C. Sree Ramulu, J.
1. In this revision petition, the only question that arises for consideration is whether the lower court, viz., the court of the Additional Chief Judge, City Civil Court, Hyderabad, has jurisdiction to try the case O.S. No. 101 of 1983 on its file and whether the impugned order dated April 7, 1983, holding that the court had jurisdiction to try the suit is sustainable in law.
2. The material facts which facts which are not in dispute are at that the first defendant is a limited company constituted under the provisions of the Indian Companies Act, 1913, for carrying on the business of manufacture, buying, selling ,etc., of pesticides, insecticides etc., based at Karimnagar. Defendants Nos. 2 to 6 are the promoters of the said company residing at Karimnagar. The company acquired land and machinery, etc., at Karimnagar for carrying on the business. Defendants Nos.2 to 6 approached the plaintiff-Union Bank of India, branch at Karimnagar, for granting loan facilities to the company. The plaintiff-bank sanctioned a limit of Rs. 1,00,000 to the first defendant-company under hypothecation. A promote was executed on July 5, 1973, on behalf of the first defendant-company as security at Karimnagar and a letter of hypothecation was also executed at Karimnagar on the same day in favour of the plaintiff-bank. Defendants Nos.2 to 6 stood as guarantors undertaking personal liability and executed a letter of continuing guarantee on July 5, 1973, at Karimnagar. The first defendant-company availed of the cash credit facility. The liability under the hypothecation account and the remaining confirmation letters admitting the liability were executed at Karimnagar. The plaintiff-bank also sanctioned a limit of Rs. 2 lakhs on January 25, 1974, as security for the pledge liability. Similarly, an agreement was also executed in favour of the plaintiff- bank on behalf of the first defendant company. Defendants Nos. 2 to 6 stood as guarantors undertaking personal liability to pay the amount due under pleddge account and executed a letters of continuing guarantee in favour of the plaintiff-bank on January 25,1974. This loan facility (cash credit) was availed of by the first defendant company. The liability under this account was acknowledged in writing on several dates. Balance confirmation letters were given on December 31, 1976, admitting the liability under the pledge account. While it was so, on the application of one of the creditors of the first defendant-company in C.P. No.2 of 1979, this court, by its order dated November 23, 1979, passed orders that the first defendant- company be wound up and the official liquidator was appointed as liquidator of the first defendant-company. The winding up proceedings are still pending on the file of this court. On an application made by the plaintiff-bank in C.A. No.19 of 1980 in C.P. No. 2. of 1979, this court on April 4, 1980, permitted the plaintiff to stand outside the winding proceedings and proceed privately against the secured properties (i.e., pledge and hypothecation) for recovery of the amounts due to the plaintiff bank from the first defendant-company and ordered that after exhausting the said remedy, if any amount is still due by the first defendant-company to the plaintiff-bank, the plaintiff-bank may participate in the winding-up proceeding for recovery of the balance.
3. The State Financial Corporation claiming to be a secured creditor of the first defendant-company is said to have sold the site, factory, machinery, etc., of the first defendant-company in July 1982, for recovery of the amount due to it by the first defendant-company. The plaintiff-bank also sold away the properties under pledge and hypothecation on August4,1982, and the sale proceeds were credited to the respective accounts.
4. In C.A.No. 129 of 1982 in C.P.No.2 of 1979, this court permitted the plaintiff-bank by its order dated September 24, 1982, to file a suite against the first defendant-company also for receiver of the amounts due on giving an undertaking that the decree will not executed separately against the assets do the first defendant-company except by way of participating in the winding-up proceedings. The plaintiff- bank claimed that an amount of Rs.2,00,775.73 was due under the hypothecation account and an amount of Rs.1,46,843.30 was due under the pledge account and that defendants Nos. 2 to 6 are personally and also jointly and severally liable to pay the amounts due to the plaintiff-bank.
