{"id":102873,"date":"1963-05-07T00:00:00","date_gmt":"1963-05-06T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/union-of-india-and-another-vs-ladu-lal-jain-on-7-may-1963"},"modified":"2015-08-01T04:55:41","modified_gmt":"2015-07-31T23:25:41","slug":"union-of-india-and-another-vs-ladu-lal-jain-on-7-may-1963","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/union-of-india-and-another-vs-ladu-lal-jain-on-7-may-1963","title":{"rendered":"Union Of India And Another vs Ladu Lal Jain on 7 May, 1963"},"content":{"rendered":"
Supreme Court of India<\/div>\n
Union Of India And Another vs Ladu Lal Jain on 7 May, 1963<\/div>\n
Equivalent citations: 1963 AIR 1681, \t\t 1964 SCR (3) 624<\/div>\n
Author: R Dayal<\/div>\n
Bench: Dayal, Raghubar<\/div>\n
           PETITIONER:\nUNION OF INDIA AND ANOTHER\n\n\tVs.\n\nRESPONDENT:\nLADU LAL JAIN\n\nDATE OF JUDGMENT:\n07\/05\/1963\n\nBENCH:\nDAYAL, RAGHUBAR\nBENCH:\nDAYAL, RAGHUBAR\nSUBBARAO, K.\nMUDHOLKAR, J.R.\n\nCITATION:\n 1963 AIR 1681\t\t  1964 SCR  (3) 624\n CITATOR INFO :\n D\t    1988 SC1003\t (2,3)\n R\t    1990 SC 104\t (4)\n\n\nACT:\nCivil  Procedure-Jurisdiction of Court-Railway\theadquarters\nat a place within the jurisdiction of Court-Railway owned by\nthe  Government\t \"if a business\"-Code  of  Civil  Procedure,\n1908  (V of 1908), ss. 20, 115-Constitution of India,  Arts.\n19 (6), 298.\n\n\n\nHEADNOTE:\nThe  plaintiff respondent instituted a suit in the court  of\nthe Additional Subordinate Judge, Gauhati, against the Union\nof  India and the Northern Frontier Railway  represented  by\nthe  General  Manager,\thaving its  headquarters  at  Pandu.\nPandu  is within the jurisdiction of the Subordinate  judge.\nThe  claim was for the recovery of a sum of Rs.\t 8,250\/-  on\naccount of nondelivery of the goods which had been consigned\nto  the\t plaintiffs firms, The consignment was\tbooked\tfrom\nKalyanganj  station  of\t defendant No. 2  fair\tcarriage  to\nKanki,\ta station of the same defendant.  It was alleged  in\nthe  plaint that the cause of action arose at  Pandu  within\nthe  jurisdiction of the Court, where the defendant  railway\nhad  its  principal  place  of business\t by  virtue  of\t its\nheadquarters  being at Pandu.  The suit was resisted by\t the\ndefendants on the ground that the court bad no\tjurisdiction\nto entertain the suit.\nRelying\t on  the decision of the Assam High Court in  P.  C.\nBiswas v. Union of India, A. I. R. 1956 Assam 85, the  court\nof  first instance held that the principal place from  which\nthe  railway administration in a particular area is  carried\non  is\tthe principal place of business for the\t purpose  of\njurisdiction  under  s. 20 of the Code of  Civil  Procedure,\n1908, and decided the issue in favour of the plaintiff.\t The\nrevision  petition filed by the appellants was\trejected  by\nthe  High Court.  The present appeal was filed with  special\nleave granted by this Court.\nIt  was contended in the appeal by the appellants  that\t the\nrunning\t of the railway by the Union of lndia could  not  be\nsaid to amount to carrying on of business and that therefore\nthe fact that the headquarters of Northern Frontier  Railway\nAdministration was at Pandu within the jurisdiction of the\n 625\nCourt at Gauhati did not give the Court jurisdiction under\ns.   20 of the Code of Civil Procedure.\nHeld  that Arts. 19 (6) and 298 of the Constitution  clearly\nindicate  that the State can carry on business and can\teven\nexclude\t citizens completely or partially from\tcarrying  on\nthat business.\nThe running of railways which is a business when carried  on\nby  private companies or individuals does not cease to be  a\nbusiness  when\tthey are run by the Government.\t It  is\t the\nnature of the activity which determines the character of  an\nactivity.   