Appeals allowed; impugned judgment set aside for lack of territorial jurisdiction; matter transferred for prompt, lawful disposal.

The SC allowed the appeals, set aside the impugned HC judgment for want of territorial jurisdiction, and held that relief cannot be denied merely because the HC proceeded to decide on the merits after jurisdiction was contested. The Court directed Special Civil Application Nos. 3282/99 and 3279/99 to be transferred forthwith to the High Court of Madras (Chennai) and requested the Chief Justice to place them before an appropriate Bench for prompt disposal in accordance with law. Appeals are allowed.

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Issues Involved:
1. Territorial jurisdiction of the High Court of Gujarat at Ahmedabad.
2. Entitlement of the respondents to the benefit of the Pass Book Scheme under the Import Export Policy.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction of the High Court of Gujarat at Ahmedabad:

The primary contention raised by the appellants was that the High Court of Gujarat at Ahmedabad lacked territorial jurisdiction to entertain the special civil applications. The appellants argued that no part of the cause of action arose within the territorial jurisdiction of the High Court at Ahmedabad. They contended that the Pass Book Licence was issued and transactions were conducted at Chennai, and therefore, the High Court at Chennai had the jurisdiction to entertain the applications.

The respondents, on the other hand, contended that a substantial part of the cause of action arose within the territorial jurisdiction of the High Court at Ahmedabad. They argued that the business of export and import was conducted from Ahmedabad, orders were placed and executed from Ahmedabad, and documents and payments were handled at Ahmedabad. Additionally, they claimed that the non-granting and denial of credit in the Pass Book would affect their business at Ahmedabad, and they had executed a bank guarantee and a bond at Ahmedabad.

The Supreme Court noted that the High Court of Gujarat had relied on the judgment in Union of India v. Oswal Woollen Mills Ltd. to conclude that the existence of the registered office of the respondent-Company at Ahmedabad conferred territorial jurisdiction. However, the Supreme Court found this reliance misplaced, stating that the judgment in Oswal Woollen did not address the specific issue of territorial jurisdiction in the context at hand.

The Supreme Court emphasized that the facts pleaded must have a nexus or relevance with the dispute involved in the case to constitute a cause of action. It concluded that none of the facts pleaded by the respondents, such as conducting business or handling documents at Ahmedabad, had any connection with the relief sought in the applications. The Court also dismissed the argument that the execution of a bank guarantee and bond at Ahmedabad conferred jurisdiction, as these were unrelated to the Pass Book Scheme in question.

The Supreme Court held that the High Court of Gujarat at Ahmedabad did not have territorial jurisdiction to entertain the applications and directed the transfer of the cases to the High Court of Madras at Chennai.

2. Entitlement of the Respondents to the Benefit of the Pass Book Scheme:

The Supreme Court did not delve into the merits of the respondents' entitlement to the benefit of the Pass Book Scheme, as it decided to first address the issue of territorial jurisdiction. The Court noted that the High Court of Gujarat had proceeded to decide the case on merits without first resolving the jurisdictional question, which was inappropriate.

The Supreme Court directed the High Court of Madras at Chennai to take up the matter and dispose of it in accordance with the law, emphasizing the need for an expedited resolution given the prolonged litigation.

Conclusion:

The appeals were allowed, the impugned judgment of the High Court of Gujarat was set aside, and the special civil applications were directed to be transferred to the High Court of Madras at Chennai for disposal. The Supreme Court requested the Chief Justice of the High Court of Madras to expedite the hearing and disposal of the cases.

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