(1) This matter has been referred by a Division Bench by its order dated 8th March, 1983 to a larger Bench. The questions referred are as follows :
1.Can all suits against the Union of India be instituted at Delhi irrespective of the nature of the cause of action, on the ground that the Union of India resides at Delhi, or carries on business at Delhi ?
2. Can such suits also be instituted at all other places in India because the Union of India resides there, or carries on business there ?
3.Is there a difference in the jurisdiction of the court, depending on whether the contract in question is for constructing or, providing material to be used in business by the Government, or buildings or material to be used for purely sovereign purposes by the State ?
4.In the matter of construction work for railways, such as quarters, stations, or railway lines, etc., is the contract to be treated as a sovereign contract and does this have any bearing on the jurisdiction of the Court, particularly this Court to deal with the matter
(2) In response to the invitation to tender issued from the Divisional Superintendent Office, Lucknow the plaintiff submitted his tender which was for white washing and annual repairs of the staff quarter^ in various places, all within the operational jurisdiction of Divisional Superintendent, Lucknow.
(3) Disputes having arisen the petitioner filed an application under Section 20 of the Arbitration Act to file the arbitration agreement and to refer the dispute to arbitration. The railways took the preliminary objection to the jurisdiction of this Court on the ground that Divisional Office in Lucknow, within which the work was to be performed was outside the territorial jurisdiction of Delhi Courts and the agreement was also arrived at outside the jurisdiction of this Court. The matter was initially heard by D. K. Kapur, J. who by his order of 6th February, 1979 referred the matter to the Division Bench, which again referred it to Full Bench. That is how the matter is before us.
(4) It is by now well settled that the Union of India does Hot voluntarily reside or personally works for gain (see Union of India and another v. Sri Ladulal Jain : 3SCR624
(1). Mr. Sharma does not dispute that no cause of action arose in Delhi and, thereforee, it is not on the basis of this that he claims jurisdiction of this Court. His contention is that the defendant Northern Railways has its headquarters in Delhi and, thereforee, it is open to him to bring the suit in Delhi Courts. For that he relies on Uoi v. Sri Ladulal Jain (Supra), wherein in para 16 it has been held that the Union of India carries on business of running Railways and can be sued in a Court within whose territorial jurisdiction the headquarters of that the Railways run by the Union of India is situate. It is well known that Union of India is carrying on business of running various Railways and that each Railways has its own separate headquarters. Lucknow falls within Northern Railways but the headquarters of Northern Railways is in Delhi. These facts are not in dispute. Ladu Lal's case was followed in the case of M/s. Gupta Sanitary Stores v. Union of India and another 1985 Del 122(2) to which two of us Chadha, J. and G. C. Jain, J. were par-Reported in I.L.R. (1985) Del 169 ties In that case the questions that were referred to the Full Bench were whether the Union of India carries on business within the meaning of Section 20 of the Arbitration Act and second whether the Delhi Courts have jurisdiction to entertain an application under Sections 14 and 17 against Union of India not on the ground of cause of action but solely on the ground that Union of India has its central seat of power at New Delhi. The summary of the conclusions of the Full Bench is given in para 54. The Full Bench held that where the State carries on business the suit can be instituted at the place of general superintendence and management. The expression business means commercial business and not duties and functions of sovereign character.. Reading the case of M/s. Gupta (Supra) Along with the case of Ladu Lal (Supra) it is now not open to dispute that the Union of India is carrying on business of running the railways. It is also beyond doubt that the Uoi could be sued at the principal place of general superintendence and management. As mentioned above Lucknow being within the Northern Railways and the headquarters of the Northern Railways being at Delhi suit could be filed against the Uoi at Delhi. Obviously, for the same reason an application under the Arbitration Act can also be filed in Delhi. (See Shri Ram Rattan Bhartia v. Food Corporation of India and another, : AIR1978Delhi183 and N. D. Sud v. Union of India 2nd 1973 (2) Delhi 503. (4) Mr. Sayal did make an effect to distinguish Ladu Lal (Supra) and Gupta's case (Full Bench) but without any success because there is in effect no distinction on principle which have been laid down by these two cases.
(5) Mr. Sayal then sought to suggest that white washing or repairs of quarters should be distinguished from running of the railways and, thereforee, though running of the railways could be treated to be carrying on business by the Union of India, white washing of the staff quarters is an activity of a category other than commercial and more akin to being sovereign. In our view the argument is unacceptable. The building or maintenance of the staff quarters are all necessary and incidental adjuncts to the business of running of the railways. The running of railways does not only mean the transporting of passengers and goods but would inevitably include within it all the works like building quarters, laying down rails and all acts connected with the running of the railways. In our view, thereforee, the staff quarters' repairs or white washing of them etc. are an integral part of the function of running of the business of railways.
