MS UNISSI INDIA PVT LTD vs MS HIGHWAY CONSTRUCTION CO & ORS.

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* IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of Decision : 15th March 2024

+ CS(COMM) 324/2022, I.A. 7773/2022, I.A. 7774/2022 & I.A. 16022/2022
MS UNISSI INDIA PVT LTD ….. Plaintiff

Through: Mr. Vikas Tomar and Mr. Nimish Mishra, Advocates.

versus
MS HIGHWAY CONSTRUCTION CO & ORS. ….. Defendants

Through: Mr. Vishesh Kalra and Mr. Sourabh Tandon, Advocates.

HON’BLE MR. JUSTICE ANUP JAIRAM BHAMBHANI
J U D G M E N T

ANUP JAIRAM BHAMBHANI J.
I.A. 16022/2022
By way of the present application filed under Order VII Rule 10 read with section 151 of the Code of Civil Procedure 1908 (‘CPC’), defendants Nos.1, 2 and 3 seek return of the plaint, premised on the submission that this court has no territorial jurisdiction to entertain or decide the present suit since the cause of action has arisen entirely within the territorial jurisdiction of the courts of law at Mumbai, Maharashtra.
2. By way of the suit, the plaintiff company/M/s. UNISSI India Pvt. Ltd. with its corporate office in Sultanpur, New Delhi, seeks recovery of Rs. 4,25,97,132.84 from the defendants, alongwith return of the additional material allegedly lying at a certain site, or in the alternative, for payment of the cost of such material which is assessed at Rs.16,13,530/-.
3. The plaintiff also seeks pendent-lite and future interest alongwith costs, as detailed in the plaint.
4. The brief factual matrix as narrated in the plaint, that is relevant for purposes of the present application, is as follows :
4.1. The plaintiff company is in the business of supplying various types of medical equipment to its clients. Defendant No.1/M/s. Highway Construction Co. is a partnership firm, with defendants Nos.2 and 3 as its partners. The defendants are stated to have approached the plaintiff, through a third party, one M/s. Concept Healthcare Solutions Pvt. Ltd. for bidding in a tender floated by the Municipal Corporation of Greater Mumbai (‘MCGM’) for supply and erection of oxygen generation plants of various capacities during the then prevailing COVID-19 pandemic.
4.2. The plaint alleges that after some discussions had taken place between the plaintiff, the defendants and the third party (who acted as their go-between), the plaintiff addressed a letter of authority dated 25.04.2021 (‘Authority Letter’) to the Municipal Commissioner, MCGM, Mumbai, Maharashtra authorising the defendants to represent the plaintiff in the tender floated by the MCGM.
4.3. Furthermore, the plaint states that since the work under the tender was to be executed in Mumbai, the plaintiff appointed one Mr. Rajender Kadu as its authorized representative, who sent an e-mail to the defendants detailing the terms and conditions for supply of equipment for the project. The plaint further narrates that the concerned parties met the plaintiff at its Delhi Office on certain dates, which culminated in the issuance of a Purchase Order dated 08.06.2021 by the defendants to the plaintiff.
4.4. As cited in the application, the following paragraphs of the plaint are relevant :

“3. That the Defendant No. 1 acting through Defendant No.2 and 3 approached the Plaintiff via M/s Concept Healthcare Solutions Pvt. Ltd. (Mr. Rajender Kadu) for applying to a tender floated by Municipal corporation of Greater Mumbai (MCGM), Mumbai, for supply and erection of 16 PSA based Oxygen Generator Plants (18 Skids) having various capacities consisting of various groups.

*****
“8. That at last on 08.06.2021 a formal purchase order was issued by the Defendants to the Plaintiff at the Plaintiff’s Delhi office. As per the purchase order the scope of work assigned to the Plaintiff was Supply, Installations, Testing and Commissioning (SITC) of PSA based Oxygen Generator Plants along with Standard Accessories at the Hospitals, Health Centers at Various Locations within MCGM Jurisdiction. The total value of the PO was Rs.24,65,15,500.00/- excluding GST. The said purchase order further contained detailed terms and conditions. Though the purchase order was issued on 08.06.202 (sic, 08.06.2021) the work had already been started as per mutual understanding and also in view of the urgent situation that arose due to second wave of Covid-19 Pandemic.

