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27/08/2021

Manupatra - Your Guide to Indian Law and Business and Policy

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments Choice of forum by agreement.—Parties, by agreement, cannot confer jurisdiction on a Court which does not possess it under the Code. Similarly, where there is only one Court having jurisdiction over the matter, parties cannot take away the jurisdiction by agreement as such agreement would be unlawful and void. A simple printed condition on the back of a bill or consignment note which restricts the jurisdiction to only one Court cannot be a rider on the jurisdiction of another competent Court to entertain the suit e.g., words like "All transactions are subject to the jurisdiction of Courts at 'X' " printed over bill, Hundi or letters does not affect the jurisdiction of the Courts at other places if they have otherwise jurisdiction over the dispute under the Code. Where goods are purchased from Germany, the Insurance policy cannot exclude the jurisdiction of Courts in India if the delivery of goods is made in India.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments 'Actually and voluntarily resides'.—The word 'actually' in the section means where the defendant physically resides and not mere constructive residence e.g., a person might be having his constructive residence at the place where his forefathers lived but if he is in job at another place where he lives physically for some years that place where he resides for his job is the place of actual residence and not the place of his forefathers where he does not live now, even if he goes there to attend marriages of his relatives. However, leaving the place only temporarily for going abroad for a few days does not oust the jurisdiction of the Court, even if no cause of action arose within India or within the limits of such ordinary residence of the defendant. Word 'voluntarily' in the section only excludes the residence under compulsion. But the expression "voluntarily or actually resides" refer only to natural persons and not the Government or corporations. It is necessary to make it clear that a person may have more than one dwelling houses. Both a place where one works and another ancestral place where he regularly goes and such place has not been permanently left by him can be places of his actual residence. Similarly, a woman may have her residence at two places one where she ordinarily lives with her husband and another the place of her parents if she regularly visits and stays there. But where her children are living separately with their father, jurisdiction regarding claim of their custody by mother would lie with the Court situated where the father and the children are living.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments Debtor must seek creditor.—It is the principle of common law that when a place of payment is not specified between the parties, the debtor must seek his creditor. The principle has also been incorporated in Section 49 of Contract Act which provides that where no place is fixed for performance of contract, it is the duty of promisor to request the promisee to specify a reasonable place for performance of contract. But, if a place is fixed under agreement, whether expressly or impliedly, the principle that debtor must seek his creditor would not apply. However, rule does not lose its importance merely because the amount of loan is disputed.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments 'Cause of action wholly or in part arises'.—The expression "cause of action" in its wider sense means necessary conditions for the maintenance of a suit but in its popular sense 'cause of action' means immediate occasion for action or those facts which make out a case of infringement of a right. In other words it means all those material facts which the plaintiff is required to allege and prove in order to succeed in a suit that is every fact regarding act or omission on the part of defendant which is necessarily to be proved by plaintiff in a Court of law. In fact a cause of action, within the contemplation of law is that which relates to a tenable plea for getting relief in a suit. Suit can be entertained by a Court within whose local jurisdiction the cause of action wholly or in part arises. As such more than one Court may have jurisdiction about the same matter in dispute. Where a tripartite agreement is entered at one place and the advance payment involved therein is to be made at another place, a suit in respect thereto can be filed in the Courts having local jurisdiction in either of the two places. But in case of a Government contract which is not commercial in character, the place, where only tenders are received for acceptance, will have jurisdiction. In a suit for damages for breach of contract, a cause of action can be said to have arisen partly at a place where contract was entered and partly at a place where breach of contract occurred. Revocation of a contract is also a part of cause of action and Court situated at such place will also have jurisdiction to try the suit. Similarly, non-payment of price being part of cause of action, the Court at a place where the payment was to be made will have jurisdiction over the dispute. In a contract which was entered into by correspondence, the place where acceptance was posted will have the jurisdiction not where the letter of acceptance received. Where a cheque payable on a Bank at 'X' was received at 'Y', in a suit for recovery of money on said cheque, by a drawer would lie at place 'Y' as a part of cause of action has arisen there. If a bill was discounted at Bombay, the Courts at Bombay will have the jurisdiction to try the suit in the matter. In the suits relating to international commercial contracts, the intention of parties is material factor for deciding which country has jurisdiction to try the suit. In an action for infringement of trademark or passing off, the cause of action arises only at a place where the product was sold on commercial basis to a distributor, wholesaler or retailer and not at a place where individual consumer purchased it. But where a trademark was registered in the name of plaintiff at a place 'M' and business runs throughout the country, a suit for injunction and damages on account of infringement of trademark can be positively instituted at place 'M'. Merely by delivering or serving a notice under Section 80 of the Code, no part of cause of action can be said to have arisen. Where a Government servant was employed by the State within its territory, a suit for pension is not maintainable in a Court in the home State of such employee which is www.manupatrafast.in.elibrary.nirmauni.ac.in/Search/dispCommentary.aspx?nActCompId=20191&actid=787&iPage=1&hText=

