Validity of Exclusive Jurisdiction Clause and Law Governing Territorial Jurisdiction of Court for Filing of Suit

Section 15 to 20 of the Code of Civil Procedure, 1908 [“CPC”] covers ‘Place of Suing’ and dictates in which Court the Suit ought to be filed, depending on particular facts and circumstances. While Section 16 to 19 cover specific kind of Suits, viz. Suits pertaining to immovable property, Suit for compensation, etc. and provides place of suing for the same, Section 20 of the CPC on the other hand is the residuary Section and cover all ‘other Suits’ not falling under Section 16 to 19 and provides guiding principles for invoking territorial jurisdiction of the Courts. Section 20 of the CPC, essentially, postulates that a Suit shall be instituted in a Court within whose local limits-

1. The Defendant or any of the Defendants, as the case may be-

Actually, and voluntarily resides, or
Carries on business, or
Personally, works for gain

2. Cause of action, wholly or in part arises;

In case the Defendant is a Corporation, the explanation to Section 20 clarifies that 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. In Hakam Singh vs Gammon (India) Ltd.¹ the Supreme Court held that “corporation” referred to in explanation to Section 20 also includes a company registered under the Indian Companies Act.

The parties while negotiating Contract are at liberty to choose the place of suing in case a dispute arises out of the Contract. Therefore, an exclusive jurisdiction clause is incorporated in the Agreement which confers jurisdiction on Courts at a particular place to entertain the dispute arising out of the Agreement and excludes the jurisdiction of all other Courts. Section 20 of the CPC provides various places where the Plaintiff may file a Suit. For example, if the cause of action has arisen at Delhi and Mumbai, both, the Plaintiff is at liberty to file a Suit at either of the places. However, can parties, by way of any Agreement, restrict the filing of Suit to only one of the above Courts, say only Delhi, and exclude Courts at Mumbai, even though the cause of action has also arisen at Mumbai?

Criteria for a valid Exclusive Jurisdiction Clause

In Rakesh Kumar Verma vs HDFC Bank Ltd.², the Supreme Court held that a valid ‘exclusive jurisdiction clause’ must satisfy the following criteria-

It should be in consonance with Section 28 of the Contract Act i.e. it should not absolutely restrict any party from initiating legal proceedings pertaining to the Contract;
The Court that has been given exclusive jurisdiction must be competent to have such jurisdiction in the first place i.e. a Court no having jurisdiction as per the statutory regime cannot be bestowed jurisdiction by means of a Contract, and
The parties must either impliedly or explicitly confer jurisdiction on a specific set of Courts.

If the aforesaid criteria is satisfied then the validity of the exclusive jurisdiction clause shall not be called into question.

Different Classifications of Jurisdiction of Court

Section 21 of CPC enjoins the Defendant to raise objections to the jurisdiction of the Court at the earliest possible opportunity and bars the Appellate or Revisional Court from entertaining a challenge to jurisdiction, unless the Defendant had set up a challenge to the same at the Court of first instance at the earliest opportunity. In Harshad Chiman Lal Modi vs DLF Universal Ltd.³ , the Supreme Court observed that jurisdiction of a Court can be classified into following three categories on the basis of which the jurisdiction can be challenged-

Territorial or Local Jurisdiction;
Pecuniary Jurisdiction; and
Jurisdiction over the subject matter

The Supreme Court in Harshad Chiman Lal Modi (supra) held that so far the territorial and pecuniary jurisdiction are concerned, objection to such jurisdiction must be taken at the earliest possible opportunity and in any case at or before the settlement of issues. If the objection is not taken at the earliest then the Defendant shall not be allowed to take objection at a subsequent stage. Insofar the jurisdiction over the subject matter is concerned, the Supreme Court observed that it is totally distinct and stands on a different footing. If a Court having no jurisdiction over the subject matter, passes a decree then such decree is nullity and its invalidity could be set up whenever or wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings⁴.

If one or more Courts have Jurisdiction to try a Suit, an Agreement that the disputes shall be tried in one of such Courts is not contrary to Public Policy or Section 28 of Contract Act.

