Counsel must exhibit circumspection in the number of cases they cite: Supreme Court

Today, a division bench of the Supreme Court of India (“Supreme Court”) has made an important observation (Rashmi Metalinks Ltd. & Ors v.Kolkata Metropolitan Development Authority & Ors.) regarding the plethora of cases cited by the counsels. The Court observed that:

                                       “This Court, and even more so the High Court as well as the subordinate courts have to face lengthy arguments in each case because of the practice of citing innumerable decisions on a particular point of law. The correct approach is to predicate arguments on the decision which holds the field......”

(Image Source: Wikipedia)

The problem, according to the bench of Justice T.S. Thakur and Justice Vikramajit Sen, is not with the cases which deal with different questions of law. But, the main problem arises when each of the cited cases deals with the same question of law in the same manner. Senior Advocates K.V. Vishwanathan and A.M. Singhvi had appeared for the appellants and the respondents respectively. Both of them relied heavily on numbers on judgments of the Supreme Court which, in the opinion of the Court, were similar in nature. According to the court:

"Extra-Marital Relationship" may not amount to "Cruelty" under Section 498A, Indian Penal Code, 1860

In an important case (Pinakin Mahipatray Rawal v. State of Gujarat) where the question whether ‘extra-marital relationship’ could be considered as ‘cruelty’ under Section 498A of the Indian Penal Code, 1860 (“Penal Code”) had arisen, the Supreme Court of India (“Supreme Court”) has answered the question in negative. The case involved a situation where the deceased, wife of Accused-1 (“A-1”), had committed suicide following an alleged extra-marital relationship between A-1 and his colleague, Accused 2 (“A-2”). On being tired by the lower court, A-1 was convicted under Section 498A and 306 of the Penal Code. While A-2 and A-3 (‘Mother of A-1”) were acquitted of various alleged offences, A-1 was also acquitted of offence under Section 304B.

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Section 498A provides for the offence of cruelty by the husband or his relatives and Section 306 of the Penal Code provides for the offence of ‘Abetment of Suicide’. It was the case of the prosecution that the deceased had taken the step of committing suicide because of the alleged extra-marital relationship between A-1 and A-2. This relationship, according to the prosecution, had amounted to cruelty under Section 498A of the Penal Code. Though there was no evidence of any physical harm to the deceased, the prosecution rested its case on the basis of mental cruelty, as can be derived from explanation to Section 498A. With respect to the abetment of suicide, prosecution had relied on Section 113A of the Indian Evidence Act, 1872 (“Evidence Act”) where a presumption can be made that the husband or his relatives has abetted the suicide if the same takes place within 7 years of marriage.

Key Features of The Pension Fund Regulatory and Development Authority Bill, 2013

Recently, Parliament has passed The Pension Fund Regulatory and Development Authority Bill, 2013 (“Pension Bill”) which seeks to provide for the establishment of a statutory Pension Fund Regulatory and Development Authority (PFRDA) to promote old age income security.[1] The Bill, which is divided into 10 chapters and 56 clauses, has the following key features:

Pension Fund Regulatory and Development Authority (Chapter II): The Bill provides for the establishment of the Pension Fund Regulatory and Development Authority (“Authority”) with its head office in the National Capital Region. The members of the Authority will be appointed by the Central Government and there shall be one member each from the field of economics, finance, law or administrative matters. Apart from the Chairperson, there will be three whole-time and three part-time members. While Chairperson and whole-time members will hold the office for a period of five, the tenure of a part-time should not ‘exceed’ five years.

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Clause 6 of the Pension Bill provides for the conditions (five conditions in total) which can lead to the removal of the Chairperson or any other member of the Authority. If sought to be removed for acquiring interest which is prejudicial to the function as a member or for the reason that his continuance in the office is against public interest, the concerned member will be given an opportunity to be heard.

Delhi High Court directs University of Delhi to re-compute marks in LLB Entrance

In yet another case (Ram KumarJha v. University of Delhi & Ors.) of wrong answer key in an entrance exam, Delhi High Court High Court on Monday has directed the University of Delhi, respondent, for re-computing the score of the petitioner-student, Ram Kumar Jha. The petitioner, who had appeared for the entrance test (2013-14) of Faculty of Law, University of Delhi, was not satisfied with his result. On obtaining his answer sheets and copies of questions via an RTI application, the petitioner noted that answer key in respect of two questions were not correct.

