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of <h1>Gauhati Court affirms jurisdiction in money suit against Union of India & Northern Frontier Railway</h1> <h3>Union of India (UOI) and Ors. Versus Ladu Lal Jain</h3> Union of India (UOI) and Ors. Versus Ladu Lal Jain - 1963 AIR 1681 (SC) Issues:Jurisdiction of the Court under section 20 of the Code of Civil Procedure in a money suit against the Union of India and the Northern Frontier Railway.Analysis:The case involved an appeal against the High Court of Assam's order rejecting a revision application challenging the jurisdiction of the Additional Subordinate Judge, Gauhati, to try a money suit. The suit was filed by the plaintiff-respondent against the Union of India and the Northern Frontier Railway for non-delivery of goods consigned to the plaintiff's firm. The defendants contested the jurisdiction of the Gauhati Court, arguing that neither of the railway stations involved was within its jurisdiction, and the cause of action did not arise in Assam. The Trial Court and the High Court relied on the interpretation of section 20 of the Code, which determines the territorial jurisdiction of a Court based on the defendant's residence, place of business, or where the cause of action arises.The appellants contended that the running of railways by the Union of India did not amount to carrying on business, challenging the jurisdiction of the Gauhati Court under section 20 of the Code. The Court analyzed the nature of government activities in relation to business, citing precedents where activities carried out by the government were considered business if undertaken by private individuals for profit. The Court emphasized that the profit motive was not a necessary element for an activity to be considered business, and the nature of the activity determined its character.The Court referred to constitutional provisions allowing the State to engage in trade or business, indicating that running railways was a business activity. It distinguished between activities carried out for public service and commercial activities with a profit motive. The Court held that commercial activities conducted by the government for profit could not be classified as public service and affirmed that the Railways were presumed to be run on a profit basis. The judgment concluded that the Union of India carried on the business of running railways and could be sued in the Gauhati Court's jurisdiction where one of its railway headquarters was located.In summary, the judgment clarified the interpretation of section 20 of the Code in determining the territorial jurisdiction of a Court in a money suit against the Union of India and the Northern Frontier Railway. It established that the government's running of railways constituted a business activity, and the profit motive was not a prerequisite for an activity to be considered business. The Court affirmed the jurisdiction of the Gauhati Court based on the location of the railway headquarters and dismissed the appeal with costs.
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