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Indian Bank, No. 17 North Beach Road, Madras Vs. L. Ramaswamy and ors. - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKarnataka High Court
Decided On
Judge
Reported inAIR1977Kant107; ILR1977KAR407; 1977(1)KarLJ115
ActsCode of Civil Procedure (CPC), 1908 - Sections 20 - Order 1, Rule 3
AppellantIndian Bank, No. 17 North Beach Road, Madras
RespondentL. Ramaswamy and ors.
Appellant AdvocateS. Mani, Adv.
Respondent AdvocateM.P. Chandrakantharaj Urs, Adv.
Excerpt:
.....case. , (air 1964 mys 147) the facts were quite different from the facts obtaining in the present case, as in that case one of the clauses in the insurance policy had clearly envisaged the jurisdiction of a given court which was not the court where the suit in that case was filed......the plaintiff were encashed in calcutta could not have afforded any cause of action for filing the suit in calcutta high court.'the facts in oriental coal co. ltd.'s case were that this company had its registered office at calcutta. it was a registered dealer under the bihar sales tax act, 1947. it paid certain advance sales-tax amount to bihar sales tax authorities by cheque drawn on the oriental bank of commerce ltd., calcutta, which was encased at calcutta. the balance amount of sales tax was also similarly paid, the decision of the assistant superintendent of sales tax was, however, reversed in appeal by the assistant commissioner of sales tax, in view of the supreme court's decision in bengal immunity company ltd. v. state of bihar, : [1955]2scr603 . men the company claimed the.....
Judgment:

1. The short question, which is common to these five appeals, that arises for determination is as to whether the Court at Bangalore had territorial jurisdiction to entertain and try the five suits out of which the aforesaid appeals have arisen.

2. It is unnecessary to detail all the facts, as it would suffice to take notice only of such facts as will directly bear upon the question aforesaid. These facts which are not in dispute, can be stated thus:

Indian Bank with its Head Office at Madras, the appellant in all the aforesaid five appeals, was the plaintiff in all the suits. It had sanctioned a loan of Rupees 60,000/- to defendant No. 1, a Repatriate from Burma, his application for such loan, having been sponsored by defendant No. 5 - the Repatriates Co-operative Finance and Development Bank Ltd., Madras, of which defendants Nos. 1 to 4 were members. Each defendant is joined as one of the defendants to all the separate 5 suits filed against them. The plaintiff-Bank had forwarded the said application of defendant No. I along with the 'sanction ticket' to its Branch Office at Bangalore, with a direction to pay the loan amount to defendant No. 1. The loan amount thus came to be paid to defendant No. 1 at Bangalore, after an Hypothecation Deed had been executed by defendant No.1 on 18-6-1970. The Promissory note had been executed at Madras on 15-6-1970 by defendant No. 1 to which defendants Nos. 2 to 4 had also joined. A deed of Guarantee was also executed at Madras on 15th June 1970 by defendant No. 5 binding itself to the plaintiff-Bank to pay one-third of the undercharged loan along with interest thereon. Defendant No. I and his co-obligates - defendants Nos. 2 to 4, were to repay the loan amount in 30 equal installments of Rs. 2,000/- each with interest thereon at Bangalore Branch. Certain installments were so paid by defendant No. 1. But, thereafter defendant No. 1 having defaulted in performing his part of contract in regard to the repayment of loan amount, this led the plaintiff-Bank to file the aforesaid five separate suits against defend-ants Nos. 1 to 4 and defendant No. 5. The defendants of the other suits were joined to each suit as co-defendants.

3. Only defendants Nos. 1 and 5 contested the said five suits, while the others were proceeded ex prate. The aforesaid two defendants, in their respective written statements, had admitted the facts narrated above and which had been alleged by the plaintiff-Bank in its plaint. They, however, inter alia, raised an objection regarding the territorial jurisdiction of the Bangalore Court, which led to the raising of an issue by the trial Court regarding its territorial jurisdiction, which forms the issue No. 4. The trial Court treated the said issue as a preliminary one and a finding adverse to the plaintiff thereon led to the passing of the order under appeals, which required the returning of the plaint to the -plaintiff for being presented to a competent Court.