The earliest authority on this proposition is Hakam Singh (supra) wherein the Agreement between the parties contained exclusive jurisdiction clause that Courts at Bombay alone shall have jurisdiction to adjudicate the dispute between the parties. The Appellant initiated proceedings before Trial Court at Varanasi which held that since entire cause of action had arisen at Varanasi therefore Varanasi Court shall have jurisdiction notwithstanding the exclusive jurisdiction clause conferring jurisdiction on Courts at Bombay. This was overturned in Appeal by the Allahabad High Court which held that Courts at Bombay alone shall have jurisdiction in view of the jurisdiction clause. In Appeal before Supreme Court, the Court observed that since Respondent, being a Corporation/Company, has its principal office in Bombay, as per explanation to Section 20, it is deemed to be carrying on business at Bombay and therefore clause 13 of the Agreement conferring jurisdiction on Courts Bombay, is not illegal and not in contravention of Section 28 of Contract Act. The Court categorically held that where two courts or more have jurisdiction under CPC to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy or Section 28 of the Contract Act.

The ratio laid down in Hakam Singh (supra) was followed by Supreme Court in A.B.C. Laminart Pvt. Ltd. and Anr. vs A.P. Agencies, Salem ⁵ but with a slight nuance. The exclusive jurisdiction in clause in A.B.C. Laminart (supra) stipulated that “any dispute arising out of this Sale shall be subject to Kaira Jurisdiction”. The Respondents however, filed a Suit for recovery at Court in Salem. The Supreme Court observed that since Contract was executed at Kaira and goods under the Agreement were delivered at address of the Respondent at Salem, therefore Courts at both the places would have jurisdiction. The Court then observed that the exclusive jurisdiction clause does not contain the words ‘exclusive’, ‘alone’, ‘only’ therefore, it cannot be construed that jurisdiction of Courts at Salem was ousted. Therefore, the Supreme Court held that Courts at Salem would have jurisdiction notwithstanding the jurisdiction clause conferring jurisdiction on Courts at Kaira in view of absence of express exclusion.

The position of law laid down in A.B.C. Laminart (supra) underwent a change in Swastik Gases Pvt. Ltd. vs Indian Oil Corporation Ltd.⁶ wherein a three-judge bench of the Supreme Court was dealing with a matter containing jurisdiction clause conferring jurisdiction on Courts at Kolkata. The Appellant argued that since cause of action has also arisen at Jaipur, therefore the Application filed under Section 11 of the Arbitration and Conciliation Act, 1996, would be maintainable at Rajasthan High Court especially when clause 18 does not expressly bar the jurisdiction of other Courts. However, the Supreme Court observed that absence words like ‘exclusive’, ‘alone’, ‘only’ or ‘exclusive jurisdiction’ are not decisive and will not make any material difference. The Supreme Court categorically held that when Contract specifies the jurisdiction of the Courts at particular place and such Courts have jurisdiction to deal with the matter then an inference may be drawn that parties intended to exclude all other Court. Such a clause is not hit by Section 23 or 28 of Contract Act and sustainable in law. In his concurring opinion, Justice Madan Lokur also observed that the very fact that the ouster clause has been included in the Agreement between the parties, coveys their intention to exclude the jurisdiction of Courts other than those mentioned in the clause and absence of words like ‘exclusive’, ‘alone’, ‘only’ in the jurisdiction clause is immaterial.

In B.E. Simoese Staraburg Niedental vs Chhatisgarh Investment Ltd.⁷, the three judge bench of Supreme Court was adjudicating a matter wherein the Contract contained an exclusive jurisdiction clause conferring jurisdiction on Courts at Goa. However, the Respondent filed Section 9 Application under Arbitration Act before District Judge, Raipur on the premise that cause of action also arose at Raipur. The Supreme Court relied upon Swastik Gases (supra) and held that since cause of action arose at Goa and Raipur both, therefore the Jurisdiction clause conferring jurisdiction on Courts Goa, is legal and ought to be upheld. Therefore, the Court held that Raipur Court does not have jurisdiction in view of the exclusive jurisdiction clause conferring jurisdiction on Courts at Goa.

In Baboon Investments Holding BV vs M/s Atria Brindavan Power Pvt. Ltd.⁸ the Division Bench of Karnataka High Court was adjudicating a matter in which the exclusive jurisdiction clause in the Agreement conferred exclusive jurisdiction on Courts at Mumbai. However, Plaintiff initiated proceedings before Commercial Court in Bengaluru which was opposed by the Appellant on the ground of exclusive jurisdiction conferred on Courts at Mumbai. The Trial Court did not entertain the objection and therefore, the Appellant appealed before the High Court. The Division Bench observed that the cause of action has arisen at Mumbai and Banglore both, therefore, the jurisdiction clause, conferring jurisdiction on Courts at Mumbai is not bad in law. Therefore, the Court held that Commercial Court at Bangaluru would not have the jurisdiction and allowed the Appeal by setting aside the impugned order. The Respondent/Plaintiff agreed to move an Application before Commercial Court seeking return of Plaint.

