1. I agree with the conclusions arrived at by any learned brother and desire to make a few observations on some of the questions of law which ha has so elaborately discussed in his judgment. It is contended on behalf of the defendant-appellant that the Court of the Subordinate Judge at Agra had no jurisdiction to try the suit. It is pointed out that the contract between the parties was entered into at Baroda, where payment was to be made, and that the defendant's place of business is also at Baroda. The plaintiff's reply to this objection is that the cause of action for the suit arose partly, at any rate, at every one of the places where, according to the terms of the contract between the parties, sleepers could be delivered and that Agra was one of the places where the contract made it permissible for the plaintiff to make delivery. The agreement does not mention in clear terms that the plaintiff could deliver at Agra; but the language employed in the various orders can leave no room for doubt that Agra was one of the places where sleepers could be delivered. To quote the precise words : 'F.O.R. Stations on R.K., N.W., E.I., B.N., and B.N.W. Railways.' These words are entered in a column headed materials to be supplied.' I have no doubt that the words imply that sleepers may be supplied by the contractor free of rail at stations on the railway lines therein mentioned. It is not disputed that Agra is one of such stations. It was faintly suggested that the words merely make the dafendant liable for freight from the place where they are loaded and that there is nothing to warrant the supposition that delivery was to be made anywhere but the destination. I do not think that the words and the surrounding circumstances justify that view. It is not merely the liability to pay freight which is intended to be dealt with by these words in this part of the agreement. The words 'materials to be supplied' with the words 'F.O.R. Stations on... Railways' clearly mean that the sleepers shall be supplied at any of the stations on certain railway lines and thereafter the supplier's responsibility will end. This view finds support from Benaim and Co. v. Debono (1924) A.C. 514 decided by their Lordships of the judicial Committee. In that case a merchant carrying on business in Gibralter agreed to sell F.O.B. Gibralter to a merchant of Malta. It was found that the acceptance of the agreement having taken place in Malta the contract should be deemed to have been entered into there. In determining the place of performance the place of delivery assumed considerable importance. Their Lordships found that delivery was to be made in Gibralter which should be deemed to be the place of performance. In this view, I take it to be established that the agreement between the parties was that the plaintiff could supply sleepers at Agra where the defendant would take delivery and thereafter pay all charges of transport.
2. The second ground on which the jurisdiction of the learned Subordinate Judge of Agra, and indeed of every other Court in British India, is questioned has reference to the domicile of the defendant, Gaikwar of Baroda's State Railway, no part of whose organization is in British India. It is contended, mainly on the authority of Gurdial Singh v. Raja of Faridkot (1894) 22 Cal. 222 that territorial jurisdiction attaches (with special exceptions) upon all persons either permanently or temporarily resident within the territory, while they are within it; but it does not follow them after they have withdrawn from it, and when they are living in another independent country. Some of the dicta occurring in that case, at first sight, lend considerable force to the appellant's contention. To ascertain the ratio decidendi of that case in its true perspective, the circumstances of that case should be clearly borne in mind. The defendant in that case, who was a native of Jhind, an independent territory was sued by the Raja of Faridkot which is another independent territory and in which the defendant had been-employed as treasurer. The suit was instituted in one of the Courts at Faridkot for relief arising out of contract or tort, the defendant having incurred certain liabilities in relation to his duties as the treasurer of Faridkot State. The defendant was served with notice of the suit in Jhind, where he had resumed his residence before the suit. He did not enter appearance, and an ex parte decree was passed. Subsequently proceedings were taken in the Punjab before a British Indian Court, the action being founded on the decree passed by the Faridkot Court, which was rightly treated as the decree of a foreign Court and could be effective in British India only if another decree were passed by a British Indian Court under Section 13, Civil P.C., (Section 14, Act 14 of 1882). It was objected by the defendant that the decree passed by the Faridkot Court was a nullity as that Court had no jurisdiction over a foreigner like the defendant. The Chief Court overruled this objection; but the Privy Council upheld it. The gist of their Lordships' decision is contained in the following passage:
Under these circumstances, there was, in their Lordships' opinion, nothing to take this case out of the general rule, that the plaintiff must sue in the Court to which the defendant is subject at the time of suit (actor sequitur forum rei) which is rightly stated by Sir Kobert Phillimore (International Law, vol. 4, Section 891) to 'lie at the root of all international and of most domestic jurisprudence on this matter.' All jurisdiction is properly territorial, and extra territorium jus dicenti, impune non paretur.
3. Their Lordships proceeded to observe that:
These are doctrines laid down by all the leading authorities on International Law; among others, by story (Conflict of Laws, 2nd Edn., Sections 546, 549, 553, 554, 556, 586) and by Chancellor Kent (Commentaries, Vol. 1, p. 284, note (c) 10th Edn.), and no exception is made to them in favour of the exercise of jurisdiction against a defendant not otherwise subject to it by the Courts of the country in which the cause of action arose, or (in cases of contract) by the Courts of the locus solutionis. In those cases as well as all others, when the action is personal, the Courts of the country in which a defendant resides have power, and they ought to be resorted to, to do justice.
4. Referring to an English case their Lordships expressed the opinion that:
Boeyond doubt, in such a case the laws of the country in which an obligation was contracted ?might bind the parties so far as the interpretation and effect of the obligation was concerned on whatever forum the remedy might be sought...if he (Blackburn, J.) had heard argument upon the question, whether an obligation to accept the forum loci contracsus, as having, by reasons of the contract, a conventional jurisdiction against the parties in a suit founded upon that contract for all future time, wherever they might be domiciled or resident, was generally to be implied, he would have come (as their Lordships do) to the conclusion that such obligation, unless expressed, could not be implied.
5. It is abundantly clear that, according to international law, pure and simple, a Court has no jurisdiction to entertain a suit against a foreigner who does not permanently or temporarily reside within its jurisdiction and who has not submitted to its jurisdiction, only because the contract giving rise to the suit was entered into within its jurisdiction or because the cause of action, wholly or in part arose within its jurisdiction. There are however clear indications in the judgment of their Lordships that somewhat different considerations arise where local legislature has conferred jurisdiction upon the Court in which a foreigner is sued on the ground that the cause of action arose within its jurisdiction. Their Lordships said:
In a personal action, to which none of these causes of jurisdiction apply, a decree pronounced in absentem by a foreign Court, to the jurisdiction of which the defendant has not in any way submitted himself, is by International law an absolute nullity. He is under no obligation of any kind to obey it, and it must be regarded as a mere nullity by the Courts of every nation, except (when authorized by special local legislation) in the country of the forum by which it was pronounced.
6. It follows from the exception thus recognized that, if the Indian legislature has conferred jurisdiction upon the Courts situate in British India to entertain suits against foreigners, where cause of action, wholly or in part, arose within its jurisdiction, such Court undoubtedly has jurisdiction if the conditions provided by the law to which it is subject exist. This brings us to the consideration of the question whether Section 20, Civil P.C., which is relied on by the plaintiff in support of the lower Court's jurisdiction, is wide enough to apply to a foreigner. It must be conceded that its language is so general as to entitle a plaintiff to sue in a Court in which his cause of action wholly or in part arose. There is nothing in that section which makes an exception as regards a foreigner, if other conditions are fulfilled. Subject to anything that may be said as regards the Indian legislature having power to make laws affecting the rights of foreigners, I think that a Court in British India cannot disclaim jurisdiction against a foreigner if the plaintiff's cause of action wholly or in part arose within its jurisdiction. Whatever may be the sanctity attaching to its decree whenever it is questioned in a foreign country, the Court which is required; to pass it or any other Court similarly situated cannot disregard the law made by the Indian legislature. The position and constitution of Indian States are so peculiar that abstract principles of International law, when applied to concrete cases arising in British India will lead to anomalous results. In the Faridkot case (1894) 22 Cal. 222 the jurisdiction of the Court situate in one State as regards a person owing allegiance to another State was in question. The relations between any two States situate in India are not the same as those subsisting between British India and the* States. International law regulates relationship between two absolutely independent states. The states of Faridkot and Jhind may be absolutely independent of each other; but the same however cannot be said in respect of an Indian-State vis-a-vis British India. The whole principle on which the rules of International law are based is, as observed by their Lordships of the Privy Council in the Faridkot case (1894) 22 Cal. 222 (p. 238), that:
No territorial legislation can give jurisdiction which any foreign Court ought to recognize against foreigners who owe no allegiance or obedience to the power which so legislates.
7. The jurisdiction of a Court as against a foreigner is really questioned on a more far reaching ground where local law has conferred jurisdiction upon it against foreigners. It is the power of the legislature itself which is negatived, where local legislature confers unlimited jurisdiction upon its Courts to entertain suits against foreigners, all Courts bound by such legislature cannot disclaim jurisdiction or refuse to recognize the validity of decrees passed against foreigners by such Courts; but the validity of these decrees may have to be tested in foreign countries, which are at liberty to question the power of the State in which they were passed and which will be guided by considerations involving not only the question whether the Court which passed a particular decree had jurisdiction to pass it, but the further question whether the legislature which conferred jurisdiction on the Court passing the decree had itself power to pass the law conferring that jurisdiction. The jurisdiction of the Subordinate Judge of Agra is, in substance, questioned on the ground that the Indian Legislature had no power to confer jurisdiction upon Courts in British India to entertain suits against residents in Indian States, where cause of action arose within their jurisdiction. I do not think that this ground can prevail, as it cannot be said that a resident of an Indian State owes no 'allegiance or obedience to the power which legislates.' As I shall presently show, the power to legislate, possessed by the Indian legislature, is derived from Act of Parliament, to which undoubtedly every Indian State and its subjects owe allegiance and obedience. The extent to which Indian States and its people are amenable to the authority of the Indian Legislature by the sovereign power to which both British India and Indian States owe allegiance, is to be found in Acts of Parliament, under which the Legislative Council of British India was constituted. The earliest, to which it is necessary to refer and which was in full force in 1908, when the Code of Civil Procedure, Act 5 of 1908, was passed, is the Indian Councils Act of 1861 (24 and 25 Victoria, Ch. '67.), which was passed on 1st August 1861 by the Queen's Most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons. Section 22 of that enactment provided as follows:
The Governor-General in Council shall have power at meetings for the purpose of making Laws and Regulations as aforesaid, and subject to the provisions herein contained, to make Laws and Regulations for repealing, amending, or altering any Laws or Regulations whatever, now in force or hereafter to be in force in the Indian Territories now under the Dominion of Her Majesty, and to make Laws and Regulations for all persons, whether British or Native, Foreigners or others, and for all Courts of Justice whatever and for all Places and Things whatever within the said Territories, and or all servants of the, Government of India within the Dominions of Princes and States in alliance with Her Majesty....
8. The powers thus conferred upon the Governor-General in Council were enlarged by an Amending Act of 1865 (28 and 29 Victoria, Ch. 17), the preamble of which runs as follows:
Whereas by an Act passed in the Sessions holden in the twenty-fourth and twenty-fifth years of the Reign of Her Present Majesty, Ch. 67, it was, among other things, enacted, that the Governor-General of India in Council shall have power, at meetings for the purpose of making Laws and Regulations, to make Laws and Regulations for all persons, whether British or Native, Foreigners or others, within the Indian Territories under the Dominion of Her Majesty... And whereas it is expedient to enlarge the said power by authorizing the Governor-General of India in Council to make Laws and Regulations for all British subjects of Her Majesty within the Dominions of such Princes and States....
9. The first section of the Amending Act provided:
The Governor-General of India shall have power, at Meetings for the purpose of making Laws and Regulations, to make Laws and Regulations for all British subjects of Her Majesty within the Dominions of Princes and States in India in alliance with Her Majesty, whether in the service of the Government of India or otherwise.
10. Further extensions of the Indian Councils Act of 1861 were made by the Amending Act of 1869 (32 and 33 Victoria, Ch. 98) and by that of 1892 (55 and 56 Victoria, Ch. 14). The Indian Councils Act of 1909 and the Government of India Act of 1919, which did not effect any charge of substance, were passed after the Civil Procedure Code and need not be considered in detail. It is not necessary to consider the question whether a person residing in an Indian State should be considered a foreigner or British subject, as in either case under the Indian Councils Act of 1861 as amended subsequently, the Governor-General of India in Council is authorised to make laws applicable to them. Ample safeguards were provided, at any rate, in the Indian Councils Act of 1861 to protect the interests of persons other than those residing in British India. Any improper legislation could be vetoed by the Governor-General, and further protection was afforded by Section 21 of the Act of 1861, which provided that:
Whenever any such Law or Regulation has been assented to by the Governor-General, he shall transmit to the Secretary of State for India an authentic copy thereof; and it shall be lawful for Her Majesty to signify through, the Secretary of State for India in Council, Her disallowance of such law; and such disallowance shall make void and annul such law, from or after the day on which the Governor-General shall make known, by proclamation, or by signification to his Council, that he has received the notification of such disallowance by Her Majesty.
