Territorial jurisdiction and government business: running railways counts as business for forum jurisdiction under CPC.

For territorial jurisdiction under Section 20 CPC, the test is whether the defendant carries on business at the forum, and that expression is not confined to private persons. The Supreme Court noted that Articles 298 and 19(6) recognise business activity by the Union and the States, so the character of the activity, not the identity of the actor, is decisive. Running railways is a commercial activity capable of being carried on by private persons and does not cease to be business merely because the Union conducts it. Profit motive is not essential for this purpose, and the railway headquarters therefore supported territorial jurisdiction.

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Issues: Whether the Union of India carries on business by running railways so as to attract territorial jurisdiction under Section 20 of the Code of Civil Procedure at the place where a railway headquarters is situated.

Analysis: Territorial jurisdiction under Section 20 of the Code of Civil Procedure depends, inter alia, on where the defendant carries on business. The expression is not confined to private persons. Article 298 of the Constitution of India recognises the executive power of the Union and the States to carry on trade or business, and Article 19(6) similarly contemplates business carried on by the State. The character of the activity, and not the identity of the actor, determines whether it is business. Running railways is a commercial activity of the kind that can be carried on by private persons, and there is no legal basis for treating it as ceasing to be business merely because the Union conducts it. Profit motive is not an essential ingredient of business for this purpose.

Conclusion: The Union of India carries on the business of running railways, and the Gauhati Court had territorial jurisdiction because the railway headquarters was within its local limits.

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