The fact as to who runs it and with what  motive\ncannot\taffect\tit.   'Profit element' is  not\ta  necessary\ningredient  of\tcarrying  on  of  business,  though  usually\nbusiness is carried on for profit.\nThe fact that the Government runs the railways for providing\ncheap  transport for the people and goods and for  strategic\nreasons\t will  not convert what amounts to  carrying  on  of\nbusiness into an activity of the State as a sovereign body.\nThe  Union  of\tIndia carries on  the  business\t of  running\nrailways  and  can be sued in the court of  the\t Subordinate\njudge  of Gauhati within whose territorial jurisdiction\t the\nheadquarters  of  one of the railways run by  the  Union  is\nsituated.\nCase Law reviewed.\nState  of Bombay v. Hospital Mazdoor Sabha<\/a> [1960]  2  S.C.R.\n866, The Corporation of the City of Nagpur v. Ito Employees,<\/a>\n[1960] 2 S. C. R. 942 and Satya Narain v. District Engineer,\nP. W. D., A. I. R.<\/a> 1962 S. C. 1161.\n\n\n\nJUDGMENT:\n<\/pre>\n
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 717 of 1961.
\nAppeal\tby special leave from the judgment and\torder  dated
\nApril 10, 1961 of the Assam High Court in Civil Revision No.
\n10 of 1961.\n<\/p>\n
D.   R.\t Prem,\tP.  D. Menon for R.  N.\t Sachthey,  for\t the
\nappellants.\n<\/p>\n
The respondent did not appear.\n<\/p>\n
626<\/span><\/p>\n
1963.  May 7. The judgment of the Court was delivered by
\nRAGHUBAR  DAYAL\t J.  -This  appeal,  by\t special  leave,  is
\ndirected  against  the\torder of the  High  Court  of  Assam
\nrejecting the revision application, under s. 115 of the Code
\nof  Civil  Procedure, hereinafter called the  Code,  of\t the
\nappellants against the order of the Additional\tSubordinate,
\nJudge,\tGauhati, in a money suit to the effect that  he\t had
\njurisdiction to try the suit.\n<\/p>\n
The  contention of the appellants is that this view  of\t the
\nSubordinate judge, confirmed by the High Court, is wrong.
\nTo  appreciate the contention for the appellants, the  facts
\nof  the case may be stated.  The suit was instituted by\t the
\nplaintiff  -respondent\tagainst the Union of India  and\t the
\nNorthern   Frontier  Railway  represented  by  the   General
\nManager, having its headquarters at Pandu.  It related to  a
\nclaim  for  recovery of a sum of Rs. 8,250\/- on\t account  of
\nnondelivery  of\t the goods which had been consigned  to\t the
\nplaintiff’s firm run tinder the name and style of M\/s.\tLadu
\nLal Jain.  The consignment consisted of 134 bags of rice and
\nwas  booked from Kalyanganj station of defendant No.  2\t for
\ncarriage to Kanki station of the same defendant on April 13,
\n1958.\tThe  goods  consigned  were  no,  delivered  to\t the
\nplaintiff  and hence the suit, after serving a notice  under
\ns.  77 of the Indian Railways Act on the  defendant  railway
\nand also serving a notice tinder s. 80 of the Code.  It\t was
\nalleged\t in  the plaint that the cause of  action  arose  at
\nPandu  within the jurisdiction of the Court at Gauhati,\t the
\nplace  where notice under s. 80 of the Code was duly  served
\nupon  the defendant railway and that the suit was  filed  in
\nthe  Court  within the jurisdiction of which  the  defendant
\nrailway had
\n 627<\/span>
\nits  principal\tplace  of business by virtue  of  its  held-
\nquarters  being at Pandu.  The two defendants filed a  joint
\nwritten statement.\n<\/p>\n
Kalyanganj  is in West Bengal and Kanki is in the  State  of
\nBihar.\tGauhati is in the State of Assam.  It  was contended
\ninter\talia   that  Gauhati  Court   had   no\t territorial
\njurisdiction  to  try the suit as neither of  the  aforesaid
\nrailway\t stations was within its jurisdiction and  that\t the
