The jurisdiction of a court must align with the locality where the cause of action arises, and privity of contract is essential for a valid suit.

1. Being aggrieved by the judgment and decree dated 17-3-2006 passed by the Additional District Judge, Sakti in Civil Suit No. 7 - B / 2003, where by the suit for recovery of Rs. 1,49,598.31 was decreed in favour of the respondent / plaintiff, the appellant / defendant has preferred this appeal.

2. In this appeal, it is not in dispute that the respondent / plaintiff, a woman entrepreneur, has business of steel at Sakti in the name of M/s. Vandana Trailers, Sakti. The appellant / defendant also deals in supply of steel and has his business in the name of M/s. Shriram Steels at Raipur. He also undertakes supply of steel as per orders placed. M/s. Ankur Steel Agency is also situated at Raipur. It is also not in dispute that the appellant / defendant had received two demands drafts of Rs. 1,00,000/- each at Raipur on 11-2-2002 and 21-2-2002.

3. The respondent / plaintiff pleaded that outside traders after orally entering into a contract at Sakti used to supply raw material at Sakti for meeting requirements of her business for which payment was made through Bank drafts. The appellant / defendant used to supply raw material i.e. steel either itself or through its agents who would visit Sakti, enter into an oral agreement and in pursuance thereto supply material at Sakti. Prior to the year 2001, the appellant - defendant used to supply raw material, i.e., steel mostly on the basis of requirements communicated through telephone calls.

4. The appellant / defendant obtained through deceitful means, on demand, Rs. 1,00,000/- on 11-2-2002 and Rs. 1,00,000/-on 21 - 2-2002 through Bank drafts from the respondent / plaintiff. It was only on receiving a statement of account from the appellant / defendant that it was found that sum of Rs. 1,26,980/- had been fraudulently received in excess by the appellant / defendant. Despite notices dated 1-7-2003 and 4-8-2003 sent by the respondent / plaintiff, the appellant / defendant did not return the amount of Rs. 1,26,980/-. On these premises, the plaintiff filed the suit for recovery of Rs. 1,49,598.31 with interest @ 11.25% per annum from 1-4-2002 till recovery.

5. The appellant / defendant pleaded that he had ever entered into an agreement directly with the respondent / plaintiff for supply of raw material, i.e., steel. It was pleaded that the respondent / plaintiff had authorised M/s. Ankur Steel Agency, Raipur for purchase of raw materials through different firms and it was M/s. Ankur Steel Agency, Raipur, which had placed orders with the respondent / plaintiff - firm while undertaking responsibility for payment. A written agreement Ex. D - 19 was entered into between M/s. Ankur Steel Agency as the authorised agent of the respondent / plaintiff and the appellant / defendant on 28-12-2000. M/s. Ankur Steel Agency, Raipur undertook the sole responsibility of delivering the raw material supplied to it by the appellant / defendant to the respondent / plaintiff at Sakti and to obtain payment from her. It was specifically denied that the appellant / defendant or his authorized agent ever visited Sakti or entered into an agreement directly with the respondent / plaintiff. It was, thus, specifically pleaded that for want of territorial jurisdiction to try the suit no cause of action arose in favour of the respondent / plaintiff and against the appellant / defendant for institution of the suit before the Additional District Judge, Sakti.

6. The appellant / defendant filed a counter - claim for Rs. 71,526/- pleading that for the raw materials supplied by it to the respondent / plaintiff through M