The Delhi High Court, on September 16, 2021, in the case of Messrs. Auto Movers (“Petitioner”) v. Luminous Power Technologies Private Limited (“Respondent”), in a civil revisional application preferred from an order of the Learned Additional District Judge, Tis Hazari Court, decided whether the fact of part payments having been received by the plaintiff/Respondent from the defendant/ Petitioner at Delhi would be enough to confer jurisdiction on the courts at Delhi, when the defendant/ Petitioner was carrying on business in Kolkata and the consignments were also delivered within the State of West Bengal.

Brief Facts:

The Respondent is the manufacturer of inverters, batteries etc. and had supplied certain material to the Petitioner, who is one of the regional stockists of the Respondent for the West Bengal area, for onward sale to wholesalers etc. The Respondent had thereupon raised certain invoices worth about Rs. 55,00,000/- (Rupees fifty five lacs) (approx.), out of which the Petitioner was yet to make payment of about Rs. 28,00,000 (Rupees twenty eight lacs) (approx.). A suit was filed for recovery of such allegedly outstanding amount before the Court of the Learned Additional District Judge, Tis Hazari Court by the Respondent/plaintiff, to which the Petitioner/defendant, inter-alia, raised the objection as to the maintainability of such suit. The Trial Court observed that part-payments had been maintained towards some of the aforementioned invoices raised by the Respondent upon the Petitioner at Delhi and accordingly, decided the question of maintainability of the suit in favour of the Respondent/Petitioner. The Petitioner thereafter preferred the instant civil revisional application before the Delhi High Court from such order of the Trial Court.

Petitioner's submissions/ contentions: 

The Petitioner contended that the Trial Court had fallen into error in determining its jurisdiction as it relied on an English case law that the ‘debtor must seek the creditor’, whereas it was bound to follow Section 20 of the Civil Procedure Code, 1908 (“CPC”). It has also ignored the cited case law which held that, parties could not vest a court with jurisdiction at a place where no part of the cause of action had arisen. In the present case, the orders were placed by the Petitioner/defendant, which is admittedly working for gain in West Bengal, upon the Kolkata office of the Respondent/plaintiff. The goods were dispatched from Kolkata to Birbhum, West Bengal. 10 (ten) blank cheques had been signed and handed over to the Respondent/ plaintiff as security by the Petitioner/ defendant at the Respondent’s office at Kolkata. Payments were released by the Petitioner/defendant to the Respondent/ plaintiff through RTGS from its bank branch in West Bengal. Thus, no part of the cause of action has arisen outside West Bengal, not even the payments. Mere mention of Delhi in the invoices would not suffice to vest courts in Delhi with jurisdiction. Therefore, the impugned order of the Trial Court suffers from gross infirmity and ought to be set aside by the High Court.  

Respondent’s submissions/ contentions:

The Respondent contended that the Trial Court has decided the issue of jurisdiction correctly as payments had been received by the Respondent/plaintiff in Delhi and this would be further evinced by the fact that, a case under Section 138 of the Negotiable Instruments Act, 1881 had been instituted by the Respondent in Delhi in connection with one of the cheques issued by the Petitioner/ defendant, such cheque having been presented and dishonoured in Delhi. The Petitioner/ defendant having settled such case by making payment of a sum of Rs. 24,00,000/- (Rupees twenty four lacs) could not now rake up the issue of jurisdiction.

Findings of the Court:

The Delhi High Court observed that, the Respondent/plaintiff had averred in its plaint that the invoices raised by the Respondent/ plaintiff were “subject to jurisdiction of court of Delhi only” and payments were also to be made in the jurisdiction of New Delhi and the cheque, which had been dishonoured was also to be received and realized in New Delhi. The Petitioner/ defendant had however contended that the entire cause of action has arisen within the state of West Bengal and therefore, no jurisdiction can be conferred by the doctrine of election on the Courts (in Delhi) which otherwise had no jurisdiction under Section 20 of the CPC.

In this regard, the Court went on to hold that 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. Further, it was evident that the Petitioner had made direct payments, with regard to the subject invoices raised by the respondent, into the respondent’s bank account maintained with ICICI Bank at New Delhi. In this regard, the Hon’ble High Court referred to its own previous judgment in Satyapal v. Slick Auto Accessories (P) Limited, [(2014) SCC OnLine Del 998], wherein it had been held that where the place of payment has not been fixed, as appears to be the case here, payment was to be made at the place of the creditor i.e., at Delhi in the present case. Since Section 20 of the CPC states that a Court may have jurisdiction when the cause of action arises within its local limits “wholly or in part”, the Trial Court, considering the aforementioned precedent as well as the overall factual scenario, has not made any error in assuming jurisdiction in the instant matter.

The civil revisional application preferred by the Petitioner was accordingly dismissed by the Delhi High Court.

Please find attached a copy of the judgment.

This update has been contributed by Soorjya Ganguli (Equity Partner) and Somdutta Bhattacharyya (Principal Associate).

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