TMI Blog2022 (10) TMI 635X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Court, the same by itself may not be a determinative factor to decide the matter on merit. All these cases would show how the legal position under Article 226(2) is evolving, how the concept of cause of action is incorporated in Article 226, the history behind it and though initially it is stated that even if a small fraction of the cause of action arises within the jurisdiction of the Court, that Court would have territorial jurisdiction to entertain the suit/petition to the extent that the petition is not maintainable before the Court where a small part of cause of action had arisen and the major part of cause of action shall be considered for applicability of territorial jurisdiction of the Court and had taken a full circle in observing that the concept of part of cause of action is irrelevant and had no application in criminal proceedings and only that High Court could entertain a prayer for quashing which has the supervisory jurisdiction over the jurisdictional court which is monitoring the investigation as per Cr.P.C. The issue whether a writ petition under Article 226 is maintainable against a Criminal Court situated outside the territorial jurisdiction of the Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zance order taken by the Principal Sessions Judge, Chennai in CC No.1 of 2021 against the petitioner. 2. Heard Sri S. Nagamuthu, learned Senior Counsel representing M/s. Anaveni Mogili, counsel on record for the petitioner and Smt. Anjali Agarwal, learned Standing Counsel for the Central Government and the learned Special Public Prosecutor for Enforcement Directorate representing the 1st respondent. 3. The facts of the case leading to filing of the present case are: In the year 2010, M/s. Best Crompton Engineering Projects Ltd. (BCEPL) had availed credit facilities from a consortium of Banks led by the Central Bank of India. The Central Bank of India sanctioned Rs.120.00 Crores for fund based and non-fund based working capital limit to BCEPL on 21.10.2010 secured by immovable property as well as corporate guarantee. The Andhra Bank had sanctioned credit limit to a tune of Rs.60 Crores and the Corporation Bank sanctioned credit limit to a tune of Rs.120.00 Crores to BCEPL meeting a total requirement of Rs.300 Crores. The Central Bureau of Investigation (CBI), Bangalore office registered an FIR on 01.02.2016 against BCEPL under Section 120-B read with Sections 420, 468 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any in February 2012, whereas the loan was sanctioned in 2010. Therefore, none of the charging provisions in the charge sheet or in the complaint would apply to the petitioner. The allegations in the FIR and charge sheet were civil in nature and the same would not attract the ingredients of a criminal offence. The case of the bank with respect to the FIR dated 01.02.2016 would only relate to commercial dispute for recovery of debt and grant of credit facility. The case was civil in nature and no criminal offence was made out against the petitioner. The grant of credit facility was purely for business purposes and the recovery of the same could only be related to dispute of civil nature and not otherwise and non-payment of credit facility ipso facto was not an offence under IPC or the PML Act. The respondents malafidely given colour of a criminal offence to a civil dispute. The complaint under PML Act was an abuse of process of law. 3.2. He further contended that the proceedings initiated under ECIR under PML Act were per se unwarranted and illegal. The investigation was done against the petitioner on the ipse dixit of the officers of the respondent and in complete defiance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is Court challenging issuance of summons and vide order dated 13.04.2019, this Court protected the petitioner therein from arrest. In terms of Article 226(2) of the Constitution of India, the territorial jurisdiction of the High Court would be determined if cause of action, wholly or partly, arose within its territorial jurisdiction. The Hon ble Apex Court in Navinchandra N. Majithia v. State of Maharashtra (2000) 7 SCC 640 held that mere fact that FIR was registered in a particular state would not be a sole criteria to decide whether any cause of action had arisen even partly within the territorial limits of jurisdiction of another State. The aforesaid view was subsequently reiterated by the Hon ble Apex Court in Rajendra Ramachandra Kavalekar v. State of Maharashtra (2009) 11 SCC 286. In view of the law laid down by the Hon ble Apex Court, this Court had got jurisdiction to entertain the writ petition and prayed to allow the same by quashing the cognizance taken by the Principal Sessions Judge, Chennai in CC No.1 of 2021 against the petitioner. 