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Balloram and anr. Vs. Firm Seth Uttamchand Bishandas and ors. - Court Judgment

LegalCrystal Citation
SubjectCommercial
CourtRajasthan High Court
Decided On
Case NumberCivil Revn. No. 224 of 1955
Judge
Reported inAIR1961Raj93
ActsCode of Civil Procedure (CPC) , 1908 - Sections 20 and 115; Contract Act - Sections 49
AppellantBalloram and anr.
RespondentFirm Seth Uttamchand Bishandas and ors.
Appellant Advocate D.P. Gupta and; R.K. Rastogi, Advs.
Respondent Advocate M.L. Joshi, Adv.
DispositionRevision dismissed
Cases Referred and Bharumal v. Sakhawatmal
Excerpt:
- - ' 18. the implication clearly is that unless the contract or the circumstances in which the contract was made give rise to a contrary implication, a creditor is competent to sue in any court within the local jurisdiction of which he happens to be, when his right to sue arises. in that case, the defendants had contracted undera memorandum executed and signed at calcutta tomake good any undisputed claims that the plaintiffsmessrs. having its residence at rangoon might lose owing to the failure or suspensionof payment of constituents. there is not the slightest indication that their lordships had any thing like the terms of the contact or the circumstances of the contract in their mind in arriving at the decision except that the firm's residence was at rangoon. it is not easy to..........'the debtor must seek the creditor' should have been applied or not. the common-law rule about the place of performance of contracts has beenstated in the halsbury's laws of england, third edition, volume 8, para 288 as follows:-'where no place for performance is specified either expressly or by implication from the nature and terms of the contract and the surrounding circumstances, and the act is one which requires the presence of both parties for completion, the general rule is that the promisor must seek out the promisee and perform the contract wherever he may happen to be. this rule applies not only to contracts for the payment of money, but to all promises for the performance of which the concurrence of the promisee is necessary. if, however, a debtor gives notice to his creditor.....
Judgment:
ORDER

L.N. Chhangani, J.

1. This is a plaintiffs' revision againstan appellate order of the District Judge, Bharatpurdated 8th September, 1955, dismissing the plaintiff-petitioners' appeal and maintaining the order of theCivil Judge, Bharatpur dated 22nd November, 1954returning the plaint for presentation to the propercourt.

2. The facts of the case broadly stated are as follows:--

3. The plaintiff-petitioners, Balloram and Veryamal claim to be the proprietors of a firm Bansiram Bolloram which at one time carried on business in Sibi Bluchistan, now a part of Pakistan. The defendant-non-petitioner No. 1, Seth Uttamchand Bishandas is a firm carrying on business as commission agents and bankers at Meerut in Uttar Pradesh. The defendants No. 2 to 6 who are non-petitioners in the revision petition, viz. Kishandas, Ramdas, Pehumal, Tekchand, Joturam and Jethamal, are said to be its partners.

4. The plaintiffs' case is that they appointed the defendants' firm as their commission agents for the purchase of jaggery in November-December, 1946 and in that connection, paid various sums of money to the defendant firm either in Pakistan or at Meerut. According to the plaintiffs, it was agreed that the defendants would render accounts and arrange payment of the balance that may be found due to the plaintiffs at Sibi in Pakistan.

On Asad 18, samwat 2004 corresponding to 8th August, 1947, the defendant firm sent an account to the plaintiffs' firm at Sibi according to which the defendant firm acknowledged an amount of Rs. 10,825/- as due to the plaintiffs and for the payment of the same amount, they sent two Hundis to the plaintiffs' firm at Sibi.

The plaintiffs' firm, however, did not think it proper to take payments under the Hundis and returned them to the defendant firm with a direction that the amount may be kept in deposit with the defendants and that the plaintiffs would be coming to Meerut for purchase of jaggery and would require the amount in that connection. Subsequently, in consequence of partition, the plaintiffs had to leave Pakistan and come over to India and, therefore, they could not utilize the amount for the purchase of jaggery and the amount remained in deposit with the defendant firm carrying interest at the rate of 6 per cent per annum.

