Holding

The Supreme Court held that the Calcutta High Court lacked jurisdiction as the cause of action arose in Bombay, and that under Section 3(7) of the Textile Undertakings (Taking over of Management) Act, pre‑takeover liabilities cannot be enforced against the Central Government or custodian, rendering mandamus unavailable.

Summary

The petitioners had advance contracts with two Bombay textile mills for cloth, but after the mills were taken over by the Central Government under the Textile Undertakings (Taking over of Management) Act, 1983, the custodian claimed the contracts were cancelled and it bore no liability for pre‑takeover obligations. The petitioners filed a writ petition in the Calcutta High Court seeking mandamus to compel delivery of the goods and production of records. The Supreme Court held that the cause of action arose in Bombay, so the Calcutta High Court lacked territorial jurisdiction under Article 226; Section 3(7) of the Act bars enforcement of pre‑takeover liabilities against the Central Government or custodian; no statutory duty existed to justify mandamus for a pure business contract; the writ petition was barred by limitation and raised disputed factual issues better suited to a suit. Consequently, the appeal was allowed, setting aside the Division Bench order and restoring the Single Judge’s dismissal.

Issues considered

Whether the Calcutta High Court had territorial jurisdiction to entertain the writ petition under Article 226.
Whether the cause of action for delivery of goods arose in Bombay or Calcutta.
Whether Section 3(7) of the Textile Undertakings (Taking over of Management) Act, 1983 precludes enforcement of pre‑takeover liabilities against the Central Government or custodian.
Whether a writ of mandamus can be issued for specific performance of a pure business contract.
Whether the writ petition was barred by limitation and contained disputed questions of fact.

Legislation cited

Constitution of Indias. Article 226
Textile Undertakings (Taking over of Management) Act, 1983s. 11, s. 3(7), s. 6

Subjects

Territorial jurisdictionArticle 226Textile Undertakings ActPre‑takeover liabilityMandamusSpecific performanceLimitationWrit petitionCause of action

Judgment

A NATIONAL TEXTILE CORPN. LTD. AND ORS. •
v.
•
MIS. HARIBOX SWALRAM AND ORS.

APRIL 5, 2004 "
B [S. RAJENDRA BABU AND G.P. MATHUR, JJ.)

Constitution of India, 1950: Article 226.
,.,
Cause of action-Territorial jurisdiction-Facts giving rise to-Held:
c Only those facts which have a nexus or relevance with the /is involved in the
case give rise to the cause of action within the court's territorial jurisdiction.

Writ petition -Maintainability of-Disputed questions offact-Delay and
/aches-Held: Highly disputed questions of fact could be proved by leading
evidence only in a properly constituted suit and not a mailer to be investigated
D in a writ petition-Hence, such writ petition is liable to be rejected on this
ground as well as on the ground of delay.
,..
Mandamus-Issuance of-Grounds for-Business contract-Held: For
issuance of mandamus it must be shown that a Statute imposed a legal duty
and the aggrieved party had a legal right under the Statllle to enforce its
E performance-In case of violation of the terms of a pure and simple business
contract no mandamus could be issued.

Textile Undertakings (Taking over of Management) Act, 1983:

Section 3(7)-Acquisition and requisition- "liabi/ity"-Enforcement of-
F Held: Liability incurred by a textile company before the appointed day could -'
not be ef?forced against the Central Government or the Custodian.

Words & Phrases:
...
"Liability"-Meaning of-In the context of S. 3(7) of the Textile
G Undertakings (Taking over of Management) Act, I 983.
The respondents had been purchasing various qu_antities of cloth
from two textile Mills both situate at Bombay. The respondents entered .. •
into contracts and made advance payment against the same. The concerned

H 738
NATIONAL TEXTILE CORPN I.TD. 1· llARIBOX SWALRAM 739

mills supplied and delivered the goods to the respondents from time to A
time but a substantial part of the contract remained unexecuted. The
respondents requested the mills to take necessary steps for immediate
delivery of the goods, in respect whereof payment had already been made.
The mills intimated that deliveries could not be effected as the banking
transaction and accounts of the mills had been tjozen, but assured that
arrangements were being made to deliver the gdods as early as possible. B
The management of the mills was taken over by the Central Government
under Textile Undertakings (Taking over of Management) Ordinance,
1983 which was subsequently replaced by Textile Undertakings (Taking
over of Management) Act, 1983. The Central Government constitu:ed the
appellant for the purpose of managing the textile undertakings, which in C
turn as additional custodian took over the management of the said two
mills. The respondents thereafter approached the appellant for release of
the goods and one bale of contractual specification was delivered but the
Excise Authorities detained 12 bales, as a consequence whereof the same
were not delivered.
I D
Subsequently, the appellants sent a reply stating that (1) all the
outstanding contracts had beei't cancelled on the date of take over as they
• were not binding upon them; (2) the deposits that were made with the
erstwhile management were not specifically marked towards any of the
invoice of packed material and as such could not be adjusted against any
future delivery and the respondents would have to claim this amount from
E
the erstwhile management since the Custodian was prohibited from
discharging any liability pertaining to pre-take over period; and (3) there
were no invoices against which payments were receiVed from, the
petitioners prior to take over and as such the question of effecting delivery
of paid stocks did not arise. F
Being aggrieved the respo.ndents filed a writ petition before the
Calcutta High Court praying that a writ of mandamus be issued
commanding the appellant to produce the entire records relating to the
withholding of delivery of goods pursuant to the contracts.
G
The appellant contended that the cause of action had arisen at
Bombay and, therefore, the Calcutta High Court had no territorial
jurisdiction to entertain the writ petition; that the writ petition was highly
belated and raised disputed questions of fact and, therefore, was not
maintainable.
H
740 SUPREMlo COURT REPORTS f2004J 3 S.CR.

