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Shri Badrinarain Alloys and Steels Ltd. Vs. Niel Hirjee and Anr. - Court Judgment

LegalCrystal Citation
CourtKolkata High Court
Decided On
Judge
AppellantShri Badrinarain Alloys and Steels Ltd.
RespondentNiel Hirjee and Anr.
Excerpt:
.....if the offeror receives no such intimation, even if the offeree has resolved to accept the offer, a contract may not result. but on this rule is engrafted an exception based on grounds of convenience which has the merit not of logic or principle in support, but of long acceptance by judicial decisions. if the parties are not in the presence of each other, and the offeror has not prescribed a mode of communication of acceptance, insistence upon communication of acceptance of the offer by the offeree would be found to be inconvenient, when the contract is made by letters sent by post. in adams v. lindsell, (1818) 1 b and ald 681, it was ruled as early as the 1818 by the court of king’s bench in england that the contract was complete as soon as it was put into transmission. in.....
Judgment:

ORDER

GA No.3586 of 2015 CS No.134 of 2015 IN THE HIGH COURT AT CALCUTTA Ordinary Original Civil Jurisdiction SHRI BADRINARAIN ALLOYS & STEELS LTD.Versus NIEL HIRJEE & ANR.

BEFORE: The Hon'ble JUSTICE HARISH TANDON Date : 5th May 2016.

Appearance: Mr.Reetobroto Mitra, Advocate Mr.Manik Das, Advocate Ms.Darshana Sett, Advocate ...for the petitioners/defendants.

Mr.Sabyasachi Chowdhury, Advocate ...for the plaintiffs.

Mr.Amitava Das, Advocate Mr.Mohit Gupta, Advocate Mr.M.K.Poddar, Advocate for the defendant no.2.

The respective counsels appearing for the parties have principally agreed on the settled proposition of law that the court should not venture to look into any other statements of facts and documents other than the averments made in the plaint and the documents annexed thereto, while considering an application for revocation of leave under Clause 12 of the Letters Patent.

Such leave was felt necessary by the plaintiff at the time of presentation of the plaint, as part of the cause of action arose within and part outside the territorial jurisdiction of this Court.

Even after the court grants leave under Clause 12 of the Letters Patent, it cannot act as a deterrent against the defendant who, after service of writ of summons, may apply for revocation thereof.

The principles of Order 7 Rule 11 of the Code may be usefully applied at the time of revocation of leave under Clause 12 of the Letters Patent.

Both the learned advocates have restricted their submissions on the averments made in the plaint and, according to the defendants-petitioneRs.if those statements are read harmoniously, it would reveal that the entire cause of action as alleged therein is beyond the territorial jurisdiction of this Court.

Though feebly, it is also stated by the petitioners that the plaint lacks material particulars constituting the cause of action and, therefore, the leave under Clause 12 of the Letters Patent should be revoked.

Before proceeding to deal with the judgments cited by the respective counsels, it would be profitable and relevant to narrate the salient features of the plaint.

The case made out therein is adumbrated hereinbelow: i) The plaintiff, at all material times, carried on the business for manufacturing and selling Thermo Mechanically Treated (TMT) Bars and allied products from its registered office which is within the territorial jurisdiction of this Court.

ii) On 25th September 2012, a meeting was held at the said office of the plaintiff and it was agreed that the defendants would install and enterprise grade Hardware and Software Inventory Management System to track over 30 vital parameters per work station and shall also set up the policies for corporate data security.

Apart from configuration and installation of the necessary firewalls based on the data security, the defendants shall also manage and audit the internet bandwidth and its utilization.

The aforesaid work should be carried out in collaboration or association with the defendant No.2 by the defendant No.1 and the total consideration was agreed at Rs.2,18,700/-.

iii) The aforesaid terms and conditions were reduced in writing which would appear from a letter dated 22nd September 2012 issued from the office of the plaintiff and the works were carried out by the defendant No.2 in association with the defendant No.1.

iv) Another contract was entered into by and between the parties for maintenance of the hardware and software inventories and firewall configuration for the period from 1st April 2014 to 31st March 2015 which was executed in the form of a letter issued from the office of the plaintiff recording the terms agreed in a meeting held at such office on 26th June 2014.

v) Payments were made from time to time in terms of the said agreement but dispute arose in respect of a bill dated 10th May 2014 for a sum of Rs.92,500/- on account of the re-work charges and/or extra work beyond the said agreement.

vi) It is alleged in the plaint that the said amount has been wrongfully demanded by the defendant No.1 in collusion with the defendant No.2.

