Institution of a suit under Section 20, Code of Civil Procedure, 1908

Section 20 of the Code of Civil Procedure, 1908 (“CPC”) provides that a Court, under certain circumstances, can entertain a suit. It primarily focuses on the location of defendant and cause of action. Section 20 has been designed to secure that justice might be brought as near as possible to every man's hearthstone and that the defendant should not be put to the trouble and expense of travelling long distances in order to defend himself.[1]In other words, the principle behind the provisions of clauses (a) and (b) of Section 20 is that the suit be instituted at a place where the defendant is able to defend the suit without undue trouble.[2]

Phrase “cause of action” means every fact, which, if traversed, would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court.[3]That is, it means the bundle of facts which gives rise to a right or liability.[4] The elements of a cause of action are: first, the breach of duty owing by one person to another and; second, the damage resulting to the other from the breach, or the fact or combination of facts which gives rise to a right to sue.[5]

The expression “voluntarily resides”, as provided in clause (a) and (b) of Section 20, necessarily refers to natural persons and not to legal entities. Further, the expressions “carries on business” or “personally works for gain” do not refer to functions carried on by the Union of India is discharge of its executive powers conferred by Article 298 of the Constitution.[6]The Code of Civil Procedure uses the expression “corporation” as meaning a legal person and includes a company registered under the Indian Companies Act, and there is nothing in the CPC which can show that a corporation referred to under Order 20 means only a statutory corporation and not a company registered under the Indian Companies Act.[7]

Application of doctrine of dominus litus is confined only to the cause of action which would fall within Sections 15 to 18 of the Code of Civil Procedure, and it cannot be applied where Section 20 of CPC is sought to be invoked.[8]

Moving further, the Explanation to Section 20 is actually an explanation to clause (a). It is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry on business.[9]Focusing on the interpretation of explanation to Section 20, Supreme Court, in New Moga Transport Co. v. United India Insurance Co. Ltd.,[10] held that:

                                  “On a plain reading of the Explanation to Section 20 CPC it is clear that the Explanation consists of two parts: (i) before the word “or” appearing between the words “office in India” and the words “in respect of”, and (ii) the other thereafter. The Explanation applies to a defendant which is a corporation, which term would include even a company. The first part of the Explanation applies only to such corporation which has its sole or principal office at a particular place. In that event, the court within whose jurisdiction the sole or principal office of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be deemed to carry on business at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The expression “at such place” appearing in the Explanation and the word “or” which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone has the jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office”.”

The section only tries to lay down certain principles for the institution of suit. This is to ensure that one does not misuse the judicial system for harassing a defendant. Interestingly, the decisions of the Supreme Court rendered on interpretation of Section 20(c) CPC shall apply to the writ proceedings also.[11]From above, one can get a brief overview of the important elements of Section 20.

---

[1] Laxman Prasad v. Prodigy Electronics Ltd., (2008) 1 SCC 618, 627

[2] Union of India v. Ladulal Jain, (1964) 3 SCR 624: AIR 1963 SC 1681; Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd., (2004) 4 SCC 671, 675

[3] Bloom Dekor Ltd. v. Subhash Himatlal Desai, (1994) 6 SCC 322, 328

[4] Sonic Surgical v. National Insurance Co. Ltd., (2010) 1 SCC 135, 137

[5] SBI v. Ranjan Chemicals Ltd., (2007) 1 SCC 97, 102

[6] Baktawar Singh Bal Kishan v. Union of India, (1988) 2 SCC 293, 296

[7] Hakam Singh v. Gammon (India) Ltd., (1971) 1 SCC 286, 289

[8] Mohannakumaran Nair v. Vijayakumaran Nair, (2007) 14 SCC 426

[9] Patel Roadways Ltd. v. Prasad Trading Co., (1991) 4 SCC 270, 277

[10] New Moga Transport Co. v. United India Insurance Co. Ltd., (2004) 4 SCC 677, 681

[11] Ambica Industries v. CCE, (2007) 6 SCC 769, 784