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Galley and Co., Represented by the Proprietor G. Ranganadham Vs. Dathi China Appalaswami Naidu - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtChennai
Decided On
Reported inAIR1946Mad300; (1946)1MLJ11
AppellantGalley and Co., Represented by the Proprietor G. Ranganadham
RespondentDathi China Appalaswami Naidu
Cases ReferredSoniram Jeetmull v. R.D. Tata and Co.
Excerpt:
.....case had to find and pay the creditor, their lordships referred to section 49 of the indian contract act and commented that the debtor could not, by failing to perform the statutory duty of appointing a place for payment, better his position under the contract and say that the creditor must seek him out at bis place......but in the other cases and particularly in cases where the relationship is one of agency the place of payment has to be determined independently of any such general maxim with reference to the terms of the contract, the circumstances attending on it and the necessities of the case and having regard also to the statutory provisions contained in the civil procedure code and in section 49 of the indian contract act.12. i have adverted already to ex. p-i and ex. p-4 which contain an undertaking on the part of the defendant to pay or remit the net sale proceeds to the plaintiff. if the defendant had applied to the plaintiff for appointing a place for the payment, there can, in the circumstances, be little doubt that he would have appointed his own place of business. that does not.....
Judgment:

Yahya Ali, J.

1. The defendant firm, Galley and Co., auctioneers at Madras, who are the petitioners, here were sued by the respondent who carries on business at Rajahmundry. The suit was for the recovery of a sum. of Rs, 1,632-8-0 being damages claimed for alleged breach of the contract entered into between the plaintiff and the defendant firm that the latter would sell on behalf of the plaintiff a quantity of aluminium ingots and after deducting their commission pay the balance of the sale proceeds to the plaintiff. The goods were alleged to have been sold contrary to instructions resulting in loss to the plaintiff. The contract is contained in the correspondence that passed between the parties. In Ex. D-I, the plaintiff wrote to the defendant on 12th March, 1938, asking if the firm would agree to charge a commission of five per cent, on two tons of aluminium ingots which were being sent for sale. In reply the firm wrote on 13th March, 1938 (Ex. P-I) as follows:

Your letter of yesterday's date, received and noted that you have two tons aluminium ingots for auction sale for which we thank you.

As desired by you we shall accent five per cent, commission on the sale proceeds and pay you the net sale value on the 3rd day after transaction, closes.

Awaiting your consignment of aluminium ingots as early as possible.

2. The consignment was accordingly sent to Madras from Rajahmundry and was acknowledged by the defendant by his letter Ex. P-3 dated 25th March, 1938. Some attempts at sale appear to have been made but were withdrawn by the auctioneers for want of satisfactory bids. Ultimately the goods were sold on 7th September, 1940, but no intimation of the fact of the sale having taken place was sent to the plaintiff. On 9th October, 1941, the plaintiff wrote to the defendant Ex. D-3 directing that the lot should be sold only if it fetched a value of Rs. 40 per cwt. and if that price was not fetched, the goods should be returned to Rajahmundry. In reply to this communication the defendant firm wrote Ex. P-4 dated 10th October, 1941. The letter is in these terms:

We are in receipt of your letter dated 9th instant and in reply we have to state that your aluminium ingots were sold as long ago as 7th September, 194.0, for Rs. 120, the whole lot as per instructions contained in your letter dated 4th April, 1939, but by an oversight, the sale proceeds were not remitted to you.

We are taking the details of your account (i.e.,) rent accrued from the date of receipt, amount paid for clearing the stuff, withdrawal charges on several sales tried and we shall remit you the net sale proceeds next week.

3. On 14th October, 1941, the plaintiff caused a registered notice to be sent to the defendant through his lawyer and in reply thereto, the defendant wrote the letter Ex. P-5 dated 21 st October, 1941. The defendant sent with that letter a statement of account and a cheque for the balance of Rs, 68 shown at the foot of the account. The account itself is Ex. P-6.

