IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: 
Mr. Justice Umar Ata Bandial 
Mr. Justice Sayyed Mazahar Ali Akbar Naqvi 
 
 
Civil Petition No.3380-L of 2017 
(Against 
the 
judgment 
dated 
09.10.2017 of the Lahore High 
Court, Lahore passed in RSA 
No.62/2016) 
 
 
M/s James Construction Company (Pvt.) Ltd., Lahore 
 
…Petitioner(s) 
Versus 
Province of Punjab through Secretary Communication & Works, 
Government of Punjab, Lahore etc. 
 
…Respondent(s) 
 
For the Petitioner(s): 
Mr. Zahoor Nasir Tagga, ASC 
 
 
For the Respondent(s): 
Ms. Aaliya Ejaz, Asstt.A.G. 
 
 
Date of Hearing: 
01.01.2021 
… 
ORDER 
 
 
 
Umar Ata Bandial, J.- The learned High Court in its 
impugned judgment dated 09.10.2017 has held that the 
petitioner’s suit for recovery of Rs.945,475/- against the Provincial 
Government and the concerned Highways Authorities of the 
Provincial Government in Faisalabad was not maintainable before 
the learned Civil Court at Lahore on account of lack of territorial 
jurisdiction. In this respect reliance has not been placed on any 
case law but merely on the provisions of Section 20 of the CPC. 
That provision lays down the following:- 
 
“20. Other suits to be instituted 
where defendants reside or cause of action 
arises.---Subject to the limitations aforesaid, 
C.P.No.3380-L/2017 
- 2 -
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 was 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. 
 
Explanation I.---Where a person has a 
permanent dwelling at one place and also a 
temporary residence at another place, he 
shall be deemed to reside at both places in 
respect of any cause of action arising at the 
place 
where 
he 
has 
such 
temporary 
residence. 
 
Explanation II.---A corporation shall be 
deemed to carry on business at its sole or 
principal office in Pakistan or, in respect of 
any cause of action arising at any place 
where it has also a subordinate office, at 
such place.” 
 
2. 
 
In the present case the contract was executed in 
Faisalabad but it was approved by the Provincial Government at 
Lahore vide memorandum dated 03.02.1991 issued by the Chief 
Engineer (South), Punjab Highway Department, Lahore addressed 
to the Superintending Engineer, Highway Circle, Faisalabad. This 
document was not considered by either the learned High Court in 
its judgment dated 09.10.2017 or the learned Appellate Court in 
its judgment dated 24.11.2015 to arrive at the conclusion 
C.P.No.3380-L/2017 
- 3 -
regarding the lack of jurisdiction of the Civil Courts at Lahore to 
adjudicate the claim raised by the petitioner. 
2. 
 
Learned counsel for the petitioner has placed before us 
a judgment of this Court reported as Faqir Muhammad Vs. 
Pakistan through Secretary, Ministry of Interior and Kashmir 
Affairs Division, Islamabad (2000 SCMR 1312) wherein it was 
observed:- 
“4: This is not denied that tender was 
accepted at Rawalpindi and it being so clause 
(c) of section 20, C.P.C. was attracted, which 
speaks about cause of action wholly or in 
part. It is immaterial that about acceptance 
of tender letter to the appellant was issued 
from Gilgit. The facts remains that it was 
accepted at Rawalpindi. Thus, cause of action 
in part had accrued at Rawalpindi.” 
 
3. 
 
Learned Assistant Advocate General, on the other 
hand, has placed reliance on the following passage from Justice 
Kaikaus’s concurring note in Pakistan Vs. Waliullah Sufyani (PLD 
1965 SC 310):-  
“Page 345: A suit against a person can only 
be brought under the C.P.C. at a place where 
the cause of action arose or where the 
defendant resides or carries on business or 
personally works for gain. A suit would not lie 
in the Indian Courts because the cause of 
action arose at a place which is not in India 
and a Government neither resides anywhere 
nor carries on business nor works for gain.” 
 
4. 
 
