JUDGMENT
Swatanter Kumar, J.
1. The petitioner Ms. Capital Fire Engineers filed the present petition under Section 11 of the Arbitration and Conciliation Act, 1996 praying for appointment of a sole arbitrator to whom disputes between the parties should be referred to as the respondents had failed to act in accordance with law despite the letter dated 4th April, 2001.
2. During the pendency of this petition besides filing a reply on merits the respondents also filed an application under Order 7 Rule 10 of the Code of Civil Procedure praying for return of the petition for its presentation before the Court of competent jurisdiction as no cause of action has arisen within the territorial jurisdiction of this Court. Notice on this application was issued to the petitioner, who had even filed a detailed reply to this application. When this case came up for hearing on 19th September, 2005, the Court passed the following orders :-
“This case was called out in earlier part of the day and as nobody was present on behalf of the petitioner, it was passed over and ordered to be taken up subsequently. The case has been called out again. Nobody appears on behalf of the petitioner and none was present on his behalf on 9th May, 2005. Instead of dismissing the petition in default and as the pleadings of the parties are complete on the IA, I would proceed to hear the matter.
Arguments heard. Order reserved .
3. The necessary facts are that the petitioner was awarded the works contract pertaining to installation and fixing of fire fighting system at New and Old Building of State Bank of Patiala, Head Office vide separate Award letters, however, dated 16th October, 1996 and 16th October, 1996 for a total value of Rs.37,23,588/- only.
4. According to the petitioner, the parties had agreed for a P.V.A. Clause and the copy of the agreement was not given by the respondents to the petitioner. The petitioner kept on asking for the same and submitted the bills. The petitioner had submitted the bill duly certified by the Architect and even a certificate in that regard was issued. Complete payments were not made to the petitioner. Consequently, the petitioner invoked the arbitration clause and sent a notice dated 16th February, 2001 to the respondent invoking the arbitration clause 36.1 of the agreement and also requested the respondents to appoint Sole Arbitrator within 30 days to adjudicate the disputes and differences between the parties. Vide letter dated 4th April, 2001, the respondents informed the petitioner that matter was looked into and they would revert back to the petitioner. However, nothing substantial was done, thus, resulting in filing of the present petition under Section 11 of the Act.
5. The respondents have opposed the petition on merits and it is stated that the petitioner has not himself resorted to para 36.2 of the agreement and now cannot be permitted to take benefit of his own wrong. Further it is stated that the respondent bank had paid to the petitioner for the work done by it in terms and conditions of the Notice Inviting Tender and all the payments were made as agreed and without prejudice to the parties. On 30th July, 1998, full and final payment was made to the petitioner, which was received by the petitioner without any protest from 30th July, 1998 to 16th February, 2000 and as such no dispute is referable to the arbitrator. Besides taking the stand on merits as already noticed, the respondents have also filed an application under Order 7 Rule 10 CPC for return of the petition for its presentation to the Court of competent jurisdiction. It has been stated that Registered as well as the Head Office of the Bank is at Patiala; the contract between the parties was signed at Patiala; the payments were made and acceptance thereof was done at Patiala and as such no cause of action or part thereof has arisen within the territorial jurisdiction of this Court. As no cause of action whatsoever has arisen within the territorial jurisdiction of this Court, this Court has no jurisdiction to entertain and decide the present petition.
6. Counsel for the respondents has relied upon the decisions of the Supreme Court as well as the decisions of this Court reported as Bakhtawar Singh Balkrishan v. Union of India and Ors. AIR 1988 SC 1003, Jasbir Singh Kohli v. Kuwait International Finance Co. S.A.K. 1998-II Apex Decisions-(Delhi) page 665, Indo Gulf Explosives Ltd. and Anr. v. U.P. State Indu. Development Corporation (Upsidc) and Anr.1999-I Apex Decisions-(Delhi) 677, Kitec Industries (India) Ltd. v. Unicor Cmbh Rahn Plastmaschinen and Anr.1999-II Apex Decisions – (Delhi) page 537, Nellicka Cane Corporation v. State Trading Corporation of India Ltd. and Anr.1999-VI Apex Decisions- (Delhi) page 785, United Builders (Regd.) v. M/s Indian Oil Corporation and Ors. 2002-I Apex Decisions (Delhi), page 574 and Osnar Paints & Contracts Pvt. Ltd. v. National Buildings Construction Corporation. and Anr. 2002-VI Apex Decisions-(Delhi) page 53 in support of his contentions.