A Single Judge held that the Calcutta High Court had no jurisdiction
to entertain the writ petition. But the Division Bench reversed this fihding
on the ground that the contract was revoked at Calcutta and, therefore,
the cause of action had arisen at Calcutta. The Division Bench also held
that the appellant only was liable to supply the cloth to the respondents
and not the two textile mills. Hence the appeal.
B
Allowing the appeal, the Court
...'
HELD: I. Each and every fact pleaded in the writ petition does not
ipso facto lead to the conclusion that those facts give rise to a cause of
action within the Court's territorial jurisdiction unless those facts pleaded
C are such which have a nexus or relevance with the lis involved in the case.
Facts, which have no bearing with the lis or dispute involved in the case,
do not give rise to a cause of action so as to confer territorial jurisdiction
on the Court concerned. (749-FJ

D Union of India v. Adani Exports ltd., AIR (1002) SC 126, State of
Rajasthan v. Mis. Swaika properties, AIR (1985) SC 1289 and Oil and Natural
Gas Commission v. Utpal Kumar Basu, (1994( 4 SCC 711, relied on.

2.1. In the present case, the textile mills are situate in Bombay and
the supply of cloth was to be made by them ex-factory at Bombay.
E According to the respondents, the money was paid to the mills at Bombay.
The Single Judge held that the Calcutta High Court had no jurisdiction
to entertain the writ petition. The Division Bench has reversed this finding
on the groond that the concluded contract had come into existence, which
could be cancelled only after giving an opportunity of hearing, and
consequently the question of revocation of the contract at its Calcutta
F address would constitute a cause of action. The view taken by the Division
Bench is wholly erroneous in law. It was nowhere pleaded in the writ
petition that the appellant had initiated any action under Section 11 of
the Textile Undertakings (Taking over of Management) Act, 1983 by
issuing any notice to the respondents for cancellation of the contract. In
G fact it is stated in the writ petition that the Central Government did not
follow the procedure prescribed in Section 11 for cancellation of the
contract. (750-GJ

2.2. The mere fact that the respondents carry on business at Calcutta
or that the reply to the correspondence made by them was received at
H Calcutta is not an integral part of the cause of action and, therefore, the
NATIONAL TEXTILE CORPN. LTD.'' HARIBOX SWALRAM 741
"'' Calcutta High Court had no jurisdiction to entertain the writ petition and A
the view to the contrary taken by the Division Bench cannot be sustained.
(751-B-CI

3.1. Section 3(7) of the Act is very clear and says in no uncertain
terms that any liability incurred by a textile company in relation to the
textile undertaking shall not be enforceable against the Central B
Government or the Custodian. (751-F(

3.2. The words "any liability" in Section 3(7) of the Act are of wide
amplitude to cover every liability that was incurred by the textile company
in relation to the textile undertaking before the appointed day. (752-AI
c
Rashtriya Mill Mazdoor Sangh v. National Textile Corporation (South
Maharashtra) ltd., (1996( I SCC 313, relied on.

3.3. According to the case set up by the respondents, money was paid
by them to the two textile mills before the appointed day but they had
D
..... failed to supply the cloth. Assuming the aforesaid position to be correct,
... after receipt of money, the textile mills having incurred a liability, were
; under an obligation to supply the cloth to the respondents. On the facts
pleaded, the liability had been incurred by the textile company and
consequently it could not be enforced against the Central Government or
the Custodian. The view taken by the Division Bench of the High Court E
that it was not a liability of the textile company cannot be accepted.
(752-E-F(

4.1. The writ petition raised highly disputed questions of fact which
.. could be proved by leading evidence in a properly constituted suit and
was not a matter to be investigated in a writ petition. (753-A( F
""'
4.2. The writ petition was highly belated and was, therefore, liable
to be rejected on this ground alone. (753-F(

5. It is well settled that in order that mandamus be issued to compel
the authorities to do something, it must be shown that there is a Statute, G
which imposes a legal duty, and the aggrieved party has a legal right under
> .... the Statute to enforce its performance. The present is a case of pure and
simple business contract. The respondents have no statutory right nor any
statutory duty is cast upon the appellants whose performance may be
legally enforced. No writ of mandamus can, therefore, be issued as prayed H
-t'
742 SUPREME CO(IRT REPORTS [200~] 3 S.C.R.