\nconsignment never travelled within any part of the State  of
\nAssam  and  therefore the cause of action  could  not  arise
\nwithin the jurisdiction of any Court in Assam It was further
\ncontended  that\t mere  service\tof  notice,  which  was\t not
\nadmitted,   on\tthe  defendants\t at  a\tplace\twithin\t the
\njurisdiction  of  the  Court,  could  not  vest\t territorial
\njurisdiction  on it and that defendant No. 1, the  Union  of
\nIndia,\thad no principal place of business at Pandu  or\t any
\nother place within the jurisdiction of the Court, its  head-
\nquarters office being at New Delhi.  It was also stated that
\ndefendant  No.\t2 is owned and managed by defendant  No.  1,
\nthat  the office of defendant No. 2 at Pandu was also  owned
\nand  controlled\t by defendant No. 1 and that the  office  at
\nPandu  was a branch office of the Union of India  which\t was
\ncontrolled by defendant No. I from New Delhi.
\nRelying\t on  the case reported as P.C. Biswas  v.  Union  of
\nIndia  (1),  the Trial Court decided the  preliminary  issue
\nabout  jurisdiction against the defendants holding that\t the
\nprincipal  place from which the railway administrator- in  a
\nparticular  area  is carried on is the\tprincipal  place  of
\nbusiness  for the purpose of s. 20 of the (ode.\t The  single
\njudge  of the High Court rejected the revision also  on\t the
\nbasis of the same decision of his Court.\n<\/p>\n
The  territorial  jurisdiction\tof a  Court  is\t in  general
\ndetermined  by\tthe provisions of s. 20 of  the\t Code  which
\nreads :\n<\/p>\n
\t      “Subject\tto the limitations  aforesaid,\tever
\n\t      suit
\n\t      628<\/span>
\n\t      shall  be\t instituted in a  Court\t within\t the
\n\t      local limits of whose jurisdiction –<\/p>\n
\t      (a)   the defendant, or each of the defendants
\n\t      where there are more than one, at the time  of
\n\t      the  commencement\t of the suit,  actually\t and
\n\t      voluntarily  resides, or carries on  business,
\n\t      or personally works for gain or\n<\/p><\/blockquote>\n
\t      (b)   any\t of the defendants, where there\t are
\n\t      more than one, at the time of the commencement
\n\t      of   the\t suit,\tactually   and\t voluntarily
\n\t      resides,.\t  or   carries\t on   business,\t  or
\n\t      personally  works for gain, provided  that  in
\n\t      such  case  either the leave of the  Court
\n\t      is given, or the defendants who do not reside,
\n\t      or  carry on business, or personally work\t for
\n\t      gain,   as   aforesaid,  acquiesce   in\tsuch
\n\t      institution ; or\n<\/p><\/blockquote>\n
\t      (c)   the cause of action, wholly or in  part,
\n\t      arises.\n<\/p><\/blockquote>\n
\t      Explanation I : Where a person has a permanent
\n\t      dwelling\tat  one\t place\tand  also  temporary
\n\t      residence at another place, he shall be deemed
\n\t      to  reside  at both places in respect  of\t any
\n\t      cause of action arising at the place where  he
\n\t      hag such temporary residence.\n<\/p><\/blockquote>\n
\t      Explanation 11 : A corporation shall be deemed
\n\t      to carry on business at its sole or  principal
\n\t      office in India or in respect of any cause  of
\n\t      action arising at any place where it has\talso
\n\t      a subordinate office, at such place.”\n<\/p><\/blockquote>\n
The principle behind the provisions of clauses (a) and (b)  of
\ns. 20 is that the suit be instituted at a place
\n 629<\/span>
\nwhere the defendant be able to defend the suit without undue
\ntrouble.\n<\/p>\n
The expression ‘voluntarily resides or personally works\t for
\ngain’  cannot  be appropriately applied to the case  of\t the
\nGovernment.   The Government can however carry on  business.