The plaintiffs alleged having received Rs. 3,000/-on different dates and claimed that the amount of Rs. 2,825/- remained due. The plaintiffs' case further is that they have settled at Bharatpur from where they made a demand of payment from the defendants. They also served a notice dated 26th June, 1950, upon the defendants, but the defendants paid no heed. They also drew a Hundi for Rs. 1,500/- on the defendant firm to secure pay-ment, but the same was, not honoured by the defendants. They accordingly filed a suit for the recovery of Rs. 2,825/- as principal and Rs. 815/-as interest, total Rs. 3,640/- in the court of the Civil Judge, Bharatpur on 1st July, 1950.

3. The defendants resisted the plaintiffs' suitand, inter alia, pleaded that the court of the CivilJudge at Bharatpur had no jurisdiction to entertainthe suit. They denied the agreement set up bythe plaintiffs for rendering accounts and payingdues at Sibi and further pleaded that the cause ofaction did not arise either in whole or in part inany area now forming part of Pakistan.

The parties are agreed that in case of the cause of action having wholly of partly arisen in any area which now forms the part of Pakistan, the plaintiffs would be entitled to institute a suit in a court having jurisdiction over the place of residence of the plaintiffs in accordance with the provisions of the Displaced Persons (Institution of suits) Act, 1948 as amended from time to time.

6. The trial judge held that no part of the cause of action arose in Sibi and that the suit could not be instituted in his court. He, therefore, directed the return of the plaint. It will he useful to give here the various grounds on which the plaintiffs attempted to give jurisdiction to the court at Bharatpur and the findings of the Civil Judge on those grounds :-

7. In the first instance, it was urged that the return of the Hundis from Sibi by the plaintiffs with a direction that the amount sought to be paid through Hundis might be kept at Meerut, amounted to the making of an offer to the defendants and, therefore, the cause of action partly arose at Sibi on account of the offer having been made at that place.

The trial Judge after referring to a number of cases held that an offer becomes complete only when it comes to the knowledge of the persons to whom the offer is made and, therefore, the offer should be deemed to be made at the place where it comes to the notice of that person and not at a place from where it is despatched, and, therefore, it could not be said to have been made at Sibi and no part of the cause of action arose there.

8. Secondly, the plaintiffs relied upon a special agreement to the effect that the accounts would be rendered at Sibi and the balance would be paid there. The trial Judge rejected this ground by a two-fold argument: (a) that the deposit of the amount with the defendants had nothing to do with the agency business and should be treated as a separate transaction, and (b) that the fact of agreement cannot be accepted, particularly in view of a condition entered in Ex. P-1 on which the suit was based, reading, 'Subject to the jurisdiction at Meerut.'

9. Lastly, the common law principle that 'a debtor should find the creditor' was relied, upon by the plaintiffs. Dealing with this plea, the trial Judge held that there was no relationship of, creditor and debtor between the parties.

10. On these findings, the Civil Judge, Bharatpur based his order directing the return of theplaint.

11. The plaintiffs filed an appeal in the court of the District Judge, Bharatpur which affirmed the findings of the trial Judge and dismissed the appeal. The plaintiffs have consequently filed this revision.

12. The ground based upon a special agreement cannot be pressed in this revision, as it involves a pure question of fact. The findings of the courts below must be taken as binding and cannot be allowed to be agitated in revision,

13. The other contention with regard to the part of a cause of action having arisen at Sibi on account of the offer having been made from that place is also without any force. There are number of authorities including, Baroda Oil Cakes Traders v. Parshottam Narayandas, AIR 1954 Bom 491, relied upon by the lower Appellate court, which conclude the matter, The learned counsel for the petitioners had not much to say on this ground.

