M/s. Sterling Agro Industries Ltd. v. Union of India & Ors.

2. Expressing doubt with regard to the correctness and soundness of the decision in New India Assurance Company Limited v. Union of India and others, AIR 2010 Delhi 43 (FB), a Division Bench thought it appropriate to refer the matter for reconsideration by a Full Bench and, accordingly, a Full Bench was constituted and the Full Bench thought it appropriate that the matter should be considered by a larger Bench and, accordingly, the larger Bench has been constituted and the matter has been placed before us for the aforesaid purpose.

3. Before we proceed to analyze and appreciate the ratio decidendi in New India Assurance Company Limited (supra), it is seemly to exposit the necessitous primary facts averred in the present writ petition. The petitioner, in invocation of the jurisdiction under Article 226 of the Constitution of India, has called in question the legal substantiality and sustainability of the order No.214-15/10-Cus dated 9.7.2010, Annexure-1, passed by the Revisionary Authority, Government of India, Ministry of Finance, Department of Revenue, whereby the revision application preferred by the petitioner has been dismissed concurring with the view expressed by the Commissioner (Appeal-I), Customs & Central Excise, Indore whereby the appellate authority has given the stamp of approval to the order passed by the Assistant Commissioner of Customs ICD, Malanpur who had expressed the view that no drawback facility is admissible to the petitioner as it had, by way of procuring duty free inputs under Rule 19(2) of the Central Excise Rules, 2002, contravened clause (ii) of the second proviso to Rule 3(1) of the Central Excise Drawback Rules, 1995 and also condition No.7(F) of the notification No.68/2007-Cus (NT) and condition No.8(F) of the notification No.103/2008-Cus (NT).

4. It is the admitted position that the petitioner – industry is situate at Industrial Area, Q-5-6, Ghirongi, Dist. – Bhind, Malanpur in the State of Madhya Pradesh. The initial order was passed on 30.5.2009 by the Assistant Commissioner of Customs ICD, Malanpur, Dist. Bhind (M.P.). The appellate order was passed by the Commissioner (Appeals)-I, Customs and Central Excise & Service Tax at Indore (M.P.).

5. Being dissatisfied with the order passed by the revisional authority, the petitioner has invoked the inherent jurisdiction of this Court under Article 226 of the Constitution of India solely on the foundation that the revisional authority, namely, the office of the Joint Secretary to the Government of India, is in Delhi and, therefore, this Court has the territorial jurisdiction to deal with the lis in question. It is proponed in the petition that it is the Joint Secretary who is answerable to justify his order and, ergo, this Court can and should dwell upon the controversy. In the grounds enumerated in the writ petition, reliance has been placed on the decision rendered in New India Assurance Company Limited (supra).

6. We have heard the learned counsel for the parties and Mr.Atul Nanda, learned senior counsel as the Amicus Curiae.

7. At this juncture, we think it apposite to refer to the history of Article 226 of the Constitution of India. Initially, Article 226 of the Constitution of India read thus:

8. On the basis of the aforesaid constitutional provision, a strict construction was placed and the plea of cause of action or forum conveniens was not given acceptance by the Apex Court in Election Commission India v. Saka Venkata Rao, AIR 1953 SC 210. Their Lordships opined in the said case as follows: “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.”

9. In Ltd. Col. Khajoor Singh v. Union of India, AIR 1961 SC 532, a Division Bench of Jammu and Kashmir High Court had upheld the preliminary objections raised before it and had held that it had no jurisdiction to issue a writ against the Union of India and to arrive at the said conclusion, the High Court had placed reliance on the decisions in Saka Venkata Rao (supra) and K.S. Rashid and Son v. The Income Tax Investigation Commission etc., AIR 1954 SC 207. It was contended before the Apex Court that the aforesaid two decisions were distinguishable from the factual matrix therein inasmuch as in the earlier cases, the Election Commission and the Income Tax Investigation Commission were statutory bodies which have their location in Delhi and, therefore, the view was expressed in that manner. The majority posed two questions, namely, (i) whether the Government of India as such can be said to have a location in a particular place, that is, New Delhi, irrespective of the fact that its authority extends over all the States and its officers function throughout India; and (ii) whether there is any scope for introducing the concept of cause of action as the basis for exercise of jurisdiction under Article 226. Their Lordships, while dealing with the first aspect, opined thus: “It would, therefore, in our opinion be wrong to introduce in Article 226 the concept of the place where the order passed has effect in order to determine the jurisdiction of the High Court which can give relief under Article 226. The introduction of such a concept may give rise to confusion and conflict of jurisdiction.”

