http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8

CASE NO.:

Appeal (civil) 6320-6321 of 2000

PETITIONER:

UNION OF INDIA & ORS.

Vs.

RESPONDENT:

ADANI EXPORTS LTD. & ANR.

DATE OF JUDGMENT: 31/10/2001

BENCH:

N. Santosh Hegde & Ashok Bhan

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 appellants 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 since no part of the cause of action based on 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 a 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.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8

Per contra, Mr. Ashok Desai, learned senior counsel

appearing for the respondents, contended that it is incorrect to say

that no part to 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 records, we are of the considered

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 of Civil Procedure Code by deciding the question of jurisdiction

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 territorial jurisdiction of the High Court. Contentions regarding

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 said Pass Book shall effect 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

jurisdiction of this Honourable Court. This

Honourable Court has therefore, jurisdiction to

entertain, try and dispose of this Petition.

The appellants herein while opposing the civil applications

had specifically pleaded that the courts at Ahmedabad did not have

the territorial jurisdiction to adjudicate upon the claims of the

respondents since no part of the cause of action has arisen within

the territorial jurisdiction of the High Court at Ahmedabad. In their

statement of objection rebutting the pleadings of the respondents,

the appellants had contended thus :-

With reference to para 16 of the petition, I

say that since the Pass Book Licence was issued at

Chennai by the designated authority at Chennai

and the transactions concerning the said pass book

were made from Chennai port and cause of action

is lying at Chennai, it is in order that the case is

transferred to the jurisdiction of the Honble High

Court of Madras at Chennai notwithstanding the

petitioners having their office at Ahmedabad from

where the export import planning work was being

executed.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8

From the above, it is seen that the appellants had taken a

serious objection as to the territorial jurisdiction of the High Court

at Ahmedabad, contending that it is the High Court at Chennai

which alone had the jurisdiction to entertain the applications as no

part of the cause of action had arisen within the territorial

jurisdiction of the High Court at Ahmedabad. Hence, the

appellants had prayed for transfer of the case to the High Court at

Chennai.

We will now consider how the High Court dealt with this

issue. Having noticed the objection filed by the appellants in

regard to its territorial jurisdiction, the High Court following the

judgment of this Court in the case of Union of India v. Oswal

Woollen (supra) held that in view of the observations of this Court

in the said case, a civil application can be filed at the place where

the registered office of the Company is situated and having regard

to the fact that the registered office of the respondent-Company is

situated at Ahmedabad, it accepted the argument of the learned

counsel for the respondent that it is not necessary to discuss this

issue any further, meaning thereby it accepted the contention of the

respondents counsel that the High Court at Ahmedabad had the

territorial jurisdiction to decide the application.

We are unable to accept this finding of the High Court. The

view of the High Court that this Court in the case of Oswal

Woollen (supra) had held that the existence of the registered office

of a Company would ipso facto give a cause of action to the High

Court within whose jurisdiction the registered office of such

Company is situated, is not correct. As a matter of fact, in the case

of Oswal Woollen (supra), the question of territorial jurisdiction in

the sense with which we are concerned now, did not arise at all. In

that case, the observations of the Court were as follows :

Having regard to the fact that the registered

office of the Company is at Ludhiana and the

principal respondents against whom the

primary relief is sought are at New Delhi, one

would have expected the writ petition to be

filed either in the High Court of Punjab and

Haryana or in the Delhi High Court. The writ

petitioners, however, have chosen the Calcutta

High Court as the forum perhaps because one

of the interlocutory reliefs which is sought is in

respect of a consignment of beef tallow which

has arrived at the Calcutta Port. We do not

desire to probe further into the question

whether the writ petition was filed by design or

accident in the Calcutta High Court when the

office of the Company is in the State of Punjab

and all the principal respondents are in Delhi.