*****
“11. That despite non receipt of entire payments as agreed by the Defendants, the Plaintiff’s team consisting of Mr. Rajender Kadu, Devender Gupta and Anand Telang reached Mumbai on 11th June’ 21 for the site survey and the drawings were submitted on 16th and 17th June’21. The Plaintiff also supplied the material from 18th June, 2021 and all the PSA based Oxygen modules were dispatched by 10.07.21 along with other material such as tanks, Filters compressors, dryers etc., as mutually agreed, as there was scarcity of molecular sieve which is an imported item. Though there was no delay on the part of the Plaintiff, however the Defendants with malafide intention forced the Plaintiff to deduct the amount for delay, the Plaintiff had already invested huge amount thus had no option but to agree to the Defendants’ wrongful demand and due to this reason the Plaintiff agreed for deductions @ 1000/Kg amounting to Rs. 42,90,000/- in lieu of procurement of molecular sieve.
*****
“12. That the Plaintiff sent its team for installation of supplied OGP’s and started the work at Site in July’21, and its General Manager Reached Mumbai on 8th August’21 to do Installation and commissioning of the OGP’s. Despite that even after repeated follow ups with the Defendants, no payments were released. Hence, Mr. Gulshan Verma (Managing Director of the Plaintiff) along with Mr. Rajender Kadu had a meeting with the Defendant’s authorized persons Mr. Romin Chheda and Mr. Mangesh Rane on 28th and 29th August’21 in the office Penguin Building MR. Vir Mata Jijabai Bhosale Udyan Byculla east, Mumbai, 4000092, with regards to pending payments of Rs. 7,09,76,552/-. The Defendants then assured the Plaintiff that the payment shall be released within 15 days. Upon verbal assurance during that meeting of 28th of August, 2021 the Plaintiff continued with the balance installation and commissioning work. Further the Plaintiff got its first partial payment of Rs. 02 crores on 31st of August 2021. The installation work restarted from 4th of September 2021 onwards by the team of the Plaintiff. Out of the 18 Skids, that were totally ordered with UNIOX Brand of Oxygen Generator Modules with other accessories as per order, the Plaintiff commissioned 14 Skids after proper testing & commissioning. The desired Purity of Oxygen was attained and the Oxygen samples were also tested by third party as per required norms. But the remittance of pending payments of Five Crore were delayed by the Defendants yet again. After a lot of persuasion the Plaintiff received Rs. Fifty Lacs on 15/09/2021 & 20/09/2021. As per account books the payment of the balance amount of Rs.4,06,58,987.00 (Rupees Four Crores Six lacs Fifty Eight Thousands Nine Hundred Eighty Seven only) were still pending. The Plaintiff also completed Installation of balance 4 Skids however commissioning was pending on these 4 Plants/4 Skids. The Plaintiff with a view to amicably resolve the dispute sent various emails and also proposed to enter into an agreement before completing the commissioning of balance 4 Skids. However the Defendants failed to make the payment of the dues and even failed to respond to the various emails and messages sent by the Plaintiff.
*****
“23. That the Plaintiff had applied for Pre Litigation Mediation at Delhi High Court Legal Services Committee, New Delhi, which was initiated and the first hearing was held on 22.03.2022. It is pertinent to note that the mediation failed as the Defendants were not willing to settled the dispute via mediation and the same was also conveyed by the counsel of the Defendants. Thus the Plaintiff has no option but to file the present suit for recovery of the due amount.

