2022 (3) TMI 119 - HC - Companies Law

Territorial Jurisdiction of Delhi High Court - LLP is registered in Hyderabad - Access to the business accounts in possession of the respondent no.3/defendant no.3 - grievance of the respondent/plaintiff is that he has been denied access to the business accounts of the respondent no.3/defendant no.3 - entire basis of the respondent/plaintiff for filing the suit in Delhi is on account of the fact that the LLP carried out business in Delhi and that the products of the LLP are regularly sold in Delhi by means of online sales as well as through physical stores such as Nature s Soul, which is in Delhi - HELD THAT - Taking into account the nature of the disputes raised in the plaint being inter-se disputes of partners, the fact that business of the LLP is being carried out in Delhi would not vest the Courts of Delhi with jurisdiction to try and entertain the present suit. An LLP or any other business entity can carry out business in different parts of the country. But that would not mean that a suit, with regard to disputes between the partners, could be filed in any place where the business of the firm/LLP is carried out. What has been raised in the plaint is a dispute with regard to the business accounts of the LLP - Section 13 of the LLP Act provides that every LLP shall have a registered office, where all communications and notices may be addressed and shall be received. In terms of Sections 11 and 36 of the LLP Act, documents in respect of the LLP, including the incorporation document, the statement of account, annual return, etc., shall also be available for inspection with the Registrar of the concerned State in which the LLP is registered. In terms of Section 34(1) of the LLP Act, the books of account in respect of an LLP shall be maintained at the registered office. It is not the case of the respondent/plaintiff that any consent was taken to remove the books of account from the registered office to Delhi. Therefore, it would have to be taken that the books of accounts of the LLP are kept at its registered office in Hyderabad - The present suit impugns the denial of access to the business accounts of the petitioner no.3/defendant no.3 to the respondent/plaintiff. It has not been averred by the respondent/plaintiff that the books of account of the petitioner no.3/defendant no.3 are kept in Delhi. On such an emergence of facts from a reading of the plaint, in the opinion of this Court, the jurisdiction to entertain the present suit shall vest with the Courts in Hyderabad. It is evident from the facts of the present case that there is no principal or subordinate office of the LLP in the State of Delhi and neither are the books of accounts kept in Delhi, therefore, there is no cause of action in respect of the present suit, which is arising within the territorial limits of the Courts in Delhi. Furthermore, the parties by agreement cannot give jurisdiction to a Court, which otherwise does not have such jurisdiction - the Courts in Delhi lack the territorial jurisdiction to try and entertain the present suit. The petitioners/defendants have made out a case fit for interference by this Court under Article 227 of the Constitution of India as the Commercial Court has failed to appreciate that on a reading of the plaint, the Courts in Delhi lack the territorial jurisdiction to try and entertain the present suit - Petition allowed.

Summary

Issues Involved:
1. Territorial jurisdiction of Delhi courts.
2. Jurisdiction of National Company Law Tribunal (NCLT) versus Civil Courts.
3. Validity of exclusive jurisdiction clause in LLP Agreement.
4. Cause of action for filing the suit in Delhi.

Issue-wise Detailed Analysis:

1. Territorial Jurisdiction of Delhi Courts:
The petitioners contended that the Delhi courts lack territorial jurisdiction as the registered office of the LLP and the defendants are located in Hyderabad, and no business records or meetings are held in Delhi. The respondent argued that the LLP conducts business in Delhi, and the LLP Agreement grants exclusive jurisdiction to Delhi courts. The court observed that the plaint did not specify that business accounts are kept in Delhi and noted that mere business activities in Delhi do not vest jurisdiction. The court concluded that the Delhi courts lack territorial jurisdiction as the principal office and business records are in Hyderabad.

2. Jurisdiction of NCLT versus Civil Courts:
The petitioners argued that disputes between LLP partners fall under the jurisdiction of the NCLT as per the LLP Act. The court disagreed, stating that the disputes in the present suit do not pertain to Sections 60, 61, 62, and 63 of the LLP Act, which are within NCLT's jurisdiction. The court clarified that the disputes are inter se disputes of partners regarding business accounts, which can be tried by civil courts under the Commercial Courts Act, 2015.

3. Validity of Exclusive Jurisdiction Clause in LLP Agreement:
The respondent relied on Clause 23 of the LLP Agreement, which grants exclusive jurisdiction to Delhi courts. The court cited the Supreme Court's judgment in Patel Roadways Limited, emphasizing that parties cannot confer jurisdiction on a court that inherently lacks it. The court held that since the registered office and business records are in Hyderabad, the exclusive jurisdiction clause does not vest Delhi courts with jurisdiction.

4. Cause of Action for Filing the Suit in Delhi:
The court noted that the plaint was silent on specific details of the cause of action arising in Delhi. The respondent's claim that the LLP's business activities in Delhi constituted a cause of action was insufficient. The court emphasized that the registered office and business records being in Hyderabad meant the cause of action did not arise in Delhi.

Conclusion:
The court allowed the petition, setting aside the Commercial Court's order and directing the plaint to be returned to the plaintiff for filing in the appropriate court of competent jurisdiction. The court also clarified that civil courts have jurisdiction over inter se disputes of LLP partners, not the NCLT, unless specified under certain sections of the LLP Act.