5. The plaintiff-bank laid the suit O.S.No. 101 of 1983 in the Court of the Addl.Chief Judge, City Civil Court, Hyderabad. The first defendant-company was represented by the official liquidator. In spite of service of summons, he did not appear in the court and hence he was set ex parte and, as such, no written statement was filed in the suit by the date of the impugned order on behalf of the official liquidator representing the first defendant-company. In the written statement filed by defendants Nos. 2 to 6, a preliminary objection was taken stating that the Court of the Addl.Chief Judge City Civil Court, Hyderabad, has no jurisdiction to try the suit inasmuch as no part of the cause of action arose within the jurisdiction of that court. Further, it was stated that the first defendant-company was located at Karimnagar town of Karimnagar District; the other defendants were not residing or carrying on any business or trade within the jurisdiction of that court and that the plaintiff bank which advanced the loan was located at Karimnagar town and, therefore, the plaintiff-bank represented by the branch manager, Karimnagar, was not entitled to file a suit before the court at Hyderabad and hence, the Addl.Chief Judge, City Civil Court, Hyderabad, has no jurisdiction to try the suit and the suit is liable to be rejected on that ground.
6. The court below framed the jurisdictional question as issue No.7 and decided that issue as a preliminary issue. The court below held that the mere fact of the appointment of an official liquidator at Hyderabad does not give jurisdiction to the court at Hyderabad to try the case as regards the suit transaction entered into between the first defendant-company and defendants Nos. 2 to 6 in favour of the plaintiff-bank at Karimnagar, but on the question whether the order of the HIgh Court passed in C.A.No.129 of 1982 provided jurisdiction to the below at Hyderabad, the learned Addl.Chief Judge, Hyderabad, held that the court has jurisdiction to try the case at Hyderabad mainly on the ground that the right of the plaintiff-bank to lay the suit against the defendant-company was acquired by the plaintiff-bank with the leave of the High Court in C.A.No.129 of 1982 and that itself provided cause of action to the plaintiff-bank to file a suit against the first defendant-company represented by the official liquidator as the office is located at Hyderabad.
7. Sri P.W. Narayana Rao, learned counsel for the revision petitioners (defendants Nos.2 to 6) contended that merely because this court granted leave to the plaintiff-bank under section 446 of the Companies Act, 196, which is a statutory leave required before filing a suit to protect the company from the expenses of litigation. etc., it cannot furnish a cause of action at Hyderabad, much less does the location of the office of the official liquidator who represents the first defendant-company located at Karimnagar provided jurisdiction to the lower court. His further contention was that in view of the finding of the court below that the mere fact of the appointment of an official liquidator at Hyderabad does not give jurisdiction to the court at Hyderabad to try the case in respect of the suit transaction entered into between defendants Nos. 2 to 6 in favour of the plaintiff-bank, the court below has no jurisdiction to try the case.
8. Whereas, Sri T S Harinath, learned counsel for the plaintiff-bank contended that inasmuch as the winding-up order was passed by this court at Hyderabad and winding-up proceedings are still pending in the High Court at Hyderabad and the office of the official liquidator is located at Hyderabad, the Addl.Chief Judge, City Civil Court, Hyderabad, has jurisdiction to try the suit under section 20 (a) and (c) of the Civil Procedure Code.
9. The territorial jurisdiction of a court is in general determined by the provisions of section 20 of the Civil Procedure Code which reads as follows:
' 20 . Other suits to be instituted where defendants reside or cause of action arises.-
10. Subject to the limitations 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.'
11. This section enacts the rule as to the forum in all cases not falling within the limitations of section 15 to 19 as is made clear by the words 'subject to the limitations aforesaid'. The section is designed to secure that justice might be brought as near as possible to every man's hearth-stone and that the defendant should not be put to the trouble and expense of travelling distances in order to defend himself in cases in which he may be involved. The rules in the section deal with territorial jurisdiction of courts in respect of all suits other than those relating to immovable property or for recovery of movable property under distraint or attachment.
12. Under the scheme of the Code, actions are of three categories : (a) those which relate to immovable property ; (b) those which relate to persons or movable property ; and (c) mixed actions partly relating to immovable property and partly personal. The first and the third classes of suits have been dealt with under sections 16 to 18. Section 19 and 20 deal with the second class. A court jurisdiction under this section if-
(1) the defendant resides or carries on business or personally works for gain within the local limits of its jurisdiction, or
(2) the cause of action arises, wholly or in part, within such local limits.
