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National Building Construction Corporation Ltd. Vs. the Vyasa Bank Ltd. - Court Judgment

LegalCrystal Citation
SubjectContract
CourtDelhi High Court
Decided On
Case NumberSuit Appeal No. 591 of 1980 and Interim Application 307 of 1981
Judge
Reported in1982(3)DRJ49; ILR1981Delhi623
ActsIndian Contract Act, 1872 - Sections 49; Code of Civil Procedure (CPC), 1908 - Order 37
AppellantNational Building Construction Corporation Ltd.
RespondentThe Vyasa Bank Ltd.
Cases Referred and Ramasubramoniam v. Ranganathan
Excerpt:
contract act - section 49. place of performance of a contract. where there is no specific provision in the indian contract act about the place of performance, the courts in india can apply the principle of the english common law that the debtor must seek the creditor. civil procedure code - order 37. may be that the defense is sham or illusory or even 'moonshine' the defendant is entitled to leave if the court can project the interest of the plaintiff by making an order for payment of the amount in court. it is not the object of order 37 that the rights of defendants are not to be litigated at all. - - all of our footsteps through life are guided by nothing better than tentative working rules......as a rule of law to india or not. one thing seems clear. where there is no specific provision in indian contract act about the place of performance, the courts in india can apply the principle of the english common law that the debtor must seek the creditor 1966 sb 543. (4) further held that in the contract act, we have seen section 49 which provides for the place of performance. to cases to which section 49 does not apply, the courts have frequently applied common law doctrine, 'not as a rule of law but as a rule of evidence,' as allahabad and kerala doctrine as a tentative working rule. all of our footsteps through life are guided by nothing better than tentative working rules. following such a guide does, indeed, involve risks, but it is a risk to which life has accustomed us. there.....
Judgment:

(1) The plaintiff. National Building Construction Corporation Ltd., (NBBC) filed a suit against the defendant, Vyasa Bank Ltd. of Banglore, for the recovery of Rs. 7,12,000.00 on the basis of a performance bond dated 22-12-78 executed by the Bank in favor of the NBBC. The suit was filed under the provisions of order 37 of the Code of the Civil Procedure Code The Bank entered appearance and made an application for leave to defend. The Bank raised objections to the jurisdiction of this court. It was said that the Bank carries on business at Banglore and Nbbc under Section 20 of the Civil Procedure Code ought to have sued the Bank at Banglore. The other defense raised by the defendant was that the Nbbc practiced fraud on the Bank in obtaining the performance bond as they did not inform the Bank that the value of the contract had been reduced from Rs. 94,94,600.00 to Rs. 51,49,000.00 and the amount of the bond was accordingly to be reduced. On behalf of the plaintiff it was, however, contended that as the place of the performance is not indicated in the performance bond, the principle of English Common Law that the debtor must seek the creditor should be applied to this case.

(2) Held that on the question whether English Common Law doctrine that the debtor must seek the creditor applies to India, there is a wide divergence of opinion in the Indian Courts. One view is that English Common Law doctrine does not form part of the India law. This view is represented by Punjab Full Bench in firm Hira Lal v. Brij Nath 1960 Punjab 450. That the English Common Law doctrine applies to India is the other view. This view is to be found in a full bench judgment reported as State of Punjab v. A.K. Raha (Engineers) Ltd. 1964 Cal 418, S.P. Consolidated Engineering Pvt. Ltd. v. Union of India 1966 Cal 259, M/s. Manohar Lal v. Bhawani Din Bhagwanidin, 1971 All 392 and Ramasubramoniam v. Ranganathan 1978 KLT 906.

(3) In the opinion of the learned Judge it was not necessary to determine in this case whether the common law doctrine applies as a rule of law to India or not. One thing seems clear. Where there is no specific provision in Indian Contract Act about the place of performance, the courts in India can apply the principle of the English Common Law that the debtor must seek the creditor 1966 Sb 543.

(4) Further held that in the Contract Act, we have seen Section 49 which provides for the place of performance. To cases to which Section 49 does not apply, the courts have frequently applied Common Law doctrine, 'not as a rule of law but as a rule of evidence,' as Allahabad and Kerala doctrine as a tentative working rule. All of our footsteps through life are guided by nothing better than tentative working rules. Following such a guide does, indeed, involve risks, but it is a risk to which life has accustomed us. There is no statutory provision in India on the question as to what will be the place of performance where none is specified in the contract. The courts in India have, in such cases, been guided by the Common Law doctrine.

(5) From the terms of the contract and the necessities of the case the learned Judge came to the conclusion that the payment was to be made at Delhi. Though it is not stated in express terms the clearest implication from the contract and the circumstances is that the payment is to be made at Delhi. It was thereforee held that Delhi Courts have jurisdiction.

(6) During the course of the arguments, the counsel for the defendant offered to furnish a fixed deposit receipt of the entire amount in the name of the Registrar within three weeks and requested that leave be granted on his furnishing the F.D.R. In view of this the learned Judge did not express any opinion on the merits of the defense and observed that since the defendant was prepared to furnish the F.D.R. of the entire amount in dispute there is no reason why mercy be not shown to the defendant and grant him leave to defend the suit. May be that the defense is sham or illusory or even 'moonshine' the defendant is entitled to leave if the court can protect the interest of the plaintiff by making an order for payment of the amount in court. The object of order 37 Civil Procedure Code is not that the defendant's rights are not to be litigated atall. If leave is refused the effect of the order will be that the defendant is not to be heard at all to make his defense. In these circumstances the leave to defend the suit was granted to the defendant on condition of furnishing the F.D.R. for Rs. 7.12,000.00 within three weeks from the date of the order.


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