Sunrise Sports (India) Private Limited v. White Owl Sports Private Limited

1. The present appeal under Section 104 read with order XLIII Rule 1(a) of the Code of Civil Procedure, 1908 (hereinafter referred as the CPC) has been preferred by the appellant/plaintiff impugning the judgement of the trial court dated 23.09.2019, whereby the court held that it lacked territorial jurisdiction to entertain the suit and directed that the plaint be returned to be presented before the court of competent jurisdiction.

2. The facts necessary for the disposal of the present appeal are:- the appellant is an importer and distributor of badminton sports items, namely “Yonex” operating from its registered office at 6th Floor, Salcon Aurum Building, Plot No. 4, District Centre, Jasola Vihar, New Delhi-110025. The defendant is a Company with its registered office at A-1,First Floor, Epilson, Yemlur Main Road, opposite Hal Airport Road, Bangalore, Karnataka- 560037 engaged in the business of sports goods. The parties were involved in regular course of commercial dealings, wherein the defendant would routinely visit the appellant’s office in New Delhi to place orders for sports goods, which the plaintiff supplied and sold from time to time in their ordinary course of business.

3. While so, a dispute arose when it was found that the last payment received from the defendant was on 23.12.2016 and a substantial sum of ₹11,93,468/- remained due and payable. The defendant issued a cheque dated 22.12.2016 for ₹5,00,000/-which, upon presentation, was dishonoured with the endorsement ‘Account closed’. Consequently, the plaintiff instituted proceedings under Section 138 of the Negotiable Instruments Act against the defendant and its Directors, which is pending adjudication before the learned MM, PHC, New Delhi. The plaintiff further issued a legal notice dated 07.02.2017, calling upon the defendant to clear the outstanding dues. However, the defendant has failed to discharge the outstanding liability.

4. Thereafter, the appellant instituted the suit seeking recovery of money. In the plaint, it was averred that the trial court had territorial jurisdiction to entertain the suit on the ground that the appellant carries on its business and works for gain from its registered office situated in New Delhi, which falls within the territorial limits of the Court. The defendant moved an application under Order VII Rule 10 CPC seeking return of the plaint for want of territorial jurisdiction, which was allowed. Aggrieved, the plaintiff has come up in appeal.

5. The core issue arising in the present appeal is whether the trial court has the territorial jurisdiction to entertain the suit.

6. The learned Counsel for the appellant/plaintiff submitted that since the appellant’s registered office is situated in New Delhi and as all the purchase orders were placed by the defendant’s representatives either during their visits to Delhi or through telephone and e-mail communications addressed to the appellant at Delhi, the court did have jurisdiction over the matter. 6.[1] It was further submitted that the entire consignments were dispatched from New Delhi and that all invoices were also generated and issued from New Delhi. In support of submissions, the learned counsel for the appellant has relied on the dictum in Shradha Wassan v. Anil Goel, 2009 SCC OnLine Del 1285, wherein it has been held that, in the absence of a contractual stipulation to the contrary, the debtor is required to seek the creditor, and the place of payment is deemed to be the place where the creditor resides. It has also been held that a demand notice issued in Delhi calling upon the debtor to make payment at Delhi does confer territorial jurisdiction on the courts at Delhi.

7. On the other hand, the learned Counsel for the defendant submitted that the trial court lacks territorial jurisdiction to try and entertain the present suit, as no part of the cause of action has arisen within its local limits. The defendant does not carry on its business within the territorial jurisdiction of the Court. It was also submitted that the goods were delivered to the defendant at Bangalore, and the mere existence of the appellant’s office in New Delhi does not, by itself, confer jurisdiction under Section 20 CPC. The defendant neither resides nor carries on business within New Delhi and it’s Head Office is situated at Bangalore. The defendant himself had never visited the appellant’s registered office in New Delhi for placing orders. In support of the arguments, reference was made to the dictum in M/S Carmel Overseas Ltd. V. Sturdy Industries Ld. 2010 SCC Online Del 3535, wherein it was held that a vague and unsubstantiated reference to meetings between the parties cannot, confer territorial jurisdiction on the court. It is additionally submitted that the issuance of a legal notice from New Delhi would not also vest the court with territorial jurisdiction.

8. Heard both the parties.

9. It would be apposite to refer to the relevant pleadings in the plaint which reads thus;

orders for requisite sports goods and thereafter, plaintiff used to supply/sell the sports items to defendant as per the demands placed by it. It is submitted that the first sale transaction by the plaintiff to the defendant was held on 15.07.2014 and since thereafter, plaintiff had been supplying requisite material/goods/ sports items to the defendant from time to time and the defendant had been making payments against the same to the plaintiff from time to time.

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13. That the cause of action to file the present suit first arose when defendant approached to the plaintiff in Delhi to place the order of purchase and also on each date when defendant requested plaintiff to supply the sports goods to it and further on various dates when plaintiff supplied the requisite goods to defendant, in terms of its requirements being placed from time to time and defendant made payments against the said goods to the plaintiff regularly during the normal course of business. Cause of action also arose on 23.12.2016 when the cheque issued by the defendant to the plaintiff was dishonoured. It again arose on 07.02.2017 when the 'Legal Notice of Demand' was issued to the defendant by the counsel for the plaintiff and the same is still continuing as the defendant has not made any payment to the plaintiff despite its own assurance vide its e-mail dated 25.01.2017.” (emphasis supplied)

10. I also refer to the relevant paragraphs in the written statement of the respondent/defendant which reads thus;