It is in that context of noticing the motive of the parties

concerned in that case in choosing a forum, the above observation

as to the place of the registered office of the Company was

incidentally made in the judgment. Having perused the judgment in

Oswals case (supra), we are of the opinion that that judgment is

no authority to decide as to the requirement of law in regard to

establishing the territorial jurisdiction of a court. We must say in

all fairness, Mr. Desai, learned senior counsel, has not placed any

reliance on this judgment nor on the basis of the finding of the

High Court in this case in regard to its territorial jurisdiction. He,

however, contends that from the facts narrated in the civil

applications, more so in Paragraph 16 of the application, it is

crystal clear that a substantial part of the cause of action has arisen

within the jurisdiction of the High Court at Ahmedabad. He

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8

pointedly referred to the bundle of facts mentioned in Paragraph 16

of the application as also the additional fact pleaded in Paragraph 7

of the application in regard to the respondents having furnished a

bank guarantee as also a Bond in favour of the appellants. He

pointed out that the bank guarantee and the Bond were executed by

the respondents at Ahmedabad, hence, at least on this count a part

of the cause of action has arisen at Ahmedabad.

We will now examine whether any of the facts mentioned in

Paragraph 16 of the applications or for that matter in the entire

special civil applications would give rise to any part of the cause of

action at Ahmedabad, at least for the purpose of conferring

territorial jurisdiction on the High Court at Ahmedabad. At this

stage, it is relevant to mention that it is an admitted fact that none

of the respondents in the civil applications (Appellants herein) are

stationed at Ahmedabad. It is also an admitted fact that the pass-

book in question, benefit of which the respondent is seeking in the

civil applications, is issued by an authority who is stationed at

Chennai. The Designated Authority who is the competent person in

respect of the matters concerning the Pass Book Scheme and who

discharges various functions under the Scheme is also stationed at

Chennai. The entries in the pass-book under the concerned Scheme

are to be made by the authorities at Chennai. The export of prawn

made by the respondents and the import of the inputs benefit of

which the respondents are seeking in the applications, also will

have to be made through the same Port i.e. Chennai.

Inspite of the above admitted facts, the respondents herein

plead that as per the plea raised by them in paragraph 16 of the

special civil application, the following facts give rise to the cause

of action conferring territorial jurisdiction on the Court at

Ahmedabad. They are :-

(i) the respondents carry on their business of export

and import from Ahmedabad ;

(ii) their orders of export and import are placed from

and are executed at Ahmedabad ;

(iii) documents and payments for export and import are

sent/made at Ahmedabad ;

(iv) 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 ;

(v) non-granting and denial of utilisation of the credit

in the pass-book will affect the business of the

respondents at Ahmedabad ;

(vi) respondents have executed a bank guarantee

through their bankers at Ahmedabad as well as a

Bond at Ahmedabad.

Though it is also contended in para 16 of the application that

the appellants have their office at Ahmedabad, that contention has

not been pressed since it is clear from the records that none of

these appellants have their office at Ahmedabad. De hors this fact,

if we take into consideration the other facts enumerated

hereinabove in support of the cause of action pleaded by the

respondents, it is seen that none of these facts is in any way

connected with the relief sought for by the respondents in their

civil applications so as to constitute the cause of action at

Ahmedabad.

Article 226(2) of the Constitution of India which speaks of

the territorial jurisdiction of the High Court reads : -

The power conferred by clause (1) to issue

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8

directions, orders or writs to any Government,

authority or person may also be exercised by

any High Court exercising jurisdiction in

relation to the territories within which the cause

of action, wholly or in part, arises for the

exercise of such power, notwithstanding that

the seat of such Government or authority or the

residence of such person is not within those

territories.

It is clear from the above constitutional provision that a

High Court can exercise the jurisdiction in relation to the territories

within which the cause of action, wholly or in-part, arises. This

provision in the Constitution has come up for consideration in a

number of cases before this Court. In this regard, it would suffice

for us to refer to the observations of this Court in the case of Oil

and Natural Gas Commission v. Utpal Kumar Basu and Ors. (1994

4 SCC 711 at 713) wherein it was held :

Under Article 226 a High Court can exercise the

power to issue directions, orders or writs for the

enforcement of any of the fundamental rights

conferred by Part III of the Constitution or for

any other purpose if the cause of action, wholly

or in part, had arisen within the territories in

relation to which it exercises jurisdiction,

notwithstanding that the seat of the Government

or authority or the residence of the person against

whom the direction, order or writ is issued is not

within the said territories. The expression cause

of action means that bundle of facts which the

petitioner must prove, if traversed, to entitle him

to a judgment in his favour by the Court.

