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K.G. Khosla and Co. Vs. the Trustees of the Port of Bombay - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtDelhi High Court
Decided On
Case NumberRegular First Appeal No. 106-D of 1961
Judge
Reported in8(1972)DLT92
ActsLimitation Act, 1908 - Sections 14
AppellantK.G. Khosla and Co.
RespondentThe Trustees of the Port of Bombay
Advocates: Shyam Kishore,; M.K. Chawla,; P.L. Vohra,;
Cases ReferredMrs. J. H. Nelson v. S. Thakur Singh
Excerpt:
.....be purchasing the goods from elsewhere at the risk of the appellant. the limitation for such a suit, thereforee, was three years from the date of the breach under article 115 of the limitation act, 1908. the date of the breach was around 7th of april 1953 by which date the appellant had failed to supply the goods and the respondents had intimated to the appellant their intention to purchase the goods from elsewhere at the risk of the appellant, the suit in bombay city civil court was, thereforee, filed just within the period of limitation. (1)in computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a court of first instance or of appeal or revision, against the defendant shall..........of the plaintiff-respondents was for damages for breach of contract. the limitation for such a suit, thereforee, was three years from the date of the breach under article 115 of the limitation act, 1908. the date of the breach was around 7th of april 1953 by which date the appellant had failed to supply the goods and the respondents had intimated to the appellant their intention to purchase the goods from elsewhere at the risk of the appellant, the suit in bombay city civil court was, thereforee, filed just within the period of limitation. the suit in delhi was undoubtedly filed beyond the period of limitation. it is only, thereforee, if the period of time spent by the respondents in the city civil court at bombay is excluded from computing the limitation for the suit that the suit.....
Judgment:

V.S. Deshpande, J.

(1) This is a defendant's appeal against a decree for Rs. 16,825.37 P. passed against it and in favor of the respondents for damages caused to the respondents by the failure of the appellant to supply the contracted goods to the respondents.

(2) The respondents invited tenders for supply of crane chains made of wrought-iroin 'Special Quality' in their form and on their conditions. But the appellant submitted a tender in its form and subject to its own conditions as per Exhibit P-52 dated 19-1-1951 at page 203 of the paper-book. The relevant condition No. 8 was as follows:

'THEprice and anything connected with the orders are payable at Delhi and at no other place. All contracts are deemed to be made at Delhi. Only Delhi Courts will have jurisdiction relating to our contracts'.

(3) The respondents accepted the above tender of the appellant on 28-6-1951 as per Exhibit P-53 at page 204-A by placing an order for the goods on the appellant. The respondents specifically referred to the appellants tender dated 19-1-1951 and expressly committed themselves in the order to the following statement :

'CONDITIONSAccepted'.

(4) The contract thus came into existence on the condition stipulated by the appellant that the Delhi Court alone would have jurisdiction which conditions was accepted by the respondents.

(5) Originally the delivery of the goods was to be made within six months of the order but the appellant requested .for extension of time which extension was granted by the respondents. The appellant also requested for a total increase of 20 per cent in the price of the goods which was also agreed to by the respondents. The appellant, however, failed to supply to the respondents goods according to the contractual specifications and, thereforee, the respondents informed the appellant on 7-4-1953 that they would be purchasing the goods from elsewhere at the risk of the appellant. The respondents invited fresh tenders and purchased the goods from two of the tenderers by paying a price which was higher than the price at which the appellant had contracted to supply the goods by Rs. 14,058-7-0. The contracts with the new suppliers however contained a price variation clause and, thereforee, the respondents had to pay ultimately to the contractor a price which was higher than the price at which the appellant had contracted to supply the goods by Rs. 16,825-6-0 which was the amount which finally became due to the respondents from the appellant.

