Case Analysis: M/S S. S. Hospitality v. M/S Sagar Ratna Restaurants Pvt.
Ltd.Facts of the case:
M/S S. S. Hospitality (the petitioner) has filed a revision petition challenging
the order of the learned District Judge (Commercial Court) dismissing their
application under Order VII Rule 11 of the Code of Civil Procedure, 1908. The
petitioner argued that the suit filed by M/S Sagar Ratna Restaurants Pvt. Ltd.
(the respondent) was not maintainable in Delhi and should have been filed in
Chandigarh due to the issue of territorial jurisdiction. The petitioner
acknowledges that the application should have been filed under Order VII Rule 10
instead of Rule 11. The main issue before the court is whether the suit was
validly instituted in Delhi or should have been filed in Chandigarh.
Court and Bench:
The case was heard in the High Court of Delhi by Hon'ble Mr. Justice C. Hari
- Whether the suit filed by the respondent was maintainable in the learned
Commercial Court at Delhi or should have been filed in Chandigarh.
- Whether the respondent had a subordinate office at Chandigarh, as
claimed by the petitioner.
The petitioner argued that the suit should have been filed in Chandigarh as the
entire cause of action, which was the alleged infringement of the respondent's
trademark, had arisen in Chandigarh. They relied on the interpretation given in
the case of Ultra Home Construction Pvt. Ltd. v. Purushottam Kumar Chaubey,
where it was held that if a plaintiff has a principal office at one place and a
subordinate office at another, and the cause of action arises at the place where
the subordinate office is located, the suit should be filed in the court having
jurisdiction over the subordinate office.
The respondent contended that they did not have a subordinate office in
Chandigarh. Therefore, the provision cited by the petitioner did not apply in
this case. They argued that a franchisee cannot be considered a subordinate
office and that there is a fundamental difference between the two.
The court analyzed the meaning of a "subordinate office" and held that it refers
to an office in the nature of a branch or another office of the principal
office, over which the principal office exercises control. The court emphasized
that managerial subordination is a crucial aspect of a subordinate office. On
the other hand, a franchisee is a separate entity governed by a franchise
agreement, and its obligations are limited to the terms of the agreement. The
court concluded that a franchisee cannot be considered a subordinate office.
After considering the arguments presented by both parties, the court rejected
the petitioner's claim that the respondent had a subordinate office in
Chandigarh. The court emphasized the distinction between a subordinate office
and a franchisee, stating that a franchisee does not fall within the definition
of a subordinate office. Therefore, the suit filed by the respondent in Delhi
was held to be validly instituted.
In this case, the court clarified the meaning of a subordinate office and
distinguished it from a franchisee. The court's interpretation aligned with the
principle that a subordinate office is an office over which the principal office
exercises control, while a franchisee operates independently under a franchise
agreement. Based on this analysis, the court concluded that the suit filed by
the respondent in Delhi was maintainable. This decision provides clarity on the
issue of territorial jurisdiction and helps establish a precedent for future
cases involving similar disputes.