2001 (10) TMI 321 - SC - Customs

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 ... Territorial jurisdiction under Article 226(2) of the Constitution - cause of action - bundle of facts - nexus with the lis - transfer of proceedings in the interest of justiceTerritorial jurisdiction under Article 226(2) of the Constitution - cause of action - bundle of facts - nexus with the lis - transfer of proceedings in the interest of justice - Whether the High Court of Gujarat at Ahmedabad had territorial jurisdiction to entertain the special civil applications - HELD THAT: - The Court applied the test under Article 226(2) that territorial jurisdiction depends on whether the cause of action, wholly or in part, arose within the territories of the High Court - the expression 'cause of action' being the bundle of facts the petitioner must prove. The Court held that the facts pleaded by the respondents (business carried on from Ahmedabad; orders, documents and payments handled from Ahmedabad; economic impact at Ahmedabad) did not have the requisite nexus with the lis concerning denial of benefits under the Pass Book Scheme issued and administered from Chennai, and therefore did not constitute a part of the cause of action conferring jurisdiction on the Gujarat High Court. The Court further found that the execution of a bank guarantee and a Bond at Ahmedabad was factually and temporally unconnected to the Pass Book claim (being executed later in relation to customs valuation disputes) and thus was extraneous and insufficient to create jurisdiction. The Court rejected reliance on the incidental observations in Union of India v. Oswal Woollen Mills Ltd. as authoritative for conferring jurisdiction, noting that those remarks were not an adjudication of the territorial-jurisdiction test and were made in a different context. Because the Gujarat High Court proceeded to decide the merits without determining jurisdiction as a preliminary issue (Order XIV Rule 2, CPC would have been the appropriate course), its judgment was held to have been rendered by a court lacking territorial jurisdiction. [Paras 16, 17, 18, 19, 20]Gujarat High Court lacked territorial jurisdiction; its judgment is set aside and the special civil applications are to be transferred to the High Court of Madras for adjudication.Final Conclusion: Appeals allowed; impugned judgment of the Gujarat High Court set aside for want of territorial jurisdiction and Special Civil Application Nos. 3282/99 and 3279/99 are directed to be transferred to the High Court of Madras for disposal in accordance with law. 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.