A by the respondents. 1753-C-H; 754-AI
CIVIL APPELLATE JURISDICTION Civil Appeal No. 3142-
43 of 2002.

From the Judgment and Order dated 4.8.2000 of the Calcutta High
B Court in Appeal from Original Order Nos. 457 and 459 of 1997.
WITH

C.A. No. 3144 of 2002.

C K.N. Raval, Solicitor General and Ms. B. Sunita Rao for the Appellants.

Dr. G.C. Bharuka, Ritesh Agrawal, Devashish Bharuka, Vishwajit Singh,
Tripurari Ray and Ms. Ruby Singh Ahuja (NP) for the Respondents.

The Judgment of the Court was delivered by
D
C.P. MA THUR, J. These appeals by special leave have been preferred
against the judgment and order dated 4.8.2000 of a Division Bench of the
Calcutta High Court, whereby the appeal preferred by respondent nos. 1 and
2 was allowed, the order dated 11.4.1997 of the learned single Judge dismissing
the writ petition was set aside and the writ petition was disposed of with
E certain directions.

2. Respondent nos. 2 and 3 filed the writ petition praying that a writ
of mandamus be issued commanding the appellant herein to produce the
entire records relating to the withholding of delivery of goods pursuant to the
contracts mentiOned in Annexure-A to the writ petition and also to deliver the
F goods mentioned in Annexure-A upon adjustment of advance payment made
by them. A further prayer was made that the appellants herein be directed to
take a final decision as envisaged in the letter dated 24.10.1989 (Annexure
-A to the writ petition) and an injunction be issued restraining the appellants
from transferring, dealing with or disposing of goods pursuant to the contracts
G mentioned in Annexure-A in any manner without keeping the goods which
are to be supplied to writ retitioner no. I.

1. The case set up in the writ petition is as follows. The writ petitioners
had been purchasing various quantities of cloth from Finlay Mills Limited
and Gold l\iohur Mills Limited, both situate in Bombay. The petitioners
H entered into contracts specified in Annexure-A to the writ petition and made
,
,I.
NATIONAL TEXTILE CORPN. L rn. r. llARIBOX SWALRAM [G.l'.MAHIUR . .I.I 743

advance payment against the same. The concerned mills supplied and delivered A
the goods to the petitioners from time to time but a substantial part of the
contract remained unexecuted. By the letter dated 26.9.1993 the mills were
requested to take necessary steps for immediate delivery of the goods. in
respect whereof payment had already been made. The mills vide their letter
dated 29.9.1993 intimated that deliveries could not be effocted as the banking
transaction and accounts of the mills had been frozen, but assured that B
arrangements were being made to deliver the goods as early as possible. The
management of the mills was taken over by the Central Government on
18.10.1993 under Textile Undertakings (Taking Over of Management)
Ordinance, 1983 which was subsequently replaced by Textile Undertakings
(Taking Over of Management) Act, 1993 on 25.12.1993. The Central c
Government constituted National Textile Corporation (South Maharashtra)
Limited for the purpose of managing the textile undertakings which in turn
as additional custodian took over the management of the two textile
undertakings. The writ petitioners, thereafter approached the appellants for
release of the goods and one bale of contractual specification was delivered
but 12 bales were detained by the Excise Authorities, as a consequence D
... whereof the same were not delivered. The National Textile Corporation (South
; Maharashtra) vide their letter dated 15.3.1984 requested the Officer on Special
Duty of taken over mills including Gold Mohur Mills and Gold Mohur Mills
to furnish particulars in prescribed proforma to enable it to take up the matter
with the Central Government for taking action under section 11 (I) of the Act E
for the purpose of cancelling or varying any contract or agreement entered
prior to pre-take over period which action had to be taken on or before
14.4.1984. After giving a reasonable opportunity of hearing to the parties
concerned. the textile mills called upon the writ petitioners to verify the pre-
,, take over contracts and joint meetings took place for the said purpose and the
.. matter was referred back to the Officer on Special Duty. The writ petitioners F
then vide their letter dated 13. I0.1984 requested the Chairman-cum-Managing
Director of National Textile Corporation (South Maharashtra) Ltd. to deliver
the balance quantity of cloth in terms of the pending contracts and to adjust
all sums of money which had been paid by way of advance. The appellants
sent a reply on 7.11.1994 stating that (I) all the outstanding contracts had
G
.. been cancelled on the date of take over as they were not binding upon them;
(2) the deposits that were made with the erstwhile management were not
· specifically marked towards any of invoice of packed material and as such
cou Id not be adjusted against any future delivery and the writ petitioners will
have to claim this amount from the er:>twhile management since the custodian
is prohibited from discharging any liability pertaining to pre-take over period; H
,...., I

744 SUPREME COURT REPORTS (2004] 3 S.C.R.

A and (3) there were no invoices against which payments were received from
the petitioners prior to take over and as such the question of e~fecting delivery
of paid stocks did not arise. The writ petitioners made several representations
and they were informed by the letter dated 4.10.1989 that the matter relating
to delivery of cloth in pursuance of pre-take over contracts was under active
consideration. However, no delivery was effected. The writ petition was
B thereafter filed in December, 1989 seeking the reliefs mentioned in the earlier
part of the judgment.

