Skip to content


L.N. Gupta Vs. Tara Mani - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberCivil Revision Appeal No. 90 of 1983
Judge
Reported inAIR1984Delhi49; 24(1983)DLT184; 1983(5)DRJ190
ActsCode of Civil Procedure (CPC), 1908 - Sections 20
AppellantL.N. Gupta
RespondentTara Mani
Advocates: S.K. Khurana and; G.N. Aggarwal, Advs
Cases ReferredMaula Baksh v. Mian Abdul Majid Khan and
Excerpt:
.....no presentment is necessary under the law as the suit was against the maker of the pronote. the place of payment has, thereforee, got to be ascertained. if the payee chooses to exclude bangalore, the other alternative place will be a place appointed by mutual agreement and if not, then, by the creditor. since the respondent lived at delhi and demand notice was sent by her from delhi, it is clear that the money was to be paid to her at delhi, which is confirmed by the discreet silence on the part of the defendants. the exception to section 64 of the negotiable instruments act makes it clear that the place of presentment in such a case will not determine the place of payment. since the pronote was not endorsed and the payee was the original creditor, the rule that the debtor must find..........or in part arises. place of performance in full or in part of a contract and, thereforee, the place of payment or of part payment will give rise to a cause of action in that place. such place can be specified at the time of making the contract, may be appointed later on, or may be implied. indian contract act, 1872, sections 47, 48 and 49 deal with the place of performance. so far as the stipulated place is concerned, there should ordinarily be no problem. but where the contract is silent about the place, and (i) the promiseis not required to indicate the place, the place of performance shall be the place at which the promise ought to be performed, or the promisor must ask the promisefor a reasonable place, and (2) where the promiseis required to specify the place, at the place.....
Judgment:

M.L. Jain, J.

(1) The respondent plaintiff Tara Mani, a widow living in D-II/160, Kaka Nagar, New Delhi, filed a suit in Delhi against the petitioners defendants on the basis of a pronote which was made and delivered on 9-6-1978 in Bangalore in her favor by the petitioners defendants payable on demand 'at Bangalore or any part of India'. In New Delhi she was living with her relative and attorney B.S. Gupta. On 12-3-1981 B.S. Gupta wrote from New Delhi to the petitioners to remit the amount due to her within 30 days. On 11-5-1981 her advocate upon instructions from Smt. Tara Mani by a notice called upon the petitioners to pay the amount due within seven days. Since no payment was forthcoming, the present suit was filed on 28-5-1981.

(2) Upon an objection, a preliminary issue was framed whether the Delhi court had any jurisdiction. The learned Additional District Judge was of the view that the defendants agreed to make payment on demand at any part of India. So, if payment could be demanded in Delhi in terms of the contract, suit could also lie at Delhi. The choice was left with the plaintiff on the basis of the contract between the parties and the defendants cannot now contend that the suit could be instituted only in Bangalore. By his order of 26-11-1982, the learned Judge decided the issue in favor of the plaintiff. Hence, this petition.

(3) Upon hearing the counsel, I am of the view that the petition ought to be dismissed.

(4) Under Section 20, Clause (c), Civil Procedure Code ., a suit can be filed in a court in whose jurisdiction the cause of action, wholly or in part arises. Place of performance in full or in part of a contract and, thereforee, the place of payment or of part payment will give rise to a cause of action in that place. Such place can be specified at the time of making the contract, may be appointed later on, or may be implied. Indian Contract Act, 1872, Sections 47, 48 and 49 deal with the place of performance. So far as the stipulated place is concerned, there should ordinarily be no problem. But where the contract is silent about the place, and (i) the promiseis not required to indicate the place, the place of performance shall be the place at which the promise ought to be performed, or the promisor must ask the promisefor a reasonable place, and (2) where the promiseis required to specify the place, at the place appointed by him, provided such place is a proper place. Now, there may arise situations in which the promiseis not required to specify the place or if required does not so specify the place, or if the place so specified is neither reasonable nor proper, then the court may be called upon to look for loci solutionis, that is the proper place of performance. This the court can do by taking into consideration all the relevant factors.

(5) In England, in a situation of this kind one of the basic rules has been that the creditor should seek the debtor, worked out in practice, it means that the debtor should make payment at the place where at the relevant time the creditor lives, carries on business or works turn gains as the case may be. Mr. Gopal Narain for the respondent urged that this rule is as well applicable to the case under consideration.