11. The power thus conferred upon the Governor-General is very wide and comprehensive, and it cannot be doubted that any law passed by the legislative authority in British India which has received the assent of the Governor-General, must be recognized as binding on those residing in Indian States, so far as such law affects them. Sections 84 and 87, Civil P.C., clearly illustrate the existence of this power. In those sections foreign states, princes, chiefs and ambassadors and envoys have been accorded certain privileges as regards suits to be brought against them. Section 20, Civil P.C., which provides for forum as regards all suits whether instituted against British Indian subjects or others, is as already mentioned, wide enough to cover cases against persons residing in Indian States. It is clear to me that a decree passed against a person residing in an Indian State by a Court having jurisdiction under Section 20, Civil P.C., cannot be disregarded as one passed without jurisdiction by any Court in British India or one situate in an Indian State, all of which owe allegiance to the Crown, from whom legislative authority is derived by the Indian Legislature, which conferred jurisdiction upon the Court passing it. The case law bearing on this question fully supports the conclusion arrived at by me, though the reasoning and the grounds on which the case of Gurdayal Singh v. Raja of Faridkot (1894) 22 Cal. 222 is distinguished may be somewhat different. In Kessowji Damodar Jairam v. Khimji Jairam (1888) 12 Bom. 57, which is relied on by the defendant appellant and supports him, had reference to Clause 12, Letters Patent, of the Bombay High Court. It was certainly held in that case that the Bombay High Court could not, in the exercise of its original jurisdiction, entertain the suit against a resident of Cutch, who, if he had been residing in British India, would have been amenable to its jurisdiction. Later rulings of the Bombay High Court practically overrule it : Sea Girdhar Damodar v. Kassigar Hiragar (1893) 17 Bom. 662 and Rambhat v. Shanker Baswant (1901) 25 Bom. 528, in which it was definitely held that:
Under the Civil Procedure Code (Act 14 of 1882) British Courts are empowered to pass judgment against a non-resident foreigner provided that the cause of action has arisen within the jurisdiction of the Court pronouncing the judgment.
12. The Madras High Court has also taken the same view in Srinivasa Moorthy v. Venkata Varada Ayyangar (1906) 29 Mad. 239. An observation of their Lordships of the Privy Council in Annamalai Chetty v. Murugasa Chetty (1903) 26 Mad. 544 (at p. 552) fully supports the view taken by the Bombay and the Madras High Courts:
Their Lordships see no reason for doubting the correctness of the decision of the case of Girdhar Damodar v. Kassigar Hiragar (1893) 17 Bom. 662 at p. 666 where the defendant was a native of Cutch and the cause of action arose within the local limits of the jurisdiction of the British Indian Court in which the action was brought. But that case does not cover the present one.
13. The case to which their Lordships made reference has already been mentioned by me. It was held in that case that the Bombay High Court had jurisdiction to entertain a suit on its original side against a native of Cutch as the cause of action has arisen within its jurisdiction. Another case decided by their Lordships of the Privy Council, is Srinivasa Moorthy v. Venkata Varada Ayyangar (1911) 34 Mad. 257, on appeal from the decision in Srinivasa Moorthy v. Venkata Varada Ayyangar (1906) 29 Mad. 239, It must be said as regards this case that the decision turned on the question whether the defendant who was not a permanent resident of British India, was held to be dwelling within the jurisdiction of the Madras High Court within the meaning of its Letters Patent. At first sight there seems an inconsistency between a dictum of their Lordships of the Privy Council in the Faridkot case (1894) 22 Cal. 222 and their reference with approval to Girdhar Damodar v. Kassigar Hiragar (1893) 17 Bom. 662, already quoted. It seems to me that the two are easily reconcilable. In the Faridkot case (1894) 22 Cal. 222 the question was whether the Court of one Indian State had jurisdiction over a person residing in another Indian State. Their Lordships held in the negative, even though the cause of action had accrued within the jurisdiction of the Faridkot Court, the reason being that one of these States had no authority to confer jurisdiction upon its Court so as to affect residents of another State, assuming the law in force in Faridkot conferred jurisdiction upon its Courts against foreigners in the manner laid down by Section 20, Civil P.C. In the case of Girdhar Damodhar v. Kassigar Hiragar (1893) 17 Bom. 662, the question was whether a Court in British India had jurisdiction against a resident of Cutch, where the cause of action arose within its jurisdiction. The answer in the affirmative, given both by the Bombay High Court and their Lordships of the Privy Council is easily supported on the hypothesis which I have discussed above, namely, that the Indian legislature has so enacted Section 20, Civil P.C., as to confer jurisdiction on the British Indian Courts as regards parsons residing in Indian States, who owe allegiance to the Crown, from whom the Indian Legislature derives its authority.
14. A Bench of this Court held in V. E. Smith v. Indian Textile Co. : AIR1927All413 that the Code of Civil Procedure extends to the whole of British India, and there is no limitation in the Code or in any other Act in force in this country excepting foreigners from the jurisdiction of British Indian Courts. My learned brother has dealt at length on the question whether the defendant submitted to the jurisdiction of the learned Subordinate Judge by appearing and contesting the plaintiff's case. I agree with him that it is not open to the defendant to turn round and escape the consequence of the decree passed by the Court below on the ground that it had no jurisdiction. It is true that the defendant questioned the jurisdiction of the learned Subordinate Judge. This however does not take away the effect of the defendant's conduct in appearing and contesting the plaintiff's claim to the bitter end. If the defendant had no intention of submitting to the jurisdiction of the lower Court, he should have ignored the process issued by it. This view is fully borne out by the cases cited and discussed by my learned brother and I have nothing to add. Another contention put forward on behalf of the defendant-appellant was that the suit, as framed, was not maintainable. The defendant has been styled as the 'Gaikwar Baroda State Railway through its manager and Engineer-in-Chief.' It was argued that the person really sued is His Highness the Maharaja and that no permission of the Governor-General of India having been obtained, as required by Section 86, Civil P.C., the suit was not maintainable. It is said that the satisfaction of the decree, if passed, will be obtained from funds belonging to the Maharaja. The question however is whether Section 86, Civil P.C., is applicable to a claim of the nature made in the present case. Section 86, occurs in a part of the Civil Procedure Code which is headed as 'suits by aliens and by or against foreign and native rulers.' Section 86 contemplates cases in which a claim is directed against a prince or chief as such. It is said that Section 87 which provides that a sovereign prince or a ruling chief shall be sued in the name of his State, is against this view. I do not think that there is any inconsistency between Section 87 and Section 86 being limited to suits against Princes and Chiefs personally. Both the sections have been framed in deference to the dignity of the Princes and Chiefs. Where the consent of the Governor-General required by Section 86 is given, the Code further provides in Section 87 that the name of the Prince and Chief should not be dragged in the title of the suit and that he should be sued in the name of his State. These sections must be read with other parts of the Civil Procedure Code, which, in my opinion, cover a case like this. Order 30, Rule 10, Civil P.C., provides that:
Any person carrying on business in a name or style other than his own name must be sued in such name or style as if it were a firm name; and so far as the nature of the case will permit all rules under this order shall apply.
15. Since the Maharaja of Baroda carries on business that is, runs a railway in the name and style of 'The Gaikwara Baroda State Railway' he can be sued in such name. The object underlying Sections 86 and 87, Civil P.C., is in no way frustrated. The contract having been entered into by the railway administration represented by its manager, the other party to the contract is entitled to treat it as a legal entity for obtaining relief against breach of such contract. He (the opposite party) need not go behind it to find out as to who is behind the railway administration. If the owner of the railway allows the railway to deal with third persons as a legal entity and to enter into a contract on that footing, he cannot, when a suit is brought on such contract, assert his position as the proper party, nor can the railway administration repudiate its liability to be sued. If a railway administration could enter into a contract through its manager, I can see no jurisdiction for holding that it cannot be sued through the same agency. So far as the ruler of the state is concerned, no property other than that administered by the railway will be liable to satisfy the decree which may be passed against the railway administration. In this connection it is important to note that the contracts now sued on were made with the railway administration.
16. The learned Subordinate Judge has elaborately dealt with the question whether the Gaikwar Baroda State Railway is a corporation sole. I do not think that it is necessary to express any opinion on that question. In my view, even if the Gaikwar Baroda State Railway is a corporation sole, the contention urged on behalf of the defendant-appellant, which is based on Section 86, Civil P.C., has to be met. It cannot, in my opinion, be met by reference to Order 29, which makes certain provisions for suits by or against corporations. There are only three rules in that order, none of which lays down that a suit may be brought against a corporation in its own name. The proposition that a suit against a corporation without disclosing the name of the person behind it is maintainable, cannot be supported by anything, in Order 29. In my opinion, Order 30, Civil P.C., which is headed as 'suits by or against firms and persons carrying on business in names other than their own,' will have to be resorted to for holding that such a suit is maintainable. As I have said, Rule 10 of that order clearly, covers a case like the one before us. On questions other than those discussed above I am in full agreement with the conclusion arrived at by my learned brother, and have nothing to add.
Rachhpal Singh, J.
17. This is a defendant's appeal arising out of a suit to recover balance of the price of the goods supplied and damages. The facts which have given rise to this litigation between the parties may briefly be stated as follows : Sheikh Habibullah, the plaintiff-respondent, is a timber merchant, carrying on business at Agra and takes contracts for the supply of sleepers and logs of wood to various railway administrations in India. The defendant in this case is Gaikwar Baroda State Railway, and it had been sued through its Manager and Chief Engineer. On 19th April 1923, the plaintiff was given a contract, under work order No. 42, for the supply of 25,000 sleepers. On 23rd April 1923, the plaintiff was given three more contracts for the supply of sleepers under work orders Nos. 1-M, 2-M and 3-M. All these contracts were given to the plaintiff by the Manager and Chief Engineer of the defendant railway, who according to the plaintiff, was fully competent and authorised to make them on its behalf. There are some other contracts mentioned in the plaint, but we are not concerned with them in this appeal. The plaintiff says that in respect of contracts Nos. 1-M, 2-M and 3-M he supplied certain goods but no supply has been made in regard to contract No. 42. Mr. Martin was the Manager and Chief Engineer of the defendant railway when the aforesaid four contracts were given to the plaintiff. He left the service of the defendant railway on 26th April 1923, that is to say a few days after the contracts were given. He was succeeded by Mr. Houldcraft, who, under his letter dated 14th of June 1923 cancelled all the orders which had been placed with the plaintiff, on the allegation that the materials which the plaintiff had supplied were unfit for use or of inferior quality.
18. The plaintiff alleges that on authorities this order of cancellation his representation to the Baroda State was withdrawn and the contracts were revived. Some negotiations went on and then it was agreed, according to the plaintiff, that the goods yet to be delivered should be inspected before delivery. The plaintiff says that he was agreeable to this proposal, but the Baroda State authorities insisted that the inspection should be by its officers, while he wanted this to be done through some independent agency. The defendant railway also insisted that the plaintiff should accept reduced rates for the goods which were to be supplied as a condition precedent to revival of the orders. The plaintiff did not agree to this. Eventually the Manager and Chief Engineer of the defendant railway cancelled all the work orders by his letter dated 3rd May 1934 which was received by him at Agra on 7th May 1924. The plaintiff thereupon instituted a suit in the Court below against the defendant to recover a sum of Rs. 1,54,906-10-0. The plaintiff denied that the goods supplied by him were unfit or of inferior quality, and he contended that the action of the defendant in cancelling the work orders was wrongful.
19. The defendant pleaded that H.H. the Maharaja of Bardda was the owner of the defendant railway and he should have been sued; and as this was not done the suit as instituted was bad and not maintainable. It was also contended that the Court below had no jurisdiction to try the suit, that it was not within limitation and that it was bad for the reasons given in para. 27 of the written statement. The main plea in defence was that the goods which the plaintiff had supplied were rotten and below the specification required and so the defendant was justified in cancelling the work orders. It was also alleged that the plaintiff had been overpaid, and that nothing was due to him.
