TMI Blog2012 (6) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... Ashvin M. Shah being the opposite party No. 2 in this proceeding. In respect of 300 shares, the defendant No. 1 company agreed to issue duplicate share certificates provided certain obligations being fulfilled by the plaintiff. The plaintiff denied having sold any such shares in favour of any third party and required the defendant company to produce and deliver the said thousand shares which, however, the defendant No. 1 had failed to perform. In this background, the suit for declaration claiming ownership over 1000 Equity shares and other reliefs has been filed. 2. In the proceeding, the company invited the Court to adjudicate the issue No. 3 before deciding the other issues. The said issue No. 3 is as follows:- Has this Court jurisdiction to try the instant suit. 3. The said issue was heard on the basis of an application filed under Order 14 Rule 2 of the Code of Civil Procedure. The grounds for deciding the said issue in favour of the defendant Company and against the plaintiff are as follows:- (a). The registered office of the defendant No. 1 is situated at Patiala Road, Nabha, Punjab and as such this learned Court does not have the jurisdiction to try and determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t created by any law for the time being in force. 9. The scope of the amended provision for settlement of issues was considered in M/s. Pratap Ch. Dey Ors. vs. Allahabad Bank Ors. (AIR 1997 Cal 96). The Hon'ble Justice Tarun Chatterjee (as His Lordship then was) in considering the said amended provision held:- For the purpose of holding that O.14, R. 2 of the Code of Civil Procedure as it now stands can be applied in an appropriate case by the Court in its discretion, it is necessary to consider the O.14, R. 2 of the Code of Civil Procedure before its amendment. It reads as follows:- Where issues both of law and fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issue of law only it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issue of fact until after the issues of law have been determined. 13. Before the amendment of O.14, R. 2 of the Code of Civil Procedure it was a well-settled rule that in appealable cases all issues arising in the suit ought to be ordinarily tried and decided. The reason for the introduction of this rule is to avoid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to-- (a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue. 14. From a bare look to the amended provision of R. 2 of O.14 of the Code of Civil Procedure it is evident that the amended rule is divided into sub-rules (1) and (2). Sub-rule (1) of Rule 2 of Order 14, of the Code of Civil Procedure has recognised the unamended rule that all the issues arising in the suit must be ordinarily tried notwithstanding that the case can be disposed of on a preliminary issue. Sub-rule (2) of Rule 2 of Order 14 of the Code of Civil Procedure provides a limited exception to the ordinary rule of trial. In sub-rule (2) of Rule 2 of Order 14 of the Code of Civil Procedure the incorporation of the word 'may', in my view, has again some special significance. It is my firm opinion that by the incorporation of the word &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar to the suit as a preliminary issue if it considers expedient to do so. 15. From the discussions made hereinabove and considering the aforesaid observations made by the Author in Mulla's Code of Civil Procedure 14th Edition, it is, therefore, evident that the amended Order 14, Rule 2 of the Code of Civil Procedure confers limited discretion to decide a preliminary issue of law first before deciding the other issues. 10. The Hon'ble Supreme Court in Ramesh B. Desai Ors. vs. Bipin Vadilal Mehta Ors. reported in 2006 (5) SCC 638 considered the scope and ambit of Order 14 Rule 2 CPC in Paragraph 13 of the said report which is reproduced hereinbelow:- 13. Sub-rule (2) of Order 14 Rule 2 CPC lays down that where issues both of law and of fact arise in the same suit, and the Court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to (a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force. The provisions of this Rule came up for consideration before this Court in Major S.S. Khanna vs. Brig. F.J. Dillon (AIR 1964 SC 497) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he cause of action in the plaint is failure to deliver the shares to the plaintiffs which the plaintiffs claimed to have purchased at Calcutta. The non-receipt of the shares at Calcutta is the cause of action in the suit. The plaintiff is residing at Calcutta. The plaintiffs applied for the shares and paid consideration for acquiring such shares at Calcutta. The said shares were purchased from a stock broker having its office at Lalbazar Street, at Calcutta and after purchasing the said shares they were sent to the petitioner for recording transfer. The bonus shares were received at Calcutta. The plaintiff, however, did not receive the 1000 shares which were sent for recording transfer, according to the plaintiff, in the month of April, 1997 and which subsequently as is contended, had been illegally transferred in favour of the opposite party No. 2. The defendant contended that no cause of action had arisen within the territorial jurisdiction of the Civil Court at Calcutta on the grounds mentioned hereinabove. 