1996 JTR(SC) 562
1996 2 AllCJ 1218 ; 1996 2 CLT(SC) 68 ; 1996 3 JT 656 ; 1996 3 Scale 190 ; 1996 3 SCC 443 ; 1996 3 SCR 405 ; 1996 2 UJ 129 ; 1996 3 Supreme 509
1996(3) Supreme 509
SUPREME COURT OF INDIA
K. Ramaswamy and K. Venkataswami, JJ.
M/s. South East Asia Shipping Co. Ltd. -Appellant
versus
M/s. Mav Bharat Enterprises Pvt. Ltd. & Ors. -Respondents
Civil Appeal No. 1116 of 1981
Decided on 13-3-1996
Act
Referred
:CIVIL PROCEDURE CODE : S.20(c)
SPECIFIC RELIEF ACT : S.38
A) The Civil Procedure Code, Section 20(c), read with the Specific Relief Act, Section 38, governs the principles governing jurisdiction and the enforcement of obligations where a bank guarantee is executed and relied upon in a particular territorial forum. The provisions contemplate that a suit seeking specific relief grounded on a breach of contract supported by a bank guarantee may lie only where the cause of action, meaning the bundle of facts giving rise to the legal injury, arises within the jurisdiction of the forum. The present case examines whether the execution of the bank guarantee in Delhi, coupled with its transmission for performance to Bombay, suffices to vest jurisdiction in the Delhi High Court under these statutory provisions.
B) A cause of action is a bundle of facts which, if proved, would give rise to a legal right enforceable in court; it must include some act done by the defendant. Performance of the contract is required to be evaluated where it occurs, and merely executing a bank guarantee in a different location, without more, does not create a cause of action in that location. The forum must have jurisdiction over the relevant part of the cause of action for the suit to be maintainable.
Facts of the case:
The respondents obtained a decree for perpetual injunction against the appellant restraining enforcement of a bank guarantee dated July 16, 1977. The contract for transporting cargo of livestock was executed in Bombay, and the performance obligations under it were to be fulfilled in Bombay. The bank guarantee in question was executed in Delhi and transmitted to Bombay for the purposes of the contract. The single Judge held that no part of the cause of action arose within the Delhi High Courts jurisdiction, and therefore the suit could not proceed there. The Division Bench allowed the appeal, holding that the execution of the bank guarantee in Delhi and the liability arising thereunder were sufficient to give the Delhi High Court jurisdiction.
Findings of Court:
The Supreme Court held that the contract was executed in Bombay, the performance was to take place in Bombay, and merely executing the bank guarantee at Delhi and transmitting it for performance in Bombay did not constitute a cause of action arising in Delhi. Consequently, the Delhi High Court lacked jurisdiction to entertain the suit, and the direction to return the plaint to the proper court was correct in law.
Issues:
Whether the execution of a bank guarantee in Delhi, where the contract was executed and performance was to take place in Bombay, gives rise to a cause of action sufficient to confer jurisdiction on the Delhi High Court under the Civil Procedure Code and the Specific Relief Act.
Ratio Decidendi:
Jurisdiction depends on the location where the cause of action arises, which requires the facts giving rise to the legal injury to be located within the forum. A bank guarantee executed in one state, merely supporting a contract performed in another state, does not in itself create a cause of action in the state of execution.
Result:
The appeal is allowed. The Division Bench order is set aside, and the single Judges order restoring the suit to the proper court is reinstated, with no costs awarded.
A) The Civil Procedure Code, Section 20(c), read with the Specific Relief Act, Section 38, governs the principles governing jurisdiction and the enforcement of obligations where a bank guarantee is executed and relied upon in a particular territorial forum. The provisions contemplate that a suit seeking specific relief grounded on a breach of contract supported by a bank guarantee may lie only where the cause of action, meaning the bundle of facts giving rise to the legal injury, arises within the jurisdiction of the forum. The present case examines whether the execution of the bank guarantee in Delhi, coupled with its transmission for performance to Bombay, suffices to vest jurisdiction in the Delhi High Court under these statutory provisions.