20. The learned Subordinate Judge who tried the case held that he had jurisdiction to try it, that the claim was within limitation that the action of the defendant in cancelling the work orders was wrongful, and that the plaintiff was entitled to a decree. The suit was decreed for a sum of Rs. 1,01,437 with future interest at 6 per cent, per annum. The defendant has preferred this appeal against the decree of the Court below.
21. Now I proceed to consider the various points raised in this appeal on behalf of the defendant appellant. The fourth issue in the case is:
Are the contracts relied on by the plaintiff legal and binding on the defendant
22. The plaintiff in para. 3 of the plaint stated that he had entered into these contracts with the defendant railway through its Manager and Engineer-in-Chief who was competent to make them on its behalf. The defendant in his written statement denied that the contracts ware validly entered into. In para. 27 of the written statement the defendant stated that these contracts in question were illegal and invalid on the following grounds among others:
(1) One of the orders was signed after the goods covered by them had been delivered by the plaintiff. (2) The forms used for the order, referred to in para. 2 of the plaint, (were not, and are not) the proper forms prescribed for contracts under the rules and regulations of the defendant (vide annexure No. 1 which is the contract form in which such contracts are executed). (3) In respect of order No. 2-M the plaintiff falsely and fraudulently represented that the rate therein mentioned was the same as that in his agreement with the B.N. Railway for the supply of metre gauge sleepers. As a matter of fact the B.N. Railway had got no metre gauge line at all. No. other grounds were mentioned in the written statement on the basis of which the defendant contended that the contracts were illegal and invalid. The parties were examined by the Court, and at p. 31 we find that the counsel for the defendant made a further statement on this question. It was stated that on the following two grounds the contracts were not legally binding : (1) That wrong forms were used. (2) That the Manager and Engineer-in-Chief, who was a mere servant of the defendant railway, had no power to enter into contracts on its behalf without the sanction of the Minister in charge of the State, that the Manager could not put his signature to the contract without his sanction.
23. Dealing with the first objection it may be remarked that the statement made by the counsel for defendant, printed at p. 31 is correct when he says that the forms which had been used were not proper forms in which contracts of this kind should have been drawn up. There is no doubt that the forms used are meant for use in relation to building contracts given to contractors; but it is altogether wrong to say that the contract would become illegal or, not binding, simply because the Manager and Engineer-in-Chief who entered into contracts with the plaintiff, used these wrong forms. It was a servant of the defendant railway who was responsible for using wrong forms, and surely the defendant cannot derive any advantage from this omission of its own servant. In all the work orders it is clearly stated how many sleepers the plaintiff is to supply, at what rate he is to be paid, and that he is to supply sleepers as per usual specification. In spite of the use of wrong forms these contracts, if otherwise good, would be perfectly binding between the parties. In order to decide the question we have to look to the terms of the contracts. The second point taken by the defendant's counsel in the statement printed at p. 31 was that Mr. Martin, the manager and Engineer-in-Chief of the defendant railway had no authority to enter into the contracts which are the subject matter of the dispute between the parties to this appeal. It was stated that the Manager of the defendant railway had no power to enter into a contract without the sanction of the Minister in charge, and that he signed these contracts without obtaining the sanction of the Minister, and was not competent to do so. On a consideration of the evidence produced in this case I am of opinion that the point must be decided against the defendant. The defendant has not produced any rules or regulations of the State, or the railway, on a perusal of which we could see for ourselves as to whether or not under them the Manager and Engineer of the railway was competent to enter into binding contracts. No rule has been shown to prove that under it the Manager of the defendant railway has to obtain sanction of the Minister in charge before making a binding contract.
24. It is significant that during a long correspondence which passed between the plaintiff on the one side and the defendant and his legal advisers on the other, never was a suggestion made that the contracts were not binding because the manager of the defendant railway had not obtained permission of the Minister in charge. According to the correspondence Mr. Hould craft, who succeeded Mr. Martin, in the end of 1923, within a few days after these contracts in suit had been made intimated to the State authorities about them; but the State never repudiated the contracts on the ground that the Manager had no power to make the contract. In respect of work order No. 1-M, 1488 sleepers had been supplied by the plaintiff. The defendant or the State never, after knowing that these sleepers had been supplied in pursuance of an order placed by Mr. Martin with the plaintiff told him that the contract was not binding on the ground that Mr. Martin had no authority to make it. As regards 2.M, out of 10,000 sleepers only 9327 were supplied, and the defendant's Manager paid a large sum of about Rs. 41,000, and yet the defendant never took any objection that the contract was illegal. As regards the other two contracts Nos. 42 and 3-M., the defendant throughout his correspondence with the plaintiff never suggested that these contracts were not binding because the man who made them was not competent to do so. On the other hand throughout the defendant expressed his willingness to accept the goods to be supplied under these two contracts, if the plaintiff could come to terms as regards the method of their inspection before delivery. We have on the record several contracts relating to supplies of sleepers and wood in previous years all entered into between him and the Manager of the defendant Railway. I shall cite only a few of them as instances:
1. Work order No. 3 printed at p. 2 for 4,000 sleepers, dated 9th October 1920.
2. Work order No. 19 for 5,000 sleepers, dated 1st November 1920, printed at p. 245.
3. Work order No. 11, printed at p. 23, dated 5th February 1921, for the supply of 60 sleepers.
4. Work order No. 9 of 1921, printed at p. 253, dated 5th February 1921, for 14,000 sleepers.
5. Work order No. 19 of 14th May 1921, printed at p. 257 for the supply of 26,000 sleepers.
25. It will be seen that all these contracts were entered into by the Manager of the defendant Railway on its behalf. Goods were supplied and full payments made in satisfaction thereof. The defendant never raised a plea before that the Manager who had entered into these contracts was not authorized to do so. It is not suggested that those contracts were made by him with the sanction of the State. On behalf of the defendant, we were referred to the evidence of Sir Manubhai Mehta, the Diwan of the State and Mr. Parekh, who deposed that the contracts could not be made without the sanction of the Minister. It would have been much better if the defendant, instead of relying on the opinion of these gentlemen as regards the interpretation of the State rules on the subject, had produced those rules so that we might have been in a position to decide for ourselves the question of competency or otherwise of the Manager to make binding contracts on behalf of the defendant. No explanation was offered as to why, if the Manager of the defendant had no power, he was allowed for years to enter into contracts without any repudiation on the part of the State. Here we have a case of a contractor who has been supplying materials to the defendant railway for several years. All the contracts under which he made supplies were entered into by the Manager and he was always paid. Under these circumstances, the plaintiff was perfectly justified in entering into contracts with the Engineer-in-Chief of the defendant rail-way. The counsel for the defendant in his statement at p. 31 stated that most of the sleepers supplied by the plaintiff had been used in the work for which they were found fit, and some of them were still lying in the defendant's godown. If the case of the defendant was that the contracts were by an unauthorized person, then the defendant Railway was not justified in using the sleepers which the plaintiff had supplied in pursuance of those contracts. The action of the defendant in using the sleepers goes to show that it accepted the position that its Manager had full power to enter into a binding contract and it is no longer open to the defendant in view of these circumstances to change its position. The only documentary evidence on the record is an extract from the State railways' construction Code, printed at p. 243. This cannot help the defendant. All that it says is that the Manager and Engineer-in-Chief should call for tenders, but it is open to him not to do so for any reason. As regards Clause 3, para. 27, all that is necessary to say is that it was not even mentioned in his arguments by the Learned Counsel for the appellant. In my opinion, the sworn testimony of the plaintiff and the inference arising from the practice observed in other similar transactions show that the Manager had powers to make contracts on behalf of the defendant railway which have not been rebutted by the appellant. It must therefore be held that the Manager and Engineer-in-Chief of the defendant railway was competent to make contracts with the plaintiff on its behalf. The next question for consideration is that of jurisdiction. This question has two aspects which have to be considered separately, They may be subdivided as follows : (1) Whether a cause of action arose within the jurisdiction of Agra Courts. (2) Whether a foreigner not residing in British India can be sued in a British Court, if a cause of action arises against him in British India. We shall deal with these two points separately. I shall, at first, take up the question whether a cause of action arose within the jurisdiction of the learned Subordinate Judge of Agra. Section 20, Clause (c), Civil P.C., permits a plaintiff to sue in a Court within whose jurisdiction the cause of action arose wholly or in part. The plaintiff contends that his case is covered by Clause (c). The question as to what the expression 'cause of action' means, has been the subject of discussion in a large' number of cases decided by their Lordships of the Privy Council and various High Courts. In Mt. Chand Kour v. Partab Singh (1889) 16 Cal. 98, their Lordships of the Privy Council dealing with the question-made the following observations:
Now the cause of action has no relation whatsoever to the defence which may be set up by the defendant, nor does it depend upon the character of the relief prayed for by the plaintiff. It refers entirely to the grounds set forth in the plaint as the cause of action, or, in other words, to, the media upon which the plaintiff asks the. Court to arrive at a conclusion in his favour.
26. In a case Duncan Bros. and Co. v. Jeetmull Sreedharee Lal (1892) 19 Cal. 372 (F.B.) (at p. 379} it was remarked that the question
whether any particular fact constitutes a cause of action is a question of fact in each case, with reference to the substance rather than the form of action.
27. Now lei us see what is the cause of action given by the plaintiff in his plaint, as it will be on a consideration of the fact given therein that we shall have to decide whether they can be said to constitute a cause of action which gave the Court below jurisdiction. In the case before us the plaintiff in his plaint mentions that various contracts for the supply of wood were entered into between him and the defendant. The goods to be supplied were to be sent to Goyaghat, a certain place in Baroda State, from various places. Then be states that the Manager and Engineer-in-Chief of the defendant railway wrongfully cancelled his contracts on the ground that the goods already supplied were of inferior quality and were not up to specification. The reason why the plaintiff says that the Agra Court had jurisdiction to try his suit is stated in the plaint as follows:
The cause of action arose at Agra, one of the Railway Stations on the East Indian Railway where the contract was to be performed under the contracts and where the said letter No. 4,698 was delivered to the plaintiff on 7th May 1924.
28. What the plaintiff says is that under the terms of this contract he agreed to give delivery of goods at, among other places, railway stations on the East Indian Railway, and as Agra happens to be one of those stations where he could have given delivery, a part of the cause of action arose there but owing to the wrongful action of the defendant in cancelling the contract he was prevented from giving delivery of the goods supplied at Agra. This contention of the plaintiff has found favour with the learned Subordinate Judge, and what we have to consider is whether the view taken by him is correct. In considering this question it is necessary to bear in mind that in no two cases the facts are alike, and therefore it is desirable that in order to find out whether a cause of action arose wholly or in part within the jurisdiction of the Agra Court we should care, fully look into the proved facts of the case before us. In the four work orders in suit there is an express provision that the delivery of the goods to be supplied is agreed to be made 'F.O.R. stations of East Indian and other rail way s mentioned therein.' Now, Agra is one of the stations on the East Indian Bail way and according to the contracts goods could have been delivered there if the plaintiff had so chosen. From the correspondence, it will be seen that the plaintiff was always willing and anxious to make deliveries of the goods. In this connection I may refer to two letters of the plaintiff printed at pp. 319 and 323. The plaintiff could not deliver goods owing to the cancellation of the contracts by the defendant. At this stage it is not necessary to go into the question whether the action of the defendant in cancelling the contract was wrongful or not. It appears to me that where the parties to a contract agree that the delivery is to be made at a particular place then a cause of action would arise there in part at least, because under the terms of the contract it is the place where a part of the contract is to be performed. And if owing to the action of the buyer the seller is unable to perform the contract at the place agreed upon he will have a right to institute his suit there.
29. In the case before us, under the agreement between the parties, the plaintiff agreed to deliver goods at various stations of several railways. It is, in my opinion, open to him to institute a suit for damages for breach of contract at any one of those stations. In a suit for damages for breach of contract the cause of action consists of making the contract and of its breach so that the suit may be filed either at the place where the contract was made, or, at the place where it should have been performed. Agra is one of the several places where the contract could have been performed by making delivery of goods to the defendant, F.O.R. in accordance with the terms of the contract, and so, I think that the contention of the plaintiff that the cause of action in part arose there, appears to be well founded.