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different from the State where he served.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments Explanation to section.—If a cause of action arises within the local limits of a Court, Clause (c) of the section is attracted and the Explanation that the defendant corporation carries business at a particular place has no relevance. In other words for ascertaining the territorial jurisdiction, what is more material is the cause of action as compared to the registered office of the defendant corporation. The word 'corporation' used in the Explanation not only includes statutory corporations but also companies registered under the Indian Companies Act. Where a corporation has many branches or offices in India, a suit against such corporation can be instituted in any of the Courts having jurisdiction over either of such places notwithstanding that cause of action has not arisen there. But where not only plaintiff company is a foreign company but defendant-companies are also foreign companies and cause of action also arose beyond territorial limits of India, the suit filed in the matter cannot be said to be within jurisdiction of the local Court in India merely for the reason that plaintiff-company was in agreement with a Indian company to manage certain affairs.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises Comments "Carries on business or personally works for gain".—Word "business" has a wide meaning and it includes anything which is an occupation or duty which requires attention. The expression "carries on business" does not restrict its meaning to the work for gain or profit. The running of Railways by the Government is also a business carried by the Government. However, the construction work by Military Engineering Services for Indian Armed Forces is a sovereign function of the Union of India. Receipt by a priest of offerings by devotees in a shrine is not a business, and nor it is a work for gain. The expression "personally works for gain" refers only to individuals and not to the Government or public sector corporations e.g., a lawyer personally works for gain but a State does not. Where the defendant has opened its subordinate offices and a transaction is entered there out of which dispute has arisen a suit can be filed in the Court having local jurisdiction over such sub-office. In cases of the international commercial contracts, the intention of parties as to the acceptance of legal system' is material factor to decide which Court has the jurisdiction to try the dispute.

CODE OF CIVIL PROCEDURE, 1908 Section 20 - Other suits to be instituted where defendants reside or cause of action arises

ANNOTATION Amendments

Prior to Amendment

The Code of Civil Procedure (Amendment) Act, 1976 omitted Explanation I and Explanation II was substituted.

Omitted Explanation I use to read as under:

Effective Date Code of Civil Procedure (Amendment) Act, 1976 w.e.f. 1st February, 1977

Explanation I. -- where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where has such temporary residence.

Case Cited 1. Rajasthan High Court Advocate Assn. v. Union of India, MANU/SC/0827/2000: AIR 2001 SC 416. 2. Begum Sabiha Sultan v. Nawab Mohd. Mansur Ali Khan MANU/SC/1970/2007: AIR 2007 SC 1636; Harshad Chiman Lal Modi v. DLF Universal Ltd. and Anr. MANU/SC/0710/2005. 3. Arinits Sales Pvt. Ltd. v. Rockwell Plastic Pvt. Ltd. MANU/DE/9208/2007 4. Union of India v. Ladu Lal Jain, MANU/SC/0010/1963: AIR 1963 SC 1681. 5. Prahlad Rai Dalmia v. Union of India MANU/DE/0228/1984: AIR1986Delhi76. 6. M/s I. D. L. Chemicals v. Income-tax Officer, MANU/OR/0050/1986: AIR 1986 Ori 136. www.manupatrafast.in.elibrary.nirmauni.ac.in/Search/dispCommentary.aspx?nActCompId=20191&actid=787&iPage=1&hText=