(6) The respondents filed a suit in the City Civil Court at Bombay for this amount on 5-3-1956. On 22-8-1956, however, the appellant objected to the jurisdiction of the Bombay Court to try the . suit by pointing out that according to comdition No. 8 of the tender submitted by the appellant and accepted by the respondents only Delhi Courts could have jurisdiction to entertain the suit. The City Civil Court Bombay decided the question of territorial jurisdiction as a preliminary issue, and held that the Delhi Court alone had the jurisdiction to try the suit in view of condition No. 8 of the appellant's tender which had been accepted by the respondents. It also held that this condition was not void by virtue of section 28 of the Indian Contract Act. It, thereforee, ordered the return of the plaint to the respondents on 15-12-1958. The respondents actually got the plaint on 18-12-1958 and presented it to the Court at Delhi on 19-12-1958. The appellant then objected to the suit in the Delhi Court on the ground that its institution in Delhi was barred by limitation. The respondents replied that the time spent by them in the City Civil Court at Bombay should be excluded from the computation of the limitation under section 14 of the Limitation Act. The Sub Judge 1st Class, Delhi, held that the respondents were entitled to the benefit of section 14 of the Limitation Act and the suit was, thereforee, in time. He, thereforee, decreed the claim of the respondents with costs.

(7) The maim ground on which the appellant has challenged the correctness of the trial Court's judgment is that the respondents were not entitled to the benefit of section 14 of the Limitation Act and, thereforee, the suit was barred by time.

(8) The suit of the plaintiff-respondents was for damages for breach of contract. The limitation for such a suit, thereforee, was three years from the date of the breach under Article 115 of the Limitation Act, 1908. The date of the breach was around 7th of April 1953 by which date the appellant had failed to supply the goods and the respondents had intimated to the appellant their intention to purchase the goods from elsewhere at the risk of the appellant, The suit in Bombay City Civil Court was, thereforee, filed just within the period of limitation. The suit in Delhi was undoubtedly filed beyond the period of limitation. It is only, thereforee, if the period of time spent by the respondents in the City Civil Court at Bombay is excluded from computing the limitation for the suit that the suit of the respondents as filed in Delhi can be said to be within time.

(9) SUB-SECTION (1) of section 14 of the Limitation Act which alone is relevant is as follows :

'14.Exclusion of time of proceeding bona fide in Court without jurisdiction.

(1)In computing the period of limitation for any suit the time during which the plaintiff has been prosecuting with due diligence another civil proceeding, whether in a Court of first instance or of appeal or revision, against the defendant shall be excluded, where the proceeding relates to the same matter in issue and is prosecuted in good faith in a Court which, from defect of jurisdiction or other cause of a like nature, is unable to entertain it.'

(10) To claim the benefit of section 14(1), the respondents have to show that they were prosecuting 'with due diligence' another civil proceeding on the same cause of action 'in good faith' in a Court which, from defect of jurisdiction, was unable to entertain it. The respondents have thus to satisfy two conditions, namely :-(1) of good faith and (2) of due diligence.

(11) Can it be said that the respondents acted in good faith in filing the suit at Bombay The meaning of the expression 'good faith' as used in section 14(1) of the Limitation Act is to be found in the definition of that expression in section 2(7) of the said Act which is as follows:

'NOTHINGshall be deemed to be done in good faith which is not done with due care and attention'.

(12) It is well-established law that when two Courts would be having jurisdiction to try a suit arising out of a contract, an agreement between the parties to such a contract that only one of these Courts shall have exclusive jurisdiction to try such a suit is valid and is not in any way hit by section 28 of the Contract Act. This proposition is so well-established that it was not disputed by the learned counsel for the respondents at the bar. It is sufficient to refer to the Full Bench decision of the Lahore High Court in Musa Ji Lukman Ji v. Durga Dass AIR 1946 Lah 57 to show that this was the accepted law even then. It has never bean doubted till now. The appellant resided at Delhi. The payment of the price under the contract for the supply of goods was performance of the contract or a part of the contract. Under section 20 of the Civil Procedure Code, thereforee, a part of the cause of action for a suit arising out of such a contract would arise at Delhi. Another part of the cause of action which consisted in the supply of goods at Bombay would arise at Bombay. This was, thereforee, precisely a case in which the parties were entitled to contract that only one of the two Courts, namely, the Court at Delhi would have juris- diction to try a suit arising out of contract. It is true that it was the appellant who broke the contract and, thereforee, the question of the respondents paying the price of the goods to the appellant at Delhi did not arise at all. But even so the appellant resides at Delhi and under section 20 of the Civil Procedure Code, a suit even for breach of contract could be filed either at Delhi or at Bombay. This again made the contract conferring exclusive jurisdiction to the Court at Delhi a valid one.