4. The learned Special Public Prosecutor for Directorate of Enforcement, on the other hand, raised a preliminary objection of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st Union of India before this Court and summons were challenged and the interim orders were granted would not cloth this Court with jurisdiction as in the said case jurisdiction was never decided and no finding was ever rendered that in the facts of that case jurisdiction rested with this court and prayed to treat the issue of jurisdiction as preliminary issue before proceeding with the merits of the matter. 4.2. Even on the merits, learned Special Public Prosecutor submitted that 3 criminal cases vide RC No.4(E)/2016/CBI/BS FC/BLR, dated 01.02.2016; FIR vide RC No.4/2017 dated 03.02.2017 and RC No.14/2018 dated 16.07.2018 were registered by CBI, BS FC, Bangalore against BCEPL and their key officials based on the complaints preferred by the consortium of banks for the offences punishable under Sections 420, 468 and 471 IPC and other substantive offences. The allegation in the complaints were that the officials of BCEPL along with other persons hatched a criminal conspiracy amongst themselves at Chennai and Hyderabad and other places during the period from 2010 to 2013 in order to defraud/cheat consortium of Banks led by the Central Bank of India and obtained loan to a tune of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing group of companies: a) Global Forgings Ltd. (presently Cosmos Forgings Ltd.) b) Tejaswini Engineering Pvt. Ltd. c) Ganga Exim Pvt. Ltd. (presently Icon Commodities Pvt. Ltd.) d) Godawari Exports Imports Pvt. Ltd. (BP Ferrium Industries Pvt. Ltd.) 4.4. He further submitted that the petitioner who was the Managing Director of BCEPL was also a Director in M/s.Velugu Power Solutions Pvt. Ltd. as well as in M/s.Mahal Hotel Pvt. Ltd., and vide his statement given under Section 50 of the PML Act stated that the investments made by M/s. Velugu Power Solutions into BCEPL were out of funds that came from various Sujana Group of Companies and the said investment was done to clear and regularize the Bank accounts of BCEPL, that the amount invested in BCEPL was Rs.32.33 lakhs, that he was the Managing Director of Mahal Hotel Pvt. Ltd., and the company was started with the purpose of purchasing an under construction Marriot Hotel at Chennai belonging to Viceroy Hotels Pvt. Ltd., Hyderabad, that the entire investment into Mahal Hotel Pvt. Ltd., was through Sujana Group of Companies. The investment of purchase of Marriot Hotel, Chennai from Viceroy Hotels Pvt. Ltd., wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjudicating authority in OC No.1118 of 2019 confirmed the provisional attachment order (PAO) No.04/2019 vide its order dated 11.09.2019. The Directorate of Enforcement had taken possession of attached properties on 15.09.2019. 4.7. The petitioner was the Managing Director of M/s. BCEPL from 2012 onwards. He was also the Managing Director of M/s. Mahal Hotels Pvt. Ltd., the company which was used as conduit to place part of the proceeds of crime after layering through various fictitious companies which was finally integrated with M/s. Viceroy Hotels Ltd., in order to project the same as untainted. The investigation conducted under PML Act revealed that the proceeds of crime that were routed to M/s. Viceroy Hotels Ltd., through Mahal Hotel Pvt. Ltd., was originated from the diversion of bank loans obtained by BCEPL by cheating the consortium of banks. The petitioner herein executed Business Transfer Agreement on behalf of M/s. Mahal Hotels in the capacity of Managing Director with M/s. Viceroy Hotels. The petitioner herein had directly indulged and knowingly was a party and actually involved in the process or activity connected with the proceeds of crime. Even though loans were s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to which it exercises jurisdiction , to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, for the enforcement of any of the rights conferred by Part III or for any other purpose. Under clause (2) of Article 226 the High Court may exercise its power conferred by clause (1) if the cause of action, wholly or in part, had arisen within the territory over which it exercises Jurisdiction, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. On a plain reading of the aforesaid two clauses of Article 226 of the Constitution it becomes clear that a High Court can exercise the power to issue directions, orders or writs for the enforcement of any of the fundamental rights conferred by Part III of the Constitution or for any other purpose if the cause of action, wholly or impart, had arisen within the territories in relation to which it exercises jurisdiction, notwithstanding that the seat of the Government or authority or the residence of the person against whom the direction, order or writ 'is issued is not within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition under Article 226 against the Union of India or any other body or authority located in Delhi if the cause of action has arisen, wholly or in part, within its Jurisdiction. Clause (1-A) was later renumbered as clause (2) of Article 226. Therefore, the learned counsel for NICCO is right that this amendment was introduced to supersede the view taken by this Court in the aforesaid case. But as stated earlier, on a plain reading of clause (2) of Article 226, it is clear that the power conferred by clause (1) can be exercised by the High Court provided the cause of action, wholly or in part, had arisen within its territorial limits. 