Ircon Employees'' Cooperative Housing Society Ltd. vs Unit Construction Co. Pvt. Ltd. and Another

Partha Sakha Datta, J.—The opposite party No. 1 i.e. the Unit Construction Company Private Ltd. instituted Title Suit No. 1917 of 2008 against Ircon Employees'' Co-operative Housing Society Ltd., the petitioner herein and one Pace Consultants Private Ltd. praying for following reliefs:

a. Decree for Rs.20,77,946/- as pleaded in paragraph 28 above.

b. Decree for Rs.2,82,44,080/- as pleaded in paragraph 29 above;

c. Decree for determination of the extent of the work carried out by the plaintiff at site for which no payment has been made by the defendant and decree for such sums be passed as may be found due and payable by the defendant to the plaintiff after determination of the extent of the work carried out by the plaintiff, and in the alternative, decree for return to the plaintiff of all building materials, fittings etc. installed by the plaintiff at site for which no payment has been made by the defendants;

d. Perpetual injunction restraining the defendants or its men and agents from alienating and/or altering and/or dealing and/or changing the nature and character in any manner and/or creating any third party interest of the suit property;

e. Receiver;

f. Injunction;

g. Cost;

h. Such further or other order.

The case of the plaintiff was that the plaintiff was awarded a contract for construction of three numbers of G + 11 storied block at Action Area, 1 A, New Town, Rajarhat, District 24 - Parganas (North) by the present petitioner-defendant No. 1 by an agreement dated 19th of January 2004. The opposite party No. 2 is an engineer appointed by the petitioner (defendant No. 1) to supervise the construction. Since there was no escalation clause in the agreement the plaintiff-opposite party found it impossible to carry out the construction to the end and requested the defendant No. 1 for alteration of the terms of the subsisting contract. Then followed a revised letter of acceptance dated 2nd of July, 2004 issued by the defendant No. 1 providing therein for increase in the cost of steel. The plaintiff-opposite party executed two separate bank guarantees. The engineer-defendant No. 2 provided the plaintiff with structural drawings. The plaintiff carried out construction on the basis of the drawings for the ground floor, first floor and the 2nd floor of the building. The defendants did not obtain sanction and/or permission for construction of the remaining floors from HIDCO, the sanctioning authority. The plaintiff continued incurring huge expenditure for maintaining the site, manpower, machinery etc. Since the work was held up for reasons attributable to the defendant Nos. 1 and 2 the cost of construction substantially increased. The plaintiff continued to incur recurring expenditure for maintaining the work at the site. The defendant No. 1 (petitioner) in (sic) around January 2007 requested the plaintiff to continue with the work on revised terms. Plaintiff agreed to do so subject to the two defendant discharging their obligations under the contract. By the time plaintiff completed the structure upto the level of second floor. So far as the balance work i.e. internal and external plastering upto second floor level is concerned the same was not technically possible till such time the total structure was completed. By a letter dated 5th of February, 2007 the defendant-petition forwarded a revised offer for completion of the work at a cost of Rs. 330 lacs. The plaintiff submitted the revised Bill of Quantities (BOQ) which was accepted by the defendants. Thus, contract on the terms recorded in the defendant No. 1''s letter dated 5th February, 2007 read with the BOQ as approved and accepted by the defendant by letter dated 28th February, 2007 came into existence, but the plaintiff could not proceed with the work on the grounds, namely, that there was no approval from HIDCO, that outstanding bills remained unpaid, and structural drawings for the remaining portion of the building were not issued. Meanwhile, again the price of the impute materials increased and the revised price in terms of the letter dated 5th February, 2007 became illusory. On 24th October, 2007 plaintiff submitted its revised offer. No permission from HIDCO was also available. However a meeting was held between the parties on 29th December, 2007 when the plaintiffs were persuaded to accept the offer for Rs. 3.80 crores but no agreement could be reached. On 15th January 2008 the defendant forwarded a copy of the approval of HIDCO. By a letter dated 22nd January, 2008 the defendant No. 1 expressed its desire to have the revised offer approved by the Board of Directors. It was not possible for the plaintiff to do the work at Rs. 3.80 crores. The revised offer submitted by the plaintiff on 18th of March, 2008 was not accepted by the defendant No. 1. According to the plaintiff no valid or subsisting contract could be reached by and between the parties and the agreement as recorded in the letter dated 5th February, 2007 was rendered nugatory and null and void. Thus, according to the plaintiff, the agreement for construction dated 5th of February, 2007 is a void contract as it is an agreement to do an act impossible in itself. Thus, the plaintiff states that there was no question of termination of contract by defendant No. 1 as there was no valid or subsisting contract between the parties and in the circumstance, the plaintiff instituted the suit for the aforesaid reliefs.