4. The learned Counsel for the appellant has canvassed before me the proposition that the Bangalore Court had the territorial jurisdiction to try the suits in question, inasmuch as the part of cause of action arose in Bangalore on account of the fact that the loan amount was paid to defendant No. 1 at Bangalore and defendant No. I was to effect repayment thereof at Bangalore. That the facts that the loan amount was paid to defendant No. 1 at Bangalore and that the loan amount. Was to be repaid by defendant No. I at Bangalore, are not in dispute, as the same stand admitted by the contesting defendants Nos. 1 and 5.

4-A. No authority is required for the proposition that payment of the contracted loan amount and the re-payment thereof pertain to the performance of the loan contract and the cause of action do arise at a place not only where a contract is concluded but where performance thereof takes place.

4-B. Mr. M. P. Chandrakantha Raj Urs learned Counsel for the only contesting respondent, has, however, contended that the said principle of law no longer holds good in view of the following observations of the Supreme Court in State of Bihar v. Oriental Coal Co. Ltd., : (1974)3CTR(SC)209 :

'This takes us to the question whether the High Court of Calcutta had territorial jurisdiction to entertain the plaintiff's suit We have earlier come to the conclusion that under law, the assessments made by the assessing authority are valid assessments and therefore it cannot be said that the payments made by the plaintiff were made under any mistaken impression of the law. Hence in our opinion the fact that the cheque issued by the Plaintiff were encashed in Calcutta could not have afforded any cause of action for filing the suit in Calcutta High Court.'

The facts in Oriental Coal Co. Ltd.'s case were that this company had its registered office at Calcutta. It was a registered dealer under the Bihar Sales Tax Act, 1947. It paid certain advance sales-tax amount to Bihar sales Tax authorities by cheque drawn on the Oriental Bank of Commerce Ltd., Calcutta, which was encased at Calcutta. The balance amount of sales tax was also similarly paid, The decision of the Assistant Superintendent of Sales Tax was, however, reversed in appeal by the Assistant Commissioner of Sales Tax, in view of the Supreme Court's decision in Bengal immunity Company Ltd. v. State of Bihar, : [1955]2SCR603 . Men the company claimed the amount back, although in the meantime the Parliament had invalidated the effect of Bengal Immunity Company's case by -passing the Sales Tax Laws (validation) Act. When the sales tax authorities declined to refund the amount in question, the said company filed a suit on the original side of the Calcutta High Court claiming the said sun, with interest and costs. In the plaint, the plaintiff put forward three different grounds as affording it a cause of action to institute the suit on the original side of the Calcutta High Court, viz., (1) that the payments in question were made by the company under a bona fide mistake of law, viz., that it was liable to pay sales tax to the defendant during the periods in question, hence it had a right to get back that amount and as the cheque in question were encased at Calcutta, a part of the cause of action arose in Calcutta; (2) that its appeal to the Assistant Commissioner of Sales Tax was heard in Calcutta and the order of the appellate authority was received at Calcutta, therefore, a part of the cause of action on that basis also arose in Calcutta; and (3) that its registered office was situated in Calcutta and it being the duty of the debtor to find out the creditor and, pay the debt, it was open to the plaintiff to sue the defendant in Calcutta. Their Lordships found that in view of the Sales Tax Laws (Validation) Act, which was given retrospective operation, no refund was due to the plaintiff-company, and further, the refund of the sales tax amount, according to the Bihar Sales Tax Rules, 1949, could be had by a dealer only through one of the Government treasuries and that in view of the above, the entire cause, of action in respect of the claim for refund on the basis of the appellate authority's order arose only within the State of Bihar and no part of that cause of action arose outside Bihar.

