Legal Blog: April 2023

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Sunday, April 9, 2023

Seat / Venue of Arbitration not a determinative factor in attracting jurisdiction of a Writ Court: Delhi High Court

The Delhi High Court in Durgapur Freight Terminal P. Ltd. v. Union of India has recently held that an arbitration clause providing for seat / venue would not be a determinate factor for conferring jurisdiction on a writ court, if the court otherwise does not have jurisdiction in the traditional sense. The bench analysed the provisions of Article 226 of the Constitution of India, 1950 and also the concept of forum convenience, to hold that the courts at Delhi would not have jurisdiction as no part of cause of action has arisen in Delhi. The relevant observations of the bench, as as under:

11. In the writ petition, the petitioners have claimed jurisdiction of this Court in the following terms:-

"59. The present petition is maintainable before this Hon'ble Court inasmuch as the concerned respondents viz. respondent nos. 1 to 4 who took the decisions impugned are located within the territorial jurisdiction of this Hon'ble Court. Moreover the essential part of cause of action viz. decisions leading to the acts and/or omission including non- consideration of the petitioner's representation dated December 28, 2022 have taken place within the territorial jurisdiction of this Hon'ble Court."

12. Before proceeding further, it is deemed apposite to advert to clauses (1) and (2) of Article 226 of the Constitution of India, which read as under:-

"226. Power of High Courts to issue certain writs.--(1) Notwithstanding anything in Article 32, every High Court shall have power, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. 
(2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories."

13. A reading of Clauses (1) and (2) of Article 226 of the Constitution of India would show that a High Court has territorial jurisdiction to issue writs under two situations: one, where the person/authority to whom the writ is to be issued is situated within the territory over which the High Court exercises jurisdiction, and two, where the cause of action, wholly or in part, arises for issuance of a writ within such territory. For the sake of convenience, the first may be referred to as 'jurisdiction by virtue of situs' and the other as 'jurisdiction by virtue of cause of action'.

14. In the instant case, the petitioners have claimed jurisdiction of this Court under both clauses of Article 226 of the Constitution of India. The tests to determine whether this Court has jurisdiction under these Clauses are well-defined. While before exercising jurisdiction by virtue of situs, this Court is required to arrive at a positive finding that the authority/person to whom the writ has to be issued lies within the territory over which the Court exercises jurisdiction; in order to exercise jurisdiction by virtue of cause of action, the Court shall be of the opinion that cause of action, wholly or in part, has arisen within the jurisdiction over which it exercises jurisdiction.

15. The Supreme Court in Utpal Kumar Basu and Others (Supra) has observed that the question as to whether the High Court has territorial jurisdiction to entertain a writ petition has to be decided on the basis of facts pleaded in the petition, the truth or otherwise thereof being immaterial. Relevant excerpt from the decision is extracted hereunder:-

"6. ...Therefore, in determining the objection of lack of territorial jurisdiction the court must take all the facts pleaded in support of the cause of action into consideration albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition. Therefore, the question whether in the instant case the Calcutta High Court had jurisdiction to entertain and decide the writ petition in question even on the facts alleged must depend upon whether the averments made in paragraphs 5, 7, 18, 22, 26 and 43 are sufficient in law to establish that a part of the cause of action had arisen within the jurisdiction of the Calcutta High Court."

16. The scope of Article 226(2) of the Constitution of India came to be analysed in depth in Kusum Ingots & Alloys Ltd. v. Union of India and Another reported as (2004) 6 SCC 254, where the Supreme Court observed thus:-

"9. Although in view of Section 141 of the Code of Civil Procedure the provisions thereof would not apply to writ proceedings, the phraseology used in Section 20(c) of the Code of Civil Procedure and clause (2) of Article 226, being in pari materia, the decisions of this Court rendered on interpretation of Section 20(c) CPC shall apply to the writ proceedings also. Before proceeding to discuss the matter further it may be pointed out that the entire bundle of facts pleaded need not constitute a cause of action as what is necessary to be proved before the petitioner can obtain a decree is the material facts. The expression material facts is also known as integral facts.

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