In Rakesh Kumar Verma vs HDFC Bank⁹ the Supreme Court was adjudicating two similar appeals wherein the Appellants Rakesh and Deepti were appointed by the HDFC Bank in different positions in the Company. Their appointment letters contained an exclusive jurisdiction clause conferring exclusive jurisdiction on Courts at Mumbai. Subsequently, their services were terminated by the Bank vide termination letter. While Rakesh filed Civil Suit challenging his termination in Trial Court at Patna, on the other hand Deepti filed her Civil Suit before Rohini Court, in Delhi. Both the Suits were opposed by the Bank on ground of exclusive jurisdiction conferred on Courts at Mumbai. The matters reached Supreme Court in Appeal. The Supreme Court observed that since appointment letters were issued from Mumbai, employment agreement was dispatched from Mumbai, the decision to terminate the services of Rakesh and Deepti was taken in Mumbai and letter of termination were dispatched from Mumbai, therefore, cause of action arose in Mumbai and a clause in the Agreement conferring jurisdiction on Courts at Mumbai, which has jurisdiction under CPC, is not illegal, and not against Public Policy or Section 28 of Contract Act.

Parties by an Agreement cannot confer jurisdiction on a Court which otherwise does not possess under CPC. Such a Clause is void and against Public Policy

While parties have the liberty to confer jurisdiction upon a Court of their choice, however, it is imperative that the Court upon which the jurisdiction has been conferred has jurisdiction in law, in consonance with the illustrations laid down in Section 20 of the CPC. If the chosen Court has no nexus whatsoever with the dispute at hand then that Court would not have jurisdiction notwithstanding the exclusive jurisdiction clause in the Contract conferring jurisdiction on it to entertain the dispute.

The three judge bench judgment of the Supreme Court in the matter of Patel Roadways Ltd., Bombay vs Prasad Trading Company and Ors.¹⁰ is an important decision wherein the Supreme Court has undertaken threadbare analysis of the expression “carries on business” vis-à-vis explanation to Section 20 of CPC. The Agreement between the parties conferred exclusive jurisdiction on Courts at Mumbai. The Respondent delivered goods at subordinate office of Appellant, at Madras, for transport to Delhi. However, the Appellant could not safely transport the goods to Delhi as the goods reached Delhi in a damaged condition. The Respondent filed Suit for damages in City Civil Court at Madras which was opposed by the Appellant on the ground of exclusive jurisdiction clause conferring jurisdiction on Court at Mumbai. The Appellant argued that as per explanation to Section 20, the Appellant is deemed to be carrying on business at its principal office which is at Mumbai. The Supreme Court however, clarified that explanation to Section 20 is in two parts-

“9…The Explanation is in two parts, one before the word “or” occurring between the words “office in India” and the words “in respect of” and the other thereafter. The Explanation applies to a defendant which is a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will “be deemed to carry on business” at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The words “at such place” occurring at the end of the Explanation and the word “or” referred to above which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the Court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office“. (emphasis supplied)

The Supreme Court linked cause of action with the subordinate office and held that when the Defendant has a Principal office and sub-ordinate office and cause of action arises at the sub-ordinate office, then the Defendant cannot be heard to say that it cannot be sued at the subordinate office because it does not carry on business at that place. The Supreme Court noted that the intention of the legislature was that in case of a corporation, the location of its subordinate office where the cause of action arises, is to be the relevant place for the filing of suit and not the principal place of business. In the present case, the Court observed that since the Appellant had its subordinate office where the goods were delivered by the Respondent for transport to Delhi, i.e. Madras, the cause of action arose at Madras, therefore, the Courts at Bombay did not have any jurisdiction at all to entertain the suit and the parties could not confer jurisdiction on the Courts at Bombay by an Agreement.