12. The word 'defendant' means all the defendants where there are more defendants than one in the suit.
13. When the defendants neither reside nor carry on business nor any part of the cause of action arises within the limits of the jurisdiction the court, such court has no territorial jurisdiction to try the suit, under section 20, Civil Procedure Code. However, it is open to the defendants to waive this objection, and if they do so, they cannot subsequently take the objection. Section 21 is limited to objections in the appellate and revisional court. Section 21 is a statutory recognition of the principle that the defect as to the place of suing under sections 15 to 20 may be waived. Independently of this section, the defendant may waive the objection and may be subsequently precluded from taking it. (Vide Hira Lal Patni v. Kali Nath, : [1962]2SCR747 ). In Bahrain Petroleum Co. Ltd. v. P.J.Pappu, : (1966)IILLJ144SC , it was observed that (headnote):
'Where the defendant allows that trial court to proceed to judgment without raising the objection as to the place of suing and takes the chance of a verdict in his favour, he waives the objection, and will not be subsequently permitted to raise it. It is even possible to say that long and continued participation by the defendant in the proceedings without any protest may, in an appropriate case, amount to a waiver of the objection.'
14. In the present case, defendants Nos.2 to 6 have raised the question of jurisdiction of the court at Hyderabad try try the case on the ground that the cause of action arose to the plaintiff-bank at Karimnagar and that the plaintiff-bank as well as the first defendant-company are located at Karimnagar.
15. The plaintiff-bank stated in paragraph 14 of he plain that the cause of action for the suit arose on and from July 5,1973 and January 25,1974, when accounts were opened and documents were executed and subsequently when the two liabilities were acknowledged from time to time, on and from November 23, 1979, when the High Court of Andhra Pradesh passed winding up orders, on and from April 4, 1980, when the Andhra Pradesh High Court passed order in C A No. 19 of 1980 in C P No. 2 of 1979, on and from September 24, 1982, when the High Court of Andhra Pradesh granted permission to file suit, and on and from September 14, 1972, when demand notice was issued to defendants Nos. 2 to 6 at Hyderabad where the official liquidator's office is situated, and where winding up proceedings are pending, within the jurisdiction of the court of the Addl.Chief Judge, City Civil Court, Hyderabad.
16. As per these averments in the plaint, it is clear that the plaintiff- bank did not claim the competency of the court to try the case on the ground of residence of the defendants. But, firstly, on the ground that the office of the official liquidator is situated at Hyderabad, secondly, on the ground that the winding-up proceedings are pending in the High Court which is located within the jurisdiction of City Civil Court, Hyderabad, and further, winding-up order was passed by this court within the jurisdiction of the City Civil Court, Hyderabad.
17. Sri T S Harinath, learned counsel for the plaintiff-bank, claims that the court below has jurisdiction to try the case not on the ground where the suit transaction took place and not also on the basis of the residence and location of defendants Nos. 2 to 6 and the plaintiff- bank, but mainly on the ground that the office of the official liquidator is located at Hyderabad and similarly this court which passed the winding-up order and deals with winding up proceedings is located at Hyderabad.
18. We have,therefore, to consider the question whether the location of the office of the official liquidator representing the first defendant-company at Hyderabad and also location of the High Court which passed winding-up orders and also pendency of the winding-up proceedings at Hyderabad will furnish cause of action to the plaintiff-bank to file the suit in the court below at Hyderabad.
19. Sri Harinath, learned learned advocate for the plaintiff-bank contended that the location of the office of the official liquidator at Hyderabad furnishes a cause of action to the plaintiff-bank to institute the suit against the defendants at Hyderabad. whereas, Sri P V Narayanarao, learned counsel for the revision petitioners, i.e., defendants Nos.2 to 6 contended that the mere location of the office of the official liquidator does not empower the plaintiff to file the suit at Hyderabad. His contention is that the official liquidator represents the first defendants-company which is located at Karimnagar. Mere residence of the official liquidator at Hyderabad does not enable the plaintiff to file the suit at Hyderabad. All the functions of the official liquidator in respect of the management of the property of the first defendant and carrying on its business have to be done only at Karimnagar. According to him the location of the office of the first defendant at Karimnagar is material for the purpose of determining the local limits of the jurisdiction of the court where the suit has to be instituted and the place of residence of the official liquidator is not at all material for the purpose of determining the jurisdiction of the court under section 20 of the Code. Learned counsel contended that the real party in the case is the first defendant-company and not the official liquidator in his individual or official capacity. The official liquidator merely represents the first defendant-company on account of the winding-up proceedings. The official liquidator, according to him has not carried on any business of the first defendant company at Hyderabad. Further the location of his office at Hyderabad or his own residence at Hyderabad has nothing to do with the location of office of the first defendant or its business which has to be conducted at Karimnagar.