6.2 In Alchemist s case (4 supra), the Hon ble Apex Court held that: 12. Before entering into the controversy in the present appeal, let the legal position be examined: Article 226 of the Constitution as it originally enacted had two-fold limitations on the jurisdiction of High Courts with regard to their territorial jurisdiction. Firstly, the power could be exercised by the High Court throughout the territories in relation to which it exercises jurisdiction , i.e. the writs issued by the court cannot run beyond the territories subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be within those territories , which clearly implies that they must be amenable to its jurisdiction either by residence or location within those territories . (emphasis supplied) As to the cause of action, the Court stated: The rule that cause of action attracts jurisdiction in suits is based on statutory enactment and cannot apply to writs issuable under Article 226 which makes no reference to any cause of action or where it arises but insists on the presence of the person or authority 'within the territories' in relation to which the High Court exercises jurisdiction . Again, a question arose in Khajoor Singh v. Union of India [(1961) 2 SCR 528 : AIR 1961 SC 532]. A Bench of seven Judges was called upon to consider the correctness or otherwise of Saka Venkata Rao. The majority (Sinha, C.J., Kapoor, Gajendragadkar, Wanchoo, Das Gupta and Shah, JJ.) reaffirmed and approved the view taken by this Court earlier in Saka Venkata Rao and held that the High Court of Jammu Kashmir was right in not entertaining the writ petition filed by the petitioner on the ground that it had no territorial jurisdiction. Speaking for the majority, Sinha, C.J., stated: It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfer jurisdiction on a High Court under Article 226 of the Constitution. As Joint Committee observed: This clause would enable the High Court within whose jurisdiction the cause of action arises to issue directions, orders or writs to any Government, authority or person, notwithstanding that the seat of such Government or authority or the residence of such person is outside the territorial jurisdiction of the High Court. The Committee feel that the High Court within whose jurisdiction the cause of action arises in part only should also be vested with such jurisdiction . 18. The legislative history of the constitutional provisions, therefore, make it clear that after 1963, cause of action is relevant and germane and a writ petition can be instituted in a High Court within the territorial jurisdiction of which cause of action in whole or in part arises. It may be stated that the expression 'cause of action' has neither been defined in the Constitution nor in the Code of Civil Procedure, 1908. It may, however, be described as a bundle of essential facts necessary for the plaintiff to prove before he can succeed. Failure to prove such facts would give the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether a particular fact constitutes a cause of action or not must be decided on the basis of the facts and circumstances of each case. In our judgment, the test is whether a particular fact(s) is (are) of substance and can be said to be material, integral or essential part of the lis between the parties. If it is, it forms a part of cause of action. If it is not, it does not form a part of cause of action. It is also well settled that in determining the question, the substance of the matter and not the form thereof has to be considered. 26. In Union of India Ors. v. Oswal Woollen Mills Ltd. Ors., (1984) 3 SCR 342 : AIR 1984 SC 1264, the registered office of the Company was situated at Ludhiana, but a petition was filed in the High Court of Calcutta on the ground that the Company had its branch office there. The order was challenged by the Union of India. And this Court held that since the registered office of the Company was at Ludhiana and the principal respondents against whom primary relief was sought were at New Delhi, one would have expected the writ petitioner to approach either the High Court of Punjab Haryana or the High Court of Delhi. The forum chosen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petition, questioning the Constitutionality of a Parliamentary Act was not be maintainable in the High Court of Delhi merely because the seat of the Union of India was in Delhi. On the point of forum- conveniens , the Supreme Court held as follows: 30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. ( See Bhagat Singh Bugga Vs. Dewan Jagbir Sawhney (AIR 1941 Cal 670 : ILR (1941) 1 Cal 490), Madanlal Jalan Vs. Madanlal [(1945) 49 CWN 357 : AIR 1949 Cal 495], Bharat Coking Coal Ltd. Vs. Jharia Talkies Cold Storage (P) Ltd. [(1997) CWN 122], S.S.Jain Co. Vs. Union of India [(1994) 1 CHN 445] and New Horizons Ltd. Vs. Union of India [AIR 1994 Delhi 126]. (emphasis supplied) 22. In the above decision (Kusum Ingots and Alloys Ltd. case) of the Supreme Court, the Apex Court held that a High Court may refuse to exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court cannot be totally oblivious of the Concept of Forum Conveniens. The conclusion thus arrived at was that the Principles of Forum Conveniens, though applicable to the International law as a principle of Comity of Nations, would apply to the discretionary remedy under Article 226 of the Constitution of India. 