Case Note & Summary
Background: The dispute arose from a civil suit filed by M/S Nav Bharat Enterprises Pvt. Ltd. and others against M/S South East Asia Shipping Co. Ltd. seeking a perpetual injunction to restrain the appellant from enforcing a bank guarantee dated July 16, 1977. The suit was filed on the original side of the Delhi High Court. Facts: The underlying contract was executed in Bombay and performance of obligations and liabilities under the contract was required to be done in Bombay, as cargo of livestock was to be transported by ship from Kandla to Damman or Jeddah. In furtherance of the execution of the contract at Bombay, the respondents executed the bank guarantee at Delhi and transmitted it to Bombay for performance of the contract. The learned single Judge held that no part of the cause of action had arisen within the jurisdiction of the Delhi High Court and directed return of the plaint for presentation to the proper court. On appeal, the Division Bench of the Delhi High Court reversed, concluding that since the bank guarantee was executed in Delhi and payments were to be made in Delhi, the High Court had jurisdiction to try the suit. Legal Issues: The sole controversy before the Supreme Court was whether the Delhi High Court had jurisdiction to entertain the suit, specifically whether any part of the cause of action had arisen in Delhi. Arguments: The respondents relied on ABC Laminart Pvt. Ltd. & Anr. vs. A.P. Agencies, Salem to contend that since part of the cause of action had arisen in Delhi (execution of bank guarantee and enforcement of liability from the bank at Delhi), the Delhi High Court had jurisdiction. The appellant contended that the Delhi High Court lacked jurisdiction because the contract was executed and performed in Bombay. Court's Analysis: The Supreme Court reiterated that cause of action consists of a bundle of facts which give cause to enforce the legal injury for redress in a court of law. It must include some act done by the defendant, since in the absence of such an act no cause of action would accrue. Given the admitted position that the contract was executed and performed within the jurisdiction of the Bombay High Court, merely because the bank guarantee was executed at Delhi and transmitted for performance in Bombay did not constitute a cause of action to lay the suit on the original side of the Delhi High Court. The contention that execution of the bank guarantee and enforcement of liability from the bank at Delhi conferred jurisdiction was rejected. Decision: The Supreme Court held that the learned single Judge was right in concluding that no part of the cause of action had arisen within the jurisdiction of the Delhi High Court. The appeal was allowed, the order of the Division Bench was set aside, and the order of the learned single Judge directing return of the plaint for presentation to the proper court was restored. No costs were awarded.
Headnote
A) Civil Procedure - Jurisdiction - Cause of Action - Not mentioned - The Supreme Court considered whether execution of a bank guarantee in Delhi gave rise to a part of cause of action in Delhi when the underlying contract was executed and to be performed in Bombay. It held that cause of action is a bundle of facts and must include some act done by the defendant; in the absence of such act no cause of action would accrue. Merely because the bank guarantee was executed at Delhi and transmitted for performance in Bombay, it did not constitute a cause of action to enable the respondent to lay the suit on the original side of the Delhi High Court. Held: the appeal was allowed, the order of the Division Bench was set aside, and the order of the learned single Judge directing return of the plaint for presentation to the proper court was restored.
Issue of Consideration
Whether the Delhi High Court had jurisdiction to entertain the suit when the contract was executed and performed in Bombay, and only the bank guarantee was executed in Delhi.
Final Decision
Appeal allowed; order of Division Bench set aside; order of learned single Judge restored; no costs. Directed return of plaint for presentation to proper court.
Law Points
- Cause of action is a bundle of facts
- Part of cause of action arises where contract executed and performed
- Execution of bank guarantee alone does not confer jurisdiction
- Plaintiff must establish some act by defendant within jurisdiction