(6) In 1481 in his Estates and Tenures, Sir Thomas Littleton observed 'the Feiffer is bound to seek the feoffee, if he be then in any other place within the realm of England'. According to Sheppard's Touchstone, 'when an obligation is to pay a sum of money, do any like transitory thing to the obligee on a day certain, but no place is set down, it must be done to the person of the obligee wheresoever he be, and for this purpose, the obligor must at his peril seek out the obligee if he be intra qualuor Maria (infra regnum Angliae) but if he be not within the kingdom, he is not bound to seek him, and yet the condition is not broken. And if the thing to be done be either local, i.e. such a thing as must be done in or at a place certain, as the making of a foe-foment of land, payment of rent or the like, in this case the thing must be done at that very place and a tender of doing it in that place is a sufficient performance of the condition.' The simple reason for this is that the obligee has contracted to do so : Haldane v. Johnson (1853) 8 Exch. 689. In 1844, in Walton v. Mascall (1844) 13 M. & W. 452, Parker B. said : 'A request for payment of a debt is quite immaterial, unless the parties to the contract have stipulated that it shall be made; if they have not, the law requires no notice or request but the debtor is bound to find out the creditor and pay him the debt when due.' 'It behoveth him that made that obligation to seek him to whom the obligation is made, if he be in England.' : Fessard v. Mugnier (1865) 18 C.B. 286. In Robey & Co. v. The Snaefell Mining Co. Lid. (1888) 20 Qbd 152, there was no definite agreement as to where the money was to be paid. Stephen J. observed that the debtors having to pay for the goods it was their duty to send or bring the money to the creditors. This, in practice, would impose little inconvenience on the defendant. In Thorn v. City Rice Mills (1889) 40 Ch. D. 357, there were two places 192 named. It was held that it was for the person to whom payment is to be made to fix the place at which he will be paid. Until he has selected the place at which he will be paid, there can be no default. In Thompson v. Palmer and another (1893) 2 QBD 80, there was no express provision as to the place of payment. Lopes L.J. said that we must draw the best inference we can from the terms of the contract and to some extent from the surrounding circumstances. The reasonable inference in the case was that the payment was to be made in a place where the plaintiff carried on business, and he would probably be and could give a discharge for the moneys or where he would have an agent who could. He rejected the suggestion that the payment might be tendered at any place and that the plaintiff would be bound to take it, if so tendered. In The Eider (1893) Ca 119, there was no place specified in the contract for payment. What then is the ordinary rule Lord Esher M R. answered that the debtor must follow his creditor, and must pay where the creditor is. Bowen L.J. answered that the general rule is that where no place of payment is specified either expressly or by implication, the debtor must seek his creditor. 'If no certain place be appointed in the contract for performance, and it requires the presence of the promisee, it must in general, be made or tendered to him, wherever he may be: subject to the condition in some cases of his appointing a proper place.': Leake on Contracts (1921 ed.). These are the dimensions of the rule.

(7) Despite Soniram Jeet Mull v. R.D. Tata and Company Ltd. AIR 127 P.C. 156, a controversy has been carried on whether this principle is applicable in India. The contract in that case did not say where the moneys were to be paid. The Privy Council observed that the implication was indisputable that they were to be paid at the place where the respondents firm was. Such inference can justly be drawn from the terms of the contract itself or from the necessities of the case, involving in the obligation to pay the creditor, the further obligation of finding the creditor so as to pay him. A Full Bench decision in Firm Hira Lnl Girdhori Lal and another v. Baij Nath Hordial Khatri. , came to hold that in order to find whether the money was agreed expressly or impliedly to be paid within its territorial jurisdiction, the court is entitled to take into consideration the contract, its attending circumstances, the creditor's ordinary place of residence or business and the course of dealings between the parties including all the other factors relevant in a given case, but it cannot assume jurisdiction solely on the basis of the English common law rule that where there is no express agreement that payment is to be made at a particular place, a debtor must seek his creditor as that rule is not applicable in India, as a matter of law, to determine the forum where the suit is to be instituted. M/s Manohar Oil Mills and another v. M/s Bhawanidin, : AIR1971All326 , and Ram Subramaniam v. Ranganathan. 1978 Ker. L.T 906, have found that to the cases in which Section 49 of the Contract Act does not apply, the common law doctrine applies 'not as a rule of law but as a rule of evidence'. I am in respectful agreement with the statement, but partly. What is a rule of evidence, if it is not a rule of law? I, thereforee, agree that the common law rule should be invoked in such cases not merely as a rule to help locate the forum but as a part of the law relating to contractual obligations where the statute is silent in the matter. Avadh Behari J. has, thereforee, with his usual caution concluded that we cannot totally exclude the application of this rule from our law : M/s Natonal Buildiong Construction Corporation Ltd. v. The Vyasa.Bank Ltd. : 1982(3)DRJ49 . la State of Punjab v. A.K. Raha (Engineers) Ltd. : AIR1964Cal418 , it was observed :

