2015 (8) TMI 932 - HC - Companies Law

Territorial jurisdiction to entertain suit location of registered office of the company or location of carrying business or location of directors or location of regional office - Cause of action arising at principle place Whether Trial Judge was right in taking view that respondent having only regional office in Mumbai, part of cause of action must also arise in Mumbai Held that - Supreme court in case of Jindal Vijaynagar Steel 2006 (8) TMI 594 - SUPREME COURT OF INDIA rejected argument of reading explanation to Section 20 into Clause12 of Letters Patent, because section 120 of CPC expressly provides that Section 20 shall not apply to High Court in exercise of its original civil jurisdiction As per settled position, principles of CPC should nevertheless be applied, as far as possible, to proceedings of civil nature, even where application of CPC has been barred Since respondent was carrying on business within limits of jurisdiction of current Court through its regional office, it is not necessary to consider whether cause of action or any part thereof arose within territorial limits of current Court Requirements of clause 12 are clearly satisfied once defendant is stated to be carrying on its business through regional office within territorial limits Impugned order set aside and summary suit is maintainable under Clause12 of Letters Patent Decided in favour of Appellant.

Issues Involved:
1. Whether the defendant can be said to be carrying on business in Mumbai, where it does not have its principal place of business, but only a regional office.
2. Whether the learned Trial Judge was right in reading the explanation to Section 20 of the CPC into Clause 12 of the Letters Patent.

Issue-wise Detailed Analysis:

1. Carrying on Business in Mumbai:
The primary issue was whether the defendant, having its registered office in Bhavnagar, Gujarat, but a regional office in Mumbai, can be considered as carrying on business in Mumbai for the purposes of Clause 12 of the Letters Patent. The learned trial Judge had held that the defendant's principal place of business being in Bhavnagar meant it could not be considered as carrying on business in Mumbai unless a part of the cause of action arose there.

The appellate court referred to the case of Pratap Singh v. The Bank of America, where it was held that a defendant having a branch or regional office in Mumbai is deemed to be carrying on business in Mumbai. The court emphasized that for jurisdiction under Clause 12, it is irrelevant whether the cause of action arose wholly or in part within or outside Mumbai if the defendant carries on business in Mumbai. The court concluded that the defendant's regional office in Mumbai suffices to establish that it carries on business in Mumbai.

2. Applicability of Explanation to Section 20 of CPC to Clause 12 of Letters Patent:
The second issue was whether the explanation to Section 20 of the CPC, which requires part of the cause of action to arise in the jurisdiction where a corporation has a subordinate office, should be read into Clause 12 of the Letters Patent. The trial Judge had relied on this explanation to deny jurisdiction.

The appellate court referred to the Supreme Court judgment in Jindal Vijaynagar Steel (JSW Steel Ltd.) v. Jindal Praxair Oxygen Company Ltd., which clarified that Section 120 of the CPC explicitly excludes the applicability of Section 20 to the High Court in its original civil jurisdiction. The Supreme Court had rejected the argument that the principles of Section 20 of the CPC should be applied to Clause 12 of the Letters Patent, emphasizing that the Letters Patent is a special charter conferring jurisdiction on Chartered High Courts, and it operates independently of the CPC.

The appellate court, following the Supreme Court's ruling, held that the explanation to Section 20 cannot be applied to Clause 12 of the Letters Patent. Thus, the requirement that part of the cause of action must arise within the jurisdiction is not applicable when determining whether a defendant carries on business within the jurisdiction for the purposes of Clause 12.

Conclusion:
The appellate court allowed the appeal, setting aside the learned Single Judge's order. It held that since the defendant carries on business through its regional office in Mumbai, the requirements of Clause 12 of the Letters Patent are satisfied, and the Summary Suit is maintainable in the High Court of Judicature at Bombay. The registry was directed to register the plaint subject to compliance with all formalities.

← Previous Next →