REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO.5360 OF 2010

Cement Workers’ Mandal           ….Appellant(s)

VERSUS

Global Cements Ltd  (HMP Cements Ltd.) & Ors.        …Respondent(s)

J U D G M E N T

Abhay Manohar Sapre, J.

1.  This appeal is filed against the final judgment

and order dated 27.04.2007 passed by the  High

Court  of  Gujarat  at  Ahmedabad  in Letters  Patent

Appeal No.1020 of 2006 in Civil Application No.770

of  2005  whereby the  Division  Bench  of the  High

Court allowed the said Letters Patent Appeal filed by

respondent No.1 herein holding that the High Court 1

had no territorial jurisdiction to entertain the

Special  Civil  Application  (in  short, “SCA”) filed by

the appellant herein which was entertained and

allowed by the Single Judge.  

2. A few facts need mention hereinbelow for the

disposal of this appeal, which involves a short legal

question.

3. Respondent No.1 herein is a Limited Company

having its registered office at Calcutta.  Respondent

No.1 was engaged in the business of manufacture

and sale of cement.  They have a cement factory at

Porbandar in the State of Gujarat.

4. The appellant is a  Union of  workers. These

workers were working,  at all  relevant time,  in the

cement factory of respondent  No.1 at Porbandar.

According to the appellant­Union, as many as 500

workers, who are the members of it, were working at

the relevant time in the said cement factory.

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5. Respondent No.1, however, closed the cement

factory somewhere in the year 1998 for myriad

reasons without paying the wages to its workers.   

6. A dispute, therefore, arose between the

appellant­Union and Respondent No.1­Company

(employer) regarding the non­payment of

outstanding wages payable to the workers. The

appellant­ Union, therefore, approached the Labour

Court at Junagadh (Gujarat) and filed Recovery

Application No.86/98 under the Industrial Disputes

Act, 1947 for the recovery of the outstanding wages

payable to the workers against Respondent No.1.

7. By order dated 12.04.1999, the Labour Court

allowed the application and directed Respondent

No.1­Company to pay a sum of Rs.81,50,744/­ with

a cost of Rs.50,000/­ to the workers. This was

followed by issuance of recovery certificate dated

04.09.2000 for Rs.60,35,379/­ by the Collector,

Junagadh  as arrears of land revenue.   The said

certificate, however, has remained unexecuted.  

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8. It appears that Respondent No.2 ­ Indian Bank

had given business loan to Respondent No.1­

Company, which they failed to repay to the Indian

Bank.  The  Indian Bank  (R­2), therefore,   filed  a

claim petition before the Debt Recovery Tribunal (for

short “the DRT) at Calcutta against Respondent

No.1­Company for recovery of their unpaid loan

amount with interest.

9. By order dated 04.03.2003, the DRT allowed

the claim petition and ordered for sale of the

properties of Respondent No.1­Company after giving

due publicity.  The DRT also appointed one Receiver

to take appropriate steps in this regard. The

Receiver informed the appellant­Union accordingly.

10. It is with these background facts, the

appellant­Union filed a petition (Special Civil

Application No.12212 of 2004) in the High Court of

Gujarat at Ahmadabad out of which this appeal

arises.   The SCA was filed against the Indian

Bank(respondent No.2 herein) and the

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Company(respondent  No.1  herein).  The  appellant

claimed the following reliefs in their SCA:

“A. To issue an order, direction in the nature of  mandamus and/or  any other  appropriate writ, order or direction, directing the respondent No.1 Indian Bank, Kolkata, to deposit the 50% amount of the sale proceeds of the Porbandar H.M.P. Cement with the District Collector, Porbandar, and the District Collector be directed to pay by account payee cheque to each of the workmen proportionately towards the part­payment of the legal dues to the individual workman concerned; ALTERNATIVELY.

B. To issue direction to the respondent No.1 Indian Bank to pay 50% of the amount to the petitioner union who shall directly pay to the workmen by account payee cheque either under the supervision  of  District  Collector, Porbandar or Assistant Labour Commissioner, Porbandar.

