Holding

The Delhi High Court possessed territorial jurisdiction because a part of the cause of action arose in Delhi, and the plaintiff was entitled to join all defendants in one suit under the CPC.

Summary

Bhushan Steel (now Tata Steel) filed a suit in the Delhi High Court against several parties, including Arcadia Shipping, alleging non‑payment under a Letter of Credit for galvanized steel shipped from Mumbai to Djibouti. The plaintiff claimed that the cause of action arose in Delhi because the supply order and payment obligations were placed there, and sought to join all defendants in a single suit. Arcadia contended that the Delhi court lacked territorial jurisdiction, arguing that its involvement was limited to the shipment from Mumbai. The Supreme Court examined Section 20(c) of the CPC and Order I Rules 3 and 7, holding that a part of the cause of action did arise in Delhi, conferring jurisdiction. It further ruled that the transactions of sale and shipment were intrinsically linked, justifying the joinder of all defendants. Consequently, the Court set aside the Single Judge’s finding of lack of jurisdiction and dismissed the appeal.

Issues considered

Whether the Delhi High Court had territorial jurisdiction over the suit against Arcadia Shipping under Section 20(c) of the CPC.
Whether the plaintiff could join all defendants in a single suit under Order I Rules 3 and 7 of the CPC.

Legislation cited

Code of Civil Procedure, 1908s. 20(c)

Subjects

Territorial JurisdictionBill of LadingDominus LitisLetters of CreditSale of Goods

Judgment

[2024] 5 S.C.R. 404 : 2024 INSC 333

Arcadia Shipping Ltd.
v.
Tata Steel Limited and Others
(Civil Appeal No. 5599 of 2024)
16 April 2024
[Sanjiv Khanna* and Dipankar Datta, JJ.]

Issue for Consideration
Whether the Division Bench of the Delhi High Court was correct
in setting aside the finding of the Single Judge that the Delhi High
Court has no territorial jurisdiction.

Headnotes
Territorial Jurisdiction – Suit by Bhushan Steel & Strips Ltd.
(now Tata Steel Limited) – Section 20(c) of the Civil Procedure
Code, 1908 – Scope of, Explained.
Held: Section 20(c) of the Civil Procedure Code, 1908 accords
dominus litis to the plaintiff to institute a suit within local limits of
whose jurisdiction the cause of action, wholly or in part, arises
– Situs of the cause of action, even in part, will confer territorial
jurisdiction on that court – Two transactions took place – One of
sale of goods of galvanised steel in Delhi and one of shipment of
goods by Arcadia from Mumbai to Djibouti, Ethiopia – Although
Arcadia’s involvement was restricted to the second transaction
only, the transactions were intrinsically intertwined – The supply
order was placed in Delhi and the payment was to be released
in Delhi – However, the sale of goods and then their shipment
(from Mumbai to Djibouti) was connected and synchronised –
Therefore, the Delhi High Court has jurisdiction under Section
20(c) of the CPC as the cause of action arose in part in Delhi.
[Paras 7, 8, 10, 13 and 14]
Code of Civil Procedure, 1908 – Order 1, Rules 3 and 7 – Scope
of, Explained.
Held: Order 1 Rule 3 of the CPC provides that the plaintiff may
join as a defendant in one suit, all persons against whom, the
plaintiff claims the right to relief in respect of, or arising out of,
the same act or transaction or series of transactions – The claim

* Author
[2024] 5 S.C.R. 405

Arcadia Shipping Ltd. v. Tata Steel Limited and Others

viz. the defendants can be joint, several or in the alternative – It
is permissible to file one civil suit, even when, separate suits can
be brought against such persons, when common questions of law
and fact arise – Order 1 Rule 7 of the CPC permits a plaintiff to
join two or more defendants in order that the question as to which
of the defendants is liable, and to what extent, can be decided
in one suit – As per Order 1, Rules 3 and 7 of the CPC, it was
permissible for Bhushan Steel to enjoin in a single suit all the
defendants, including Arcadia – The cause of action could not
have been adjudicated without impleading all the defendants as
parties – Thus, in terms of Order 1 Rule 3 of the CPC, the relief
claimed by Bhushan Steel lies against all the defendants, albeit to
different extents and arising out of a series of transactions – Thus,
Bhushan Steel was within its rights to enjoin all the defendants
under a single suit as per Order 1 Rule 7 of the CPC. [Paras 11,
12 and 13]
Bill of Lading – Purpose of, Explained.
Held: A Bill of Lading serves the following purposes: (a) it is
receipt of the goods shipped and the terms on which they have
been received; (b) it is evidence for the contract of carriage of
goods; and (c) it is a document of title for the goods specified
therein. [Para 8]
Territorial Jurisdiction – Question of – Stage at which to be
decided – At the outset.
Held: The issue of territorial jurisdiction should be decided at the
outset rather than being deferred till the matter is resolved. [Para 15]

List of Acts
Code of Civil Procedure Code, 1908.