30. The result of the contract put in simple language, was this : the defendant and the plaintiff entered into a contract in Baroda State, under which the plaintiff agreed to supply goods. The defendant directed the plaintiff to deliver goods F.O.R. at certain railway stations. If the contract had not been cancelled by the defendant, the plaintiff could have performed his part of the contract by making delivery at any of the stations on the railways mentioned, then he would have been entitled to sue for the price in Court within whose jurisdiction the place of delivery was. I cannot understand how it can be said that no cause of action would arise at the place where the goods could have been delivered but for the cancellation of the contract by the defendant. The Learned Counsel for the defendant-appellant contended before us that it may be inferred from the conduct of the plaintiff that he had no intention of making any delivery of goods at Agra. The plaintiff had produced evidence to prove that the goods which he desired to send to the defendant were lying at some stations in the Central Provinces, and at a station on the B.K. Railway. It is urged that this shows that he had no idea of delivering any goods at Agra. I entirely disagree with this proposition. According to the agreement between the parties Agra was one of the places where the contract could have been performed by making delivery, and we do not know what the plaintiff might have done if the contract had not been cancelled. It appears to me that it is open to the plaintiff to sue the defendant at any of the places where the contract was to be performed by making delivery of goods. Section 38, Contract Act, says:
Where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for non-performance, nor does he thereby lose his rights under the contract.
31. Under the terms of the contract between the parties one of the rights of the plaintiff was to be able to sue the defendant at any of the places where the goods were to be delivered, and the contract was to be performed and he can be said to have lost that right simply because of the cancellation of the contract by the defendant. The performance of a contract is a part of the cause of action and a suit in respect of it can always be filed at the place where the contract should have been performed. I may refer to a few of the decided cases on the question before us. In Ghunni Lal v. Mahipatrav (1868) 5 B.H.C.A. 33, it was held that in an action for breach of promise of contract the cause of action arose at the place where the goods ought to have been delivered. In that case the plaintiff and the defendant had entered into an agreement at Parola. The defendant agreed to sell and deliver certain goods to the plaintiff. It was further agreed that the goods would be measured at a place called Mawrod and would be delivered at place called Padsha. The goods were not delivered. The Court held that the cause of action arose at Padsha where the goods were to be delivered. It is not easy to understand why the Court held that action did not lie at Parola also where the contract was made and price paid. Another case on the point is Llewhellin v. Chunni Lal (1882) 4 All. 423. The defendant was a resident of Saran district. In that district the plaintiff and the defendant entered into a contract under which the plaintiff agreed to deliver certain goods to the defendant when the price was to be paid by a draft on Calcutta or Cawnpore where the plaintiff carried on business. The plaintiff delivered the goods in Saran district. The plaintiff sued the defendant for the price at Cawnpore. A Bench of two learned Judges of this Court held that the Cawnpore Court had jurisdiction because the intention of the parties was that the price would be paid there. The following observations made in that case, to be found at p. 425, go to support the case of the plaintiff-respondent in this appeal before us:
In the present instance for example the plaintiffs were to deliver the 500 maunds of fresh and clean up country indigo-seed at Sattaghat on or before 15th February 1887. If they had failed to make such delivery the defendant might have sued them in the courts of the district in which Sattaghat is situate, or in Cawnpore where the plaintiffs carry on their business for damages for breach of contract or to enforce the specific performance. So if the defendant had refused to accept the delivery on the ground of the indigo seed not being of the quality agreed to the plaintiffs might in their turn have sued him in the same Court for damages.
32. These observations go to show that the Court was of opinion that in a case like the one before us a suit would lie at the place where the delivery was to be made. In Shea Charan Lal v. Taj Bhai Ali Bhai A.I.R. 1917 All. 365 it was decided that an action for damages for breach of contract would lie at the place where the delivery was to be made: see on the same point Bam Lal v. Bhola Nath A.I.R. 1920 All. 6. The plaintiff in that case was a resident at Kasganj and he ordered certain goods which were delivered V.P.P. at Kasganj. He sued for damages and this Court held that as the place of delivery was Kasganj the suit would lie there. I may refer to the case of Benaim and Co. v. Debono (1924) A.C. 514. A merchant carrying on business in Gibralter sold to the respondents, a merchant in Malta certain goods F.O.B. Gibralter. The acceptance was made at Malta and so that was the place where the contract was deemed to have been made. One of the questions which had to be considered in the case was as to which was the place of the performance of the contract. Dealing with this question their Lordships of the Privy Council made the following observations:
No doubt the contract should be regarded as made in Malta for thence came the final acceptance by the respondent of the offer made by the appellants. But it appears to their Lordships to be plain on the face of the documents that the contract was to be performed by the delivery of goods on board a ship at Gibralter selected by the respondent; from the moment of such delivery the appellants had no further control over the goods, and parted with their possession and property in them. The principle of law applicable is thus stated by Mr. Dicey in his book the Conflict of Laws, 3rd Edn., p. 609 : 'When the contract is made in one country and is to be performed either wholly or partly in another, then the proper law of the contract, specially as to the mode of the country where the performance is to take place. (Lex loci solutionia)'. This statement of the law is in full accordance with the judgment of the Court in Jacob v. Credit Lyonnais (1884) 12 Q.B.D. 589 and the authorities there cited.
33. The law as regards the effect of delivery to a carrier is the same in India as in Gibralter. Section 91, Contract Act, runs as follows : 'A delivery to a whar-finger or carrier of the goods sold has the same effect as a delivery to the buyer...' 'So far as the place of the performance in a case like the one before us is concerned, there is no difference between it and the case which was before their Lordships of the Privy Council. Under the terms of the contracts in question the plaintiff could have performed them by making delivery to the common carrier at Agra if the defendant had not cancelled the contracts. I am therefore of opinion that the principle of the decision referred to above is applicable to the case before us. For the reasons given above, I hold that one of the places where the contracts could have been performed by the plaintiff was Agra and therefore the Court below had jurisdiction to try the case as a part of the cause of action arose in Agra district.
34. The second contention of the appellant as regards the question of jurisdiction is that as the defendant is a foreigner, the Courts in British India have no jurisdiction to entertain a suit against him. The question of forum has to be decided with reference to the provisions of Section 20, Civil P.C., which is applicable to the whole of British India with the exception of some scheduled districts. It appears to me that there is no warrant for the contention that the Courts in British India have no jurisdiction over foreigners. It is conceded that the Courts in British India have jurisdiction over foreigners carrying on business in this country. But it is strongly contended on behalf of the appellant that British Courts have no jurisdiction against non-resident foreigners who do not carry on business or work for gain in British India even though the cause of action may have arisen against them wholly or in part in British India. I find myself unable to agree with this contention. Section 20, Civil P.C., says that subject to the limitations aforesaid every suit shall be instituted in a Court within the local limits of whose jurisdiction (c) the cause of action wholly or in part arises. If it had been the intention of the legislature that this part of Section 20 would not be applicable to non-resident foreigners even though the cause of action arises wholly or in part in British India such intention would have been made clear. The right to institute a suit within the jurisdiction of the Court where the cause of action has arisen wholly or in part is absolute and is not subject to any condition whatsoever. All that the plaintiff has to show is that the cause of action arose within the jurisdiction of the Court, and it would have jurisdiction to entertain the action whether the defendant is a resident of British India or a foreigner. In several cases decided by the Indian High Courts to which I shall make a reference presently, the plea now urged before us was raised but was not accepted. But before doing so I wish to refer to two of the Indian cases on which reliance has been placed on behalf of the appellant. The first of them is Kessowji Damoiar Jairam v. Khimji Jairam (1888) 12 Bom. 57. A careful perusal of this judgment shows that the point decided was that a non-resident foreigner carrying on business within the jurisdiction of British Courts through an agent, and when the cause of action has not arisen in British India, cannot be sued in British Courts. I do not think that this ruling can be said to help the defendant-appellant's contention because it is made abundantly clear in the judgment itself that it was a case where the cause of action had wholly arisen outside the jurisdiction of the British Courts. The learned Judge who decided that case stated the question for decision at p. 520 as follows:
Can one native of Cutch under these circumstances sue another native of Cutch in this (Bombay) Court, when the cause of action arose and the subject matter of the suit is, wholly outside the limit of jurisdiction....
35. These observations clearly go to show that the result of the case might have been different if the cause of action had arisen wholly or in part in British India. We have seen that Section 20, Clause (c) of the Code gives jurisdiction to the Court to hear a suit where a cause of action has wholly or in part arisen within its local limits. It does not exclude the case of a foreigner. The learned Judge who decided the case mentioned above remarks in his judgment at p. 525:
To decide that we have jurisdiction would be contrary to international comity and a violation of the principle that no sovereignty can extend its process beyond its territorial limits to subject either person or property to its judicial decision.
36. But the case would be otherwise if the legislature had laid down that the Courts would have jurisdiction. On this point the observations of Cotton, L.J., in Ex parte Blain (1879) 12 Ch. D. 522, at pp.531 and 532, which are mentioned in Kessowji Damodar Jairam v. Khimji Jairam (1888) 12 Bom. 57 may be quoted here:
We are not dealing with the question which might arise if an English Act of Parliament had expressly laid that as against a Chilian subject, or any other alien who had never been in England, the Court should on certain facts being proved, entertain a petition and make an adjudication. In such a case it might be the duty of the Court, acting in the execution of the English Act of Parliament, whatever the consequences might be and however a foreign nation might object, to 'say this is the English statute, and we must act on it, and the question which you, a foreigner, raise we are bound to disregard'....
37. In this country Section 20, Civil P.C., as I understand it, gives the Courts power to entertain cases against foreigners provided the cause of action wholly or in part arises within its local limit and we are bound to decide the case in accordance with the provisions of the Code regardless of the rule of 'International comity'. Another case on which reliance is placed on behalf of the appellant is the ruling of their Lordships of the Privy Council in Gurdayal Singh v. Raja of Faridkote (1894) 22 Cal. 222. In that case the Baja of Faridkote obtained a decree in Court in Faridkote against the defendant who was not a resident of the State and who did not submit to its jurisdiction. On the basis of that decree, a suit was instituted against the defendant in the British Court. Their Lordships of the Privy Council held that a decree obtained against the defendant under these circumstances passed by the State Court was a mere nullity. In the course of their judgment their Lordships made the following important observation:
Jurisdiction being properly territorial and attaching, with certain restrictions, upon every person permanently or temporarily resident within the territory, does not follow a foreigner, after his withdrawal thence living in another state... But no territorial legislature can give jurisdiction which a Court of foreign state ought to recognise over an absent foreigner owing no allegiance to the state so legislating...in a personal action, to which none of the causes of jurisdiction apply a decree pronounced by a Court of foreign state in absentem the latter not having submitted himself to its authority, is by international law a nullity... Not to the Court of the state in which the cause of action has arisen, nor in a case of contract to those of the locus solutionis should resort be had by the plaintiff, but to the Courts of the state in which the defendant resides, the Court of the latter state having jurisdiction in all personal action....
38. In Ram Ravji v. Pralhaddas (1896) 20 Bom. 138, the contention raised was based on the above cited ruling of their Lordships. Farran, C.J., in his judgment at p. 142 made the following observations:
It has been however argued upon the authority of Gurdayal Singh v. Raja of Faridkote (1894) 22 Cal. 222 that admitting that the part of the cause of action arose in Bombay the Court had no jurisdiction over the defendant who is a subject of, Baroda State, and a foreigner, inasmuch as before the suit was filed, he had ceased to carryon business in Bombay and to be amenable to the jurisdiction of this High Court, The answer, to this question appears to us to be found in a passage of the Privy Council itself. In a personal action a decree pronounced in absentem by a foreign Court to the jurisdiction of which the defendant has not in any way submitted himself, is by international law an absolute nullity. He is under no obligation of any kind to obey it, and must be regarded as a mere nullity by the Court of every nation, except (when authorised by special local legislature) in the country of the forum by which it was pronounced.