In Ranbaxy Fine Chemicals Ltd. vs National Enterprises ¹¹ the Delhi High Court was adjudicating a matter in which clause 17 of the Agreement conferred exclusive jurisdiction on Courts at Delhi. The Plaintiff under the Agreement agreed to supply goods to Defendant from its godown in Maharashtra to the address of the Defendant in Chhattisgarh. Pursuant to a dispute, the Plaintiff filed a suit for recovery in Delhi by solely relying on clause 17 of the Agreement without averring if cause of action has arisen in Delhi. Court observed that no cause of action arose in Delhi, and Plaintiff ought to have filed Suit in Maharashtra or Chhattisgarh, having jurisdiction as per Section 20 of the CPC. The Court categorically held that mere statement in clause 17 of the Agreement that Delhi alone will have jurisdiction would not confer jurisdiction on Delhi Courts if the Court otherwise lacks inherent jurisdiction and parties by their Agreement cannot confer jurisdiction on a Court which otherwise does not possess the jurisdiction under CPC. The Court further held that if the Delhi Courts do not have jurisdiction and the Courts at Chhattisgarh and Maharashtra have jurisdiction then the Agreement in question which ouster jurisdiction of those Courts and confer jurisdiction on Delhi Courts, in unlawful and void.

It is also relevant to reproduce the principles laid down by the Delhi High Court in Jai Ganesh Petroleum vs Union of India¹² for invoking territorial jurisdiction of Court-

Making and signing of a contract is part of cause of action;
Parties cannot by consent confer jurisdiction on a court;
In the case of several courts having jurisdiction, parties can legally agree to exclude the jurisdiction of any of such courts and elect to restrict territorial jurisdiction to one out of such courts which otherwise has jurisdiction;
The High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts which constitute the cause or are necessary to decide the dispute have wholly arisen within its territorial jurisdiction, or, in any case, which have, at least in part, arisen within its jurisdiction;
Each and every fact pleaded in the petition does not ipsofacto lead to the conclusion that those facts constitute cause of action vesting territorial jurisdiction upon the court to adjudicate upon the lis;
Only those facts pleaded which have a nexus or relevance with the issues involved in the lis confer territorial jurisdiction on the court;
In determining an objection relating to lack of territorial jurisdiction, the court must take all the facts pleaded in support of the cause of action as pleaded in the petition into consideration without embarking upon an inquiry as to the correctness or otherwise to the fact that;
A question of territorial jurisdiction must be apparent on the facts pleaded in the petition, the source or otherwise of the averments made in the writ petition being immaterial. In matters where the parties have agreed to restrict jurisdiction to one or the other court out of several courts which may have territorial jurisdiction, such clause would be enforceable only if the litigation which has arisen falls within the domain of the subject matter which is being provided in such clause. The parties may have confined jurisdiction to litigation arising only under the agreement. In such cases, the court has to arrive at a finding that the litigation between the parties was within the domain of the clause confining jurisdiction. If it does not, then the territorial jurisdiction of the court could be barred;
The court must be satisfied that all relevant facts which have merely a substantial nexus with the lis are located within its territorial jurisdiction;
Even if it were to be held that a court has jurisdiction, yet guided by principles of forum non-conveniens, the court may divert the parties to the court having a closer connection with the subject matter of the litigation. Residence of parties, location of evidence, situs of the dispute and such like considerations could guide the decision of the court to this effect.

In Rattan Singh Associates Pvt. Ltd. vs Gill Power Generation Company PVt. Ltd.¹³ the Delhi High Court added one more principle to the above laid down, viz. “A trivial or insignificant part of the cause of action arising at a particular place or where it may have incidentally arisen, would not be sufficient to confer territorial jurisdiction on the Court. It is the Court within whose jurisdiction, the cause of action has substantially arisen which would have territorial jurisdiction to adjudicate upon the lis”. In the aforesaid case the Petitioner had filed a Section 11 Petition before the Delhi High Court for appointment of Arbitrator. The Petitioner contended that the Agreement was executed in Delhi. However, undisputedly the Contract was to be performed at Punjab and the Respondent was located in Punjab. The Court held that even if it is to be assumed that the Agreement was executed in Delhi, yet Delhi High Court would not be the proper Court to exercise the jurisdiction as the Contract has not been performed in Delhi. Since the subject matter of the dispute has arisen at Punjab and all material aspects of the cause of action for maintaining the Petition have not arisen at Delhi, consequently, Delhi High Court would not have the territorial jurisdiction on the subject matter of the dispute.The Court also observed that mere existence of an office within the jurisdiction of the Court which is called upon the exercise jurisdiction, anything more, by itself, would not be sufficient to permit the Court to exercise jurisdiction over the subject matter of the litigation.