'WHERE no place of payment is specified in the contract either expressly or impliedly, the debtor must seek the creditor; the obligation to pay the debt involves the obligation to find the creditor and to pay him at the place where he is when the money is payable.'

(8) The position of law could not have been stated more categorically than it was done in S.P. Consolidated Engineering Co. (P) Ltd. v. Union of India and another, : AIR1966Cal259 . The learned Judge said : 'The English Common Law Rule that 'a debtor must seek the creditor' is universal in its application, since it is founded on justice and equity. It is surely not a technical rule of English law, wrongly made applicable to India. It is a beneficient rule, inflexible and is of universal application. The rule cannot be said to be nothing more than a presumption rebuttable by contrary evidence. When there is evidence to indicate the place where the parties to a contract intended that the debt was payable, then the court will hold that such place of payment has been indicated in the contract itself, though not expressly but by implication. The occasion for applying the rule, as a rule of justice, equity and good conscience, would arise only when the court finds that no place of payment is expressly stated in the contract nor is it possible to find such place of payment indicated in the contract by necessary implication, on the relevant evidence on record.'

(9) Following Bharumal v. Sekhawatmal, : AIR1956Bom111 , it was held in M/s Shoba singh and Sons v. Saurashtra Iron Foundary and Steel Works (Pvt.) Ltd., : AIR1968Guj276 , that the common law rule that the debtor should find the creditor and pay the debts where the creditor resides, applied in India in fit cases. I am in respectful agreement with this reiteration.

(10) But a further question still survives whether the rule is applicable to promissory notes. Can a payee file a suit in the place where he lives, carries on business or works for gain, for recovery of money payable on demand but without specifying the place of payment? Jivatlal Purtapshi and others v. Lalbhai Fulchand Shah : AIR1942Bom251 , laid down that Section 49 of the Contract Act, 1872 and common law rule that the creditor must seek out his creditor in order to pay him, did not apply to negotiable instruments. The moneys due under the pronote being payable on demand, the natural inference was that the moneys were payable at the place where the demand was communicated to and received by the debtor. In that case the demand for payment was made from Bombay by notice addressed to the debtor at Ahmedabad. No reply was sent to that notice by the debtor. It was held that the moneys were payable at Ahmedabad and the court at Bombay had no jurisdiction. As per Sew Baran Saw & another v. Ram 194 Charitra Dubey and of hers : AIR1929Cal306 , where the creditor recited in the assignment that the money due on the promissory note assigned should be paid at the place where the assignee resides, it cannot give the assignee a right to sue on the promissory note in the court of that place. In Manek Devji v. Rathanbai w/o Khetu Devji Air 1950 Cut 66, the plaintiff brought a suit in the Kutch court on a promissory note executed in Bombay by the defendant who was a resident of Bombay. There was a recital in the pronote that the amount was payable anywhere. It was held that the Kutch court had no territorial jurisdiction to entertain the suit. Sailum Eshwarayya v. Thakur Devi Singh Air 1953 Hyd. 289, laid down that the common law rule does not apply to pronotes. J.N Suhni v. The State of Madhya Bharat Air 1954 M.B. 184, said that it does not apply to a pronote payable on demand and which is not payable at a specified place. On the other hand, in Md. Ishaq Khan v. Muhamad Islam Ullah Khan and others Air 1951 Lah. 481, the plaintiff had executed a pronote in U.P. but had delivered the pronote at Delhi to the payee who was a widow, living in Delhi, and she made demands upon the defendant from Delhi and it was held that the Delhi court had jurisdiction to entertain the claim.

