Appeal No 717 of 1961
Appeal by special leave from the judgment and order dated April 10 1961 of the Assam High Court in Civil Revision No 10 of 1961
D R Prem P D Menon for R N Sachthey for the appellants
The respondent did not appear
626 1963
May 7
The judgment of the Court was delivered by RAGHUBAR DAYAL J
This appeal by special leave is directed against the order of the High Court of Assam rejecting the revision application under section 115 of the Code of Civil Procedure hereinafter called the Code of the appellants against the order of the Additional Subordinate Judge Gauhati in a money suit to the effect that he had jurisdiction to try the suit
The contention of the appellants is that this view of the Subordinate judge confirmed by the High Court is wrong
To appreciate the contention for the appellants the facts of the case may be stated
The suit was instituted by the plaintiff respondent against the Union of India and the Northern Frontier Railway represented by the General Manager having its headquarters at Pandu
It related to a claim for recovery of a sum of Rs 8250 on account of nondelivery of the goods which had been consigned to the plaintiff s firm run tinder the name and style of Ms Ladu Lal Jain
The consignment consisted of 134 bags of rice and was booked from Kalyanganj station of defendant No 2 for carriage to Kanki station of the same defendant on April 13 1958
The goods consigned were no delivered to the plaintiff and hence the suit after serving a notice under section 77 of the Indian Railways Act on the defendant railway and also serving a notice tinder section 80 of the Code
It was alleged in the plaint that the cause of action arose at Pandu within the jurisdiction of the Court at Gauhati the place where notice under section 80 of the Code was duly served upon the defendant railway and that the suit was filed in the Court within the jurisdiction of which the defendant railway had 627 its principal place of business by virtue of its held quarters being at Pandu
The two defendants filed a joint written statement
Kalyanganj is in West Bengal and Kanki is in the State of Bihar
Gauhati is in the State of Assam
It was contended inter alia that Gauhati Court had no territorial jurisdiction to try the suit as neither of the aforesaid railway stations was within its jurisdiction and that the consignment never travelled within any part of the State of Assam and therefore the cause of action could not arise within the jurisdiction of any Court in Assam It was further contended that mere service of notice which was not admitted on the defendants at a place within the jurisdiction of the Court could not vest territorial jurisdiction on it and that defendant No 1 the Union of India had no principal place of business at Pandu or any other place within the jurisdiction of the Court its head quarters office being at New Delhi
It was also stated that defendant No 2 is owned and managed by defendant No 1 that the office of defendant No 2 at Pandu was also owned and controlled by defendant No 1 and that the office at Pandu was a branch office of the Union of India which was controlled by defendant No I from New Delhi
Relying on the case reported as PC Biswas vs Union of India 1 the Trial Court decided the preliminary issue about jurisdiction against the defendants holding that the principal place from which the railway administrator in a particular area is carried on is the principal place of business for the purpose of section 20 of the ode
The single judge of the High Court rejected the revision also on the basis of the same decision of his Court
The territorial jurisdiction of a Court is in general determined by the provisions of section 20 of the Code which reads  Subject to the limitations aforesaid ever suit 628 shall be instituted in a Court within the local limits of whose jurisdiction a the defendant or each of the defendants where there are 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 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 c the cause of action wholly or in part arises
Explanation I  Where a person has a permanent dwelling at one place and also temporary residence at another place he shall be deemed to reside at both places in respect of any cause of action arising at the place where he hag such temporary residence
Explanation 11  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
 The principle behind the provisions of clauses a and b of section 20 is that the suit be instituted at a place 629 where the defendant be able to defend the suit without undue trouble
The expression voluntarily resides or personally works for gain  cannot be appropriately applied to the case of the Government
The Government can however carry on business
The mere fact that the expression carries on business  is used along with the other expressions does not mean that it would apply only to such persons to whom the other two expires ions regarding residence or of personally working for gain would apply
The sole contention raised for the appellants in this Court is that the running of railways by the Union of India cannot be said to amount to its carrying on business and that therefore the fact that the headquarters of the Northern Frontier Railway Administration is at Pandu within the jurisdiction of the Court at Gauhati does not give the Court jurisdiction under section 20 of the Code
The contention is based on the reasoning that any undertaking run by the Government even if it amounts to the carrying on of a business when run by a private individual would not be the carrying on of business by the Government if there was no element of profit making in it
