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Premchand Roychand and Sons Vs. Moti Lall Agarwala - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case NumberO.C.J. Suit No. 3072 of 1947
Judge
Reported inAIR1951Bom249; (1950)52BOMLR643
ActsContract Act, 1872 - Sections 2
AppellantPremchand Roychand and Sons
RespondentMoti Lall Agarwala
Appellant AdvocateK.T. Desai and ;B.J. Divan, Advs.
Respondent AdvocateM.M. Jhavery and ;Y.B. Rege, Advs.
DispositionAppeal dismissed
Excerpt:
letters patent (bombay), clause 12 - agreement to sell shares to defendant doing share business in delhi--offer to sell sent by firm doing share business in bombay and accepted in delhi by defendant--whether part of cause of action arises in bombay--maintainability of suit, for breach of contract, against defendant, at bombay.; the plaintiffs, who were carrying on business as share-brokers in bombay, offered to sell to the defendant, who was a share-broker residing and carrying on business in delhi, certain shares. the offer was communicated to the defendant by telegram which was received by him in delhi and he accepted the offer by telegram. the performance of the contract by sending the share certificates together with the relative transfer forms and also the draft to the defendant was..........in fact offered by the plaintiffs to him in delhi, that the breach of the contract, if any, took place in delhi and that therefore the whole cause of action having arisen in delhi, this court has no jurisdiction to try this suit in spite of the leave under clause 12, letters patent having been granted. it is clear on the correspondence which has been put in before me that the offer to sell the 110 shares, though communicated by the plaintiffs by their telegram dated 3-10-1946, was received by the defendant in delhi and he accepted the said offer by his telegram dated 4-10-1946 in delhi. there is also no doubt that the performance of the contract offered by the plaintiffs to the defendant at delhi by sending the share certificates together with the relative transfer forms and also the.....
Judgment:

Bhagwati, J.

1. His Lordship, after stating facts, proceeded:] Before I proceed to discuss the merits of the case, I shall first deal with what could have been urged as a preliminary objection or could have been asked to be tried as a preliminary issue, viz., whether this Court has jurisdiction to entertain this suit. The contention of the defendant in this behalf has been that he was residing in and carrying on business in Delhi that the contract was made by the acceptance by him of the offer of the plaintiffs in Delhi, that the performance of the contract was to be made and was in fact offered by the plaintiffs to him in Delhi, that the breach of the contract, if any, took place in Delhi and that therefore the whole cause of action having arisen in Delhi, this Court has no jurisdiction to try this suit in spite of the leave under Clause 12, Letters Patent having been granted. It is clear on the correspondence which has been put in before me that the offer to sell the 110 shares, though communicated by the plaintiffs by their telegram dated 3-10-1946, was received by the defendant in Delhi and he accepted the said offer by his telegram dated 4-10-1946 in Delhi. There is also no doubt that the performance of the contract offered by the plaintiffs to the defendant at Delhi by sending the share certificates together with the relative transfer forms and also the draft to the defendant was in Delhi. The breach, if any, by the defendant also took place in Delhi, because he refused to retire the draft in Delhi. Nothing further happened and there was no question of any part of the cause of action having arisen in Bombay.

2. Counsel for the plaintiffs, however, argued that this was a case not under the Civil P. C., but under Clause 12, Letters Patent, and what the Court had got to consider was not where the contract was made hut whether a part of the cauce of action had in fact arisen in Bombay. He contended that even though ordinarily a contract could be said to have been made in the place where the offer was accepted, there was a difference which obtained when you came to consider whether a part of the cause of action in a suit on contract did arise within jurisdiction. He relied upon the observations of Pulton J., in Dobson and Barlow v. Bengal Spinning and Weaving Co. 21 Bom. 126 where the learned Judge observed (p. 134) :

'But if tbe making of the contract be part of the cause of action, it appears to follow that the act of concurrence of either party which is essential to the contract is itself a part of the cause of action, for without such act of concurrence the contract cannot come Into existence.'