The proposition dealt with by the aforesaid judgment 
was regarding the specific residence of the Government. In the 
present case, the provisions of Section 20 of the CPC have been 
invoked with respect to the place of accrual of the cause of action 
C.P.No.3380-L/2017 
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wholly or in part. Be that as it may, even in relation to the rule 
enunciated in the afore-noted judgment, this Court has restricted 
the said proposition in a recent decision reported as Province of 
Punjab 
through 
Secretary 
to 
Government 
of 
Punjab, 
Communication and Works Department, Lahore and another 
Vs. Messrs Muhammad Tufail and Company (PLD 2017 SC 53). 
The relevant portion is produced below:- 
“22: The commercial activities undertaken by 
a government are not included in the 
"ordinary 
connotation" 
of 
the 
word 
"Government”. Indeed we are not persuaded 
by the reasoning of the learned High Court in 
Fazal Muhammad's case (supra) to the effect 
that commercial activities are undertaken by 
Government for welfare purposes and for that 
reason they are to be treated as part of its 
functions. The commercial activities do not 
form a part of the core functions of a 
government which remain its executive, 
judicial, 
legislative 
and 
administrative 
functions. When a government enters into the 
domain of business and commerce it cannot 
be given a premium of its position and must 
be treated at par with its competitors or near 
competitors in the private sector. It must be 
subject 
to 
the 
laws 
of 
the 
land. 
Its 
commercial activities must be regulated in 
the same manner as those of the private 
sector. It cannot be exempted therefrom 
simply by the dint of being a "government". 
Hence when a government is engaged in the 
'business' of road building through the 
vehicle of construction contracts with a 
private contractor then it cannot be allowed 
to claim privileges on account of being the 
government. In these circumstances it would 
be liable to be treated as a corporation in 
terms of Explanation II to Section 20, C.P.C. 
In the case of Bakhtawar Singh (supra) the 
Supreme Court of India upheld the decision 
of the Delhi High Court dismissing an the 
application of a contractor under Sections 14 
and 17 of the Indian Arbitration Act by 
holding 
that 
the 
phrase 
'actually 
and 
voluntarily' resides, 'carried on business' or 
'personally works for gain' do not apply to 
legal entities like the Union of India and only 
C.P.No.3380-L/2017 
- 5 -
to natural persons. But this inapplicability is 
only in reference to the sovereign functions of 
the State (as the contract pertained to 
maintaining armed forces therefore it was 
considered to be a sovereign activity of the 
State). When the State carries on commercial 
activities then Section 20, C.P.C. would 
apply, as held in Ladulal Jain's case (supra). 
We find ourselves in agreement with this 
subtle 
but 
important 
distinction. 
The 
Government in the exercise of its core 
functions 
viz, 
its 
executive, 
legislative, 
judicial 
and 
quasi-judicial, 
and 
administrative 
roles 
exercises 
sovereign 
powers. But when it engages in commercial 
activities it is not exercising sovereign power, 
rather it is engaging in business/commercial 
activities and merits no undue advantage 
over ordinary litigants: it is subject to Section 
20, C.P.C. in its entirety. 
(emphasis supplied) 
 
5.  
 
In the above quoted case, this Court, after examining 
in detail the case-law of Pakistan and India, reached the 
conclusion that by engaging in activities which did not form part of 
its sovereign functions i.e. which could be performed by private 
entities if the Government was not in charge of them, the 
Government was in effect carrying on a business. Consequently, it 
was held that in such situations the Government would be subject 
to Section 20 of the CPC in its entirety. We agree. Therefore, in our 
considered opinion, keeping in view the nature of the activity in 
which the Government was involved in, namely, the construction of 
roads, the specific issue raised in these proceedings is governed by 
Section 20 of the CPC in toto. Accordingly, the learned Civil Court 
at Lahore did have the territorial jurisdiction to entertain the suit 
filed by the petitioner (both in terms of clause (a) and clause (c) of 
Section 20 of the CPC). Learned counsel for both the parties agree 
that insofar as the merits of the case are concerned, the same 
C.P.No.3380-L/2017 
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stand adjudicated by the judgment of the learned Trial Court and 
on that issue no contest was made by the Provincial Government 
before the learned Appellate Court as recorded in paragraph No.7 
of its judgment dated 24.11.2015. 
6. 
 
In the light of the foregoing discussion, the impugned 
judgments dated 09.10.2017 and 24.11.2015 are set aside. As a 
result, this petition is converted into an appeal and allowed.  
 
 
 
Judge 
 
 
 
Judge 
Lahore, the 
1st of January, 2021 
approved for reporting 
Waqas Naseer/Meher LC 