Along with the presentation of the plaint the plaintiff-opposite party No. 1 filed an application under Order 39 Rule 1 and 2 read with section 151 of the CPC praying for restraining the opposite parties from dealing with or disposing of or alienating or creating any third party interest in respect of the suit property or from changing the nature and character of the suit property situated at Action Area, 1A New Town, Rajarhat.

The learned trial Court by an ex parte ad interim order of injunction dated 4th of July, 2008 restrained the present petitioner from disposing alienating or creating any third party interest or changing the nature and character of the suit property.

The defendant No. 1, the present petitioner filed a petition before the trial Court questioning the territorial jurisdiction of the learned trial Court 10 entertain the suit. It was contended in the petition that the plaintiff prayed for money decree for injunction to restrain the defendant No. 1 from alienating the suit property or from changing the nature and character of the suit property and also for decree for determination of the work carried out by the plaintiff in the suit property at Rajarhat in the District of 24-Parganas (N) The suit property upon which ex parte interim injunction was granted by the order dated 4th of July, 2008 is situated at Rajarhat in the District of 24-Parganas (N) which was outside the jurisdiction of the Court and is expressly barred u/s 16 of the CPC. Accordingly, it was prayed that ex parte interim injunction be set aside.

The defendant filed another petition u/s 8 of the Arbitration and Conciliation Act 1996 before the trial Court and the plaintiff also filed a written objection thereto.

The petition of the defendant No. 1 challenging the territorial jurisdiction of the learned trial Court was heard on 19th August, 2008 and before the learned trial Court objection was taken out that since the suit property was situated outside its jurisdiction the learned trial Court has got no territorial jurisdiction to entertain the suit, far less to pass an order of injunction. The learned trial Court overruled the objection with reference to the decision in Seth Hiralal Patni Vs. Sri Kali Nath, and Smt. Smriti Jaiswal and Another Vs. Romi Jaiswal and Another, and held that the Court has enough jurisdiction. Learned trial Court observed that a careful study of the materials available on record reveals that no relief was claimed by the plaintiff in respect of immovable property involved in the case; on the contrary, the suit was filed for recovery of money from the defendants for the works so far done by the plaintiffs and towards damages. Therefore, according to the learned trial Court the argument that the suit property was lying outside the territorial jurisdiction of the trial court is of no consequence. Moreover, according to the learned trial Court adjudication of any title of the immovable property was not required in any manner and the plaintiff has no case of invasion of his right to enjoyment of the suit property. Rather plaintiff has complained of breach of an obligation arising from contract. Holding thus, the learned trial Court extended its earlier order of ex parte ad interim injunction and rejected the petitioner''s petition for vacation of interim order which was filed on the ground of lack of territorial jurisdiction.

This order dated 19th August, 2008 is the subject matter of challenge in this application under Article 227 of the Constitution of India.

