1. This preliminary objection raises a two-fold point of jurisdiction viz, (1) whether, in this case, the whole cause of action arose out of the jurisdiction and, therefore, this Court has no power to hear the third party notice at all; and (2) if part of the cause of action arose within the jurisdiction, then, whether express leave was not necessary under Clause 12 of the Letters Patent before the third party notice could be served.
2. I am now on the third party notice, and have, as between plaintiffs and defendant already given a decree in favour of the plaintiffs. The present issue, viz., No. 1, is between the defendant and the third party.
3. On the first point, the substance of the suit relates to certain cotton contracts on which, as I have said, I have found the defendant is liable to the plaintiffs. As between the defendant and the third party the defendant's case depends on a right of indemnity and, substantially, it is based on an express agreement of the 21st May 1916, Exhibit No. 4. The effect of that agreement was that the third party was to take over the cotton contracts then outstanding between the plaintiffs and the defendant, and that the defendant was to carry out certain instructions of the third party in relation thereto, and that the third party thenceforth was to be responsible peculiarly on these contracts. The third party says that the true relation was not that of principal and agent but that of vendor and purchaser, or assignor and assignee. Even assuming in his favour, without deciding the point that that is the true view, still it is clear that the contract, Exhibit 4, contemplated the defendant carrying out its terms by performing certain acts in Bombay. In other words, if he came to sue the third party on this contract as he has now done, he would have to prove certain acts of his which either took place in Bombay, or which, by means of telegram, resulted in acts in Bombay. What I refer to are the cotton transactions which the plaintiffs carried out in Bombay as the result of instructions given by the defendant. It seems to me that, on that ground alone, a part of the cause of action has arisen in Bombay, because, to sue on the contract, it would be necessary for the defendant to prove certain operations carried out in Bombay by his instructions.
4. Mr. Setalvad, for the defendants, has taken another point, and that also seems to me, as at present advised, to be well founded. He says, as far as the third party notice is concerned, a part of the cause of action is this very suit in Bombay, because the validity of a third party notice depends on two things, viz., first a hostile suit in Court, and secondly, a right to indemnity. The hostile suit be relies on is this very suit filed in Bombay. It, teems to me, therefore, that the third party's objection on the ground that the subject-matter of this third party notice arose wholly out of jurisdiction, unfounded.
5. Now, I come to the second point, which has given me rather mere trouble, and that is, whether assuming that part of the cause of action arose out of the jurisdiction, then whether leave to serve this third party notice ought not to have been obtained under Clause 12 of the Letters Patent. In considering that, one may compare three classes of proceedings, viz, (1) an ordinary suit, where you add a defendant, (2) a suit where there is a counter claim bringing in a new party, and (3) a third party notice. Now, as regards class No. 1, it seems clear that, under the Bombay High Court practice, you must obtain leave under Clause 12 of the Letters Patent to sue the new defendant although you may have obtained leave, under Clause 12 to bring the suit against the original defendant. Authority for that proposition will be found in Rampartab Samrathrai v. Foolilai 20 B. 767 : 10 I. D. 1082, Similarly as regards class 2, if you bring a counterclaim against the plaintiff and bring in as a defendant to that counter claim a new party, there, again, you must get leave under Clause 12 of the Letters Patent, because, as has very properly been admitted by Mr. Setalvau, under our Bombay Rules (rule 118) a counter-claim has the same effect as a cross-suit. Therefore if leave would be necessary for an original suit, so also is it for a cross-suit. I am assuming, of course, cases where part of the cause of action is outside the jurisdiction and where the defendants live out of the jurisdiction.
6. Now, I come to the question of the third party notice, class 3. This is, in some respects, a combination of class 1 and class 2 and for this reason. The usual order provides that the third party shall be at liberty to appear at the trial of the action and take such part therein as he may be advised, and that the third party notice is to be tried at the same time as the original suit but after it. Now, what is the effect of this order? The third party can appear at the trial and, subject to the Judge's directing, he can dispute the plaintiffs' claim. This he could not do it it was merely the case of a cross suit, because, in that event, he would have no Iccus standi on the hearing of the original suit. The third party, therefore, resembles to some degree an added defendant, although the plaintiff obtains no decree against him directly.
