This judgment will dispose the instant F.A.O. As well as F.A.O. No,65/2000 involving common questions and having same parties.
2. Two civil suits bearing Nos. 1139/1 and 1140/1 were instituted on 15-10-1996, before Mr. Ghulam Muhammad Malik, learned Civil Judge, Lahore. These were decided on 29-9-1998 and 29-10-1998 respectively.
3. Both these suits were for recovery of money. The first suit was for the recovery of Rs,88,172 and the second was for the recovery of Rs,29,572. The suits were entrusted to Mr. Ghulam Muhammad Malik, Civil Judge 1st Class, Lahore.
4. The claim of the same petitioners in both these suits was that they were not being paid their dues against the work performed although funds were available. On behalf of the defendants, a number of objections had been raised including the objection with resepct to the territorial jurisdiction of the Civil Court at Lahore for trying the suits.
5. A number of issues had been framed by the trial Court in both these suits including Issue No,4, common to both the suits, which related to the question of territorial jurisdiction. Both these suits were decreed in favour of the petitioners.
6. Regarding the question of jurisdiction, the learned trial Court had observed in both these suits that since the office of Punjab Province (defendant No,1) was located at .Lahore and the acceptance letters for the work were issued to the Executive Engineer Highway Division, Sheikhupura (defendant No,2) on behalf of the Punjab Province and as the Executive Engineer was a subordinate of the Province of the Punjab, the Court at Lahore had the territorial jurisdiction.
Therefore, the objections on the question of jurisdiction were not entertained.
7. The judgment and decree in the suit for recovery of Rs,88,172 in civil revision bearing No,1139/1 was taken in appeal before the Court of Mr.Mehmood Maqbool Bajwa, learned Additional District Judge.
Whereas, the appeal against the second suit came up for hearing before Mr. Abdul Sattar, learned Additional District Judge, Lahore. Mr. Mehmood Maqbool Bajwa, learned Additional District Judge, Lahore accepted the appeal and returned the plaint to the respondent for its presentation before the Court, at Sheikhupura having the territorial jurisdiction. While holding that the cause of action had arisen to the plaintiff at Sheikhupura and the objection with respect to the territorial jurisdiction had not been correctly decided by Mr. Ghulam Muhammad Malik, learned Civil Judge, Lahore. He, therefore,, set aside the judgment and decree of the trial Court, vide his judgment and decree dated 3-5-1999. The same was the view of Mr. Abdul Sattar, learned Additional District Judge, Lahore, who vide his judgment and decree dated 21-2-2000 set aside the judgment and decree of the trial Court and returned the plaint for presentation before the competent Court at Sheikhupura.
Both these judgments are being assailed through these appeals.
7-A. The question, therefore, is one which falls under section 20 of the Civil Procedure Code, which reads as under:-- "Subject to the limitation aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction---
(a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises."
8. Whether the words "reside" or "carry on business" within the meaning of section 20(a), C.P.C. Are applicable in case of a Government. Since 1863, the persistent view had been that the word "resides" within the meaning of section 20(a), C.P.C. Refers to natural persons and not to legal entity such as a Government.
9. It has also been a view since long that words, "carries on business" are intended by the section to apply to commercial business and not a business of a State or a Government.
10. The earliest view came in 1863 in the case of Subbayaya Budali v. Govenrment (1 Mad. High Court Rep. 286). In this case the question which came for consideration was with respect to the interpretation of clause 12 of the Letters Patent and more specifically to the portion of clause 12 which reads: "Or the defendant shall dwell or carry on business or personally work for gain within those limits". And it was held in this case that under clause 12 of the Letters Patent the Government must be considered as carrying on business at the place where its member exercises all the functions of Government, that is, in Madras. However, it was observed that the words "carries on business" under section 20 of the C.P.C. Were applicable in case of a Government. This view was later changed in the later case AIR 1927 Madras 689, wherein it was held that the word "reside" must be taken to refer to natural persons and not to entities such as Government or limited companies and that the words "carrying on business" apply to a corporate body and not to semi-corporate body like Government. It was further observed that the business in context to section 20 of C.P.C.
Meant the commercial business and not the business of a Government.
11. In another case of Lahore High Court AIR 1939 Lahore 818, the question had arisen with respect to the interpretation of the words "actually and voluntarily resides" and also the word "Business" in section 20(a), C.P.C. And the view was that, the words "actually and voluntarily resides" refer only to natural persons and not to legal entities such as Government and that the word "business" refers to commercial business and not to Government business.
12. Similar views were adopted in the cases: AIR 1950 Calcutta 208. AIR 1951 Punjab 92. AIR 1953 Calcutta 1.
13. In the case of Mian Fazal Muhammad Nizam-ud-Din Baig & Co. v. The Province of West Pakistan and others PLD 1969 Lahore 453 following observations were made:-- "In this connection he has attributed their natural and primary meanings to these words. From the above discussion it follows that those words in section 20 of the Code have been used in their primary business and natural meanings and connote a business carried on for pecuniary profits and gains by the business and trading houses. These have no application to the case of the Government engaged in commercial activities as a part of its duties for the welfare of its people.
11. There is yet another reason for us in arriving at this conclusion. In case these words are construed in a wider sense so as to be applicable to the Government engaged in the commercial activities, startling results are bound to flow from this. Applying the provisions contained in clauses
(a) and (b) of section 20 of the Code to the Government, it is liable to be sued all over the country within the territorial jurisdiction of the Courts in which it has got its offices. The railway in selling the tickets at its booking offices spreading all over the country could be said to be carrying on its business in these places and may be sued anywhere. In this respect, in accordance with Explanation II to this section, a corporation shall be deemed to carry on business at its sole or principal office or in respect of any cause of action arising at any place where it has also a subordinate to office, at such place. But in terms this explanation is not applicable to the Government, and by no fiction of law a similar construction can be placed in a suit brought against the Government. This is bound to result in anomalies and embarrassment for the Government.
Therefore, such an interpretation cannot be accepted.
12. For all these reasons, in our opinion, the Government cannot be deemed to be carrying on business within the meaning of section 20 of the Code and these words have no application in the case of a suit brought against the Government."
14. In the case of AIR 1955 Madras 345 while interpreting the words "reside" or "personally work for gain", in its application, it was observed:-- "It is now well-established that the word 'resides' must be taken to refer to natural persons and not to legal entities, such as limited companies or Governments. AIR 1927 Mad. 689 rel. On. The Union of India cannot be said to personally work for gain. That description can properly apply to an individual or individuals, and not to a corporate body, still less to the Government of State."
15. In the case of Pakistan v. Waliullah Sufyani PLD 1965 Supreme Court 310 it was held that a Government neither resides anywhere nor carries on business nor works for gain.
16. The view of this Court is that the provisions of section 20(c) of the C.P.C. Shall alone apply to a Government. Consequently, this Court holds that the views of the First Appellate Courts were correct while the trial Courts were in error in disposing of the objections with respect to the territorial jurisdiction and having illegally assumed jurisdiction, in this case. This Court, therefore, upholds the findings of the First Appellate Courts and dismisses these F.A.Os. With costs.