Mr. Bikash Ranjan Bhattacharya, learned senior counsel, appearing for the petitioner has argued on two fold points. The first point is that the learned trial Court which is situated in the District of 24-Parganas (S) has no territorial jurisdiction to entertain the suit in view of section 16 read with section 21 of the CPC. The second argument is that having given a look at the prayers of the plaintiff vis-a-vis the averments in the plaint it is made clear that the plaintiff proceeds on the footing that there is no valid and subsisting contract between the parties. This is the repeated averment of the plaintiff in the plaint and proceeding on the basis of this averment the plaintiff prays for a decree with regard to the work so far done, for damages and for determination of the amount of work done by the plaintiff at the suit land and for decree of the sum depending upon the determination of the amount Mr. Bhattacharya submits that in the context of the above averments of the plaint and that of the prayers sought for the learned Trial Court had got no jurisdiction to entertain the suit so as to pass an ex parte order of injunction on 4th of July, 2008 to restrain the defendant No. 1 from changing the nature and character of the suit property or for creating any third party interest therein. Mr. Bhattacharya submits that as observed by the learned trial Court itself the plaintiff has made no claim to the suit property and the primary object of the plaintiff was to recovery money from the defendants. If that is the observation of the learned trial Court, then the learned trial Court could not have passed the order of injunction to restrain the defendant No. 1 from disposing of or alienating or creating any third party interest or changing the nature and character of the suit property. It is argued that the work has remained incomplete as the parties have fallen into dispute. The plaintiff has categorically assaulted that the contract is no longer subsisting. Obviously, the defendant No. 1 has right to carry the further unfinished construction through any other agency and since the plaintiff does not want to carry out the remaining part of the construction and proceeds on the footing that there is no contract at all, the learned trial Court unjustly imposed an order by restraining the defendant No. 1 from changing the nature and character of the property.

With regard to the first point, the learned advocate for the petitioner submitted that it is not understood how the learned trial Court which is situated in different district could assume jurisdiction to grant relief which is otherwise not available to the plaintiff as the learned trial Court itself observed that the plaintiff has no interest in the suit property.

Mr. Aninda Mitra, learned senior counsel appearing for the opposite party-plaintiff initially touched upon the merit of the case but declined to proceed further at the last leg of the argument and desire from the Court an order as to the question whether the trial Court had territorial jurisdiction to entertain the suit. Initially, the argument of Mr. Mitra centered round the position that an order granting or refusing injunction is not a revisable order that can be challenged under Article 227 of the Constitution of India but is an appealable order under Order 43 (r) CPC. Therefore, irrespective of whether the learned trial Court has or has no jurisdiction to grant an ex parte interim injunction or to extend the ad interim order of injunction at subsequent stage pending final disposal of the application for temporary injunction as also application u/s 8 of the Arbitration and Conciliation Act, the order granting injunction cannot be assailed upon an application under Article 227 of the Constitution of India. It is submitted that where statute provides for a relief to a party to assail an order of injunction, either ex parte or contested by way an appeal the alternative remedy through an application under Article 227 of the Constitution of India must not be resorted to and the Consistent view of the Supreme Court as also of this Court has been that the plaintiff has to take out a regular appeal against the order complained of. In this connection Mr. Mitra has referred to the decisions in (2002) 2 CLJ 288 , Punjab National Bank Vs. O.C. Krishnan and Others, Sadhana Lodh Vs. National Insurance Company Ltd. and Another, ., Karpagathachi and Others Vs. Nagarathinathachi,

Mr. Mitra with respect to the question as to the entertainibility of the suit by the learned trial Court has argued that this is not a case where the defrauding No. 1 took out an application under Order 7 Rule 10 praying for rejection of the plaint, and when such an application was not filed this present application under Article 227 of the Constitution of India challenging the jurisdiction of the learned Trial Court to pass the impugned order on the alleged ground of lack of territorial jurisdiction of the learned trial Court should not be entertained; and the appropriate relief for the defendant No. 1 is to file a regular appeal against the order of injunction.