24. Recently, this Court has also held in O.S.A.Nos.38, 40 and 42 of 2020 (Sulphur Mills Limited Vs. M/s.Dayal Fertilizers Pvt. Limited and three others), by judgment dated 11.11.2020 that, even though a part of cause of action arises in one Court and the major part of cause of action had arisen within the jurisdiction of the other Court, the petition is not maintainable before the Court where the small part of cause of action had arisen. 6.4 The High Court of Madras in Karthi P. Chidambaram and Ors. Vs. Superintendent of Police held that: 12. Once an FIR is filed, it is mandatory for the Investigation Agency to send the copy of the FIR to the Magistrate/Special Court having jurisdiction. The Court which monitors the actions of the investigating agency and also addresses/redresses the grievances, if any, of either the accused or the investigating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintainable as against a criminal court which is situated outside the territorial jurisdiction of this Court. A Full Bench of this Court had occasion to consider that pertinent issue in Meenakshi Sathish v. Southern Petrochemicals Industries reported in 2007 (1) KLT 890 FB and it was held in paragraphs 9 and 10 thereof that in view of clause (2) of Article 226, if part of the cause of action had arisen in the State, writ could be issued against an authority, though the seat of that authority is outside the territorial jurisdiction of this Court. But, the cause of action which must arise in Kerala for issuing the writs of certiorari or prohibition, must relate to the commissions or omissions of an inferior court or Tribunal amenable to the writ jurisdiction of that court and not that of a private party. This Court cannot judicially review the actions of the first respondent therein (the complainant concerned) and that if a complainant files any complaint before any court it may do it rightly or wrongly and the complainant in a complaint alleging offence under Section 138 of the Negotiable Instruments Act, being a private party is not amenable to the writ jurisdiction of this Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) The power conferred by clause (1) to issue directions, orders or writs to any Government authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. The said clause was introduced as clause (1A) by the 15th Amendment Act, 1963, in view of the decisions of the Apex Court in Election Commission, India v. Saka Venkata Subba Rao ((1953) S.C.R 1144), Rashid v. I.T Investigation Commission ((1954) S.C.R 738), Lt. Col. Khajoor Singh v. Union Of India Another (AIR 1961 SC 532) and Collector of Customs v. E.I Commercial Co. (AIR 1963 SC 1124). The result of the above decisions was that Writ Petitions under Art.226 against the Union of India were maintainable only in the High Court of Punjab, as at the relevant time the territory of national capital was under the jurisdiction of the said High Court. The High Courts of Madras and Assam took a different view that if part of the cause of action arose with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered the question regarding quashing of an F.I.R and the criminal investigation conducted by the police in Shillong about the offences committed or the cause of action which arose in Maharashtra State. So, as the police from Shillong has to do investigation in Maharashtra, the Apex Court observed that the Bombay High Court has jurisdiction in the matter. The said observation can have no application to a private complaint, based on which a Magistrate's court, which is outside the jurisdiction of the Kerala High Court takes cognizance and proceeds with the trial. So, the observation in Krishnakumar Menon's case, concerning the jurisdiction of the High Court under Article 226 of the Constitution of India, does not lay down the correct legal position, as far as private complaints are concerned. Even if the cause of action for the complaint under S.138 of the Negotiable Instruments Act arose in Kerala, the Kerala High Court cannot interfere with the proceedings before a criminal court, outside the jurisdiction of this Court. 9. In the present case also the learned senior counsel for the petitioners placed reliance upon the decision of the Hon ble Supreme Court reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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