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7. Board of Trustees v. Bombay Flour Mills, MANU/SC/0119/1995: AIR 1995 SC 577. 8. R. S. D. V. Finance Co. v. Shree Vallabh Glass Works, MANU/SC/0320/1993: AIR 1993 SC 2094. 9. Union of India v. Adani Exports Ltd., MANU/SC/0696/2001: AIR 2002 SC 126. 10. Official Trustee, West Bengal . v. Sachindra Nath Chatterjee . MANU/SC/0240/1968. 11. Mohanakumaran Nair v. Vijayakumaran Nair MANU/KE/0095/2006. 12. Munna Lal v. Paney Chand, MANU/RH/0064/1959: AIR 1959 Raj 166. 13. Muthia Chettiar v. Shanmugham, MANU/SC/0398/1968: AIR 1969 SC 552. 14. Sushil v. Union of India, AIR 1980 Del 43. 15. Pooja Bahadur v. Uday Bahadur, MANU/SC/0357/1999: AIR 1999 SC 1741. 16. Bakhtawar Singh v. Union of India, MANU/DE/0179/1982: AIR 1983 Del 201. 17. Union of India v. Ladu Lal Jain, MANU/SC/0010/1963: AIR 1963 SC 1681. 18. M/s. Bakhtawar Singh v. Union of India, MANU/SC/0298/1988: AIR 1988 SC 1003 19. Standard & Co. v. Jogendra, AIR 1959 Cal 461. 20. N. H. P. C. v. M/s. Sova Enterprises, MANU/WB/0128/1959: AIR 1991 Cal 324 21. N.T.P.C. v. Singer Company, AIR 1993 SC 998 : 1992 (2) Comp LJ 256 (SC). 22. Prahlad Rai Dalmia v. Union of India MANU/DE/0228/1984: AIR1986Delhi76; Also see Gupta Sanitary Stores v. Union of India . MANU/DE/0235/1984: AIR 1985 Delhi 122; Bakhtawar Singh Balkrishan v. Union of India MANU/DE/0179/1982: AIR 1983 Delhi 201. 23. Chennimalai Yarns Pvt. Ltd v. S. Chandrasekar MANU/TN/2372/2005. 24. Manoramabai Moreshwar v. Ibrahim Khan Bismilla Khan. MANU/MH/0044/1969: AIR1969Bom366; Narayan v. Secretary of State (1906) 8 Bom. L.R. 543 : S.C. I.L.R. 30 Bom. 570. 25. Union of India v. Ladulal Jain MANU/SC/0010/1963. 26. B.G. Guttal v. R.R. Diwakar MANU/KA/0034/1977: AIR1977Kant211. 27. The Fertilizer Corporation of India Ltd. v. Ranjit Kumar Mishra MANU/OR/0036/1980: AIR 1980 Ori 152. 28. Life Insurance Corpn. v. Iqbal, MANU/JK/0001/1984: AIR 1984 J&K 1. 29. Ram Awalamb v. Jata Shanker, MANU/UP/0100/1969: AIR 1969 All 526. 30. Golden Peacock Overseas Ltd. v. Ranjit Industries MANU/DE/7609/2007 31. Rajesh Coach Builders v. Shah Nagindas Machchram 2007 (3) Bom CR 758 32. State of Bihar v. Oriental Coal Co., MANU/SC/0630/1971: AIR 1972 SC 378. 33. Natasha Sondur v. Union of India MANU/KA/0212/2005 34. Union of India v. Adnani Exports Limited MANU/SC/0696/2001 35. Calcutta Cosmopolitan Club Ltd. v. Bhanwarlal Bhandari MANU/WB/0268/2003 36. North Eastern Electricity Power Corporation Ltd. v. Lakhi Enterprise MANU/GH/0009/1992: AIR 1992 Gau 42 37. East India Consortium v. Union of India MANU/GH/0274/2001 38. M/s. Angile Insulations v. M/s. Davy Ashmore India Ltd. MANU/SC/0338/1995: AIR1995SC1766; In A.B.C Laminart Pvt. Ltd. v. A.P. Agencies, Salem MANU/SC/0001/1989: 1989 J 2 SCC 163.