C. To declare and hold the impugned action of the  Debt  Recovery  Tribunal,  Kolkata, in transferring the entire sale proceed to respondent No.1, Indian Bank, without retaining the amount of workers’ due, as illegal and without authority of law.

D. To suspend the operation, implementation and execution of the order of the Debt Recovery Tribunal insofar as the Debt Recovery Tribunal directs:

“It is being further ordered that in the case of default on the part of the defendants in adhering to any of the terms and condition hereinabove stated, the certificate

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of recovery so issued, shall automatically be altered for the total  applicant’s  claim as  filed on July 2002 and the applicant being granted the liberty to  appropriate the entire money lying with the present learned transferring Tribunal in O.A. No.142 of 1998 after receiving the said  sum from the learned Receiver and it is also being ordered that the learned Receiver is hereby being ordered to stand discharged….”

E. To grant such other and further relief as the Hon’ble Court deems fit and proper in the interest of justice.”

11. The respondent Nos.1 & 2, i.e., Company and

the Indian Bank on entering their appearance in the

SCA raised a preliminary objection before the writ

court contending that the SCA filed by the

appellant­Union is not  maintainable in the High

Court of  Gujarat at  Ahmedabad inasmuch  as  no

part of the cause of action in relation to the subject

matter of the SCA has arisen in the State of Gujarat

which entitled the appellant­Union to file the SCA in

the Gujarat High Court.  

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12. In other words, the objection was that having

regard to the nature of reliefs claimed by the

petitioner (appellant herein) in the SCA, no part of

cause of action could be said to have arisen in the

State of Gujarat, which would empower the Gujarat

High Court to entertain the SCA for its disposal on

merits.  On the other hand, it was contended that it

is clear that the entire cause of action between the

parties has accrued in the State of Calcutta where

the company's registered office is located and where

the DRT had also entertained the claim petition filed

by the Indian Bank(respondent No.2 herein) against

the Company (respondent No.1 herein) and had

passed the orders in the said claim petition.

13. The respondent Nos. 1 & 2, therefore,

contended that the said SCA was liable to be

dismissed as being not  maintainable for  want of

territorial jurisdiction of the Gujarat High Court.

14. The Single Judge by order  dated 26.10.2005

overruled the  preliminary  objection  and held that

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the Gujarat High Court has the territorial

jurisdiction to entertain the SCA.  

15. Respondent No.1 (Company) felt aggrieved and

filed the LPA before the Division Bench. By

impugned order, the Division Bench allowed the

LPA,  set  aside the  order  of the Single  Judge and

dismissed the SCA.  The Division Bench held  that

the Gujarat High Court has no territorial

jurisdiction to entertain the SCA in question

because no part of the cause of action has accrued

to file such petition(SCA) in the Gujarat High Court.

16. In other words, the Division Bench was of the

view that having regard to the nature of reliefs

claimed in the SCA, the Gujarat High Court cannot

be held to have territorial  jurisdiction to entertain

such petition for grant of the reliefs claimed therein.

17. It is against this order of the Division Bench,

the Union (petitioner in SCA) felt aggrieved and has

filed the present appeal in this Court after obtaining

the special leave to appeal.

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18. So, the short question, which arises for

consideration in this appeal, is whether the Division

Bench was justified in holding that the SCA filed by

the appellant was not maintainable for want of

territorial jurisdiction of the Gujarat High Court.

19. Heard Ms. Anushree Prashit Kapadia, learned

counsel for the appellant and Mr. Gautam Awasthi,

learned counsel for the respondents.

20. Having heard the learned counsel for the

parties and on perusal of the record of the case, we

are  inclined to allow the appeal and while setting

aside the impugned order of the  Division  Bench

restore the order of the Single Judge.       

21. In our considered opinion, the Division Bench

erred in not noticing Article 226(2) of the

Constitution of India  while deciding the question

arising in this case.  