List of Keywords
Territorial Jurisdiction, Bill of Lading, Dominus Litis, Letters of
Credit, Sale of Goods.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5599 of 2024
From the Judgment and Order dated 08.01.2024 of the High Court
of Delhi at New Delhi in FAO (OS) (COMM) 19 of 2019
406 [2024] 5 S.C.R.

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Appearances for Parties
E.R. Kumar, D.P. Mohanty, Ms. Sonal Gupta, Ms. Manisha Arya,
Abhishek Thakral, M/S. Parekh & Co., Advs. for the Petitioner.
Joy Basu, Shashank Gautam, Arvind Thapliyal, Surya Kapoor, Ms.
Saravna Vasanta, Siddhant Pandey, Rajesh Banati, Ashish Sareen,
Anoop George, Kunal Chaterjee, Ms. Aagam Kaur, Advs. for the
Respondents.
Judgment / Order of the Supreme Court

Order
Sanjiv Khanna, J.
Leave granted.
2. This order gives reasons and decides a question of territorial
jurisdiction under the Code of Civil Procedure, 19081.
3. We begin by briefly referring to the facts of the case and pleadings
in the plaint - Suit No. 458/2000:
ο The original plaintiff is Bhushan Steel & Strips Ltd2. Bhushan
Steel has merged with Tata Steel Limited (respondent no. 1
before this Court).
ο The defendant nos. 1-4 are, TYO Trading Enterprises 3
(respondent no. 2 before this Court), Commercial Bank of
Ethiopia4 (respondent no. 3 before this Court), Arcadia Shipping
Limited 5 (appellant before this Court) and M.G. Trading
Worldwide Pvt Ltd6 (respondent no. 4 before this Court).
ο Bhushan Steel was, inter alia, a manufacturer of galvanized
steel corrugated sheets.
ο TYO Trading was a company based in Ethiopia that had
instructed its agent, M.G. Trading, to place certain supply

1 For short, “Code.”
2 For short, “Bhushan Steel”.
3 For short, “TYO Trading”.
4 For short, “Bank of Ethiopia”.
5 For short, “Arcadia”.
6 For short, “M.G. Trading”.
[2024] 5 S.C.R. 407

Arcadia Shipping Ltd. v. Tata Steel Limited and Others

orders for galvanized steel corrugated sheets with Bhushan
Steel.
ο Accordingly, M.G. Trading placed orders with Bhushan Steel, at
Delhi, for the supply of 400 MT of galvanized steel corrugated
sheets.
ο TYO Trading had initially opened the Letter of Credit in favour
of its agent M.G. Trading.
ο Subsequently, the Letter of Credit was transferred in the name of
Bhushan Steel, pursuant to which, the material was dispatched
by Bhushan Steel, as per the supply orders.
ο The material was loaded by the shippers, Arcadia, in their
vessel - Winco Pioneer, from a port in Mumbai, India to a port
in Djibouti, Ethiopia.
ο Arcadia undertook the shipment vide two bills of lading7 -(i)
Bill of Lading No. DJB-06 for 200 MT of galvanized steel
corrugated sheets and (ii) Bill of Lading No. DJB-07 for 198
MT of galvanized steel corrugated sheets.
ο The freight charges for shipping were prepaid by Bhushan
Steel to Arcadia.
ο Arcadia was directed to deliver the goods to the order of the
Bank of Ethiopia, to whom documents had been submitted by
Bhushan Steel through their bankers, Punjab National Bank8.
The documents were to be negotiated under the Letter of Credit. ‘
ο PNB had sent the said documents to the Bank of Ethiopia for
making the payments. All formalities for encashing the Letter
of Credit had been completed by Bhushan Steel.
ο However, Bank of Ethiopia refused to encash the Letter of
Credit on the grounds of discrepancies.
ο Vide fax message dated 25.08.1999, Bhushan Steel was
informed by Arcadia that both the shipments had been released
to the consignee, TYO Trading, as they had duly presented a
Bill of Lading, endorsed by Bank of Ethiopia.