14. However, the third ground based on the common law rule, 'the debtor must find the creditor' has been pressed before me with great strenuousness. It was urged that the conclusion reached by the courts below that there is no relationship of creditor and debtor between the parties is perverse and is in clear disregard of the elementary principles of law on the point and the courts below, therefore, went completely wrong in omitting to apply the common law rule, 'the debtor must find the creditor'.

It was argued in this connection that the amount was in the first instance deposited with the defendant firm to be utilized by the plaintiffs for the purchase of jaggery, but when it became impossible for the plaintiffs to utilize the amount, it was converted into a loan and there developed a relationship of creditor and debtor between them.

15. Mr. Joshi on behalf of the non-petitioners repudiated this contention with equal vehemence and contended on the basis of certain cases which will be referred to in due course that the technical rule of common law cannot be applied in India and that the parties did not stand as creditor and debtor.

16. After considering the arguments of the learned counsel and considering the facts of the case, I am inclined to hold that in connection with the deposit of the amount, the relations between the parties were certainly that of a debtor and creditor. Evidently, in the present case, there was no bailment of currency in specie to be returned as such. The payment to the plaintiffs was sought to be made through Hundis which were not encashed and were returned.

Neither the currency in specie was offered to the plaintiffs, nor was it returned to be kept in specie. It must be borne in mind that a deposit and loan are not mutually exclusive. The deposit will generally involve only the creation of the relationship of a debtor and creditor. The conclusion of the two courts below is based upon misconception of the legal position and cannot be accepted as correct.

17. The next question, therefore, that requires to be determined is whether the common law rule, 'the debtor must seek the Creditor' should have been applied or not. The common-law rule about the place of performance of contracts has beenstated in the Halsbury's Laws of England, Third Edition, Volume 8, para 288 as follows:-

'Where no place for performance is specified either expressly or by implication from the nature and terms of the contract and the surrounding circumstances, and the act is one which requires the presence of both parties for completion, the general rule is that the promisor must seek out the promisee and perform the contract wherever he may happen to be. This rule applies not only to contracts for the payment of money, but to all promises for the performance of which the concurrence of the promisee is necessary. If, however, a debtor gives notice to his creditor of his intention to pay at a certain time at a convenient place, and the creditor makes no objection to the notice, he will be deemed to waive the necessity of a personal tender unless he attends at the place specified; and the general principle that a debtor must seek out his creditor has no application to wages payable by employers of labour who have a regular pay day and a regular office for making payment.'

18. The implication clearly is that unless the contract or the circumstances in which the contract was made give rise to a contrary implication, a creditor is competent to sue in any court within the local jurisdiction of which he happens to be, when his right to sue arises. In other words, the creditor's residence at the time of the commencement of the suit has been made, as a matter of law the basis of determining the forum.

It may, however, be stated at this stage that even in England, this rule has been mainly confined to ordinary debts and has not been applied to Negotiable Instruments, payment of rent and to transactions between principals and agents. In India, there have been several decisions of the High Courts and also of the Privy Council regarding the applicability of the Rule. The judicial opinion in India cannot be said to be unanimous.

The Judges have differed as to the circumstances under which the Rule should be applied asalso to the purposes for which it can be applied. Itwill be desirable to notice first of all, the Highauthority of the Privy Council in Soniram Jeetmullv. R. D. Tata and Co., AIR 1927 PC 156. Beforethat decision, there were conflicting decisions, someapplying the Rule and some not applying the Rule.In that case, the defendants had contracted undera memorandum executed and signed at Calcutta tomake good any undisputed claims that the plaintiffsMessrs. Tata and Co. having its residence at Rangoon might lose owing to the failure or suspensionof payment of constituents. The place of paymentwas not fixed. Dealing with the objection relatingto jurisdiction, Lord Sumner observed as follows:'It is quite true, the contract does not saywhere Messrs. Jeetmull are to pay, but it does say,by an implication which is indisputable, that theyare to pay Messrs. Tata Sons and Company and itfollows that they must pay where that firm is.'His Lordship then concluded that, upon the face ofthis contract, not indeed in express terms, but by theclearest implication, payment is to be made in Rangoon. The argument that this constitued an importation of a technical rule of the English common lawinto the Jurisprudence of India was disposed of byan observation that,

'the simple answer to that would have been that, on the contrary, it was a mere implication of the meaning of the parties.'