5. In the aforesaid observations that have been relied upon on behalf of the respondent, their Lordships, in my view, had nowhere enunciated the principle that the place of payment of the amount in performance of the loan contract does not give rise to a cause of action at the place of payment. In fact, the real ratio of the said decision finds embedded in the further observation of their Lordships to the following effect:

'Assuming, but not deciding that, the fact of encashment of cheques in Calcutta gave rise to a cause of action at Calcutta for a claim based on the ground that the payments were made on a mistaken impression of law but that circumstance cannot be said to give rise to a cause 61 action for the suit on the ground that the plaintiff is entitled to the refund of the amounts because of the appellate authority order. In our judgment the High Court failed to keep -apart the two questions namely the claim for the return of the amount paid on the basis that it was paid under a mistaken impression of law and the claim made in pursuance of the order of the appellate authority. The payments made by the plaintiff by cheques have nothing to do with the appellate authority's order. They have not been made on the basis of that order. They were made on the basis of the original assessments. The only ground on which the High Court 'has come to the conclusion that the plaintiff is entitled to claim refund of the amount paid is because of the fact that the appellate authority had decided the appeals in its favour.'

6. In fact, there cannot be two opinions on the point that part of cause of action in this case, arose at Bangalore and by virtue of the provision of Clause (c) of S. 20 , C. P. C. the Bangalore Court had jurisdiction to entertain the suit against the defendants.

7. Mr. Urs has, however, argued that so far as defendant No. 5 was concerned, no cause of action arose against it at Bangalore, as the Guarantee Deed under which it had obligated itself to the plain, tiff-Bank, was executed at Madras and in case of default in discharging of the debt by defendants Nos. 1 to 4, it was to satisfy it 9 obligation to the plaintiff-Bank at Madras under the deed of Guarantee. It was further contended by Mr. Urs that not only the Bangalore Court lacked territorial jurisdiction to entertain a separate suit against defendant No 5, it also lacked jurisdiction to implied defendant No. 5 to the other suits -and to proceed to try the said suits against the said defendant. In support of his aforesaid submissions, he placed reliance on the following observations in Bengal and North Western Railway Co. v. Sadaram Bhairodan, (ILR 49 Cal 895): (AIR 1922 Cal 500).

'The fact that the Court has jurisdiction against the Steamer Company does not give jurisdiction against the Railway Company. The fallacy of the argument, it appears to me, lies in the use of the words 'the Court has jurisdiction over the suit'. Such jurisdiction as the Court has is over the suit ' regards the Steamer Company. This does not give jurisdiction over the Railway Company, and in my opinion, O. 1, R. 3, has no bearing on the case. That rule of the Order is a provision, which relates to a joiner of parties and it assumes the existence of a suit in a proper forum, the Court having jurisdiction to try the suit. If the Court has such jurisdiction, -then O. 1, R. 3, may come into play.'

The aforesaid observations were approvingly quoted in Kurivalli Lingayya Setty v. Sitharam Agarwala, : AIR1955Mad595 and in New India Assurance Co. Ltd. v. T. X. Nanjunda Setty & Sons, (1963 (2) Mys LJ 513) = (AIR 1964 Mys 147), which decisions have also been pressed into service on behalf of respondent No 5.

8. There is no quarrel with the principle enunciated in the aforesaid three decisions, but the ratio thereof is not attracted to the facts of the present case, as the same is clearly distinguishable on facts.

9. In Bengal and North Western Railway Co.'s case (AIR 1922 Cal 500) the facts were that 2 bales of piece-goods had been allegedly delivered at Calcutta to the River Steam Navigation Co. Ltd. and the India General Steam Navigation and Railway Co. Ltd., for carriage, dispatch and delivery by transmission' to Bhupatiah, a station on the Bengal and North Western Railway, and the goods had not been delivered to the -consignee at the said Railway station. The suit was for recovery of the value of the goods to the suit that was filed -at Calcutta Court, both the River Steam Navigation Co. Ltd., and the North Western Railway Co. Ltd., were imp leaded as defendants. It was not found as a fact that the River Steam Company had not acted as the agent of the North Western Railway Co., nor the said Railway Company had its office within the jurisdiction of the -Calcutta Court, nor the Railway Station where the goods were sought to be delivered, was within the jurisdiction of the Calcutta Court. It seems that the Steamer Company had delivered the goods to the Railway Company and so; a decree against the Railway Company alone had been passed on the original side of the Calcutta Court by the learned single Judge. That judgment was reversed by a Division Bench of that Court with the observation already noticed. It is clear from the facts of that case there was no case of joint liability to the plaintiff on the part of the Steamer Company and the Railway Company. Only one of them, in the circumstances, could have been liable to the plaintiff. In that case, if the Steamer Company had not delivered the goods to the Railway Company, then the Steamer Company alone would have been liable and if the Steamer Company had delivered the goods to the Railway Company, then the Railway Company alone would have been liable. So, in either case, the suit had to be brought in the light of the above facts. If only the Steamer Company was liable the question of joining the Railway Company as a defendant in' the suit would not arise or vice versa.