(13) Learned counsel for the respondents tried to show that the condition in clause No. 8 of the appellant's tender accepted by the respondents that the price payment terms accepted at Delhi was subsequently modified by the parties when, on 9-7-1952 as per Exhibit P. 82 at page 238, the appellant proposed to send the shipping documents to the respondents at Bombay to be cleared by the respondents after payment of custom duty. The appellant agreed that the respondents should make the payment to the appellant after the goods were cleared and found by the respondents to be all right. The payment was to be made of the bills submitted by the appellant on the C.I.F. value. This was agreed to by the respondents on 12-7-1952 as per Exhibit P-83 at page 240. This only meant that the payment was to be made against the bills submitted by the appellant on the C.I.F. value of the goods. As the appellant resided at Delhi, the payment would still have to be made to the appellant at Delhi. The mere fact that 'a cheque for payment is issued by the respondents at Bombay would have meant that the payment would be made at Bombay. Condition No. 8 of the appellant's tender accepted by the respondents cannot be said to be varied either by anything contained in the acceptance order of the respondents or by this subsequent correspondence between the parties.

(14) We are unable to see, thereforee, anything either in the pleadings or in the evidence of the parties which would throw any doubt on the validity of the condition in the contract that a suit arising out of it had to be instituted at Delhi. In view of this clear agreement. we are unable to see how the respondents could at all think that the Bombay Court had any jurisdiction to try the suit. The burden of proof was, thereforee, heavy on the respondents to show that they acted in good faith in filing the suit in the Court at Bombay. The question of good faith in the present case is fortunately easy to decide. The decision does not depend on any evidence as to what was going on in the mind of the officers or the legal advisers of the respondents. For, the law was absolutely clear that the Court at Bombay had no jurisdiction. Neither the officers nor the legal advisers of the respondents could, thereforee, have any reason to think otherwise. The legal position was so much beyond doubt that neither any officer nor any legal adviser of the respondents made any attempt to show that they had any reason to think that the Court at Bombay had any semblance of jurisdiction. It is significant to note that the interrogatories submitted by the respondents' counsel at Delhi for the examination on commission of Shri S. R. Vakil, Solicitor and Legal Adviser of the respondents pointedly asked Question No, 17 as follows :

'CANyou assign any reason or reasons for the filing of the suit by the plaintiffs at Bombay ?'.

(15) When Shri S. R. Vakil was examined as a witness, this question was not put to him by the respondents' counsel. Shri Vakil merely stated as follows at page 110:

'INfiling the suit in Bombay, the plaintiffs acted on bona fide legal advice and there was no negligence or lack of good faith or due diligence on the part of the plaintiffs in prosecuting the claim'.

(16) Shri Vakil was apparently himself the Legal Adviser of the respondents. It is strange that he should himself say that the respondents acted on legal advice. Such language could be very well understood from the client but not from the Legal Adviser himself. It was the duty of Shri Vakil as a Legal Adviser of the respondents to come forward to explain how the suit came to be filed at Bombay when the law so clearly pointed out that only the Delhi Court had the jurisdiction to try the suit. Shri Vakil apparently realized that no good reason could be given by him for filing the suit at Bombay. He, thereforee, did not try to give any such reason. Shri Parmanand Valiram Thadhani who dealt with this contract on behalf of the respondents was also examined on commission. He merely stated at page 101 as follows :

'WEhad to file the suit in Bombay City Civil Court as we were advised by our legal advisers that the Bombay City Civil Court had jurisdiction in the matter'.