Mr. Bidyut Kumar Banerjee, learned senior advocate appearing for the opposite party No. 2 adopted the line of reasoning advanced by Mr. Bhattacharya, learned advocate for the defendant No. 1 but added that cause of action cannot be said to have originated within the jurisdiction of the learned trial Court at Alipore. Provision of section 20 of the CPC relating to institution of other suits is to the effect that subject to the limitations contained in the preceding sections suits shall be instituted within the local limit of the jurisdiction of the Court where the cause of action wholly or in part arises or where any of the defendant resides or carries on business. Mr. Banerjee submitted that where a suit is governed u/s 16 of the CPC there is no question of applicability of the provision of section 20 thereof, and where a suit is not required to instituted u/s 16 of the CPC or Other provisions then the provision u/s 20 may be taken resort to for the purpose of determining the territorial jurisdiction. A reference was made to the decision in R. Viswanathan Vs. Rukn-Ul-Mulk Syed Abdul Wajid, .

The Court asked Mr. Mitra, learned senior advocate, appearing for the opposite party No. 1 whether die Court by virtue of the power under Article 227 of the Constitution of India can examine an order of the learned trial Court so as to determine the jurisdiction of the trial Court whether such jurisdiction is territorial, pecuniary or inherent to pass such an order. Mr. Mitra in his usual fairness submitted that the Court has; but in the instant case the Court must not exercise that jurisdiction firstly because the defendant No. 1 did not file any, petition before the learned trial Court under Order 7 Rule 10 CPC and if such an application was filed and order was passed thereon then the position would have been different, and secondly because the order impugned has the effect of granting extension of interim injunction without disposal of the principal application and when that order is appealable application of Article 227 of the Constitution of India is misnomer.

Mr. Bhattacharya, learned senior advocate appearing for the defendant No. 1 submitted on the other hand that it is for the Court to say whether it will make an order for return of the plaint for presentation to the proper Court having regard to the provision of Order 7 Rule 10 CPC. It is the authority the trial Court to pass such an order either suo motu or an application of party. What matters most is the glaring fact that the defendant took out an application without filing a written objection to the plaintiffs petition under Order 39 Rule 1 and 2 CPC to challenge the territorial jurisdiction of the learned trial Court so as to entertain the suit and to pass order upon such entertaining; and in the application it was clearly stated that the learned trial Court did not have any territorial jurisdiction because the property upon which injunction was granted by the learned trial Court is situated under P.S. Rajarhat in the District of 24-Parganas (N). If the property on which injunction was granted is outside the territorial jurisdiction of the learned trial Court then definitely an application under Article 227 of the Constitutions of India is not a misconceived one particularly when in the face of such an objection taken out at the very preliminary stage of hearing the learned trial Court on flimsy and unjust grounds overturned such plea and assumes jurisdiction which it has not.

Therefore, the question is whether the learned trial Court rightly rejected; the defendant''s application challenging the territorial jurisdiction of the learned trial Court to pass an ex parte order of injunction.

It is made clear that by this order I must not enter into the merit of the case of the parties more particularly when the learned senior counsel appearing for the plaintiff urges the Court to decide on the question of jurisdiction of the learned trial Court without touching upon the merit of the case of the parties. Entering into the merit of the case of the parties would entail a serious consequence. If this Court hold upon hearing the learned advocates for the parties that the learned trial Court had no territorial jurisdiction to entertain the suit then any reflection on the merit of the case of the plaintiff on the basis of which the ex parte injunction was granted on 4th of July, 2008 will influence any Court that would have lawful jurisdiction to try the suit. In fact, the order impugned dated 19th August, 2008 is not at all an order disposing of an application for temporary injunction under Order 39 Rule 1 and 2 CPC. If the impugned order would have been an order disposing of an application under Order 39 Rule 1 and 2 CPC then definitely the Court could not have entertained this application under Article 227 of the Constitution of India as it would have been a appealable order. The order under challenge deals with the question of jurisdiction of the trial Court to entertain the suit and thereby negates such plea. In the circumstances the matter is considered under Article 227 of the Constitution of India as it goes to the jurisdiction of the trial Court to assume jurisdiction. The defendant petitioner did not file any written objection against the injunction application of the plaintiff. Naturally, the learned trial Court was not posted with the pleadings of the defendant No. 1. The entire length and breadth of the order impugned of the learned trial Court is disposal by rejection of the defendant No. 1''s application for appropriate order by recalling the order dated 4th of July, 2008 on the ground of lack of territorial jurisdiction of the learned trial Court.