Exceptional circumstances wherein the Exclusive Jurisdiction Clause will not be upheld

In Shridhar Vyapaar Pvt. Ltd. vs Gammon India Ltd.¹⁴ the Calcutta High Court although reiterated the principle laid down in Swastik Gases (supra) viz. where parties have agreed to confer exclusive jurisdiction to a Court located at a particular place, the intention of the parties to exclude all other courts must be given primacy, however, drew out the following exceptions wherein the exclusive jurisdiction clause will not be upheld-

Where one of the parties to the Agreement pleads ignorance of the clause or proves by conduct supported by evidence that the clause was unilateral addition to the Agreement by one party only and not affirmed by the other.
Where despite both parties agreeing to confer exclusive jurisdiction on certain Courts, filing or continuing proceedings in the Court agreed upon would either be oppressive or cause insurmountable inconvenience to either of the parties.
Where the evidence forming the basis of the dispute and the witnesses who would bring that evidence to light are located in a jurisdiction other than that agreed upon by the parties.
Where parties have by an agreement, conferred jurisdiction upon a Court which is not competent to try the proceedings.

In Sangha Erectors Pvt. Ltd. vs Laxmi Cranes and Trailer Pvt. Ltd.¹⁵ the Kerala High Court also observed that unilateral affirmation by one of the parties to the Contract, without the same being specifically accepted by the other party, will not confer exclusive jurisdiction on any court by overlooking the conferment of jurisdiction based on cause of action stipulated in Section 20(c) of the CPC. Therefore, it is imperative that there is consensus ad-idem between the parties vis-à-vis the exclusive jurisdiction clause.

Exclusive Jurisdiction clause will not override Jurisdiction statutorily conferred upon Courts.

In Harshad Chiman Lal Modi vs DLF Universal Ltd. and Anr.¹⁶ the Plaintiff filed a Suit for specific performance of Plot Buyer Agreement, at Delhi, and inter alia prayed for possession of the immovable property, situated in Gurgaon. Clause 28 of the Agreement conferred exclusive jurisdiction on Courts at Delhi. The Plaintiff argued that the Defendants were having their head office in Delhi, the Agreement was executed in Delhi, payment was to be made in Delhi and breach of Agreement took place in Delhi therefore Delhi Court has jurisdiction. The Supreme Court however, observed that as per Section 16 of the CPC, actions against res or property should be brought in the forum where such res is situate. A Court within whose territorial jurisdiction the property is not situate has no power to deal with and decide the rights or interest in such property. The Court also observed that although proviso to Section 16 empowers the Court to still grant relief where the relief sought vis-à-vis the immovable property, can be obtained through the personal obedience of the Defendant, however, such a provision ought not to be interpreted or construed to enlarge the scope of the principal provision.

In Rohit Kochhar vs Vipul Infrastructure Developers Ltd. Ors.¹⁷ the Supreme Court was adjudicating a case wherein the Plaintiff filed Suit for specific performance in Delhi inter alia seeking relief of permanent injunction and specific performance of Contract executed between parties in connection with a commercial property situated in Gurgaon. The Plaintiff inter alia argued that even though the immovable property is situated in Gurgaon, however, the relief sought can be granted through personal obedience of the Defendant, as per proviso to Section 16 of CPC and no prayer for possession has been made in the Suit. The Supreme Court drew sustenance from the ratio laid down in Harshad Chiman Lal (supra) and observed that even if the Suit for specific performance is decreed without a specific decree for transfer of the possession of the suit property, the same can be enforced only when the trial court directs the Defendants to convey the suit property to the Plaintiff by getting the sale deed registered with respect to the suit property as it is only after registration that the transfer of title would take place from the Defendants to Plaintiff. The registration of sale deed would have to take place at Gurugram as the property is situated there and the Defendants would have to go to Gurugram, i.e. outside the jurisdiction of Delhi High Court for execution of sale deed. Therefore, the Supreme Court observed that the proviso to Section 16 would not be applicable in the present case. The Supreme Court also considered the argument of the Plaintiff that no prayer of possession has been made in the Suit and held that transfer of possession is implicit in the Contract between the parties and absence of specific prayer seeking transfer of possession would not have any bearing on the character of Suit, which is one covered by Section 16(d) of the CPC.

