CEMENT WORKERS’ MANDAL versus GLOBAL CEMENTS LTD. (HMP CEMENTS LTD.) & ORS on 14 February 2019

CEMENT WORKERS’ MANDAL

v.

GLOBAL CEMENTS LTD. (HMP CEMENTS LTD.) & ORS.

(Civil Appeal No.5360 of 2010)

FEBRUARY 14, 2019

[ABHAY MANOHAR SAPRE ANDDINESH MAHESHWARI, JJ.]

Constitution of India: Art. 226(2) – Territorial jurisdiction ofthe High Court to entertain the petition – Held: Expression “thecause of action, wholly or in part, arises” occurring in Art. 226(2)has to be read in the context of s. 20(c) CPC which deals with filingof the suit within the local limits of the jurisdiction of the Civil Courts– Issue as to whether the cause of action for filing the petition,wholly or in part, arose in the context of territorial jurisdiction ofthe High Court, is to be decided keeping in view the provisions ofArt. 226(2) r/w s. 20 CPC – On facts, the part of the cause of actionas contemplated in Art. 226(2) has arisen within the territorialjurisdiction of the Gujarat High Court for filing the petition to claimappropriate reliefs in relation to such dispute against theCompany – Thus, the application was maintainable in the High Court– Order of the Single Judge is restored to the extent it decides thatthe application is maintainable in the Gujarat High Court – Codeof Civil Procedure, 1908 – s. 20.

Allowing the appeal, the Court

HELD: 1.1 Article 226(2) of the Constitution empowersthe High Court to entertain the writ petition if the cause of actionto file such writ petition against the respondents of the said writpetition has arisen wholly or in part within the territorialjurisdiction of ‘A’ High Court. Clause (2) further empowers aHigh Court to issue any order, directions or writ as provided inclause (1) of Article 226 in such writ petition notwithstandingthat seat of such Government or the Authority or the residenceof such person against whom the writ petition is filed does notfall within the territories of the “A” High Court but falls in theterritories of the “B” High Court. [Paras 24, 25] [365-A-C]

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A1.2 Respondent No.1-Company has its factory at Porbandar,which is a part of State of Gujarat. The Labour Court, Junagadh,which is also a part of State of Gujarat, entertained the disputebetween the appellant-Union and respondent No.1-Company andpassed a recovery order. One of the reliefs claimed in the petition(SCA) pertains to non-payment of outstanding wages payable toBthe workers by respondent No.1-Company. Thus, the part of thecause of action as contemplated in Article 226 (2) has arisen withinthe territorial jurisdiction of the Gujarat High Court for filing thepetition (SCA) to claim appropriate reliefs in relation to suchdispute against respondent No.1-Company. [Paras 26-27]C[365-C-E]

1.3 The expression “thecause of action, wholly or in part,arises” occurring in Article 226(2) of the Constitution has to beread in the context of Section 20(c) CPC which deals with filingof the suit within the local limits of the jurisdiction of the CivilDCourts. Indeed, the question as to whether the cause of actionfor filing the petition, wholly or in part, arose in the context ofterritorial jurisdiction of the High Court and whether the GujaratHigh Court has territorial jurisdiction to entertain the appellant’spetition (SCA) or not, is required to be decided keeping in viewthe provisions of Article 226(2) read with the provisions of SectionE20 CPC. [Paras 28-29] [365-F-H]

1.4 Special Civil Application (SCA) was maintainable in theHigh Court inasmuch as the part of the cause of action to filesuch petition did accrue to the appellant within the territorialjurisdiction of the Gujarat High Court. SCA was required to beFdecided on merits by the High Court. The impugned order of theDivision Bench is set aside and the order of the Single Judge isrestored to the extent it decides that the SCA as maintainable inthe GujaratHigh Court. The case is remanded to the Single Judge(Writ Court) for deciding the petition(SCA) on merits strictly inGaccordance with law. [Paras 30-33] [366-A-D]

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5360of 2010.

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5360of 2010.

From the Judgment and Order dated 27.04.2007 of the High Courtof Gujarat at Ahmedabad in Letters Patent Appeal No. 1020 of 2006.H

Ms. Anushree Prashit Kapadia, Ms. Kavita Bhardwaj, Advs. forthe Appellant.

Gautam Awasthi, Saurabh Trivedi, Advs. for the Respondents.

