & 2 of CPC)
Decided On : 22-11-2022
| Table of Content |
|---|
| 1. application for rejection on jurisdiction grounds. (Para 1 , 2) |
| 2. factual background of the distributorship. (Para 3 , 4) |
| 3. parties dispute over jurisdiction and cause of action. (Para 5 , 6) |
| 4. court's reasoning on cause of action and jurisdiction. (Para 8 , 9 , 10) |
| 5. dismissal of applications based on earlier findings. (Para 11 , 17) |
| 6. conclusion and directions for further proceedings. (Para 12 , 18 , 19 , 20) |
| 7. finding on defendants 3-6 as improper parties. (Para 14 , 15 , 16) |
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 h
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.
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 ....
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.
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.
The court's jurisdiction to entertain a suit is determined by accepting all statements in the plaint to be true, without evaluating their merits.
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