A further argument that section 49 of the Indian Contract Act displaces the rule was met and it was held that it is not possible to accede to the contention that section 49 of the Indian Contract Act gets rid of inferences, that should 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.

19. What principles should be deduced from this decsion will be taken up a little later, but it must be safely said that the Privy Council recognised the applicability of the Rule and earlier decisions of the High Courts that the Rule cannot be applied in India, cannot be considered as laying down the correct law.

20. Mr. Joshi contended that the Privy Council case has been interpreted not to imply that the rule should be invoked for the purpose of determining the forum. He has relied upon the following cases:

The first case is Audinarayana v. Lakshminarayana, AIR 1940 Mad 588, where Varadachariar J. found it difficult to read the Privy Council decisionas laying down that as a rule of law, the principle that the debtor is bound to seek out his creditor and to pay his debt is to prevail in this country even for the purpose of determining the jurisdiction of the particular court. The learned Judge pointed but that their Lordships of the Privy Council tookcare to indicate at the end of the judgment that the decision was based upon the inferences drawn from the terms of the impact itself or from the necessities of the case.

It may be noted that their Lordships of the Privy Council drew from the fact that the defendants were to pay to the plaintiff, a conclusion as a matter of course that they must pay where the firm as. There is not the slightest indication that their Lordships had any thing like the terms of the contact or the circumstances of the contract in their mind in arriving at the decision except that the firm's residence was at Rangoon.

In these circumstances, it is difficult to appreciate how the rule cannot be invoked to determine the place of performance directly and the forum indirectly. To me, it appears, the learned Judge was merely emphasizing that the creditor's residence cannot, as a matter of law, be taken to determine the forum, but the learned Judge cannot be taken to lay down positively that no inference should be drawn that the creditor's place of residence at the time of the agreement should be taken impliedlyas the place for the payment of the debt. If the creditor's place of residence at the time of agreement should be presumed to be the place of the payment in the absence of a contract to the contrary, then it follows as a necessary corollary that the creditor's residence does affect the determination of the forum.

21. Another case relied upon by the learned counse1 for the non-petitioners is Ramalmga Iyer v. Jayalakshmi, AIR 1941 Mad 695, Leach C. J. in doubt-ing whether the common law rule had full force in the country, adopted the following principle:-

'In the first place, the terms of the contract are to be looked at and, if they do not help, the Court must have regard to the necessities of the case in deciding whether the rule should be applied.'

In the same case, Somayya J. observed as follows :

'If the common law rule of England is to be invoked as a mere aid in finding out the place of performance of a contract, I have no objection to its being so used and that is the way in which the Judicial Committee used it in ILR 5 Rang 451 : (AIR 1927 PC 150), but if it is argued that in every case of debtor and creditor, the rule is to be applied without considering either the terms of the contract or the circumstances attending on it or the necessities of the case, I have no hesitation In rejecting the contention. The question whether the common law rule of England is to be applied to a country of vast distances as India has to be considered with care.'

22. The learned Judges in this case also- did not appreciate the conclusion factually reached by their Lordships of the Privy Council, but over-emphasized the observations made generally in repelling arguments. Even at the cost of repetition, I must point out that the Privy Council held the defendants liable to pay at Rangoon on the basis of the mere plaintiff's residence.

23. The learned counsel for the non-petitioners then relied upon three Punjab cases, Piyarasing v. Bhagwadas, AIR 1951 Punj 33, Niranjansingh v. Jagjitsingh, (S) AIR 1955 Punj 128, Premnath v. Kaudoomal Rikhiram, AIR 1958 Punj 361.

