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Asper section 20 of CPC, when a plaint is filed against a company who has a principal office and a subordinate office, it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction where such a cause of action arose. This was held by Hon’ble Justice Shri Sanjay S. Agrawal in the case of Jayant Jha Vs. South Eastern Coalfields Limited and Ors. [M.A No.40 of 2017] on the 24^th of August 2021, before the Hon’ble High Court of Chhattisgarh at Bilaspur.

The brief facts of the case are, the plaintiff who is the Proprietor of Ritika Enterprises, instituted a suit claiming recovery of Rs.7,47,499/- by submitting interi alia that he supplied spare parts of the machine described in Plaint schedule-‘A’ to the Defendants i.e. Somna Colliery, Bijuri, District Anuppur (M.P.). According to the Plaintiff, the Defendants have failed to make their payment despite the delivery of the alleged materials, which led to the issuance of the Demand Notice dated 16.09.2009. However, in spite of that, the same was not paid, therefore, he has been constrained to institute the suit in the instant nature instituted on 25.09.2010. While contesting the claim, an objection was raised by the Defendants regarding territorial jurisdiction of the Court by submitting inter alia that the Plaintiff’s office is at Bijuri and the disputed materials alleged to have been delivered was at Somna Colliery, Bijuri, District Anuppur (M.P.), which is beyond its jurisdiction, therefore the suit as framed and instituted, is barred by jurisdiction. After considering the aforesaid issue, it was observed by the trial Court while taking note of the explanation to Section 20 of CPC since the cause of action has arisen at Somna Colliery, Bijuri, District Anuppur (M.P.), where the disputed materials alleged to have been delivered, therefore, the cause of action has arisen at the said place which is beyond the territorial jurisdiction of this Court and accordingly, the claim as made has been held to be barred by jurisdiction under Section 20 of CPC and the Plaint has been directed to be returned in exercise of the powers enumerated under Order 7 Rule 10 of CPC for its presentation before the competent Court having its territorial jurisdiction by its separate order, which was passed on the same day, i.e. 23.12.2016. This is the order, which has been impugned by way of this Appeal.

The counsel for the plaintiff submitted that, the Court below, while misinterpreting the provisions prescribed under Section 20 of CPC, has erred in holding that it has no jurisdiction to entertain the suit. According to him, the suit can be instituted where Defendants reside or where the cause of action arises and since the business of Defendants is at Manendragarh, therefore, the suit ought not to have been held to be barred by jurisdiction. The counsel for the respondent however supported the order passed by the trial court and submitted that the plaint ought to be barred by jurisdiction. The learned judges heard both the counsels and relied on the judgement in the case of Patel Roadways Limited, Bombay vs. Prasad Trading Company (1991) 4 Supreme Court Cases 270, wherein it was held that, “The Explanation is really an Explanation to clause (a). It is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corporation situated at such place. The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed to be carrying on business, the disjunctive “or” will not be there. Instead, the second part of the Explanation would have read “and, in respect of any cause of action arising at any place where it has a subordinate office, also at such place. The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry-on business at that place. It would be a great hard-ship if, in spite of the corporation having a subordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus, the Explanation provides an alternative locus for the corporation’s place of business, not an additional one.”

The petition was dismissed and judgment of the trial court was upheld by decreeing that, “Applying the aforesaid principles to the case in hand where admittedly no cause of action, either wholly or in part as provided under clause (c) of Section 20 CPC arose in the Court of Manendragarh, the Head Office of the Defendants, and as the disputed spare parts of the machine alleged to have been supplied to the Office of Somna Colliery, Bijuri, District Anuppur (M.P.), the cause of action has, therefore, arisen at the said place, which is beyond the territorial jurisdiction of the Court below. In view of the said background, the trial Court has not committed any illegality in returning the Plaint in exercise of the powers under Order 7 Rule 10 of CPC and I do not find any legal infirmity in the same so as to call for any interference in this appeal”.

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