(Image Source: University of Delhi Website)

Consequently, the petitioner approached the High Court for directing the respondent to rectify the answer and to take the admission of the petitioner. The High Court, while accepting the contentions of the petitioner, held that it would be failing to discharge its duty if it does not correct answers which are patently wrong:

                                       “It is  true  that ordinarily  the  Courts should  not  interfered  with  the answers  notified  by  the  examiners  but,  where  the  Court  finds  that  the answer  contained  in  the  answer  key  in  respect  of  a  particular  question cannot even be  said one of the possible correct and appropriate answers, not to speak of the most appropriate answer, the Court would be failing in its duty, if it  does not correct such patently wrong answer and leaves a wronged  candidate  remediless,  particularly  when  the  question  under consideration relates to a field of law.”

Hearing Affected Party not Necessary for "Further Investigation" under Section 26(7) of the Competition Act, 2002

Delhi High Court has recently, in South Asia LGP Company Private Limited v. Competition Commission of India & Ors, held that the affected party does not have a right of hearing before the Competition Commission of India (“Commission”) can order a further investigation under Section 26(7) of the Competition Act, 2002 (“Competition Act”).

In the present case, a complaint was made against the petitioner, South Asia LPG Company Private Ltd, by the respondent no.3, East India Petroleum Private Limited. It was alleged in the complaint that the petitioner was misusing its dominant position in the terminaling services at Vishakhapatnam Port. The relevant market under Section 2(r) of the Competition Act, as identified by the Director General, was ‘upstream and downstream terminaling services at the Vishakhapatnam Port’.

The Commission, under Section 19 of the Competition Act, may inquiry to check whether there has a contravention of the provisions contained in subsection (1) of Section 3 or subsection (1) of Section 4. The said inquiry can be initiated by the Commission either suo moto or on a reference by the government/statutory authority or on receipt of information from a person, i.e., complainant. If Commission is of the prima facie opinion that there is an alleged contravention of the provisions, it can then direct the Director General under Section 26(1) to cause an investigation into the matter.[1]In case the Director General comes to the conclusion that no contravention of the impugned provisions have been made, the complainant is provided with an opportunity to rebut such findings of the Director General under Competition Act.

Is there any Right of Representation by Counsel in an Arbitration Proceeding?

In what can be considered as an important issue for arbitration jurisprudence in India, constitutionality of the clause 15.22 of Multi-Commodity Exchange of India Ltd (MCX) has been challenged before the Madras High Court (Source: The Hindu, The Business Standard and The New Indian Express newspapers).[1] The issue is important since the impugned clause prohibits the parties to represent themselves by counsel, attorney or advocate in an arbitration proceeding.[2] Clause 15.22 of the by-law reads as:

“...15.22 Appearance by Counsel, Attorney or Advocate not permitted

In arbitral proceedings, the parties to the dispute shall not be permitted to appear by counsel, attorney or advocate.”

In the present petition, it has been contended that the impugned clause violates the right to avail the legal assistance in an arbitration proceedings. It was further contended that any award, which is made without allowing the petition to appear by a legal counsel before the arbitration proceedings, can be challenged under Section 34 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”). Under Section 34 of the Arbitration Act, an arbitral award may be set aside by the court if the party can show that it could not present the case. This comes down to the question whether, in the absence of a counsel or attorney or advocate, it can be said that the concerned party was not able to present its case before the arbitral tribunal.

Advocate-on-Record in the Supreme Court: Legal Profession, Commercialisation and 'Lending of Name'

A few days back, a division bench of the Supreme Court of India (“Supreme Court”) has warned  Rameshwar Prasad Goyal, an Advocate-on-Record (“AoR”), for merely lending his name in several cases [In Re: Rameshwar Prasad Goyal, Advocate].[1] The court, while quoting the phrase “Law is no trade, briefs no merchandise”, vehemently criticised the commercialisation of legal profession which leads to such malpractices. In the present case, a show cause notice was issued to Mr. Goyal when he refused to appear before the Court for clarifying a factual controversy. Later, it appeared that Mr. Goyal had merely lent his name in the impugned matter. In the light of this instance and other prior instances, the purpose which AoR was instituted for has come into question.