In Alpha Residents Welfare Association (Regd.) Karnal & Ors. vs Alpha Corp. Development Pvt. Ltd. & Ors.¹⁸ the Plaintiff filed Suit for specific performance in Karnal, inter alia seeking declaration, mandatory and permanent injunction with respect to the immovable property situated at Karnal. The Agreement between the parties contained an exclusive jurisdiction clause, conferring jurisdiction on Courts at Delhi. The Defendants moved an Application under Order 7 Rule 11 seeking dismissal of Plaint on ground of jurisdiction. The Trial Court dismissed the Application however, the High Court allowed the same in Appeal, directing rejection of Plaint. In Appeal before the Supreme Court, the Court reiterated the principle laid down in Harshad Chiman Lal (supra) and held that clause 23 of the Agreement conferring jurisdiction on courts at Delhi would not override the jurisdiction conferred staturily to the Courts. The Court explained by citing the following example-

“It may not be out of place to put an example that in case an agreement has been entered between the parties not with respect to the immovable property, but for business transactions or otherwise, in that situation, where the immovable property is not involved, subject to the limitations prescribed under the law, by virtue of an agreement, the parties may decide regarding place of sue and conferment of jurisdiction to the Court. It may be one of the places where a part of cause of action arose. Again, with caveat that the parties by agreement cannot confer jurisdiction on a Court, which otherwise it does not have. But in a case of immovable property, by virtue of the agreement, the jurisdiction cannot be taken away from the place where the property or part thereof is situate, as specified in Sections 16 and 17 of CPC. In other words, it is not open to the parties to confer jurisdiction on a Civil Court by agreement which it does not possess under the Code of Civil Procedure.” (emphasis supplied)

Determining Territorial Jurisdiction of the High Court for entertaining Writ Petition

Article 226 (1) of the Constitution of India confers power upon the High Court to issue Writs to any person, authority, including any government, that are situated “within its territory”. Therefore, a prima facie reading of the provision suggests that in order to invoke Article 226(1) of the Constitution, it is immaterial where the cause of action may have arisen, what is imperative is that the Respondent must be situated within the territorial limits of the High Court.

Article 226(2) on the other hand, confers additional power upon the High Court to entertain Writ Petition if cause of action wholly or in part, arises within its territory, notwithstanding that the seat of Government or Authority is not within its territory. Therefore, if cause of action has arisen within the jurisdiction of New Delhi, however, the concerned Government Authority against which action is sought, has its registered address in Mumbai, then Delhi High Court would have the jurisdiction to entertain the Writ Petition as per Article 226(2) of the Constitution.

It is now well settled that a Writ Petition is a Public Law remedy which may be filed by any person, however, the main Respondent in the Writ Petition should be either Government, Governmental Agencies, or State instrumentalities of a State within the meaning of Article 12¹⁹. It is common knowledge that the Seat of Government of India is in New Delhi and the Government as such is located in Delhi²⁰. Mostly all the Public Sector Undertakings have their registered offices in New Delhi. Therefore, by a plain reading of Article 226(1) a party may invoke the Jurisdiction of Delhi High Court under Article 226(1) notwithstanding that the cause of action may have arisen entirely in a different State. If Article 226(1) is followed stricto sensu, then Delhi High Court would be inundated with Writ Petitions.

In Kusum Ingots and Alloys Ltd. vs Union of India²¹ the Supreme Court observed that Section 20(c) of the CPC would be applicable to Writ Proceedings for invoking territorial jurisdiction of High Court. The three-judge bench was adjudicating the issue whether the Seat of the Parliament or the Legislature of a State would be a relevant factor for determining the territorial jurisdiction of a High Court to entertain a Writ Petition under Article 226 of the Constitution. In facts of this case, the Appellant was registered under the Companies Act having its head office at Mumbai. It obtained a loan from the Bhopal Branch of the State Bank of India. The Bank issued a notice for repayment of loan from Bhopal under the SARFAESI Act, 2002. The Appellant Company filed Writ Petition in the Delhi High Court challenging the vires of the Legislation which was dismissed by the Delhi High Court. In SLP to Supreme Court, the Appellant contended that since the Constitutionality of a Parliamentary Legislation was questioned, the High Court of Delhi had the requisite jurisdiction. The Supreme Court, however disagreed and clarified that a Writ Petition questioning a Parliamentary Act shall not be maintainable in the High Court of Delhi only because the Seat of the Union of India is in Delhi. The Court emphasized on “cause of action” and observed that in order to confer jurisdiction on a High Court to entertain a writ petition it must disclose that the integral facts pleaded in support of the cause of action do constitute a cause so as to empower the court to decide the dispute and the entire or a part of it arose within its jurisdiction

A Division Bench of Delhi High Court in the matter of Ex-Rect./GD Vinod Kumar vs Union of India²² held that clauses (1) and (2) of Article 226 have to be read and construed in conjunction with each other and in order to take the benefit of the enlarged jurisdiction of Article 226, it would be obligatory upon the Petitioner to show that any cause of action or part thereof had arisen within the territorial jurisdiction of the High Court.

