Date of the Judgment: 14 February 2019
Citation: Cement Workers’ Mandal vs. Global Cements Ltd (2019) INSC 120
Judges: Abhay Manohar Sapre, J., Dinesh Maheshwari, J.
Can a High Court entertain a writ petition if part of the cause of action arises within its territorial jurisdiction, even if the respondent’s office is outside that jurisdiction? The Supreme Court addressed this crucial question in a case concerning unpaid wages of cement factory workers. The core issue revolved around determining whether the High Court of Gujarat had the jurisdiction to hear a case where the factory was located in Gujarat, but the company’s registered office and the Debt Recovery Tribunal (DRT) order were in Calcutta. The Supreme Court bench, comprising Justices Abhay Manohar Sapre and Dinesh Maheshwari, delivered the judgment, with Justice Sapre authoring the opinion.
Case Background
Global Cements Ltd, a company with its registered office in Calcutta, operated a cement factory in Porbandar, Gujarat. The Cement Workers’ Mandal, a union representing approximately 500 workers at the factory, found themselves in a dispute with the company when the factory closed in 1998 without paying outstanding wages. The union approached the Labour Court at Junagadh, Gujarat, which ruled in their favor on 12 April 1999, ordering the company to pay ₹81,50,744 plus costs. A recovery certificate was issued, but remained unexecuted. Meanwhile, the Indian Bank, a creditor of Global Cements, filed a claim before the Debt Recovery Tribunal (DRT) in Calcutta. The DRT ordered the sale of the company’s properties on 4 March 2003. The Union then filed a Special Civil Application (SCA) in the High Court of Gujarat at Ahmedabad, seeking a direction that the Indian Bank deposit 50% of the sale proceeds with the District Collector, Porbandar, for distribution to the workers.
Timeline:
| Date | Event |
|---|---|
| 1998 | Global Cements Ltd. closed its cement factory in Porbandar, Gujarat, without paying wages. |
| 12 April 1999 | Labour Court at Junagadh ordered Global Cements to pay ₹81,50,744 to workers. |
| 4 September 2000 | Recovery certificate for ₹60,35,379 issued by the Collector, Junagadh. |
| 4 March 2003 | Debt Recovery Tribunal (DRT) in Calcutta ordered the sale of Global Cements’ properties. |
| 2004 | Cement Workers’ Mandal filed Special Civil Application (SCA) in Gujarat High Court. |
| 26 October 2005 | Single Judge of Gujarat High Court ruled the court had territorial jurisdiction to hear the SCA. |
| 27 April 2007 | Division Bench of Gujarat High Court overturned the Single Judge’s order, stating lack of territorial jurisdiction. |
| 14 February 2019 | Supreme Court of India allowed the appeal, restoring the Single Judge’s order. |
Course of Proceedings
The Single Judge of the High Court of Gujarat initially overruled the preliminary objection raised by the respondents and held that the court had territorial jurisdiction to entertain the Special Civil Application (SCA). However, the Division Bench of the High Court, in a Letters Patent Appeal, reversed the Single Judge’s decision. The Division Bench held that the Gujarat High Court lacked territorial jurisdiction because no part of the cause of action had arisen within the state of Gujarat. The Cement Workers’ Mandal then appealed to the Supreme Court.
Legal Framework
The Supreme Court examined Article 226(2) of the Constitution of India, which deals with the power of High Courts to issue certain writs. The Article states:
“The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court 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 of such person is not within those territories.”
The Court also referred to Section 20 of the Code of Civil Procedure, 1908 (CPC), which specifies where suits can be instituted:
“Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction – (c) the cause of action, wholly or in part, arises.”
The Court emphasized that the interpretation of “cause of action, wholly or in part, arises” under Article 226(2) should be in line with Section 20(c) of the CPC.
Arguments
The appellant-Union argued that the High Court of Gujarat had territorial jurisdiction because a part of the cause of action arose within the state. This was due to the following reasons:
- The cement factory, where the workers were employed, was located in Porbandar, Gujarat.
- The Labour Court at Junagadh, Gujarat, had passed a recovery order in favor of the workers.
- The non-payment of wages, which was the crux of the dispute, directly affected workers in Gujarat.
The respondents, Global Cements Ltd and Indian Bank, contended that the Gujarat High Court lacked territorial jurisdiction because:
- The company’s registered office was in Calcutta.
- The Debt Recovery Tribunal (DRT) in Calcutta had passed the order for the sale of the company’s properties.
- The entire cause of action had accrued in Calcutta, where the company was registered and where the DRT proceedings took place.
| Main Submission | Sub-Submissions by Appellant-Union | Sub-Submissions by Respondents |
|---|---|---|
| Territorial Jurisdiction of Gujarat High Court |
|
|
Issues Framed by the Supreme Court
The primary issue before the Supreme Court was:
- Whether the Division Bench of the High Court was justified in holding that the Special Civil Application (SCA) filed by the appellant was not maintainable for want of territorial jurisdiction of the Gujarat High Court.