(11) It seems to be that under the provisions of the Negotiable Instruments Act, 1881, the place of presentment of a promissory note largely determines the place of payment, but the exception to Section 64 of the said Act provides that where a promissory note is payable on demand and is not payable at a specified place, no presentment is necessary in order to charge the maker thereof. What should then be done in such a case? I think in such a case the common law rule can legitimately be invoked. In Dorahji Nowrosjee Pajnigar v. Jamshetji Peslonji Mehla Air 1936 Bom. 218, the money was payable at ''Poona, Bombay or elsewhere'. It was held that the pronote no doubt could have been presented at Bombay or Poona but being payable elsewhere it is also payable at a place not specified. It does not make it incumbent upon the promiseto present it at any specified place. In Chunilal Mayachand v. E.E. Millard Air 1938 Bom. 278, in a similar type of a pronote, it was held that it was a pronote payable on demand at any place and since the creditor demanded payment in Bombay that fixes the place of payment and makes it unnecessary for the promisor to apply to the promiseto fix a place for payment under Section 49 of the Contract Act. There was no option with the creditor to make a demand upon the debtor to pay him at such place as he chose. According to Mehr Baksh v. Hari Chand Air 1935 Lah. 623. what constitutes a specified place depends upon the circumstances of each case. Specified place is-equal to 'address.' If' that is not known, mere possession is sufficient and no presentment is necessary : Firm Sheikh Mohammad Ismoil' Maula Baksh v. Mian Abdul Majid Khan and another Air 1937 Lah. 259. According to Nanu Mal v.Firm Shibba Mal Nand Kishore and others Air 1939 Lah. 18, where a pronote does not specify any place where the payment was to be made, it should be presumed that the payment was to be made at a usual place of business of the creditor and the cause of action arises in that place because no presentment is necessary when the suit is against the maker of a pronote, In Srilal Singhania v ..Anartlal Mondal : AIR1940Cal443 , it was held that the common law rule applies to pronotes if no place for payment is specified. In Sha Dharji and another v. She Newji Jivraj and another Air 1952 Cut 58, it was held that a Khata may contain a stipulation for pay- ment at any place specifically or generally. In such a case the contract is to be performed at a place at which the creditor wants the payment to be made. In Arunchalam Chitiar and another v. Murugappa Chettiar and another : AIR1956Mad629 , it was observed that if a note is executed at one place and delivered at another or made payable at another place, part of the cause of action arises at each one of those places and the suit may be filed at any place at the option of the plaintiff.

(12) Now, in the present case, the moneys were payable on demand 'at Bangalore or at any part of India'. Any place in India is apparently an indeterminate place. It amounts to a place not specified. No presentment is necessary under the law as the suit was against the maker of the pronote. The place of payment has, thereforee, got to be ascertained. It. seems to me that if the payee chooses to exclude Bangalore, the other alter native place will be a place appointed by mutual agreement and if not, then, by the creditor. Since the widow lived in Delhi, and she sent the demand notices from Delhi, it is clear that the money was to be paid to her in Delhi. That is confirmed by the discreet silence on the part of the defendants. If they had any doubt about the place of payment, was it not their obligation to apply to her that either she should accept payment at Bangalore or she should specify any other reasonable place in terms of Section 49 of the Contract Act? All the surrounding circumstances and silence on the part of the drawer indicate that payment was to be made at Delhi. Exception to Section 64 of the Negotiable Instruments Act, 1881, further makes it clear that the place of presentment in such a case will not determine the place of payment. It was not a pronote endorsed and the defendants could not complain that he could not run after the assignee, as his obligation under the common law was only to find the original creditor. Where two places are named for payment or performance, the choice lies presumptively with the creditor or promisewho must give notice of the place as a condition of charging the debtor or promisor in default : Leake on Contracts, P. 640 (1921 ed.) (Rippinghall v.Llyod(1834) 5 B& Ad. 742. I am, thereforee, of the view that the rule that the debtor must find the creditor is applicable to promissory notes payable on demand in which the place of payment is not specified or where alternative places are mentioned. As a result of the discussion of law and the facts of this case, one can safely say that the defendants were bound to make payment in Delhi.

(13) I, thereforee, hold that the learned lower court was correct in assuming jurisdiction and dismiss this revision petition. The costs here shall abide the result of the suit.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //