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Madan Lal and ors. Vs. Chawla Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtAllahabad High Court
Decided On
Case NumberCivil Revision No. 1296 of 1951
Judge
Reported inAIR1959All612
ActsContract Act, 1872 - Sections 49; Code of Civil Procedure (CPC) , 1908 - Sections 20
AppellantMadan Lal and ors.
RespondentChawla Bank Ltd.
Appellant AdvocateJ.N. Waghray and ;S.B. Chaudhary, Advs.
Respondent AdvocateL. Chandra, Adv.
DispositionRevision allowed
Excerpt:
.....not - where suit is not filed either at a place where the defendant debtor resides or carries on business or at place where the contract is made - court has to see where the contract was to be performed - rule does not entitle the creditor in the absence of contract to the contrary to claim payment beyond the jurisdiction of the country where the contract was made. - - it was held that -the dealings showed a running account very much like a customer's current account in a bank and that it was reasonable to assume, as in the case of banking and insurance, that on the termination of the contact the balance was to be paid at lyallpur and not elsewhere and which localised the place of primary obligation,'and that the elements of this contract, that is to say, the contract out of which..........be made at dehra dun, but no payment was made by the defendant. hence the plaintiff filed the suit at dehra dun. 4. on these facts the question is whether the plaintiff was entitled to bring the suit at dehra dun. the jurisdiction of the court in cases based on con-tracts is governed by section 20 of the code of civil procedure. section 20 runs as follows : 'subject to the limitations aforesaid, 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 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 or (b) any of the defendants, where there are more than one at the time of the commencement of.....
Judgment:
ORDER

C.B. Agarwala, J.

1. This is a defendants' application in revision under Section 115 of the Code of Civil Procedure arising out of a suit for recovery of a sum of money.

2. The plaintiff opposite party is a joint stock company incorporated under the Indian Companies Act. It used to carry on its business in the N. W. F Province and after partition of India its business was shifted to Dehra Dun. The defendant-applicant had opened a cash credit account with the company at its branch at Kohat in Pakistan. The defendant also migrated to India and is living at Jullunder. The plaintiff filed a suit for the recovery of the sum due from the defendant applicant on the basis of the cash credit account, at Dehra Dun, the place where the company now carries on business.

It was alleged by the plaintiff company that there was no specific place of payment mentioned in the contract between the parties and as such it was the duty of the debtor to find his creditor and so the court at Dehra Dun had jurisdiction to try the suit. The defendant contested the suit and one of the preliminary issues raised by him was that the suit was not cognizable by the court at Dehra Dun. The trial court held that the suit was not cognizable by it and returned the plaint for presentation to the proper court. The plaintiff appealed to the lower appellate court which held that the suit was cognizable at Dehra Dun in the trial court and consequently it allowed the appeal and remanded the case to the Court below for decision on the merits. Against this order the defendant has come up in re-vision to this Court.

3. The agreement for cash credit account was executed by the defendant on 3-9-1948, at Kohat in Pakistan. No specific place for payment of the amount due to the plaintiff company was mentioned in the agreement, but the fact remains that the money was advanced at Kohat at the branch of the plaintiff company and payments from time to time were also made by the defendant-applicant at Kohat. No payments were made at Dehra Dun. The plain-tiff company after it had shifted to India notified to the defendant-applicant that payment should be made at Dehra Dun, but no payment was made by the defendant. Hence the plaintiff filed the suit at Dehra Dun.

4. On these facts the question is whether the plaintiff was entitled to bring the suit at Dehra Dun. The jurisdiction of the court in cases based on con-tracts is governed by Section 20 of the Code of Civil Procedure. Section 20 runs as follows :

'Subject to the limitations aforesaid, 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 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 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'. Section 49 of the Indian Contract Act provides.- 'Where a promise is to be performed without application by the promisee and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise and to perform' it at such place.'

5. It is urged by learned counsel for the plaintiff opposite party that the English Common Law principle that the debtor must seek his creditor applies to India. Whether the rule applies or not to India in all its aspects, it cannot override the statute i.e., Section 20 of the Code of Civil Procedure under which a suit has to be filed either at the place where the defendant resides or at the place where the cause of action wholly or in part arises.

The suit has not been filed at the place where the defendant resides. The cause of action arises either at the place where the contract is made, or where it is to be performed. The contract was mada at Kohat, and the suit has not been filed there. Therefore we have to see where the contract was to be performed. In other words, what one has to find out is, which place it was where by agreement, express or implied, the payment was to be made. That ihe English Common Law rule also recognises this fact is clear from the statement of the rule itself in Hals-bury's Laws of England, para 275 of Vol 7, second edition :

'Where no place for performance is specified either expressly or by implication from the nature and terms of the contract and the surrounding circumstances and the act is one which requires the presence of both parties for completion, the general rule is that the promisor must seek out the promisee and perform the contract wherever he may happen to be. This rule applies not only to contracts for the payment of money, but to all promises for the performance of which the occurrence of the promise is necessary.'