Under Section 52 of the Advocates Act, 1961 (“Advocates Act”), a saving provision, Supreme Court has the power to make rules for determining the persons who shall be entitled to act or plead before the court. Though Section 30 of the Advocates Act confers on an enrolled advocate a right to practice before any court, the same has been interpreted by the Supreme Court as being subject to Section 52 of the Advocates Act. While framing such rules under Section 52, Supreme Court exercises the power conferred on it under Article 145 of the Constitution of India, 1950 (“Constitution”).

The system of AoR, created under Supreme Court Rules, 1966 (“Rules”),[2]  is important primarily because they exercise a legalised monopoly in pleading the matters before the Supreme Court. That is, no advocate other than an AoR can file an appearance and act for a party before the Supreme Court.[3] In addition to this, a senior advocate cannot appear before the Supreme Court without an AoR. Last year, the institution of AoR was unsuccessfully challenged before the Delhi High Court (Balraj Singh Malik v. Supreme Court of India through Its Registrar General).[4] Before the High Court, it was contended by the petitioner that AoR merely lends name without being responsible for the conduct of the case. It was further contended that Supreme Court, under Article 145 of the Constitution, has no power to continue the system of AoR. The High Court, while dismissing the petition, was of the opinion that the Supreme Court is competent to create such an institution of AoR. High Court held that:

Right to Privacy and Online Social Networking Space: What Indian Law can do?

With a tremendous increase in the usage of social networking website, an equally proportionate concern has also arisen regarding the issue of privacy. Though there are a number of judicial precedents dealing with issue of privacy in relation to telephone interception, surveillance etc, hardly are there any precedents which can sufficiently enlighten one to realise the scope of right to privacy in social networking space. Is there a crucial difference between the privacy in physical and online space? I argue that though there provisions, such as Section 72A of the Information Technology Act, 2000 (“IT Act”), make one criminally liable for negligently sharing personal data information, they are not sufficient for the purpose of online social networking.

In this issue of online space, the primary hurdle arises when seeks to identify the data which requires protection. Not every data can be given protection, for example, data which is already available in public domain. Also since the nature of online space is different, the measure of protection should be different. For instance, it is not as easy to locate a particular data in physical space as one can locate it online using ‘google.com’; hence, data is more vulnerable in online space than in physical space. This problem ultimately directs one to identify the nature of “privacy right” which one enjoys.

If one looks at the dictionary meaning of privacy, there is a possibility of getting an unclear and uncertain definition: ‘a state in which one is not observed or disturbed by other people’.[1]And, if one sees definition of right to privacy provided by the Supreme Court, then there is a possibility of getting a very broad definition. 

Clause 3 of the Draft National Privacy Bill, 2011 confers on every individual a right to privacy. Though a specific definition is not given, the clause contains a list of information which will be covered under the privacy right of an individual. Though there are a number of shortcomings in the (an exhaustive discussion on data protection and Privacy Bill will be done in one of the next posts). I herein discuss the existing legislations and legal principles which deal with the issue of data protection in online networking space.

What’s in the number of Arbitrators? : An analysis of Section 10 of the Arbitration and Conciliation Act, 1996

In order to ensure that an arbitral proceeding is run smoothly, it is imperative to have the presence of arbitrators. In some situations, arbitral proceedings may require the presence of several arbitrators. However, there is also a possibility that, in some situations, the presence of a single arbitrator may be sufficient for the conduct of arbitral proceedings. Section 10 of the Arbitration and Conciliation Act, 1996 (“Arbitration”) provides that the number of such arbitrators shall not be in even. Section 10(1) of the Arbitration Act reads as:

“…..The parties are free to determine the number of arbitrators, provided that such number shall not be an even number.”

Given this situation, will an arbitration agreement, providing for an even number of arbitrator, become invalid? In this post, while focusing on the decisions of the Supreme Court of India (“Supreme Court”), we will explain this issue pertaining to Section 10 of the Arbitration Act.