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39. World Tanker Carrier Corporation v. SNP Shipping Services Pvt. Ltd. MANU/SC/0296/1998: AIR 1998 SC 2330. 40. Mohannakumaran Nair v. Vijayakumaran Nair MANU/SC/8021/2007: 2007 (12) SCALE 130 41. Taneja Skins Co. Pvt. Ltd. v. Bharath Skins Corporation MANU/DE/1366/2001: AIR 2002 Delhi 179. 42. State of Gujarat v. Sarati Devi, MANU/SC/0247/1996: AIR 1996 SC 937. 43. Shri J.C. Thind, v. Union of India (UOI) MANU/UP/1309/2005; Kusum Ingots & Alloys Ltd. v. Union of India MANU/SC/0430/2004. 44. P.S.R. Krishna v. Union of India. MANU/AP/1023/2006. 45. Hari Gokal Jewellers v. Satish Kapur MANU/DE/8540/2006. 46. Veena Enterprises Ltd v. Greater Noida Industrial Development Authority MANU/DE/2921/2005. 47. Matanhella Brothers v. Shri Mahabir Industries Pvt. Ltd. MANU/BH/0011/1970: AIR 1970 Pat 91; Kirloskar Bros. Ltd., Indore v. Engineering Machinery Mart, Narsinghpur, M.P. MANU/MP/0021/1982: AIR 1982 MP 75. 48. Shakti Cement Co. v. FACT, MANU/KE/0015/1990: AIR 1990 Ker 86. 49. Union of India v. Ajit Mehta, MANU/MH/0007/1990: AIR 1990 Bom 45. 50. A. B. C. Laminart (P.) Ltd. v. A. P. Agencies, MANU/SC/0001/1989: AIR 1989 SC 1239 51. Sapan Consultants v. Rashtriya Chemicals, AIR 1982 Del 157. 52. Zila Parishad v. Shanti, MANU/UP/0164/1965: AIR 1965 All 590. 53. American Pipe Co. v. State, AIR 1983 Cal 186. 54. Dena Bank v. Irons Ltd., AIR 1987 Bom 227 55. N. T. P. C. v. Singer Company, MANU/SC/0146/1993: AIR 1993 SC 998 56. Karuppan Chettiar v. Somasundaram Chettiar MANU/TN/0169/1961. 57. H. P. Horticulture v. Mohan Meakins Ltd. MANU/PH/0147/1981: AIR 1981 P&H 117. 58. Amrutanjan Ltd. v. Ashwin Fine Chemicals, MANU/TN/0050/1991: AIR 1991 Mad 277 59. Kuldeep Singh v. Union of India . MANU/DE/0165/1985: AIR 1986 Delhi 56. 60. INCOMM Tele Limited v. Bharat Sanchar Nigam Limited MANU/AP/0693/2005. 61. Hakam Singh v. Gammon (India) Ltd., MANU/SC/0001/1971: AIR 1971 SC 740. 62. M/s. Patel Roadways Limited, Bombay v. M/s. Prasad Trading Company MANU/SC/0280/1992: (1991) 4 SCC 270; North Eastern Electricity Power Corporation Ltd. v. Lakhi Enterprise MANU/GH/0009/1992: AIR1992Gau42; Life Insurance Corporation of India v. Smt. Iqbal Kaur MANU/JK/0001/1984: AIR 1984 J&K 1. 63. O. N. G. C. v. Raj Engg MANU/WB/0033/1987: AIR 1987 Cal 165 : 1987 (1) Cal HN 37. 64. A. B. C. Laminart (P.) Ltd. v. A. P. Agencies, MANU/SC/0001/1989: AIR 1989 SC 1239. 65. S. E. Roadways v. United India Insurance Co., MANU/KE/0009/1991: AIR 1991 Ker 41. 66. National Starch & Chemical v. Weikfield Products, MANU/KE/0062/1990: AIR 1990 Ker 291; Sponge Iron v. Andhra Steel, MANU/AP/0157/1989: AIR 1989 AP 206 at 208; East India Transport Co. v. National Insurance Co., MANU/AP/0010/1991: AIR 1991 AP 53 at 60 (FB). 67. Wruttembergische v. Corommondel C. Industry, MANU/AP/0016/1990: AIR 1990 AP 97. 68. Pacific Refractories Ltd. v. Stein Heurtey India Projects Pvt. Ltd. MANU/MH/0237/2006. www.manupatrafast.in.elibrary.nirmauni.ac.in/Search/dispCommentary.aspx?nActCompId=20191&actid=787&iPage=1&hText=

