A transport company has its head office at Chandigarh and branch offices at Chennai, Jaipur and Mumbai. A dispute cropped up between Sam and the Company in respect of a transaction made through Chennai office… How the court will decide?

Question: A transport company has its head office at Chandigarh and branch offices at Chennai, Jaipur and Mumbai. A dispute cropped up between Sam and the Company in respect of a transaction made through Chennai office.

Sam files a suit in respect of this dispute against the company in a court at Jaipur. How the court will decide?

Find the answer to the mains question only on Legal Bites. [A transport company has its head office at Chandigarh and branch offices at Chennai, Jaipur and Mumbai. A dispute cropped up between Sam and the Company in respect of a transaction made through Chennai office… How the court will decide?]

Answer

The dispute in the case is related to a transaction between Sam and the company. Accordingly, section 20 of the Code of Civil Procedure, 1908 comes into play. The relevant provision of section 20 regarding the case is:

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;

[Explanation] – 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.

So if a suit is filed against a corporation on the ground of its carrying on business then it will lie at its head office. If a suit is filed on the basis of where the cause of action arose, it will lie at its branch office.

Accordingly, on the basis of the case at hand, the suit against the company can be filed at Chandigarh where it has its head office or at Chennai where the company has its branch office and where the cause of action arose. Hence, no suit can be entertained by a court in Jaipur.

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