39. It appears to me that the view taken by the learned Chief Justice is that in, this country we have legislation giving jurisdiction to the Courts to entertain cases against foreigners where a cause of action arises wholly or in part in British India and so the decree, so far as this country is concerned, would not be a nullity. Another important and instructive case on the point is the one reported in Rambhat v. Shanker (1901) 25 Bom. 528. There the learned Judges of the Bombay High Court held that under the Civil Procedure Code British Courts are empowered to pass judgment against a non-resident foreigner provided that the cause of action has arisen within the jurisdiction of the Court pronouncing judgment. A perusal of the case shows that it was contended before the Court that under Section 17, (Section 20 of the present Code), Civil Procedure Code the Court bad jurisdiction to entertain the suit as the cause of action arose within its local limits, that the Courts were bound by the Civil Procedure Code and that if under its provisions, a Court could take cognizance of a suit, it must do so, even though in doing so it may violate the rules of International law. On behalf of the opposite party the reply was that the points for the determination were two : (1) whether the Court was judicially competent to entertain the action; and (2) how far its judgment would be effective. It was contended that the competence was to be determined with reference to the provisions of Section 17, (Section 20 of the new Code), Civil P.C., and effectiveness of the judgment by reference to the rules of International law. Dealing with the first question the learned Judges held according to the Civil Procedure Code, the British Indian Courts were empowered to pass a judgment against a non-resident foreigner provided that the cause of action had arisen within the jurisdiction of the Court pronouncing the judgment. Dealing with the second question as regards the effectiveness of the judgment it held that it did not arise. It is clear to me that if the British Court has the power to pass a judgment having regard to the provisions of the Civil Procedure Code, then the other question as to whether or not it would be effective everywhere need not be considered. Under the law of the country the Court has power to pass a judgment and will give effect to it. As remarked in the case reported in Rajabhai Narain v. Karim Mahomed A.I.R. 1919 Mad. 883:
A Municipal Court is entitled to exercise its jurisdiction over a non-resident foreigner where the cause of action arises within its jurisdiction. The question whether its decree can be enforced against him in the foreign state is a question for the disposal of that state.
40. Even according to the view taken by their Lordships of the Privy Council the decree would be binding at least in the country of the forum when authorized by the special local legislation. The most important case on the point is the Full Bench ruling of the Madras High Court in Srinivasa Moorthy v. Venkata Varada Ayyangar (1906) 29 Mad. 239. It was held there that the jurisdiction conferred by Clause 12, Letters Patent, (same as Section 20, Civil P.C., so far as the case before us is concerned), where the cause of action arises wholly or in part within Madras extends to suits against absent foreigners. At p. 246 of the judgment, Arnold White, C. J., observed:
It seems to ma that to give jurisdiction over an absent foreigner where the cause of action against him arises within the local limits of the jurisdiction of the Court is the legitimate exercise of sovereign rights.
41. At p. 247, the learned Judge observed:
Sir V. Bhashyam Ayyangar's proposition was that it was contrary to the principles of International Law for a Court to exercise jurisdiction over an absent foreigner solely upon the ground that the cause of action had arisen within the local limits of the jurisdiction of the Court. I do not think that more recent authorities support this proposition.
42. At pp. 250 and 251, the learned Judge observes:
My learned brother reads Lord Selborne's judgment Gurdyal Singh v. liaja of Faridkote (1894) 22 Cal. 222 in that case as containing a statement of the law that accrual of the cause of action in a particular place does not confer on the Courts of that place jurisdiction over a non-resident foreigner. It seems to me that the question of whether the accrual of the cause of action confers jurisdiction must depend on the terms of the enactment which creates the jurisdiction, the Court cannot decline to exercise the jurisdiction on the ground that the conferring of the jurisdiction was contrary to the general principles of International Law. I do not think that this proposition is inconsistent with Lord Selborne's judgment taken as a whole. In my judgment, in original side appeal No. 6 of 1900 I said : 'In Gurdayal Singh v. Raja of Faridkote (1894) 22 Cal. 222 the actual point decided by the Privy Council was that when a decree has been obtained ex parte in the Courts of a Native State-against a defendant who was not a subject of that State, an action founded on those decrees ought not to be entertained by a Court of another State or country...' The words; 'absolute nullity' clearly are qualified by the-words in parenthesis at the end of the passage.
43. So far as our own High Court is conr cerned it has been held by a Bench of two learned Judges in V. E. Smith v. Indian Textile Co : AIR1927All413 , that there was no limitation in the Civil Procedure Code, or any other Act in force in India exempting foreigners from the jurisdiction of the British Indian Courts. Mullah in his Commentary on the Civil Procedure Code at p. 110 says that if a cause of action has arisen in British India then the British Indian Courts have jurisdiction to entertain the suit. After a consideration of these rulings it appears to me, if I may be permitted to say so with all respect, that in one passage the view taken by their Lordships of the Privy Council in Gurdayal Singh v. Raja of Faridkote (1894) 22 Cal. 222, seems to be that even if the cause of action has arisen within the jurisdiction of the Court it has no jurisdiction to try a suit against a foreigner. So far as this point is concerned the various subsequent rulings in which that ruling of their Lordships was considered throw no light on the point. The view of Farran, C.J., in Ram Ravji v. Pralhaddas (1896) 20 Bom. 138, about the interpretation of the Faridkote ruling is that even according to that ruling the decree passed against an absent foreigner would be binding in at least the country where it was passed provided the local legislature of that decree authorized the procedure. But no attempt has been made to explain the observations of their Lordships that 'no territorial legislation can give jurisdiction over an absent foreigner owing no allegiance to the state so legislating.' But it appears that later on their Lordships of the Privy Council, in Annanmalai Chetty v. Murugasa Chetty (1903) 26 Mad. 544 held that Girdhar Darnodar v. Kassigar Hirdgar (1893) 17 Bom. 662, was rightly decided. Lord Lindley at p. 552 remarked:
Their Lordships see no reason for doubting he correctness of the decision of the case of Girdhar Damodar v. Kassigar Hiragar (1893) 17 Bom. 662 where the defendant was a native of Kutoh and the cause of action arose within the local limit of the jurisdiction of the British Indian Courts in which the action was brought.
44. Now, it will be seen that according to v this view a suit against a non-resident a foreigner would be maintainable in the t British Court if the cause of action against him has arisen within the local limits of the British Court. This later pronouncement of their Lordships has been interpreted by the High Courts in India to mean that the view taken in the Faridkote case (1894) 22 Cal. 222, is not applicable to those 1 cases in which the cause of action has arisen within the local limits of the British Indian Courts. Arnold White, C.J., discussing this aspect of the case in Srinivasa Moorthy v. Venkat Varada Ayyangar (1906) 29 Mad. 239, made the following observations:
Sir Section Subrahmania Ayyar, J., in his judgment points out that the ground upon which the Privy Council in Annanmalai Chetty v. Murugasa Chetty (1903) 26 Mad. 544 upheld the decision in Girdhar Damodar v. Kassigar Hiragar (1893) 17 Bom. 662 was that the cause of action had arisen in Bombay, and that the same ground of jurisdiction existed in the case then before this Court, and the learned judge was of opinion that the question was governed by the latest pronouncement of the Judicial Committee, (i.e. the opinion expressed by Lord Lindley in the case to which I have already referred) upon the point. I entirely agree with my learned brother's conclusion.
45. This case decided by the Full Bench of Madras Srinivasa Moorthy v. Venkata Varada Ayyangar (1906) 29 Mad. 239, went in appeal before their Lordships of the Privy Council, whose decision affirming that view is reported in Srinivasa Moorthy v. Venkata Varada Ayyangar (1911) 34 Mad. 257. Another case on the point is T. Subbarao v. Mir Gulam Ali Khan (1906) 29 Mad. 69, in which a Bench of two learned Judges of the Madras High Court held that a non-resident foreigner, who is a protected Native State, may be sued in the Courts of British India, if the cause of action arose within the jurisdiction of any such Court. Even apart from the provisions of Section 14, Civil P.C., the cause of action in the case of contracts arises at the place of performance. Thus we see that according to the recent pronouncement of their Lordships of the Privy Council in Annanmalai Chetty v. Murugasa Chetty (1903) 26 Mad. 544, a British Court would have jurisdiction against a non-resident foreigner if the cause of action has arisen within its local limits. This view has also been taken by the High Courts of Bombay, Madras and by our own High Court. For these reasons I am of opinion that the Agra Court had jurisdiction against the defendant in spite of the fact that he does not reside in India, because the cause of action arose within its local limits. Another important question to be considered in connexion with this point is whether it is open to the defendant to raise the plea of jurisdiction after having defended the suit on its merits. The question arose in a Madras case Sivaraman Chetti v. Iburam Saheb (1895) 18 Mad. 327. It was decided there that when a pleader representing the defendant appeared and stated that he had no instructions, and an ex parte decree was passed it could not be said that he had submitted to the jurisdiction of the Court. But the learned Judges who decided that case made the following observations which deserve notice:
Had the defendant been allowed a hearing and the case then decided against him, we should have held following Kandoth Mammi v. Abdu Kalandan (1874) 8 M.H.Cr. 14 and Fazal Shau Khan v. Gafar Khan (1892) 15 Mad. 82 that having taken the chance of a judgment in his favour, he could not, when an action is brought against him on the judgment, take exception to the jurisdiction....
46. The leading case on the point is Harris v. Taylor (1915) 2 K.B. 580. In that case it was held that if a defendant appears in a foreign Court to argue his appeal on the question of jurisdiction he will be deemed to have submitted himself to the jurisdiction of the Court. This was a case in which a summons issued by a Court in the Isle of Man was served on the defendant a foreigner who resided in England. He appeared 'conditionally' and argued the question of jurisdiction. That point ms decided against him. After that he did not appear, and the suit was decreed. Then on the strength of it the plaintiff sued the defendant in a Court in England on foot of the decree passed by the Court in the Ilse of Man. The defendant pleaded that the Court in that place had no jurisdiction and so the decree passed was a nullity. This contention was not accepted. Buckley, L.J., in his judgment made the following observations : at pp. 587 f and 588:
The question which we have to decide in this appeal depends, as I have said, on whether the defendant submitted to the jurisdiction of the Isle of Man Court, and, in order to decide that question, it is necessary to consider what it was that the defendant did on 17th March, when as the record states, he appeared conditionally to set aside the writ. When the defendant was served with the process he had the alternative of doing nothing, although the Court might have given judgment against him, the judgment could not have been enforced against him unless he had some property within the jurisdiction of the Court. But the defendant was not content to do nothing. He did something which he was not obliged to do; but which, I take it, he thought it was in his interest to do. He went to the Court and contended that the Court had no jurisdiction over him. The Court however decided against this contention, and held that the defendant was amenable to its jurisdiction. In my opinion, there was a voluntary appearance by the defendant in the Isle of Man Court, and a submission by him to the jurisdiction of that Court. If the decision of that Court on that occasion had been in his favour he would have taken advantage of it; as the decision was against him he was bound by it, and it became his duty to appear in that action; and as he chose not to appear and to defend, he must abide by the consequences which follow from his having done so.
47. It will be seen that this was a case in which the question which the Courts were called upon to decide was whether a foreigner, who had entered appearance in a foreign Court and bad protested against its jurisdiction could later on be permitted to challenge the validity of the decree passed against him on the ground that the Court had no jurisdiction. But it appears to me that the principle of the decision is a priori applicable to cases in which a foreigner after protesting that the Court has no jurisdiction takes his chance of winning the case by defending it on the merits. In my opinion, after having put his case before the Court he should not be allowed to take up the plea of want of jurisdiction. This is not a case in which there was want of jurisdiction over the subject-matter of the action, and where, under no circumstances could the Court entertain the action; but it was a case in which the Court had jurisdiction unless the defendant could show otherwise by proving that under the Civil Procedure Code, the suit was not within the cognizance of the Court, because he was a foreigner. The principle of the decision, reported in Chandu Lal v. Awad Umar Sultan (1897) 21 Bom. 351, appears to be applicable to the case before me (see p. 371). It was open to the defendant corporation (for the purpose of this point, I shall assume that the position of the defendant Railway is that of a corporation), that it bad no jurisdiction to hear the suit, and that, for that reason the corporation was not going to enter into any defence. If a decree had then been passed ex parte, it would have been open to the defendant to challenge that decree on the ground that it was a nullity because the Court had no jurisdiction. But the defendant not only took the plea of want of jurisdiction, but also entered appearance, and during the course of a protracted trial produced evidence, cross-examined the witnesses of the opposite party, and took his chance of winning the case on merits. I am therefore of opinion that it is no longer open to the defendant to say that the Court had no jurisdiction to entertain the suit.