7. From the pleadings of the parties, it is clear that the facts in regard to execution of the agreement and performance of the contract are not in dispute. On merits, the respondent bank may or may not have a defense to the claim of the petitioner but that is not the subject matter of the present controversy. The bank has filed documents on record. The agreement dated 10th July, 1995 clearly states that the agreement has been executed at Patiala. Another agreement between the parties has also been filed on record at page 73 of the documents, which again shows that the agreement was entered into between the parties at Patiala and it was signed by the petitioner and the officers of the bank at Patiala. There is no dispute to the fact that Registered and Head Office of the Bank is at Patiala. The work order given to the petitioner by the respondent also shows that fire fighting system was to be provided at the old and new building of the State Bank of Patiala at Patiala. The petitioner only has filed some correspondence which is addressed to the office of the petitioner at New Delhi. Once the agreement was entered into between the parties at Patiala, the entire work of the contract is to be performed at Patiala, payments were made at Patiala then the substantial as well as integral cause of action has accrued if at all in favor of the petitioner at Patiala and not within the territorial jurisdiction of this Court. Merely because some documents were addressed by the respondent bank at Delhi in regard to execution of work would not divest the court at Patiala and vest the jurisdiction in this Court.
8. The Supreme Court in the case of Oil Natural Gas Commission v. Utpal Kumar Basu and Ors. , held as under :-
…Therefore, broadly speaking, NICCO claims that a part of the cause of action arose within the jurisdiction of the advertisement in Calcutta and made representations demanding justice from Calcutta on learning about the rejection of its offer. The advertisements itself mentioned that the tenders should be submitted at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. Of course, the execution of the contract work was to be carried out at Hazira in Gujarat. Therefore, merely because it read the advertisement at Calcutta and submitted the offer from Calcutta and made representations from Calcutta would not, in our opinion, constitute facts forming an integral part of the cause of action. So also the mere fact that it sent fax messages from Calcutta and received a reply thereto at Calcutta would not constitute an integral part of the cause of action. Besides the fax message of January 15, 1993, cannot be construed as conveying rejections of the offer as that fact occurred on January 27, 1993. We are, therefore, of the opinion that even if the averments in the writ petition are taken as true, it cannot be said that a part of the cause of action arose within the jurisdiction of the Calcutta High Court….
The submission of the learned counsel for NICCO based on Section 21 of the Code of Civil Procedure that even if this Court comes to the conclusion that the High Court of Calcutta had no jurisdiction, this Court should, in the absence of proof of prejudice, refuse to interfere with the decision of the High Court unless it is otherwise found to be erroneous. While the spirit of Section 21 of the Code of Civil Procedure may support such a submission, we are afraid, the discretion cannot be used in favor of a party which deliberately invokes the jurisdiction of a Court which has no jurisdiction whatsoever for ulterior motives. That would only encourage such type of litigation. The object underlying the provisions in Section 21 is not to encourage ;such litigants but to avoid harassment to litigants who had bonafide and in good faith commenced proceedings in a court which is later found to be wanting in jurisdiction. In the instant case, we are convinced, beyond doubt, that NICCO did not act bona fide in moving the Calcutta High Court and, therefore, the submission based on Section 21 must fail.
9. Even in the case of Rajasthan High Court Advocates Association v. Union of India and Ors., AIR 2001 Supreme Court 416, the Supreme Court held as under:-
“The expression ’cause of action’ has acquired a judicially settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right of the immediate occasion for the action. In the wider sense it means the necessary conditions for the maintenance of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in ’cause of action.’ It has to be let to be determined in each individual case as to where the cause of action arises.
10. In the light of the above enunciated principles it is clear that merely because some incidental correspondence was sent to Delhi, which has no material or substantial bearing and integral cause of action in favor of the petitioner, would not vest this court with the territorial jurisdiction to entertain and decide the present petition. As no cause of action, much less a substantial or integral cause of action had arisen within the territorial jurisdiction of this court, the parties by consent cannot confer jurisdiction, as otherwise this court has no jurisdiction to entertain and decide the present suit. The attempt of the petitioner to invoke the jurisdiction of this court apparently is a deliberate attempt to invoke the jurisdiction of the court where none was vested in the court. The provisions of Section 20 of the Code of Civil Procedure can be invoked where the defendant or defendants reside or carries on the business. The residence or carrying on of business by the petitioner per se would not vest territorial jurisdiction in the court, as residence of the plaintiff could not be a determining factor in this regard. The Supreme Court in the case of New Moga Transport Co., through its Proprietor Krishanlal Jhanwar v. United India Insurance Co. Ltd. and Ors., , while rejecting such a plea raised by the plaintiff held as under:-
“By a long series of decisions it has been held that where two courts or more have jurisdiction under CPC to try a suit or proceedings, an agreement between the parties that the dispute between them shall be tried in any one of such courts is not contrary to public policy and in no may contravenes Section 28 of the Indian Contract Act, 1872. Therefore, if on the facts of a given case more than one court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two courts. But by an agreement parties cannot confer jurisdiction on a court which otherwise does not have jurisdiction to deal with a matter.