Therefore, the question before this Court is the question of jurisdiction of the learned trial Court to entertain the suit. Learned trial Court observed that though the prayer for injunction to restrain the defendants from changing the nature and character of the suit property or from creating any third party interest in respect of the suit property is a prayer in the nature of incidental and consequential relief and the primary object of the plaintiff was to recovery money from the defendants, and thus being so the Court cannot be said to be without jurisdiction to entertain the suit. Yet at the same time the learned trial Court refused to recall the order of interim injunction dated 4th of July, 2008 whereby the defendants were restrained by way of ad interim order of injunction from disposing, alienating, encumbrance or creating any third party interest or changing the nature and character of the suit in any manner. The learned trial Court thought it fit to grant such injunction and to continue the same till the application for injunction is heard fully. An application u/s 8 of the Arbitration and Conciliation Act was also filed by the defendant and that application was fixed for hearing without fixing a date for hearing of the injunction application. Now, if the learned trial court was of the opinion that an injunction was necessary to be maintained to restrain the defendants from disposing, alienating, encumbrancing or creating any third party interest or changing the nature and character of the suit property in any manner whatsoever then it has to be observed that the learned trial Court did not have territorial jurisdiction to pass such order of injunction in respect of the immovable property which is unquestionably situated outside the jurisdiction of the learned trial Court. The question whether such an injunction should have been passed or not is not commented upon because the application for injunction is yet to be disposed of. By the order impugned the learned trial Court further extended the order of ad interim injunction to a certain date. u/s 21 of the CPC the objections to jurisdiction cannot be availed of unless it was taken in the court of first instance at the earliest possible opportunity and consistent with section 21 the application was filed before the learned trial Court raising point that in view of section 16 CPC the place of institution of the suit is the place within the local limits of whose jurisdiction the property is situate. If it is a suit under clauses (d) or (e) of the section 16 of the CPC it shall be under the provision of the said section have to be instituted in the Court within the local limits of whose jurisdiction the property is situate. The learned trial Court observed that the suit was instituted for recovery of certain amounts of money from the defendants with a further prayer for determination of the extent of the work carried out by the plaintiff at the suit land for which no payment has been made by the defendant No. 1 and in a sense the suit was for recovery of money from defendants for the works so far done by the plaintiff and towards damages. It is not understood what the learned trial Court intended to mean by such observation when at the same breadth he found it expedient to grant interim injunction by its earlier order dated 4th of July, 2008 and extended by the impugned order dated 19th August, 2008. If by the said observation the learned trial Court intended to invoke section 20 of the CPC then it has to be observed that the provision of section 20 is always subject to the provisions preceding the said section. Once the learned trial Court maintains that the injunction in terms of prayer (d) of the plaint in respect of the immovable property which is situated outside the jurisdiction of the learned trial Court was a necessity then obviously the suit is covered by section 16 at the present moment the Court must look at the plaint as it stands. The law is very well settled that when a suit is governed under earlier provisions including the provision u/s 16 then section 20 of the CPC cannot be invoked. Their Lordships of the Supreme Court in Biswanathan (supra) observed at paragraph 18 that section 20 of the CPC extends jurisdiction of the Courts to persons or transactions beyond the territorial limits of the Courts and such jurisdiction in persona which transcends territorial limits is conferred on the courts by the law making authority. Thus, an action in personam lies normally where the defendant is personally within the jurisdiction or submits to the jurisdiction of the Court. Following this decision the Orissa High Court in Prativa Pattanaik v. State of Orissa, in 2001 AIHC 3796 held that if the suit is required to be filed at the place indicated in section 16, section 20 of the CPC would not be applicable, as the said section 20 itself starts with the clause "subject to limitations aforesaid." The instant suit cannot be said to be a suit in personam. Money claim of Rs. 20, 77, 946/- as has been pleaded in paragraph 28 of the plaint and claim for Rs. 2,82,44,080/ as pleaded in paragraph 