Alchemist Limited And Another vs State Bank Of Sikkim And Others

A simple issue before this Court in the present appeal is as to whether a part of the cause of action had arisen within the territorial jurisdiction of the High Court of Punjab & Haryana so as to entertain a writ petition under Article 226 of the Constitution filed by the appellant-Company against the respondents. Brief facts of the case are that the Appellant is a company having its Registered and Corporate Office at Chandigarh. Respondent No. 1 is the State Bank of Sikkim, and Respondent No. 2 is the State of Sikkim. The second respondent-State of Sikkim was desirous of disinvesting 49% of its equity capital in the first respondent-State Bank of Sikkim to a strategic partner with transfer of management in the first respondent Bank. For that purpose, the second respondent issued an advertisement in "Economic Times" on January 21, 2004 and invited offers for strategic partnership. Interested parties, firms and companies having management expertise were asked to apply with detailed bio-data profiles to the State Bank of Sikkim at its Head Office at Gangtok on or before February 7, 2004. It was stipulated in the advertisement that the offers made by the parties would be subject to scrutiny by the Board of Directors of the first respondent-Bank. It was also clarified that the right to accept or reject the offer without assigning any reason was reserved by the Board of Directors. The Appellant Company submitted its formal proposal for the strategic business partnership vide its offer dated February 3, 2004. Several proposals were received from various entities, and the Board of Directors in its 143rd meeting short-listed two entities, viz. the Appellant Company and another company based in Calcutta. Negotiations took place between the Appellant Company and the first respondent-Bank. The Chairman and Managing Director of the first respondent-Bank visited Chandigarh for further negotiations. The first respondent-Bank asked the Appellant to deposit a sum of Rs. 4.50 crores with the State Bank of India in a fixed deposit to show its bona fides and utilization by the first respondent-Bank for its revival. The Appellant deposited the said amount with the State Bank of India, Chandigarh on March 16, 2005, and the photocopies of the receipt were handed over to the executives of the first respondent-Bank at Chandigarh. Through a letter dated February 20, 2004, the first respondent-Bank informed the Appellant Company that its proposal was accepted in principle subject to consideration and approval of the Government of Sikkim. On February 23, 2006, the Appellant Company received a communication at Chandigarh by which the first respondent-Bank informed the Appellant-Company that the Government of Sikkim had not approved the proposal submitted by the Appellant Company and sought to withdraw the communication dated February 20, 2004. The Appellant Company, therefore, filed a writ petition before the High Court of Punjab & Haryana under Article 226 of the Constitution challenging the letter-cum-order dated February 23, 2006.

The High Court dismissed the writ petition only on the ground that it did not have territorial jurisdiction to entertain the writ petition as no cause of action had arisen within the territorial jurisdiction of the Court. The High Court did not enter into merits of the matter and granted liberty to the Appellant-Company to seek appropriate remedy before an appropriate Court. The said decision of the High Court is challenged by the Appellant-Company in this appeal. We have heard the learned counsel for the parties.

In our opinion, the High Court was wholly justified in upholding the preliminary objection raised by the respondents and in dismissing the petition on the ground of want of territorial jurisdiction.

In the present case, the facts which have been pleaded by the Appellant Company, in our judgment, cannot be said to be essential, integral or material facts so as to constitute a part of 'cause of action' within the meaning of Article 226(2) of the Constitution. The High Court, in our opinion, therefore, was not wrong in dismissing the petition.

For the foregoing reasons, we see no infirmity in the order passed by the High Court dismissing the petition on the ground of want of territorial jurisdiction. The appeal, therefore, deserves to be dismissed and is accordingly dismissed. In the facts and circumstances of the case, however, we leave the parties to bear their own costs.