11. Still in another case titled as Patel Roadways Limited, Bombay v. Prasad Trading Company , the Supreme Court while commenting upon Section 20(a) Explanation held that where the defendant company has a principal office as well as a subordinate office at different places and the cause of action had arisen at the subordinate office, that Court alone will have the jurisdiction and not where the principal office of the defendant is situated.
12. In the case of Union of India v. Adani Exports Ltd. , the Supreme Court while explaining the principle laid down by that Court in the case of Union of India and Ors. v. Oswal Woollen Mills Ltd. explained the scope of territorial jurisdiction and held as under:-
We are unable to accept this finding of the High Court. The view of the High Court that this Court in the case of Oswal Woollen (supra) had held that the existence of the registered office of a Company would ipso facto give a cause of action to the High Court within whose jurisdiction the registered office of such a Company is situated, is not correct. As a matter of fact, in the case of Oswal Woollen (supra), the question of territorial jurisdiction in the sense with which we are concerned now, did not arise at all. In that case, the observations of the Court were as follows:
“Having regard to the fact that the registered office of the Company is at Ludhiana and the principal respondents against whom the primary relief is sought are at New Delhi, one would have expected the writ petition to be filed either in the High Court of Punjab and Haryana or in the Delhi High Court. The writ petitioners, however, have chosen the Calcutta High Court as the forum perhaps because one of the interlocutory relief which is sought is in respect of a consignment of beef tallow which has arrived at the Calcutta Port. …We do not desire to probe further into the question whether the writ petition was filed by design or accident in the Calcutta High Court when the office of the Company is in the State of Punjab and all the principal respondents are in Delhi.
It is in that context of noticing the motive of the parties concerned in that case in choosing a forum, the above observation as to the place of the registered office of the Company was incidentally made in the judgment. Having perused the judgment in Oswal’s case (supra), we are of the opinion that judgment is no authority to decide as to the requirement of law in regard to establishing the territorial jurisdiction of a court. We must say in all fairness, Mr. Desai, learned senior counsel, has not placed any reliance on this judgment nor on the basis of the finding of the High Court in this case in regard to its territorial jurisdiction. He, however, contends that from the facts narrated in the civil applications, more so in Paragraph 16 of the application, it is crystal clear that a substantial part of the cause of action has arisen within the jurisdiction of the High Court of Ahamedabad.
13. As is clear in this very case, while explaining the principle that registered office of a company within the territorial jurisdiction of the court would not ipso facto give a cause of action to that Court, the Court also reiterated the principle that the entire facts pleaded would determine the cause of action and not merely the happening of an inconsequential event that would determine the cause of action, and held as under:-
“In order to confer jurisdiction on a High Court to entertain a writ petition or a special civil application, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the Court to decide a dispute which has, at least in-part, arisen within its jurisdiction. It is clear that each and every fact pleaded in the application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the Court’s territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the Court concerned.
