Introduction

This landmark Supreme Court judgment, delivered by Justice R.S. Bachawat, addressed the critical issue of territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 (CPC), and the waiver of jurisdictional objections under Section 21. The Court ruled that the defendants did not waive their objection to territorial jurisdiction. The judgment reaffirms the principles governing territorial jurisdiction, establishes the scope of waiver under Section 21, and clarifies the effect of arbitration applications on jurisdictional objections.

Facts of the Case  

• The plaintiff was a typist clerk employed by the second defendant, The Bahrein Petroleum Co. Ltd. 
• The first defendant was the recruiting agent of the Company at Bombay. 
• The contract of service was signed at Bombay, with the zone of operation being Bahrein Island outside India. 
• The plaintiff instituted a suit for recovery of gratuity and arrears of salary against the Company and its recruiting agent in the Court of the Subordinate Judge of Cochin. 
• Both defendants applied to the Cochin Court for stay of the suit. 
• The Cochin Court refused to stay the suit, and appeals to the District Court of Ernakulam and revision petition to the High Court were dismissed. 
• The Cochin Court initially passed an order for the suit to proceed ex parte, but later set aside this order and allowed defendants to file their written statement. 
• In their written statement, defendants pleaded on merits and disputed the territorial jurisdiction of the Cochin Court. 
• On defendants' application, the Cochin Court tried the preliminary issue of jurisdiction and held that it had no territorial jurisdiction to try the suit. 
• The Cochin Court directed return of the plaint for presentation to the proper Court. 
• An appeal to the District Judge of Ernakulam was dismissed. 
• On revision, the High Court of Kerala held that defendants had waived the objection to territorial jurisdiction, set aside the lower courts' orders, and directed the Cochin Court to try the suit on merits. 
• The second defendant appealed to the Supreme Court by special leave. 

Issues Involved  

• Territorial Jurisdiction: Whether the Cochin Court had territorial jurisdiction to try the suit under Section 20 of the Code of Civil Procedure, 1908. 
• Waiver of Jurisdictional Objection: Whether the defendants waived their objection to territorial jurisdiction by their conduct in the proceedings. 
• Effect of Arbitration Applications: Whether filing applications constituted a waiver of jurisdictional objections. 
• Scope of Section 21: Whether Section 21 of the Code of Civil Procedure precluded defendants from raising jurisdictional objections in the Supreme Court. 
• Failure of Justice: Whether there was a consequent failure of justice as required under Section 21 of the Code. 

Court's Observations 

• Justice R.S. Bachawat's made the following observations: 
  • Lack of Territorial Jurisdiction: Held that the defendants neither resided nor carried on business, nor did any part of the cause of action arise within the local limits of the Cochin Court's jurisdiction, hence the Court had no territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908. 
  • General Rule on Waiver: Emphasized that as a general rule, neither consent nor waiver nor acquiescence can confer jurisdiction upon a Court otherwise incompetent to try the suit, but Section 21 provides an exception for defects as to place of suing. 
  • No Waiver by Defendants: Found no conduct of defendants which amounted to waiver or precluded them from raising the jurisdictional objection, noting that defendants protested jurisdiction at the earliest opportunity and before taking any steps in the suit. 
  • Arbitration Applications: Ruled that filing applications for stay of suit does not constitute recognition that the Court has jurisdiction to try the suit, as such applications must be made to the Court before which the suit is pending regardless of its jurisdiction. 
  • Persistent Objection: Observed that defendants consistently protested against the jurisdiction throughout proceedings, applied for stay orders, fought up to appellate and revisional courts, and lodged their protest at the earliest opportunity without ever waiving or abandoning their objection. 
  • High Court's Reasoning Rejected: Disagreed with the High Court's view that by filing appeals, defendants conceded that the Cochin Court had jurisdiction, holding that such applications cannot have that effect. 
  • Section 21 Application: Clarified that the condition "unless there has been a consequent failure of justice" in Section 21 implies that the suit has already been tried on merits, and since only the preliminary jurisdiction issue was decided, there could not be consequent failure of justice at that stage. 
  • Policy Underlying Section 21: Explained that the policy underlying Section 21 is that when a case has been tried on merits and judgment rendered, it should not be liable to be reversed on technical grounds unless it resulted in failure of justice. 

Conclusion  

This landmark judgment establishes important principles regarding territorial jurisdiction under the Code of Civil Procedure, 1908. The Supreme Court allowed the appeal, set aside the High Court's judgment, and restored the orders of the trial Court and District Court. The judgment clarifies that Section 21 of the Code does not preclude jurisdictional objections when the suit has not been tried on merits, and reinforces that applications for stay under arbitration laws do not constitute acceptance of the Court's jurisdiction to try the suit on merits.