Comparison between UNCITRAL Model Law and Arbitration Act, 1996

Section 10 of the Arbitration Act is based on Article 10 of the 1985 UNCITRAL Model Law on International Commercial Arbitration (“Model Law”).[1]Article 10(1) of the Model Law reads as:

“….The parties are free to determine the number of arbitrators”

A difference can be seen between Section 10 of the Arbitration Act and Article 10 of the Model Law. While Model Law does not require the parties to provide for an odd number of arbitrators, such requirement is present in Arbitration Act. If Parliament of India (“Parliament”) has added such words, there must have been a reason behind it. Did Parliament intend to render arbitration agreement, contrary to Section 10 of Arbitration Act, as invalid? Before arriving at any conclusion, it is important to see the take of the Supreme Court on the issue.

Interim Measures under Section 9 of the Arbitration and Conciliation Act, 1996

Section 9 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) provides for a situation whereby a party, before the enforcement of an arbitral award, can approach a court for interim measures. For instance, interim measures can be sought against any goods which are the subject-matter of arbitration. Importance of such measures cannot be easily neglected, especially when it affects the enforceability of the contingent arbitral award. Supreme Court of India (“Supreme Court”) has, in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.[1], held that Section 9 of the Arbitration Act, by virtue of being in Part I, is applicable where the place of arbitration is in India. Though the reasoning was ambiguous, this has, for the time being, become the legal position.

Nature of Power under Section 9 of the Arbitration Act

The court, under Section 9 of the Arbitration Act, is empowered to grant interim measures. Such measures, as the language of the section suggests, can be granted even before the commencement of arbitration proceedings. Since the measures are of "interim" character, a careful consideration is always required.

In Arvind Constructions Co. (P) Ltd. v. Kalinga Mining Corpn.,[2] it was held by the court that exercise of power under Section 9 of the Act must be based on well-recognised principles governing the grant of interim injunctions and other orders of interim protection or the appointment of a Receiver. That is, it would not be correct to say that the power under Section 9 of the Act is totally independent of the well-known principles of interim injunctions.[3]As regard the applicability of Specific Relief Act, 1963 to an application, under Section 9 of the Arbitration Act, it was held by the Supreme Court, in Adhunik Steels Ltd. v. Orissa Manganese and Minerals (P) Ltd.,[4] that:

“When the grant of relief by way of injunction is, in general, governed by the Specific Relief Act, and Section 9 of the Act provides for an approach to the court for an interim injunction, we wonder how the relevant provisions of the Specific Relief Act can be kept out of consideration.”

Reference to Arbitration under Section 8, Arbitration and Conciliation Act, 1996

With a view to avoid traditional court system, arbitration has, over a period of time, been able to secure a unique position. Despite all of its flaws, arbitration has now become a popular means of alternative dispute resolution. To make sure that no party, having agreed to arbitrate, institutes a suit before a civil court, Section 8 was inserted in Arbitration and Conciliation Act, 1996 (“Act”).

Assume a situation where a matter or issue, falling within the scope of arbitration agreement, is adjudicated by the court. This would certainly defeat the very purpose of arbitration. As far the Part I of the Act is concerned, this situation has been taken care of under Section 8.

Substantive requirement of Section 8 of the Arbitration Act, provided in sub-section (1), can be read as:

                                  “A judicial authority before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party so applies not later than when submitting his first statement on the substance of the dispute, refer the parties to arbitration.”

From a bare reading of the section, it becomes clear that judicial intervention is sought to be minimised. Let us now proceed and analyse the section. Since the Act is based on 1985 UNCITRAL Model law on International Commercial Arbitration (“Model Law”),[1] it is vital to first compare Section 8 in its light.

Section 8 of Arbitration Act and Article 8 of UNCITRAL Model Law

Section 8 of the Act has not exactly followed the language of Article 8 of Model Law. Firstly, Model Law uses the term “court”, while Section 8 of the Act uses the term “judicial authority”. Now, there can be situations when an authority, which is not a court, can nonetheless act judicially [Example: Tribunals]. Secondly, last line of Article 8 of the Model Law is not present in the Section 8 of the Act:

                            

      “................unless it finds that the agreement is null and void, inoperative or incapable of being performed”

Contrary to this, Section 8 of the Act nowhere mentions this requirement. One probable reason can be the encouragement that was sought to given to arbitration, with minimum judicial interference. In Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd,[2] Supreme Court held that (3-judge bench decision):

