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SUPREME COURT OF INDIA
Santosh Hegde, Ashok Bhan, JJ
Union of India – Appellant
Versus
Adani Exports Ltd. – Respondent
Appeal (civil) 6320-6321 of 2000 | C.A.No. 6319/2000
For the Appellants/Petitioners: Mukul Rohtagi, Jaideep Gupta
For the Respondents: Ashok Desai
Territorial jurisdiction under Article 226(2) requires a direct nexus between the pleaded facts and the dispute (lis). The mere location of a company's registered office or general business activities does not constitute a 'cause of action' if the core dispute arose elsewhere.
Headnote:(A) Constitution of India - Art. 226(2) - Code of Civil Procedure, 1908 - O.XIV R.2 - Territorial jurisdiction of High Court - Cause of action - Whether the location of a company's registered office or the place where business payments are handled confers jurisdiction under Article 226(2) when the core dispute arises elsewhere - High Court of Gujarat held that the registered office in Ahmedabad conferred jurisdiction - This view is incorrect as the registered office does not ipso facto create a cause of action - The "cause of action" must have a direct nexus with the dispute involved (the lis) - In the present case, the Pass Book Scheme was issued and administered at Chennai, and exports occurred through Chennai port - Mere execution of bank guarantees or managing business from Ahmedabad without nexus to the specific denial of benefit under the scheme does not constitute a cause of action. (Paras 15, 21, 24)
Facts of the case:
The respondents sought benefits under the Pass Book Scheme of the Import Export Policy for shrimp exports. They filed applications in the High Court of Gujarat. The Union of India challenged the jurisdiction, stating that the scheme was administered, the pass-book issued, and the exports executed at Chennai. The Gujarat High Court accepted jurisdiction based on the fact that the respondent company's registered office was situated in Ahmedabad.
Findings of Court:
The Supreme Court found that the Gujarat High Court's reliance on the location of the registered office was misplaced. It was determined that none of the facts pleaded in the application (such as business activities in Ahmedabad or the execution of bank guarantees) had a direct nexus with the actual dispute concerning the Pass Book Scheme to confer territorial jurisdiction under Article 226(2).
Issues: Whether the High Court of Gujarat had territorial jurisdiction over the matter based on the location of the respondent company's registered office and other general business activities conducted in Ahmedabad.
Ratio Decidendi: Territorial jurisdiction under Article 226(2) of the Constitution is determined by whether the cause of action, wholly or in part, arises within the court's jurisdiction. A "cause of action" consists of a bundle of facts which, if proven, entitle the petitioner to relief; such facts must have a direct nexus or relevance to the lis (the dispute). General business operations or the location of a registered office, without a direct link to the grievance, do not confer jurisdiction.
Result: Appeals allowed; matter transferred to the High Court of Madras at Chennai.
Legal Category Hierarchy
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practice and procedure
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territorial jurisdiction
- cause of action
- high court jurisdiction under article 226
- transfer of cases
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territorial jurisdiction
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constitutional law
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article 226 of the constitution
- territorial jurisdiction
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article 226 of the constitution
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administrative law
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import and export policy
- pass book scheme
- writ jurisdiction
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import and export policy
JUDGMENT:
(With C.A.No. 6319/2000)
J U D G M E N T
SANTOSH HEGDE, J.
These civil appeals are preferred by the Union of India and Others challenging the judgment and order of the High Court of Gujarat at Ahmedabad made in Special Civil Application Nos.3282/99 and 3279/99 wherein the High Court allowed the said civil applications and granted the relief as prayed for by the petitioner therein.
Though in these appeals, principal contention involved pertains to the entitlement of the respondents herein to the benefit of the Pass Book Scheme found in paragraph 54 of the Import Export Policy introduced by the appellant herein w.e.f. 1st April, 1995 in relation to certain credits to be given on export of Shrimps, the appellant firstly challenges before us the territorial jurisdiction of the High Court of Gujarat at Ahmedabad to entertain the civil applications and grant relief in favour of the respondents.
Mr. Mukul Rohtagi, learned Additional Solicitor General of India and Mr. Jaideep Gupta, learned counsel appearing for the appellants, contended that the High Court at Ahmedabad did not have the territorial jurisdiction to entertain the special civil applications filed under Article 226 of the Constitution of India in which the applications were filed arose within the territorial jurisdiction of the High Court at Ahmedabad. They contended that though this ground was specifically urged, the High Court wrongly placing reliance on the judgment of this Court in the case of Union of India & Ors. vs. Oswal Woollen Mills Ltd. & Ors. (1984 (2) SCC 646) rejected the said objection of the appellants and granted the relief which, of course, the appellants contend even on merits is not liable to be granted. They contend that since the question of jurisdiction in this case goes to the root of the matter, this issue should be first decided and if it is held in favour of the appellants, then ipso facto the judgment under appeal is liable to be set aside as having been delivered by a court of no jurisdiction.
Per contra, Mr. Ashok Desai, learned senior counsel appearing for the respondents, contended that it is incorrect to say that no part of the cause of action arose within the territorial jurisdiction of the High Court at Ahmedabad. According to the learned counsel, a substantial part of the cause of action has arisen within the territorial jurisdiction of the High Court at Ahmedabad, hence, the judgment in question cannot be invalidated on this preliminary ground. He placed strong reliance on the judgment of this Court in the case of Navinchandra N. Majithia vs. State of Maharashtra & Ors. (2000 (7) SCC 640).
Having considered the arguments addressed on behalf of the parties and having perused the pleadings, we are of the opinion that the question of jurisdiction should be first decided by us before going into the merits of the case in hand. As a matter of fact, we feel it would have been more appropriate on the facts of these cases if the High Court had proceeded under Order XIV Rule 2 as a preliminary issue first instead of deciding the case on merit.
For deciding the above issue, it is necessary to first notice the contentions raised in the special civil applications to establish the cause of action and the territorial jurisdiction of the High Court are pleaded in the applications at para 16 which read thus:
The petitioners carry on business of export and import from Ahmedabad. The orders for export and import are placed from and executed from Ahmedabad. The documents and payments for export and imports are sent/made at Ahmedabad. The credit of duty claimed in respect of exports were handled from Ahmedabad since export orders were received at Ahmedabad and payments also received at Ahmedabad. The non-granting and denial of utilisation of the credit in the pass-book will affect the business of the Petitioners at Ahmedabad. Respondent Nos. 1 to 3 have regional offices at Ahmedabad. A substantial part of the cause of action has arisen within the