13. The learned senior Counsel appearing on behalf of the petitioner on the basis of the decisions in Morgan Stanley Mutual Fund vs. Kartick Das reported in 1994 (4) SCC 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that once there is a statutory mode of delivering the document by post and deeming provision of such delivery, the place where such posting is done is the place of performance of statutory duty and the same stands discharged as soon as the document is posted. Hence the cause of action for the default of not sending the share certificates within the stipulated time would arise at the place where the registered office of the company is situated as from that place the share certificates can be posted and are usually posted. If the addressee is available at the same locality where the registered office of the company is situated, it is reasonable to think that service of documents may be effected by personally delivering to him. But if the addressee is residing at a distant place it is unreasonable to expect the company to depute somebody to travel up to that distance to personally deliver it to him. The only usual mode which any company would then adopt is to send it to him by post. For such default, as contemplated under section 113(1), there is no question of any cause of action arising at the place where the complainant was to receive postal delivery. What is punishable under sub-s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mportance in revenue law, and the place of incorporation is not conclusive on this question. In general, residence depends upon the place where the central control and management of the company is located. It follows that if such central control is divided, the company may have more than one residence. The locality of the shares of a company is that of the register of shares. 19. It was on the basis of the aforesaid observations, it is contended that the City Civil Court at Calcutta has no territorial jurisdiction. 20. In the instant case, the plaintiff did not initiate any proceeding under section 113(2) of the Companies Act, 1956. It is a civil suit simplicitor in which the declaration of status and entitlement to such shares have been claimed. In Morgan Stanley (supra) the Hon'ble Supreme Court was considering the jurisdiction of Consumer Forum to entertain a complaint filed by a prospective investor and propriety of an ex parte ad interim order. The territorial jurisdiction of a Civil Court to entertain a suit of like nature was not the issue before the Hon'ble Supreme Court and, accordingly, the said decision cannot assist the petitioner. In fact, in Paragraph 42 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been adopted and followed by different High Courts including the Hon'ble Supreme Court. In Laxman Prasad vs. Prodigy Electronics Ltd. Anr. (2008 (1) SCC 618) it was held that 'cause of action' simply stated would mean a right to sue. The relevant observations of the Hon'ble Supreme Court are set out hereinbelow:- 30. We find considerable force in the submission of the learned Counsel for the respondent Company. In our view, cause of action and applicability of law are two distinct, different and independent things an one cannot be confused with the other. The expression cause of action has not been defined in the Code. It is, however, settled law that every suit presupposes the existence of a cause of action. If there is no cause of action, the plaint has to be rejected [Rule 11(a) of Order 7]. Stated simply, cause of action means a right to sue. It consists of material facts which are imperative for the plaintiff to allege and prove to succeed in the suit. The classic definition of the expression ( cause of action ) is found in the observations of Lord Brett in Cooke vs. Gill (1873 LR 8 CP 107). His Lordship stated: Cause of action means eve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. 34. Bare reading of Clause (c) leaves no room for doubt that a suit would lie in a Court within the local limits of whose jurisdiction the cause of action has arisen, wholly or partly. 35. 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. 24. The expression cause of action was considered in Om Prakash Srivastava vs. Union of India, 2006 (6) SCC 207 and it was held:- 12. The expression 'cause of action' has acquired a judicially settled meaning. In the restricted sense 'cause of action' means the circumstances forming the infraction of the right or the immediate occasion for the reaction. In the wider sense, it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but also the infraction upled with the right itself. Compendiously, as noted above, the expression ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... City Civil Court to entertain the said suit filed by the plaintiff for a decree of declaration that the plaintiff is the lawful owner of 2000 shares in M/s. Reliance Industries and the defendant is bound to transfer or issue duplicate share certificates in the name of the plaintiff. The plaintiff also claimed mandatory injunction, directing the defendants to make over such transfer shares in the name of the plaintiff or to issue duplicate shares. One of the grounds for lack of territorial jurisdiction is that all the defendants reside or work at Bombay which is the outside jurisdiction of the Courts of West Bengal and no part of the cause of action arose within West Bengal. The said objection was considered in Paragraph 9 by Their Lordships, the relevant portion whereof is set out hereinbelow:- The question whether a part of the action arose within the jurisdiction of the Court in West Bengal is to be determined with reference to the allegations made in the plaint and if from the allegations so made, an obligation arises in favour of the plaintiff and against the defendants, there can be no doubt that the part of the cause of action for the reliefs claimed has arisen within the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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