Can You File a Commercial Suit Against a Company in Another State?

Short answer: yes, if part of the cause of action arose where you file

You can sue an outstation company in your own city's court if any part of the cause of action arose there, or if the company carries on business in your city in the way the law understands that phrase. If neither applies, you'll have to go where the company is or where the dispute really happened. Section 20 of the Code of Civil Procedure, 1908 gives you these options. The Commercial Courts Act, 2015 leaves them as they are.

"Cause of action" just means the set of facts you'd have to prove to win. There was a contract. You did your part. They didn't do theirs. In a supply or service dispute those facts can be spread over two or three cities. You may have accepted the order in Delhi, dispatched from your factory in Bawana, and been owed payment into your Delhi account. Each of those can hand a court jurisdiction. Some links are much stronger than others, though.

Two things cut down your options. A clause in the contract picking one of the competent courts binds both of you. And no court gets jurisdiction just because you happen to live near it. There has to be a real connection between the dispute and the place. We've explained how territory and claim value work together on our page about which court will hear your commercial case.

The sections you'll keep hearing about

Where does a company "carry on business" for Section 20?

At its registered or principal office. And at a branch, but only for disputes that came out of that branch. That's the Explanation to Section 20, applied by the Supreme Court in Patel Roadways v. Prasad Trading Co. (1991). It catches a lot of clients off guard. Say a Bengaluru company has a sales office in Connaught Place. That doesn't, by itself, let you sue it in Delhi over a deal that was negotiated and carried out entirely from Bengaluru.

The branch matters when your deal actually ran through it. Did the Delhi branch issue the PO? Did your goods go to it, or did it certify your bills or release the payments? Then the company carries on business in Delhi for this dispute, and Delhi courts have jurisdiction on that ground too. Look at the header of the purchase order. Look at the GSTIN on it, since each state registration has its own. Check the delivery address and which bank the payments came from. Between them, they usually tell you which office was really dealing with you.

You can always sue at the registered office. Get it from the Ministry of Corporate Affairs master data, not the letterhead. Letterheads often show a corporate office somewhere else entirely. The company can never say the registered office was the wrong place to sue it. That's why it's the fallback when the facts in your own city are thin.

Which facts count as part of the cause of action in a supply or service dispute?

Courts look at where the facts that really matter took place. In business money claims, those usually are where the contract was made and where it was meant to be performed. Then where the goods were delivered or the work done, where payment was due, and where the breach happened. Incidental facts don't count. Where you typed up your invoice doesn't matter. Nor does where their reply to your legal notice landed.

Where a contract is "made" turns on how it was accepted. For a phone contract, the Supreme Court said in Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas (1966) that it's made where the acceptance is heard. For email, Section 13(3) of the Information Technology Act, 2000 treats an electronic record as received at the addressee's place of business. So suppose the company emailed its PO to you in Okhla and you accepted it. Or it accepted your quotation by an email that reached you in Okhla. Either way, trace the chain properly. Who gave the final acceptance, and where it landed, can decide whether Delhi has jurisdiction at all.

Place of payment is the point that gets argued the most. If the contract or invoices say you're to be paid into your Delhi bank account, or at your Delhi office, Delhi courts have commonly treated that as part of the cause of action. If the contract is silent on it, it's argued both ways. The answer depends on the court and the facts. Don't lean on payment alone if you've got something stronger.

When Advocate B.K. Singh is asked to pick the court in an inter-state matter, the team first prepares a one-page chronology. Every event gets a line with its date, its place and the document that proves it, because a court will want proof of each, not your memory of it. Quotation sent from where. Order received where. Dispatched from where, delivered where, invoice payable where. Once that page exists, the right court is usually obvious. And later it becomes the jurisdiction paragraph of the plaint, more or less word for word.