B) A cause of action is a bundle of facts which, if proved, would give rise to a legal right enforceable in court; it must include some act done by the defendant. Performance of the contract is required to be evaluated where it occurs, and merely executing a bank guarantee in a different location, without more, does not create a cause of action in that location. The forum must have jurisdiction over the relevant part of the cause of action for the suit to be maintainable.
Facts of the case:
The respondents obtained a decree for perpetual injunction against the appellant restraining enforcement of a bank guarantee dated July 16, 1977. The contract for transporting cargo of livestock was executed in Bombay, and the performance obligations under it were to be fulfilled in Bombay. The bank guarantee in question was executed in Delhi and transmitted to Bombay for the purposes of the contract. The single Judge held that no part of the cause of action arose within the Delhi High Courts jurisdiction, and therefore the suit could not proceed there. The Division Bench allowed the appeal, holding that the execution of the bank guarantee in Delhi and the liability arising thereunder were sufficient to give the Delhi High Court jurisdiction.
Findings of Court:
The Supreme Court held that the contract was executed in Bombay, the performance was to take place in Bombay, and merely executing the bank guarantee at Delhi and transmitting it for performance in Bombay did not constitute a cause of action arising in Delhi. Consequently, the Delhi High Court lacked jurisdiction to entertain the suit, and the direction to return the plaint to the proper court was correct in law.
Issues:
Whether the execution of a bank guarantee in Delhi, where the contract was executed and performance was to take place in Bombay, gives rise to a cause of action sufficient to confer jurisdiction on the Delhi High Court under the Civil Procedure Code and the Specific Relief Act.
Ratio Decidendi:
Jurisdiction depends on the location where the cause of action arises, which requires the facts giving rise to the legal injury to be located within the forum. A bank guarantee executed in one state, merely supporting a contract performed in another state, does not in itself create a cause of action in the state of execution.
Result:
The appeal is allowed. The Division Bench order is set aside, and the single Judges order restoring the suit to the proper court is reinstated, with no costs awarded.
Jurisdiction - The judgment discusses the scope of cause of action and jurisdiction in relation to where a bank guarantee was executed, distinguishing the facts from the referred case.
ORDER
This appeal by special leave arises from the order of the Division Bench of the Delhi High Court made on February 19, 1980 in FAO (OS) No. 56/79. The respondents had filed a suit on the original side of the Delhi High Court for perpetual injunction against the appellant from enforcing bank guarantee dated July 16, 1977. The learned single Judge held that no part of the cause of action had arisen within the jurisdiction of the High Court and, therefore, the Court lacked jurisdiction to entertain the suit. On appeal, the Division Bench concluded that since the bank guarantee was executed in Delhi and payments were to be made in Delhi, the High Court has jurisdiction to try the suit and the direction of the learned single Judge to return the plaint for presentation to the proper Court was not correct in law. Thus this appeal by special leave.
2. The only controversy is whether the Delhi High Court has jurisdiction to entertain the suit. It is an admitted position that the contract was executed in Bombay. It is also an admitted position that the performance of obligations and liabilities under the contract was required to be done in Bombay inasmuch as Cargo of livestock was to be transported in the ship from Kandia to Damman or Jeddah. It is also an admitted position that in furtherance of the execution of the contract at Bombay, the respondents had executed ,the bank guarantee at Delhi and had transmitted it to Bombay for performance of the contract. The question, therefore, is whether any part of the cause of action had arisen in Delhi. The learned counsel for the respondents had relied upon a judgment of this Court in ABC Laminart Put. Ltd. &Anr. v. A.P. Agencies, Salem1, to contend that since part to the cause of action had arisen in Delhi, the High Court on the original side has jurisdiction to entertain the suit. We are unable to accept the contention.
3. It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if transversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e., within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained.
4. We, therefore, hold that the learned single Judge was right in his conclusion that no part of the cause of Action had arisen within the jurisdiction on the original side of the High Court of Delhi and direct to return the plaint for presentation to the proper court.
5. The appeal is accordingly allowed. The order of the Division Bench is set aside and that of learned single Judge is restored. No costs.
Appeal allowed.
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