                                  “Unlike Section 45, the judicial authority under Section 8 has not been conferred the power to refuse reference to arbitration on the ground of invalidity of the agreement. It is evident that the object is to avoid delay and accelerate reference to arbitration leaving the parties to raise objections, if any, to the validity of the arbitration agreement before the arbitral forum and/or post-award under Section 34 of the Act.” (emphasis supplied)

Since the question of minimum judicial interference has arisen, it would be interesting to refer Section 5 of the Act which puts a limit on the judicial intervention. Though the objective of minimum judicial interference finds support in Section 5 of the Act, it has been held that the same should not be used for interpreting Section 8 of the Act.[3]

As to what is “judicial authority”, we have already analysed it in another post. However, to provide a brief overview, the term “judicial authority” has been retained especially in view of policy of least intervention, which cannot be limited only to the courts.[4]

Use of the term “judicial authority”, in Section 5 and Section 8 of the Arbitration Act, 1996, is also not a recognition by Parliament that Part I will apply to the international commercial arbitrations held outside India.[5]This point is important given the criticism of Bhatia International v. Bulk Trading S.A. judgment, which made Part I applicable to arbitrations held outside India.[6]

To know more about the term “judicial authority”, see this post -  "Judicial Authority" under Section 8 of the Arbitration and Conciliation Act, 1996

Conditions to be satisfied for the application of Section 8

For the application of Section 8 of the Act, there are certain conditions which need to be satisfied. The conditions which are required to be satisfied under sub-sections (1) and (2) of Section 8 before the court can exercise its powers are:[7]

            (1) There must be an arbitration agreement;

(2) A party to the agreement brings an action in the court against the other party;

(3) Subject-matter of the action is the same as the subject-matter of the arbitration agreement;

(4) The other party moves the court for referring the parties to arbitration before it submits his first statement on the substance of the dispute.

(5) Along with the application the other party tenders the original arbitration agreement or duly certified copy thereof.

(6) Whether the reliefs sought in the suit are those that can be adjudicated and granted in arbitration.[8]

(7) Whether all the parties to the suit are parties to the arbitration agreement.[9]

As far as the requirement under sub-section (2) is concerned, even a duly certified copy is acceptable.[10]Further, the photocopies of the lease agreements could be taken on record under Section 8 of the Arbitration Act for ascertaining the existence of arbitration clause.[11]

Mandatory nature of Section 8

On comprehending the language of Section 8 of the Act, it would become clear that a judicial authority is obliged to refer the parties to arbitration. The provision is not discretionary in nature but mandatory. A civil court has no jurisdiction to entertain a suit after an application under Section 8 of the Act is made for arbitration.[12] That is, if an application, having satisfied the requirement of Section 8, is made, the court has to refer the parties to arbitration.[13]Its application cannot be denied merely on a plea of estoppel.[14]

"First Statement on the Substance of the Dispute"

Under Section 8 of the Act, a party, seeking for arbitration, should so apply ‘not later than when submitting his first statement on the substance of the dispute’. In Rashtriya Ispat Nigam Ltd. v. Verma Transport Co.,[15] Supreme Court held that the expression “first statement on the substance of the dispute” contained in Section 8(1) of the Act is different from the expression “written statement”.[16]It was held that:

                                  “The expression “first statement on the substance of the dispute” contained in Section 8(1) of the 1996 Act must be contradistinguished with the expression “written statement”. It employs submission of the party to the jurisdiction of the judicial authority. What is, therefore, needed is a finding on the part of the judicial authority that the party has waived its right to invoke the arbitration clause. If an application is filed before actually filing the first statement on the substance of the dispute, in our opinion, the party cannot be said to have waived its right or acquiesced itself to the jurisdiction of the court. What is, therefore, material is as to whether the petitioner has filed his first statement on the substance of the dispute or not, if not, his application under Section 8 of the 1996 Act, may not be held wholly unmaintainable. We would deal with this question in some detail, a little later.”[17]

Hence, reply to an interim injunction application would not deprive a person from making an application under Section 8 of the Act. It is also evident from sub-section (3) of Section 8 that the pendency of an application under Section 8 before any court will not come in the way of an arbitration being commenced or continued and an arbitral award being made.[18] Further, the judicial authority `referring the parties to arbitration' under section 8 of the Act, has no power to appoint an arbitrator.[19]

Inclusion of “Third Party” in Arbitral Reference

Arbitration agreement is based on the principle of party autonomy. Hence, under Section 8, it would be very difficult to force a non-signatory to arbitration agreement to arbitrate. In Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya,[20] Supreme Court was of the view that:

                                  “.....there is no provision in the Act that when the subject-matter of the suit includes subject-matter of the arbitration agreement as well as other disputes, the matter is required to be referred to arbitration. There is also no provision for splitting the cause or parties and referring the subject-matter of the suit to the arbitrators”.

