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2007 Supreme(SC) 360
Supreme Court Of India
C.K. THAKKER & LOKESHWAR SINGH PANTA
Alchemist Limited and Another-PETITIONER
Versus
State Bank of Sikkim and Others-RESPONDENT
Appeal (civil) 1426 of 2007
@ Special Leave Petition (Civil) No. 9698/2006
Decided On : 16/03/2007
Territorial jurisdiction under Article 226(2) of the Constitution is conferred only if a material, essential, or integral part of the cause of action arises within the High Court's jurisdiction. Mere residency, place of business, or receipt of communication is insufficient unless integral to the core dispute.
Headnote:(A) Constitution of India - Article 226 - Territorial jurisdiction of High Courts - Concept of 'cause of action' - Meaning and scope - A cause of action is a bundle of essential facts necessary for the petitioner to prove in order to support the right to a judgment - For a High Court to exercise jurisdiction under Clause (2) of Article 226, the cause of action must arise, wholly or in part, within its territorial jurisdiction - The test to determine if a fact constitutes a part of the cause of action is whether such fact is a material, integral, or essential part of the dispute (lis) between the parties.
(B) Territorial Jurisdiction - Mere receipt of a communication or letter of revocation at a particular place, or the fact that the petitioner carries on business or has a registered office within the territorial jurisdiction of a High Court, does not confer jurisdiction if such facts are not integral to the cause of action.
Facts of the case:
A company with its registered office in one state applied for a strategic partnership with a bank and state government located in another state. Negotiations were held and certain deposits were made in the company's home state. The partnership was initially accepted in principle, but the state government later withdrew the approval. The company filed a writ petition in the High Court of its home state challenging the revocation. The High Court dismissed the petition on the grounds that it lacked territorial jurisdiction as no cause of action had arisen within its jurisdiction.
Findings of Court:
The High Court was justified in dismissing the petition. The events pleaded by the company—including its place of business, the location of negotiations, the making of deposits, and the receipt of the revocation letter—were not material, essential, or integral facts of the dispute, and thus did not constitute a part of the cause of action.
Issues: Whether the facts pleaded by the appellant—including its registered office location, negotiations, deposit of funds, and receipt of a revocation letter—were sufficient to establish that a part of the cause of action had arisen within the territorial jurisdiction of the High Court.
Ratio Decidendi: To confer jurisdiction under Article 226(2) of the Constitution, the alleged facts must be material, essential, or integral to the lis. Facts that are incidental or have no bearing on the core dispute do not constitute a cause of action, regardless of whether the petitioner resides or conducts business in that jurisdiction.
Result: Appeal dismissed.
Legal Category Hierarchy
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constitutional law
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writ jurisdiction
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territorial jurisdiction
- cause of action
- article 226
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amendment
- fifteenth amendment
- forty-second amendment
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territorial jurisdiction
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writ jurisdiction
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practice and procedure
- appeal
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jurisdiction
- territorial jurisdiction
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administrative law
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government contracts
- disinvestment
- strategic partnership
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government contracts
J U D G M E N T
C.K. THAKKER, J.
Leave granted.
A simple issue before this Court in the present appeal is as to whether a part of the cause of action had arisen within the territorial jurisdiction of the High Court of Punjab & Haryana so as to entertain a writ petition under Article 226 of the Constitution filed by the appellant-Company against the respondents.
Brief facts of the case are that the Appellant is a company having its Registered and Corporate Office at Chandigarh. Respondent No. 1 is the State Bank of Sikkim, and Respondent No. 2 is the State of Sikkim. The second respondent-State of Sikkim was desirous of disinvesting 49% of its equity capital in the first respondent-State Bank of Sikkim to a strategic partner with transfer of management in the first respondent Bank. For that purpose, the second respondent issued an advertisement in "Economic Times" on January 21, 2004 and invited offers for strategic partnership. Interested parties, firms and companies having management expertise were asked to apply with detailed bio-data profiles to the State Bank of Sikkim at its Head Office at Gangtok on or before February 7, 2004. It was stipulated in the advertisement that the offers made by the parties would be subject to scrutiny by the Board of Directors of the first respondent-Bank. It was also clarified that the right to accept or reject the offer without assigning any reason was reserved by the Board of Directors.
The Appellant Company submitted its formal proposal for the strategic business partnership vide its offer dated February 3, 2004. Several proposals were received from various entities, and the Board of Directors in its 143rd meeting short-listed two entities, viz. the Appellant Company and another company based in Calcutta. Negotiations took place between the Appellant Company and the first respondent-Bank. The Chairman and Managing Director of the first respondent-Bank visited Chandigarh for further negotiations. The first respondent-Bank asked the Appellant to deposit a sum of Rs. 4.50 crores with the State Bank of India in a fixed deposit to show its bona fides and utilization by the first respondent-Bank for its revival. The Appellant deposited the said amount with the State Bank of India, Chandigarh on March 16, 2005, and the photocopies of the receipt were handed over to the executives of the first respondent-Bank at Chandigarh. Through a letter dated February 20, 2004, the first respondent-Bank informed the Appellant Company that its proposal was accepted in principle subject to consideration and approval of the Government of Sikkim. On February 23, 2006, the Appellant Company received a communication at Chandigarh by which the first respondent-Bank informed the Appellant-Company that the Government of Sikkim had not approved the proposal submitted by the Appellant Company and sought to withdraw the communication dated February 20, 2004. The Appellant Company, therefore, filed a writ petition before the High Court of Punjab & Haryana under Article 226 of the Constitution challenging the letter-cum-order dated February 23, 2006.
The High Court dismissed the writ petition only on the ground that it did not have territorial jurisdiction to entertain the writ petition as no cause of action had arisen within the territorial jurisdiction of the Court. The High Court did not enter into merits of the matter and granted liberty to the Appellant-Company to seek appropriate remedy before an appropriate Court.
The said decision of the High Court is challenged by the Appellant-Company in this appeal. We have heard the learned counsel for the parties.
The Appellant Company contended that a part of cause of action had arisen within the territorial jurisdiction of the High Court of Punjab & Haryana. The Appellant Company, for such submission, relied on the following facts:
i)The Appellant-Company has its Registered and Corporate Office at Chandigarh;
ii)The Appellant-Company carries on business at Chandigarh;
iii) The offer
