Jurisdictional Complexities under Section 20 of the C.P.C.: Analyzing the Place of Suing

By Mohd. Sahil Khan 11 Minutes Read

Introduction

Suppose you are a resident of Lucknow, Uttar Pradesh, and you’re involved in a car accident with a driver from Delhi. Where should you file your lawsuit? Should it be in Lucknow, Delhi court, or elsewhere? This is a common dilemma many people face. Section 20 of the Code of Civil Procedure (hereinafter referred to as C.P.C.) is the legal provision that attempts to answer this question.

Section 20 of C.P.C. in India is designed to streamline and rationalize determining the appropriate court for a suit. However, it has been subjected to various interpretations, leading to confusion, especially in the digital era, where determining jurisdiction is becoming even more challenging.

Place of Suing when Defendant or multiple Defendants reside in the Same Place

Section 20 starts with ‘Subject to the limitations aforesaid,’ but what are the limitations that must be followed while instituting a suit under Section 20? The limitations flow from Section 15 to Section 19 of the C.P.C. Section 15 deals with the pecuniary jurisdiction of the courts, and Section 16 to 18 deals with the jurisdiction of immovable property. Whereas Section 19 deals with jurisdiction pertaining to wrong done to persons or immovable property. This means that the provisions enshrined in Section 15 to Section 19 must be followed while instituting a suit under Section 20.

• Section 20(a) provides for a condition with one or more defendants located at the same place. The suit shall be instituted where such defendants should either reside, carry on business, or be personally working for gain. This implies that all the defendants are living or working in one common place at the time of the commencement of the suit.
• Time of the commencement of the suit’ means that the court’s jurisdiction will be examined concerning the date on which the plaint was presented at the filing counter.
• For example, A and B (residing in Kolkata) entered into a contract with C (resident of Delhi) to deliver goods to him on a specified date. A and B did not fulfill their obligation; in such a case, C can file a suit against both A and B in Kolkata, where they reside, pursuant to Section 20(a).
• From the above illustration, the question that emerges is why the aggrieved party has to take the pain of instituting a suit where the defendants reside when he has suffered the loss. The answer to this is based on the Latin maxim ‘equity acts in personam,’ meaning that he who seeks equity will have to follow the person from whom he seeks equity.

Place of Suing when Defendants reside in Different Places

• Section 20(b) lays down a situation wherein defendants reside in different places. allowing a suit to be filed in a jurisdiction where either of the defendants resides or carries on business.
• For a suit to be instituted at either of the defendants’ places, two conditions must be fulfilled:

1. The court has granted permission to institute the suit at the said place.
2. The defendant, who does not live at the place where the suit is instituted, acquiesced.

• For instance, A (residing in Mumbai) and B (residing in Chennai) agree to supply goods to C (resident of Bangalore). A and B failed to fulfill their contractual obligations. According to Section 20(b), C can file a suit in either Mumbai or Chennai, provided that the court grants the permission and the defendant not living at that place acquiesces.

Place of suing where Cause of Action arises

• Section 20(c) allows a suit to be filed in a court within whose jurisdiction the cause of action, wholly or in part, arises.
• The cause of action is a crucial factor in determining jurisdiction, and it encompasses all the facts which, if proven, would entitle the plaintiff to relief. The cause of action need not be confined to a single location; it can arise in multiple jurisdictions, allowing the plaintiff to choose any of those jurisdictions.
• However, this flexibility also creates room for jurisdictional disputes, mainly when different parts of the cause of action arise in different places. In such cases, courts have held that even if a small fraction of the cause of action arises within a particular jurisdiction, the court will have jurisdiction to entertain the suit.
• For example, in the landmark case of Patel Roadways Ltd. v. Prasad Trading Company[1], the court found that the cause of action has arisen in both Chennai and Delhi. In such a scenario, the plaintiff can file the suit in either Chennai or Delhi.

Therefore, Section 20 elucidates that a suit can be instituted either at the place where the defendant resides or where the cause of action has arisen.

Place of suing in e-commerce dispute

• Indian courts have not established a standardized approach for adjudicating e-commerce disputes due to the unique nature of online commerce, which makes determining a specific location for jurisdiction challenging.
• However, various legal tests have been developed through case law to help determine the appropriate jurisdiction in these matters. Ultimately, the court has the discretion to choose the most suitable method.
• In the case of Banyan Tree Holding (P) Limited v. A. Murali Krishna Reddy & Anr.[2], the court clarified that merely having an interactive website in a particular State does not automatically grant that State jurisdiction over e-commerce disputes.
• To establish jurisdiction, the plaintiff must demonstrate that the defendant specifically targeted viewers in the forum state for commercial transactions, resulting in harm or injury to the plaintiff within that state. The plaintiff must provide evidence of a specific commercial transaction conducted through the website between the defendant and a user in the forum state that led to the alleged harm.

Place of Suing involving a Juristic person

It is pertinent to understand the place of the institution of the suit when dealing with juristic persons. A juristic person is essentially an artificial person, often referred to as a company or corporation.

• In the case of a company or corporation, the suit can be instituted at the place of business or where the cause of action has arisen.
• The challenge of determining jurisdiction becomes more complex when companies have a decentralized structure, with headquarters in one place and subsidiary offices in others.
• When a company has a sole business office, the place of business is that sole office. However, when a company has multiple offices with one principal office, the cause of action becomes crucial in determining the place of business.
• For instance, if the cause of action has arisen at a branch office, then such branch office is deemed as the place of business. When the cause of action has not arisen at the branch office, the principal office is the place of business.
• In Patel Roadways Ltd. v. Prasad Trading Company[3], the company has its principal office in Mumbai, while the cause of action had arisen in Delhi and Chennai. The court observed that Delhi and Chennai shall be deemed as places of business, and accordingly, the plaintiff shall institute the suit in either Delhi or Chennai.
• In M/S. Dhodha House v. S.K. Maingi[4], the court distinguished between ‘carries on business’ and ‘personally works for gain.’ The term ‘carries on business’ refers to a location where business activity is conducted, and the individual has a financial stake or managerial role, regardless of their physical presence. Meanwhile, ‘personally works for gain’ means that the person works for himself, not through his agents, for which he attains a salary or remuneration.

Conclusion

In conclusion, Section 20 of the C.P.C. provides a framework for determining the appropriate court for civil suits. While it seeks to streamline the process, the complexities arising from multiple defendants, the nature of the cause of action, and the emergence of e-commerce have presented unique challenges. The courts have had to adapt and interpret the provisions of Section 20 to address these evolving scenarios. By understanding the nuances of this section and the various factors that influence jurisdiction, litigants and legal professionals can navigate the complexities of the Indian legal system more effectively.

[1] AIR 1992 SC 1514.

[2] 2009 SCC OnLine Del 3780.

[3] Supra note 1.

[4] AIR 2006 SC 730.

Mohd. Sahil Khan