Further, in this case, court held that if a matter lies outside the arbitration agreement and is also between some of the parties who are not parties to the arbitration agreement; there is no question of application of Section 8.[21]The issue of inclusion of non-signatory was once again brought before the Supreme Court in Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc.[22]Though, in this case, court was dealing with Section 45 of the Act, correctness of the law in Sunkandya Holdings (supra) was questioned. Court, however, declined to examine the correctness of Sukanya Holdings (supra) thereby stating that:

                                  “...in that case the Court was concerned with the disputes of a partnership concern. A suit had been filed for dissolution of partnership firm and accounts also challenging the conveyance deed executed by the partnership firm in favour of one of the parties to the suit. The Court noticing the facts of the case emphasised that where the subject-matter of the suit includes the subject-matter for arbitration agreement as well as other disputes, the Court did not refer the matter to arbitration in terms of Section 8 of the Act. In the case in hand, there is a mother agreement and there are other ancillary agreements to the mother agreement. It is a case of composite transaction between the same parties or the parties claiming through or under them falling under Section 45 of the Act. Thus, the dictum stated in para 13 of the judgment of Sukanya [(2003) 5 SCC 531] would not apply to the present case.” (emphasis supplied)

Unlike Chloro Controls (supra), the issue in Sukanya Holdings (supra) was not related to a composite transaction but to a partnership firm. It would be interesting to see the viewpoint of the court if an issue, related to composite transaction, comes before it under Section 8.

Above analysis contains a brief overview of Section 8 of the Arbitration and Conciliation Act, 1996

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[1] UNCITRAL Model Law on International Commercial Arbitration, 1985

[2] Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd., (2005) 7 SCC 234, 248; See also India Household and Healthcare Ltd. v. LG Household and Healthcare Ltd., (2007) 5 SCC 510, 516

[3] Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531, 535

[4] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552

[5] Id, at 622

[6] Bhatia International v. Bulk Trading S.A., (2002) 4 SCC 105

[7] P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539, 542; Magma Leasing & Finance Ltd. v. Potluri Madhavilata, (2009) 10 SCC 103, 114

[8] Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, 542

[9] Id

[10] Atul Singh v. Sunil Kumar Singh, (2008) 2 SCC 602, 609

[11] Bharat Sewa Sansthan v. U.P. Electronics Corpn. Ltd., (2007) 7 SCC 737, 747

[12] Hindustan Petroleum Corpn. Ltd. v. Pinkcity Midway Petroleums, (2003) 6 SCC 503, 515

[13] Kalpana Kothari v. Sudha Yadav, (2002) 1 SCC 203, 208; Magma Leasing & Finance Ltd. v. Potluri Madhavilata, (2009) 10 SCC 103, 114; P. Anand Gajapathi Raju v. P.V.G. Raju, (2000) 4 SCC 539, 542; Agri Gold Exims Ltd. v. Sri Lakshmi Knits & Wovens, (2007) 3 SCC 686, 691; Rashtriya Ispat Nigam Ltd. v. Verma Transport Co., (2006) 7 SCC 275, 284; SBP & Co. v. Patel Engg. Ltd., (2005) 8 SCC 618, 648

[14] Id

[15] (2006) 7 SCC 275

[16] Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, 544

[17] Rashtriya Ispat Nigam Ltd. v. Verma Transport Co., (2006) 7 SCC 275, 289

[18] Vijay Kumar Sharma v. Raghunandan Sharma, (2010) 2 SCC 486, 489

[19] State Of Goa vs M/S Praveen Enterprises on 4 July, 2011

[20] Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531, 535

[21] Sukanya Holdings (P) Ltd. v. Jayesh H. Pandya, (2003) 5 SCC 531, 536

[22] Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641

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.

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[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