Belying upon these observations he contended that the offer which was an act of concurrence on the part of the plaintiffs and without which the contract could not have been made in Delhi by the acceptance by the defendant there, had certainly been sent by the plaintiffs from Bombay, and that, therefore, a part of the cause of action had certainly arisen within jurisdiction. This being a decision of a Judge of co-ordinate jurisdiction, I would have been bound to follow the same provided, however, that it considered the various aspects of the question and was really a decision on the point which is at issue before me. It is well-known that the general observations which are to be found in the various authorities have got to be construed with reference to the facts and circumstances of the cases in which they have been made. The case before Fulton J., was a case where the agreement which was the subject-matter of the suit was signed in Bombay by the party whose act of concurrence was considered by the learned Judge as investing this Court with jurisdiction. In such a case there could not be the slightest doubt that whether the matter was looked at from the point of view of the cause of action having arisen within jurisdiction or from the point of view of the contract being made within jurisdiction, there was not the slightest difficulty on the point. These remarks of Fulton J., therefore should be understood as having regard to the facts and circumstances of the particular case, and I am quite sure that the learned Judge there did not intend to make any general observations of the nature which have been relied upon by counsel for the plaintiffs. As a matter offact this decision of Fulton J,, was delivered in 1896 and there have been later authorities both in England and India which are contrary to the position enunciated so broadly by Fulton J., in that judgment. In Clarke Brothers v Knowles (1918) 1 K. B. 128 : 87 L. J. K. B. 189 it was held by Lush J. that where a contract was made by offer and acaeptanae sent through the post between parties residing in different county Court districts, the posting of the offer is not part of the cause of action within the meaning of the section, the words in Section 74, County Courts Act. 1888, being that every action or matter might be commenced by leave of the Judge on Regiatrar in the Court in the district of which the cause of action or claim wholly or in part arose. Lawrence J. observed at p. 132 (in the same case) :

'It was contended by the defendant that the posting of the offer did not constitute part of the cause of action, and that the registrar ought not to have granted the leave asked for. I agree that the posting of the offer was no part of the cause of action. The making of an offer is part of the cause of action, but an offer is made where it is received, and that in this case was at Croydon. I think, therefore, that there was no jurisdiction in the West Hartlepool County Court to deal with the case.'

8. The case in Dobson and Barlow v. Bengal Spinning and Weaving Co. 21 Bom 126 was followed by the Calcutta High Court in Engineering Supplies Ltd. v. Dhandhania & Co. : AIR1931Cal659 . That was a decision of the appeal Court at Calcutta consisting of Bankin C. J. and C. C. Ghose J. and the learned Chief Justice thereobserved (p. 546):

'We have to ask ourselves whether something, which the plaintiff is obliged to prove as a fact in order that his case may succeed, is a thing which took place within Calcutta. If it is, it seems to me to be no answer to say that what took place in Calcutta was not by itself a contract and it seems to me to be wrong to introduce notions, which depend upon the view that a contract, which was In fact made by people at different places, was made in the place where the last assent was given. Strictly a contract is not a fact but an obligation which may result from a series of facts.'

Then the learned Chief Justice proceeded to rely upon the observations of Fulton J. in Dolson and Barlow's case 21 Bom. 126 and agreed with the same. This decision, however, has not been followed by various High Courts in India. In Ahmad Bux v. Fazal Karim, i. L, B. (1940) Mad. 195 : A. I. R. 1910 Mad. 49 Eatan Lal v. Harcharan Lal I. L. R (1947) ALL. 44 : A. I. R. 1947 ALL. 337 and PoJchar Mal v. Khanewal Oil Mills A. I. R. 1945 LabIC. 260 : 221 I. C. 594, Engineering Supplies Ltd.'s case, : AIR1931Cal659 , was specifically referred to and was not followed. The ratio which was adopted in these judgments was the same as I have enunciated as takenfrom Clarke Brothers' case 1918 K. B. 128 : 87 L. j. K. b. 189. Pokhar Mal v. Khanewal Oil Mills A. I. R. 1945 all 260 : 221 I. C. 594, also reiterated the same principle and there is no doubt in my mind that the true principle is that even though an offer may have emanated from a place within jurisdiction, it cannot be said to have been made until that offer baa been received by the party to whom it has been made. If the party to whom the offer is thus communicated resides or carries on business outside jurisdiction, the offer cannot be said to have been made within jurisdiction. In my opinion, therefore, it cannot be stated that even though the offer in this case has been communicated by telegram by the plaintiffs from Bombay to the defendant in Delhi it can be said to have been made in Bombay, and it cannot be stated that therefore any part of the cause of action has arisen within jurisdiction. An attempt was further made by counsel for the plaintiffs to rely upon the decision of Patanjali Sastri J. in In re Perianna Mudali A. I. R. 1942 Mad. 31 : 43 Cri. L. J. 361. It was, however, pointed out by counsel for the defendant that this case was overruled by a decision of the Madras High Court in Manilal v. Venkatachalapathy I. L. R. (1944) Mad. 95 : A. I. R. 1943 Mad. 471.

4. I have therefore come to the conclusion that no part of the cause of action arose in Bombay, and even with leave under Clause 12, Letters Patent, which the plaintiffs obtained from this Court this Court has co jurisdiction to entertain this suit against the defendant, the defendant having all along resided and carried on business in Delhi, the contract having been made in Delhi by reason of the acceptance of the offer by his telegram dated 4-10-1946, in Delhi, and the breach thereof as I will state hereafter having also taken place in Delhi. The fact that the plaintiffs attempted to sell and did sell these shares in Bombay on 14-6-1947, is a matter of no consequence. The resale also was as I will state hereafter not binding on the defendant and it would not afford to the plaintiffa any cause of action which they could ventilate against the defendant in this Court.


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