Jurisdiction Cannot Be Founded On Casual Or Incidental Facts If Not Have A Direct Nexus With The Lis: : Delhi High Court

Delhi High Court has dismissed an appeal against return of plaint in a commercial recovery suit, holding that a company's registered office at Delhi confers no territorial jurisdiction when the purchase orders were issued from Noida, goods were manufactured and to be delivered at Jalgaon, and the entire breach occurred outside Delhi. Preliminary negotiations in Delhi and a techno-commercial offer issued from Delhi, the Court held, are merely incidental facts that cannot anchor jurisdiction.

The Division Bench of Justice Anil Kshetarpal and Justice Amit Mahajan delivered the ruling on April 15, 2026, in FAO(OS)(COMM) No. 281 of 2024, upholding the Single Judge's order returning the plaint and sustaining costs of Rs. 10,000/- imposed for suppression of material facts.

The Division Bench was called upon to decide whether preliminary negotiations in Delhi and a techno-commercial offer issued from Delhi constitute a material part of the cause of action for territorial jurisdiction; whether the registered office of the defendant company in Delhi invokes jurisdiction under Section 20 CPC when its operational office is at Noida; whether an exclusive jurisdiction clause in purchase orders can confer jurisdiction on Delhi courts when no part of the cause of action arose there; and whether the appellant's non-disclosure warranted costs.

The Division Bench at the outset stated the governing principle for Order VII Rule 10 applications: the court must adopt a "pragmatic and realistic approach" to ascertain where the real cause of action arose, reading the plaint holistically and not by mechanically isolating stray averments. The test is to discern the bundle of essential facts and their nexus to territorial jurisdiction. "Jurisdiction cannot be founded on casual or incidental facts which do not have a direct nexus with the lis."

On the core question of what constitutes the cause of action in this suit, the bench was clear. The plaint sought recovery for two grievances: the respondent's failure to take delivery of PLB duct pipes at Jalgaon, and failure to pay the balance consideration. Both purchase orders were placed from Noida. Manufacturing and delivery obligations were anchored at Jalgaon. The alleged breach — non-lifting and non-payment — arose entirely outside Delhi. The preliminary discussions in Delhi and the techno-commercial offer were, on this analysis, merely incidental to the real dispute.

The Court dealt a decisive blow to the appellant's reliance on the techno-commercial offer as creating a Delhi nexus, invoking the settled proposition from A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163. A contract is concluded only on acceptance of the offer, not on its making. The communication dated 07.06.2019 was plainly an offer; the contract was formed only when the respondent placed its purchase orders from Noida. "Mere making of an offer at a particular place does not confer jurisdiction on that place as the contract can only be said to be made on acceptance of an offer. Making of an offer does not form a part of the cause of action."

On the registered office argument, the Division Bench applied the landmark Supreme Court ruling in Patel Roadways Limited, Bombay v. Prasad Trading Company, 1992 AIR 1514, to explain the Explanation to Section 20 CPC. The Explanation creates a restrictive hierarchy: where a corporation has both a principal office and a subordinate office, and the cause of action arises at the subordinate office, jurisdiction lies at the subordinate office's location to the exclusion of the principal office. The respondent's operational and commercial activities were entirely out of its Noida office; its Delhi registered office was a mere formality with no connection to this dispute. "The entirety of the commercial dealings emanated from Noida and culminated at Jalgaon."

The appellant had invoked an exclusive jurisdiction clause in the purchase orders vesting jurisdiction in Delhi courts. The Division Bench firmly rejected this contention on first principles. Parties cannot by agreement confer jurisdiction on a court that otherwise lacks it under Section 20 CPC. An exclusive jurisdiction clause is operative only when two or more courts independently possess territorial jurisdiction and the parties choose to restrict themselves to one. Where no part of the cause of action arises within the chosen forum, the clause is rendered wholly ineffectual. The contract was neither made nor accepted in Delhi; no contractual obligation was to be performed in Delhi; no breach was alleged to have occurred there.

The appellant had sought to rely on the Division Bench's earlier decision in Aakash Chaturbhuj Chhabria v. Hewlett Packard Enterprises India Pvt. Ltd. to press for a "composite cause of action" view. The Court distinguished that case sharply: it involved a multi-party fraud conspiracy where the composite cause of action arose from a single indivisible fraudulent design involving multiple defendants residing within Delhi's jurisdiction. The present case was a straightforward bilateral commercial dispute between a single plaintiff and a single corporate defendant, governed by the mandatory deeming fiction in the Explanation to Section 20 CPC. "The 'composite cause of action' theory cannot be imported into a sale-of-goods contract where the performance and breach occurred exclusively within the jurisdiction of a subordinate office."

On suppression of material facts, the Division Bench found no ground to interfere with the costs imposed. The appellant had filed an application for return of plaint in a prior Noida suit raising identical jurisdiction arguments — and that application had been dismissed. This was a material fact which had to be disclosed in the plaint, regardless of the fact that the order was under challenge before the Allahabad High Court. "While the issue may be sub judice before the Allahabad High Court, it was incumbent on the Appellant to make a full disclosure in relation to the same in the plaint."

Concluding, the bench held that the Single Judge had meticulously considered all aspects and correctly concluded that no part of the cause of action accrued within Delhi's territorial limits — a conclusion firmly grounded in the pleadings, contractual documents, and settled jurisdictional principles.

Date of Decision: April 15, 2026