Therefore, before the general rule can be applied, one has to be sure that no place for performance is specified either expressly or by implication from the nature and terms of the contract and surrounding circumstances.

6. Again, in Willison on Contracts, Vol VI, para 1812, the rule is stated in the following words :

'There are special rules in regard to negotiable paper, in regard to the transfer of chattels and in regard to the payment of rent by a tenant of real estate, but apart from such special rules the general principle of common law is that the debtor must seek the creditor and make tender to him wherever he is found; and even without reference to this principle the creditor's place of residence at the time when the contract was made will often be deemed by fair implication of fact the place of performance contracted for.'

In the present case by fair implication of fact the place of performance contracted for must be deemed to be the place of residence of the creditor's company at the time when the contract was made, and this was Kohat.

7. In Bengalimal v. Firm Ganga Ram Asharfi Lal, AIR 1923 All 465 (1), the plaintiff's firm was atAgra. The contract was made at Budaun with the defendants' firm for the sale of certain goods to thai; firm which were to be delivered at Budaun. The goods were despatched from Agra and delivery was taken at Budaun. As the price was not paid the plaintiff's firm brought the suit at Agra for the recovery of the price. It was held by Banerji J. that -

'If goods are purchased or money is borrowed, the payment for the goods or repayment of the money must be presumed to have been agreed to be made at the place and residence of the seller or the vendor as the case may be.'

It was therefore held that the Agra Court had jurisdiction. In this case the agreement was made at Agra, the plaintiff's firm carried on business at Agra and therefore on the principle enunciated in the ruling it was deemed that the payment was to be made at Agra.

8. In Delhi Cloth and General Mills Co., Ltd. v. Harnam Singh, : [1955]2SCR402 , the plaintiffs carried on business with the defendant company for some 4 years before 1947 and purchased cloth from the company from time to time at Lyallpur which is now in Pakistan. In 1947 there was a balance of about Rs. 12,000/- left in favour of the plaintiffs. They brought the suit against the defendant to recover the amount plus interest. It was held that -

'the dealings showed a running account very much like a customer's current account in a bank and that it was reasonable to assume, as in the case of banking and insurance, that on the termination of the contact the balance was to be paid at Lyallpur and not elsewhere and which localised the place of primary obligation,' and

'that the elements of this contract, that is to say, the contract out of which the obligation to pay arose, were most densely grouped at Lyallpur and that that was its natural seat and the place with which the transaction had its closest and most real connection.'

9. In Piyara Singh v. Bhagwan Das AIR 1951 Punjab 33, Kapur J., expressed the opinion that-

'the technical rule of the debtor seeking the creditor is not applicable in India for the purpose of determining the local jurisdiction of the Courts because that would be engrafting something on to Section 20.'

This case was followed by the same Court in Niranjan Singh v. Jagjit Singh, . In Gokul Das v. Nathu, : AIR1926All477 , the facts were similar and it was held that In the absence of a contract to the contrary the borrower ought to seek out the lender for payment. In that case also it was quite obvious that the money having been advanced by the firm which had its head office at Moradabad, the payment must be made at Moradabad. It was not a case where the plaintiff had changed his residence.

10. In Palaniappa Chettiar v. Subbiah Chettiar, AIR 1937 Rang 433, it was held that the English doctrine that the debtor must seek his creditor for the purpose of making payment in discharge of his liability applies to the case of a suit for recovery of money advanced as a loan. But the creditor's place of residence in that ease however remained the same as it was at the time when the sum was advanced.

11. Section 49 of the Indian Contract Act can only apply when there is no place fixed for the performance of the contract and when the promise is to be performed without application of the promisee. Where the place is fixed for the performance of a contract either expressly or by implication, the rule mentioned in Section 49 can have no application.

12. It seems to me that in the present case the parties impliedly agreed upon the place of payment. As already stated the money was advanced at Kohatand the defendant also made payments to the plain-tiff company at Kohat. The plaintiff company also carried on business at Kohat. The necessary implication therefore is that the parties agreed that the payment must be made at Kohat. It would not therefore be a case in which there was no agreement between the parties about the place of payment. The lower appellate Court was of opinion that there should be deemed to have been an implied agreement that the payment was to be made wherever the plaintiff company carried on its business. In my opinion there is no warrant for any such presumption. In the absence of any agreement to the contrary the defendant cannot be held bound to make the payment wherever the plaintiff company may choose to shift its business.

13. Again, the rule that a debtor must seek his creditor does not entitle the creditor in the absence of a contract to the contrary, to claim payment beyond the jurisdiction of the country where the contract was made. The contract was made in Pakistan (the date of the contract being after the partition of India), and the creditor was not entitled on shifting to India to say that the payment should be made at his new, place of residence.

14. For all these reasons I am of opinion that in the present case the suit could not be filed at Dehra Dun.

15. The result therefore is that the application is allowed, the order of the lower appellate Court is set aside and the order of the trial Court is restored. The plaint will now be returned to the plaintiff for presentation to the proper Court. The applicant will have his costs of all the Courts from the opposite party.


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