4. The writ petition was contested on behalf of the appellants herein
and the Principal Officer of National Textile Corporation (South Maharashtra)
C Ltd. filed a detailed counter-affidavit. Certain pleas taken in para 3 of the
counter affidavit have an important bearing and therefore the same is being
reproduced below:

"Para 3. At the outset I state as follows :-

(a) The writ petition being directed to obtain specific performance
D of the disputed contracts and further claiming a decree for the
same which can and should be obtained by filing. a regular suit,
further the same being concerned with very many disputed
questions of facts, this application to by - pass the said usual
procedure of suit is not maintainable and ought to be dismissed
E on that ground.
(b) The contract in question admittedly having been entered into at
Bombay, with companies situate at Bombay, relating to goods
to be delivered from Bombay and the payment in respect thereof
were required to be made at Bombay and some part whereof
F having in fact been paid at Bombay, the entirety of the cause of
action being the subject matter of the writ petition had arisen,
if at all, within the jurisdiction of the Bombay High Court.
Accordingly the instant writ petition seeking to enforce such
cause of action which has arisen wholly outside the said
jurisdiction is not enforceable at the High Court at Calcutta,
G neither the High Court of Calcutta has jurisdiction over the
same. Hence, the application is misconceived and not
maintainable.
...
(c) Admittedly, the cause of action contained in the writ petition
having arisen in 1983 when the Take Over Act came into force
H and sought to be enforced in 1989 after expiry of long six years,
NATIONAL TEXTILE CORPN. LTD. r HARIBOX SWALRAM[G.P.MA THUR . .I.] 745

is clearly belated. The applicant being also guilty of latches no A
relief should be granted in a writ petition which only helps the
vigilarit but not the ident. Besides, the application is also barred
by the law of limitation and ought liable to be rejected."

It was further pleaded that on the appointed date no :;ods mant1factured,
earmarked and ready for delivery as claimed by the writ petitioners were B
lying and as such there was no question of delivery of any remaining goods
under any alleged contract. Whatever goods were delivered to the writ
petitioners, the same had been earmarked for them as invoices in respect
whereof had already been issued for which payments had been received
earlier and title in respect whereof had already passed on to the writ petitioners. C
Similar procedure had been adopted in respect of many others and cloth was
delivered to them which were lying manufactured in their account. However,
there was no liability to deliver any further goods. The respondents had not
received any advance payment as alleged by the writ petitioners. It was
further pleaded that the respondents under the provisions of the Act were not
liable to deliver any further goods under any alleged contract for the pre-take D
over period in respect whereof no title had passed on to the writ petitioners.
It was specifically denied that other dealers, similarly situate, had been
delivered any goods in respect of pre-take over contracts and a uniform
principle was adopted in this regard. No invoices had been raised in respect
of any alleged balance goods of a pre-take over period. It was also pleaded
that the payments, if any, alleged to have been made by the writ petitioners E
were in fact made to the erstwhile company and the writ petitioners were at
liberty to recover the same from them but the respondents were not liable to
pay back any amount or to deliver any goods. It was also asserted that the
respondents had been discharged of every liability of any kind for the pre-
take over period. The other allegations made in the writ petitions were also F
denied.

5. After exchange of affidavits the hearing of the writ petition
commenced before a learned Single Judge on 14.6.1990 and finally judgment
was reserved on 5.12.1990. However, after considerable period of time the
writ petition was released by the learned Single Judge. Thereafter sometime G
in 1995 the writ petitioners made a prayer to file a supplementary affidavit
for the purpose of bringing on record a letter dated 24.10.1989 allegedly
written by the Chairman-cum-Managing Director, National Textile Corporatio1\
which was addressed to the Joint Secretary, Ministry of Textile, Government
of India. The prayer was strongly opposed on behalf of the appellants herein. H
746 SUPREME COURT REPORTS 1200.J I 3 S.C.R.

