1976 (2) TMI 108 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the High Court of Bombay to entertain and try the suit.
2. Submission to jurisdiction by the defendant-bank.
3. Application of private international law in determining jurisdiction over a foreign corporation.

Detailed Analysis:

1. Jurisdiction of the High Court of Bombay to entertain and try the suit:
The primary issue framed for determination was whether the High Court of Bombay had jurisdiction to entertain and try the suit filed by the plaintiff. The plaintiff argued that the defendant-bank, having a principal place of business in Bombay, could be sued in this court under clause 12 of the Letters Patent of the High Court of Bombay. However, it was established that no part of the cause of action arose within the jurisdiction of this court. The court held that the mere fact that the defendant-bank had a branch office in Bombay did not confer jurisdiction on this court for a cause of action that arose entirely outside India.

2. Submission to jurisdiction by the defendant-bank:
The plaintiff contended that the defendant-bank had submitted to the jurisdiction of the court by its actions both before and after the filing of the suit. The plaintiff argued that the clause in the indemnity agreements allowing suits to be filed in California or Punjab, the registration of the defendant-bank with the Registrar of Companies, and the conduct of business in Bombay amounted to submission to jurisdiction. The court rejected this argument, stating that the clause in the indemnity agreements applied only to suits to enforce the indemnity and did not confer any right to file the present suit in Bombay. The registration with the Registrar of Companies was a legal requirement and not a voluntary submission to jurisdiction. Additionally, the court referenced the Supreme Court's decision in Bahrein Petroleum Co Ltd. v. P. J. Pappu, which clarified that filing a written statement addressing merits while objecting to jurisdiction did not constitute a waiver of the jurisdictional objection.

3. Application of private international law in determining jurisdiction over a foreign corporation:
The court examined whether a foreign corporation, which has a branch office in India, could be sued in India for a cause of action that arose entirely outside the country. The court noted that the English common law rule, which bases jurisdiction on the service of the writ, was not applicable in India. The court emphasized that both clause 12 of the Letters Patent and section 20 of the Code of Civil Procedure embodied provisions of municipal law dealing with domestic jurisdiction and did not extend to foreign corporations for causes of action arising abroad. The court proposed adopting a rational rule of private international law consistent with Explanation II to section 20 of the Code of Civil Procedure, which would allow jurisdiction over foreign corporations only for causes of action arising at the place where their office is located. Consequently, the court held that it had no jurisdiction over the defendant-bank in the present case, as the entire cause of action arose outside India.

Conclusion:
The court concluded that it did not have jurisdiction to entertain or try the suit filed by the plaintiff. The preliminary issue of jurisdiction was answered in the negative, and the plaintiff's suit was dismissed with costs.