20. Sri P.V.Narayanarao further contended that the suit of the plaintiff bank is based on promissory notes and contracts executed by the first defendant and defendants Nos.2 to 6 in favour of the bank. The bank is a creditor and defendants Nos.1 to 6 are debtors. Further, the claim of the plaintiff bank to some extent is also based on promissory notes and agreement of guarantee. According to him the amount for which defendants Nos 1 to 6 are liable to the bank is payable to the plaintiff bank at Karimnagar. His further contention is that the execution of promotes and execution of the contract agreements by themselves are part of the cause of action for the suit. The payment of money under the promotes and agreements is part of the performance of the contract and will furnish the cause of action.
21. His further contention is that the official liquidator holds a public office and hence the location of his offices at Hyderabad and his function at Hyderabad have no relevance under section 20 Civil Procedure Code for determination of the jurisdiction of the court where the suit is filed against the first defendant company. An official liquidator, after the company is ordered to be would up, takes into custody or under his control all the properties effects and actionable claims to which the company is or appears to be entitled. But the company does not lose its corporate character and legal entity merely because it has gone into liquidation under orders of the court. The corporate status and legal entity of the company remains. Decrees could be passed against the company in spite of the official liquidator taking the property into custody. (Vide State of Bihar v. Syed Anisur Ramhman [1977] 47 Comp Cas 372 (Pat).
22. Further the expression 'voluntarily resides or carries on business or personally works for gain' refers only to natural persons and not to legal entities. (Vide Union of India v. Ladulal Jain, : [1964]3SCR624 ). In Badrinaryan v. Excise Commissioner [1962] 1 An WR 133; AIR. 1962 AP 382, a Bench of this court, considering the very expression occurring in section 20 Civil Procedure Code, observed that these words clearly refer to natural persons and not to a legal entity. Hence, it cannot be said that the residence of the office liquidator who is the holder of a public office has no reliance for the papaw of determining the jurisdiction of the court under section 20 of the Code. Similarly, I cannot accept the contention of learned counsel for the plaintiff-bank that passing of winding-up orders by this court at Hyderabad finishes any cause of action to file the sit against the defendants at Hyderabad. The passing of winding up orders by High Court is only a statuary function discharged by this court and it has no relevance to give cause of action for laying of a suit. The High Court appointed the official liquidator for purpose of taking custody of the property of the first defendant company to fulfill the statutory obligation. The property of the first defendant company to fulfill the statutory obligation. The true position of the official liquidator is that of an agent employed for the purpose of winding up of the first defendant company. The property of the first defendant company does not vest in the official liquidator but passes into his custody so as to be applied by him in accordance with the provisions of the Companies Act. He occupies a fiduciary position as regards the duties to be discharged by him and is accountable to the same extent as an agent. ( Vide Knowles v. Scott [1891] I Ch 717 and R.Gertzenstein Ltd, Inure [1936] 3 All ER 341 (Ch D). Because of the mere appointment of the liquidator who represents the first defendant company in the suit filed by the plaintiff-bank the place of the location of the first defendant company is material and not that of the place of residence of the official liquidator who represents the first defendant company. Similarly the place of location of the High Court which passed the winding up orders and which is dealing with the winding up proceedings in discharge of its statutory functions cannot be a ground for determining the territorial jurisdiction of the court. The court below having held that the residence or office of the official liquidator is not material for the purpose of determining the jurisdiction of the court in vies of the place of location of the first defendant company, viz at Karimnagar, the learned judge was wrong in holding that the court below has jurisdiction to try the suit merely because the High Court passed orders appointing the official liquidator in the winding up proceedings.
23. For these reasons, I allow this revision and set aside the order passed by the court below and hold that the court at Hyderabad has no jurisdiction to try the suit filed by the plaintiff bank. I further hold that the court at Karimnagar alone is competent to try the suit against the defendants including the first defendant represented by the official liquidator. Accordingly, I direct the court below to return the plaint to the plaintiff for presentation to proper court. No costs.