M/s. Nirula brothers pvt. Ltd. vs Krishan Kumar Khurana

Prem Chand Pandit, J. (20.05.1970)

The only point for decision in this case is whether the civil courts at Gurgaon have jurisdiction to try this suit. This question has been decided against the Petitioner and against that decision, he has filed the present revision petition. Krishna Kumar Khurana brought a suit for the recovery of Rs. 3295.50 against M/s. Nirula Brothers Pvt. Ltd., New Delhi, in the civil court at Gurgaon. According to the plaintiff, this amount represented his salary, which was due to him from the defendant, who had appointed him as their Adminstrative Officer at Gurgaon where they had their factory also, though their Head office was at New Delhi'' The case of the plaintiff was that the civil courts at Gurgaon had jurisdiction to entertain the suit, because part of the cause of action accrued to him at that place. The position of the defendant on the other hand, was even though the cause of action, wholly or in part, might have arisen at Gurgaon, but since their Company had no subordinate office at Gurgaon, therefore the civil courts there had no jurisdiction to try the suit.

The court below has accepted the stand of the plaintiff by means of the impugned order and that has led to the present revision petition by the defendant company. Section 20 of the CPC is in these terms-

Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction.

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants where there are more than one at the time of the commencement of the suit, actually, and voluntarily resides or carries on business, or personally works for gain, provided that in such case either the leave of the court is given, or the defendants who do not reside or carry on business, or personally work for gain, as afore said, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

Explanation I.-Where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence.

Explanation II-A Corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

The argument of the learned counsel for the Petitioner is that explanation II controls the applicability of the main provisions of Section 20, when the defendant in a suit is a Corporation. If a person wishes to sure a Corporation, then he can do so either at the place where the said Corporation has its sole or principal office in India, because it is there that it will be deemed to carry on its business, or at a place where it has a subordinate office, but in the latter case only if the cause of action had also arisen there. In support of his submission, counsel relied on a Single Bench decision of this Court in Home Insurance Co. Ltd., New Delhi Vs. Jagatjit Sugar Mills Co. Ltd. and Another, , where it was held:

The place of suing is governed by Section 20, Code of Civil Procedure, and in regard to incorporated companies it is within the four corners of that section that one have to find the place of suing. According to the statute, an incorporated company can be sued at its principal place of business or if cause of action arises at some other place and it has got a subordinate place of business, at that place also. The mere fact that the former office has been shifted to a new place would not also transfer the right of the plaintiff to bring a suit at that place.

In the instant case, according to the learned counsel, the court below was in error in holding that the Gurgaon court had jurisdiction to try the suit only because the cause of act on had arisen to the plaintiff at that place. Unless it was found that the defendant company had a subordinate office also at Gurgaon. the suit could not be instituted there.

Learned counsel for the plaintiff-respondent, on the other hand, contended that the main provisions of Section 20 governed suits against the Corporations as well. u/s 20(a), if it could be proved that the Corporation carried on business at a place then a suit could be brought at such a place. Similarly, u/s 20(c), if the Cause of action wholly or in part arose against a Corporation at a particular place, the plaintiff could sue the Corporation at that place, explanation II, according to the counsel, merely stated that even though the Corporation did not carry on business at its sole or principal office in India, it will be deemed to carry on business at that place and the suit could be brought there as well. If somebody, however, wanted to bring a suit at a place where the Corporation had only its subordinate office and not the principal office, then that could be done only it the cause of action had also arisen at that place. He further contended that Clauses (a),(b) and (c) of Section 20, were independent and none of them was controlled, restricted or repealed by either explanation I or II to the Section. If a case falls under any of the said clauses, then one should not go to the Explanations and it should be decided according to the particular clause under which it is covered or by which it is found to be governed so far as the question of the territorial jurisdiction of the Court is concerned. Reliance was placed on another Single Bench ruling of this Court in Bhola Nath Aggarwal and Anr. v. The Empire of India Life Assurance Company Ltd. (1947) 49 P.L.R, 162, where it was observed:

A Corporation can be said to carry on business at the head office or at the place where it has branch in respect of the cause of action which arises wholly, or in part at the place where the branch office is situated. If no put or the cause of action arises at the place of the branch office'' the Corporation cannot be said to transact business at that place. Where an insurance company has its head office at Bombay and a branch office at Lahore, the Lahore courts can have jurisdiction to try a suit against the Company if it can be shown that the cause of action wholly or in part arose within the jurisdiction of Lahore courts, otherwise the suit must be instituted at Bombay, where the Head Office is situate or at some place where the cause of action wholly or in part arose.

