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2006 DIGILAW 1679 (PNJ)

Alchemist Limited Company v. State Bank Of Sikkim

2006-04-25

H.S.BHALLA, VINEY MITTAL

body2006
Judgment 1. Petitioner No.1 is Alchemist Limited, a Company incorporated under the Companies Act, 1956, having its registered office at village Dappar, district Patiala and having its corporate office at Chandigarh. Petitioner No. 2 - Kanwar Deep Singh is the Chairman and Managing Director of the said Company. 2. The petitioners have approached this Court for the issuance of a writ of certiorari for quashing the notice/order dated February 23, 2006 issued by Managing Director, State Bank of Sikkim, communicating to the petitioner-Company that the earlier decision dated February 20, 2005 issued by the State Government of Sikkim with regard to strategic partnership with petitioner-Company had been reviewed by the Board of Directors of the State Bank of Sikkim in its 149th meeting held on February 20, 2006 and the acceptance of the proposal of the petitioner-Company in principle had been withdrawn, since the said proposal had not been approved by the State Government of Sikkim. The present writ petition has been filed by the petitioners against the following respondents :- "1. State Bank of Sikkim, a Government Bank, incorporated under the State Bank of Sikkim Proclamation, 1968 published by the Government of Sikkim and having its office at 31A, National Highway, Gangtok-737101 in the State Bank of Sikkim; 2. State Bank of Sikkim, represented by the Chief Secretary, having his office at Gangtok, Sikkim; 3. The Managing Director, State Bank of Sikkim, having his office at 31A, National Highway, Gangtok-737101, Sikkim." 3. The relevant facts, as pleaded by the petitioners, show that in the month of September, 2003, Government of Sikkim had desired to disinvest 49% of the equity capital of State Bank of Sikkim to a strategic partner with transfer of management control in the State Bank of Sikkim. In pursuance to the aforesaid offer floated by State Government of Sikkim and State Bank of Sikkim, the petitioner-Company made an offer on September 27, 2003 offering itself for the aforesaid participation in the said joint venture project. Later on, an advertisement dated January 21, 2004 appeared in the newspaper "Economic Times" on behalf of the State Government of Sikkim, whereby a formal notice, inviting offer of joint venture, was published. The desirous parties, Firms, Companies having management expertise were required to apply with detailed bio-data profiles, to the Bank s Head Office at Gangtok on or before February 7, 2004. The desirous parties, Firms, Companies having management expertise were required to apply with detailed bio-data profiles, to the Bank s Head Office at Gangtok on or before February 7, 2004. It was clearly stipulated in the aforesaid advertisement that the offers made by the parties would be subject to scrutiny by the Board of Directors and the rights to accept or reject offers, without assigning any reason thereof, were reserved by the Board of Directors. A copy of the aforesaid advertisement has been appended as Annexure P-3 with the present writ petition. It appears that the petitioner-Company formally submitted its proposal for the aforesaid strategic business partnership, through its offer dated February 3, 2004. It has been averred by the petitioners that the State Government of Sikkim received 13 offers in all from different organizations and after preliminary examination of all the aforesaid offers, the Board of Directors in its 143rd meeting short-listed the names of the two organisations, i.e., petitioner-company and one another Calcutta based company. 4. The petitioners have also detailed the various steps through which negotiations went on between the Sikkim Bank and the petitioner-Company. It has also been averred by the petitioners that the Chairman and the Management (Managing) Director of the Sikkim Bank had visited Chandigarh for negotiations and before the aforesaid visit of the Chairman, the petitioner-Company was required to make a deposit of Rs. 4.50 crores with State Bank of India in Fixed Deposit to show its bona fides. The petitioners have also maintained that on account of the aforesaid requirement, the petitioner-Company deposited the aforesaid amount of Rs. 4.50 crores in Fixed Deposit with State Bank of India, Chandigarh on March 16, 2005. On the basis of the aforesaid facts, it has been maintained by the petitioners that the petitioner-Company legitimately expected that the final and formal agreement between the petitioner-Company and the respondents would be executed in due course. However, instead of requiring the petitioner-Company to enter into formal agreement of the aforesaid joint venture, a communication dated February 23, 2006 was received by the Chairman-cum-Managing Director of the petitioner-Company, conveying that State Government of Sikkim had not approved the recommendations made by the Bank and therefore, the earlier offer dated February 20,2005 issued with regard to strategic partnership between petitioner-Company and State Bank of India was reviewed and the same was withdrawn. The aforesaid communication dated February 23, 2006 has been appended as Annexure P-12 with the present petition and is a subject-matter of challenge by the petitioners before us. 5. At the outset, being not satisfied with regard to the territorial jurisdiction of this Court on account of the fact that neither any cause of action nor a part thereof, had arisen to the petitioners within the territorial jurisdiction of this Court, we required learned counsel for the petitioners to satisfy us on the said issue. 