If the Steamer Company had acted as the agent of the Railway Company or the Railway Company as the agent of the Steamer Company, then the decision in that case in my opinion, would have been otherwise.

10. In Kurivalli Lingayya Setty's case also, : AIR1955Mad595 the facts were clearly distinguishable from the facts of the present case. There, one merchant was cheated by defendant No.1 in that case. He initiated criminal action against defendant No. 1. Defendant No. 1 was convicted and a sum of Rs. 7,000/- that was found on his person was got deposited in the Magistrate's Court at Adoni. Later on, defendant 2 obtained a decree in a sum of Rs. 10,000/- against defendant 1 at Guntur and in execution thereof, defendant 1 in collusion with defendant 2 got attached the sum of Rs. 7,000/which was in deposit in the Court of the Magistrate at Adoni. The plaintiff on coming to know about the said fraud, filed a suit for recovery of Rs. 7,000/against defendant No. 1 at Bellary Sub-Court, to which defendant 2 was joined as one of the defendants. Defendant 2 raised an objection as to the propriety of his being imp leaded as co-defendant in the suit against defendant 1. His plea prevailed with the High Court on the ground that to the first fraud defendant 2 was not a party. Defendant 2 was involved only with regard to the attachment of Rs. 7,000/- in execution of the decree against defendant 1 at Guntur. The said act having taken place at Guntur, the cause of action against defendant 2 arose only at Guntur and therefore, that fact constituted a separate cause of action for a suit against defendant 2 which could have been filed only at Guntur. He could not have been joined as a defendant along with defendant No. 1 in a suit arising out of a cause of action against defendant 1 at another place, for to the said cause of action, defendant 2 was not in any manner connected with defendant 1.

11. In New India Assurance Co. Ltd., (AIR 1964 Mys 147) the facts were quite different from the facts obtaining in the present case, as in that case one of the clauses in the insurance policy had clearly envisaged the jurisdiction of a given court which was not the Court where the suit in that case was filed.

12. In the present case, the contesting respondent No. 5 stands in the position of a guarantor of the performance of their part by defendants Nos.1 to 4 under the loan contract relating to the re-payment of the loan amount. Me contesting respondent No. 5 therefore, stood in a position very different from the position of the defendants in the aforesaid three cases on which Mr. Urs has relied upon and who had contested the territorial jurisdiction of the Court in those cases, for in the present suits unlike those cases joint or several decrees could be obtained by the plaintiff against respondent No. 5 Bank. When such is the case, it is open to the plaintiff to imp lead the surety as co-defendant to a suit in a Court, which was competent to try the suit against the principal debtors.

13. For the reasons aforesaid, it is held that the Court at Bangalore has jurisdiction to try all the suits, because to all the suits, because to all suits the principal debtors and the surety i.e. Respondent No. 5-Bank, are parties. In the result, the appeals are allowed the orders of the trial Court under appeal are set aside and the cases are remitted back to the trial Court for decision on merits and for the trial of the other issues in the suits in accordance with law.

14. In the circumstances of the given cases, the parties are directed to bear their own costs.

15. In view of the decision in the appeals, it is unnecessary to pronounce upon and decide the application filed by the appellant for additional evidence under O. 41, R. 27, C. P. C.

16. Cases remanded.


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