Counsel contended that there was some conflict between the two authorities mentioned above. That being so. it would be desirable that the point involved in the case should be referred to a larger Bench. Since the only question that arises for determination in this revision petition is the one on which there is said conflict, I would refer the case itself to a Division Bench for decision. Let the papers be placed before the learned Chief Justice for passing necessary order in that respect at a very early date, as the suit was instituted in July 1969 and it is yet at its preliminary stage.

JUDGMENT

Gopal Singh, J.

This reference to the Division Bench has arisen in revision petition filed by M/S Narula Brothers Pvt. Ltd, defendant against K.K. Khurana plaintiff from the order of sub Judge 1st Class, Gurgaon dated March 31, 1970 holding that that court had jurisdiction to try the suit filed by the plaintiff against the defendant for recovery of Rs. 3295.50 claimed on account of arrears of his salary.

The defendant is a limited company registered under the Indian Companies Act It has its Head Office at New Delhi. It runs a factory at Gurgaon The plaintiff was employed by the defendant on October 28, l966 as Administrative Officer in charge of the factory at Gurgaon. He resigned on September 18, 1968. The plaintiff filed the suit at Gurgaon on July 29, 1969. In para 7 of the plaint, the plaintiff stated that the cause of action arose to the plaintiff for recovery of the salary on the dates, when it had to be paid to the plaintiff that the plaintiff had been appointed at Gurgaon and that he worked for gain there and consequently the court at Gurgaon had jurisdiction to entertain the suit. In the written statement filed on behalf of the defendant, a preliminary objection was raised that the defendant was a limited company incorporated under the Indian Companies Act and that the plaintiff had been appointed at New Delhi and not at Gurgaon. It added that he used to a receive salary from the office at New Delhi and hence the court at Gurgaon had no jurisdiction.

In the replication filed on behalf of the plaintiff, the reply of the defendant that the plaintiff had been appointed at New Delhi was repudiated and it was asserted that the plaintiff had been appointed at Gurgaon and that he was entitled to receive his salary at Gurgaon and had been receiving the same there.