7. Then, when the third party notice is tried, it is in the nature of a cross-claim, namely, a claim brought by the defendant against the third party. Perhaps, to be quite accurate, a cross suit should involve a claim against the plaintiff as fell, but the analogy is near enough for my purpose. Therefore, on principle, one would expect to find that it is as necessary to obtain leave for a third party notice as it would be if the third party was added as a defendant, or if a counter-claim was brought against him as a new party.
8. Counsel have been unable to find any Indian authority on the point and they tell me that the third party procedure was introduced into this Court by Sir Lawrence Jenkins and that other Indian High Courts have not yet adopted it. This may account for that lack of Indian authority.
9. As far as the English practice is concerned, it is quite clear from the decision of the Court of Appeal in McCheane v. Gyled (1902), Ch. D. 287 : 71 L.J. Ch. 183, 86 L.T. 1 : 50 W.R. 876 that under the English practice the leave of the Court is necessary to serve third party notice out of the jurisdiction. Mr. Setalvad say this decision depends on the wording of the English Supreme Court Rules, one of which requires third party notices to be served like writs (as in our Rule 127), and another of which requires leave for service of writs out of the jurisdiction. The latter rule, he says, is not to be found in our practice, for Clause 12 of the Letters Patent requires leave for certain suits and not for service of writs.
10. I do not, however, propose to discuss the differences--for there are differences--between the English rules as to pleadings and service out of the jurisdiction on the one hand and the Indian rules as to pleadings and leave under Clause 12 on the other hand. Nor do I propose to rely on Mc Cheane v. Gyles (1902), Ch. D. 287 : 71 L.J. Ch. 183, 86 L.T. 1 : 50 W.R. 876 as governing our practice. It is only useful by analogy. But I may just notice that our Bombay rules have so faithfully copied the English third party rules as to retain in Rule 127 a reference to a statement of claim a pleading unknown in our Courts. In fact, in England the writ precedes the statement of claim. In India, the plaint precedes the writ.
11. The real point here is, I think, whether these third party proceedings come within the description 'suits of every description' in Clause 12 of the Letters Patent. Now, as to that, our third party rules will be found in Chapter VIII, Rules 127 to 133. It is to be observed that, under Rule 128, if the third party does not appear on the third party notice, he is to be deemed to admit the validity of the decree obtained against the defendant, and his own liability to contribute or indemnify to the extent claimed in the third party notice. Then, under Rule 129, 'where a third party makes default in entering an appearance in the suit in case the suit is tried and results in favour of the plaintiff, the Judge who tries the suit may, at or after the trial, pass such decree as the nature of the case may require, for the defendant giving the notice against the third party.'
12. Therefore, although we do not find in the third party rules, express words like those in Rule 118 treating counter--claim as cross suits, and, although we have not got the same express provision in any of the Indian Statutes, as is contained in the English Judicature Act, 1873, Section 24(iii), which expressly provides for third parties, still we have under the Bombay High Court Rules a form of procedure which is in substance a 'suit' against the third party within the Letters Patent. Before the third party notice has been served on him, he is a free man and no Court can pass a decree against him. As a result of that third party notice he is in peril, and may, unless he takes certain steps, have a decree passed against him. It seems to me, therefore, that, substantially, the case falls within Clause 12 of the Letters Patent, just as the case of an added defendant or of a counter-claim against a new party does, and that leave under Clause 12 is necessary.
13. This brings me to the next question whether leave was, in point of fact, obtained. Leave in the ordinary way was not obtained, that is to say, there is not the usual express endorsement 'Leave under Clause 12 of the Letters Patent'. But the Judge's order of the 9th August 1917 giving leave to issue the third party notice was in the following form: 'I do order that the defendant be and he is hereby authorised to issue a third party notice against the said Karim Elahi Seth notwithstanding the time to file his written statement having expired and to serve the same upon him by sending it by registered post to the address of the said Karim Elahi Seth at Mohulla Dhalan, Peshawar City'.
14. Here you get an express statement in the Judge's own order that the defendant is to be at liberty to serve this third party notice by sending it by registered post outside, the jurisdiction.