10. Thereafter, it has been held as follows: “There can, therefore, be no escape from the conclusion that these words in Article 226 refer not to the place where the Government may be functioning but only to the place where the person or authority is either resident or is located. So far therefore as a natural person is concerned, he is within those territories if he resides there permanently or temporarily. So far as an authority (other than a Government) is concerned, it is within the territories if its office is located there. So far as a Government is concerned it is within the territories only if its seat is within those territories.”

11. Their Lordships then answered the second question in the following terms: “16. Article 226 as it stands does not refer anywhere to the accrual of cause of action and to the jurisdiction of the High Court depending on the place where the cause of action accrues being within its territorial jurisdiction. Proceedings under Article 226 are not suits; they provide for extraordinary remedies by a special procedure and give powers of correction to the High Court over persons and authorities and these special powers have to be exercised within the limits set for them. These two limitations have already been indicated by us above and one of them is that the person or authority concerned must be within the territories over which the High Court exercises jurisdiction. Is it possible then to overlook this constitutional limitation and say that the High Court can issue a writ against a person or authority even though it may not be within its territories simply because the cause of action has arisen within those territories? It seems to us that it would be going in the face of the express provision in Art. 226 and doing away with an express limitation contained therein if the concept of cause of action were to be introduced in it. Nor do we think that it is right to say that because Art. 300 specifically provides for suits by and against the Government of India, the proceedings under Art. 226 are also covered by Art. 300. It seems to us that Art. 300 which is on the same line as S.176 of the Government of India Act, 1935, dealt with suits as such and proceedings analogous to or consequent upon suits and has no reference to the extraordinary remedies provided by Art. 226 of the Constitution. The concept of cause of action cannot in our opinion be introduced in Art. 226, for by doing so we shall be doing away with the express provision contained therein which requires that the person or authority to whom the writ is to be issued should be resident in or located within the territories over which the High Court has jurisdiction. It is true that this may result in some inconvenience to person residing far away from New Delhi who are aggrieved by some order of the Government of India as such, and that may be a reason for making a suitable constitutional amendment in Art. 226.”

12. After the said decision came into the field, the Parliament brought the 15th Amendment and inserted Clause (1A) in the Constitution by the 15th Amendment Act, 1963. Clause (1A) read as follows: “(1A) 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.”

13. By the 42nd constitutional amendment, Clause (1A) was renumbered as Clause (2) and in the present incarnation, it reads as follows: “(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.”

14. From the aforesaid chronological narration of the growth of Article 226 of the Constitution, the concept of cause of action arising wholly or in part came into existence for the exercise of power under the said Article.

15. Regard being had to the aforesaid historical backdrop, we shall presently proceed to deal with the Full Bench decision in New India Assurance Company Limited (supra) to perceive how it has dealt with the concept of jurisdiction in the context of the conception of cause of action and the appreciation of the ratio of various citations by the Full Bench referred to by it. It is worth noting that the matter travelled to the Full Bench by reference made by the Division Bench while hearing a letters patent appeal from an order of the single Judge who had dismissed the writ petition summarily on the ground that significant part of the cause of action could not have been said to have arisen within the territorial jurisdiction of this Court and merely because the order under challenge had been passed by the appellate authority located within the territorial jurisdiction, the same could not be sufficient enough for conferment of jurisdiction. The learned single Judge, to arrive at the said conclusion, had placed reliance on the decisions in Ambica Industries v. Commissioner of Central Excise, 2007 (213) ELT 323(SC), Bombay Snuff (P) Ltd. v. Union of India, 2006 (194) ELT 264 (Del), Rajkumar Shivhare v. Assistant Director of Enforcement, Mumbai 154 (2008) DLT 28 and West Coast Ingots (P) Ltd. v. Commissioner of Central Excise, New Delhi, 2007 (209) ELT 343 (Del). The Full Bench referred to the arguments canvassed at the Bar, took note of the legislative history of Article 226 of the Constitution of India and referred to the decisions of the Apex Court in Collector of Customs, Calcutta v. East India Commercial Co. Ltd., Calcutta and others, AIR 1963 SC 1124, Kusum Ingots & Alloys Ltd. v. Union of India, (2004) 6 SCC 254, Sri Nasiruddin v. State Transport Appellate Tribunal, (1975) 2 SCC 671 and Navinchandra N. Majithia v. State of Maharashtra, AIR 2000 SC 2966, the decision of the High Court of Bombay in Kishore Rungta and ors. v. Punjab National Bank and ors., 2003 (151) ELT 502 (Bom) and the decision of the High Court of Delhi in Indian Institute of Technology v. P.C. Jain and Ors., 45 (1991) DLT42 and eventually held thus:

16. On a nuanced scrutiny of the decision of the Full Bench, it is clear as day that it has expressed the view which can be culled out in seriatim as follows:

(i) Once the Court comes to hold that it has jurisdiction, the plea that only an insignificant or miniscule part of the cause of action has accrued within the jurisdiction of the Court or that the substantial cause of action has accrued in another State is inconsequential.

