Law on territorial jurisdiction explained | Will the place mentioned on invoice decide the jurisdiction of a Court on filing of a suit against it? Del HC explains

Delhi High Court: Asha Menon, J., emphasized the law on territorial jurisdiction while addressing the present matter.

Present petition was filed impugning the order of Additional District Judge.

Petitioner was the defendant before the Trial Court. Respondent had filed a suit against the petitioner/defendant for the recovery of a sum of Rs 28, 43, 209.68/.

The claim of the respondent was that it was a well-known manufacturer providing a portfolio of solutions for packaged power, diversified generation, electrical control and safety and energy optimization.

Petitioner/defendant was the regional stockists and distributors, who were appointed to procure/buy goods being traded by the respondent/plaintiff and supply them to wholesalers and retailers of the respondent/plaintiff in the market, who, in turn, would sell the same to the consumers.

Further the respondent/plaintiff claimed that a running current account was maintained with the petitioner/defendant against which a statement of account/ledger was regularly maintained by it in the normal course of business.

A sum of Rs 28,43, 209.68 was due and payable by the petitioner/defendant. Hence the present suit was filed.

Petitioner/Defendant’s counsel, Deepika Mishra submitted that Trial Court had fallen into error in determining its jurisdiction as it relied on English case law that the ‘debtor must seek the creditor’, whereas it was bound to follow Section 20 of the Civil Procedure Code, 1908.

Section 20 clearly provides that a Court within whose local limits the cause of action, “wholly or in part”, arises, would have territorial jurisdiction to try the suit.

The registered office of the petitioner/defendant was in West Bengal.

Petitioner/Defendant’s counsel submitted that the invoice itself recorded a Kolkata address. The warehouse was also stated to be located in West Bengal and therefore, the goods were neither dispatched from Delhi nor the invoices were raised at Delhi. counsel for the respondent/plaintiff pointed to the “subject to jurisdiction of court of Delhi only” clause in the invoices. There does not appear to have been any demurrer by the petitioner/defendant against this clause.

Hence, in light of Section 20 of CPC, the Court found some strength in the contention of respondent/plaintiff that on the basis of the ‘place of work’ of the petitioner/defendant, as well as the part cause of action of supply of goods, both reflected jurisdiction of the West Bengal courts.

However, the respondent/plaintiff has also claimed that payments were to be received in Delhi and therefore, part cause of action has arisen in Delhi and as such, the clause in the invoices referred to hereinabove did not confer jurisdiction at a place which had no jurisdiction.

In Court’s opinion, the suit could be filed at Delhi and Trial Court had not committed any error in answering the preliminary issue.

Bench stated that, when the part cause of action had arisen on account of the payments made by the petitioner/defendant directly into the bank account of respondent/plaintiff, even if these were not on regular basis, and there is nothing to show that the place of payment had been fixed, even without following the principle that the ‘debtor must seek out the creditor’, it was clear that the Delhi Courts have jurisdiction to try the suit and the invoice does not vest jurisdiction in a court which had no jurisdiction at all.

In view of the foregoing discussion, the High Court found no merit in the petition. [Auto Movers v. Luminous Power Technologies (P) Ltd.,  2021 SCC OnLine Del 4387, 16-09-2021]


Advocates before the Court:

For the petitioner: Deepika Mishra, Advocate

For the respondent: Pallav Saxena, Deepak Chawla, Aruj Dhingra and Neeraj Malik, Advocates

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