The plaintiff refused to pay the said amount.

vii) It is averred that the defendant No.1 was also providing the mailbox service through third party hiring on internet domain service to the plaintiff for the period 22nd May 2013 till 21st May 2014 and a separate bill was raised for such service which was duly paid by the plaintiff.

viii) While requests for renewal of the said mailbox services were made to the defendant No.1, a refusal came from the said defendant as he insisted for payment of the said sum of Rs.92,500/- before agreeing to renew the said services.

ix) Because of suspension of such services availed by the plaintiff through the said defendant No.1, the plaintiff has to suffer and a meeting was held on 11th November 2014 wherein the second contract and the connected services were agreed to be terminated with immediate effect and the restoration of the mailbox services was refused to be done unless the purported disputed bill is paid.

x) It is stated that even after refusal to restore the mailbox services, the defendant No.1 did not provide the necessary password and configurations support.

The plaintiff was unable to utilize the said services between the period 10th November 2014 till 17th November 2014 as thereafter third party could reconfigure, re-authenticate and resume the said service.

xi) The other statements in the plaint relate to the damages and the loss suffered for the action of the defendants in abruptly discontinuing the mailbox service and a claim for money is made on the above pretext.

Admittedly, both the defendants are outside the territorial jurisdiction of this Court, though the agreements and the availing of services thereunder are pleaded to have been rendered within the territorial jurisdiction of this Court.

Bearing in mind that all the statements or averments made in the plaint are presumed to be true and correct, let me see whether the cause of action as pleaded have arisen within the territorial jurisdiction of this Court constituting the cause of action on which the suit can be founded or is mere fact on which the claim cannot be based.

Mr.Mitra, learned counsel for the defendants submits that mere making an offer at a place without acceptance thereof at another place does not form part of the cause of action in an action for damages for breach of contract.

In support of the aforesaid contention, he relies upon a judgment of the Supreme Court in the case of Bhagwandas Goverdhandas Kedia v.

M/S.Girdharlal Parshottamdas & Co.& Others reported in AIR1966SC543 It is further submitted that if the contract is pleaded for the purpose of jurisdiction and if such contract fails for one reason or another, the cause of action disappears and the suit shall be liable to fail as held in the case of A.B.C.Laminart PVT.LTD.& Anr.

versus A.P.Agencies, Salem, reported in (1989) 2 SCC163 Relying upon an observation of the Division Bench of this Court in the case of Adhunik Technology PVT.LTD.versus Caretel Infotech LTD.& Anr., reported in 2009 (2) CHN168 Mr.Mitra would contend that there is a distinction between a material fact or an integral fact for the purpose of cause of action to have arisen within the territorial limits of this Court and the facts which have no nexus and/or co-relation with the cause of action.

He, thus, submits that once the parties have agreed to rescind and/or cancel the contract, such contract does not survive in the eye of law and, therefore, the suit based thereupon is liable to fail on account of nondisclosure of cause of action.

He further submits that the alleged services used to be provided from the place of the business of the defendant which is admittedly outside the territorial jurisdiction of this Court and, therefore, the leave should be revoked and the plaint to be taken off from the file.

On the other hand, Mr.Chaudhury, learned Counsel appearing for the plaintiff, says that it is not a case based purely on a contract, but on refusal to provide the password and other configuration by the defendant which causes loss and damages as the plaintiff could not avail such facilities even through a third party and, therefore, the claim on account of damage is not based on the contract as alleged which was admittedly terminated.

He further submits that the loss and damages have been suffered by the plaintiff at its place of business as those services used to be availed therefrom and, therefore, the claim can be made before a Court within the territorial jurisdiction the business is carried on by the plaintiff.