Therefore, in determining the objection of lack of

territorial jurisdiction the court must take all the

facts pleaded in support of the cause of action

into consideration albeit without embarking upon

an enquiry as to the correctness or otherwise of

the said facts. Thus the question of territorial

jurisdiction must be decided on the facts pleaded

in the petition, the truth or otherwise of the

averments made in the petition being

immaterial.

It is seen from the above that in order to confer jurisdiction

on a High Court to entertain a writ petition or a special civil

application as in this case, the High Court must be satisfied from

the entire facts pleaded in support of the cause of action that those

facts do constitute a cause so as to empower the court to decide a

dispute which has, at least in-part, arisen within its jurisdiction. It

is clear from the above judgment that each and every fact pleaded

by the respondents in their application does not ipso facto lead to

the conclusion that those facts give rise to a cause of action within

the courts territorial jurisdiction unless those facts pleaded are

such which have a nexus or relevance with the lis that is involved

in the case. Facts which have no bearing with the lis or the dispute

involved in the case, do not give rise to a cause of action so as to

confer territorial jurisdiction on the court concerned. If we apply

this principle then we see that none of the facts pleaded in

Paragraph 16 of the petition, in our opinion, fall into the category

of bundle of facts which would constitute a cause of action giving

rise to a dispute which could confer territorial jurisdiction on the

courts at Ahmedabad.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8

As we have noticed earlier, the fact that the respondents are

carrying on the business of export and import or that they are

receiving the export and import orders at Ahmedabad or that their

documents and payments for exports and imports are sent/made at

Ahmedabad, has no connection whatsoever with the dispute that is

involved in the applications. Similarly, the fact that the credit of

duty claimed in respect of exports that were made from Chennai

were handled by the respondents from Ahmedabad have also no

connection whatsoever with the actions of the appellants impugned

in the application. The non-granting and denial of credit in the

pass-book having an ultimate effect, if any, on the business of the

respondents at Ahmedabad would not also, in our opinion, give

rise to any such cause of action to a court at Ahmedabad to

adjudicate on the actions complained against the appellants.

Mr. Ashok Desai, however, pleaded that the respondents

have executed a bank guarantee and a Bond at Ahmedabad which

in law the respondents are entitled to get cancelled through the

intervention of the courts at Ahmedabad. This fact having been

specifically pleaded in the application and a relief being sought for

that purpose, would definitely give rise to a part of cause of action

at Ahmedabad, but on behalf of the appellants, it is pointed out to

us that the subject-matter involved in the applications pertains to

the denial of the benefit of the import-exports scheme which ended

w.e.f. 31.3.1997 while the bank guarantee and the Bond in

question were not part of the Pass Book Scheme which is the

subject-matter of the special civil applications with which we are

concerned now. Execution of the bank guarantee was not with

reference to the demand of the respondents to give it due credit in

the pass book but the same was executed much later than

31.3.1997 in regard to certain disputes pending with the customs

authorities in regard to the valuations made by the said authorities

as to the value of the export and import of prawn and its inputs. It

was also pointed out that these customs authorities, as a matter of

fact, are not even parties to these special civil applications. Thus, it

is contended that the factum of the respondents having executed a

bank guarantee and a Bond at Ahmedabad will have no direct

nexus or bearing on the disputes involved in these applications. It

is pointed out to us by learned counsel for the appellants that in

regard to the correctness of the valuation, separate proceedings

have been initiated and against the findings in those proceedings,

separate appeals are pending in this Court, therefore, the bank

guarantee and the Bond executed by the respondents, as a matter of

fact, have nothing to do with the cause of action that may arise to

challenge the denial of the benefit of the Pass Book Scheme.

