Case Note & Summary
The appeal arose from a dispute between Cement Workers' Mandal (appellant-Union) and Global Cements Ltd (respondent-company) and Indian Bank (respondent-bank). The Union represented workers employed at the company's cement factory in Porbandar, Gujarat. The company closed the factory in 1998 without paying wages. The Union filed Recovery Application No.86/98 before the Labour Court at Junagadh, which on 12.04.1999 directed the company to pay Rs.81,50,744/- plus costs. A recovery certificate for Rs.60,35,379/- was issued by the Collector, Junagadh, but remained unexecuted. Meanwhile, Indian Bank had lent money to the company and filed a claim before the Debt Recovery Tribunal (DRT) at Calcutta, which on 04.03.2003 ordered sale of company properties. The Union then filed Special Civil Application No.12212 of 2004 in the Gujarat High Court seeking directions to Indian Bank to deposit 50% of sale proceeds with the District Collector for payment to workers, or alternatively to pay the Union directly. The respondents raised a preliminary objection that the Gujarat High Court lacked territorial jurisdiction as no part of cause of action arose in Gujarat. The Single Judge overruled the objection, but the Division Bench in LPA No.1020 of 2006 allowed the appeal and dismissed the SCA for want of jurisdiction. The Union appealed to the Supreme Court. The Supreme Court held that the Division Bench erred in not considering Article 226(2) of the Constitution read with Section 20 CPC. Since the workers were employed in Porbandar, the Labour Court proceedings and recovery certificate were in Gujarat, part of cause of action arose in Gujarat. Therefore, the Gujarat High Court had territorial jurisdiction. The Supreme Court allowed the appeal, set aside the Division Bench order, and restored the Single Judge's order, remitting the matter for hearing on merits.
Headnote
A) Constitutional Law - Territorial Jurisdiction - Article 226(2) of the Constitution of India - Cause of Action - The High Court has jurisdiction if any part of the cause of action arises within its territory. In this case, the workers were employed at the factory in Porbandar, Gujarat, and the Labour Court at Junagadh passed the recovery order. Hence, part of cause of action arose in Gujarat, conferring jurisdiction on Gujarat High Court. (Paras 21-24) B) Industrial Disputes Act - Recovery of Wages - Sections 33C, 33C(1) - Workers' Dues - The Labour Court at Junagadh allowed Recovery Application No.86/98 and directed payment of Rs.81,50,744/- to workers. The recovery certificate was issued by Collector, Junagadh. These proceedings in Gujarat form part of cause of action. (Paras 6-7) C) Civil Procedure Code - Jurisdiction - Section 20 CPC - Cause of Action - The principles of Section 20 CPC apply to writ petitions under Article 226(2). Since part of cause of action arose in Gujarat, the Gujarat High Court had jurisdiction. (Paras 22-24)
Issue of Consideration
Whether the Gujarat High Court had territorial jurisdiction to entertain the Special Civil Application filed by the appellant-Union seeking direction to Indian Bank to pay part of sale proceeds of the company's properties to workers for unpaid wages.
Final Decision
The Supreme Court allowed the appeal, set aside the Division Bench order dated 27.04.2007, and restored the Single Judge's order dated 26.10.2005. The matter is remitted to the High Court for hearing on merits.
Law Points
- Territorial jurisdiction under Article 226(2) of the Constitution
- Cause of action for writ petition
- Section 20 CPC applicability
- Workers' dues priority over secured creditors