6. Shri R. S. Cheema, learned Senior Counsel, appearing for the petitioners, has addressed arguments before us on the question of territorial jurisdiction of this Court vis-a-vis the cause of action, which had arisen to the petitioners. Learned Senior Counsel has specifically referred to averments made by the petitioners in para 38 of the present petition to contend that the cause of action, or in any case a part thereof, has arisen to the petitioners, within the territorial jurisdiction of this Court. For the sake of appreciating the aforesaid contention of the learned Senior Counsel, it would be relevant to notice the averments made by the petitioners in para 38 of the petition, as follows :- "38. The petitioner carries on business within the jurisdiction of this Hon ble Court. The offer of the petitioner was accepted by respondent No. 1 by way of its letter dated February 20, 2004 and the same was communicated to the petitioner at Chandigarh within the jurisdiction of this Hon ble Court. The Chairman and Managing Director of respondent No. 1 visited the projects of the petitioner situated in and around Chandigarh in 3rd week of March, 2005 and insisted to keep a sum of Rs. 4 crores 50 lacs which the petitioner deposited with State Bank of India at Chandigarh and the agreement between the parties was acted upon partly at Chandigarh within the jurisdiction of this Hon ble Court. Negotiations were held between the parties in the 3rd week of March, 2005 pursuant to the approval dated February 20, 2004 at Chandigarh within the jurisdiction of this Hon ble Court. The impugned letter dated February 23, 2006 was communicated by respondent No. 1 and received by the petitioner at Chandigarh within the jurisdiction of this Hon ble Court. Negotiations were held between the parties in the 3rd week of March, 2005 pursuant to the approval dated February 20, 2004 at Chandigarh within the jurisdiction of this Hon ble Court. The impugned letter dated February 23, 2006 was communicated by respondent No. 1 and received by the petitioner at Chandigarh within the jurisdiction of this Hon ble Court. The registered office and corporate office of the petitioner is situate within the jurisdiction of this Hon ble Court and by the impugned actions of the respondents the petitioner suffered injury and thus the rights of the petitioner have been violated at Chandigarh, within the jurisdiction of this Hon ble Court. Thus, cause of action arises for exercise of power under Article 226 by this Hon ble Court and as such this Hon ble Court has jurisdiction to receive, try and determine this petition." 7. Shri Cheema, learned Senior Counsel appearing for the petitioners, on the basis of the averments made in the aforesaid para 38 of the petition, has argued that the petitioners were carrying on the business within the jurisdiction of this Court and the offer had been sent by the petitioners to respondent No. 1 from Chandigarh and the aforesaid offer was accepted by respondent No.1 by way of its letter dated February 20, 2004 and the same was communicated to the petitioners at Chandigarh. It has also been contended that the Chairman and Managing Director of respondent No. 1 had visited the projects of the petitioner situated in and around Chandigarh in 3rd week of March, 2005 and on an insistence of the respondents, the petitioner-Company had made a deposit of Rs. 4.50 crores with the State Bank of India at Chandigarh. Learned Senior Counsel maintains that the negotiations were also held between the parties in the month of March, 2005 at Chandigarh Lastly, reliance has also been placed upon a receipt of the communication dated February 23, 2006 by the petitioners at Chandigarh. On the basis of the aforesaid facts, it has been vehemently argued by learned Senior Counsel that a part of the cause of action, in any case, had arisen within the territorial jurisdiction of this Court. 8. On the basis of the aforesaid facts, it has been vehemently argued by learned Senior Counsel that a part of the cause of action, in any case, had arisen within the territorial jurisdiction of this Court. 8. Shri Cheema has also referred to the provision of Article 226 (2) of the Constitution of India to contend that this Court would have the territorial jurisdiction not only with regard to cases where the cause of action wholly arises within the territorial jurisdiction of this Court, but also in cases where a part of the cause of action so arises. It has been contended that the language of Article 226 (2) of the Constitution of India was in pari-materia with provisions of Section 20(c) of Code of Civil Procedure and, therefore, if it could be shown that a part of the cause of action had arisen within the jurisdiction of this Court, then the present petition filed by the petitioners was entertainable by this Court. 9. At this stage, we may notice the language of Article 226(2) of the Constitution of India as follows :- "226(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." 10. There is no quarrel with the propositions of law canvassed by learned Senior Counsel. It is not in dispute that if even a part of cause of action is shown to have arisen within the territorial jurisdiction of this Court, then this Court would have a jurisdiction as to the grievance made by the petitioners with regard to the aforesaid cause of action. However, the question, which has to be examined is, as to whether even a part of the cause of action can be said to have arisen in favour of the petitioners within the territorial jurisdiction of this Court? 11. The expression "cause of action" means a bundle of facts, which the petitioners must prove, if traversed, to entitle him to a judgement in his favour by the Court. 