The Judgment of the Court was delivered by ABHAY MANOHAR SAPRE, J. 1. This appeal is filed againstthe final judgment and order dated 27.04.2007 passed by the High Courtof Gujarat at Ahmedabad in Letters Patent Appeal No.1020 of 2006 inCivil Application No.770 of 2005 whereby the Division Bench of theHigh Court allowed the said Letters Patent Appeal filed by respondentNo.1 herein holding that the High Court had no territorial jurisdiction toentertain the Special Civil Application (in short, “SCA”) filed by theappellant herein which was entertained and allowed by the Single Judge.

2. A few facts need mention hereinbelow for the disposal of thisappeal, which involves a short legal question.

3. Respondent No.1 herein is a Limited Company having itsregistered office at Calcutta. Respondent No.1 was engaged in thebusiness of manufacture and sale of cement. They have a cement factoryat Porbandar in the State of Gujarat.

4. The appellant is a Union of workers. These workers wereworking, at all relevant time, in the cement factory of respondent No.1at Porbandar. According to the appellant-Union, as many as 500 workers,who are the members of it, were working at the relevant time in the saidcement factory.

5. Respondent No.1, however, closed the cement factorysomewhere in the year 1998 for myriad reasons without paying the wagesto its workers.

6. A dispute, therefore, arose between the appellant-Union andRespondent No.1-Company (employer) regarding the non-payment ofoutstanding wages payable to the workers. The appellant- Union,therefore, approached the Labour Court at Junagadh (Gujarat) and filedRecovery Application No.86/98 under the Industrial Disputes Act, 1947for the recovery of the outstanding wages payable to the workers againstRespondent No.1.

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7. By order dated 12.04.1999, the Labour Court allowed theapplication and directed Respondent No.1-Company to pay a sum ofRs.81,50,744/- with a cost of Rs.50,000/- to the workers. This wasfollowed by issuance of recovery certificate dated 04.09.2000 forRs.60,35,379/- by the Collector, Junagadh as arrears of land revenue.The said certificate, however, has remained unexecuted.

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8. It appears that Respondent No.2 - Indian Bank had givenbusiness loan to Respondent No.1- Company, which they failed to repayto the Indian Bank. The Indian Bank (R-2), therefore, filed a claimpetition before the Debt Recovery Tribunal (for short “the DRT) atCalcutta against Respondent No.1-Company for recovery of their unpaidCloan amount with interest.

9. By order dated 04.03.2003, the DRT allowed the claim petitionand ordered for sale of the properties of Respondent No.1-Companyafter giving due publicity. The DRT also appointed one Receiver to takeappropriate steps in this regard. The Receiver informed the appellant-DUnion accordingly.

10. It is with these background facts, the appellant-Union filed apetition (Special Civil Application No.12212 of 2004) in the High Courtof Gujarat at Ahmadabad out of which this appeal arises. The SCA wasfiled against the Indian Bank(respondent No.2 herein) and theECompany(respondent No.1 herein). The appellant claimed the followingreliefs in their SCA:

“A. To issue an order, direction in the nature of mandamusand/or any other appropriate writ, order or direction,directing the respondent No.1 Indian Bank, Kolkata, todeposit the 50% amount of the sale proceeds of thePorbandar H.M.P. Cement with the District Collector,Porbandar, and the District Collector be directed to pay byaccount payee cheque to each of the workmenproportionately towards the part-payment of the legal duesto the individual workman concerned; ALTERNATIVELY.

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B. To issue direction to the respondent No.1 Indian Bankto pay 50% of the amount to the petitioner union who shalldirectly pay to the workmen by account payee cheque eitherunder the supervision of District Collector, Porbandar orAssistant Labour Commissioner, Porbandar.

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CEMENT WORKERS’ MANDAL v. GLOBAL CEMENTS LTD(HMP CEMENTS LTD.) [ABHAY MANOHAR SAPRE, J.]

C. To declare and hold the impugned action of the DebtRecovery Tribunal, Kolkata, in transferring the entire saleproceed to respondent No.1, Indian Bank, without retainingthe amount of workers’ due, as illegal and without authorityof law.

D. To suspend the operation, implementation and executionof the order of the Debt Recovery Tribunal insofar as theDebt Recovery Tribunal directs:

“It is being further ordered that in the case of default onthe part of the defendants in adhering to any of the termsand condition hereinabove stated, the certificate ofrecovery so issued, shall automatically be altered for thetotal applicant’s claim as filed on July 2002 and theapplicant being granted the liberty to appropriate theentire money lying with the present learned transferringTribunal in O.A. No.142 of 1998 after receiving the saidsum from the learned Receiver and it is also beingordered that the learned Receiver is hereby beingordered to stand discharged….”

