LAXMAN PRASAD versus PRODIGY ELECTRONICS LTD. AND ANR.

Citation: [2007] 13 S.C.R. 13 · Decided: 10-12-2007 · Supreme Court of India · Bench: C.K. THAKKER
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Judgment (excerpt)

LAXMAN PRASAD 
A 
-;. 
v. 
PRODIGY ELECTRONICS LTD. AND ANR. 
DECEMBER 10, 2007 
[C.K. THAKKER AND ALTAMAS KABIR, JJ.] 
B 
Code of Civil Procedure, 1908: s.20(c), Or. 7, rr. JO and 11 
- Territorial jurisdiction - Agreement stipulating that terms/ 
conditions contained therein to be interpreted in accordance with 
laws of Hongkong - Breach of agreement - Suit filed in Delhi - c 
Maintainability of - Held: Applicability of law is distinct and 
different from cause of action - Since part of cause of action 
arose in Delhi, suit filed in Delhi is maintainable-Application of 
defendant under Or. 7 rr. 10 and 11 rightly rejected by High Court. 
D 
Cost - Imposed by court - On defendant for filing application 
to delay progress of suit - Interference with - Held: Not called for. 
Words and phrases: 'Cause of action' - Meaning of 
The plaintiff company-respondent No.I was incorporated E 
under the laws of Hongkong and engaged in the business of 
trading PCB product under the name and style of 'Prodigy 
Electronics'. The defendant-appellant joined plaintiff company 
for marketing PCB products. In September, 2004, an employment 
" 
contract was entered into between the defendant and the plaintiff F 
.. 
company. The terms of employment contract stipulated that on 
resignation or termination, the employee would not engage 
himself in a similar or competitive business for two years nor 
would he contact or solicit any customer or the supplier with 
whom the plaintiff company conducted business during the G 
employment and that the defendant would maintain confidentiality. 
,,,_ 
Clause 18 of the agreement declared that terms and conditions 
of the agreement would be interpreted in accordance with the 
laws of Hongkong. 
13 
H 
-L 
14 
SUPREME COURT REPORTS 
[2007] 13 (Addi.) S.C.R. 
A 
The defendant tendered his resignation and his employment 
came to an end in December, 2004. The plaintiff company found 
-.\-
that the defendant contacted potential customers of the company 
and informed them that he was representing plaintiff company. 
The defendant also participated in the Trade Fair in Delhi in 
B 2005 and used the goodwill and the trade name of the plaintiff 
company. 
The plaintiff company filed a suit in Delhi High Court for 
permanent and mandatory injunction against the defendant as 
c also for damages. It also filed an application for interim injunction 
restraining the defendant from using the trade name 'Prodigy'. 
The defendant filed written statement and also an 
application under Or. 7 rr. 10 and 11 CPC praying for rejection/ 
return of the plaint for presentation to proper Court on the 
D ground that the plaint disclosed no cause of action and that 
clause 18 of the agreement granted exclusive jurisdiction to 
Courts in Hongkong and on that ground also Delhi Court had no 
jurisdiction in the matter. The High Court dismissed the 
E 
application and also imposed cost of Rs. 4000/-, holding that the 
agreement did not take away jurisdiction of the court and the 
application was filed only to delay the progress of the suit. 
Defendant challenged the said order by filing the present appeal. 
Dismissing the appeal, the Court 
F 
HELD: 1. No case has been made out by the defendant-
appellant from which it can be said that Delhi Court had no 
jurisdiction. (Para 13] (21-B] 
2.1. 'Cause of action' and 'applicability of law' are two 
G distinct, different and independent things and one cannot be 
confused with the other. The expression 'cause of action' has 
not been defined in the Code of Civil Procedure, 1908. It is, 
-i-
however, settled law that every suit pre-supposes the existence 
of a cause of action. If there is no cause of action, the plaint has 
H 
LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 
15 
ANDANR. 
-f 
to be rejected under o.7 r.11 CPC. Cause of action means a A 
right to sue. It consists of material facts which are imperative 
for the plaintiff to allege and prove to succeed in the suit. Under 
s.20(c) CPC, a suit would lie in a court within the local limits of 
whose jurisdiction the cause of action has arisen, wholly or partly. 
S. 20 has been designed to secure that justice must be brought B 
as near as possible to every man's hearthstone and that the 
._< 
defendant should not be put to the trouble and expense of 
travelling long distances in order to defend himself. 
[Paras 15, 20, 21] [22-A, B, C, 23-H, 24-A] c 
2.2. The argument of the defendant that the agreement 
was executed in Hong Kong and hence
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