*****
“25. That the cause of action arose in favour of the Plaintiff and against the Defendant, when the Plaintiff fulfilled all its obligations by supplying all the oxygen plants to the Defendants as per the purchase order and when the Defendants refused to make the payment for the same. The cause of action arose on again on (sic) 25.01.2022 when the official of the Plaintiff met the Official of the Defendants and the Defendants acknowledged their liability and promised to make the payment, but failed to do so and it further arose when a legal notice dated 07.02.2022 demanding the pending amount, which the Defendants again failed to pay and further when the Defendants failed to appear for the Pre Litigation Mediation and settle the dispute amicably. The cause of action keeps arising each day as the payment of the due amount is not being made by the Defendants.
*****
“27. That this Hon’ble Court has both pecuniary jurisdiction and territorial jurisdiction to try and decide the present matter as the value of the subject matter of the suit is more than Rs.2 Crores and the Plaintiff’s office is situated at Delhi where all the operations of the business take place. Moreover, the purchase orders were also raised in Delhi by the Defendants and the cause of action also took place in Delhi as well.”
(emphasis supplied)

5. Based on the narration in the plaint and the documents upon which it is based, the applicants/defendants contend as follows :
5.1. That the defendants have their ‘Registered Office’ at Allahabad, Uttar Pradesh, and a ‘Branch Office’ in Borivali-West, Mumbai, Maharashtra.
5.2. That, as is specifically pleaded in paras 3, 11 and 12 of the plaint, the tender was floated by the MCGM in Mumbai, Maharashtra; and the supply, installation and commissioning of the oxygen generation plants that were subject matter of the tender was to be done in Mumbai.
5.3. That it is the plaintiff’s own case that the cause of action has arisen by reason of alleged non-payment by the defendants to the plaintiff for the work allegedly carried-out in relation to the project, which work has been undertaken in Mumbai.
5.4. That territorial jurisdiction has been sought to be conferred by the plaintiff on this court based solely on the location of the plaintiff’s office, which is impermissible since the jurisdiction can only be where the defendants’ office is located.
5.5. That the plaintiff has falsely claimed that the Purchase Order from which the disputes have arisen was raised by the defendants in Delhi, which is factually incorrect, since the Purchase Order in question was issued by the defendants from their Mumbai office and was only received by the plaintiff at Delhi.
5.6. That Authority Letter dated 25.04.2021 issued by the plaintiff to the Commissioner, MCGM was also intended to authorize the defendants to represent the plaintiff in the subject tender before the MCGM in Mumbai.
5.7. That furthermore, the plaint itself narrates that since the work was to be executed in Mumbai, the plaintiff had appointed Mr. Rajender Kadu as its authorized representative to deal with the defendants in relation to the contract in Mumbai.
5.8. That section 20 of the CPC, which governs the territorial jurisdiction of the court in the context of the present case, reads as follows :
“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-
“(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

“(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally works for gain, as aforesaid, acquiesce in such institution; or
“(c) The cause of action, wholly or in part, arises.”

5.9. The defendants argue that the present case is covered by section 20(a) and/or section 20(c) of the CPC, whereby the courts at Mumbai, Maharashtra alone would have territorial jurisdiction over the disputes that have arisen between the parties.
5.10. That the relevant portion of the Purchase Order, from which the disputes have arisen, reads as under :
“Scope of Work: Supply of PSA Based Oxygen Generator Plants along with Standard Accessories at the hospitals, health centers at various locations with MCGM Jurisdiction.”

“General Terms and Conditions:-

“1) Billing Details:- All the Tax Invoice related to supply of Materials should be raised in the name of our authorized procurement agency of Mumbai Region, M/s. Parichay Department Stores Private Limited, Billing Address–Shop No.1 & 2, Madhav Apartment, Kastur Park, Shimpoli Road, Borivali (West), Mumbai, Pin-400 092, Maharashtra, GST Number:- 27AADCP6306N1Z4. Please mention Shipped to address: M/s. Highway Construction Co., Respective Site Address of various hospitals of MCGM, on Delivery Challan, GST e-waybill and Tax Invoices. GST e-way bill should be issued along with each and every consignment of materials.