4. The defendant raised several averments in his written statement one of which was that no part of the cause of action arose at Rajahmundry. and that consequently the Rajahmundry Court had no jurisdiction to entertain the suit. The learned District Munsiff tried the issue relating to jurisdiction as a preliminary issue and finding that the Court had no jurisdiction directed that the plaint be returned for presentation to the proper Court. Plaintiff appealed to the District Judge who differed from the view taken by the first Court and held that the Rajahmundry Court had jurisdiction to try the suit. This revision petition filed by the defendant arises out of that order of the District Judge.

5. Cause (c) of Section 20 of the Civil Procedure Code of 1908 provides that a suit shall be instituted in the Court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises. In the Code of 1882, the corresponding provision was contained in Explanation III to the corresponding section (Section 17) which ran as follows:

In suits arising out of contract, the cause of action arises within the meaning of this section at any of the following places, viz., (1) the place where the contract was made; (2) the place where the contract was to be performed or performance thereof completed; (3) the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable.

6. Although this explanation has been omitted in the present Code as no longer necessary in view of the wide ambit of Clause (c) of Section 20, it is nevertheless a correct statement of what is still the law. In the present case, the Rajahmundry Court will have jurisdiction if the plaintiff can show that, under the terms of the contract the' performance of the contract has to be compl ted in Rajahmundry or that in performance of the contract any money to which the suit relates as expressly or impliedly payable at Rajahmundry. Reference has been made to Ex. P-I which contains the acceptance of the plaintiff's offer by the defendant firm and in it is found the statement that the defendant would pay the plaintiff the net sale proceeds on the 3rd day after the transaction closes. Likewise in Ex. P-4 when the defendant was reminded of the contract, which the firm appears to have completely forgotten the defendant again reiterated that after examining the accounts, the net sale proceeds would be remitted to the plaintiff. In both these letters, no express reference has been made to the place where payment would be made and hence the question is whether, having regard to the nature of the case and the attendant cirucmstances, it can be found that by necessary implication the defendant had agreed to make the payment to the plaintiff at Rajahmundry. Apart from the technical aspect of the matter or the aspect that arises upon a scrutiny of the judicial decisions bearing upon the point, as a matter of plain reasoning, it could be premised that when a person says ' I shall pay you the sale proceeds within a particular time,' he means, unless he has qualified that statement by adding that he would pay at his own place, that he would pay and deliver at the place of the addressee or payee. But apart from this simple and natural way of looking at the thing, a specific provision is found in Section 49 of the Indian Contract Act that when a promise is to be performed without application by the promisee and no place is fixed for the performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the performance of the promise and to perform it at such place. The duty having been cast by statute on the promisor (in the present case the defendant) to apply to the promisee to appoint a place for the performance of his obligation to pay the amount, he cannot, either as a matter of law or of justice, improve his position by neglecting to perform that duty.

