SUBODH KUMAR GUPTAversusSHRIKANT GUPTA AND ORS.

A                        SUBODH KUMAR GUPTA
                                   v.
                        SHRIKANT GUPTA AND ORS.

                                AUGUST 19, 1993

B
               [A.M. AHMADI AND N. YENKATACHALA, J.1.J


           Civil Procedure Code, 1908-S.W(c)-Suit for dissolution of paitner-
    ship-Where entire rlispwe related to what happened al Mandsaw; agreement
C   for dissolution of pmt1te1~hip executed at Bhilai and only a bald allegation
    that there was a branch officer at Chandigarh where the plaintiff resided--
    Held, Chandigmh Cowt would not have te11it01ial jurisdiction

          The. plititioner, his father, brother and one other person \Vere
    partners with a 20% share each in the profits and losses of the firm. The
D   partnership was one at will. The registered head office was at Bombay. Its
    factory was at Mandsaur, where the petitioner lived with his father and
    brothers. The petitioner shifted to Chandigarh in 1974 and, according to
    him, the branch office was at Chandigarh as evident from the stationery
    of the firm. His father moved to Rajnandgaon in 1980. Disputes arose
    about the management and accounts of the firm. Consequently in 1992 an
E   agreement for dissolution of the partnership firm and for distribution of
    assets was drawn up at Bhilai with a stipulation that the accounts to be
    settled within one month.

          The petitioner contended that the agreement was void and un-force-
F   able because material facts had been suppressed, certain assets of the firm
    had not been included in the agreement and the period of one month had
    elapsed.

        The respondent·defendant 1 raised a preliminary contention that the
    Chandigarh Court had no jurisdiction.
G
           The Trial Judge held that a part of the cause of action had arisen
    withi.n the territorial limits of the Chandigarh Court. On appeal, a learned
    single Judge concluded that a mere allegation that the firm had a branch
    office at Chandigarh could not invest the Chandigarh Court with jurisdic-
H   tion.
                                        660
           S.K. GUPTA v. SHRIKANTGUPTA[AHMADl,J.]                          661

      Dismissing the appeal, this Court                                           A
       HELD: 1. As is evident from the averments in the plaint no part of
the cause of action arose within the territorial jurisdiction of the Chan-
digarh Court. The entire dispute is in relation to what happened at
Mandsaur. An agreement to settle the dispute and dissolve the partnership
was executed in 1992 at Bhilai, outside the territorial jurisdiction of the       B
Chandigarh Court. Unless this agreement is set aside there is no question
of the Chandigarh Court entertaining a suit for dissolution of the partner-
ship and rendition of accounts. (665-A-B]

      It is not enough to state that the agreement is a void document. A
competent Court has to declare it void before the petitioner - plaintiff can
                                                                                  c
ignore it. (665-E]

     None of the defendants was ever residing in Chandigarh or did any
business whatsoever in Chandigarh. (666-D]
                                                                                  D
       2. Mere bald allegation that he was having a branch office of the firm
at Chandigarh will not confer jurisdiction unless it is shown that a part
of the cause of action arose within the territorial jurisdiction of that Court.
                                                                       (666-C]
       CIVIL APPELLATE JURISDICTION : Special Leave Petition                      E
(Civil) No. 10301 of 1993.

     From the Judgment and Order dated 8.7.93 of the Punjab & Haryana
High Court in C.R. No.1483/93.

       K.K. Venugopal, S.K. Gambhir and Vivek Gambhir for the
                                                                                  F
petitioner.

    Shanti Bhushan, Ashok H. Desai, M.L. Bachawat, S.K. Jain, A.P.
Dhamija, S. Atreya and A.K. Srivastava for the respondents.

      The Judgment of the Court was delivered by
                                                                                  G
      AHMADI, J. The petitioner is the original plaintiff. He filed a suit in
the Court of the learned Senior Judge, Chandigarh, for dissolution of the
firm carrying on business in the name and style of Mis. Rajaram & Brothers
of which he claimed to be a partner alongwith his father, brothers and one
K.K. Jindal. Each partner had 20% share in the profits and losses of the H
    662                   SUPREME COURT REPORTS (1993] SUPP. 1 S.C.R.

