Ultra Home Construction Pvt. Ltd V. Purushottam Kumar Chaubey & Others (2016 SCC ONLINE DEL 376)

                  

PREMISE OF APPEAL: 

This appeal has been preferred against the judgment dated 20/07/2015 in CS (OS) 2065/2015. By virtue of the impugned judgment the learned single judge has dismissed a suit filed by the appellant on the ground that this court does not have the territorial jurisdiction to entertain the same. The said dismissal of the suit was in limine, without requiring the presence of the defendants. 

QUESTION OF LAW:

Whether the action of the Appellant of operating a hotel at Deogarh, Jharkhand in association with Clark-inn hotel group be deemed as “carrying on the business” at Deogarh Jharkhand? 

FACTS: 

• The appellant is inter alia operating a hotel at Deogarh, Jharkhand in association with Clark-Inn hotel group. The said hotel is being run under the name – Amrapali Clark-Inn. It is alleged that the defendants have launched a residential project at Deogarh, Jharkhand under a deceptively similar name – AMBAPALI GREEN. 
• It is evident that the appellant had invoked the jurisdiction of this court on the ground that its principal office (registered office) was located in Delhi and that, therefore, it carried on business in Delhi. Consequently, it was stated that this court has territorial jurisdiction within the meaning of section 134(2) of the Trade Marks Act, 1999 and also under section 62(2) of the Copyright Act, 1957 and the Code of Civil Procedure, 1908. The learned single judge, placing reliance on the recent decision of the Supreme Court in Indian Performing Rights Society Ltd v. Sanjay Dalia: (2015) 10 SCC 161, disagreed and observed as under:-  "7. I may note that it is conceded on behalf of the plaintiff that at the place where the defendants are infringing the trademark at the ogre, Jharkhand, plaintiff has a hotel, and if the plaintiff as a hotel can surely the plaintiff is carrying on business at that particular place and carrying on of the hotel business is very much a part of carrying on of the business of the plaintiff and therefore the race of the judgment in Indian Performing Rights Society Ltd’s case (supra) clearly applies. The plaintiff is running the hotel with the Clark-Inn Hotel Group i.e. Plaintiff Company does have a share in the profits and losses in the hotel which is being run along with the Clark-Inn Hotel Group at the Deogarh, Jharkhand. Once that is so, there is a running business and plaintiff is therefore carrying on business at Deogarh, Jharkhand, and consequently the ratio of the judgment in the case of Indian performing rights Society Ltd (supra) applies and hence this court would not have territorial jurisdiction."

ARGUMENTS OF APPELLANT: 

• The learned counsel for the appellant submitted that the learned single judge had not correctly appreciated the finding and the ratio of the decision of the Supreme Court in the case of Sanjay Dalia (supra). It was contended that the Supreme Court did not hold that the jurisdiction of the court where the principal place of business or the registered office of the proprietor of the registered trademark and that of the copyright was situated would be ousted if the cause of action had arisen at another place where the plaintiff also had some activities. 
• It was contended that the learned single judge erred in dismissing the suit of the appellant and in holding that this court did not have territorial jurisdiction although the registered office of the appellant was located in Delhi, merely on the ground that the appellant owned a hotel named "AMRAPALI CLARKS INN" at Deogarh, the place where the cause of action arose. Placing reliance on the Supreme Court decision in Dhoda House v. SK Maingi: (2006) 9 SCC 41 it was contended that merely owning a hotel at a place would not mean the carrying on of business at that place. 
• It was submitted that even though the appellant has a hotel at Deogarh, Jharkhand it cannot be said that it is carrying on business at Deogarh, Jharkhand. It was also contended that the learned single judge had erred in law in dismissing the suit in limine. 
• It was submitted that the learned single judge, if he found that this court did not have the territorial jurisdiction to entertain the suit, could only have returned the plaint to the appellant for filing before a court of competent jurisdiction and the suit could not have been dismissed in limine. 

ARGUMENTS OF DEFENDANT: 

• The learned counsel appearing on behalf of the defendants submitted that the learned single judge had correctly held that this court does not have territorial jurisdiction for entertaining the suit. It was contended that the appellant had clearly admitted that it was carrying on business at Deogarh, Jharkhand inasmuch as it had a hotel, albeit in collaboration with Clarks Inn, at that place. 
• It was also admitted that the alleged cause of action had arisen at Deogarh, Jharkhand because it was alleged that the defendants had established a residential project at that place by the name of "AMBAPALI GREEN". All the defendants, as would be evident from the memo of parties itself, reside and/or carry on business at Deogarh, Jharkhand. Therefore, it is Deogarh, Jharkhand where the suit could have been filed and not Delhi since no part of the cause of action arose in Delhi. The mere fact that the appellant had its principal office (registered office) in Delhi would not enable it to file the suit in Delhi because the cause of action arose at Deogarh which was a place where it carried on its business. It was submitted that the learned single judge had correctly understood and applied the ratio of the Supreme Court decision in Sanjay Dalia (supra). 