22. In other words, the question as to whether the

Gujarat  High  Court has territorial jurisdiction to

entertain the appellant's petition(SCA) or not,

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should have been decided keeping in view the

provisions of Article 226(2) of the Constitution read

with Section 20 of the Code of Civil Procedure, 1908

(for short,  “CPC”).

23. Article 226 of the Constitution and Section 20

of CPC read as under:  

“  Article 226 of the Constitution

226.  Power of  High Courts to issue certain writs

(1) Notwithstanding anything in Article 32 every High Court shall have powers, throughout the territories in relation 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, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose.

(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.

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every suit shall be instituted in Court within the local limits of whose jurisdiction­

(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

(b) any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided  that in  such case  either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

(c) the cause of action, wholly or in part, arises.

Explanation ­ A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.”

24. Article 226(2) of the Constitution, in clear

terms,  empowers the  High Court (let  us  say   “A”

High Court) to entertain the writ petition if the

cause of action to file such writ petition against the

respondents of the said writ petition has arisen

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wholly or in part within the territorial jurisdiction of

“A”  High Court.  

25. Clause (2) further empowers a High Court to

issue any order,  directions or  writ  as provided  in

clause (1) of Article 226 of the Constitution in such

writ petition notwithstanding that seat of such

Government or the  Authority or the residence of

such person against whom the writ petition is filed

does not fall within the territories of the “A” High

Court but falls in the territories of the “B”  High

Court.

26. Coming to the facts of this case, we find from

the averments of the petition(SCA) that firstly,

Respondent No.1­Company has its factory at

Porbandar, which is a part of State of Gujarat;

Second, the Labour Court, Junagadh, which is also

a part of State of Gujarat, entertained the dispute

between the appellant­Union and respondent No.1­

Company and passed a recovery order; and Third,

one of the reliefs claimed in the petition(SCA)

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pertains to non­payment of outstanding wages

payable to the workers by respondent No.1­

Company.  

27. In the light of these three reasons, we are of

the view that the  part of the cause of action as

contemplated in Article 226 (2) of the Constitution

has arisen within the territorial  jurisdiction of the

Gujarat  High  Court for filing the  petition(SCA) to

claim appropriate reliefs in relation to such dispute

against respondent No.1­Company.  

28. In our considered opinion, the expression “the

cause of action, wholly or in part, arises”  occurring

in Article 226(2) of the Constitution has to be read

in the context of Section 20(c) of CPC which deals

with filing of the suit within the local limits of the

jurisdiction of the Civil Courts.  

29. Indeed, the question as to whether the cause

of  action  for filing  the petition,  wholly  or in part,

arose in the context of territorial jurisdiction of the

High Court is required to be decided keeping in view

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the provisions of Article 226(2) of the Constitution

read with the provisions of Section 20 of CPC.  

30. In the light of the foregoing discussion, we are

of the  view  that the  appellant's  petition(SCA)  was

maintainable in the Gujarat High Court inasmuch

as the part of the cause of action to file such

petition did accrue to the appellant herein

(petitioner) within the territorial  jurisdiction of the

Gujarat High Court.  

31. In these circumstances, the SCA was required

to be decided on merits by the Gujarat High Court.

32. In view of the foregoing discussion, the appeal

succeeds and is hereby allowed. The impugned

order  of the  Division  Bench  is set  aside  and the

order of the Single Judge is restored to the extent it

decides that the  petition(SCA)  as  maintainable in

the Gujarat High Court.

33. The case is accordingly remanded to the Single

Judge (Writ Court) for deciding the petition(SCA) on

merits strictly in accordance with law uninfluenced

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by  any  of the  observations  made  by the  Division

Bench and this Court because this Court has

decided only the  issue of territorial jurisdiction of

the Gujarat High Court and not beyond it.

34. Since the petition(SCA) is old, we request the

Single Judge to decide it preferably within six

months.  

   …………………………………J.       [ABHAY MANOHAR SAPRE]

....…..................................J.              [DINESH MAHESHWARI]

New Delhi; February 14, 2019.        

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