A The learned Single Judge by his order dated 17.1.1995 granted permission
for filing of a supplementary affidavit and affidavit-in-opposition. if any.
Thereafter, the writ petitioners filed an affidavit annexing therewith a copy
of a letter dated 24.10.1989 purported to have been written by Mr. Sundaram
Chairman-cum-Managing Director. National Texti:c Corporation to Shri
B Saptharishi, Joint Secretary, Ministry of Textile, Government of India. The
letter makes a reference to the representation made by the writ petitioners and
two other firms regarding delivery of cotton fabrics by Finlay Mills and Gold
Moliur Mills against pre-take over contracts. It states that the matter had been
examined at their end and the position of contract balance as per the party
and the contract balance as per the mi~s was as detailed in Annexure-A
C enclosed to the letter. It is further mentioned therein that the position could
not be certified as absolutely correct as most of the or.iginal records and
documents were in possession of CBI. It goes on to say that after taking over
of the management, all the contracts for supply had not been subsequently
cancelled and/or varied by the Additional Custodian at any time. If the request
was to be considered, all parties similarly situated will have to be treated on
D the same footing and accordingly deliveries to the extent of Rs. I 01.72 lakhs
will have to be effected to 224 parties of eight taken-over textile mills without
receiving any demand. At the end of the letter it is stated that though the
party had raised a dispute promptly the question whether a parties' claim had
to be acceded to now after a lapse of six years raised a point of proprietary
E and also loss of Rs. 40. 70 lakhs to NTC. In the concluding portion of the
letter it is mentioned that although the party had raised a fairly arguable case,
the best course of action would be to obtain a judicial pronouncement in the
matter so as to avoid any possible future objection from audit or from propriety
angle. In the Annexure to the letter the credit balance of the writ petitioners
as on 18.10.89 was shown as Rs.10,47,145.33 as against Finlay Mills and
F Rs.21,89,056.26 as against Gold Mohur Mills.

6. An affidavit in reply was filed to the aforesaid supplementary affidavit
and it was submitted that the writ petitioners were put to strict proof of the
letter dated 24.10.1989 as the same was alleged to have been given to them
G by Mr. Sundaram without disclosing the reason for doing so. The letter was
a confidential internal communication and there was no occasion for Mr.
Sundaram to hand over a copy of the same to the writ petitioners especially
when he (Mr Sundaram) had left employment of National Textile Corporation
(South Maharahstra) Ltd. in December, 1992. The letter was at best comment
or opinion of Mr. Sundaram and was contrary to the opinion of the Attorney-
H General to the effect that the alleged contracts were not genuine. A copy of
I

'j..

NATIONAL TEXTILE CORPN LTD. r llARIBOX S\V AL RAM [G.I'. MATHUR . .1. J 74 7

the opinion of the Attorney-General was also annexed. It was also pleaded A
that the Government of India had not accepted the alleged claim of the writ
petitioners and had in fact launched prosecution against the Principal Officer
of respondent no.4 for giving delivery of stocks to several parties after the
date of taking over. It was further pleaded that the letter cannot be taken as
an admission of the alleged claim of the writ petitioners under any
circumstances.
B

7. The learned Single Judge held that the contract sought to be relied
upon by the writ petitioners was doubtful as it did not signify the assent of
the concerned mills. Whether sale contracts were made in the manner indicated
and were acted upon by the mills concerned was a question of fact which had C
to be established by evidence. There was no evidence on record of the case
to establish the contract. Sim''1rly no attempt had been made by the writ
petitioners to establish independently that a sum in excess of Rs. 40 lakhs
was lying to the credit of the concerned mills. In fact there was no assertion
to that effect in the writ petition and no particulars of such advance had been
furnished. It was also held that the respondents in the writ petition were not D
in picture at the time the invoices, which had been relied upon, were prepared
and it was the management which was in control of the concerned mills
+ before the take over period and therefore in such circumstances it was
obligatory on the part of the writ petitioners to prove the facts but no attempt
to that effect had been made except relying upon the letter of the concerned E
mills of September, I 983. The learned Single Judge also held that he had
directed the writ petitioners to produce the original of the pending contracts
but they failed to comply with the said direction. They merely handed over
a zerox copy of the contract of sak of cotton cloth which only contained the
signature of the buyer and not of the seller. This zerox copy produced was
of a printed proforma wherein the words "The Gold Mohur" had been typed F
before the printed words "Mills Ltd." Even this document did not make any
mention of any payment having been made by way of advance nor it mentioned
that any credit balance lying with the mills should be appropriated towards
the contract. The learned Judge further held that the respondents had disowned
their obligation to deliver the goods in November, 1984 but the writ petition G
was filed after more than five years and even if the period of limitation was
taken to be that of a civil suit, the writ petition was barred by limitation. The
leaP1ed Judge then considered in detail the effect of sub-section (7) of section
3, and sections 6 and 11 and other provisions of the Act and held that all
contracts relating to the management of the business and all contracts relating
to the management of the affairs of the Textile Undertaking stood terminated H
748 SUPREME COURT REPORTS 12004] 3 S.C.R.