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69. Ranjana Nagpal alias Ranjana Malik v. Devi Ram MANU/HP/0040/2001. 70. New Moga Transport Company v. United India Insurance Co. Ltd.. MANU/SC/0398/2004. 71. New Moga Transport Company v. United India Insurance Co. Ltd. AIR 2004 SC 2154. 72. The Indian Performing Right Society Ltd. v. Sanjay Dalia 155 (2008) DLT 164. 73. Central Ware Housing Corpn. v. Central Bank, MANU/AP/0049/1973: AIR 1973 AP 387. 74. Patel Roadways Ltd, Bombay v. Prasad Trading Company AIR 1992 SC 1514, Rapti Contractors v. Reliance Energy Ltd. MANU/DE/0144/2009 75. Kajaria Exports v. Union of India, MANU/WB/0015/1985: AIR 1985 Cal 70. 76. Hakam Singh v. Gammon (India) Ltd., MANU/SC/0001/1971: AIR 1971 SC 740. 77. Surinder Singh v. Bengal National Textiles, AIR 1978 P & H 156 : 79 Pun LR 555. 78. Milkfood Limited v. Union Bank of India DE-2007-1144. 79. Sanghi Transport Limited rep. by its General Manager v. Oriental Insurance Company 2007 (4) CTC 496. 80. M/s. Patel Roadways Limited, Bombay v. M/s. Prasad Trading Company MANU/SC/0280/1992: (1991) 4 SCC 270. 81. World Tanker Carrier Corpn. v. S.N.P. Shipping Services Pvt. Ltd MANU/SC/0296/1998: AIR 1998 SC 2330 (2338). 82. Union of India (UOI) v. State of Rajasthan MANU/SC/0021/1984: AIR 1984 SC 1675. 83. Top of Form State of Bihar v. Union of India MANU/SC/0062/1969: AIR 1970 SC 1446. 84. Sunder Lal v. Lal Narain MANU/UP/0195/1955: AIR 1955 All 669. 85. Mahalaxmi Bank v. Chhotanagpur Co., MANU/WB/0118/1955: AIR 1955 Cal 413. 86. State v. Raha Ltd., MANU/WB/0079/1964: AIR 1964 Cal 418. 87. Sunder Lal. v. Jai Narain MANU/UP/0195/1955: AIR1955All669. 88. State of Punjab v. A.K. Raha (Engineers) Ltd. MANU/WB/0079/1964: AIR1964Cal418 89. ABC Laminart v. A.P. Agencies, MANU/SC/0001/1989. 90. Sita Ram v. Ram Chandra, 26 Pun Re 1918: AIR 1918. Lah 52 (A). SYNOPSIS 1. Scope ............................................ 182 2. 'Actually and voluntarily resides'.. 183 3. "Carries on business or personally works for gain" ............................ 185

(b) Where two or more Courts may have jurisdiction .................... 189

6. Choice of forum by agreement .... 191 7. Explanation to section ................ 192

4. Section 20(b) ................................ 185

8. Suits before the Supreme Court 194

5. Cause of action wholly or in part arise .............................................. 186

9. Debtor must seek creditor ........ 195

(a) Principles regarding www.manupatrafast.in.elibrary.nirmauni.ac.in/Search/dispCommentary.aspx?nActCompId=20191&actid=787&iPage=1&hText=

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cause of action ..................................... 188 1. Scop...