In Easter Coalfields & Ors. vs Kalyan Banerjee²³ the Respondent was an Employee in the Appellant Company, serving at Mugma, Jharkhand. His services were terminated by the General Manager/Disciplinary Authority, which was also situated in Mugma, Jharkhand. However, the Respondent filed Writ Petition before the Calcutta High Court, challenging its termination and contended that since the head office of the Appellant is situated in Calcutta therefore, Calcutta High Court would have jurisdiction. The Division Bench of the High Court, however disagreed and dismissed the Petition by observing that simply because a head office of the Company is within the territorial limits of the Calcutta High Court, that will not give jurisdiction to the Court unless cause of action arises within the territorial limits of the Calcutta High Court. However, in Review proceedings, the aforesaid judgment was set aside which was challenged in SLP before the Supreme Court. The Supreme Court noted that entire cause of action had arisen in Jharkhand and in view of the law laid down in Kusum Ingots (supra) only that Court will have jurisdiction within whose territorial limits the entire cause of action has arisen. The Supreme Court further reiterated that merely because the head office of the Appellant company was situated in the State of West Bengal, the same by itself will not confer any jurisdiction on Calcutta High Court, particularly when the head office had nothing to do with the order of punishment passed against the Respondent. A full Bench of the Delhi High Court in the matter of Sterling Agro Industries vs Union of India²⁴, held that while entertaining Writ Petition the doctrine of forum conveniens and the nature of cause of action are required to be scrutinised upon the factual matrix of each case.

In Shrishti Udaipur Hotels and Resorts Pvt. Ltd. vs Housing and Urban Development Corporation Limited²⁵, the Delhi High Court was adjudicating a Writ Petition filed by the Petitioner challenging the Loan Recall Notice issued by the Respondent. In the facts of this case, the loan agreement between the parties was executed in Jaipur; the land in question where the project was being developed by the Petitioner was situated in Udaipur; and the impugned loan recall notice was issued by the Jaipur regional branch of the Respondent. However, the Petitioner invoked the jurisdiction of Delhi High Court by inter alia contending that the Registered office of the Respondent/Corporation was in Delhi. However, the Delhi High Court held that that this cannot be a ground to canvass that the cause of action has arisen within the territorial jurisdiction of Delhi High Court. The Court further observed that a bald submission made to the effect that ordinarily a decision to recall a loan from a client is taken at the head office of the Respondent/Corporation would not be of much assistance to the Petitioner. Since the entire cause of action had arisen in Jaipur, the Court held that the Writ Petition was not maintainable before Delhi High Court. In Jayshreyesh Kaushik vs Union of India & Anr.²⁶, the Delhi High Court similarly observed that since no part of cause of action had arisen within its territorial limits, merely impleading the Union of India through the Secretary, Government of India, Department of Atomic Energy, which is located in Delhi, would not by itself vest the Court with territorial jurisdiction.

In Centre for Public Interest Litigation vs Union of India & Ors²⁷, a Division Bench of the Delhi High Court was adjudicating a Writ Petition filed by the Petitioner challenging the e-tender process for allotment of land which was situated in Gujrat. The Respondent opposed the Petition on the ground of territorial jurisdiction by contending that the E-tender process took place in Gujrat, the land for which tender has been issued is situated in Gujrat; the lease agreement was executed in Gujrat, and the decision-making authority is also situated in Gujrat, therefore no part of cause of action arose within the territorial limits of Delhi High Court. The Respondent also argued that merely because the Union of India has been arrayed as Respondent, that would not confer any right upon the Petitioner to file Petition before Delhi High Court. The Court acceded to the submissions made by the Respondents and noted that since no part of cause of action arose within the territorial limits of the Delhi High Court, therefore, Writ Petition was not maintainable.