There is no allegation in the written statement that the Government is not running railways for profit
No issue was framed about it
The Court below recorded no decision on the point
It cannot be presumed that the Government is not making a profit from its running the railways in the country or is not running it with a profit motive
The fact that the Government runs the railways for providing quick and cheap transport for people and goods and for strategic reasons will not convert what amounts to the carrying on of a business into an activity of the State as a sovereign body
630 Article 298 of the Constitution provides that the executive power of the Union and of each State shall extend to the carrying on of any trade or business and cl
6 of article 19 provides that nothing in sub cl
section g of cl
1 of that Article shall prevent the State from making any law relating to the carrying on by the State or by a corporation owned or controlled by the State of any trade business industry or service whether to the exclusion complete or partial of citizens or otherwise
These provisions clearly indicate that the State can carry on business and can even exclude citizens completely or partially from carrying on that business
Running of railways is a business
that is not denied
Private companies and individuals carried on the business of running railways prior to the State taking them over
The only question then is whether the running of railways ceases to be a business when they are run by Government
There appears to be no good reason to hold that it is so
It is the nature of the activity which defines its character
Running of railways is such an activity which comes within the expression business 
The fact as to who runs it and with what motive cannot affect it
This Court bad occasions to detemine the nature of certain activities of Government
The rationale of those cases is a good guide for determining the point before us
In State of Bombay vs The Hospital Mozdoor Sabha1  the question was whether the relevant provisions of the  applied to the group of hospitals run by the State of Bombay and whether they are industry  within the meaning of that Act
The decision of the question depended on the interpretation of the definition of industry  prescribed by section 2 j of the Act
This section provides that industry means any business trade undertaking etc of employers
In considering the question it became necessary to enquire whether that activity ie the running of the 1 631 hospitals would be an undertaking if it is carried on by a private citizen or a group of private citizens
It was field that if a hospital is run by private citizens for profit it would be an undertaking very much like the trade or business in their conventional sense
It was observed at p 878  Thus the character of the activity involved in running a hospital brings the institution of the hospital within section 2j
Does it make any difference that the hospital is run by the Government in the interpretation of the word undertaking  in section 2 j  In our opinion the answer to this question must be in the negative
It is the character of the activity which decides the question as to whether the activity in question attracts the provision of section 2j who conducts the activity and whether it is conducted for profit or not do not make a material difference  To similar effect were the observations in The Corporation of the City of Nagpur vs Its employees where it was said  If a service rendered by an individual or a private person would be an industry it would equally be an industry in the hands of a corporation
 It was earlier said at p 960 Monetary considerations for service is therefore not an essential characteristic of industry in a modern State Barring the regal functions of a municipality if such other activities of it if undertaken by an individual would be industry then they would equally be industry in the hands of a municipality 1 1960 a SCR 942 962 632 Lastly in Satya Narain vs District Engineer PWD 1 the question for determination was whether plying motor buses by the Government by way of commercial activity amounts to its running it on a public service
In determining this question this Court observed at p 1163 It is undoubtedly not easy to define what is Public service  and each activity has to be considered by itself for deciding whether it is carried on as a public service or not
Certain activities will undoubtedly be regarded as public services as for instance those undertaken in the exercise of the sovereign power of the State or of governmental functions
About these there can be no doubt
Similarly a pure business undertaking though run by the Government cannot be classified as public service
But where a particular activity concerns a public utility a question may arise whether it falls in the first or the second category
The mere fact that that activity may be useful to the public would not necessarily render it public service
An activity however beneficial to the people and however useful cannot in our opinion be reasonably regarded as public service if it is of a type which may be carried on by private individuals and is carried on by government with a distinct profit motive
It may be that plying stage carriage buses even though for hire is an activity undertaken by the Government for ensuring the people a cheap regular and reliable mode of transport and is in that sense beneficial to the public