A firm apd the partnership was one at will. The head office of the firm was
    situate at Bombay where it was registered with the Registrar of Firms. Its
    factory was situate at Mandsaur where the father Rajaram Gupta lived with
    his sons and attended to the partnership business. The plaintiff also was
    residing at Mandsaur till 1974 when he shifted to Chandigarh. After he
B   shifted to Chandigarh he visited Mandsaur of and on in connection with
    the business of the firm. His case is that after he shifted to Chandigarh he
    used to call for and receive statements of accounts of the business carried
    on at Mandsaur and he also received and booked orders for the firm at
    Chandigarh which he forwarded to Mandsaur for execution. According to
    him, the branch office of the firm was at Chandigarh as is evident from the
C   stationery of the firm. According to him, his father shifted from Mandsaur
    to Rajnandgaon sometime in the year 1980 and thereafter his brothers
    Shrikant Gupta and Suryakant Gupta were virtually incharge of the busi-
    ness at Mandsaur. Cert~in disputes arose as regards the management of
    the partnership business and consequently the correctness of th~ accounts
D   maintained by Shrikant Gupta and Suryakant Gupta at Mandsaur became
    suspect. The plaintiff further contended that he had sent his representative
    to Mandsaur to check the accounts but his two brothers did not permit him
    to do so. He also personally went to Mandsaur and it appears from the
    averment in the plaint that his brothers were not cooperative and in fact
    some criminal complaints came to be lodged in regard to certain incidents
E   which happened at Mandsaur while he was there. In the end the father
    Rajaram Gupta went to Mandsaur and later a meeting took place ·at Bhilai
    on 26th November, 1992. At the said meeting an agreement was drawn up
    for the dissplution of the partnership firm and for distribution of its assets
    amongst the partners. It was mentioned in the agreement that it \vill enure
F   for one mont!Ymeaning thereby that the accounts of the partnership would
                                                                                     ,,
    be settled within that time. The plaintiff now contends that the said
    agreement is void since material facts were suppressed by his two brothers
    and in any case the accounts were not settled within the period of one
    month. He also contends that certain assets owned by the firm were not
    included in the agreement and that also rendered the agreement void and
G   unenforceable in law. He, therefore, contended that the agreement had to
    be ignored and the firm was required to be dissolved and accounts to be
    settled by the appointment of a Commissioner. He also claimed certain
    other incidental reliefs.

H         The first defendant Shrikant Gupta entered an appearance and
             S.K. GUPTA v. SHRIKANT GUPTA [AHMADI, J.]                        663

  raised a preliminary contention that on the averments in the plaint the            A
  Court at Chandigarh had no jurisdiction to entertain and decide the suit.
  He contended that from the avermeitts in the plaint it is manifest that the
. head office of the firm was situated at Bombay, that none of the defendants
  was residing or carrying on business within the territorial jurisdiction of the
  Chandigarh Court and that no part no of the cause of action had arisen             B
  therein. The learned Trial Judge dismissed the application holding that a
  part of the cause of action had arisen within the territorial limits of the
  Chandigarh Court. However, on revision, a learned Single Judge of the
  High Court after carefully analysing the averments in the plaint came td
  the conclusion that on the mere allegation that the firm had a branch office
  at Chandigarh the Court at Chandigarh could not be invested with juris-            C
  diction since no part of the cause of action had arisen within its jurisdiction.
  The.learned Judge in the High Court observes:

          "With regard to the allegation made by the plaintiff that the first
          has its branch office at Chandigarh, suffice it to say that apart from D
          the bald allegation made in the plaint, there is nothing on record
          to prove that the firm has any regular branch office at Chandigarh.
          Moreover, the fact that the firm has a branch office at Chandigarh
          is also not sufficient enough to confe~· jurisdiction on a Cour.t at .
          Chandigarh unless it is established that cause of action, on the '
          basis of which relief is being claimed, has arisen within the ter- E
          ritorial jurisdiction of that Court. In the present case, apart form
          other, the factory of the firm as well as the assets of the firm are
          also situated outside the territorial jurisdiction of Court at Chan-
          digarh. The relief sought in the suit is the dissolution of the firm
          and rendition of accounts of a firm which has its factory at F
          Mandsaur and Head Office at Bombay. In this view of the matter,
          I am of the considered view that the court at Chandigarh has no
          jurisdiction to entertain the suit.11

 On this line of reasoning, the learned Judge in the High Court set aside
 the or de{'- onh'e. Trial Court and directed that the plaint be returned to the     G
 plaintiff for presentation in a competent court. It is this order. of the
 learned Single Judge which is assailed before us.

       Sections 15 to 20 of the Code of Civil Procedure indicate the place
. where a suit can be instituted. Section 15 states that every suit shall be         H
    664                   SUPREME COURT REPORTS [1993] SUPP. 1 S.C.R.

A   instituted in the court of the lowest grade competent to try it. Section 16
    then proceeds to state that the suit shall be instituted where the subject-
    matter is situate. Then comes section 20 which is relevant for our purposes.
    It reads as under:

            "20. Other suits to be instituted where defendants reside or cause
B           of action arises - Subject to the limitations aforesaid, e~ery suit
            shall be instituted in a Court within the local limits of whose
            jurisdiction -

                 (a) the defendant, or each of the defendants where there are
c                more than one, at the time of the commencement of the suit,
                 actually and voluntarily resides, or carries on business, or
                 personally works for gain; or

                 (b) any of the defendants, where there are more than one, at
                 the time of the· commencement of the suit, actually and
D                voluntarily resides, or carries on business, or personally
                 works for gain, provided that in such case either the leave of
                 the Court is given, or the defendants who do not reside, or
                 carry on business, or personally work for gain, as aforesaid,
                 acquiesce in such institution; or
E
                  (i:) the cause of action, wholly or in part, arises.