7

8 For short, “PNB”.
408 [2024] 5 S.C.R.

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ο Vide letter dated 07.09.1998, TYO Trading informed Bhushan
Steel, through M.G. Trading, that they had made the payment,
which would be released by the Bank of Ethiopia.
ο The payment was not received by Bhushan Steel. The material
was delivered and could not be shipped back to Bhushan Steel.
ο Thus, the defendants had taken a contradictory stand. While
TYO Trading had stated that they had paid for the goods, the
Bank of Ethiopia had refused to honour the Letter of Credit.
Arcadia had stated that the material had been released to
TYO Trading upon presentation of the Bill of Lading which
was duly endorsed by the Bank of Ethiopia. Further, PNB had
returned the original documents, including the Bill of Ladings
to Bhushan Steel stating that they had received them without
any encashment of the Letter of Credit by the Bank of Ethiopia.
ο Paragraphs 22 and 29 of the plaint read as under:
“22. That thus the fact remains that the payment of
the said bill of lading has not been paid to the plaintiff
and is still liable to be paid to the plaintiff and the
plaintiff is fully entitled for an amount of US$ 2,76,510
which is the liability of defendant no.1 and 2 in the
event of goods rightly being released by defendant
no. 3 after obtaining duly endorsed bill of lading from
defendant no. 2, but in case the goods had been
released without obtaining the endorsement then
it is the liability of defendant nos. 1, 2 and 3 jointly
and severally towards plaintiff for making payment
thereof as defendant no. 2 cannot escape its liability
under any circumstances as if the irrevocable Letter
of Credit would not have been issued by defendant
no.2 duly transferred in favour of plaintiff, the plaintiff
would not have supplied the said goods and since
despite the fact that all the conditions of supply was
fulfilled by plaintiff of the irrevocable Letter of Credit,
the defendant no.2 have not released the payment,
therefore the liability of defendant no.2 remains in all
eventuality and the liability of defendant no.3 arises
if they had delivered the goods without obtaining
endorsement from defendant no.2 and as such in
[2024] 5 S.C.R. 409

Arcadia Shipping Ltd. v. Tata Steel Limited and Others

order to escape their liability defendant no. 3 to
establish and prove that they hold with them the
original Bill- of Lading duly endorsed by defendant
no.2 to release the said goods in favour of defendant
no.1, otherwise defendant no.3 cannot escape its
liability for payment. This is so the original documents
have been returned back unpaid to the plaintiff by
their bankers Punjab National Bank and as such it
is surprising as to how the goods had been released
by defendant no. 3 as confirmed by them in favour of
defendant no. 1 vide their fax dated 29th August, 1999.
xxx xxx xxx
29. That the cause of action arose for the first
time when defendant no.4 assigned the said order
placed by defendant no.1 in favour of plaintiff;
again arose on 23rd June, 1998 when the goods
were supplied to defendant no.1 and was sent to
defendant no. 3; again arose on 7th September,
1998, when defendant no. 1 confirmed having
made the payment to defendant no.2 and assure
the early release of the payment; again arose
when the documents were returned to the plaintiff
on 23rd August, 1999 when the plaintiff enquired
about the status of the goods; again arose on
25th August, 1999 when defendant no.3 confirmed
having delivered the goods to defendant no.1 and
the authority of defendant no.2 and finally arose on
29th November, 1999 when despite the legal notice
the defendants failed to release the payment and
is a continuing one.”
In this manner, it was pleaded that if an endorsement on the
Bill of Lading was made by the Bank of Ethiopia, they would be
liable. Arcadia would be liable if they were not able to establish
and prove that the original Bill of Lading was duly endorsed by
the Bank of Ethiopia.
ο Accordingly, the defendants were jointly and severally liable.
ο Paragraph 30 of the plaint relating to the territorial jurisdiction
reads as under:
410 [2024] 5 S.C.R.

