करणाधिकरणयोश्च

Heading adhikāra करणाधिकरणयोः इत्यधिकारः

The affix ल्युट् is added to a root when the relation of the word so formed to the verb is that of an instrument or location.

Word by word (padaccheda)

In / when - saptamī · dvivacanaIndeclinable च avyaya

In / when Saptamī (7th case): "in X" or "when X", a domain or condition.
Indeclinable An avyaya such as च "and", वा "optionally", न "not".

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Full reading

- च

Pāṇini leaves out words that carry over from earlier sūtras. Expand to see the rule as a reader actually understands it.

Commentary

The affix ल्युट् is added to a root when the relation of the word so formed to the verb is that of an instrument or location.
Thus इध्मप्रव्रश्चनः 'an axe' (lit. an instrument for cutting wood); 'palasa-cutter'; गोदोहनी 'milk-pail' (a vessel into which milk is milked); so also सक्तुधानी । In other words, this affix expresses also the idea of the instrumental case (a tool), and of the locative case (a repository).

Śrīśa Chandra Vasu, The Ashtadhyayi of Panini (1897), via ashtadhyayi.com.