11. The expression "cause of action" means a bundle of facts, which the petitioners must prove, if traversed, to entitle him to a judgement in his favour by the Court. In these circumstances, in determining the objection of lack of territorial jurisdiction, the Court must take, all the facts pleaded in support of the cause of action, into consideration. 12. The Hon ble Supreme Court of India in the case of Oil and Natural Gas Commission V/s. Utpal Kumar Basu and others, (1994) 4 Supreme Court Cases 711 : (1994 AIR SCW 3287) had examined a similar controversy. In the aforesaid case, Engineers India Ltd. (EIL) acting as consultants for Oil and Natural Gas Commission, had issued an advertisement in leading newspapers of the country inviting tenders for setting up of a Kerosene Recovery Processing Unit at ONGC s Hazira Complex in Gujarat. Tenders were invited, which were to be communicated to EIL at New Delhi. One NICCO, having its registered office in Calcutta, having become aware of the tender notice in Calcutta, applied. The tenders were to be scrutinised by a Tender Committee and a final decision was to be taken by a Steering Committee at New Delhi. On receipt of the offer from NICCO and from various other persons, the bids were scrutinised by EIL at New Delhi. NICCO s bids were ejected on the ground that it was not eligible. The recommendations made by the EIL were considered by the Tender Committee, which, however, expressed view that NICCO should also be called for proposed meeting to be held by EIL at New Delhi. However, EIL once again reiterated that NICCO lacked experience criteria and as such, was not eligible. The Tender Committee re-examined the view of EIL and accepted the same. Consequently, the NICCO was not recommended for short-listing by the Tender Committee. On a representation made by NICCO, the matter was reconsidered, but earlier view was maintained and a final decision was taken by the Steering Committee at New Delhi, whereby it was decided to award the contract to M/s. Cimmco Ltd. A writ petition came to be filed by NICCO in the Calcutta High Court praying that ONGC be restrained from awarding a contract to any other party and if awarded, to cancel the same. An objection was raised with regard to territorial jurisdiction of the Calcutta High Court. An objection was raised with regard to territorial jurisdiction of the Calcutta High Court. However, the Calcutta High Court held that since a revised price bid had been received by NICCO at Calcutta and various other communications were also received by NICCO at Calcutta, therefore, a part of cause of action had arisen within the jurisdiction of the Calcutta High Court, where a message was also received. Consequently, the Calcutta High Court held that it had the territorial jurisdiction since a part of the cause of action had arisen within the jurisdiction. The matter was taken to the Apex Court by ONGC. It was contended that neither the cause of action, nor any part thereof, had arisen, within the territorial jurisdiction of the Calcutta High Court and, therefore, the Calcutta High Court had no jurisdiction. The aforesaid contention of ONGC was accepted and it was held that the Calcutta High Court had no territorial jurisdiction. It was observed by the Apex Court that mere service of a notice/communication to a party, would not give rise to a cause of action within that territory. 13. The facts and circumstances of the aforesaid case are identical with the facts of the present case. The law laid down by the Apex Court in the aforesaid authority applies on all fours to the controversy in the present case as well. 14. A similar controversy again arose before the Apex Court in the case of Union of India and others V/s. Adani Exports Ltd. and another (2002) 1 Supreme Court Cases 567 : (AIR 2002 SC 126). The law laid down in Utpal Kumar Basu s case (2004 AIR SCW 3287) (supra) was reiterated by the Apex Court. It was held that in order to confer jurisdiction on a High Court to entertain a writ petition or a Special Leave Application under Article 226 (2) of the Constitution, the High Court must be satisfied from the entire facts pleaded in support of the cause of action that those facts do constitute a cause so as to empower the Court to decide a dispute, which has, at least, in part arisen within its jurisdiction. It was further held that each and every fact pleaded by the petitioners in the writ petition, would not, ipso facto, lead to the conclusion that those facts will give rise to a cause of action within a Court s territorial jurisdiction, unless those facts are such, which have a nexus or relevance with the lis, that is involved in the case. 15. A similar law was laid down by the Hon ble Supreme Court in National Textile Corporation Ltd. and others V/s. Haribox Swalram and others, (2004) 9 Supreme Court Cases 786 : (AIR 2004 SC 1998). 16. In view of the aforesaid settled propositions of law, we have no hesitation in holding that this Court has no territorial jurisdiction to entertain the present petition filed by the petitioners. Even if all the facts pleaded by the petitioners in the present petition are accepted at their face value, still we are satisfied that neither any cause of action nor any part thereof, has arisen to the petitioners, within the territorial jurisdiction of this Court. 17. In view of the aforesaid discussion, we find that the present writ petition filed by the petitioners before this Court is not maintainable. The same is, consequently, dismissed. However, the petitioners would be at liberty to seek their remedies before a Court of competent jurisdiction.