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“That the cause of action arose at Delhi as the
order was placed at Delhi and the payment was to
be released at Delhi, therefore this Hon’ble Court
has got the Jurisdiction to try and adjudicate upon
the present suit.”
Bhushan Steel had thus pleaded that the High Court at Delhi
possessed territorial jurisdiction to decide the Suit.
4. Vide judgement/order dated 20.12.2017, the Single Judge of the
High Court at Delhi recording the following findings:
ο Bank of Ethiopia had refused to honour the Letter of Credit
on account of discrepancies as the goods were shipped
late and the documents were presented after the course of
negotiation.
ο Goods were released and in spite of efforts of Bhushan Steel
to call back the shipment, the goods could not be retrieved.
ο TYO Trading Enterprises was untraceable and were
proceeded ex-parte.
ο Arcadia had loaded and shipped the goods, however, they
failed to divulge the actual recipient in Ethiopia. Arcadia
failed to inform Bhushan Steel about their due compliance.
Acadia had taken conflicting and inconsistent stands regarding
the person to whom the goods were released. The original
documents, including the Bills of Lading were returned to
Bhushan Steel and were in their possession. Thus, the
goods could not have been released by Arcadia without the
production of the original Bill of Ladings which were with
Bhushan Steel.
ο Therefore, the goods were released by Arcadia unauthorisedly
and have not been accounted for by them. Accordingly,
Arcadia is liable to Bhushan Steel for the loss suffered.9
Arcadia should pay Bhushan Steel the value of the goods,
without any interest.

9 The judgment records that Arcadia had not disclosed who was the ‘Principal’, who was an undisclosed
foreign party. Arcadia had not produced document to show if the freight charges were received on behalf
of the ‘Principal’ etc.
[2024] 5 S.C.R. 411

Arcadia Shipping Ltd. v. Tata Steel Limited and Others

Despite these findings, the Single Judge directed the return of the
plaint on the question of territorial jurisdiction, as reproduced below:
“Issue No. 1
27. This Court agrees with defendant No.3’s contention
that this Court lacks territorial jurisdiction to entertain and
decide the present suit. Apparently, no cause of action
arose against defendant No.3 within the jurisdiction of the
Court to grant the relief prayed for. Defendant No. 3 carries
on its business at Mumbai. It is not at controversy that the
goods in question were shipped / loaded at Mumbai, the
freight charges were paid there. The goods were to be
delivered at Djibouti Port, Ethiopia Apparently, no cause
of action whatsoever qua defendant No. 3 arose at Delhi
to attract the territorial jurisdiction of this Court. This Court
has no jurisdiction to entertain and decide the present suit
qua the defendant No. 3. This issue is decided in favour
of the defendant No.3 and against the plaintiff.
Relief
28. Since this Court has no territorial jurisdiction to entertain
and decide the present suit qua defendant No. 3, the relief
claimed by the plaintiff against defendant No. 3 cannot
be granted.
29. Plaint be returned to the plaintiff to be presented before
the Court of Competent Jurisdiction, as per law.”
5. A Division Bench of the High Court at Delhi, vide judgment/order
09.01.2024, allowed an appeal against the judgement/order passed
by the Single Judge dated 20.12.2017, in an appeal preferred by
Tata Steel Limited.
6. The present appeal has been preferred by the appellant – Arcadia
against the judgment/order of the Division Bench of the High Court
at Delhi, dated 08.01.2024.
7. Arcadia submits that two distinct transactions occurred: first, the sale
of goods and second, a shipment of goods from Mumbai to Djibouti.
Arcadia emphasizes that their involvement was restricted to the
second transaction. Notably, the supply orders, integral to the first
transaction, were placed in Delhi. Thus, Arcadia submits that a suit
412 [2024] 5 S.C.R.

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cannot be brought against them in Delhi, as they were not a part of
the first transaction and their businesses were located out of Mumbai.
8. In our opinion, the contention raised by Arcadia has no merit.
The transactions are intrinsically intertwined and cannot be
compartmentalized into watertight silos. The shipment of goods
was linked and connected with the sale of goods by Bhushan Steel
through, inter alia, the Bill of Lading. A Bill of Lading essentially
serves a tri-fold purpose: (a) it is receipt of the goods shipped and
the terms on which they have been received; (b) it is evidence for
the contract of carriage of goods; and (c) it is a document of title
for the goods specified therein. Consequently, the release of goods
by the shipper, Arcadia, hinged upon the presentation of the Bill of
Lading by the receiver, TYO Trading at the point of receipt. However,
the Bill of Lading necessitated proper endorsement by the Bank of
Ethiopia since they were the issuers of the Letter of Credit. Bhushan
Steel remained the owner of the goods. In this manner, the actions
of Arcadia and the transactions were interconnected with each other.
Upon reading paragraphs 22, 29 and 30 of the plaint referred to
above and after perusing the facts of the case, it is clear to us that
a part of the cause of action had arisen in Delhi.
9. It would be opportune to refer to the provisions of the Code.
10. Section 20(c) of the Code accords dominus litis to the plaintiff to
institute a suit within local limits of whose jurisdiction the cause of
action, wholly or in part arises.10 Every suit is based upon the cause
of action, and the situs of the cause of action, even in part, will
confer territorial jurisdiction on the court. The expression ‘cause of
action’ can be given either a restrictive or wide meaning. However,
it is judicially read to mean - every fact that the plaintiff should prove
to support their right to the judgment.
11. Order I Rule 3 of the Code states that the plaintiff may join as a
defendant in one suit, all persons against whom, the plaintiff claims
the right to relief in respect of, or arising out of, the same act or

