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Civil ProcedureSupreme Court of India

Ahmed Abdulla Ahmed Al Ghurair & Anr. v. Star Health and Allied Insurance Co. Ltd. & Ors.

Civil Appeal · 2018 INSC 1100Decided 26 Nov 2018
Civil Appeal Nos. 9786-9799 of 2018
Justice A.K. Sikri · Justice Ashok Bhushan

Background

The appellants, claiming a beneficial interest (through their power of attorney holder) in certain shares of Star Health Insurance Company that were registered in the names of other respondents, filed a suit before the Madras High Court seeking a declaration of that beneficial interest. They obtained leave to sue there under Clause 12 of the Letters Patent on the ground that part of the cause of action arose within its jurisdiction. The defendants applied to revoke that leave, contesting the Madras High Court's territorial jurisdiction; a Single Judge rejected the challenge, but a Division Bench reversed this and rejected the plaint for want of jurisdiction, which the appellants then challenged before the Supreme Court in thirteen connected appeals.

Decision Breakdown

The Supreme Court confined itself to the limited jurisdictional question of whether the Madras High Court had territorial jurisdiction to entertain the suit. Examining the underlying facts, the dispute arose from a decision of a foreign (Dubai-based) corporate group to deconsolidate and remove the beneficial-interest status over the shares, the Court found that the appellants' real grievance was an indirect challenge to that foreign group's own decision, in which they had themselves participated, and that the relief sought against the India-based defendant was merely consequential. Since the core dispute and the parties with the primary interest were situated outside the Court's jurisdiction and the essential cause of action did not genuinely arise in Chennai, the Court agreed with the Division Bench that the suit was not maintainable there. It found no merit in the appeals and dismissed all thirteen of them.

Lesson Learnt

A litigant cannot manufacture territorial jurisdiction for a court by suing a party only consequentially connected to a dispute, when the real controversy and the principal parties are situated entirely outside that court's jurisdiction.

Ahmed Abdulla Ahmed Al Ghurair & Anr. v. Star Health and Allied Insurance Co. Ltd. & Ors. – Legal Case Shots | LegalAware