15. It is, accordingly, argued that there was implied leave under Clause 12. But, as I have already intimated, there are differences between Clause 12 and the English rules as to service out of the jurisdiction, and to treat the two as the same may be misleading. Further, my attention has been drawn to the judgment of Mr. Justice Candy in Rampartab Samrathrai v. Foolihai 20 B. 767 : 10 I. D. 1082, where there had been an order made by Farran, J, to add a party as a defendant. That party was out of the jurisdiction. Subsequently, at the trial, the point that no leave had been obtained, was raised, and it was answered by saying that is the Judge gave leave to add this party, it must be inferred that he gave leave also under Clause 12. Candy, J., overruled that answer and said, at page 774: 'It cannot be inferred that leave was then allowed or granted. In Jairam Narayan v. Ata aram Narayan 4 B 482 : 2 I. D. 830 Mr. Justice West was asked to draw a similar inference, because leave had been granted to the plaintiff to sue as a pauper: 'but such leave' (be said) 'does not by any means necessarily imply that this particular question was judicially considered.'
16. I may add that the order of Mr. Justice Farran will be found in Foolibai v. Rampartab Samrathrai 17 B 466 9 I D 303 and that the point as to jurisdiction does not appear to have been raised before him, but that on appeal it was evidently present to the mind of Sir Charles Sargent, having regard to what that learned Judge said on page 465.
17. No doubt, there is a distinction on the facts of the present case, because Mr. Justice Kajiji's order expressly mentions service out of the jurisdiction. In the view, however, which I take, it is unnecessary to decide this point. I will leave it open for future decision if necessary. I will only add that, in my opinion, Solicitors should be careful to get leave under Clause 12 in express terms. If that had been done here, of course, the point would have been unarguable.
18. Assuming, then, for the purposes of this case (but without deciding the point) that the Judge's order of 9th August 1917 did not give the necessary leave under Clause 12, it still remains to be seen what was done on that third party notice. The order, as I have said, was made on the 9th of August, and on the 7th of September the usual summons for directions was taken out. In answer to that summons the third party filed an affidavit of the 21st September 1917 and in paragraph 1 of that he said: 'I appear on this third party notice under protest and submit that this Honourable Court has no jurisdiction to try the question between the defendant and myself as raised by the defendant in his written statement and in his affidavit of 23rd July last' and he went on to say 'I submit the whole of the cause of action between the defendant and myself arose in Peshawar'. That point I have already; dealt with. It is the first objection. This; affidavit did not raise the second objection, namely, that if part of the cause of action arose in Bombay, leave under Clause 12 of, the Letters Patent had not been applied for That affidavit was answered by the defendant, and the third party put in a further affidavit of the 4th October 1917. Then, on the hearing of the summons, the Judge made his order of the 5th October 1917 in which he ordered the summons for directions to be made absolute; that the third party do file his written statement within four weeks, and make and file his affidavit of documents, and be at liberty to appear at the trial of this action and take such part therein as he may be advised and be bound by the result of the trial, and that the question of the liability of the third party to indemnify the defendant be tried at the trial of this action but subsequent thereto, and he ordered the costs to be costs in the cause. That was the usual form of order.
19. There is not a word said there about reserving the right of the third party to raise the point of jurisdiction at the trial. I must, I think, on he facts and on this order, assume that the learned Judge decided the point of jurisdiction against the third party. There has been no appeal from that order and it was made as long ago as October 1917. If I was now to decide that this Court has no jurisdiction to hear the third party notice, I should in effect be heading an appeal, and reversing, on appeal, the decision of Mr. Justice Kajiji which, of course, I have no jurisdiction to do. Further, when it comes to the farther point of embarrassment, which also was raised before Mr. Justice Kajiji, and to the argument that in, the exercise of my discretion I should decline to hear this third party notice and leave the defendant to a fresh suit, I think there, again, I really cannot enter into questions of that sort, in view of the deliberate decision of the Chamber Judge made so long ago as October 1917. It will be noticed that in Mc Cheane v. Gyles (1902), Ch. D. 287 : 71 L.J. Ch. 183, 86 L.T. 1 : 50 W.R. 876 the third party moved to pet aside the notice and order and when the motion was refused an appeal was presented (see pages 289.290).
20. I, therefore, think that in substance this question of jurisdiction is res judicata having regard to the order of the Chamber Judge of the 5th October 1917 and that, accordingly, the point of jurisdiction which has been raised at the trial failed.
21. I accordingly answer Issue No. 1, viz., whether the Court has jurisdiction to try this suit between the defendant and the third party, in the affirmative, and direct the trial of the other issues on the third party notice to processed.