A) ABSTRACT / HEADNOTE

This case concerns the interpretation of territorial jurisdiction under Section 20(c) of the Code of Civil Procedure, 1908 (CPC). The Supreme Court analyzed whether the Delhi High Court held jurisdiction in a case involving interconnected transactions—one concerning the sale of galvanized steel and the other relating to its shipment. The Court ruled that as a part of the cause of action arose in Delhi, the High Court rightly assumed jurisdiction. The Court emphasized that claims under Order 1 Rules 3 and 7 of the CPC could be combined when interconnected issues arise, necessitating the impleadment of all parties in one suit.

Keywords: Territorial Jurisdiction, Dominus Litis, Bill of Lading, Civil Procedure Code, Letters of Credit.

B) CASE DETAILS

i) Judgment Cause Title:
Arcadia Shipping Ltd. v. Tata Steel Limited and Others

ii) Case Number:
Civil Appeal No. 5599 of 2024

iii) Judgment Date:
16 April 2024

iv) Court:
Supreme Court of India

v) Quorum:
Hon’ble Justices Sanjiv Khanna and Dipankar Datta

vi) Author:
Justice Sanjiv Khanna

vii) Citation:
[2024] 5 S.C.R. 404 : 2024 INSC 333

viii) Legal Provisions Involved:

• Section 20(c), CPC: Jurisdiction based on cause of action.
• Order 1 Rules 3 and 7, CPC: Joinder of defendants in a single suit.
• Bill of Lading: Legal document governing carriage of goods.

ix) Judgments Overruled by the Case (if any):
The Single Judge’s order dismissing the territorial jurisdiction of the Delhi High Court was overruled.

x) Related Law Subjects:
Civil Procedure, Contract Law, Jurisdictional Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The dispute arose when Bhushan Steel & Strips Ltd., now Tata Steel Limited, sold galvanized steel sheets to TYO Trading Enterprises (Ethiopia) under a Letter of Credit. Arcadia Shipping Ltd. transported the goods. However, the buyer failed to pay, causing a dispute about the jurisdiction where the suit could be filed. The Single Judge of the Delhi High Court rejected territorial jurisdiction, reasoning that Arcadia operated from Mumbai. The Division Bench reversed this finding, prompting the appeal to the Supreme Court.

D) FACTS OF THE CASE

• Bhushan Steel agreed to supply galvanized steel sheets to TYO Trading through its agent M.G. Trading in Ethiopia.
• Orders for the steel were placed in Delhi, and payments were to be processed in Delhi under a Letter of Credit issued by the Commercial Bank of Ethiopia.
• Arcadia shipped 400 MT of steel from Mumbai to Djibouti under two Bills of Lading.
• Payment disputes arose after the Bank of Ethiopia refused to honor the Letter of Credit, citing discrepancies.
• Goods were allegedly delivered by Arcadia to the consignee without proper authorization, leaving Bhushan Steel uncompensated.
• The plaintiff claimed joint and several liability for the loss and sought legal recourse in Delhi, asserting jurisdiction under Section 20(c), CPC.

E) LEGAL ISSUES RAISED

1. Does the Delhi High Court have territorial jurisdiction under Section 20(c), CPC?
2. Were the interconnected transactions sufficient to establish a common cause of action for jurisdiction?
3. Was Arcadia liable for unauthorized release of goods?

F) PETITIONER’S ARGUMENTS

1. Restricted Role of Arcadia: Arcadia argued its role was confined to shipping and unrelated to the sale transaction in Delhi. Hence, no jurisdiction existed in Delhi.
2. Business in Mumbai: As Arcadia operated solely from Mumbai, all actions relating to shipping took place there.
3. Compartmentalization of Transactions: The sale and shipment transactions should not be conflated to justify territorial jurisdiction.

G) RESPONDENT’S ARGUMENTS

1. Integrated Transactions: Tata Steel asserted the interconnected nature of the transactions made it inseparable.
2. Place of Cause of Action: Since the supply orders and payments originated in Delhi, part of the cause of action arose there.
3. Liability of Arcadia: Arcadia released goods to the consignee without proper endorsement, violating the terms of the Bills of Lading.

H) JUDGMENT

a. RATIO DECIDENDI

The Supreme Court held that territorial jurisdiction under Section 20(c), CPC is determined by the situs of the cause of action. The interconnected nature of the sale and shipment transactions, coupled with Delhi being the origin of supply orders and payment, conferred jurisdiction on the Delhi High Court. The Court emphasized:

• A Bill of Lading functions as a receipt, evidence of contract, and title to goods.
• Arcadia was liable for unauthorized release without obtaining proper endorsements.
• Combining claims under Order 1 Rules 3 and 7, CPC was valid as common questions of law and fact arose.

b. OBITER DICTA

The Court noted that questions of jurisdiction should ideally be resolved at the outset, ensuring procedural efficiency.

c. GUIDELINES (IF ANY)

1. A part of the cause of action arising in a location suffices for jurisdiction under Section 20(c), CPC.
2. Courts should carefully analyze the intrinsic link between transactions to assess jurisdiction.

I) CONCLUSION & COMMENTS

The judgment underscores the plaintiff’s dominus litis right and expands the scope of jurisdiction for interconnected transactions. The ruling strengthens procedural mechanisms for dealing with multi-party disputes.

J) REFERENCES

a. Important Cases Referred

1. A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, AIR 1989 SC 1239.
2. Laxman Prasad v. Prodigy Electronics Ltd., (2008) 1 SCC 618.

b. Important Statutes Referred

1. Code of Civil Procedure, 1908: Sections 20(c), Order 1 Rules 3 and 7.
2. Bills of Lading Act, 1856.