REASONING AND STATUTORY PROVISIONS: 

• The Explanation to Sec. 20 CPC it is clear that it consists of two parts. First, before the word “or” appearing between the words “office in India” and the words “in respect of”, and the other thereafter. The first part of the Explanation applies only to such corporation which has its sole or principal office at a particular place. In that event, the court within whose jurisdiction the sole or principal office of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be deemed to carry on business at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The expression “at such place” appearing in the Explanation and the word “or” which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone has the jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office”.
• The purpose of sec. 20 of CPC, a company having both a principal office and a subordinate office at a different place would be deemed to carry on business either at the principal office or at the place of the subordinate office but not at both places. If the cause of action arose at the place of the subordinate office then the company would be deemed to carry on business at the place of the subordinate office alone. On the other hand, if the cause of action did not arise at the place of the subordinate office then the company would be deemed to carry on business at the place of its principal office.
• Supreme Court in Sanjay Dalia (supra) held that this deeming provision contained in the explanation in sec. 20 of CPC has been read into sec. 134(2) of the Trade Marks Act, 1999 and sec. 62(2) of the Copyright Act, 1957 for the purposes of isolating the place where the plaintiff can be said to carry on business. It will be noted that though the expression “carries on business” is used in all the three provisions (i.e., sec. 20 of CPC, sec. 134(2) of the Trade marks Act, 1999 and sec. 62(2) of the Copyright Act, 1957). 
• There is no doubt about it that the words used in Sec. 62 of the Copyright Act and Sec. 134 of the Trade Marks Act, “notwithstanding anything contained in CPC or any other law for the time being in force”, emphasize that the requirement of Sec. 20 CPC would not have to be complied with by the plaintiff if he resides or carries on business in the local limits of the court where he has filed the suit but, in our view, at the same time, as the provision providing for an additional forum, cannot be interpreted in the manner that it has authorized the plaintiff to institute a suit at a different place other than the place where he is ordinarily residing or having principal office and incidentally where the cause of action wholly or in part has also arisen. The impugned judgments, in our considered view, do not take away the additional forum and fundamental basis of conferring the right and advantage to the authors of the Copyright Act and the Trade Marks Act provided under the aforesaid provisions.” 
• In the present case the appellant has its principal office in Delhi. Its subordinate office is at Deogarh, Jharkhand where it runs one of its hotels Amrapali Clarks Inn, albeit in collaboration with Clarks Inn hotels. The alleged cause of action has accrued at Deogarh, Jharkhand. Therefore, the appellant could, in respect of the alleged cause of action in this suit, institute a suit against the defendants at Deogarh, Jharkhand but not in Delhi. Thus, the conclusion arrived at by the learned single judge that this court did not have the territorial jurisdiction to entertain the suit cannot be faulted. 
• Interestingly, in the present case, even if the deeming fiction of the Explanation in sec. 20 of CPC is not imported into either of the said sec. 134(2) or 62(2), on the basis of the averments made in the plaint itself it becomes clear that the plaintiff carries on business at, inter alia, Deogarh. 
• The appellant has a clear and admitted interest in the business of its hotel – Amrapali Clarks Inn – at Deogarh. On the basis of the averments in the plaint, the plaintiff carries on business through the said hotel at Deogarh. 

• Clearly, on the basis of the averments in the plaint itself, the appellant carries on business in Deogarh, Jharkhand. It may also carry on business at Delhi. But, because the cause of action has allegedly arisen in Deogarh, Jharkhand, and not in Delhi, the appellant/plaintiff cannot sue the defendants in Delhi in view of the decision in Sanjay Dalia (supra). Thus, this court does not have the territorial jurisdiction to entertain the suit. And, on this count, the decision of the learned single judge cannot be faulted. But, the suit ought not to have been dismissed. As this court did not have jurisdiction, the plaint ought to have been returned under order 7 rule 10 CPC. Only to that extent, the learned single judge had erred. 

ANALYSIS OF DECISION: 

The Division Bench in this case held that a Plaintiff cannot sue an infringer at its registered office or principal place of business but must go the infringers place of business / place of infringement if the Plaintiff has a subordinate office at that place. The Division Bench contemplated 4 situations in the context of the plaintiff being a corporation (which includes a company). 

• The case where the plaintiff has a sole office. In such a case, even if the cause of action has arisen at a different place, the plaintiff can institute a suit at the place of the sole office. 
• The case where the plaintiff has a principal office at one place and a subordinate or branch office at another place and the cause of action has arisen at the place of the principal office. In such a case, the plaintiff may sue at the place of the principal office but cannot sue at the place of the subordinate office. 
• The case where the plaintiff has a principal office at one place and the cause of action has arisen at the place where its subordinate office is located. In this eventuality, the plaintiff would be deemed to carry on business at the place of his subordinate office and not at the place of the principal office. Thus, the plaintiff could sue at the place of the subordinate office and cannot sue at the place of the principal office – Applicable in this case. 
• The case where the cause of action neither arises at the place of the principal office nor at the place of the subordinate office but at some other place. In this case, the plaintiff would be deemed to carry on business at the place of its principal office and not at the place of the subordinate office. And, consequently, it could institute a suit at the place of its principal office but not at the place of its subordinate office. 

RELEVANT PARAGRAPH OF THE PLAINT: 

Para 39, Para 52 

IMPORTANT REFERENCE: 

Indian Performing Right Society Ltd. V. Sanjay Dalia: (2015) 10 SCC 161