Case Note & Summary
The Plaintiff, The Bank of New York Mellon, London Branch, filed a suit against Zenith Infotech Limited and others seeking to declare a transaction relating to the MSD Business as null and void and in breach of fiduciary duty. The Plaintiff obtained leave under Clause XII of the Letters Patent to sue Defendant No.3, a US-based private equity fund, on the ground that a material part of the cause of action arose in Mumbai, including the execution of trust deeds in Mumbai. Defendant No.3 filed a Chamber Summons seeking revocation of the leave or deletion from the suit, arguing that no part of the cause of action arose within the jurisdiction against it and that it was not a necessary party. The Court dismissed the summons, holding that for grant of leave under Clause XII, it is sufficient if a part of the cause of action arises within the jurisdiction; it is not necessary that the cause of action must arise against each defendant. The Court further held that Defendant No.3 was a proper party, not a necessary party, and its joinder was not fraudulent. The Court also noted that the Plaintiff had a bona fide claim against Defendant No.3 based on allegations of collusion and fraudulent structuring. The leave was upheld, and the Chamber Summons was dismissed with costs.
Headnote
A) Civil Procedure - Territorial Jurisdiction - Leave under Clause XII Letters Patent - Revocation of Leave - The Court held that for grant of leave under Clause XII, it is sufficient if a part of the cause of action arises within the jurisdiction; it is not necessary that the cause of action must arise against each defendant. The presence of Defendant No.3, who is not a necessary party, does not affect the maintainability of the suit against other defendants. (Paras 5-7)
B) Civil Procedure - Necessary Party - Proper Party - The Court distinguished between a necessary party (without whom no effective order can be passed) and a proper party (whose presence is desirable for complete adjudication). Defendant No.3 was held to be a proper party, not a necessary party, and its joinder was not fraudulent. (Paras 8-10)
C) Civil Procedure - Cause of Action - Part of Cause of Action - The trust deeds were executed in Mumbai, and the Plaintiff's claim for payment under the bonds arose in Mumbai. This constitutes a material part of the cause of action, sufficient to invoke the jurisdiction of the Bombay High Court under Clause XII. (Paras 4-6)
Issue of Consideration
Whether the leave granted to the Plaintiff under Clause XII of the Letters Patent should be revoked on the ground that Defendant No.3 is not a necessary party and no part of the cause of action arose within the jurisdiction of this Court against Defendant No.3.
Final Decision
The Chamber Summons is dismissed with costs.
Law Points
- Clause XII Letters Patent
- leave to sue
- cause of action
- necessary party
- proper party
- revocation of leave
- territorial jurisdiction
Case Details
2014 LawText (BOM) (04) 68
Chamber Summons No. 1945 of 2011 in Suit No. 2865 of 2011
Mr.Navroz Seervai, Senior Advocate with Mr.Rahul Narichania, Senior Advocate, Mr.Sahil Kanuga i/b. M/s. AZB & Partners for Plaintiff. Mr.Arif Bookwala with Mr.Zal Andhyarujina i/b. M/s.Doijode & Associates for Defendant Nos.1, 5 and 6. Mr.Darius Khambatta, Senior Advocate with Mr.Sharan Jagtiani, Mr.Aditya Mehta i/b. M/s..Nishith Desai & Associates for Defendant Nos.2, 3 and 4.
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Nature of Litigation
Application for revocation of leave granted under Clause XII of the Letters Patent or deletion of Defendant No.3 from the suit.
Remedy Sought
Defendant No.3 sought revocation of leave granted to the Plaintiff under Clause XII of the Letters Patent or in the alternative, deletion of Defendant No.3 from the array of parties.
Filing Reason
Defendant No.3 contended that no part of the cause of action arose within the jurisdiction of the Court against it and that it was not a necessary party.
Previous Decisions
Leave under Clause XII was granted to the Plaintiff before filing the suit.
Issues
Whether the leave granted under Clause XII of the Letters Patent should be revoked on the ground that no part of the cause of action arose within the jurisdiction against Defendant No.3.
Whether Defendant No.3 is a necessary party to the suit.
Submissions/Arguments
Defendant No.3 argued that no part of the cause of action arose within the jurisdiction of this Court against it, and it was not a necessary party. The joinder was alleged to be fraudulent to invoke jurisdiction.
Plaintiff argued that a material part of the cause of action arose in Mumbai, including execution of trust deeds, and Defendant No.3 was a proper party involved in the alleged collusive transaction.
Ratio Decidendi
For grant of leave under Clause XII of the Letters Patent, it is sufficient if a part of the cause of action arises within the jurisdiction; it is not necessary that the cause of action must arise against each defendant. The presence of a defendant who is not a necessary party does not affect the maintainability of the suit against other defendants. The joinder of Defendant No.3 was not fraudulent, and the Plaintiff had a bona fide claim against it.
Judgment Excerpts
For grant of leave under Clause XII, it is sufficient if a part of the cause of action arises within the jurisdiction; it is not necessary that the cause of action must arise against each defendant.
The presence of Defendant No.3, who is not a necessary party, does not affect the maintainability of the suit against other defendants.
Procedural History
The Plaintiff filed Suit No. 2865 of 2011 after obtaining leave under Clause XII of the Letters Patent. Defendant No.3 filed Chamber Summons No. 1945 of 2011 seeking revocation of leave or deletion from the suit. The summons was heard and reserved on 20 February 2014, and judgment pronounced on 16 April 2014.
Acts & Sections
- Letters Patent (Bombay): Clause XII
