Case: Union Of India And Another Vs. Ladu Lal Jain

1. This appeal, by special leave, is directed against the order of the High Court of Assam rejecting the revision application, under S. 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.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 represent by the General Manager, having its headquarters at Pandu. It related to a claim for recovery of a sum of Rs. 8,250/- on account of non-delivery of the goods which had been consigned to the plaintiffs firm run under the name and style of M/s 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 not delivered to the plaintiff and hence the suit after serving a notice under S.77 of the Indian Railways Act on the defendant railway and also serving a notice under S. 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 S. 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 its principal place of business by virtue of its headquarters being at Pandu. The two defendants filed a joint written statement.4. 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 headquarters 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 of Pandu was a branch office of the Union of India which was controlled by defendant No. 1 from New Delhi.

Court's reasoning:
2. The contention of the appellants is that this view of the Subordinate Judge, confirmed by the High Court, is wrong.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, though it may be that occasionally they are run at a loss.15. The case reported as Director of Rationing and Distribution v. The Corporation of Calcutta, (1961) I SCR 158: (AIR 1960 SC 1955) 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 food stuffs with a view to maintaining peace and good government.