24. In AIR 1951 Punj 33 the applicability of the rule was considered in respect of a promissory note, which according to the learned Judges themselves who decided the case, stood on a different basis. Kapur J. of course noticed and discussed several cases on the applicability of the rule to ordinary debts and summed up his conclusions in this behalf as follows:-

'(1) that the technical rule of the debtor seeking the creditor is not applicable in India for the purpose of determining the local jurisdiction of the Courts because that would be engrafting something on to Section 20 C. P. C.; (2) that in cases where Indian Courts have applied this rule to ordinary debts this has mostly been used only as one of the factors to be taken into consideration for determining as to what is the place where the contract implies the performance to be made.'

25. The observations of Kapur J. are based upon the observations of Varadachariar J. in AIR 1940 Mad 588, which have already been discussed above. The later Punjab cases (S) AIR 1955 Punj 128 and AIR 1958 Punj 361 merely follow the earlier Punjab case, in AIR 1951 Punj 33. In my opinion, the interpretation of the Privy Council in the earlier Punjab case, in AIR 1951 Punj 33 is not quite accurate,

26. Assuming that the technical common law rule that, the creditor's residence at the date of the institution of the suit' should, determine as a matter of law, the jurisdiction may not be imported for determining the forum, it is difficult to deduce any other conclusion from the Privy Council, decisionthan the one that if there is no express or implied contract to the contrary, the creditor's place of residence at the time of the agreement should as a matter of course be treated as the place of the performance of the contract or for that matter, the place of the re-payment of the debt, and should determine the forum.

There arc several cases, where the rule has been applied in the manner indicated above. See Champaklal v. Nectar Tea Co., AIR 1933 Bom 179, Md. Esuff v. M. Hatcem and Co., AIR 1934 Mad 581 and Shimoga Oil Mills v. Radhakrishna Oil Mills, AIR 1952 Mys 111, cited by Mr. d. P. Gupta appearing for the petitioners. In addition, I noticed two cases, Tulsiman Bibi v. Abdul Latif, AIR 1936 Cal 97 and Bharumal v. Sakhawatmal, AIR 1950 Bom 111. R. C. Mitter J., in the former and Chief Justice Chagla and Dixit J. in the latter applied the rule even with reference to the creditor's residence at the time of the institution of the suit. The learned Judges in the Bombay case, AIR 1956 Bom 111 observed that

'the common law rule is a reasonable rule and it is in conformity with justice and equity because it recognises the obligation of the debtor to pay his debt and that obligation can only be discharged by the debtor going to his Creditor and repaying the amount, and the common law rule imposes this obligation only when there is no express contract to the contrary.'

27. In my opinion, these two decisions have taken rather the other extreme view and in view of the language of the Privy Council decision in AIR 1927 PC 156, they cannot derive support from It. The Privy Council in that case proceeded to determine the place of payment so as to determine jurisdiction and further termed the rule as technical one. There is nothing in that decision to indicate that their Lordships contemplated the applicability of the rule in the manner in which it was applied in these two cases.

28. Before summing up the principles to be deduced, it will bo necessary to refer to two statutory provisions which have been considered in connection with the applicability of this rule -- Section 20 C. P. C. and Section 49 of the Indian Contract Act.

29. It has been suggested in AIR 1951 Punj 33 that the applicability of the rule will amount to engrafting an exception to Section 20 C. P. C. With respect, I cannot share this opinion. Section 20(c) contemplates that a suit can be filed in a court within whose jurisdiction a part of the cause of action 'arises. The place of performance is one of the important elements in a contract and it is settled law that a cause of action arises also partly at the place of performance. If the rule is applied to treat the creditor's residence as the place of performance and thereby to determine the forum, I cannot see how it will amount to create an exception to section 20 C. P. C.

30. Section 49 of the Indian Contract Act reads as follows:-

'49. Place for performance of promise whereno application to be made and no place fixed forperformance. -- When a promise is to be performed without application by the promisee, and noplace is fixed for the performance of it, it is the duty of the promissor to apply to the promisee to appoint a reasonable place for the performance of the promise, and to perform it at such place.'