In Dr. Rakesh Dwivedi vs Coal India Ltd.²⁸, the Petitioner argued that the Delhi High Court would have the territorial jurisdiction to entertain the Writ Petition on the following grounds-

One of the Offices of Coal India Ltd. was located in Delhi
Petitioner is posted and works for gain in Delhi
The communications with regard to his grievances were addressed to the official Respondents from Delhi.
The response to one of the representations was received by the Petitioner in Delhi.

The Delhi High Court, however, observed that none of the above factors would confer territorial jurisdiction upon the Court. The Court reiterated that even though the Corporate Office of the Respondent is located in Delhi but that by itself will not clothe Delhi High Court with jurisdiction to entertain the Petition. The Court further emphasized that the letter and spirit of Article 226(2) is that no High Court shall have territorial jurisdiction to entertain a Petition unless a cause of action arises in its territorial limits and the location of the office of the Authority or Department will not be enough to confer the jurisdiction. Since no part of cause of action arose within the territorial limits of Delhi High Court, the Court dismissed the Petition for lack of jurisdiction.

In Meghalya Oxygen Pvt. Ltd. vs Oil and Natural Gas Corporation²⁹ the work awarded under the Tender was to be executed at Agartala and the entire communication between the parties including the show cause notice issued to the Bidder and reply thereto by the bidder and also the banning Order were issued at Agartala by the Regional office of ONGC. However the bidder challenged the Banning order before the Delhi High Court by filing Writ Petition on inter alia ground that the registered office of the ONGC is at Delhi therefore Delhi High Court would have jurisdiction. However, the Court held that since the entire cause of action arose at Agartala, the Delhi High Court would not have jurisdiction and the parties cannot by way of an Agreement confer jurisdiction on a Court which otherwise does not have.

The aforesaid line of authorities suggest that the sole determining and decisive factor for invoking Writ Jurisdiction of the High Court, insofar the territorial limits are concerned, is “cause of action”. The Petitioner must demonstrate that the cause of action, wholly or in part, arose within the territorial limits of the High Court and the mere fact that the seat of the Government or the concerned department is located within the territorial limits of the High Court, will not confer jurisdiction upon the Court³⁰. Even though clauses (1) and (2) of Article 226 are separate, with clause (2) extending the territorial limits of the High Court to entertain Writ Petition, however, as observed by the Division Bench of Delhi High Court in Ex-Rect./GD Vinod Kumar (supra), both the clauses have to be read and construed in conjunction with each other. In Bharati Nidhi Ltd. vs Securities and Exchange Board of India & Ors.³¹ 8586 the Delhi High Court held that even if a small part of cause of action is established and the same is found to be non-integral for non-material to the lis, the court may invoke the doctrine of forum non-conveniens and decline to exercise its writ jurisdiction. This was further affirmed by the Division Bench of Delhi High Court.³² In Mr. Gautam Mondal vs Union of India³³2025 the Division Bench of Delhi High Court observed that passing of order in Delhi is not enough to invoke its writ jurisdiction. In the aforesaid case, entire cause of action had arisen in West Bengal therefore, the Court declined to exercise Writ jurisdiction.

The question as to whether the Court has territorial jurisdiction to entertain a Writ Petition must be arrived at on the basis of averments made in the Petition, the truth or otherwise thereof being immaterial³³Oil and Natural Gas Commission vs Utpal Kumar Basu and Ors. (1994) 4 SCC 711. All the necessary facts must form an “integral part” of cause of action. The fact which is neither material nor essential nor integral part of cause of action would not constitute a part of cause of action within the meaning of clause (2) of Article 226 of the Constitution³⁴. The mere fact that the Writ Petitioner carries on business at Calcutta or that the reply to the correspondence made by it was received at Calcutta is not an integral part of the cause of action so as to confer Calcutta High Court with jurisdiction to entertain the Petition³⁵.

Conclusion

From a conspectus of the above decisions, the position of law that emerges is that the exclusive jurisdiction clause, conferring jurisdiction on a particular Court, will not ipso facto confer jurisdiction upon the Court mentioned in the clause. Such a clause has to be tested on the touchstone of the principles laid down in the above judgments. A Party by way of an Agreement cannot confer jurisdiction upon a Court which otherwise does not possess jurisdiction, in law. Even if the Court, on which the jurisdiction has been conferred by the parties, in fact, has the jurisdiction to try the case, still the parties, in exceptional circumstances, as laid down by Calcutta High Court in Shridhar Vyapaar Pvt. Ltd (supra), contest the applicability of the exclusive jurisdiction clause.

By Daksh Pandit