A on the appointed day and consequently the Central Government or the
Custodian were neither obliged to discharge the contractual obligations by
effecting deliveries, nor they were obliged to give any adjustments of the
advances said to have been made. Regarding the letter dated 24. I0.1989 it
was held that the letter itself mentions that the facts stated therein could not
B be verified as most of the original records and documents had been seized
and were lying in possession of CBI. That apart, the object of the letter was
not to admit any liability or obligation but an opinion was expressed that the
best course of action was to obtain a judicial pronouncement in the matter.
Finally, the learned Single Judge held that the entire cause of action accrued
in Bombay and therefore the High Court of Calcutta had no jurisdiction to
C entertain the writ petition. On these findings the writ petition was dismissed.

8. Feeling aggrieved by the judgment and order of the learned Single
Judge the writ petitioners preferred an appeal before the Division Bench of
the Calcutta High Court. The Division Bench held that Calcutta High Court
had the jurisdiction to hear the matter as part of cause of action accrued there.
D On merits it was held that ordinarily a writ of mandamus cannot be issued
for specific performance of a contract yet there is no absolute bar in doing
so. The Bench went on to hold that whether in fact there existed any contract
or not would be a question of fact and having regard to the fact that the State
has a statutory duty to perform the contract the appeal was disposed of with
E the following direction:

"In a situation of this nature, we are of the opinion that interest
of justice would be subserved if the present incumbent of the post of
Chairman-cum-Managing Director gives an oppo1tunity of hearing to
the petitioners and try to sort out the differences before the parties
F across the table. We do not intend to go into the merit of the matter
so as to arrive at a finding one way or the other as to whether the
existence of contract had been proved or not but by moulding the
reliefs, we are of the opinion that even if it be found that it is not
possible for the respondent no.2 to supply the goods to the petitioners,
we have no doubt in our 111 ind that in the event it is found that a sum
G of Rs.40 lakhs is lying in its hand, steps should be taken for its refund
as expeditiously as possible and upon payment of interest @ Rs.12%
p.a."

9. Shri Kirit N. Raval, learned Solicitor General appearing for the
appellants, has strenuously urged that no part of cause of action had accrued
H in Calcutta as the Textile Mills were situate in Bombay and supply was to be
NATIONAL TEXTILE CORPN. LTD.,. HARIBOX SWALRAM [G.P.MATHUR. l] 749

made ex-factory at Bombay and the alleged payment by the writ petitioners A
was also made at the said place. It has thus been urged that it is not a case
where even a part of cause of action may have accrued in the State of West
Bengal which could enable the Calcutta High Court to entertain the writ
petition and to grant any relief to the writ petitioners. Shri G.C.Bharuka,
learned senior counsel appearing for the respondents herein (writ petitioners) B
has submitted that the writ petitioners were carrying on business at Calcutta,
the letters were sent by them from Calcutta and replies to the same had also
been received by them at Calcutta and therefore part of cause of action had
accrued in the State of West Bengal and consequently the view taken by the
Division Bench of the High Court that it had jurisdiction to entertain the writ
petition was perfectly correct. C
I 0. Under Clause (2) of Article 226 of the Constitution, the High Court
is empowered to issue writs, orders or directions to any Government, authority
or person 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 D
of such person is not within those territories. Cause of action as understood
in the civil proceedings means every fact which, if traversed, it would be
necessary for the plaintiff to prove in order to support his right to a judgment
of the Court. To put it in a different way, it is bundle of facts which taken
with law applicable to them, gives the plaintiff a right to relief against the E
defendant. In Union of India v. Adani Exports ltd., AIR (2002) SC 126 in
the context of clause (2) of Article 226 of the Constitution, it has been
explained that each and every fact pleaded in the writ petition does not ipso
facto lead to the conclusion that those facts give rise to a cause of action
within the Court's territorial jurisdiction unless those facts pleaded are such
which have a nexus or relevance with the lis that is involved in the case. F
Facts which have no bearing with the lis or dispute involved in the case, do
not give rise to a cause of action so as to confer territorial jurisdiction on the
Court concerned. A similar question was examined in State of Rajasthan v.
Mis Swaika Properties, AIR (1985) SC 1289. Here certain properties belonging
to a company which had its registered office in Calcutta were sought to be G
acquired in Jaipur and a notice under Section 52 of the Rajasthan Urban
Improvement Act was served upon the company at Calcutta. The question
which arose for consideration was whether the service of notice at the head
office of the company at Calcutta could give rise to a cause of action within
the State of West Bengal to enable the Calcutta High Court to exercise
jurisdiction in a matter where challenge to acquisition proceedings conducted H
750 SUPREME COURT REPORTS 12004] 3 S.C.R.

A in Jaipur was made. It was held that the entire cause of action culminating
in the acquisition of the land under Section 152 of the Rajasthan Act arose
within the territorial jurisdiction of the Rajasthan High Court and it was not
necessary for the company to plead the service of notice upon them at Calcutta
for grant of appropriate writ, order or direction under Article 226 of the
B Constitution for quashing the notice issued by the Rajasthan Government
under Section 52 of the Act. It was thus held that Calcutta High Court had
no jurisdiction to entertain the writ petition.