It does not however cease to be a commercial activity if it is run with profit motive
Indeed even private operators in order to attract custom are also interested in providing the same facilities to the public as the Government undertaking provides
Since that is so it is difficult 1 A I R 633 to see what difference there is between the activity carried on by private individuals and that carried on by Government
By reason of the fact that a commercial undertaking is owned and run by the State it does not ipso facto become a public service 
 This case simply held that commercial activity carried on with profit motive cannot be held to be public service 
It does not hold that such activity carried on by Government will not be business  if conducted without profit motive
We are of opinion that profit element  is not a necessary ingredient of carrying on business though usually business is carried on for profit
It is to be presumed that the Railways are run on a profit basis though it may be that occasionally they are run at a loss
The case reported as Director of Rationing  Distribution vs The Corporation of Calcutta 1 relied on for the appellants is really of no help to them
It was in connection with the sovereign activities of the State that it was said that the State was not bound by any statute unless the statute provided to that effect in express terms or by necessary implication
The contention that the Government could not get the benefit of this law in connection with its business activities was neither repelled nor considered
It was held to have no foundation as there was nothing on the record that the Food Department of the Government of West Bengal by undertaking rationing and distribution of food on a rational basis had embarked upon any trade or business and in the absence of any such indication it appeared that the department was discharging the elementary duty of a sovereign to ensure proper and equitable distribution of available foodstuffs with a view to maintaining peace and good government
1 1961 I C
A 158 634 In view of what we have said above we hold that the Union of India carries on the business of running railways and can be sued in the Court of the Subordinate Judge of Gauhati within whose territorial jurisdiction the headquarters of one of the railways run by the Union is situated
We accor dingly dismiss the appeal with costs
Appeal dismissed


Summary:
The plaintiff respondent instituted a suit in the court of the Additional Subordinate Judge Gauhati against the Union of India and the Northern Frontier Railway represented by the General Manager having its headquarters at Pandu
Pandu is within the jurisdiction of the Subordinate judge
The claim was for the recovery of a sum of Rs 8250 on account of nondelivery of the goods which had been consigned to the plaintiffs firms The consignment was booked from Kalyanganj station of defendant No 2 fair carriage to Kanki a station of the same defendant
It was alleged in the plaint that the cause of action arose at Pandu within the jurisdiction of the Court where the defendant railway had its principal place of business by virtue of its headquarters being at Pandu
The suit was resisted by the defendants on the ground that the court bad no jurisdiction to entertain the suit
Relying on the decision of the Assam High Court in P C Biswas vs Union of India A I R  the court of first instance held that the principal place from which the railway administration in a particular area is carried on is the principal place of business for the purpose of jurisdiction under section 20 of the Code of Civil Procedure 1908 and decided the issue in favour of the plaintiff
The revision petition filed by the appellants was rejected by the High Court
The present appeal was filed with special leave granted by this Court
It was contended in the appeal by the appellants that the running of the railway by the Union of lndia could not be said to amount to carrying on of business and that therefore the fact that the headquarters of Northern Frontier Railway Administration was at Pandu within the jurisdiction of the 625 Court at Gauhati did not give the Court jurisdiction under section 20 of the Code of Civil Procedure
Held that articles 19 6 and 298 of the Constitution clearly indicate that the State can carry on business and can even exclude citizens completely or partially from carrying on that business
The running of railways which is a business when carried on by private companies or individuals does not cease to be a business when they are run by the Government
It is the nature of the activity which determines the character of an activity
The fact as to who runs it and with what motive cannot affect it Profit element  is not a necessary ingredient of carrying on of business though usually business is carried on for profit
The fact that the Government runs the railways for providing cheap transport for the people and goods and for strategic reasons will not convert what amounts to carrying on of business into an activity of the State as a sovereign body
The Union of India carries on the business of running railways and can be sued in the court of the Subordinate judge of Gauhati within whose territorial jurisdiction the headquarters of one of the railways run by the Union is situated
Case Law reviewed
State of Bombay vs Hospital Mazdoor Sabha 1960 2 SCR 866 The Corporation of the City of Nagpur vs Ito Employees  and Satya Narain vs District Engineer P W D A I R