An unsettling decision

by Aditya Shamlal | August 13, 2011

Recently in the case of Sterling Agro Industries Ltd. v. Union of India, decided on August 1, 2011, the Delhi High Court constituted a five-judge bench, comprising of Chief Justice Dipak Mishra, Justice Vikramjit Sen, Justice A.K. Sikri, Justice Sanjiv Khanna, and Justice Manmohan. The issue at hand was whether the High Court of Delhi is the appropriate forum to decide writs which originate from orders of tribunals/ or revisional authorities located in New Delhi. The reason a five-judge bench was required to decide this issue was because, last year, a full bench (three judges) of the Delhi High Court in New India Assurance Co. Ltd v. Union of India (AIR 2010 Delhi 43) (“New India Assurance Case”), had decided a case on similar issues, and it would have been binding on the regular full-benches or division benches of the Delhi High Court.

Without going into the facts of the present case, the five-judge bench came to the following conclusions regarding the territorial writ jurisdiction of the Delhi High Court and the ratio in the New India Assurance Case:

(a) The finding recorded by the Full Bench that the sole cause of action emerges at the place or location where the tribunal/appellate authority / revisional authority is situated and the Delhi High Court cannot decline to entertain the writ petition as that would amount to failure of the duty of the Court cannot be accepted inasmuch as such a finding is totally based on the situs of the tribunal/appellate authority / revisional authority, totally ignoring the concept of forum convenes.

This conclusion in my humble opinion is completely wrong and misconceived. In paragraph thirty of the New India Assurance Case, the court merely observed that in the present facts and circumstances the sole cause of action for the writ petition arose due to the order of the appellate authority; however, this was not the final ruling or ratio of the court in the New India Assurance Case. In fact, in paragraph 31 of the New India Assurance Case, the court goes on the say, “for the foregoing reasons, we hold that where an order is passed by an appellate authority or revisional authority a part of cause of action arises in that place. When the original authority is situated at one place and the appellate authority is situated at another, a writ petition would be maintainable at both the places.” (Emphasis added)

Therefore, the Court in the New India Assurance Case never really held that when a tribunal or appellate authority passes an order it is the sole cause of action for the purposes of a writ. They merely observed that as per the facts of that particular case, in the writ petition, the order of the tribunal was the sole cause of action, and it is trite law that to determine the issue of territorial jusrdiction, the Court must decide on the basis of the averments made in the petition itself, and the truth or otherwise of the averment would be immaterial.

(b) Even if a miniscule part of the cause of action arises within the jurisdiction of the Court, a writ petition would be maintainable before this Court (that is, the Delhi High Court). However the cause of action would have to be understood as per the ratio laid down in the case of Alchemist Ltd v. State Bank of Sikkim ((2007) 11 SCC 335).

Para 37 of the Alchemist case states that, “it is clear that for the purpose of deciding whether facts averred by the appellant-petitioner would or would not constitute a part of cause of action, one has to consider whether such fact constitutes a material, essential or integral part of the cause of action. It is no doubt true that even if a small fraction of the cause of action arises within the jurisdiction of the Court, the Court would have territorial jurisdiction to entertain the suit or petition. Nevertheless, it must be a “part of cause of action”, nothing less than that”.

Therefore, my question would be, would not the order of the appellate authority/revisional authority/tribunal fall under the category of material, essential or integral part of the cause of action, especially if the very order of the authority is the thing being challenged before the Court? Therefore, on further reading of the ratio laid down in the instant five-judge bench decision, the contradictory nature of clause (b) of the Hon’ble judges’ conclusions will become apparent.

Chief Justice Dipak Misra of the Delhi High Court, who passed the judgment in this case.

Image above (and on article thumbnail) taken from the website of the Delhi High Court.

(c) An order of the appellate authority constitutes a part of cause of action to make the writ petition maintainable in the high court within whose jurisdiction the appellate authority is situated. Yet, the same may not be the singular factor to compel the high court to decide the matter on merits. The high court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens.

This in my opinion is against the ratio laid down by the Supreme Court in the case of Kusum Ingots & Alloys Ltd v. Union of India ((2004) 6 SCC 254). The Supreme Court in Kusum Ingots stated that, “even if a small part of cause of action arises within the territorial jurisdiction of the high court, the same, by itself may not be considered to be a determinative factor compelling the high court to decide the matter on merit. In appropriate cases the court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens” (Emphasis added)

Herein the contradiction becomes apparent. The High Court has gone over and above the ratio in Kusum Ingots, by saying that an order of the appellate authority may not be the singular factor to compel the High Court to decide the matter on merits. Can the order of a tribunal or appellate authority which itself is being challenged before the high court be classified as a small part of the cause of action? The Delhi High Court in the five judge bench decision have not said that; they have said that the order of the appellate authority is a part of the cause of action, which is more like stating the obvious. However they have not gone on to say that it is a small part of the cause of action, and if it cannot be classified as a small part of the cause of action, then by rejecting petitions on the grounds of territorial jurisdiction, even where the tribunal or appellate authority is situated in Delhi, the Delhi High Court will be operating against the law laid down by the Supreme Court of India.