7. Apart from and independently of this statutory provision, the plaintiff's advocate has relied on the English Common Law rule enunciated by Bowen, L.J., in the ' the Eidtor,' (1893) L.R.P.D. 119 that where there is no express contract to the contrary a debtor should seek out and pay the creditor and contends that consequently, it was the defendant's duty to pay him at his place of residence. On the defendant's side it is argued that the English rule has no application and should not be extended to this country and that the trend of the decisions in the various Courts has been in that direction. A large volume of case-law has been cited on both sides upon this question. I shall deal with a few of these cases. In Motilal v. Surajmal I.L.R.(1904)Bom. 167 Tyabji, J., in a case of del credere agency applied the maxim that where no specific contract exists as to the place where the payment of the debt is to be made, it is the duty of the debtor to make the payment where the creditor is. That decision was followed by the same Court in Kedarmal v. Surajmal I.L.R.(1908)33 Bom. 364. Both these cases were followed with approval by this Court in Naina Maracayar v. Somasundaram Chettiar (1920) 11 L.W. 593 which was a case of a merchant at Negapatam who consigned goods to a merchant at Penang for sale on commission. It was held that the Negapatam Court had jurisdiction to entertain the suit as a part of the cause of action arose there since the arrangement was that the Penang merchant should remit the proceeds by sending to Negapatam hundials drawn on some firm in the Madras Presidency. In Venkata Reddi v. Nataraja Setti : (1924)46MLJ371 upon similar facts Ramesam, J., held that by implication money was intended to be paid to the plaintiff at bis native place and consequently jurisdiction arose at plaintiff's place. It is necessary however to note that as early as 1907 in Raman Chettiar v. Gopalachariar I.L.R.(1908)Mad. 223 this Court had discountenanced the extension of the general rule to cases governed by the third explanation to Section 17 of the Code of 1882 and distinguished the decision of Tyabji, J., in Motilal v. Surajmal I.L.R.(1904) Bom. 167 and held that the Court is bound to seek the jurisdiction of the Court within the provisions of the Code.

8. This was the position until about 1924. Further doubt was cast on the applicability of the English Common Law rule by the Allahabad High Court in Tikaram v. Daulat Ram I.L.R.(1924)All. 465. A Division Bench of that Court while discussing the English rule expressed the view that while it might be generally applicable to the ordinary case of purchaser and vendor, it would not with equal force apply to the case of principal and agent or master and servant. That was also a case of del credere agency. While referring to Motilal v. Surajmal I.L.R.(1904)Bom. 167 the learned Judges pointed out that they were not entirely in accord with that decision. The Allahabad decision was referred to by a Division Bench of the Bombay High Court in Nandlal v. KisanlaP as also the decision in Motilal v. Surajmal I.L.R.(1904)Bom. 167 and the learned Judges preferred to follow the view taken by the Allahabad High Court in Tikaram v. Daulatram I.L.R.(1924)All. 465. This was also a case of commission agency and in the course of the judgment, reference was made to the decision of the Privy Council in Soniram Jeetmull v. R.D. Tata And Co., Ltd. (1927) 53 M.L.J. 25 : L.R.54 IndAp 265 : I.L.R. 5 Rang. 451 to which I shall advert presently. Motilal v. Surajmal I.L.R.(1904)30 Bom. 167 was again not followed in Mohamed v. Jute and Gunny Brokers, Ltd. (1930) 33 Bom. L.R. 1364 a decision of a single Judge1 of the Bombay High Court, on the ground that the Allahabad High Court differed from Tyabji, J.'s view and the Allahabad decision was followed by the Bombay High Court in Nandlal v. Kisanlal : AIR1928Bom548 the appellants before the Privy Council were sued in Rangoon by R.D. Tata and Co., who had a business branch at that place, for payment of sums of money due upon the failure of constituents to satisfy debts due to Messrs. Tata Sons and Co., which sums the defendants had undertaken to make good to them. In that suit Messrs. Jeetmull, who carried on business at Calcutta, contended that they could not be sued for this money in Rangoon. Clause 2 of the contract expressed Messrs. Jeetmull's obligation to pay and stated that Messrs. Jeetmull were to make good any undisputed claims that Messrs Tata and Co., might lose owing to the failure on suspension of payments of constituents. Upon this clause the question arose whether the contract relating to payment was performable by Messrs. Jeetmull at Rangoon. On the plain construction of the clause, their Lordships said this:

It is quite true that the contract does not say where Messrs. Jeetmull was to pay, but it does say, by an implication which is indisputable, that they are to pay Messrs. Tata Sons Co. and it follows that they must pay where that firm is. Hence one would think that, upon the face of this contract, not indeed in express terms, but by the clearest implication, payment is to be made in Rangoon.

