M/S Sagar Marketing vs. Okaya Power PVT LTD & Anr.

Facts

The appellant, M/s Sagar Marketing, filed an appeal against an order dated 08.09.2022 passed by the learned Commercial Court. The Commercial Court had rejected the appellant's application under Order VII Rule 10 and 11 of the Code of Civil Procedure, 1908. The appellant contended that the suit filed by the respondent, Okaya Power Pvt Ltd, was not maintainable as no part of the cause of action had arisen within the territorial jurisdiction of the Commercial Court. The appellant argued that the entire transaction, including supply, payment, and GST, occurred in Karnataka, where the appellant's principal place of business is located. The respondent, however, pleaded that the cause of action arose within Delhi jurisdiction.

Held

The Court held that the question of territorial jurisdiction, at the stage of an application under Order VII Rule 10 CPC, must be determined on a demurrer, meaning by accepting all averments made in the plaint as correct. The Court noted that the respondent (plaintiff) had pleaded specific averments in paragraph 22 of the plaint, detailing how the cause of action arose within the territorial jurisdiction of the learned Commercial Court. These averments included the placement of orders to the plaintiff's registered office in Delhi, payments and transactions made to the plaintiff's bank account in Delhi, maintenance of ledger accounts in Delhi, and specific clauses in the retail invoices subjecting disputes to Delhi jurisdiction. The Court found that if these averments were correct, the Commercial Court would indeed have jurisdiction. The appellant's attempt to controvert these averments was considered a triable issue. Therefore, the Court found no fault with the learned Commercial Court's decision to reject the appellant's application under Order VII Rule 10 CPC.

Key Issues

1. Whether the learned Commercial Court has territorial jurisdiction to entertain the suit, as per Order VII Rule 10 and 11 of the Code of Civil Procedure, 1908? Petitioner's Arguments: The appellant argued that no part of the cause of action arose within the territorial limits of the learned Commercial Court. They contended that the goods were supplied from Karnataka, the order was placed in Karnataka, GST was paid in Karnataka, and the appellant's principal place of business is in Karnataka, making the suit not maintainable in Delhi. Respondent's Arguments: The respondent (plaintiff in the suit) averred that the cause of action arose within the territorial jurisdiction of the learned Commercial Court. They stated that the order was placed from the appellant's office to the plaintiff's registered office in Delhi, payments and other transactions were made to the plaintiff's bank account in Delhi, the ledger account was maintained at the plaintiff's Delhi office, and acknowledgements and commitments were made at the registered office in Delhi. Furthermore, the retail invoices, as an executed agreement, specifically stated that all disputes shall be subject to Delhi jurisdiction.