The Delhi High Court recently narrowed the scope of the expression ‘carries on business’ and thus held that an Indian company cannot be regarded as carrying on business in Delhi if it neither has a principal office, head office, registered office or a branch office in the capital city.
Plaintiff, a Mumbai based company, sued defendants (who are based in different States) for trademark infringement and passing off in Delhi High Court claiming jurisdiction as the Plaintiff is selling goods to customers based in Delhi through its website, and thus carrying on business there.
Differentiating the present case with an earlier Division Bench ruling of the Delhi High Court on the same issue, the Court said, “No doubt, the judgment of the Division Bench holds that where internet transactions take place, there would be territorial jurisdiction at the place where internet transaction is done by accessing the website, however, the Division Bench in the judgment in the case of World Wrestling Entertainment does not deal with the situation qua internet transactions as to when the plaintiff is a corporation viz. a company registered under the Companies Act, 1956 and whether there is ‘carrying on business’ even if the plaintiff company has no office at the place where the plaintiff’s website is accessed for carrying out the transactions.
After going through Supreme Court rulings, the Court said, “…..wherever a plaintiff or a defendant is a corporation, carrying on business by such a corporation or a company necessarily has to be taken alongwith existence of a branch office or a principal office or a registered office, with the place where the cause of action also is said to have arisen.”
The Court, however, noted that if the subject suit or any other civil suit is filed not on the ground of residence i.e. carrying on of business of the plaintiff company at a particular place such as Delhi where the present suit is filed, but on the different ground that it is the impugned activities of the defendants which are taking place at Delhi and therefore part of cause of action arises at Delhi, then, in such a case Delhi could have territorial jurisdiction.