\nThe  mere fact that the expression ‘carries on business’  is
\nused along with the other expressions, does not mean that it
\nwould  apply  only  to such persons to whom  the  other\t two
\nexpires\t ions regarding residence or of\t personally  working
\nfor gain would apply.\n<\/p>\n
The sole contention raised for the appellants in this  Court
\nis that the running of railways by the Union of India cannot
\nbe  said  to  amount to its carrying on\t business  and\tthat
\ntherefore  the\tfact that the headquarters of  the  Northern
\nFrontier  Railway  Administration  is at  Pandu\t within\t the
\njurisdiction of the Court at Gauhati does not give the Court
\njurisdiction under s. 20 of the Code.\n<\/p>\n
The   contention  is  based  on\t the  reasoning\t  that\t any
\nundertaking run by the Government, even if it amounts to the
\ncarrying on of a business when run by a private\t individual,
\nwould  not be the carrying on of business by the  Government
\nif there was no element of profit making in it.\t There is no
\nallegation  in the written statement that the Government  is
\nnot running railways for profit.  No issue was framed  about
\nit.  The Court below recorded no decision on the point.\t  It
\ncannot\tbe  presumed  that the Government is  not  making  a
\nprofit\tfrom its running the railways in the country  or  is
\nnot running it with a profit motive.\n<\/p>\n
The fact that the Government runs the railways for providing
\nquick  and  cheap  transport for people and  goods  and\t for
\nstrategic  reasons  will  not convert what  amounts  to\t the
\ncarrying on of a business into an activity of the State as a
\nsovereign body.\n<\/p>\n
630<\/span><\/p>\n
Article 298 of the Constitution provides that the  executive
\npower  of  the Union and of each State shall extend  to\t the
\ncarrying on of any trade or business and cl. (6) of Art.  19
\nprovides  that nothing in sub-cl. s. (g) of cl. (1) of\tthat
\nArticle shall prevent the State from making any law relating
\nto  the carrying on by the State or by a corporation  owned-
\nor controlled by the State, of any trade, business, industry
\nor  service, whether to the exclusion, complete or  partial,
\nof citizens or otherwise.  These provisions clearly indicate
\nthat  the State can carry on business and can  even  exclude
\ncitizens  completely  or  partially from  carrying  on\tthat
\nbusiness.   Running of railways is a business. that  is\t not
\ndenied.\t  Private companies and individuals carried  on\t the
\nbusiness of running railways, prior to the State taking them
\nover.\tThe  only question then is whether  the\t running  of
\nrailways  ,ceases  to  be a business when they\tare  run  by
\nGovernment.  There appears to be no good reason to hold that
\nit  is so.  It is the nature of the activity  which  defines
\nits  character.\t  Running of railways is  such\tan  activity
\nwhich  comes within the expression ‘business’.\tThe fact  as
\nto who runs it and with what motive cannot affect it.
