In which court suit for damages for breach of contract may be instituted?

Question: In which court suit for damages for breach of contract may be instituted? [Bihar C.J. 1979]

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Answer

The jurisdiction of a court for filing a civil suit is covered under Section 16 to 20 of The Code of Civil Procedure, 1908. Further, the suit for damages for breach of contract is not covered under Section 16 to 19 of the Code. Section 20 determines the forum for the institution of a suit is not covered by Section 16 to 19. Thus, it will be covered by Section 20.

Section 20 states that –

Other suits to be instituted where defendants reside or cause of action arises.

Subject to the limitations aforesaid, every suit 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 works for gain, as aforesaid, acquiesce in such institution; or

(c) The cause of action, wholly or in part, arises.

Thus, according to Section 20, a suit may be filed in the court within the local limits of whose jurisdiction the cause of action arises (wholly or partly) or where the defendant resides. In the landmark case of N.E. Electricity Corporation Ltd v. M/S Lukhi Enterprises, AIR 1992 Gua 43, it was held that the cause of action consists of the making of the contract and of its breach and the suit may be instituted either at the place where the contract was made or at the place where the contract should have been performed and the breach occurred.

Therefore, according to Section 20 along with the decision given in the case, it can be said that in the case of a suit for damages for breach of contract, the suit may be instituted in the court within the local limits of whose jurisdiction the contract was made or where contract should have been performed and breach occurred or where the defendant resides.

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