Territorial jurisdiction in a commercial suit: what a jurisdiction clause can and can't do

A jurisdiction clause can pick among courts that already have jurisdiction and shut out the rest. It can't create jurisdiction out of nothing. The Supreme Court settled that in A.B.C. Laminart v. A.P. Agencies (1989). It went a step further in Swastik Gases v. Indian Oil Corporation (2013). If a clause names the courts of one place, it'll usually be read as excluding the others even without words like "only" or "exclusively". Otherwise why name them at all?

So read the clause first, then choose. Suppose the agreement says courts at Mumbai alone have jurisdiction, and some of the cause of action arose in Mumbai. You'll have to sue in Mumbai, even though part of it also arose in Delhi. But if the clause names a city with no link at all to the deal, it doesn't work. Section 20 applies in the ordinary way.

Check for an arbitration clause as well. If there's a valid one, the company can ask the court to send the dispute to arbitration under Section 8 of the Arbitration and Conciliation Act, 1996, wherever you've filed. The seat of arbitration then decides which court supervises the process. That side of things is covered on arbitrationlawyer.in. For future contracts, our guide on the contract clauses that end up deciding court cases shows how to draft both kinds of clause.

Does "subject to Delhi jurisdiction" on your invoice settle it?

Usually not, on its own. That line at the foot of your invoice is printed on your own document. If the company's earlier PO said something different, or said nothing, the court will ask whether the company ever agreed to your invoice terms. Courts have gone both ways. A lot turns on how long you traded on those invoices without any objection, and whether the buyer signed or stamped them when the goods arrived.

What the line can do is back up other facts. Say your invoices also state that payment is to be made in Delhi and carry your Delhi bank details. The buyer acknowledged them and kept making part payments for months without protest. That adds real weight to the argument that part of the cause of action arose in Delhi. Treat the printed line as a bonus. Don't build your choice of court on it.

Where can you sue? Inter-state situations we see often

Sue at home or in their state? The real trade-off

Just because you can sue at home doesn't mean you should. A Delhi suit is easy on you, your witnesses and your files. The travel becomes the defendant's problem. The price comes later. If the company's bank accounts, receivables and property are in its own state, a Delhi decree has to be transferred there for execution. That's one more stage, and usually a few more months.

Sue in the company's city and it flips. You'll need local counsel, or Delhi counsel working alongside associate counsel there. Someone from your side has to turn up for evidence. In some states the district courts run largely in the regional language, so documents and depositions may need translating. But execution is direct. And local counsel know how that particular court lists its matters and how fast it moves.

Video hearings have taken a lot of the pain out of travel, and courts in Delhi and many other states now routinely allow appearances by video and, with permission, evidence too. Don't assume every hearing in another state can be done online, though. Ask first. Where a suit has to be filed out of state, we work with associate counsel there.

Which court within that city, and does the value threshold change from state to state?

The Rs 3 lakh specified value is the same all over India, so a claim that size is a commercial dispute wherever you file. What differs is which court in that state takes it. In Delhi, suits up to Rs 2 crore go to the District Judge (Commercial Court) and bigger ones to the Commercial Division of the Delhi High Court. There's been a proposal to raise that district limit, so check the current figure before you file. Only five High Courts have ordinary original civil jurisdiction (Delhi, Bombay, Calcutta, Madras and Himachal Pradesh). Each one sets its own value line. Everywhere else, commercial suits begin in the district courts.

Inside NCR, the district matters too. In Delhi a suit goes to the district Commercial Court for the area where the cause of action arose or the defendant is, so Saket, Tis Hazari, Karkardooma, Rohini, Dwarka or Patiala House. In UP or Haryana it goes to the court designated as the Commercial Court for that district. Our guide on where to file a commercial suit in Noida, Ghaziabad and Gurugram walks through the NCR districts. If you're chasing an individual rather than a company, read the guide on filing a money recovery suit when the debtor lives in another city. It's a closer fit.

Section 12A mediation when the company sits in another state

Pre-institution mediation is still compulsory, unless your suit really does need urgent interim relief, and the usual practice is to apply to the legal services authority for the place where you plan to file. That authority sends notice to the company at its registered or relevant office in the other state. These days, mediation sessions with a far-off party are often held online.