48. I now proceed to consider the plea taken by the defendant Railway that the suit was bad as it was not instituted against H.H. the Maharaja of Baroda, who owns this Railway. The defendant in para. 24 of the written statement says that the Railway is owned by the Maharaja and is managed by his Government, and that the claim against the manager of the Railway who is merely a paid servant of the State is bad. Now, I may state here that the claim of the plaintiff is not against the Manager, but against the defendant Railway, through its Manager and Engineer-in-Chief. The view taken by the learned Subordinate Judge is that though H.H. the Maharaja of Baroda, is the owner of the Railway, yet it is a corporation, and in that capacity can be sued through its Manager. The accuracy of this finding is challenged before us in this appeal. It is admitted by the plaintiff that the defendant Railway is the property of H.H. the Maharaja of Baroda and is managed by his Government. Now, it will be seen that the suit as framed is not against a foreign prince and so there can be no question about the sanction of the Governor-General as contemplated in Section 86, Civil P.C. But it is urged on behalf of the appellant that in substance the suit is one against a ruling prince and the plaintiff is making an indirect attempt to attain his object which is to reach the property of a ruling prince which he cannot be allowed to do I proceed to consider this point. The rules of English law on the subject are to be found stated in Dicey's Conflict of Laws, Edn. 2, p. 195, et. seq. The first rule is in respect of persons. It lays down that the Courts in England have no jurisdiction (subject to exceptions hereinafter mentioned) to entertain any action or other proceedings against any foreign sovereign and against certain other persons. The Learned Counsel for the appellant relies on this rule. He has cited the Case reported in The Parlement Beige (1880) 5 P.D. 197. In that case it was held that:
as a consequence of the absolute independence Of every sovereign authority and of the international comity which induced every sovereign State to respect the independence of every other foreign state, each state declines to exercise moans by any of its Courts any of its territorial jurisdiction over the person of any sovereign or ambassador or over the public property of any state which is destined to its public use...though such sovereign, ambassador or property be within its territory.
49. It is necessary to set forth here, very briefly, the facts of that case. It was found that a ship bearing the name of the Parlement Beige came into collision with a British ship. It was found that : 'the Parlement Beige was the property of His Majesty the King of the Belgians, and in his possession, control, and employment as reigning sovereign of the state and was a public vessel of the sovereign and state carrying His Majesty's royal pennon, and was navigated and employed by and in possession of such Government.' The contention raised was that all movable property, which is the public property of a sovereign and nation used for public purposes, is exempt from adverse interference by any Court of judicature. This contention found favour with the Court. On the other side it was contended that the action was not one against a sovereign but it was a suit in rem against the vessel itself. The learned Judges in their judgment at pp. 207 and 208 observed:
From all these authorities it seems to us, although other reasons have sometimes been suggested, that the real principle on which the exemption of every sovereign from the jurisdiction of every Court has been deduced is that the exercise of such jurisdiction would be incompatible with his regal dignity, that is to say, with his absolute independence of every superior authority.
50. This rule is based on an implied agreement between all the sovereigns not to exercise jurisdiction against others and their properties : see p. 205. At p. 201 the learned Judges quote with approval the contention which had been raised in a previously decided case:
There is another point of view. It is the interest and duty of every sovereign independent state to maintain unimpeached its honour and dignity.
51. At p. 218 the learned Judges say:
This is conclusive to show that the liability to compensate must be fixed not merely on the property but also on the owner through the property. If so, the owner is at least indirectly impleaded to answer to, that is to say, effected by, the judgment of the Court.
52. At p. 219 it is remarked:
To implead an independent sovereign in such a way is to call upon him either to sacrifice his property or his independence. To place him in that position is a breach of the principle upon which the immunity from jurisdiction exists. We think that he cannot be indirectly impleaded. This case is upon consideration of it, brought within the general rule that a sovereign authority cannot be personally impleaded in any Court.
53. It is on these last observations that reliance is placed on behalf of the defendant appellant. At p. 220 the learned Judges made observations which go to show that according to the law of England a sovereign could not be sued even if he was carrying on a private trading adventure. The question for our consideration is whether this rule of international law can be applied in the cases of suits against ruling Princes in India. In my opinion, it cannot be applied. The foundation for the rule is described in the above cited ruling as follows:
The real principle on which the exemption of every sovereign from the jurisdiction of every Court has been deduced is that the exercise of such jurisdiction would be incompatible with his regal dignity, that is to say, with his absolute independence of every superior authority.
54. I think that the very foundation for the above mentioned principle is wanting in the case of ruling Princes in India. The principle of the rule is that exercise of jurisdiction would be incompatible with the absolute independence of a foreign sovereign of every superior authority. Now, I think that this rule cannot be made applicable to the case of ruling Princes in India because they are not independent rulers. The rule of International law is that an independent sovereign is absolutely privileged. But such is not the case in India. He can be sued in a British Court after the sanction of the Governor-General has been obtained as provided for under Section 86, which enacts:
Any such Prince or Chief...may with the consent of the Governor-General in Council, certified by the signature of a Secretary to the Government of India but not without such consent, be sued in any competent Court.
(2) Such consent may be given...but it shall not be given unless it appears to the Government that the Prince, Chief, or ambassador or envoy, (a) has instituted a suit in the Court desiring to sue him; (b) by himself or another trader within the local limits of the jurisdiction of the Court, or (c) is in possession of immoveable property.
(3) No such prince, chief...shall be arrested under this Code, and, except with the consent of the Governor-General in Council...no decree shall be executed against the property of any such prince....
55. Thus it will be seen that in India a ruling prince can be sued in a British Court. He can be arrested and his property can be attached provided that the sanction of the Government is obtained. The Government of India has power to hold an inquiry into his conduct. The Government has the power to depose him. To me it appears that the rule of international law which is based on the principle of 'absolute independence of the sovereign to recognize any superior authority' cannot be applied to princes in India for the simple reason that they are subordinate to the authority of the British Grown. According to my view the rule of International law has been modified by the provisions of Section 86, Civil P.C. The Princes can claim exemption not on the ground of their absolute sovereignty but only under the provisions of Section 86, Civil P.C. Under the provisions of the Civil Procedure Code, the Courts in British India have jurisdiction against every person unless there is something to the contrary in its provisions, the rule of International law notwithstanding. In Rambhat v. Shanker (1901) 25 Bom. 528, it was remarked:
It may well be doubted whether it would be correct in such a case as this to say that the assertion of jurisdiction by the British Legislature is inconsistent with the comity of nations, or with the established rules of Private International law. Is Sangli State a nation within the meaning of these rules...? Is it reasonable to apply to the territories of such a dependent chief the comity of nations or the rules of Private International law such as would be applicable between England, and, say, France or Germany
56. My own opinion is in agreement with this view. The British Crown is the paramount authority in India. The ruling Princes owe allegiance to the British Crown as sovereign powers. And it would certainly be a misnomer to Style Indian States as 'nations.' They are dependent states. I do not think that the rules of Private International law can be made applicable to such states. In any case, it is clear to me that the Civil Procedure Code modifies the rule of Private International law so far as the Indian States in India are concerned, and the case has to be decided not with reference to Private International law, but with regard to the provisions of Section 86, Civil P.C. In a case Chandu Lal v. Awad Umar Sultan (1897) 21 Bom. 351, this point was considered by Strachey, J. At pp. 371 and 372 he says:
There is another point of view from which the question may be regarded. What Section 433 (now Section 86) does is to create a personal privilege for sovereign princes and ruling chiefs... It is a modified form of absolute privileges enjoyed by independent sovereigns...in the Courts in England, in accordance with the principle of English law. The difference is that while the privilege is unconditional, dependent only on the will of the sovereign, in India it is dependent upon the consent of the Governor-General in Council, which can only be given under specified conditions.
57. I am in agreement with this view. On a perusal of Section 86, Civil P.C., two points are clear. One is that a ruling Prince cannot be sued without the sanction of the Governor-General in Council. The other is that no execution can be issued against him without such sanction. Beyond these two points no other privilege can be claimed under the Civil Procedure Code, by a ruling Prince. According to my view there is nothing in the Code which prevents a plaintiff from making an indirect attempt to reach the property of a ruling Prince. The rule that the property of a sovereign or a nation can be reached by an indirect method is based on the principle that to permit such an attempt would be inconsistent with the independence and equality of the state which is represented by such owner. See p. 220 of the ruling in Parlement Belge (1880) 5 P.D. 197. But this rule cannot be applied in India, according to my view, for the reasons given above. It is open in India to a plaintiff to attain his object so long as he does not contravene the express provisions of the Civil Procedure Code. In the case before us the plaintiff is not suing a ruling Prince. Nor is he trying to execute his decree against such a Prince. So, the provisions of Section 86, Civil P.C., do not apply to the case. What he wants is a decree against the defendant Railway which is the property of a ruling Prince. There is nothing in the provisions of the Civil Procedure Code, which prevents him from doing so. What he says is this:
It is true that the Prince is the owner of the defendant railway; but the defendant railway is corporation owned by the prince, and he (the plaintiff) is entitled to sue it as such in its corporate name.
58. The question for consideration is whether the defendant Railway is a corporation. The view taken by the learned Subordinate Judge is that it is. After a consideration of the point I am of opinion that the learned Subordinate Judge's view is correct. He is right in saying that in India no one can build a Railway without the sanction of the sovereign authority, the King acting through the Secretary of State. It may be assumed that the permission to build the defendant Railway was given to His Highness the Maharaja of Baroda by His Majesty the King of England for India acting through the Secretary of State for India. The permission to build the Railway was given for public purposes. Under these circumstances the position of His Highness the Maharaja of Baroda is that of a corporation sole. This being so the corporation can be sued through its Manager. Order 29, Civil P.C., lays down the procedure to be followed in suits against corporations. A corporation can be sued through its Secretary or Manager. As remarked by the learned Subordinate Judge in his judgment:
A corporation is an artificial or fictitious person. Its peculiarity is that it has a legal existence distinct from the sum of its members.
59. In the case before us the defendant Railway came into existence under a grant from the sovereign power, and it is therefore a corporation though its owner is one person (His Highness the Maharaja of Baroda), and not several persons. Railway administrations throughout the country are sued through their managers; for instance, if a suit for damages is brought against the Nizam's Guaranteed Railway, it will not be the Nizam who will be sued, but the Railway administration through its manager. There is only one exception which is provided for by the Civil Procedure Code, which enacts that in the case of Railways owned by the Indian Government, suit shall be instituted against the Secretary of State for India in Council. In the case before us His Highness the Maharaja of Baroda, owning the corporation, authorized his Manager to enter into contracts, and make binding contracts on behalf of the Railways. There does not appear to be any reason why the Railway Administration which has entered into a contract through its Manager who can make valid contracts with the permission of the owner should not be sued in its corporate name; in other words, the position is this : the owner of the corporation carries on business under an assumed name, and the suit therefore can be instituted against that assumed name without in any manner infringing the provisions of Section 86, Civil P.C. It appears to me that where a suit is instituted not against the Prince himself, but against a business concern run by the State or a ruling Prince it cannot be said that it is one against the Prince himself. This question came up for consideration in a case, Ram Narain Budh Singh v. Gwalior Light Railway A.I.R. 1932 Lah. 136. It was held in that case that a suit against a business concern managed by a durbar of a State is not a suit against the Prince or Chief to which the rule of privileges enacted by Section 86 could be applicable. There is another aspect of the case which is to be kept in view, and it is that times have changed, and sovereigns and ruling Princes in these modern days are carrying on business, and it would be wrong to apply rules of International law based on international comity to their cases. Still another aspect of the case deserves special attention. It is whether His Highness the Maharaja of Baroda has not waived his privilege assuming that such a privilege did exist, by his entering appearance and defending the case on the merits. Under the law, as it stands, it is open to the persons in whose favour an exemption is made to waive the privilege. There are two kinds of cases: one is where there is a want of jurisdiction over the subject-matter of the action, and where under no circumstances can the Court entertain the action; the other class of cases is that in which the Court has jurisdiction, but it cannot be exercised without special leave. As remarked in, Chandu Lal v. Awad Umar Sultan (1897) 21 Bom. 351 at p. 371:
The distinction drawn by Cave, J., between cases where there is a want of jurisdiction over the subject-matter of the action, where under no circumstances can the Court entertain the particular kind of action and cases, where jurisdiction over subject-matter existing, leave is required in the particular case before the Court can entertain the action exactly corresponds with the distinction drawn by the Privy Counoil in Ledgard v. Bull (1887) 9 All. 191, between the absence of the inherent jurisdiction over the subject-matter and initial irregularities in the institution of a suit which the Court is competent to try. In Mighall v. Sultan of Johore (1894) 1 Q.B. 149, the Court of appeal were agreed that an independent sovereign may when sued waive his privilege and elect to submit to the jurisdiction by appearance to a writ.