\nThis  Court bad occasions to detemine the nature of  certain
\nactivities of Government.  The rationale of those cases is a
\ngood guide for determining the point before us.\t In State of
\nBombay\tv. The Hospital Mozdoor Sabha<\/a>(1)’ the  question\t was
\nwhether\t the relevant provisions of the Industrial  Disputes
\nAct,  1947,  applied to the group of hospitals\trun  by\t the
\nState  of Bombay and whether they are ‘industry’ within\t the
\nmeaning of that Act.  The decision of the question  depended
\non  the\t interpretation\t of  the  definition  of  ‘industry’
\nprescribed  -by s. 2 (j) of the Act.  This section  provides
\nthat  industry means any business, trade, undertaking  etc.,
\nof  employers.\t In  considering  the  question\t it   became
\nnecessary  to  enquire\twhether\t that  activity,  i.e.,\t the
\nrunning of the
\n(1)  [1961] 2 S. C. R. 866.\n<\/p>\n
 631<\/span><\/p>\n
hospitals, would be an undertaking if it is carried on by  a
\nprivate\t citizen  or a group of private\t citizens.   It\t was
\nfield  that  if a hospital is run by  private  citizens\t for
\nprofit, it would be an undertaking very much like the  trade
\nor business in their conventional sense.  It was observed at
\np. 878 :\n<\/p>\n
\t      “Thus  the character of the activity  involved
\n\t      in  running a hospital brings the\t institution
\n\t      of the hospital within s. 2.(j). Does it\tmake
\n\t      any difference that the hospital is run by the
\n\t      Government  in the interpretation of the\tword
\n\t      undertaking’ in s. 2 (j) ? In our opinion, the
\n\t      answer  to  this\tquestion  must\tbe  in\t the
\n\t      negative.\t It is the character of the activity
\n\t      which  decides the question as to whether\t the
\n\t      activity in question attracts the provision of
\n\t      s. 2(j); who conducts the activity and whether
\n\t      it is conducted for profit or not do not\tmake
\n\t\t\t    a material difference ”\n<\/p><\/blockquote>\n
\t      To similar effect were the observations in The
\n\t      Corporation  of  the  City of  Nagpur  v.\t Its
\n\t      employees where it was said :\n<\/p><\/blockquote>\n
\t      “If  a service rendered by an individual or  a
\n\t      private person would be an industry, it  would
\n\t      equally  be  an  industry in the\thands  of  a
\n\t      corporation.”\n<\/p><\/blockquote>\n
\t      It was earlier said at p. 960
\n\t      “Monetary\t  considerations  for  service\t is,
\n\t      therefore, not an essential characteristic  of
\n\t      industry in a modern State.”\n<\/p><\/blockquote>\n
\t      “Barring\t  the\tregal\tfunctions    of\t   a
\n\t      municipality, if such other activities of\t it,
\n\t      if  undertaken  by  an  individual,  would  be
\n\t      industry, then they would equally be  industry
\n\t      in the hands of a municipality,
\n(1)  [1960] a S.C.R. 942, 962,
\n632<\/span>
\nLastly,\t in Satya Narain v. District Engineer,\tP.W.D.<\/a>\t(1),
\nthe  question  for determination was  whether  plying  motor
\nbuses  by  the\tGovernment by  way  of\tcommercial  activity
\namounts\t to  its  running  it  on  a  public  service.\t  In
\ndetermining this question, this Court observed at p. 1163:\n<\/p><\/blockquote>\n
\t      “It is undoubtedly not easy to define what  is
\n\t      “Public  service’ and each activity has to  be
\n\t      considered  by itself for deciding whether  it
\n\t      is  carried  on as a public  service  or\tnot.
\n\t      Certain\tactivities   will   undoubtedly\t  be
\n\t      regarded as public services, as for  instance,
\n\t      those  undertaken\t in  the  exercise  of\t the
\n\t      sovereign\t  power\t  of   the   State   or\t  of
\n\t      governmental functions.  About these there can
\n\t      be  no  doubt.   Similarly  a  pure   business
\n\t      undertaking  though  run\tby  the\t  Government
\n\t      cannot  be classified as public service.\t But
\n\t      where a particular activity concerns a  public
\n\t      utility a question may arise whether it  falls
\n\t      in the first or the second category.  The mere
\n\t      fact  that that activity may be useful to\t the
\n\t      public would not necessarily render it  public
\n\t      service.\t An activity however  beneficial  to
\n\t      the  people and however useful cannot, in\t our
\n\t      opinion,\tbe  reasonably\tregarded  as  public
