1985 (11) TMI 207 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Additional Chief Judge, City Civil Court, Hyderabad, to try the suit.
2. Cause of action and its relevance to jurisdiction.
3. Impact of the location of the official liquidator and the High Court's winding-up orders on jurisdiction.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Additional Chief Judge, City Civil Court, Hyderabad, to Try the Suit:
The primary issue was whether the Additional Chief Judge, City Civil Court, Hyderabad, had jurisdiction to try the case O.S. No. 101 of 1983. The lower court held that it had jurisdiction mainly because the High Court had granted leave to the plaintiff-bank to file the suit against the first defendant-company, represented by the official liquidator based in Hyderabad. However, the defendants argued that no part of the cause of action arose within the jurisdiction of the Hyderabad court, as all relevant transactions and the location of the parties were at Karimnagar. The High Court concluded that the mere appointment of an official liquidator at Hyderabad does not confer jurisdiction on the Hyderabad court, as the transactions and the parties were based in Karimnagar.

2. Cause of Action and Its Relevance to Jurisdiction:
The plaintiff-bank argued that the cause of action arose on several dates, including the dates of execution of documents and acknowledgment of liabilities, and the dates of High Court orders related to the winding-up proceedings. The plaintiff claimed that the location of the official liquidator's office at Hyderabad and the High Court's orders provided a cause of action to file the suit in Hyderabad. However, the High Court clarified that the cause of action must be based on the location where the transactions occurred and where the parties are situated. The court emphasized that the cause of action related to the transactions and agreements executed at Karimnagar, and not the administrative actions taken by the official liquidator or the High Court's orders.

3. Impact of the Location of the Official Liquidator and the High Court's Winding-up Orders on Jurisdiction:
The plaintiff-bank contended that the location of the official liquidator's office and the High Court's orders in the winding-up proceedings at Hyderabad provided jurisdiction to the Hyderabad court. The High Court rejected this argument, stating that the official liquidator's location and the High Court's statutory functions in the winding-up proceedings do not furnish a cause of action for the suit. The court noted that the official liquidator merely represents the first defendant-company and that the company's location at Karimnagar is material for determining jurisdiction. The court also highlighted that the statutory functions of the High Court in passing winding-up orders do not influence the territorial jurisdiction for filing the suit.

Conclusion:
The High Court allowed the revision petition, setting aside the order of the lower court, and held that the court at Hyderabad had no jurisdiction to try the suit. The court determined that the court at Karimnagar alone is competent to try the suit against the defendants, including the first defendant represented by the official liquidator. The court directed the lower court to return the plaint to the plaintiff for presentation to the proper court.