11. The question of jurisdiction was considered in considerable detail
in Oi/ and Natural Gas Commission v. Utpal Kumar Basu. (1994] 4 SCC 711
C and it was held that merely because the writ petitioner submitted the tender
and made representations from Calcutta in response to an advertisement
inviting tenders which were to be considered at New Delhi and the work was
to be performed in Hazira (Gujarat) and also received replies to the fax
messages at Calcutta, could not constitute facts forming an integral part of
cause of action. It was further held that the High Court could not assume
D jurisdiction on the ground that the writ petitioner resides in or carries on
business from a registered office in the State of West Bengal.

12. In the present case, the textile mills are situate in Bombay and the
supply of cloth was to be made by them ex-factory at Bombay. According
to the writ petitioners, the money was paid to the mills at Bombay. The
E learned Single Judge after a detailed discussion of the matter held that the
Calcutta High Court had no jurisdiction to entertain the writ petition. The
Division Bench has reversed this finding on the ground that concluded contract
had come into existence which could be cancelled only after giving an
opportunity of hearing and consequently the question of revocation of the
F contract at its Calcutta address would constitute a cause of action. In our
opinion, the .view taken by the Division Bench is wholly erroneous in law.
It was nowhere pleaded in the writ petition that the appellant herein had '
initiated any action under Section 11 of the Act by issuing any notice to the
writ petitioner for cancellation of the contract. In fact, it is stated in para 18
of the petition that the Central Government did not follow the procedure
G prescribed in Section 11 for cancellation of contract. Regarding the jurisdiction
of the Calcutta High Court, the relevant statement was made in para 73 of the
writ petition wherein it was stated as under :

"73. Your petitioner carries on business and maintains all accounts
at the aforesaid place of business within the jurisdiction. Your
H petitioner states that by reason of the aforesaid, your petitioners have
_,
t
NA T!ONAL TEXTILE CORPN. LTD. 1·. IMRlllOX SIVAL RAM [G l'.MA THUR).] 75 J

"'" suffered loss and damage at its said place of business within the A
jurisdiction. All notices and correspondences referred to herein-above
addressed to your petitioner has been received by your petiti0ner at
your petitioner's place of business within the jurisdiction. In the
circi;mstances this Hon 'ble Court has the jurisdiction to ente11ain the
present application."
B
As discussed earlier, the mere fact that the writ petitioner carries on
business at Calcutta or that the reply to the correspondence made by it was
received at Calcutta is not an integral part of the cause of action and, therefore,
the Calcutta High Court had no jurisdiction to entertain the writ petition and
the view to the contrary taken by the Division Bench cannot be sustained. In
view of the above finding, the writ petition is liable to be dismissed. However,
c
in order to avoid any further harassment to the parties and to put an end to
the litigation, we would examine the matter on merits as well.

13. Chapter II of the Textile Undertakings (Taking over of Management)
Act, 1983 deals with Taking Over Of The Management Of Certain Textile D

.. Undertakings. Sub-section (1) of Section 3 lays down that on and from the
appointed day, the management of all the textile undertakings shall vest in
the Central Government. Sub-section (7) of Section 3 is important and it
'I
reads as under :

Section 3 (7): For the removal of doubts, it is hereby declared that E
any liability incurred by a textile company in relation to the textile
undertaking before the appointed day shall be enforceable against the
concerned textile company and not against the Central Government
or the Custodian.
_,. This provision is very clear and says in no uncertain terms that any F
~ liability incurred by a textile company in relation to the textile undertaking
shall not be enforceable against the Central Government or the custodian.
The effect of this provision was examined in Rashtriya Mill Mazdoor Sangh
v. National Textile Corporation (South Maharashtra) Ltd., [1996] 1 SCC 313
where the question of payment of gratuity of a workman who left the
......
G
employment just a few months before "the appointed day" came up for
consideration. It was held that the language of sub-section (7) of Section 3
"I is clear and unambiguous inasmuch as in the said provision it has been
declared that any liability incurred by the textile company in relation to the
textile undertaking before the appointed day shall be enforceable against the
textile company concerned and not against the Central Government or the H
752 SUPREME COURT REPORTS [2004] 3 S C.R.
II
A Custodian. It was also held that the words "any liability" in sub-section (7)
of Section 3 are of wide amplitude to cover ~very liability !hat was incurred ""
by the textile company in relation to the textile undertaking before the
appointed day. The Court thus rejected the contention that sub-section (7) of
Section 3 must be so construed as to exclude its applicability in respect of
liability for payment of gratuity_ under the Payment of Gratuity Act. The
B Court also examined the provisions of the Textile: Undertakings
(Nationalisation) Ordinance, 1995 (Ordinance No.6of1995) which was later
on replaced by the Textile Undertakings (Nationalisation) Act, I995) and
held as under :

"The provisions of Ordinance 6 of I 995 also show that the
c liabilities for the period prior to the take-over of the management are
to be discharged from the amount payable to the owner of the textile
undertaking for the acquisition of the undertaking and not by the·
NTC. It is, therefore, not possible to uphold the contention urged on
behalf of the appellant that NTC is liable in respect of the gratuity
D amount payable under the Payment of Gratuity Act to Respondent 2."