One of the issues framed on the pleadings of the parties was as to whether the court at Gurgaon had no jurisdiction to try the suit. This issue was tried by the court as a preliminary issue. Both the parties led evidence. Jitender Mehta D.W. I appeared on behalf of the defendant-company. He is Manager of the Company. He stated that the factory of the defendant-company is situate at Gurgaon that right from the date the plaintiff was appointed as an Administrative Officer upto the date he resigned, he worked at Gurgaon as Administrative Officer. He stated that the plaintiff used to be issued receipts for the salary. He admitted that he personally never paid any salary to the plaintiff. This witness also admitted that the factory situate at Gurgaon was registered under the Indian Factories Act, 1948 and that all labour disputes pertaining to the factory were referred to the Conciliation Officer at Gurgaon and that all industrial and labour returns were submitted from the office of the factory at Gurgaon. The plaintiff himself went into the witness box as P.W.I. He stated that he was incharge of the factory in the capacity of its Administrative Officer at Gurgaon that while functioning there right from the date of his appointment, he was paid his salary at Gurgaon and that he used to issue receipts to the defendant company for the salary received by him at Gurgaon. In course of his cross-examination, he emphatically denied the suggestion put to him that he used to go to Delhi to receive his salary It is the defendant company, who were in custody of the various documents pointing out to the place where the plaintiff was receiving his salary. They have withheld those documents from the court. The burden of this preliminary issue was upon the defendant to show that the court at Gurgaon had no jurisdiction to entertain the suit and therefore the defendant had to establish that the salary was not being received by and paid to the plaintiff at Gurgaon but at New Delhi. It has been averred on behalf of the defendant-company that the salary was being paid to the plaintiff by cheques in their Head Office at New Delhi. No such documentary evidence has been produced. The documentary evidence relating to this issue having been withheld by the defendant-company, no importance could be attached to the oral assertion of Jitendar Mehta that the salary was being paid to the plaintiff at New Delhi. It is admittedly the case of the defendant-company that the plaintiff right from the date of his appointment to the date of his resignation worked as Administrative Officer at Gurgaon. Being Administrative Officer, he was in charge of the administrative work of the office pertaining to the factory set up by the defendant-company at Gurgaon In the absence of any contract to the contrary and none has been proved on the file on behalf of the defendant-company, the salary would be payable to the plaintiff at the place, where he carried on his work as an Administrative Officer. It has also been stated by the plaintiff that he had been allotted a house at Gurgaon and that he resided there in that house and the rent of that house was being pail by the defendant-company According to letter dated December 22, l966 addressed by the Managing Director of the defendant-company to the Chief Inspector of Factories, Haryana State. Chandigarh, Exhibit P. 2, the latter was communicated that the plaintiff would be working as a Factory Manager with effect from January 1, 1967 for the purpose of the provisions of the various labour laws. This has reference to the factory being run by the defendant-company at Gurgaon. for which the plaintiff had been appointed as Administrative Officer. This letter also shows that the plaintiff was the principal officer appointed as Administrative Officer and described in this letter as Factory Manager and was administratively in charge of the affairs pertaining to the factory. This letter leaves no doubt that the plaintiff was running the administrative office of the factory at Gurgaon.

The above evidence leads to the conclusion that the defendant company was running an office at Gurgaon and the plaintiff had been appointed as Administrative Officer incharge of that company. That office being obviously under the control and supervision of the Head Office was nothing but an office subordinate to the Head Office of the Company situate at New Delhi Taking into consideration the cumulative effect of the evidence of Jitender Mehta D.W. I, the trial court drew the inference that the defendant-company had its subordinate office at Gurgaon. The correctness of that view taken by the trial court has not been challenged by any ground in the grounds of appeal. Thus, the defendant-company has treated as correct the finding of the trial court that it had a subordinate office at Gurgaon.

From the above discussion, the following two facts follow:

(1) The defendant company had its subordinate office at Gurgaon.

(2) The plaintiff was in charge of that office as Administrative Officer and was to be paid his salary there.

The question that arises for determination is as to whether by virtue of Explanation II appended to Section 20 of the Code of Civil Procedure, cause of action cannot arise to the plaintiff for filing the suit at Gurgaon, when on the basis of these findings of fact it has been found that the subordinate office of the defendant-company is situate at Gurgaon and the plaintiff is entitled to the payment of salary there. The relevant part of Section 20 along with Explanation II runs as follows:

Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction -

(a) the defendant, or each of the defendant''s where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business or personally works for gain; or

(b)...

(c) the cause of action, wholly or in part, arises.

Explanation I

Explanation II A corporation shall be deemed to carry on business at its sole or principal office in India, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

Under second part of Explanation II, a suit filed against the defendant company would be entertainable in a civil court exercising jurisdiction over the place, where the subordinate office of the defendant-company is situate and where the cause of action arose to the plaintiff against that company. We have found that the subordinate office of the company is situate at Gurgaon and the cause of action arose to the plaintiff at Gurgaon consequent upon failure of the defendant-company to pay salary to the plaintiff there. Thus, both the conditions pertaining to the maintainability of the suit against the defendant-company as referred to in second part of Explanation II of Section 20 of the CPC being satisfied, civil court at Gurgaon has jurisdiction.

For the foregoing reasons, we dismiss the revision petition and uphold the order of the trial Court. There will, however, be no order as to costs. The counsel for the parties have undertaken that the parties shall appear before the trial court on October 5, 1971.

Prem Chand Pandit, J.

I agree.