He relies upon a judgement of A.B.C.Laminart (supra) for the proposition that the cause of action shall be deemed to have arisen at a place of its performance and the breach has occurred therein.

He, thus, submits that leave under Clause 12 of the Letters Patent should no be revoked as the defendant has not made out any case required to be made for such purpose.

There does not appear to be any quarrel to the settled proposition of law as laid down in Bhagwandas Goverdhandas Kedia (supra) that the acceptance and intimation of acceptance of an offer are requisite ingredients and/or requirements in a binding contract.

In a commercial field the meeting of minds is a foundation of contract.

The majority decision on formation of concluded contract and/or a binding contract has been succinctly observed in paragraphs 8 and 9 of the said report which runs thus : “8.

Acceptance and intimation of acceptance of offer are, therefore, both necessary to result in a binding contract.

In the case of a contract which consists of mutual promises, the offeror must receive intimation that the offferee has accepted his offer and has signified his willingness to perform his promise.

When parties are in the presence of each other the method of communication will depend upon the nature of the offer and the circumstances in which it is made.

When an offer is orally made, acceptance may be expected to be made by an oral reply, but even a nod, or other act which indubitably intimates acceptance may suffice.

If the offeror receives no such intimation, even if the offeree has resolved to accept the offer, a contract may not result.

But on this rule is engrafted an exception based on grounds of convenience which has the merit not of logic or principle in support, but of long acceptance by judicial decisions.

If the parties are not in the presence of each other, and the offeror has not prescribed a mode of communication of acceptance, insistence upon communication of acceptance of the offer by the offeree would be found to be inconvenient, when the contract is made by letters sent by post.

In Adams v.

Lindsell, (1818) 1 B and Ald 681, it was ruled as early as the 1818 by the Court of King’s Bench in England that the contract was complete as soon as it was put into transmission.

In Adams’ case (1818) 1 B and Ald 681, the defendants wrote a letter to the plaintiff offering to sell a quantity of wool and requiring an answer by post.

The plaintiff accepted the offer and posted a letter of acceptance, which was delivered to the defendants nearly a week after they had made their offer.

The defendants, however, sold the goods to a third party, after the letter of acceptance was posted but before it was received by the defendants.

The defendants were held liable in damages.

The Court in that case is reported to have observed that “if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it.

And so it might go on ad infinitum”.

The rule in Adams’ case (1818) 1 B and Ald 681, was approved by the House of Lords in Dunlop v.

Vincent Higgins (1848) 1 HLC381 The rule was based on commercial expediency, or what Cheshire calls “empirical grounds”.

It makes a large inroad upon the concept of consensus, “a meeting of minds” which is the basis of information of a contract.

It would be futile, however, to enter upon an academic discussion, whether the exception is justifiable in strict theory, and acceptable in principle.

The exception has long been recognised in the United Kingdom and in other countries where the law of contracts is based on the common law of England.

Authorities in India also exhibit a fairly uniform trend that in case of negotiations by post the contract is complete when acceptance of the offer is put into a couRs.of transmission to the offeror: see Baroda Oil Cakes traders case, ILR (1954) Bom 1137: (AIR1954Bom 451).and cases cited therein.

A similar rule has been adopted when the offer and acceptance are by telegraMs.The exception to the general rule requiring intimation of acceptance may be summarised as follows.

When by agreement, couRs.of conduct, or usage of trade, acceptance by post or telegram is authorised, the bargain is struck and the contract is complete when the acceptance is put into a couRs.of transmission by the offeree by posting a letter or dispatching a telegram.”

9. The defendants contend that the same rule applies in the case of contracts made by conversation on telephone.

The plaintiffs contend that the rule which applies to those contracts is the ordinary rule which regards a contract as complete only when acceptance is intimated to the prosper.

In the case of a telephonic conversation, in a sense the parties are in the presence of each other: each party is able to hear the voice of the other.

There is instantaneous communication of speech intimating offer and acceptance, rejection or counter-offer.

Intervention of an electrical impulse which results in the instantaneous communication of messages from a distance does not alter the nature of the conversation as to make it analogous to that of an offer and acceptance through post or by telegraph”.

