Appeal against the decision of the Delhi High Court's Division Bench was dismissed by the Supreme Court. The Court affirmed that the Delhi High Court had proper territorial jurisdiction to hear the case, as part of the cause of action arose in Delhi. The case involved disputes over the supply of galvanized steel sheets by Bhushan Steel (now Tata Steel) and its shipment by Arcadia to Ethiopia. Bhushan Steel had not received payment despite fulfilling the contractual terms, leading to the involvement of multiple defendants, including TYO Trading Enterprises and the Commercial Bank of Ethiopia.

1. Parties Involved:

   • Plaintiff: Bhushan Steel & Strips Ltd. (merged with Tata Steel)
   • Defendants:
     • TYO Trading Enterprises
     • Commercial Bank of Ethiopia
     • Arcadia Shipping Limited
     • M.G. Trading Worldwide Pvt. Ltd.

2. Transactions:

   • Order Placement: TYO Trading, through its agent M.G. Trading, placed orders in Delhi for 400 MT of galvanized steel sheets with Bhushan Steel.
   • Letter of Credit: Opened by the Bank of Ethiopia, the Letter of Credit was transferred to Bhushan Steel.
   • Shipment: Arcadia Shipping loaded the material in Mumbai and transported it to Djibouti, Ethiopia, via two bills of lading.
   • Discrepancy and Non-Payment: The Commercial Bank of Ethiopia refused to encash the Letter of Credit, citing discrepancies, although Arcadia delivered the goods.

3. Plaintiff's Allegation:

   • Bhushan Steel alleged that Arcadia released the goods without proper documentation, as the original bills of lading were still in their possession.

4. Defendants' Stance:

   • Arcadia claimed they were only involved in the shipment from Mumbai and had no role in the order placement or payment process in Delhi. They contended that no part of the cause of action arose in Delhi.

5. Trial Court Decision:

   • The Single Judge of the Delhi High Court ruled that while Arcadia was liable for the loss of goods, the Court lacked territorial jurisdiction over the matter, as no cause of action arose in Delhi.

6. Appeal:

   • The Division Bench overturned this decision, holding that part of the cause of action did arise in Delhi due to the order placement and contractual obligations originating there.

7. Supreme Court Decision:

   • The Supreme Court dismissed Arcadia's appeal, affirming the Delhi High Court's jurisdiction. The Court stated that the transactions were interconnected, and Bhushan Steel was justified in filing a suit in Delhi under Section 20(c) of the Code of Civil Procedure, 1908.

Acts and Sections Discussed:

• Code of Civil Procedure, 1908:
  • Section 20(c): Territorial jurisdiction based on the situs of the cause of action.
  • Order I, Rule 3: Joinder of multiple defendants when claims arise from the same transaction or series of transactions.
  • Order I, Rule 7: Joinder of defendants when the plaintiff is in doubt regarding the liable party.

Ratio Decidendi:

The Court held that territorial jurisdiction was valid in Delhi as part of the cause of action (order placement and payment release) arose there. The Court also noted that the sale of goods and their subsequent shipment were interconnected transactions, which could not be separated into distinct silos. As such, Arcadia could not evade jurisdiction on the basis that their business was conducted in Mumbai, as the cause of action arose in part in Delhi.

Subjects:

Territorial Jurisdiction, Contract Disputes, Maritime Law, Commercial Litigation, Civil Appeal, Jurisdiction, Bill of Lading, Shipment Dispute, Code of Civil Procedure