(ii) The “sole” cause of action emerges when an order by the appellate authority situated within the territorial jurisdiction of Delhi is passed and when the “sole” cause of action accrues entirely within the jurisdiction of this Court, declining to entertain the writ petition would amount to failure of duty of the Court.

(iii) This Court has jurisdiction under Article 227 since it has the power of superintendence over tribunals situated within its jurisdiction and judged in that light, it cannot be said that only an insignificant or miniscule part of the cause of action has accrued within the jurisdiction of this Court.

(iv) Even if the doctrine of cause of action is adopted or invoked, the substantial part of the cause of action arises because the order under assail is that of the appellate authority / tribunal which is situated in Delhi.

(v) As the original order merges into the appellate order, the place where the appellate authority is located is also the forum conveniens.

(vi) The remedy under Article 226 being discretionary, the Court may refuse to exercise jurisdiction only when jurisdiction has been invoked with malafide intent. Be it noted, the Full Bench had also observed that as the appellate authority is situate at New Delhi, the Delhi High Court has the jurisdiction under Article 226 of the Constitution of India and, therefore, there was no occasion for the learned Single Judge to apply the principle of forum conveniens to refuse exercise of jurisdiction.

17. Presently, we shall proceed to advert to the authorities that have been referred to and relied upon by the Full Bench for the simon pure reason that understanding of the principles exposited therein would enable us to appreciate the enunciation of the law by the Full Bench and also refer to certain authorities that have been cited before us.

18. In the case of Sri Nasiruddin (supra), it has been held thus: “…the expression "cause of action" in an application under Article 226 would be as the expression is understood and if the cause of action arose because of the appellate order or the revisional order which came to be passed at Lucknow then Lucknow would have jurisdiction though the original order was passed at a place outside the areas in Oudh. It may be that the original order was in favour of the person applying for a writ. In such case an adverse appellate order might be the cause of action. The expression "cause of action" is well-known. If the cause of action arises wholly or in part at a place within the specified Oudh areas, the Lucknow Bench will have jurisdiction. If the cause of action arises wholly within the specified Oudh areas, it is indisputable that the Lucknow Bench would have exclusive jurisdiction in such a matter. If the cause of action arises in part within the specified areas in Oudh it would be open to the litigant who is the dominus litis to have his forum conveniens. The litigant has the right to go to a Court where part of his cause of action arises. In such cases, it is incorrect to say that the litigant chooses any particular Court. The choice is by reason of the jurisdiction of the Court being attracted by part of cause of action arising within the jurisdiction of the Court…”

19. In Kishore Rungta and ors. (supra), a writ petition was filed challenging the order passed by the Debt Recovery Appellate Tribunal, Mumbai dismissing an order of the Debt Recovery Appellate Tribunal, Jaipur. A preliminary objection was raised regarding the jurisdiction of the High Court of Bombay. The Division Bench of the High Court of Bombay referred to the decisions in East India Commercial Co. Ltd., Calcutta and others (supra), Damomal Kausomal Raisinghani v. Union of India, AIR 1967 Bom 355, Navinchandra N. Majithia (supra) and Sita Ram Singhania v. Bank of Tokyo-Mitsubishi Ltd. and ors, AIR 2000 SC 2180 and came to opine thus:

20. In Alchemist Ltd. and Anr. v. State Bank of Sikkim and ors., (2007) 11 SCC 335, after referring to the decisions in A.B.C. Laminart (P) Ltd. v. A.P. Agencies, AIR 1989 SC 1239, Union of India v. Oswal Woollen Mills Ltd., (1984) 2 SCC 646, State of Rajasthan v. Swaika Properties, AIR 1985 SC 1289, Oil and Natural Gas Commission v. Utpal Kumar Basu and others, (1994) 4 SCC 711, CBI, Anti-Corruption Branch v. Narayan Diwakar, (1999) 4 SCC 656, Union of India v. Adani Exports Ltd., (2002) 1 SCC 567, Kusum Ingots & Alloys Ltd. (supra) and National Textile Corpn. Ltd. v. Haribox Swalram, (2004) 9 SCC 786, the Supreme Court expressed the view as follows:

37. From the aforesaid discussion and keeping in view the ratio laid down in a catena of decisions by this Court, it is clear that for the purpose of deciding whether facts averred by the appellant- petitioner would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential, or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the court, the court would have territorial jurisdiction to entertain the suit/petition. Nevertheless it must be a “part of cause of action”, nothing less than that.