Inclusion of this totally extraneous claim in the present writ

petition cannot be construed as being a factor giving rise to a cause

of action. In the case of ONGC (supra), this Court negatived the

contentions advanced on behalf of the respondents therein that

either the acquisition of knowledge made through media at a

particular place or owning and having an office or property or

residing at a particular place, receiving of a fax message at a

particular place, receiving telephone calls and maintaining

statements of accounts of business, printing of letterheads

indicating branch offices of the firm, booking of orders from a

particular place are not the factors which would give rise to either

wholly or in part cause of action conferring territorial jurisdiction

to courts. In the said case, this Court also held that the mere service

of notice is also not a fact giving rise to a cause of action unless

such notice is an integral part of the cause of action.

Mr. Desai, however, placed reliance on a recent judgment of

this Court in Navinchandra v. State of Maharashtra (supra) wherein

this Court had held that a part of the cause of action had arisen

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8

within the jurisdiction of the Bombay High Court. It is to be noted

that in the said petition, among other reliefs, the writ petitioner had

prayed for a writ of mandamus to the State of Meghalaya to

transfer the investigation to Mumbai Police as also allegations of

mala fides were made as to the filing of the complaint at Shillong.

It was also averred in that case that the petitioner was primarily

aggrieved by the criminal complaint filed at Meghalaya because

the bulk of the investigation was carried on at Bombay. The said

writ petition was dismissed by the Bombay High Court solely on

the ground that since the complaint in question was filed in

Shillong in the State of Meghalaya and the petitioner had sought

for quashing of the said complaint, such a writ petition was not

maintainable before the High Court of Bombay. According to this

Court, that finding was given without taking into consideration the

other alternative prayers in the writ petition to which we have

made reference hereinabove, which prayers according to this

Court, gave rise to a cause of action to move the High Court at

Bombay for relief. Therefore, in our opinion, this judgment does

not help the writ petitioner to justify its action in filing a writ

petition before the Gujarat High Court. That apart, we must notice

that the said judgment is delivered in a matter involving criminal

dispute and consequences of such dispute have a direct bearing on

the personal freedom of a citizen guaranteed under Article 21 of

the Constitution. Therefore, the consideration that arises in

deciding the question of territorial jurisdiction in cases involving

criminal offences may not always apply to cases involving civil

disputes like the special civil applications with which we are

concerned. Mr. Desai then urged that since the High Court has

elaborately dealt with the merits of the case and given a finding in

favour of the respondents in the interest of justice, we should not

interfere with the said finding and uphold the same. We are not

inclined to accept this argument of the learned counsel because the

appellants herein had taken objection to the entertainment of the

special civil applications by the Gujarat High Court on the ground

of lack of territorial jurisdiction in the first instance itself and the

same was rejected, according to us, wholly on unsustainable

grounds. As a matter of fact, the appellant on the entertainment of

the civil application and grant of interim order, had challenged the

said order on the ground of want of jurisdiction by way of a civil

appeal in this Court which appeal is pending consideration by this

Court, therefore, the objection having been taken at the first

instance itself and the court having not proceeded to decide this

question of territorial jurisdiction as contemplated under Order

XIV Rule 2 CPC, we think we cannot deny relief to the appellant

solely on the ground that the High Court has chosen to proceed to

decide the case on merit. This being a judgment of a court having

no territorial jurisdiction, the judgment has to be set aside.

However, the special civil applications cannot be dismissed on this

ground because it has been the contention of the appellants

themselves in the objections filed by them before the High Court,

that these applications ought to be transferred to the High Court at

Chennai, in the interest of justice, we agree with this plea.

For the reasons stated above, these appeals succeed and the

same are hereby allowed. The impugned judgment is set aside. We

further direct that Special Civil Application Nos. 3282/99 and

3279/99 filed by the respondents are hereby directed to be

transferred to the High Court of Madras at Chennai forthwith and

on receipt of the papers, we request the Chief Justice of the High

Court of Madras to place them before an appropriate Bench for

disposal in accordance with law. We are also of the opinion that

since the parties have already undergone one round of litigation

before the High Court at Ahmedabad and thereafter in these

appeals before us, it is appropriate to request the High Court to

dispose of these appeals as early as possible. The appeals are,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 8

accordingly, allowed.

J.

(N Santosh Hegde)

..J.

October 31, 2001. (Ashok Bhan)