“2) Payment Details: – Payment will be releases directly (sic) from M/s. Parichay Department Stores Private Limited against Tax Invoices for supply of Materials, as per agreed payment milestone mailed on 07/06/2021.
*****
“7) Place of Delivery: The goods shall be delivered at the respective site as per the instructions provided by MCGM. All the materials to be delivered at the designated delivery place as per the time stipulated schedule.”
(emphasis supplied)

5.11. That, in any case, the plaint does not allege that the issuance of the purchase order has given rise to any cause of action; and it is therefore irrelevant whether the purchase order was received by the plaintiff in Delhi or elsewhere.
6. In support of its prayer in the application, the defendants have relied upon certain judicial precedents, the most relevant of which has been dealt-with later in the judgement.
7. Opposing the application, the plaintiff has raised the following contentions :
7.1. That the authorised representatives of the plaintiff had various meetings with the defendants at the plaintiff’s Delhi office to finalise the terms and conditions of the contract, including on the dates as detailed in the reply to this application.
7.2. That defendant No.1 company issued Purchase Order dated 08.06.2021 in favour of the plaintiff “at their Delhi office”.
7.3. That part-payment for the work performed by the plaintiff was credited into the plaintiff’s account maintained with a bank in Delhi and/or at its Delhi office.
7.4. That in view of the foregoing, even if a part of the cause of action has arisen within Delhi, this court would have territorial jurisdiction to entertain and decide the present suit; and therefore, the application seeking return of the plaint deserves to be rejected.
8. In its defense to the application, the plaintiff has also relied upon some judicial precedents, which have been considered by the court, to the extent these were relevant.
9. The legal and factual matrix upon which the decision of the present application turns, is quite straight-forward, and may be summarised as follows :
9.1. For purposes of the present application, it is sufficient to refer to one of the earliest expositions of the law on this issue by the Supreme Court in A.B.C. Laminart Pvt. Ltd. and Anr. vs. A.P. Agencies, Salem1, and in particular to para-15 thereof, which reads as under :
“15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of, its breach, so that the suit may be filed either at the place where they contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on (sic)a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors.”
(emphasis supplied)

9.2. A perusal of Purchase Order dated 08.06.2021 shows that it was stamped and issued by the defendants from their office in Mumbai, Maharashtra. The purchase order also mentions the Registered Office of the defendants as being in Allahabad, U.P., with a Branch Office in Mumbai, Maharashtra. The purchase order contains no reference to any office of the defendants being in Delhi. The purchase order was obviously addressed to the plaintiff at its office in Delhi. The relevant clauses of the purchase order have already been extracted above.
9.3. A reading of the purchase order would show that it refers to an offer and a revised offer having been sent by the plaintiff to the defendants from Delhi to Mumbai; based on which, the defendants issued to the plaintiff the purchase order. The plaintiff’s offer emanating from Delhi was accepted by the defendants in Mumbai. The contract was therefore made or concluded in Mumbai. Issuance of the purchase order was the consequence of the contract that was concluded in Mumbai. By way of the purchase order, the defendants ordered the plaintiff to supply and install the equipment in Mumbai. There is no dispute that the contract was performed in Mumbai. The matter is therefore squarely covered by the clear enunciation by the Supreme Court in A.B.C. Laminart (supra) of the manner in which section 20(c) CPC is to be applied namely “….. if the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else…..”.
9.4. It is also evident that the only two aspects of the transaction based on which the plaintiff seeks to anchor territorial jurisdiction in this court, are : one, that various meetings have taken place between representatives of the defendants and the plaintiff in Delhi; and two, that the plaintiff’s office is situate at Delhi. However, in the opinion of this court, these two aspects do not help the plaintiff in founding the cause of action within the territorial jurisdiction of this court in view of the position of law under section 20 CPC and the decision in A.B.C. Laminart (supra), as discussed above.
10. In the above view of the matter, this court is persuaded to hold that territorial jurisdiction in respect of the claims that are subject matter of the suit, would vest in the competent court within Mumbai; and that this court has no territorial jurisdiction to entertain, try or decide the suit.
11. Accordingly, the application is allowed.
12. The plaint is directed to be returned to the plaintiff; with a direction to the plaintiff that it be presented before the court of competent jurisdiction in Mumbai, Maharashtra, as per further directions issued in the daily order.

ANUP JAIRAM BHAMBHANI, J

MARCH 15, 2024/ak

1 (1989) 2 SCC 163
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CS(COMM) 324/2022 Page 1 of 13