Paragraph numbers below are the court’s original numbering, recovered from the source text.
10. Section 20(c) of the Code accords dominus litis to the plaintiff to institute a suit within local limits of whose jurisdiction the cause of action, wholly or in part arises.10 Every suit is based upon the cause of action, and the situs of the cause of action, even in part, will confer territorial jurisdiction on the court. The expression ‘cause of action’ can be given either a restrictive or wide meaning. However, it is judicially read to mean – every fact that the plaintiff should prove to support their right to the judgment.
11. Order I Rule 3 of the Code states that the plaintiff may join as a defendant in one suit, all persons against whom, the plaintiff claims the right to relief in respect of, or arising out of, the same act or “20. Other suits to be instituted where defendants reside or cause of action arises.—Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction— xxx xxx xxx (c) the cause of action, wholly or in part, arises. [2024] 5 S.C.R. Arcadia Shipping Ltd. v. Tata Steel Limited and Others transaction or series of transactions.11 The claim viz. the defendants can be joint, several or in the alternative. Thus, it is permissible to file one civil suit, even when, separate suits can be brought against such persons, when common questions of law and fact arise.
12. Order I Rule 7 of the Code permits a plaintiff who is in doubt as to the person from whom they are entitled to obtain redress, to join two or more defendants in order that the question as to which of the defendants is liable, and to what extent, can be decided in one suit.12
13. The supply order was placed in Delhi and the payment was to be released in Delhi. Accordingly, the cause of action arose in part at Delhi, in terms of Section 20(c) of the Code. As per Order I Rules 3 and 7 of the Code, it was permissible for Bhushan Steel to enjoin in a single suit all the defendants, including Arcadia. Their claim of right to relief lies against all such defendants. Further, the relief claimed was in respect of or arising out of a series of transactions, the sale of goods and then their shipment, which transactions were connected and synchronized with the relief claimed. The cause of action could not have been adjudicated without impleading all the defendants as parties. Thus, in terms of Order I Rule 3, the relief claimed by Bhushan Steel lies against all the defendants, albeit to different extents and was ‘in respect of and arises out of a series of transactions’. Thus, Bhushan Steel was within its rights to enjoin all the defendants under a single suit as per Order I Rule 7 of the Code such that the extent of liability of each defendant could be decided in the same suit.
14. Therefore, the Division Bench of the High Court was right in setting aside the finding recorded by the Single Judge viz issue no. 1 – territorial jurisdiction.
15. However, we must also record that a question of territorial jurisdiction should ordinarily be decided at the outset rather than being deferred “3. Who may be joined as defendants.—All persons may be joined in one suit as defendants where— (a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and (b) if separate suits were brought against such persons, any common question of law or fact would arise.” “7. When plaintiff in doubt from whom redress is to be sought.— Where the plaintiff is in doubt as to the person from whom he is entitled to obtain redress, he may join two or more defendants in order that the question as to which of the defendants is liable, and to what extent, may be determined as between all parties.” 414 till all matters are resolved. In the judgment dated 20.09.2017, the Single Judge held that no liability can be fastened to TYO Trading and Bank of Ethiopia. However, it held that liability could be fastened to Arcadia. In the context of the dispute in question, the different and divergent stands of the defendants, the remedy was to file a civil suit against the defendants, which in the facts was maintainable in Delhi, a part of the cause of action having arisen in Delhi.
16. Hence, the Single Judge erred in upholding Arcadia’s contention regarding lack of territorial jurisdiction of the Delhi High Court and absence of any cause of action arising against them in Delhi, based on their businesses being located in Mumbai.
17. For the aforesaid reasons, the present civil appeal is dismissed.
18. Pending application(s), if any, shall stand disposed of. Headnotes prepared by: Result of the case: Raghav Bhatia, Hony. Associate Editor Appeal dismissed. (Verified by: Kanu Agrawal, Adv.)