2024 (6) TMI 196 - HC - Companies Law

Company head office location insufficient for writ jurisdiction under Article 226(2) without territorial cause of action

Meghana T.V. Versus Union Of India

The Delhi HC dismissed a writ petition challenging alleged cheating and misappropriation of funds by a company, ruling it lacked territorial jurisdiction. ... Maintainability of petition - lack of territorial jurisdiction - invocation of Doctrine of Forum Conveniens - cheating - misappropriation of funds - defrauding of the investors - siphoning of the funds - HELD THAT:- A plain reading of Clause (2) to Article 226 of the Constitution of India makes it clear that the High Court could issue a writ when the person or the authority against whom the writ is issued is located outside its territorial jurisdiction, provided the cause of action wholly or partially arises within the Court’s territorial jurisdiction. Needless to state that the expression‘cause of action’ for exercising powers under Article 226 (2) of the Constitution of India is to be assigned the same meaning as assigned to such an expression under Section 20 (c) of the CPC. Further, merely because the seat or the main head office of the respondent is located in Delhi would not be sufficient to confer jurisdiction upon this Court. Reference in this regard can be invited to a decision by the Supreme Court in the case of UNION OF INDIA (UOI) AND ORS. VERSUS R. THIYAGARAJAN [2020 (4) TMI 915 - SUPREME COURT] wherein it is reiterated that unlike the Supreme Court, which can exercise jurisdiction over the entire country, the jurisdiction of the High Courts is limited to the territorial jurisdiction of the State (s) of which it is the High Court; and that such orders may be passed if it impacts the people within its territorial jurisdiction and the High Courts have no pan-India jurisdiction. Further, there is no averment that any person or authority within the territorial jurisdiction of this Court is substantially affected by the affairs of the company in question i.e. VSPL. There is no gainsaying that the respondent has its Regional Office with necessary paraphernalia in the State of Karnataka and the petitioner has appropriate efficacious remedy to approach the Karnataka High Court in order to seek appropriate reliefs. In a case like the present one, this Court can refuse to exercise its discretionary jurisdiction by invoking the Doctrine of Forum Conveniens. Reference made to a decision by the Supreme Court in the case of U.P. RASHTRIYA CHINI MILL ADHIKARI PARISHAD LUCKNOW VERSUS STATE OF U.P. [1995 (7) TMI 423 - SUPREME COURT] wherein it was held that the situs of office of the Parliament, Legislature of a State or Authorities empowered to make subordinate legislation, would not by itself, constitute any “cause of action” or “cases arising”. Likewise, mere fact that the respondent-Ministry of Corporate Affairs can appoint or entrust the investigation to the SFIO from Delhi would not by itself be sufficient to invoke the territorial jurisdiction of this Court. The present Writ Petition is dismissed for not being maintainable before this Court for lack of territorial jurisdiction. Issues:1. Jurisdictional issue regarding the maintainability of the Writ Petition before the Delhi High Court.Detailed Analysis:The judgment pertains to a Writ Petition invoking Article 226 of the Constitution of India seeking directions for the appointment of an investigator and completion of an investigation as ordered by the National Company Law Tribunal (NCLT) Bengaluru. The petitioner sought relief due to alleged fraud and misappropriation by a company under liquidation. The NCLT had directed the forwarding of documents to the Central Government for investigation by the Serious Fraud Investigation Office (SFIO). The petitioner argued that the Ministry of Corporate Affairs had failed to act despite the NCLT order. The respondent contested the maintainability of the petition based on territorial jurisdiction.The Court noted that the cause of action, involving alleged cheating and misappropriation, arose in Karnataka where the company was located. The petitioner argued that the respondent's main office in Delhi conferred territorial jurisdiction on the Delhi High Court. However, the Court clarified that the mere presence of the office in Delhi did not automatically grant jurisdiction. Citing legal precedents, the Court emphasized that High Courts' jurisdiction is limited to their respective states and does not extend pan-India. It was highlighted that the petitioner could seek redressal in the Karnataka High Court, where the company was situated, invoking the Doctrine of Forum Conveniens.Referring to a Supreme Court decision, the Court reiterated that the location of an office alone does not establish a cause of action. The judgment emphasized that the Ministry's ability to appoint the SFIO from Delhi did not justify invoking Delhi High Court's jurisdiction. Consequently, the Writ Petition was dismissed for lack of territorial jurisdiction, emphasizing the importance of the situs of the cause of action in determining the appropriate forum for legal proceedings.In conclusion, the judgment delves into the intricacies of territorial jurisdiction concerning Writ Petitions under Article 226, emphasizing the significance of the cause of action's location in determining the appropriate forum for legal redressal. The Court's decision underscores the principles governing jurisdictional boundaries and the application of legal precedents in determining the maintainability of petitions before High Courts.