If the company ignores the notice or refuses to take part, the authority issues a non-starter report. You can file your suit with that. If the company does turn up, the three-month period (plus two more months if both agree) is excluded from limitation. One thing people miss. Your mediation application should already show where you'll sue and the facts that give that court jurisdiction. A company that later fights jurisdiction will seize on any mismatch. Our guide on whether mediation is compulsory before a commercial suit explains how it works.

Getting the summons served on an outstation company

Order XXIX Rule 2 of the CPC deals with serving a company, and it says you can serve the secretary, a director or another principal officer. Or you can leave the summons at the registered office, or post it there. The commercial provisions of Order V allow service by speed post and approved courier, and in practice by email to the address the company actually uses. Where needed, Section 28 of the CPC lets the summons go through a court in the other state.

We'd serve at the registered office from the MCA master data, at any office that dealt with you, and at every email address in the correspondence. It costs a little more. It also kills the argument, which comes up constantly in inter-state cases, that the company never got the summons. Service matters because the 30 to 120-day window for the written statement runs from the date of service. If the company doesn't appear, the court can go ahead ex parte. But if it later shows it was never served, the decree can be set aside under Order IX Rule 13. Then you're back at the start.

What if the company says your court has no jurisdiction?

Expect it. A company sued away from home nearly always takes the territorial point. Sometimes it comes as an application under Order VII Rule 11 right at the start. More often it's in the written statement. The court may decide it as a preliminary issue under Order XIV Rule 2 if the pleadings and documents are enough. If the facts are disputed, it can leave the point for trial.

If the objection succeeds, the plaint is returned under Order VII Rule 10. In EXL Careers v. Frankfinn Aviation Services (2020), the Supreme Court held that the suit then starts afresh in the new court. Everything done in the first court is lost. Limitation doesn't stop running for you either. Section 14 of the Limitation Act, 1963 excludes the time spent in good faith in the wrong court, but the claim still has to be within time otherwise. If you're already close to the three-year mark, that's a real danger.

In inter-state files, Advocate B.K. Singh pleads jurisdiction fact by fact. Each fact is tied to a document in the annexures, and he never rests on one ground alone. Compare two plaints. One says the cause of action arose in Delhi because the order was accepted at the plaintiff's Okhla office by email of a given date, the goods left Okhla under the e-way bills in Annexure P-6, and payment was due into the plaintiff's Delhi branch account under clause 7. The other just says part of the cause of action arose within this court's jurisdiction. The first is far harder to knock out.

Getting paid when the company and its assets are in another state

A Delhi decree is good anywhere in India. But the Delhi court can't directly seize property in another state. Under Sections 38 and 39 of the CPC, you ask the court that passed the decree to transfer it for execution to the court where the company's assets are. Section 39(4) makes it clear that for property outside the original court's limits, the decree-holder has to go through that other court. In practice that means an application, a certified copy of the decree and a transfer order. Usually a few weeks, sometimes a few months.

Bank accounts can often be attached through the court where the branch is. Money that the company's own customers owe it can be attached by garnishee orders. In Rahul S. Shah v. Jinendra Kumar Gandhi (2021), the Supreme Court directed that execution should ordinarily be finished within six months. Reality often lags behind. Our page on executing a decree explains the tools. If most of the company's assets are back in its home state, think about that when you choose the court, not after.

How we decide where to sue a company in another state

We test territorial jurisdiction in this order, before anyone starts drafting the mediation application.

1. Read the contract for court and arbitration clauses

   Go through the agreement, the POs, any general terms and tender papers. Mark every clause that names courts or sends disputes to arbitration. Note which document the parties actually signed or accepted. It's not always the one you think.

2. Build the place-by-place chronology

   For every event (quotation, order, acceptance, dispatch, delivery, invoicing, payment, breach) write down the date, the place and the document. That shows you every court with a connection.

3. Pin down the company's offices

   Take the registered office from MCA records, then find any branch that handled your contract, using the GSTIN on its orders and the bank it paid you from.

