S. 20 CPC| Company Presumed To Operate From Where Principal Office Is Located In Absence Of 'Exclusion Clause': Delhi High Court

The Delhi High Court has reiterated that for the purposes of determining territorial jurisdiction of Courts, a company is presumed to carry its business from where its principal office is located.

In the present case, where the Defendant-company claimed to operate from Jaipur, Justice Yogesh Khanna further made it clear:

"the company has its principle office at Delhi; this Court shall have the jurisdiction. Merely by mentioning on the invoices viz. the disputes shall be subject to the jurisdiction at Jaipur would not snatch away the jurisdiction of this Court as there was no exclusion clause in the invoices."

The defendant-company has its registered office in Delhi. However, it had disputed the jurisdiction of Delhi courts, stating that the contract was entered into at Jaipur; invoices were raised at Jaipur; the goods were supplied at Jaipur, and further the invoices contain the clause subject to Jaipur jurisdiction. Merely because the registered office is at Delhi and it alone would not give rise to a cause of action at Delhi. 

At the outset, the Court perused Section 20 of CPC which pertains to Territorial Jurisdiction. The explanation to this provision stipulates: 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, at such place.

In this light, the Court observed,

"Admittedly defendant nos.2 to 4 have their registered office at Delhi. The explanation to Section 20 CPC makes it clear where principal office is located, the company is presumed to carry its business from there."

The Court proceeded to note that the three impugned cheques were from a Bank based out of Shalimar Bagh (Delhi) and that the arbitration proceeding between defendant no. 1 and 4 were also filed in Delhi.

"Thus the part of cause of action arose at Delhi coupled with the fact the company has its principle office at Delhi; this Court shall have the jurisdiction," it held.

Case Title: Bela Goyal Proprietor of Ispat Sangrah (India) v. VIIPL – MIPL JV (Jaipur) & Ors.,

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