E. To grant such other and further relief as the Hon’bleCourt deems fit and proper in the interest of justice.”

11. The respondent Nos.1 & 2, i.e., Company and the Indian Bankon entering their appearance in the SCA raised a preliminary objectionbefore the writ court contending that the SCA filed by the appellant-Union is not maintainable in the High Court of Gujarat at Ahmedabadinasmuch as no part of the cause of action in relation to the subjectmatter of the SCA has arisen in the State of Gujarat which entitled theappellant-Union to file the SCA in the Gujarat High Court.

12. In other words, the objection was that having regard to thenature of reliefs claimed by the petitioner (appellant herein) in the SCA,no part of cause of action could be said to have arisen in the State ofGujarat, which would empower the Gujarat High Court to entertain theSCA for its disposal on merits. On the other hand, it was contended thatit is clear that the entire cause of action between the parties has accruedin the State of Calcutta where the company’s registered office is locatedand where the DRT had also entertained the claim petition filed by theIndian Bank(respondent No.2 herein) against the Company (respondentNo.1 herein) and had passed the orders in the said claim petition.

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13. The respondent Nos. 1 & 2, therefore, contended that thesaid SCA was liable to be dismissed as being not maintainable for wantof territorial jurisdiction of the Gujarat High Court.

14. The Single Judge by order dated 26.10.2005 overruled thepreliminary objection and held that the Gujarat High Court has theBterritorial jurisdiction to entertain the SCA.

15. Respondent No.1 (Company) felt aggrieved and filed the LPAbefore the Division Bench. By impugned order, the Division Benchallowed the LPA, set aside the order of the Single Judge and dismissedthe SCA. The Division Bench held that the Gujarat High Court has noCterritorial jurisdiction to entertain the SCA in question because no part ofthe cause of action has accrued to file such petition(SCA) in the GujaratHigh Court.

16. In other words, the Division Bench was of the view that havingregard to the nature of reliefs claimed in the SCA, the Gujarat HighDCourt cannot be held to have territorial jurisdiction to entertain suchpetition for grant of the reliefs claimed therein.

17. It is against this order of the Division Bench, the Union(petitioner in SCA) felt aggrieved and has filed the present appeal in thisCourt after obtaining the special leave to appeal.

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18. So, the short question, which arises for consideration in thisappeal, is whether the Division Bench was justified in holding that theSCA filed by the appellant was not maintainable for want of territorialjurisdiction of the Gujarat High Court.

19. Heard Ms. Anushree Prashit Kapadia, learned counsel forFthe appellant and Mr. Gautam Awasthi, learned counsel for therespondents.

20. Having heard the learned counsel for the parties and on perusalof the record of the case, we are inclined to allow the appeal and whilesetting aside the impugned order of the Division Bench restore the orderGof the Single Judge.

21. In our considered opinion, the Division Bench erred in notnoticing Article 226(2) of the Constitution of India while deciding thequestion arising in this case.

22. In other words, the question as to whether the Gujarat HighCourt has territorial jurisdiction to entertain the appellant’s petition(SCA)or not, should have been decided keeping in view the provisions of Article226(2) of the Constitution read with Section 20 of the Code of CivilProcedure, 1908 (for short, “CPC”).

23. Article 226 of the Constitution and Section 20 of CPC read asunder:

“Article 226 of the Constitution

226. Power of High Courts to issue certain writs

(1) Notwithstanding anything in Article 32 every High Courtshall have powers, throughout the territories in relation towhich it exercises jurisdiction, to issue to any person orauthority, including in appropriate cases, any Government,within those territories directions, orders or writs, includingwrits in the nature of habeas corpus, mandamus,prohibition, quo warranto and certiorari, or any of them, forthe enforcement of any of the rights conferred by Part IIIand for any other purpose.

(2) The power conferred by clause (1) to issue directions,orders or writs to any Government, authority or person mayalso be exercised by any High Court exercising jurisdictionin 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 orauthority or the residence of such person is not within thoseterritories.