4. List the competent courts, then apply the clause

   Put the chronology, the offices and any jurisdiction clause together, and that gives you the list of courts that can hear the suit. If a valid exclusive clause names one of them, that's your court.

5. Weigh convenience against recovery

   For each option, compare witness travel, counsel, language and how quickly matters get listed. Set that against where the company's assets are. Choose with execution in mind.

6. Check the value and the right court in that city

   Work out the specified value with interest up to the filing date, then find which court in that city takes suits of that size.

7. Start Section 12A mediation in that place

   Apply to the legal services authority there with the jurisdiction facts spelled out, and serve the company at every address you know. All of them.

If mediation goes nowhere, we file the plaint with a jurisdiction paragraph built straight from the chronology. For a plain debt, everything after that runs like any other money recovery suit.

Time and cost when the defendant is in another state

Papers that show where the cause of action arose

• The signed agreement, the POs and any general terms. Flag the jurisdiction and arbitration clauses
• Emails or letters showing who made the offer, who accepted it, and from which office
• Call logs or WhatsApp messages, if the deal was closed over the phone
• E-way bills, delivery challans and LR copies, so the dispatch and delivery points are on record
• Your invoices, showing where payment was to be made and your bank details
• Bank statements that show which account and branch the company paid you from
• MCA master data for the registered office, and GST details of the office that dealt with you
• The legal notice, their reply if any, and the Section 12A mediation papers
• A Section 63 Bharatiya Sakshya Adhiniyam certificate for the emails and other electronic records you'll rely on

How the answer changes with the kind of business you run

• Goods suppliers. You usually have the strongest home connection, since acceptance, dispatch and payment often all happen at your end. Hang on to the dispatch papers and the email accepting the order.
• Service firms and IT vendors. If you deliver remotely from your Delhi office, there's a fair argument the work was performed in Delhi. If your people sat at the client's site in another state, that state has the better claim.
• Distributors and franchisees. The principal company drafts these agreements, and they nearly always name its home city's courts, often with arbitration thrown in. Read that clause before anything else. It usually decides it.
• Contractors. Building or site work in another state ties the dispute to that place. Any claim about the property itself has to be filed there.
• Registered MSMEs. Section 18(4) of the MSMED Act, 2006 lets the Facilitation Council where the supplier is located hear the dispute. So an NCR supplier can usually go to the NCR Council even if the buyer is elsewhere. Compare that with a suit before you decide.
• Brand and content owners. Trademark and copyright suits have special rules that let you sue where you carry on business. Our page on trademark infringement suits covers it.

Mistakes we see when businesses sue across state lines

• Filing at home because it's home. Your city needs a legal link to the dispute. Convenience isn't one.
• Pointing to a branch that had nothing to do with it. Their office in your city only counts if your dispute came out of it.
• Skipping over the jurisdiction clause. If it names a competent court, expect it to be enforced, word "exclusive" or not.
• Banking on the invoice footer. A line printed on your own invoice is thin proof that they agreed to anything.
• A one-line jurisdiction paragraph. Plead every connecting fact and attach the document for each.
• Forgetting where the money actually is. A quick Delhi decree is half the job if every rupee they have sits in another state.
• Cutting limitation too fine. If the plaint comes back near the end of the three years, the whole claim can go.

What to do this week

Dig out the signed contract, or the POs and general terms, and mark any jurisdiction or arbitration clause. Then build the chronology, place by place. Where did the order come from? Where did you accept it, where did you dispatch or do the work, where were you to be paid, and where did they default? Put the document against each line. Look up the company's registered office on the MCA site and note which of its offices you actually dealt with.

Then list the courts that can hear the case, apply the clause, and think hard about where their money is. Start Section 12A mediation in the place you pick. Get the plaint ready for a commercial court that has jurisdiction over your claim.

If you'd like your contract and emails read for jurisdiction before you commit to a court, send them to Advocate B.K. Singh's team through the contact page.