31. It only imposes a duty on the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise.

32. I have already referred to the manner in which the Privy Council disposed of the argument based upon Section 49. I may further refer to in this connection the observations of the Privy Council:

'It is not easy to reconcile with the ordinary rules of law a Construction which enables the promisor to better his position under his contract by neglecting to perform a statutory duty imposed upon him with regard to its performance.'

33. All that Section 49 implies is that if subsequent to a contract, the place of performance ot contract, or for that matter the place of payment of debt, is fixed on an application by the promisor with the consent of the promisee, then it will not be open to the parties to apply the rule.

34. Now, the principles which should be deduced from a review of the Privy Council case and various subsequent decisions and a consideration of the statutory provisions, may be stated as follows :-

(1) The technical rule that the creditor's residence at the commencement of the suit should determine the forum in the absence of a contract to the contrary should not be applied in India. India is a vast country and it is hardly fair to impose a burden upon the debtor to seek the creditor whereever he happens to go in this vast country. The Privy Council case, AIR 1927 PC 156 is Consistent with this proposition. The contrary authorities in cases, AIR 1936 Cal 97 and AIR 1956 Bom 111 do not in my judgment state the correct law.

(2) If the place of performance of contract or for that matter, the place of payment of debt can be shown to be fixed expressly or impliedly and irrespective of or despite the inferences arising from the obligation of the debtor to seek the creditor involved in the obligation to pay him, the applicability of the rule does not arise.

(3) Even though the place has not been fixed at the time of agreement expressaly or impliedly, I but if it has been subsequently fixed under Section 49 of the Contract Act on an application of the promisor and with the consent of the promisee, the rule should not be applied.

(4) If it is not possible to establish an agreement respecting the place of performance or payment, express or implied, the court should apply the rule and should presume that the place of the creditor's residence at the time of the agreement was implied to be the place of performance or payment. The cases which have taken the view that the rule is only one of the factors that should be considered in determining the place of performance have not correctly interpreted the Privy Council decision AIR 1927 PC 156. Obviously, if on a consideration of the various circumstances, it is not possible to arrive at a finding as to an express or implied agreement regarding the place of performance or payment, I cannot see how other factors should beconsidered along with this rule for determining the place of performance, as the rule implies a clear presumption in the absence of a contract to the contrary.

35. Examining the present case in the light of these principles, the only question that has to be considered is whether there was any agreement between the parties, express or implied, determining the place of payment. If such an agreement is established, the rule will not apply. If such an agreement is not proved, then the rule should be applied and it will be presumed that the place of payment was Sibi in Pakistan and on that basis, the suit shall be deemed to have been properly instituted at Bharatpur, where the creditor resided at the time of the commencement of the suit in view of the provisions of the Displaced Persons (Institution of Suits) Act, 1948.

The trial Court has not recorded any definite finding as to whether there was an agreement for the payment of the money at Meerut, although he hinted at such an agreement by observing that the amount was kept with the defendants' firm on an understanding that the plaintiffs or their employees would go to Meerut and utilize it for the purposed of purchasing jaggery. The lower appellate court, however, records a finding that the place of repayment was Meerut and not Sibi.

It is true that this finding has been arrived at generally and vaguely, yet bearing in mind that the defendants were commission agents and the money was deposited with them by the plaintiffs to be utilized by them at Meerut for purchasing jaggery, I am inclined to accept the findings of the lower appellate court and do not see any adequate ground for disturbing the findings in the exercise of the revisional jurisdiction.

A further support for this fact is found from the condition stated in Ex. P-1 as there is an implied agreement between the parties that the place of performance will be at Meerut. In this view of the matter the petitioners cannot invoke the aid of this rule for holding that the place of payment should be presumed to be Sibi and that on that basis, the suit was properly instituted. Under the circumstances, I have no alternative, but to reject this revision petition.

36. In the result, the revision petition is hereby dismissed. Looking to the circumstances of the case, there will be no order as to costs.


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