(3) Where any party against whom an interim order, whetherby way of injunction or stay or in any other manner, is madeon, or in any proceedings relating to, a petition under clause(1), without- (a) furnishing to such party copies of such petition andall documents in support of the plea for such interimorder; and (b) giving such party an opportunity of being heard, A

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makes an application to the High Court for the vacationof such order and furnishes a copy of such application tothe party in whose favour such order has been made orthe counsel of such party, the High Court shall disposeof the application within a period of two weeks from thedate on which it is received or from the date on whichthe copy of such application is so furnished, whicheveris later, or where the High Court is closed on the lastday of that period, before the expiry of the next dayafterwards on which the High Court is open; and if theapplication is not so disposed of, the interim order shall,on the expiry of that period, or, as the case may be, theexpiry of the said next day, stand vacated

(4) The power conferred on a High Court by this articleshall not be in derogation of the power conferred on theSupreme Court by clause (2) of Article 32.”

“Section 20 of CPC

20. Other suits to be instituted where defendants reside orcause of action arises- Subject to the limitations aforesaid,every suit shall be instituted in Court within the local limitsof whose jurisdiction- (a) the defendant, or each of the defendants where thereare more than one, at the time of the commencement ofthe suit, actually and voluntarily resides, or carries onbusiness, or personally works for gain; or (b) any of the defendants, where there are more thanone, at the time of the commencement of the suit actuallyand voluntarily resides, or carries on business, orpersonally works for gain, provided that in such caseeither the leave of the Court is given, or the defendantswho do not reside, or carry on business, or personallywork for gain, as aforesaid, acquiesce in such institution;or

(c) the cause of action, wholly or in part, arises.

Explanation - A corporation shall be deemed to carry onbusiness at its sole or principal office in India or, in respect of any cause of action arising at any place where it has alsoa subordinate office, at such place.”

24. Article 226(2) of the Constitution, in clear terms, empowersthe High Court (let us say “A” High Court) to entertain the writ petitionif the cause of action to file such writ petition against the respondents ofthe said writ petition has arisen wholly or in part within the territorialjurisdiction of “A” High Court.

25. Clause (2) further empowers a High Court to issue any order,directions or writ as provided in clause (1) of Article 226 of the Constitutionin such writ petition notwithstanding that seat of such Government orthe Authority or the residence of such person against whom the writpetition is filed does not fall within the territories of the “A” High Courtbut falls in the territories of the “B” High Court.

26. Coming to the facts of this case, we find from the avermentsof the petition(SCA) that firstly, Respondent No.1-Company has itsfactory at Porbandar, which is a part of State of Gujarat; Second, theLabour Court, Junagadh, which is also a part of State of Gujarat,entertained the dispute between the appellant-Union and respondent No.1-Company and passed a recovery order; and Third, one of the reliefsclaimed in the petition(SCA) pertains to non-payment of outstandingwages payable to the workers by respondent No.1-Company.

27. In the light of these three reasons, we are of the view that thepart of the cause of action as contemplated in Article 226 (2) of theConstitution has arisen within the territorial jurisdiction of the GujaratHigh Court for filing the petition(SCA) to claim appropriate reliefs inrelation to such dispute against respondent No.1-Company.

28. In our considered opinion, the expression “thecause of action,wholly or in part, arises” occurring in Article 226(2) of the Constitutionhas to be read in the context of Section 20(c) of CPC which deals withfiling of the suit within the local limits of the jurisdiction of the CivilCourts.

29. Indeed, the question as to whether the cause of action forfiling the petition, wholly or in part, arose in the context of territorialjurisdiction of the High Court is required to be decided keeping in viewthe provisions of Article 226(2) of the Constitution read with theprovisions of Section 20 of CPC.

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30. In the light of the foregoing discussion, we are of the viewthat the appellant’s petition(SCA) was maintainable in the Gujarat HighCourt inasmuch as the part of the cause of action to file such petition didaccrue to the appellant herein (petitioner) within the territorial jurisdictionof the Gujarat High Court.

31. In these circumstances, the SCA was required to be decidedon merits by the Gujarat High Court.

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32. In view of the foregoing discussion, the appeal succeeds andis hereby allowed. The impugned order of the Division Bench is setaside and the order of the Single Judge is restored to the extent it decidesCthat the petition(SCA) as maintainable in the Gujarat High Court.

33. The case is accordingly remanded to the Single Judge (WritCourt) for deciding the petition(SCA) on merits strictly in accordancewith law uninfluenced by any of the observations made by the DivisionBench and this Court because this Court has decided only the issue ofDterritorial jurisdiction of the Gujarat High Court and not beyond it.

34. Since the petition(SCA) is old, we request the Single Judge todecide it preferably within six months.

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Nidhi Jain

Appeal allowed.

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