In the case of A.B.C.Laminart (supra) the observations recorded in paragraph 15 thereof, which are relied on by both the parties does not lay down any different rules than what has been taken in a majority decision in the case of Bhagwandas Goverdhandas Kedia (supra).The said paragraph is set out hereinbelow : “15.

In the matter of a contract there may arise causes of action of various kinds.

In a suit for damages for breach of contract the cause of action consists of the making of 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 and the breach occurred.

The making of the contract is part of the cause of action.

A suit on a contract, therefore, can be filed at the place where it was made.

The determination of the place where the contract was made is part of the law of contract.

But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract.

Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated.

The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have been performed or its performance completed.

If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else.

In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent.

Part of cause of action arises where money is expressly or impliedly payable under a contract.

In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie.

If a contract is pleaded as part of the cause of action giving jurisdiction to the court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappeaRs.The above are some of the connecting factors”.

There is no quarrel on the proposition of law as laid down above that if the entire claim is based on a contract and if the contract is ultimately found to be invalid or fails on a legal parameter, it would evaporate the cause of action and the suit would then be liable to be dismissed.

What is to be seen whether the entire cause of action is based on the contact and the other reliefs cannot be segregated and/or separated and/or divorced therefrom and forms the integral part of the cause of action.

I am afraid whether the observations relied upon by the defendant in the above cited report has any relevance in the present context.

As indicated above, though the factum of contract between the parties are stated in the plaint but the entire claim is based upon non-providing the password and the other configuration which resulted into a loss and damages suffered by the plaintiff which is independent one and, therefore, it cannot be said that it is purely based upon the contract.

A distinction must be drawn between the facts required to be pleaded and the material facts constituting the cause of action.

The theory of material facts and the integral facts have been succinctly applied and elaborately discussed by a Division Bench in the case of Adhunik Technology PVT.LTD.(supra).It would be convenient to quote the paragraph 19 which is set out hereinbelow : “19.

Therefore, at this stage we should consider whether on the basis of “material facts” or “integral facts” pleaded in the plaint which are required to be proved by the plaintiff in order to get the relief claimed by assuming those to be true, any part of cause of action had arisen within the territorial limit of the Trial Court.

Merely because the plaintiff has pleaded some unnecessary incident which allegedly occurred within the jurisdiction of the Court, for such irrelevant fact, the Trial Court would not be vested with the jurisdiction.

The present case is based on the allegation of breach of letter of intent between the plaintiff and the defendant No.1.

In such a case, if the defendant denied the very existence of such agreement, the place of execution of such agreement would have become a relevant fact.

This Court, in the past, directed the learned Trial Judge to consider the written objection of the defendant No.1 before extending the ad interim injunction any further.

In the written objection, the defendant No.1 has admitted the existence of the alleged agreement between the parties but has blamed the plaintiff for its violation and has alleged lack of territorial jurisdiction of the Trial Court as the alleged violation, if at all, occurred at the Salt Lake beyond the territorial limit of the Trial Court.

Therefore, in view of the admitted existence of the agreement between the parties, the alleged place of execution of the agreement loses its importance for giving ultimate relief to the plaintiff”.

It is, therefore, to be seen that whether any part of the cause of action has arisen within the territorial jurisdiction of this Court for the purpose of maintainability of the suit.

The cause of action has not been defined in a statute book.

The definition thereof has been given in a plethora of judgements wherein it is uniformly stated that it is a bundle of facts required to be pleaded and/or to be proved to invite the Court to grant the relief as claimed therein.

It is also not in dispute that if the minuscule part of the cause of action arose within the jurisdiction of the Court before whom the action is led, such suit is maintainable despite the fact that the major part of the cause of action arose beyond the territorial jurisdiction of the said Court.

Though the contracts have been pleaded so the breach thereof in the plaint but the claim is also made for the damage and loss suffered for alleged action of the defendant in refusing to provide password and configuration to avail mail box services.

This Court, therefore, does not find any grounds to revoke the leave under Clause 12.

The application is, thus, dismissed.

No order as to costs.

Urgent certified photocopy of this order, if applied for within three days, be supplied to the parties subject to compliance of all requisite formalities.

(HARISH TANDON, J.) S.

Kumar / SD


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