14. The legal position is, therefore, absolutely clear that any liability ~

incurred by a textile company in relation to the textile undertaking before the
appointed day cannot be enforced against the Central Government or the
,.
Custodian. According to the case set up by the writ petitioners, money was
E paid by them to the two textile mills before the appointed day but they had
failed to supply the cloth. Assuming the aforesaid position to be correct, after
receipt of money, the textile mills having incurred a liability, were under an
obligation to supply the cloth to the writ petitioners. On the facts pleaded, the
liability had been incurred by the textile company and consequently it could
not be enforced against the Central Government or the Custodian. We are
F .....
thus unable to accept the view taken by the Division Bench of the High Court
that it was not a liability of the textile company. •
I5. In paras 7 and 9 of the counter affidavit filed by the appellants
before the High Court, the correctness of Annexure A was specifically denied.
G In paras 15 and 16 it was categorically pleaded that on the appointed day no
goods manufactured and earmarked for the writ petitioners were lying in the
mills. In paras 21, 22, 24 and 27 receipt of payment allegedly made by the
petitioners was also denied. The appellants herein having specifically denied ..,
receipt of any payment or existence of any manufactured and earmarked
cloth for the writ petitioners on the appointed day, no relief could have been
H granted to the writ petitioners in proceedings under Article 226 of the

i-
NATIONAL TEXTILE CORPN. LTD. 1· HARIBOX S\\'ALRAM [GP MATHUR . .I] 753
"
)I Constitution. The writ petition raised highly disputed questions of fact which, A
as rightly observed by the learned Single Judge, could be proved by leading
evidence in a properly constituted suit and was not a matter to be i~vestigated
in a writ petition.

16. The appellants herein had also disputed the correctness of the letter
allegedly written by Mr.V. Sundaram, Chairman-cum-Managing Director of B
NTC to the Joint Secretary, Ministry of Textiles, Government of India on
24.10.1989. It is noteworthy that though the letter is of October 1989 but the
same was filed along with the supplementary affidayit on 27.1.1995 i.e. more
than 5 years after filing of the writ petition which had heen filed in December,
1989. Mr. Sundaram had left the employment in 1992. As the letter shows, C
it was an internal correspondence between the Chairman of National Textile
Corporation and Joint Secretary, Ministry of Textiles, Government of India.
The letter does not show that its copy was sent to anyone else much less to
the writ petitioners. In para 4 of the supplementary affidavit filed by Mahender
Kumar Goenka, it was stated that on his request Mr. Sundaram was kind
enough to hand over a copy of the said letter dated 24.10.1989 to the petitioner. D
It is extremely difficult to believe that though Mr. Sundaram left the
employment in 1992, but he was keeping a copy of the said letter with him
,,. and handed over the same to Shri Goenka in 1995. Shri Sundaram, who was
an !AS Officer holding a very responsible post of Chairman-cum-Managing
Director of National Textile Corporation, is not expected to keep private E
copies of official documents nor to hand over the same to a private party. We
are, therefore of the opinion that the view taken by the learned Single Judge
that the said document is of extremely suspicious character and could not be
taken into consideration is perfectly correct.

17. We are also in agreement with the view taken by the learned Single F
Judge that the writ petition which was filed in December 1989 was highly
belated as the claim of the writ petitioners had been categorically refuted by
the letter dated 7.11.1990 by the Director finance on behalf of National
Textile Corporation (South Maharashtra). The petition was therefore liable to
be rejected on this ground alone. That apart, the prayer made in the writ
petition is for issuance of a writ of mandamus directing the appellant herein G
to supply the goods (cloth). It is well settled that in order that a mandamus
'
__. .... be issued to compel the authorities to do something, it must be shown that
there is a statute which imposes a legal duty and the aggrieved party has a
legal right under the Statute to enforce its performance. The present is a case
of pure and simple business contract. The writ petitioners have no statutory H
754 SUPREME COURT REPORTS (2004] 3 S.C.R.

A right nor any statutory duty is cast upon the appellants whose performance
.
:(
may be legally enforced. No writ of mandamus can, therefore, be issued as
prayed by the writ petitioners.

18. For the reasons mentioned above, we are of the opinion that the
writ petition filed by the respondent herein was wholly devoid of merit and
B the same was rightly dismissed by the learned Single Judge of the High
Court. The appeal is accordingly allowed. The judgment and order of the
Division Bench of the Calcutta High Court dated 4.8.2000 is set aside and
that of the learned Single Judge restored. The appellant will be entitled to
their cost here as well as in the High Court.
c v.s.s. Appeal allowed.