29 relate to the work of construction done in the suit property and damage arising out of omission of the defendants to perform acts and obligation in relation to the suit property in terms of the agreement; respectively. Actually, these claims, according to the plaintiff, arise out of the payments due on account of construction on the land, and the damages claim was on account of cost of mobilization of plant and machinery sufficient for carrying out construction of three 11-storied blocks at the suit property. It cannot, therefore be said that the cause of action arose within the territorial jurisdiction of the learned trial Court. If by cause of action is meant every fact which it would be necessary for the plaintiff to prove as distinguished from every piece of evidence then such cause of action cannot be said to have originated even in part within the territorial jurisdiction of the learned trial Court. To attract section 20 (c) there must be in existence such fact which by itself forms part of the cause of action of the suit. In paragraph 39 of the plaint, it has been stated that cause of action arose on 19th of January, 2004 firstly. Such contract has been given go by in the plaint, and the plaintiffs states that the next contract dated 7th of February does not exist. It is claimed that on 17th of June, 2008 the plaintiff received the defendant No. 1''s letter of that date. The receipt of the letter cannot be said to be a part of cause of action. De hors the immovable property or the constructions so far raised by the plaintiff in the suit property the question of money claim on account of such construction or damage allegedly sustained by the plaintiff on account, of such construction work cannot be conceived of. Even the learned trial Court by the impugned order was unable to separate the two parts of the claims-one for permanent injunction to restrain the defendant from alienating the suit, property and the other for a money claim on account of non payment of the work of construction and of the damages. The observation of the learned trial Court that by filing an application u/s 8 of the Arbitration and Conciliation Act the defendant No. 1 submitted itself to the jurisdiction of the learned trial Court is not tenable. Since the suit was filed in the wrong Court it cannot be said that by filing the application the defendant is precluded from raising the point of territorial jurisdiction of the Court which it did raise. Learned trial Court referred to the decision in Seth Hiralal Patni Vs. Sri Kali Nath, and the decision in Hazra Medical Stores Private Ltd. Vs. Biswanath Sarkar and Others, These decisions do not appear to have any manner of application. The Supreme Court decision as has been referred to by the learned trial Court is in connection with an execution proceeding. If was simply a money claim inseparable from and an independent of any immovable property, then the situation would have been otherwise. Again, if by cause of action is meant bundle of facts then no such fact originated within the jurisdiction of the learned trial court. It is not a suit where relief can be availed of by the plaintiff by personal obedience of the defendant No. 1. Determination of the extent of the work carried out by the plaintiff at site for which relief is claimed for by a money decree cannot be ascertained without reference to the immovable property which is out side the jurisdiction of the learned trial Court. Prayers (c) and (d) are inextricably linked up with the suit property, while prayers (a) and (b) do not stand apart from the immovable property because adjudication of the money claim or damage on account of cost of mobilization of plant and machinery necessary for carrying out the construction or for retaining the plant and machinery and causing fresh mobilization or for the cost of deployment of skilled and unskilled labourers for performance of the contract in the property cannot stand alone in isolation of the immovable property. I am not considering at the moment whether all the reliefs claimed for are maintainable or not because I have already observed that the learned trial Court has decided neither the suit nor the application for temporary injunction. The learned trial Court only disposed of the defendant No. 1''s objection as to the territorial jurisdiction of the learned trial Court to entertain the suit and hear the application for injunction ex parte. The plaint as it stands would clearly reveal that it was presented before a wrong Court and the learned trial Court does not appear to have been justified in entertaining the suit and assuming jurisdiction. In the circumstances, I hold that the defendant No. 1''s objection was sustainable and the learned trial Court had no territorial jurisdiction to entertain the suit.

In view of the above matter the order impugned is set aside. It is made clear that I have not gone into the merit of the case. The suit can be instituted at the proper Court.

The application is thus disposed of.

A copy of this order shall be sent to the learned trial Court for information and necessary action.