(17) Shri Thadhani was a layman and we believe, thereforee, that the respondents must have acted on some legal advice that the suit could be filed in Bombay. The legal advice was clearly wrong. The question is whether any counsel worth the name could have given such wrong legal advice 'in good faith'. No counsel or solicitor has been named by the respondents as having given such advice. Nor any such counsel or solicitor has come forward to say that he gave such legal advice. The evidence of Shri Thadhani and Shri Vakil, even if believed, does not explain at all that there was any good reason why the suit came to be filed at Bombay. Their evidence is, thereforee, completely worthless to prove the 'good faith' of the respondents to claim the benefit of section 14(1) of the Limitatioin Act. In Lala Mata Din v. A. Narayanan (Civil Appeal Nos. 2410 & 2411 of 1966 decided on 25-8-1969) the Supreme Court speaking through Hidayatullah, C.J., considered the question whether and to what extent the mistake made by a counsel can be said to be made in good faith within the meaning of section 14(1). His lordship observed as follows :

'THElaw is settled that mistake of counsel may in certain circumstances be taken into account in condoning delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground. It is always a question whether the mistake was bona fide or was merely a device to cover an ulterior purpose such as laches on the part of the litigent or an attempt to save limitation in an underhand way'.

(18) Judged by the above test, the mere statements made by Shri Thadhani and Shri Vakil that the respondents were legally advised to file the suit at Bombay are of no use to the respondents in claiming the benefit of section 14(1). It was necessary for the respondents to show that the mistake made by the Legal Adviser, whoever he may be, was a bona fide one. For that purpose, the Legal Adviser should have been examined to explain how the mistake was made by him in good faith. The Legal Adviser was not examined. He was not even named. If Shri Vakil was the Legal Adviser, then Shri Vakil should have said that it was he who gave legal advice to the respondents. Had he said so, then he would naturally have been required to explain his reasons for giving such advice. For, legal advice has no meaning if it is not supported by reasons. In the absence of reasons, it is no advice at all. thereforee, even if we believe that some legal adviser or Shri Vakil gave such advice to the respondents, we would be still unable to give the respondents the benefit of section 14(1) inasmuch as we would still not be satisfied that such wrong legal advice will be given in good faith.

(19) Learned counsel for the respondents relied upon A. E. G. Carapiet v. A. Y. Derderian : AIR1961Cal359 paragraphs 9 and 10, where the Court emphasized the necessity of crossexamination of a witness to test the truth of his statement. The failure to do so would raise the presumption that the evidence was not disputed. This observation pre-supposes that the examination in-chief was such evidence which, in the absence of rebuttal, would prove the point on which the evidence was offered. But in the present case, the evidence of Shri Thadhani and Shri Vakil even if believed does not amount to proof of good faith. It was not. thereforee, incumbent on the counsel of the opponent to crossexamine Shri Thadhani and Shri Vakil on this point at all. The burden of proof resting on the respondents still remained undischarged. As to the duty of a party to prove good faith to claim the benefit of section 14(1) on the ground of the mistake of a counsel, the same view as taken by us above was expressed in Gulal v. Assistant Custodian (Rural) New Delhi (1966) 2 Del L T 424 by Dua, J. (as he then was) and in Mrs. J. H. Nelson v. S. Thakur Singh (1967) 69 Pun L R 64 by a Division Bench again speaking through Dua, J. (as he then was). We have, thereforee no doubt that the suit at Bombay was not filed by the respondents in good faith within the meaning of section 14(1).

(20) The appellant took the objection to the local jurisdicition of the Bombay Civil Court immediately after the suit was filed at Bombay. The respondents refused to concede the validity of the objection and went on perversely litigating in the Bombay Court. This was utter negligence on the part of the respondents. It cannot be said, thereforee, that the prosecution of the suit at Bombay by the respondents was made with 'due diligence'.

(21) We, thereforee, hold that the respondents are not entitled to exclude the time spent by them in the City Civil Court at Bombay under section 14(1) of the Limitation Act. Consequently the institution of the suit in the Court at Delhi was hopelessly barred by time as the suit was instituted far beyond the period of three years which was the period of limitation prescribed for such a suit by Article 115 of the Limitation Act.

(22) As the suit fails on the ground of limitation it is not necessary for us to determine the precise amount which the respondents could have been entitled to claim as damages from the appellant for the breach of the contract. Nor was this point argued by the parties.

(23) The judgment and decree of the trial Court are, thereforee, set aside and the suit of the plaintiffs-respondents against the defendantappellant is dismissed. As the defendant-appellant had been guilty of breach of contract, we order that the parties shall bear their own costs throughout.


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