\n\t      service  if  it  is of a\ttype  which  may  be
\n\t      carried  on  by  private\tindividuals  and  is
\n\t      carried  on  by  government  with\t a  distinct
\n\t      profit  motive.  It may be that  plying  stage
\n\t      carriage\tbuses  even though for\thire  is  an
\n\t      activity\tundertaken  by\tthe  Government\t for
\n\t      ensuring\tthe  people  a\tcheap,\tregular\t and
\n\t      reliable\tmode  of transport and\tis  in\tthat
\n\t      sense beneficial to the public.- It does\tnot,
\n\t      however, cease to be a commercial activity  if
\n\t      it  is  run with profit motive.\tIndeed\teven
\n\t      private  operators in order to attract  custom
\n\t      are  also\t interested in\tproviding  the\tsame
\n\t      facilities  to  the public as  the  Government
\n\t      undertaking provides.  Since that is so, it-is
\n\t      difficult
\n\t      (1)   A, I, R. 1962 B. C. 1161.\n<\/p><\/blockquote>\n
\t       633<\/span><\/p>\n
\t      to  see what difference there is\tbetween\t the
\n\t      activity carried on by private individuals and
\n\t      that  carried on by Government.  By reason  of
\n\t      the  fact\t that a\t commercial  undertaking  is
\n\t      owned  and run by the State it does  not\tipso
\n\t      facto become a “public service’.”\n<\/p><\/blockquote>\n<\/blockquote>\n
This  case simply held that commercial activity\t carried  on
\nwith  profit motive cannot be held to be  ‘public  service’.\n<\/p><\/blockquote>\n
It does not hold that such activity carried on by Government
\nwill not be “business’ if conducted without profit motive.
\nWe  are of opinion that ‘profit element’ is not a  necessary
\ningredient of carrying on business, though usually  business
\nis  carried  on for profit.  It is to be presumed  that\t the
\nRailways  are run on a profit basis, though it may  be\tthat
\noccasionally they are run at a loss.\n<\/p>\n
The case reported as Director of Rationing & Distribution v.
\nThe   Corporation  of  Calcutta<\/a>\t (1),  relied  on  for\t the
\nappellants  is\treally\tof  no help  to\t them.\t It  was  in
\nconnection  with the sovereign activities of the State\tthat
\nit  was\t said that the State was not bound  by\tany  statute
\nunless the statute provided to that effect in express  terms
\nor  by\tnecessary  implication.\t  The  contention  that\t the
\nGovernment  could  not\tget  the  benefit  of  this  law  in
\nconnection with its business activities was neither repelled
\nnor considered.\t It was held to have no foundation as  there
\nwas  nothing on the record that the Food Department  of\t the
\nGovernment  of\tWest  Bengal by\t undertaking  rationing\t and
\ndistribution  of food on a rational basis had embarked\tupon
\nany  trade  or\tbusiness and, in the  absence  of  any\tsuch
\nindication, it appeared that the department was\t discharging
\nthe  elementary\t duty of a sovereign to\t ensure\t proper\t and
\nequitable  distribution of available foodstuffs with a\tview
\nto maintaining peace and good government.
\n(1)  [1961] I. &.C. A? 158,
\n634<\/span>
\nIn view of what we have said above, we hold that the,  Union
\nof India carries on the business of running railways and can
\nbe  sued  in the Court of the Subordinate Judge\t of  Gauhati
\nwithin\twhose territorial jurisdiction the  headquarters  of
\none of the railways run by the Union is situated.  We accor-
\ndingly dismiss the appeal with costs.\n<\/p>\n
Appeal dismissed.<\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India Union Of India And Another vs Ladu Lal Jain on 7 May, 1963 Equivalent citations: 1963 AIR 1681, 1964 SCR (3) 624 Author: R Dayal Bench: Dayal, Raghubar PETITIONER: UNION OF INDIA AND ANOTHER Vs. RESPONDENT: LADU LAL JAIN DATE OF JUDGMENT: 07\/05\/1963 BENCH: DAYAL, RAGHUBAR BENCH: DAYAL, RAGHUBAR SUBBARAO, K. […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-102873","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nUnion Of India And Another vs Ladu Lal Jain on 7 May, 1963 - Free Judgements of Supreme Court & High Court | Legal India<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.legalindia.com\/judgments\/union-of-india-and-another-vs-ladu-lal-jain-on-7-may-1963\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Union Of India And Another vs Ladu Lal Jain on 7 May, 1963 - 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