60. It appears to me that, having regard to the circumstances of the case before us it must be held that the defendant waived his privilege, if he had any. The course open to him, when he was sued, was to ignore the summons on the ground that the Court had no jurisdiction over him, if a decree had been passed against him he could have ignored it; but he did not take the step. On the other hand he filed a written statement and pleaded among other things that the Court had no jurisdiction to try him. When he found that the Court was going to proceed with the suit, another stage ' had been reached at which he could have elected not to take any further part in the proceedings on the ground of want of jurisdiction, or he could have challenged the right of the Court to proceed with the suit against him by an appeal or revision; but the defendant adopted neither of the two courses. The defendant put up his case before the Court below, and wanted its decision on merits. He cross-examined the witnesses of the plaintiff. He produced evidence himself and for several months the matter in dispute was fought between the parties. Under these circumstances I am clearly of opinion that there was a waiver on his part to the plea of jurisdiction. It was remarked in Chandu Lal v. Awad Umar Sultan (1897) 21 Bom. 351, at p. 374:
It would in my opinion be inequitable to the last degree to allow him now to recede from that position and to avoid a trial of the issue raised by himself whether it is he or the plaintiff that has broken the contract between him. I am of opinion that he cannot do so.
61. These remarks are applicable to the case before me. The following observation in a case decided by the Patna High Court reported in Maharaj Bahadur of Rewa v. Shibsaran Lal A.I.R. 1921 Pat. 23, appears to be applicable to the case before us:
So, it has been held that if a defendant wishes to take any advantage of any irregularity in the issue of the writ of summons or in the procedure, by which the suit is commenced or carried against him he should not enter an appearance, but should serve a notice to the plaintiff to set aside the irregularity, though appearance under protest or with notice of objection does preclude the defendant from objecting to the jurisdiction. In the case before us, with full knowledge of the fact that entitled him to make an application under Section 86 under the Code, the petitioner made application after application for an adjournment to file a written statement. Application for adjournments are applications in the suit and there was accordingly an appearance by the defendant in the suit and submission to the jurisdiction of the Court, which in my opinion disentitles him from now objecting to the jurisdiction of the Court.
62. In the case before us it was open to H.H. the Maharaja to plead want of jurisdiction because of the provision of Section 86, Civil P.C. But no application was made by him objecting to the jurisdiction of the Court on the ground that virtually the suit was one against him and as such could not be tried because of the provisions of section 86. He permitted the defendant Railway to file a written statement and to defend the suit on merits. It is not open to him now after the case has been decided on merits to take the plea of want of jurisdiction. For the reasons given above I hold that the suit was not defective. The defendant Railway is a corporation and could be sued under its corporate name through its Manager and Engineer-in-Chief. Even if it be assumed that the suit was in reality against H.H. the Maharaja of Baroda, Section 86 cannot help him because he waived his privilege by allowing the defendant Railway to defend the suit on merits and to produce evidence and take the chance of getting a judgment in his favour. For these reasons the plea that the suit as framed was defective must fail.
62. One of the points in issue between the parties is whether or no the plaintiff supplied 1902 narrow gauge sleepers towards work-order No. 3-M. The plaintiff in his plaint stated that he had supplied these sleepers. The defendant denied this allegation. (His Lordship considered the evidence and held that the plaintiff failed to supply 1902 sleepers; therefore he should not have been awarded anything relating to these 1902 sleepers, and after further discussion concluded that in regard to none of the four contracts the defendant had any justification for cancelling them.) I shall now take up the plea of limitation which has been raised on behalf of the defendant-appellant. Before we can deal with it we shall first have to decide as to when the breach of contract took place. Five contentions have been raised by the Learned Counsel for the defendant-appellant : (1) that limitation began to run from 1/4th June 1923, the date on which the contracts were cancelled under a letter of that date, and subsequent negotiations between the parties did not extend the period of limitation; (2) that it was the plaintiff himself who broke the contracts; (3) that the breach of these contracts took place on 8th October 1923, when the plaintiff in his letter, printed at p. 407 insisted on the independent inspection of the goods already supplied and to be supplied; (4) that in any case the breach took place on 3rd May 1924, the date on which the defendant's Manager and Engineer-in-Chief wrote his letter of that date, printed at p. 451, cancelling the four contracts, and (5) that the plaint was filed on 7th May 1924, on deficient court-fee, which deficiency was not made good till 5th August 1924, and so it should be treated that the plaint was not properly filed till that date : and therefore the suit is not within limitation.
63. The first argument of the Learned Counsel for the defendant-appellant was that limitation began to run from 1/4th June 1923, the date on which the contracts were cancelled under a letter of that date, and subsequent negotiations between the parties did not extend the period of limitation. In support of this argument reliance is placed on the ruling of their Lordships of the Privy Council, reported in The Indian Co. v. Oditahurn Paul (1851-54) 5 M.I.A. 43. The facts briefly stated were these : In 1822 the respondent purchased at a Government sale a quantity of salt, part of a large portion then lying in the ware house of the vendors (the Government) where the salt was to be delivered. By the conditions of sale, it was declared that on payment of the purchase money, the purchaser should be furnished with permits to enable him to take possession of the salt; there was also a stipulation that the salt purchased should be cleared from the place of delivery within 12 months from the day of sale otherwise the purchaser was to pay warehouse rent for the quantity then afterwards to be delivered. The purchaser paid the purchase money, and received permits for the delivery of the salt, which was delivered to him in various quantities, down to the year 1831 : in which year an inundation took place, which destroyed the salt in the warehouse, and there remained no salt to satisfy the contract. The purchaser petitioned the vendors for a return of the purchase money, which was refused, on the ground, that the loss happened through his negligence in not sooner clearing the salt from the warehouse. An inquiry however took place at the instance of the Government who referred the matter to the Salt Collector for a report. This inquiry was made by the Government without the purchaser being a party to it. The collector did not make his report till the year 1838, and upon that report, the Government refused to return the purchase money, claimed in respect of the deficient salt. The purchaser then brought an action for damages. The plea of limitation was taken by the Government of the East India Company. It was held by their Lordships of the Privy Council that when the purchaser applied for the residue of the salt and was told that there was none to be delivered the contract was broken and the cause of action accrued from the time of such breach; and that the subsequent inquiries by the Government did not suspend the operation of limitation till the year 1838, the time of final refusal, and that the remedy was barred by limitation. I have considered this aspect of the case and am of opinion that the case relied on by the appellant is not applicable to the case before me. The facts of the two cases are different. In that case their Lordships further said:
There may be an agreement, that in consideration of an inquiry, into the merits of a disputed claim, no advantage should be taken of the statute of Limitations, in respect of the time employed in the inquiry, and an action might be brought for a breach of such an agreement.
64. In the case before us it is proved that the contracts were broken on 1/4th June 1923, by the defendant, but they were revived because the letter cancelling the contract was withdrawn by the defendant. That makes all the difference. The fact of withdrawing the cancellation was that the contracts were revived, and were not broken finally till the cancellation was communicated to the plaintiff on 7th May 1924. Now, I take the second and third contentions, I do not think that there is any substance in those contentions raised by the defendant-appellant that it was the plaintiff who broke the contract, and that the breach took place when the plaintiff wrote his letter of 8th October 1923. A careful perusal of the written statement of the defendant would show that a plea to this effect was not raised by him in the Court below. In para. 29 of the written statement the defendant stated as follows:
Some of the sleepers supplied by the plaintiff haying been sent out to the permanent way of the defendant railway were soon discovered to be rotten and below the specifications required, and this discovery was wired to the plaintiff. Thereafter a Committee was appointed by the Baroda State to examine the goods supplied by the plaintiff which were lying at Goya Ghat, Baroda. The Committee after examining the goods in the presence of the plaintiff's agents in the months of July and August 1923, found that, even adopting a most lenient standard, between 52 and 77 per cent, of the sleepers inspected by them were bad and below the specifications agreed upon, although the rates mentioned in the said orders were found to be considerably in excess of what they ought to have been. The committee submitted two reports which are marked as Annexure No. 3, In view of these reports the Baroda State decided to hold a survey in the plaintiff's presence of the whole of the supplies made by him. The plaintiff was informed accordingly on 13th September 1923, but he failed to avail himself of the opportunity thus afforded him. The plaintiff then desired to have a survey carried out by an independent officer, but when the Baroda State agreed to do so the plaintiff and his representatives admitted the very inferior quality of the goods supplied and offered to pay compensation for the same. But as the amount of compensation offered by him was much less than the loss caused by his wrongful conduct the offer was not accepted by the State. Under these circumstances the State's action in cancelling the orders is perfectly justified (vide Annexure No. 4, the correspondence between the State and the plaintiff and their legal advisers).
65. It will be seen from these allegations that the defendant-appellant never set up a case that it was the plaintiff who broke the contract. The defendant-appellant admitted in his written statement that he broke the contract and that this action was justified because of the circumstances mentioned therein. It cannot be possibly said that the contracts were broken by the plaintiff simply because he made a proposal that the inspection should be by an independent agency. All that happened was this. Under the two contracts 1-M and 2-M the plaintiff had supplied some goods. He was to supply certain more goods under these two contracts, and also under contracts Nos. 42 and 3-M. The defendant, appellant raised a contention that the goods already supplied under contracts Nos. 1-M and 2-M and another contract No. 20 with which we have no concern were bad. The plaintiff did not admit the accuracy of this contention, but was agreeable to the proposal of the defendant-appellant to the; inspection of the goods already supplied, and those which were to be supplied. Some correspondence went on in connexion with this subject, and the plaintiff insisted that the inspection work should be carried out by an independent agency. This was a mere proposal and it was open to the defendant to accept it or reject it. But it is altogether wrong to argue that because of this proposal the defendant committed a breach of contract when in his letter of 8th October 1923 he insisted on independent inspection. The defendant never treated this letter as a breach because we find that he made a counter-proposal that the re-surveying of the goods already supplied should be done by an independent officer and also by an officer of the State. The plaintiff would not agree to this and therefore the defendant put an end to the contract as admitted by him in para. 29 of his statement. The allegation that plaintiff admitted that the goods supplied were defective has not been substantiated. All that the plaintiff said was, as would appear from the correspondence, that he was ready and willing to supply new sleepers in place of those which might prove to have been defective or bad. It must therefore be held that both the pleas of the defendant-appellant that the contracts were broken on 8th October 1923, and that the plaintiff broke them are untenable.
66. The fourth contention of the Learned Counsel for the appellant is that in any case the breach of contracts took place on 3rd May 1924, the date on which the defendant's Manager and Engineer-in-Chief wrote his letter of that date printed at : p. 451, cancelling the four contracts. The reply of the plaintiff-respondent is that the breach took place on 7th May 1924, when he received this communication of the defendant. In my opinion, the contention of the plaintiff-respondent is sound and must therefore prevail. According to my view the breach took place not on the date on which the defendant wrote his letter to the plaintiff, but on the date on which the plaintiff received that letter and elected to consider the contracts as cancelled. You cannot break a contract unless you have informed of your intention to the other party, who has then an option either to treat the contract as subsisting and to carry out his part of the contract and then sue for damages or to take you at your word and treat the contract; as cancelled. Section 38, Contract Act, enacts that where a promisor has made an offer of performance to the promisee, and the offer has not been accepted, the promisor is not responsible for the non-performance nor does he thereby lose his rights under the contract. Section 39 Contract Act, lays down that where a party to a contract has refused to perform, or disabled himself from performing his promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. In the case before us we see that under con-tracts Nos. 42 and 3-M, the plaintiff had to supply 45,000 sleepers by the end of 1925. The contracts were subsisting when the defendant wrote his letter of 3rd May 1923 cancelling the contract. On the receipt of that cancellation it was open to the plaintiff to treat the contracts as subsisting. The defendant's refusal to perform the contract did not put an end to them. The plaintiff was at perfect liberty to ignore the refusal of the defendant to accept delivery and then tender the goods within the time agreed and to sue the defendant in case of refusal to take delivery, for damages. It was open to him in accordance with the provisions of Section 39, Contract Act, to put an end to the contract on receiving intimation of the defendant, if he so wished. In such a case the contract would terminate when the plaintiff elected to put an end to it and so the breach would take place when after the receipt of the letter of the defendant the plaintiff elected to put an end to the contract. In Morgan v. Bain (1874) 44 L.J.C.P. 47, Lord Coleridge delivering the judgment of the Court remarked:
The question that is raised for out consideration is whether, on 13th May, there had been a rescission of the contract. Rescission must be by both parties; either both must have intended to rescind, or one must have so acted as to justify the other in thinking that he intended to rescind.