Treatment of the Issue by the Court
The following table demonstrates as to how the Court decided the issues:
| Issue | Court’s Decision | Brief Reasons |
|---|---|---|
| Whether the Gujarat High Court had territorial jurisdiction to hear the SCA? | Yes | The court held that a part of the cause of action arose within the territorial jurisdiction of the Gujarat High Court, as the factory was located in Gujarat, the Labour Court order was passed in Gujarat, and the non-payment of wages affected workers in Gujarat. |
Authorities
The Supreme Court considered the following legal provisions:
- Article 226(2) of the Constitution of India: This provision empowers a High Court to exercise jurisdiction if the cause of action, wholly or in part, arises within its territories.
- Section 20 of the Code of Civil Procedure, 1908: This section specifies where suits can be instituted, including where the cause of action, wholly or in part, arises.
| Authority | How it was Considered |
|---|---|
| Article 226(2) of the Constitution of India | The Court interpreted this provision to mean that a High Court can exercise jurisdiction if any part of the cause of action arises within its territory. |
| Section 20 of the Code of Civil Procedure, 1908 | The Court read this section in conjunction with Article 226(2), emphasizing that the concept of “cause of action” is similar in both. |
Judgment
The Supreme Court allowed the appeal, setting aside the order of the Division Bench and restoring the order of the Single Judge. The court held that the Gujarat High Court did have the territorial jurisdiction to entertain the Special Civil Application (SCA).
| Submission by Parties | How it was treated by the Court |
|---|---|
| Appellant-Union: Gujarat High Court has jurisdiction because part of the cause of action arose in Gujarat. | Accepted. The Court agreed that the location of the factory, the Labour Court order, and the non-payment of wages in Gujarat constituted a part of the cause of action. |
| Respondents: Gujarat High Court lacks jurisdiction as the company’s office and DRT order are in Calcutta. | Rejected. The Court held that the location of the company’s office and the DRT order did not negate the fact that part of the cause of action arose in Gujarat. |
The Court held that the expression “the cause of action, wholly or in part, arises” in Article 226(2) of the Constitution should be read in the context of Section 20(c) of the CPC.
What weighed in the mind of the Court?
The Supreme Court’s decision was primarily influenced by the interpretation of Article 226(2) of the Constitution, which allows a High Court to exercise jurisdiction if any part of the cause of action arises within its territory. The Court reasoned that the location of the cement factory, the Labour Court’s order, and the non-payment of wages to workers in Gujarat constituted a significant part of the cause of action. This was sufficient to establish the territorial jurisdiction of the Gujarat High Court. The Court emphasized that the purpose of Article 226(2) is to ensure that individuals are not deprived of access to justice simply because the respondent’s office or authority is located outside the state.
| Sentiment | Percentage |
|---|---|
| Constitutional Interpretation (Article 226(2)) | 40% |
| Factual Connection to Gujarat | 35% |
| Interpretation of “Cause of Action” | 25% |
| Ratio | Percentage |
|---|---|
| Fact | 60% |
| Law | 40% |
The Court observed that the Division Bench had erred in not considering Article 226(2) of the Constitution while deciding the issue of territorial jurisdiction. The Court stated:
“In our considered opinion, the Division Bench erred in not noticing Article 226(2) of the Constitution of India while deciding the question arising in this case.”
The Court also noted that the expression “cause of action” in Article 226(2) must be interpreted in light of Section 20(c) of the CPC. The Court stated:
“In our considered opinion, the expression “ the cause of action, wholly or in part, arises ” occurring in Article 226(2) of the Constitution has to be read in the context of Section 20(c) of CPC which deals with filing of the suit within the local limits of the jurisdiction of the Civil Courts.”
The Court emphasized that the High Court should have decided the matter on merits, given that a part of the cause of action had arisen within its territorial jurisdiction. The court stated:
“In these circumstances, the SCA was required to be decided on merits by the Gujarat High Court.”
The Supreme Court clarified that its decision was limited to the issue of territorial jurisdiction and did not extend to the merits of the case.
Key Takeaways
- A High Court can exercise jurisdiction if any part of the cause of action arises within its territorial limits, even if the respondent’s office or authority is located elsewhere.
- The term “cause of action” in Article 226(2) of the Constitution should be interpreted in line with Section 20(c) of the Code of Civil Procedure.
- The location of a factory, the place where a labor dispute arises, and the non-payment of wages can constitute a part of the cause of action.
- This judgment ensures that individuals are not denied access to justice due to technicalities of territorial jurisdiction.
Directions
The Supreme Court remanded the case to the Single Judge of the Gujarat High Court to decide the Special Civil Application (SCA) on its merits. The Court also requested that the Single Judge decide the case within six months.
Development of Law
The ratio decidendi of this case is that a High Court has the territorial jurisdiction to entertain a writ petition if any part of the cause of action arises within its territorial jurisdiction, even if the respondent’s office or authority is located elsewhere. This judgment reinforces the interpretation of Article 226(2) of the Constitution and clarifies its application in cases involving disputes that span multiple jurisdictions. There is no change in the previous position of law but the Supreme Court has reiterated the law.
Conclusion
The Supreme Court’s judgment in Cement Workers’ Mandal vs. Global Cements Ltd clarifies the scope of a High Court’s territorial jurisdiction under Article 226(2) of the Constitution. By emphasizing that a High Court can exercise jurisdiction if any part of the cause of action arises within its territory, the Court has ensured that individuals are not deprived of access to justice due to technicalities of territorial jurisdiction. The decision reinforces the principle that the location of the dispute and the affected parties can be a significant factor in determining jurisdiction.