38. In the present case, the facts which have been pleaded by the Appellant Company, in our judgment, cannot be said to be essential, integral or material facts so as to constitute a part of “cause of action” within the meaning of Article 226(2) of the Constitution. The High Court, in our opinion, therefore, was not wrong in dismissing the petition.” [Emphasis added]

21. In Utpal Kumar Basu and others (supra), a three-Judge Bench of the Apex Court, while dealing with the territorial jurisdiction in the backdrop of Article 226(2), has opined thus: “5. Clause (1) of Article 226 begins with a nonobstante clause-notwithstanding anything in Article 32 and provides that every High Court shall have power “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, 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 in part, 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 the said territories. In order to confer jurisdiction on the High Court of Calcutta, NICCO must show that at least a part of the cause of action had arisen within the territorial jurisdiction of that Court. That is at best its case in the writ petition.

6. It is well settled that the expression “cause of action” means that bundle of facts which the petitioner must prove, if traversed, to entitle him to a judgment in his favour by the Court. In Chand Kour v. Partab Singh ILR (1889) 16 Cal 98, 102 Lord Watson said: “...the cause of action has no relation whatever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the grounds set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour.” Therefore, 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 albeit without embarking upon an enquiry as to the correctness or otherwise of the said facts. In other words the question whether a High Court has territorial jurisdiction to entertain a writ petition must be answered on the basis of the averments made in the petition, the truth or otherwise whereof being immaterial. To put it differently, the question of territorial jurisdiction must be decided on the facts pleaded in the petition.”

22. In Kusum Ingots & Alloys Ltd. (supra), the Apex Court posed the question whether the seat of Parliament or the legislature of a State would be a relevant factor for determining the territorial jurisdiction of a High Court to entertain a writ petition under Article 226 of the Constitution of India. Their Lordships not only referred to clause (2) of Article 226 of the Constitution of India but also to the facet of cause of action as stated in Chand Kour v. Partab Singh ILR (1887-88) 15 IA 156, Utpal Kumar Basu and others (supra), Swaika Properties (supra), Aligarh Muslim University v. Vinay Engg. Enterprises (P) Ltd., (1994) 4 SCC 710, Union of India v. Adani Exports Ltd., (2002) 1 SCC 567 and Haribox Swalram (supra) and came to hold as follows:

23. Thereafter, in paragraphs 27 and 29, their Lordships stated thus:

24. After so stating, in paragraph 30, their Lordships held thus:

25. In Ambica Industries (supra), their Lordships have expressed thus: “40. Although in view of Section 141 of the Code of Civil Procedure the provisions thereof would not apply to writ proceedings, the phraseology used in Section 20(c) of the Code of Civil Procedure and clause (2) of Article 226, being in pari materia, the decisions of this Court rendered on interpretation of Section 20(c) CPC shall apply to the writ proceedings also. Before proceeding to discuss the matter further it may be pointed out that the entire bundle of facts pleaded need not constitute a cause of action, as what is necessary to be proved, before the petitioner can obtain a decree, is material facts. The expression material facts is also known as integral facts.

41. Keeping in view the expression "cause of action" used in Clause (2) of Article 226 of the Constitution of India, indisputably even if a small fraction thereof accrues within the jurisdiction of the Court, the Court will have jurisdiction in the matter though the doctrine of forum conveniens may also have to be considered.”

26. At this juncture, we may profitably refer to the decision in Adani Exports Ltd. (supra) wherein their Lordships, after referring to the decision in Utpal Kumar Basu and others (supra), have held thus:

27. In Rajendran Chingaravelu v. R.K. Mishra, (2010) 1 SCC 457, the appellant, a Computer Engineer, with the intention to buy a property at Chennai, identified a prospective seller at Chennai and proceeded from Hyderabad with a large sum of money to Chennai and when his baggage was checked at the Hyderabad airport by the security personnel, he was allowed to leave Hyderabad. However, at Chennai, some officers of the Income Tax Investigation Wing rushed in and he was pulled out of the aircraft and taken to the office on the first floor of the airport. He was questioned there about the money he was carrying. After certain enquiry and investigation, as nothing was found to be amiss or irregular, the seized money was returned to him, but without any interest. Being aggrieved by the action of the department, he filed a writ petition in the High Court of Andhra Pradesh seeking certain reliefs. The High Court of Andhra Pradesh declined to interfere and directed the appellant therein to approach the appropriate court at Chennai. The said order was the subject matter of appeal by special leave before the Apex Court. In that context, their Lordships have held thus:

28. On a scrutiny of the aforesaid emphasized lines, it is vivid that their Lordships have opined that a part of the cause of action arose at Hyderabad as the officers at Hyderabad had alerted their counterparts at Chennai airport and further consequential income tax proceedings were also initiated at Hyderabad. In our humble view, the concept of cause of action which has been referred to in the said decision falls within the concept of cause of action as explained and elucidated in Alchemist Ltd. (supra).