10 “20. Other suits to be instituted where defendants reside or cause of action arises.—Subject to the
limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction—
xxx xxx xxx

(c) the cause of action, wholly or in part, arises.
[2024] 5 S.C.R. 413

Arcadia Shipping Ltd. v. Tata Steel Limited and Others

transaction or series of transactions.11 The claim viz. the defendants
can be joint, several or in the alternative. Thus, it is permissible to
file one civil suit, even when, separate suits can be brought against
such persons, when common questions of law and fact arise.
12. Order I Rule 7 of the Code permits a plaintiff who is in doubt as to
the person from whom they are entitled to obtain redress, to join
two or more defendants in order that the question as to which of the
defendants is liable, and to what extent, can be decided in one suit.12
13. The supply order was placed in Delhi and the payment was to be
released in Delhi. Accordingly, the cause of action arose in part at
Delhi, in terms of Section 20(c) of the Code. As per Order I Rules
3 and 7 of the Code, it was permissible for Bhushan Steel to enjoin
in a single suit all the defendants, including Arcadia. Their claim
of right to relief lies against all such defendants. Further, the relief
claimed was in respect of or arising out of a series of transactions,
the sale of goods and then their shipment, which transactions were
connected and synchronized with the relief claimed. The cause of
action could not have been adjudicated without impleading all the
defendants as parties. Thus, in terms of Order I Rule 3, the relief
claimed by Bhushan Steel lies against all the defendants, albeit to
different extents and was ‘in respect of and arises out of a series
of transactions’. Thus, Bhushan Steel was within its rights to enjoin
all the defendants under a single suit as per Order I Rule 7 of the
Code such that the extent of liability of each defendant could be
decided in the same suit.
14. Therefore, the Division Bench of the High Court was right in setting
aside the finding recorded by the Single Judge viz issue no. 1 –
territorial jurisdiction.
15. However, we must also record that a question of territorial jurisdiction
should ordinarily be decided at the outset rather than being deferred

11 “3. Who may be joined as defendants.—All persons may be joined in one suit as defendants where—
(a) any right to relief in respect of, or arising out of, the same act or transaction or series of acts or
transactions is alleged to exist against such persons, whether jointly, severally or in the alternative; and
(b) if separate suits were brought against such persons, any common question of law or fact would arise.”
12 “7. When plaintiff in doubt from whom redress is to be sought.— Where the plaintiff is in doubt as to the
person from whom he is entitled to obtain redress, he may join two or more defendants in order that the
question as to which of the defendants is liable, and to what extent, may be determined as between all
parties.”
414 [2024] 5 S.C.R.

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till all matters are resolved. In the judgment dated 20.09.2017, the
Single Judge held that no liability can be fastened to TYO Trading
and Bank of Ethiopia. However, it held that liability could be fastened
to Arcadia. In the context of the dispute in question, the different and
divergent stands of the defendants, the remedy was to file a civil
suit against the defendants, which in the facts was maintainable in
Delhi, a part of the cause of action having arisen in Delhi.
16. Hence, the Single Judge erred in upholding Arcadia’s contention
regarding lack of territorial jurisdiction of the Delhi High Court and
absence of any cause of action arising against them in Delhi, based
on their businesses being located in Mumbai.
17. For the aforesaid reasons, the present civil appeal is dismissed.
18. Pending application(s), if any, shall stand disposed of.

Headnotes prepared by: Result of the case:
Raghav Bhatia, Hony. Associate Editor Appeal dismissed.
(Verified by: Kanu Agrawal, Adv.)