(6) Mr. Sayal had sought to urge that as the regional office which had issued and accepted tender was the Divisional office at Lucknow the principal office and management must be taken to be Lucknow which would be outside the jurisdiction of this Court. We do not agree. We can find no justification to split up the concept of principal place of business by seeking to subdivide or item wise the place of running by relating to each tender. Principal place of business cannot be made to depend on each tender for it is well known that tenders are issued by various authorities depending upon their respective financial powers. Principal place of business must be a regular, fixed place independent of each tender. It may be noted that under Section 80 of the Code of Civil Procedure where a notice has to be given it is provided that in the case of the suit where, it relates to the railways the General Manager of that railway is the competent authority to receive notice. In that view if any suit is to he filed notice has to be given to the General Manager of the concerned railway. The General Manager's office which is the headquarters of each railway must. thereforee, be taken to be the place where the General Management and control is exercised. It is common case that the headquarters of Northern Railway is at Delhi.
(7) In that view the application under arbitration Act was rightly filed at Delhi and the question will be answered therein. For the reasons Suits No. 165-A of 1978 and 164-A of 1978 have also been rightly filed in Delhi. This is an application filed under Section 5 and 9 of the Arbitration Act for revoking the authority of tile sole arbitrator. In response to the tender issued from Bombay the same was accepted at Bombay. Bombay is the headquarters of Western Railways. No part of the railways covers Delhi. The only justification pleaded by Mr. Gupta, counsel for the petitioner for filing the application in Delhi appears to be that as the Uoi is carrying on business and as the Railway Board is situate in Delhi, Delhi Courts would have jurisdiction. As we have already held above though running of railways is no doubt carrying on business by the Union of India but the suit can only be brought within the jurisdiction of the courts where the headquarters of Western Railway i.e. Bombay is situate i.e. at Bombay.
(9) The correct law is now laid down in Gupta's Case (Ftill Bench). Here no part of cause of action has arisen at Delhi. The jurisdiction to entertain the application must be where the headquarters of the Western Railways is situate, namely Bombay, Mr. Gupta sought to invoke Delhi Courts jurisdiction on the ground that all the Railways including the Western Railways arc controlled by the Railway Board, whose headquarters is in Delhi and, thereforee, since Uoi is carrying on the business of running the railways, the principal place of running the Railways must he taken to be in Delhi. Personally we may feel flattered at being offerer the jurisdiction of Delhi over all the Railways being run throughout the country, but we must politely declare the invitation in view of Ladu Lal's and Gupta's case (supra) which have specifically held that jurisdiction can only be with respect to each railway and also at a place where headquarters of that Railway is situate.
(10) In that view in the present case the headquarters of Western Railways alone can be looked at for determining the jurisdiction and that place would be Bombay.
(11) We would in the circumstances hold that Delhi Courts have no jurisdiction to entertain the present application. We could, thereforee, direct that the application and other papers be returned to the applicant for being presented to proper court.
(12) The question referred to herein have as a matter of fact since answered by the earlier Full Bench in Gupta's case. However, as the decision of the said Full Bench became available subsequent to the reference made by the Division Bench on 8th March, 1983, the said reference could not have been avoided. We are of the view that the summary given in para 54 of Gupta's case may be taken as having answered the questions which have been raised in the present reference. However, for clarification sake we will answer specifically the questions raised in the present reference. Our answer is as follows :-
1. Answer to question No. 1 is that the Union of India does not reside in Delhi nor can it as such be taken to be carrying on business at Delhi irrespective of where the principal office of management of a particular commercial business is situate.
2.Answer to question No. 2 is in the negative because of what has been stated in answer to question No. 1.
3. In answer to question No. 3, any contracts for construction of building to be used while carrying on business by the government, the jurisdiction is to be treated in a different manner then when Government acts and builds in its sovereign purpose. This distinction has been pointed out in Gupta's case already.
4.In the matter of construction works for railways as in the present reference there is no distinction between building quarters or running railways because building quarters stations etc. is incidental and ancillary of the main business of running railways and would be covered in the overall purpose of running the railways.
14. Parties through their counsel have been directed to appear before Deputy Registrar on 30th May, 1985.