29. In Mosaraf Hossain Khan v. Bhagheeratha Engg. Ltd. & Ors., (2006) 3 SCC 658, the Apex Court referred to the decision in Kusum Ingots & Alloys Ltd. (supra) and observed as follows:

Thereafter, their Lordships reproduced paragraphs 27 and 28 of the said decision and a passage from Adani Exports Ltd. (supra) and proceeded to state as follows:

31. The concept of forum conveniens fundamentally means that it is obligatory on the part of the court to see the convenience of all the parties before it. The convenience in its ambit and sweep would include the existence of more appropriate forum, expenses involved, the law relating to the lis, verification of certain facts which are necessitous for just adjudication of the controversy and such other ancillary aspects. The balance of convenience is also to be taken note of. Be it noted, the Apex Court has clearly stated in the cases of Kusum Ingots (supra), Mosaraf Hossain Khan (supra) and Ambica Industries (supra) about the applicability of the doctrine of forum conveniens while opining that arising of a part of cause of action would entitle the High Court to entertain the writ petition as maintainable.

32. The principle of forum conveniens in its ambit and sweep encapsulates the concept that a cause of action arising within the jurisdiction of the Court would not itself constitute to be the determining factor compelling the Court to entertain the matter. While exercising jurisdiction under Articles 226 and 227 of the Constitution of India, the Court cannot be totally oblivious of the concept of forum conveniens. The Full Bench in New India Assurance Co. Ltd. (supra) has not kept in view the concept of forum conveniens and has expressed the view that if the appellate authority who has passed the order is situated in Delhi, then the Delhi High Court should be treated as the forum conveniens. We are unable to subscribe to the said view.

33. In view of the aforesaid analysis, we are inclined to modify the findings and conclusions of the Full Bench in New India Assurance Company Limited (supra) and proceed to state our conclusions in seriatim as follows: (a) The finding recorded by the Full Bench that the sole cause of action emerges at the place or location where the tribunal/appellate authority/revisional authority is situate and the said High Court (i.e., Delhi High Court) cannot decline to entertain the writ petition as that would amount to failure of the duty of the Court cannot be accepted inasmuch as such a finding is totally based on the situs of the tribunal/appellate authority/revisional authority totally ignoring the concept of forum conveniens. (b) Even if a miniscule part of cause of action arises within the jurisdiction of this court, a writ petition would be maintainable before this Court, however, the cause of action has to be understood as per the ratio laid down in the case of Alchemist Ltd. (supra).

(c) An order of the appellate authority constitutes a part of cause of action to make the writ petition maintainable in the High Court within whose jurisdiction the appellate authority is situated. Yet, the same may not be the singular factor to compel the High Court to decide the matter on merits. The High Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens.

(d) The conclusion that where the appellate or revisional authority is located constitutes the place of forum conveniens as stated in absolute terms by the Full Bench is not correct as it will vary from case to case and depend upon the lis in question. (e) The finding that the court may refuse to exercise jurisdiction under Article 226 if only the jurisdiction is invoked in a malafide manner is too restricted / constricted as the exercise of power under Article 226 being discretionary cannot be limited or restricted to the ground of malafide alone. (f) While entertaining a writ petition, the doctrine of forum conveniens and the nature of cause of action are required to be scrutinized by the High Court depending upon the factual matrix of each case in view of what has been stated in Ambica Industries (supra) and Adani Exports Ltd. (supra). (g) The conclusion of the earlier decision of the Full Bench in New India Assurance Company Limited (supra) “that since the original order merges into the appellate order, the place where the appellate authority is located is also forum conveniens” is not correct. (h) Any decision of this Court contrary to the conclusions enumerated hereinabove stands overruled.

34. Ex consequenti, we answer the reference by partially overruling and clarifying the decision in New India Assurance Company Limited (supra) in the above terms. Matters be listed before the appropriate Division Bench for appropriate consideration.

CHIEF JUSTICE VIKRAMAJIT SEN, J. A.K. SIKRI, J. SANJIV KHANNA, J. MANMOHAN, J. AUGUST 1, 2011 dk