            Explanation: A corporation shall be deemed to carry on business
            at its sole or principal office in India or, in respect of any cause
            of action arising at any place where it has also a subordinate office,
F           at such place."

  It will thus be seen that clauses (a) and (b) are not attracted in the facts
  of this case. None of defendants at the time of the commencement of the
  suit actually and voluntarily resided or carried on business or personally
  worked for gain within the territorial jurisdiction of the Chandigarh Court.
G Clause (b) can apply only if atleast one of the defendants actually and
  voluntarily resided or carried on business or personally worked for gain
  while the other did not. But that is not the case here. The case must,
  therefore, be governed by clause (c) which requires that the whole or part
  of the cause of action must be shown to have arisen within the territorial
H limit~ of the Chandigarh Court. Now as is evident from the averments in
            S.K. GUPTA v. SHRIKANTGUPTA[AHMAD!,J.]                         665

the plaint no part of the cause of action ar.ose within the territorial A
jurisdiction of the Chandigarh Court. On the averments in the plaint taken
at their face value the case set up by the plaintiff is that after his father left
Mandsaur his two brothers joined hands, manipulated .the accounts and
siphoned away the funds belonging to the partnership firm. The entire
dispute L, in relation to what happened at Mandsaur. Secondly, it must also
be remembered that even according to the plaintiff after his father returned
                                                                                   B
to Mandsaur there was some talk of settlement of the dispute and conse-
quently an agreement was executed on 26th November, 1992 at Bhilai by
which the partnership was dissolved and it was agreed that the liabilities
would be settled within one month. Now this agreement was executed
outside the territorial jurisdiction of the Chandigarh Court. Unless this        c
agreement is set aside there is no question of the Chandigarh Court
entertaining a suit for dissolution of the partnership and rendition of
accounts. The plaintiff cannot wish away the agreement by merely stating
that it is a void document. He cannot rest content by alleging that the
document has no efficacy in law and must, therefore, be ignored. If it is D
the case of the plaintiff that this document was obtained by fraud or
misrepresentation by suppression of material facts or for any other like
reason he must have the agreement set aside through Court and unless he
does that he cannot go behind the agreement, ignore it as a void document
and proceed to sue for dissolution of the partnership and rendition of
accounts. It is not a matter of the volition of the plaintiff to disregard the E
document as void and proceed to ignore it altogether without having it
declared void by a competent Court. It, therefore, appears clear to us that
no part of the cause of action arose within the territorial jurisdiction of the
Chandigarh Court.
                                                                                  F
      The next question is whether .the averment in paragraph 7 of the
plaint without anything more can confer jurisdiction on the Chandigarh
Court? Paragraph 7 reads as under :                                ·

         "7. That the plaintiff himself was doing•business of the firm from
         Chandigarh and in that connection had been engaged in all opera- G
         tions necessary for conduct of business. In fact, the Head Office
        .of the firm was at Bombay where the firm was registered. The
         factory/plant was located at Mandsaur. Chandigarh was one of the
         Branch Office of the firm M/s. Rajaram and Brothers. Not only
         this, the stationery printed by the firm also showed that Chandigarh H
      666                    SUPREME COURT REPORTS [1993) SUPP. 1 S.C.R.

 A             is the J;lranch Office of the firm. The stationery has been incon-
               tinuously use since the year 1974."

     The averment does not say any that of the defendants were involved in
      carrying on business at Chandigarh. The plaintiff is quite vague as to the
      type of business activity he was carrying on. He also does not say whether
  B it was with the consent of the other partners or on his owo. There is no
      averment that intimation of the opening of the branch at Chandigarh was
     given to the Registrar of Firms as required by section 61 of the Partnership
      Act. Print'.:ig of stationery is neither here nor there. It is not the plaintiffs
    · say that accounts were maintained in respect of business at Chandigarh.
. C Mere bald allegation that he was having a branch office of the firm at
      Chandigarh will not confer jurisdiction unless it is showo that a part of the
      cause of action arose within the territorial jurisdiction of that Court. None
      of the defendants was ever residing in Chandigarh or did any business
      whatsoever in Chandigarh and , therefore, we think that the learned Single
      Judge was right in the view that he took.
 D
            In the result, we see no merit in this petition and dismiss the same
      with costs. Costs quantified at Rs.10,000 to be paid in one set.

      U.R.                                                        Petition dismissed.