14. Even in the case of ONGC (supra), the Court emphasized the importance of determining the territorial jurisdiction of a court relatable to all the events giving rise to the said cause of action, and in forming of such an opinion it was held that it should constitute of the facts forming an integral part of the cause of action and merely that of facts so received would not clothe the court with territorial jurisdiction. The above principle of law was noticed in one of the recent judgment of this court in the case of The Federation of Motorsports Clubs of India v. Motorsports Association of India and Anr., in CS(OS) No. 804/2002 decided on August 25, held as under:-
“It is a settled principle of law that for determination of an application under Order 7 Rule 10 and 11 of the CPC, the applicant has to take the facts as stated in the plaint, to be correct and then alone argue that the plaint is liable to be returned or rejected, keeping in mind the provisions of Order 7 Rule 10 and 11 of the CPC. The case as averred in the plaint, can be concisely stated that the plaintiff is the only recognised federation by the Government of India and is entitled to hold such sports and shows and for that reason, resultantly the suit of the defendant for injunction should be decreed. The only two defendants in the plaint are Motorsports Association of India, 41-42, Marine Lines, Liberty Building, Mumbai and Mr. Nazir Hoosein, who is stated to be the office bearer of that association, sued at the same address. The entire plaint does not state any facts as to how and what cause of action or part thereof has arisen and how, within the territorial jurisdiction of this court? In the lengthy plaint, running into 25 pages, there is no pleading much less proper pleadings which in law could be termed as a plaint disclosing a cause of action of the events which happened within the territorial jurisdiction of this Court. Obviously, cause of action has to be construed on the basis of the bundle of facts as averred in the plaint. The plaintiff is claiming a relief against the two defendants who as per the own showing of the plaintiff, are residents of Mumbai, and having their registered office at Mumbai and are carrying on their activities from that office. Union of India is not a party to the suit and in fact, no relief is claimed against Union of India . The learned counsel appearing for the plaintiff fairly stated that they have no claim against the Union of India and they do not intend to claim any relief as they are already a recognised body by the concerned Department of the Government of India.
In terms of the provisions of Section 16, 17 and 20 of the Code, a suit shall be instituted in the Court within the local limits of whose jurisdiction the property, subject matter of the suit, the defendant/defendants reside or where a cause of action wholly or in part arises within the jurisdiction of that court. The cause of action necessarily must constitute of certain facts which in law would give rise to an actionable wrong. No facts have been averred in the plaint as to what activities were being carried out in Delhi by defendant no.1 which directly or indirectly infringed the rights of the plaintiff, so as to give rise to a ’cause of action as known in law’. The learned counsel appearing for the plaintiff made a reference to the averments made in paragraph 42 of the plaint to the effect that “the suit raises inter alia issues relating to recognition by Government of India which are activities taking place in Delhi. Consequently, the cause of action arises entirely and/or at least a substantial part thereof, at New Delhi in as much as defendant no.1 while exercising the authority as the purported ASN in India has in fact written letters pertaining to granting and cancellation of permits in respect of Motor Sports in Delhi and providing its expertise pertaining to Motor sports to persons situated in and operating from Delhi.
These averments are obviously incapable of conferring any territorial jurisdiction on this court, ex facie. If the statement of the plaintiff as argued, though not pleaded, that defendant no.1 has its registered office at Mumbai and carrying on activities all over India, then the court has to see where the substantial cause of action has arisen, and not merely an incidental activity of the other party. It will be too far-fetched to argue that on such averments court all over India would get jurisdiction, particularly in absence of any specific averment relating to an act infringing the rights of the plaintiff. The plaint in this regard, is certainly vague, indefinite and on its cumulative reading, is incapable of giving any territorial jurisdiction to this court. Whether the plaintiff is the only association recognised by the Government of India, is a fact which can be proved or disproved by leading cogent evidence from the concerned Department of the Government of India. The Government of India, as already noticed, is not a party to the present suit and in any case would neither be a proper nor a necessary party, as no relief is being claimed against Government of India in the present suit, and rightly so, in view of the judgment of the Bombay High Court and pendency of the writ petition between the parties before this Court. Mere averments of certain facts in relation to exercise of power by another authority or a Department of the State by itself would not make that Department a necessary or a proper party to the suit.
15. The cumulative effect of the above discussion is that the petitioner has failed to show that any substantial or integral cause of action has arisen within the territorial jurisdiction of this Court. On the contrary the petitioner himself has written letters to the Head Office of the Bank at Patiala and has admittedly performed the contract at Patiala. Incidental correspondence or a factor which is not material in the chain of events, which have happened between the parties, normally would not vest the Court with territorial jurisdiction. While construing the provisions of Section 20 of the Code of Civil Procedure it cannot be construed that merely because a branch office of a party is situated within the territorial jurisdiction of the Court would vest territorial jurisdiction for entertaining and adjudication of a petition under Section 11 of the Arbitration and Conciliation Act, 1996. Jurisdiction of the Court has to be determined keeping in view the complete facts and circumstances of the case and cannot be determined on the basis of a letter taken in its abstract unless such letter has a material effect on the conclusion of the contract between the parties.
16. For the reasons aforestated, this application is allowed. The petition is ordered to be returned to the petitioner for being presentation before the court of competent jurisdiction.
17. The petition as well as the IA 10136/2001 are disposed of while leaving the parties to bear their own costs.