2014 (5) TMI 1231 - HC - Indian Laws

Delhi HC declines jurisdiction over loan recall challenge citing insufficient territorial connection under Article 226(2)

Delhi HC dismissed petitioner's application seeking restoration of writ petition challenging loan recall notice. Court held that mere location of ... Territorial Jurisdiction of High Court - Doctrine of forum convenience - Cause of action arising in territorial jurisdiction or not - Seeking that the order granting it leave to withdraw the writ petition be recalled and the same be restored for being heard on merits - HELD THAT:- After the insertion of Clause (1-A) (renumbered as Clause (2), the jurisdiction of a High Court can be invoked if the cause of action arises, wholly or in part, within the territorial jurisdiction of that court. However, the expression 'cause of action' has not been defined in the Constitution or in the Code of Civil Procedure. As observed by the Supreme Court in the case of EASTERN COALFIELDS LTD. VERSUS KALYAN BANERJEE [2008 (3) TMI 480 - SUPREME COURT], 'cause of action', for the purpose of Article 226(2) of the Constitution of India, for all intent and purport, must be assigned the same meaning as envisaged under Section 20(C) of the Code of Civil Procedure. It means a bundle of essential facts that are required to be proved. However, the entire bundle of facts pleaded, need not constitute a cause of action and what is necessary to be proved is such material facts based whereon a writ petition can be allowed. Recently, a Full Bench of five Judges of this Court in the case of M/S. STERLING AGRO INDUSTRIES LTD. VERSUS UNION OF INDIA & ORS., JAN CHETNA VERSUS MINISTRY OF ENVIRONMENT AND FORESTS & ORS., MANU JAIN VERSUS SMT. NEERJA SHAH & ORS., M/S BAFNA HEALTHCARE PVT. LTD. & ORS. VERSUS COMMISSIONER OF CENTRAL EXCISE DELHI-IV & ORS., THE COMMISSIONER OF TRADE TAX & ANR. VERSUS M/S. RICOH INDIA LTD. & ORS. [2012 (6) TMI 76 - DELHI HIGH COURT - LB], had the occasion to examine the doctrine of forum convenience and the concept of cause of action in view of conflicting judgments on the issue referred to them. After examining a number of decisions of the Supreme Court on this issue including the cases of NASIRUDDIN VERSUS STATE TRANSPORT APPELLATE TRIBUNAL [1975 (8) TMI 126 - SUPREME COURT], KISHORE RUNGTA VERSUS PUNJAB NATIONAL BANK [2001 (3) TMI 944 - BOMBAY HIGH COURT], ALCHEMIST LIMITED VERSUS STATE BANK OF SIKKIM [2007 (3) TMI 382 - SUPREME COURT], the Full Bench observed The said doctrine of forum non-convenience can be invoked when the court deciding to refrain from exercising its jurisdiction, is vested with the jurisdiction to decide the case. Coming to the facts of the instant case and taking into consideration the relevant factors that must weigh with the court when deciding the issue of territorial jurisdiction, it is considered necessary to peruse the averments made in the writ petition. A plain reading of the present petition would reveal that the entire focus of the petitioner is on the Loan Agreement dated 7.11.2008 executed with the respondent/Corporation at Jaipur, and the Sub-Lease Deed dated 11.1.2008 executed with the sub-lessors in respect of the project land situated at Udaipur. The petitioner's stand is that the respondent/Corporation had wrongfully issued the impugned Loan Recall Notice dated 20.1.2014, when no sub-lease rental was payable by it under the Sub-Lease Deed and at no stage was it in default of the Loan Agreement or the Sub-Lease Deed. In the present case, the mere location of the registered office of the respondent/Corporation in Delhi, cannot be a ground to canvass that the cause of action has arisen within the territorial jurisdiction of this Court, unless and until the petitioner has been able to point out that some material decision had been taken at the office of the respondent that would have a bearing on the present petition. A bald submission made to the effect that ordinarily a decision to recall a loan from a client is taken at the head office of the respondent/Corporation would not be of much assistance to the petitioner. This Court is of the view that the facts relating to jurisdiction that have been pleaded in the application and for that matter, in the writ petition, can hardly be stated to be either essential or material, much less integral for constituting a part of the cause of action, as envisaged under Article 226(2) of the Constitution of India, for vesting territorial jurisdiction on this Court. This court is inclined to accept the submission made by learned counsel for the respondent/Corporation that neither the factors mentioned by the petitioner, nor the circumstances would by themselves confer territorial jurisdiction on this court for maintaining the petition in Delhi. Rather, this Court is of the opinion that it would be inconvenient for it to entertain the present petition and the High Court of Rajasthan would be better equipped to deal with the issues raised in the present petition. Accordingly, this Court declines to exercise the discretionary jurisdiction vested in it under Article 226 of the Constitution of India. The present application is dismissed. Issues Involved:1. Recall of the order dated 21.03.2014.2. Territorial jurisdiction of the Delhi High Court to entertain the writ petition.3. Doctrine of forum convenience.Issue-wise Detailed Analysis:1. Recall of the order dated 21.03.2014:The petitioner filed an application to recall the order dated 21.03.2014, which had granted leave to withdraw the writ petition. The petitioner argued that their counsel failed to highlight two material provisions of the Loan Agreement (Sections 8.1 and 8.2(ii)) that purportedly vested territorial jurisdiction on courts in Delhi. Additionally, the impugned notice was received at the petitioner's corporate office in Delhi, and the petitioner's bank account for loan repayments was located in Delhi.2. Territorial jurisdiction of the Delhi High Court to entertain the writ petition:The court analyzed the territorial jurisdiction under Article 226 of the Constitution of India, which allows High Courts to issue writs where the cause of action arises, wholly or in part, within its jurisdiction. The petitioner contended that part of the cause of action arose in Delhi due to the receipt of the impugned notice at its corporate office and the location of its bank account. The respondent argued that all relevant events, including the execution of the Loan Agreement and issuance of the impugned notice, took place in Jaipur, and the property involved was in Udaipur, thus vesting jurisdiction with Rajasthan courts.3. Doctrine of forum convenience:The court examined the doctrine of forum convenience, emphasizing that the convenience of all parties and the existence of a more appropriate forum are crucial factors. The court noted that the situs of the respondent's head office in Delhi alone does not confer jurisdiction. It must be shown that material decisions affecting the case were made in Delhi. The court found that the petitioner's focus was on the Loan Agreement executed in Jaipur and the Sub-Lease Deed related to the project land in Udaipur. The court concluded that the facts pleaded by the petitioner did not constitute a material part of the cause of action arising within Delhi's jurisdiction.Conclusion:The court determined that the factors cited by the petitioner were insufficient to confer territorial jurisdiction on the Delhi High Court. The significant parts of the cause of action arose in Jaipur. The court invoked the doctrine of forum convenience, finding the Rajasthan High Court better equipped to handle the case. Consequently, the application to recall the order was dismissed, and the petition was not entertained in Delhi.