(d) The conclusion that where the appellate authority or revisional authority is located constitutes the place of forum conveniens as stated in absolute terms by the Full Bench is not correct as it will vary from case to case and depend upon the lis in question.

It is once again submitted that the New India Assurance case nowhere states in absolute terms that the place where the appellate authority is located is the only factor in determining territorial jurisdiction. In fact, the New India Assurance case holds in paragraph 31, “As the order of appellate authority constitutes a part of cause of action, a writ petition would be maintainable in the high court within whose jurisdiction it is situate having regard to the fact the petitioner is domain litis to choose his forum, and that since the original order merges into the appellate order, the place where the appellate authority is located is also forum conveniens”.

(e) The finding that the court may refuse to exercise jurisdiction under Article 226 if only the jurisdiction is invoked in a mala fide manner is too restricted or constricted, as the exercise of power under Article 226 being discretionary cannot be limited or restricted to the ground of mala fide alone.

The power of the High Courts to exercise writ jurisdiction flows from Article 226 of the Constitution; it is trite law that the power given to the high courts under Article 226 is much wider in its ambit than the power to issue writs by the Supreme Court of India under Article 32. Further, it is also settled that when no restriction has been imposed by the legislators in exercise of power under Article 226, the Courts themselves cannot read in restrictions and circumscribe their own powers in any way. Therefore, the finding that reasons other than mala fide may be cited for refusal to exercise its jurisdiction under Article 226, is against the spirit of Article 226 as well as settled law laid down by the Supreme Court of India in a catena of decisions.

(f) While entertaining a writ petition, the doctrine of forum conveniens and the nature of cause of action are required to be scrutinised by the high court, depending upon the factual matrix of each case in view of what has been stated in Ambica Industries v. Commissioner of Central Excise (2007 (213) ELT 323 (SC)) and Union of India v. Adani Exports Ltd (AIR 2002 SC 126).

Firstly, the decision in Ambica Industries dealt with issues related to statutory appeals and not with territorial jurisdiction in relation to a writ petition under Article 226 of the Constitution of India, so applying the ratio of Ambica Industries would in itself be a gross error committed by the Court in this regard.

Secondly, on a less technical and more practical ground, if the High Court is required to scrutinise the ‘factual matrix’ on each and every writ petition, even when the writ is in challenge to an order of an appellate or revisional authority located within New Delhi, it would lead to an inordinate amount of delay, even more so than the current situation, and each case would take that much more time to reach disposal, as there would necessarily have to be a mini pre-trial on the issue of jurisdiction, if the ratio of this decision is to be followed. This would lead to further backlog and completely cripple the efficacy of the high court as a writ court that can dispense justice in a timely manner.

(g) The conclusion of the earlier decision of the Full Bench in New India Assurance Company Limited, “that since the original order merges into the appellate order, the place where the appellate authority is located is also forum conveniens” is not correct.

The Supreme Court in paragraph twenty-seven of Kusum Ingots categorically held that, “In other words, as order of the appellate authority constitutes a part of cause of action, a writ petition would be maintainable in the high court within whose jurisdiction it is situate having regard to the fact that the order of the appellate authority is also required to be set aside and as the order of the original authority merges with that of the appellate authority.”

Therefore, the New India Assurance Case merely re-iterates the stand taken in Kusum Ingots, that the order of the original authority merges with that of the appellate authority and then goes on to say that logically the place where the appellate authority is situated would also be forum conveniens. There is nothing logically fallacious about the stand taken in the New India Assurance Case; applying the ratio of Kusum Ingots, it makes logical sense that if the place where the original order was passed could be classified as forum conveniens, why can’t the place where the appellate authority is situated ‘also’ be classified as forum conveniens?

The views expressed and the stand taken by the Delhi High Court in the instant case defies all logic, and is also in my opinion partly against the ratio of the Supreme Court in Kusum Ingots. The only thing the High Court has achieved in this case is to make the issue of territorial jurisdiction extremely discretionary and vague with the current judgment, and one can only hope that the record is set straight by the Supreme Court when the matter reaches it in Appeal.

The judgment is available here.

Aditya Shamlal is a New Delhi-based advocate.