67. The defendant sitting at his own place may say that he rescinds the contracts. But that would not be enough. In Hochster v. De La Tour (1853) 2 E & B 678, Cockburn, C.J., gave his view on the point to be as follows:
The promisee till he pleases may treat the notice of intention as inoperative, and await the time when the contract is to be executed and then hold the other party responsible for all the consequences of non-performance....
68. The words 'may treat the notice of intention as inoperative' are important. They show that contract would be deemed to have terminated only when on receiving the notice of the intention of one party not to perform the contract the other party will have the right to decide whether he will treat the notice as in operative or put an end to the contract immediately. The position is very clearly stated by Lord Wrenbury in his judgment at pp. 51 and 52 in Bradley v. H. Newsons and co. (1919) A.C. 16, as follows:
A contract between the persons results from the consensus of the two minds agreeing animo contrabendi to terms which each accepts and which create obligations between them. The contract having been entered into may be determined in one of the three ways. First, consensus may determine it... Thirdly, if the one party to the contract, by words or by conduct, expresses to the other party an intention not to perform his obligation under the contract when the time arrives for its performance the latter may say : 'I take you at your word, I accept your repudiation of your promise and will sue you for breach.'
69. This is really no addition to, but a particular application of the first principle above stated. The first party has in fact made an offer. This offer is : 'I am not going to perform the contract. I offer to end it here and now and accept the consequence of ending it, those consequences as I know being that you can sue me for damages for my refusal.' The other may accept or decline that offer. If he accepts then by consensus the contract is determined, but with a right to damages against the party who has refused to perform. In each of these cases it is the consensus of the parties which brings the contract to end. 'In the first and the third case it is consensus dehors the contract...' In a case reported in Jhandu Mal Jagan Nath v. Phul Chand Fateh Chand A.I.R. 1925 Lah. 217, a Bench of two learned Judges of the Lahore High Court held that where there was a distinct and unequivocal refusal by one party to perform his part of the contract in its entirety, but the other party continued to urge compliance with the contract, it could not be said that the contract had terminated till the second party elected to accept the refusal to treat it as a breach of the contract. Amson in his Law of Contracts, Edn. 17, p. 344 says:
The renunciation of the contract by one of the parties before the time for performance has come, does not of itself put an end to the contract, but there must be two parties to a rescission....
70. For the reasons given above, I am of opinion that the breach of the contract took place on 7th May 1924, when the plaintiff received the defendant's letter of 3rd May 1924, intimating that the defendant had cancelled the contract and which communication the plaintiff elected to treat as a breach. There could have been no breach of the contracts in question before the plaintiff received this intimation because there must be two parties to a rescission. As regards the fifth contention that as the court-fee was not made good till 5th August 1927 that date should be taken as the proper date of the presentation of the suit, it may be said that this contention cannot prevail. Section 149, Civil P.C., enacts that where the whole or any part of any fee prescribed for any document by the law for the time being in force relating to court-fees has not been paid the Court may, in its discretion, at any stage, allow the persons by whom such fee is payable to pay the whole or part as the case may be of such court-fee; and upon such payment the document in respect of which such fee is payable, shall have the same force and effect as if such fee had been paid in the first instance. The Court in its discretion allowed time to the plaintiff for paying the deficiency in court-fee till the 5th August. As soon as the deficiency was made good the above quoted section enables the defective document to be retrospective in its effect for the insufficiency of stamp is subsequently made up with the leave of the Court. In my opinion, the view taken by the learned Subordinate Judge on this point is correct. Now, proceed to consider whether the claim of the plaintiff in respect of the various items claimed by him is within limitation, or not. As regards contracts Nos. 42 and 3-M, which were forward contracts both sides are agreed that the case is governed by Article 115, Limitation Act. As I have held that the breach of all the contracts took place on 7th May 1924, when the proposal of the defendant-appellant cancelling the contracts mentioned in his letter of 3rd May 1924, was communicated to the plaintiff, it must be held that the claim of damages in respect of the breach of these two contracts is within limitation.
71. As regards contract No. 1-M which was for the supply of 35,000 broad gauge sleepers the plaintiff has already supplied 1,488 sleepers. He claims Rs. 19,181-14-0 on account of the price of these sleepers. He had still to supply 2,012 sleepers. He claims Rs. 14,335-8-0, on account of the deterioration in price of the unsupplied sleepers in respect of this contract by way of damages. It appears that in respect of the materials supplied, a bill was prepared for payment to the plaintiff, printed at pp. 299 to 302. The bill was prepared and passed for the payment of Rs. 17,263.4-0, after a deduction of Rs. 1,918 on account of retrenchment money; but it appears that as there was no money available the payment could not be made. It was argued by the Learned Counsel for the appellant that so far as the price of the materials supplied under this order is concerned, the plaintiff, not having made a claim within three years from 24th April 1923, it was not within limitation. I am not prepared to accept the contention. The agreement of the plaintiff was at p. 291, as follows:
I accept this order on the condition at back and I will complete all the above work by the under supply 1923....
72. I take this to mean that it was open to the plaintiff to complete this contract by the end of 1923. On this point the learned Subordinate Judge has referred to the evidence of Mr. Parekh, the Executive Engineer of the defendant, who has stated in his deposition as follows:
While work is in progress to facilitate contractor's work we pay them in monthly bills for work done. And when work is completed we pay him his money finally.
73. I am of opinion, that the view taken by the learned Subordinate Judge that the claim as regards the price of the materials already supplied is within limitation is correct. What happens in these cases is that the contractors go on receiving payments in order to facilitate work, but the final bill is passed when the entire supply has been made. In the case before us the plaintiff had the right to make supplies till the end of the year 1923. Before he could finally complete his part of the contract it relieved him of that duty. The contract was revived after cancellation by the defendant and then again eventually cancelled on 7th May 1924, and so in my opinion the claim in respect of the materials supplied is within limitation. As regards damages in respect of the goods which could not be supplied because of the defendant's breach the claim is also within limitation. As regards contract No. 2-M the price of the goods supplied by the plaintiff to the defendant under this contract has already been paid minus the retrenchment money with which point f will deal separately. In respect of the goods which could not be supplied of the breach, the case as regards this contract stands exactly on the same footing as that of contract No. 1-M. I therefore decide that this part of the claim is also within limitation.
74. Another point raised by the Learned Counsel for the defendant-appellant was that so far as the contracts Nos. 1-M and 2-M, are concerned they were not revived. I cannot agree with this contention. The letter of the Manager and Chief Engineer of the defendant railway, dated 1/4th June 1923, printed at p. 317, clearly shown that all the four contracts were nancelled. It says that:
Owing to the very inferior quality of sleepers having been supplied, the following and all such work-orders so far as the unsupplied balance is concerned are hereby cancelled. Work-Orders Nos. 42, dated 19th April 1923, 1-M, 2-M, and 3-M, dated 23rd April 1923.
75. The solicitors of the defendant-appellant in their letter, dated 13th September 1923, printed at pp. 399 and 400, state:
When this detailed survey has been held you will be required to remove such of the sleepers as may be rejected and to replace them by a similar member of sound sleepers in accordance with the contract specification, and should you fail to do within a reasonable time, which will be named to you, the State will proceed against you for a refund, of HO much of the payments made to you under the contracts as represents the amount over-paid to you thereunder.
76. This can have only one meaning, which it that the order of cancellation relating to these contracts Nos. 1-M and 2-M, was also withdrawn. At p. 405 we have the hitter of the Manager and the Engineer-in-Chief of the defendant railway, saying:
Under orders from the Government of Baroda the order of cancellation of the above contract is hereby withdrawn.
76. It is true in the letter only work-orders Nos. 42 and 3-M are referred, but this has to he read along with other correspondence on the subject for instance, the letter of the defendant to the plaintiff dated 4th February 1924, printed at p. 435, says:
In connection with the work-orders (all the lour contracts in suit which are mentioned in the heading) revived under orders of His Highness Government, I have to inform you that it bus further been decided by the Government to stipulate as a condition for the revival of the mid work-orders that you agree to accept the Allowing rates.
77. This also goes to show that the order of revival withdrawing the cancellation refers to all the four contracts. On the same subject see the final letter, dated 3rd May 1924, printed at p. 451 which refers to all the contracts. I therefore think that all the four contracts had been revived. As regards the retrenchment money, the amount due to the plaintiff for the supply; of 8283 metre gauge sleepers came tot Rs. 47,600-4-0. Out of this amount a sum of Rs. 4,762 was kept back as retrenchment money on 24th April 1923, when the balance was paid. It appears that when a contractor agrees to supply materials to the defendant railway under the terms of the contract, 10 P.C. is to be withheld as security for due performance of the contract. The condition is as follows:
Condition 4: The Executive Engineer shall, retain 10 per cent, on the value of all bills submitted as security for the proper and due performance of the work. Such security to be absolutely forfeited as damages for the non-completion of the work aforesaid within the time herein stipulated, or on failure of contractor, or delay of any sort....
78. It appears to me on a consideration of the facts of the case that the plaintiff became entitled to the return of this retrenchment money only when the defendant committed a breach of the contract. If there had been no breach then the plaintiff would have been entitled to recover this amount after the completion of the contract, that is to say, after he had supplied to the defendant the full number of sleepers which were to be supplied under this contract No. 2-M. But the defendant himself broke the contract, and so the plaintiff became entitled to recover it when the contract was broken. The defendant broke the contract on 7th May 1924, and therefore the plaintiff's claim for the return of this retrenchment money is also within limitation.
79. The result is that the plaintiff-respondent is entitled to a decree in respect of the contracts Nos. 1-M, 2-M, 3-M and 42, with this exception that his claim to recover the price of 1902 sleepers alleged to have been supplied under work order No. 3-M should have been dismissed. In fixing the amount of damages in respect of the sleepers which the plaintiff could not supply because of the cancellation of the contracts, the learned Subordinate Judge has adopted a very fair method. He had taken into account what the price agreed upon between the parties was and the price of the sleepers in 1924, when the contracts were broken by the defendant. He has assessed damages with reference to the rates most favourable to the defendant. The finding of the learned Subordinate Judge on the question of the amount of damages was not challenged before us during the hearing of this appeal. The learned Subordinate Judge has allowed interest at the rate of Re. 1 per cent per mensem on the unpaid price of the sleepers which the plaintiff-respondent has supplied to the defendant and also on the retrenchment money which the plaintiff was not paid. The rate of interest appears to me to be quite reasonable. As the plaintiff did not supply 1902, narrow gauge sleepers in respect of contract No. 3-M, the amount decreed to him by the Court below will have to be reduced by Rupees 7,132.8-0, on account of the price of these sleepers plus Rs. 2,567-1-0, on account of interest, the total being Rs. 9,699-9-0. But on the finding that the plaintiff did not supply 1902 narrow gauge sleepers, he will be entitled to damages in respect of these sleepers because be was not permitted to supply them as the defendant had broken the contract. The result is that the plaintiff is entitled to Rs. 1,902, on account of damages at Re. 1 per sleeper at which rate damages were calculated by the learned Subordinate Judge. So the decree of the Court below will have to be modified to the extent of Rs. 7,797-9.0. For the reasons given above, I would allow this appeal, in part and modify the decree of the Court below to this extent that the amount decreed by the learned Subordinate Judge will be reduced by Rs. 7,797.9.0. In all other respects the appeal stands dismissed. The parties will pay and receive costs in both Courts in proportion to success and failure.
80. We allow this appeal in part, and modify the decree of the Court below, so far that the amount decreed by it shall be reduced by a sum of Rs. 7,797-9-0. In other respects the appeal is dismissed. The parties will receive and pay costs in both Courts in proportion to success and failure.