9. Thereafter reference was made to the English Common Law rule that the debtor must seek out the creditor and after saying that even without invoking the rule, it was a mere implication of the meaning of the parties that the debtor in that case had to find and pay the creditor, their Lordships referred to Section 49 of the Indian Contract Act and commented that the debtor could not, by failing to perform the statutory duty of appointing a place for payment, better his position under the contract and say that the creditor must seek him out at bis place. Some of the earlier decisions in India were thereafter examined one of which was Motilal v. Surajmal I.L.R.(1904)30 Bom. 167 and after considering those decisions, the Privy Council said:

Their Lordships do not think that in this state of the authorities it is possible to accede to the present contention that Section 49 of the Indian Contract Act gets rid of inferences, that should justly be drawn fiom 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.

10. This was a case where the relationship was that of a debtor and creditor. But the principle of this decision was extended to the case of a commission agent by the Rangoon High Court in Annamalai Chettiar v. Daw Mnin U A.I.R. 1936 Rang. 251. I may also refer to a decision of a Full Bench of this Court in Venkatachalam Pillai v. Rajaballi M. Sajun (1934) 68 M.L.J. 504 where the plaintiff who was a resident of Tuticorin sued the defendant who carried on business at Rangoon for short-fall in goods ordered and for damages on account of the inferiority of the quality of those goods. The Full Bench held that upon an examination of the documents, it was manifest that, whatever the relationship between the parties might in fact be, payment for the goods purchased by the plaintiff or on his behalf was to be made at Tuticorin. In that view, it was found that the Tuticorin Court had jurisdiction to try the suit and the fact that the defendant had obtained payment of some of the hundies at Rangoon would not deprive the Tuticorin Court of its jurisdiction to try the suit. While this was the position, Varadachariar, J., in A-dinarayana Rao Naidu v. Lakshminarayana Rao : AIR1940Mad588 having occasion to deal with a case of contract of agency, pronounced the view that the decision of the Judicial Committee in Soniram Jeetmull v. R.D. Tata and Co. (1927) 53 M.L.J. 25: L.R. 54 IndAp 265 : I.L.R. 5 Rang. 451 cannot be read to lay down that, as a rule of law, the principle that the debtor is ' bound to seek out his creditor and pay his debt is applicable in this country even for the purpose of determining the local jurisdiction of particular Courts. The facts of the case or the terms of the contract do not appear from the judgment of the learned Judge and the decision appears to have proceeded to some extent upon the obligation to render accounts and the consequent attraction to it of the provisions of Section 213 of the Indian Contract Act. There was however a definite dictum in that judgment that even assuming that the English rule either in terms or by analogy could be applied in this country, it could not be extended to a case which did not arise out of the relationship of debtor and creditor and particularly to a case of agency. Lastly, reference has to be made to the decision of this Court in Ramalinga Iyer v. Jayalakshmi : (1941)1MLJ784 . In that case plaintiff had instituted a suit in Palghat against her husband for maintenance and against her father-in-law for the return of her stridhanam properties alleged to have been entrusted to him at the time of the marriage. From the analogy of a debtor and creditor the English rule was invoked and it was contended that the defendants being debtors had to seek out the creditor and that therefore Palghat Court had jurisdiction. The learned Chief Justice and Somayya, J., held following Raman Chettiar v. Gopalachariar I.L.R.(1908)Mad. 223 that the Palghat Court had no jurisdiction and that the common law rule could not be applied in the circumstances of the case. Some of the decisions referred to above were cited including Motilal v. Surajmal I.L.R.(1904) 50. Bom. 167 and the Privy Council decision in Soniram Jedmull v. R.D. Tata and Co., Ltd. (1927) 53 M.L.J. 25 : L.R. 54 IndAp 265 : I.L.R. 5 Rang. 451 . The learned Chief Justice while referring to the latter decision observed:

It was not necessary in that case to decide whether the common law rule had full force in this country, because on examination of the terms of the contract the Privy Council considered that the suit had been instituted in the proper Court. But giving full weight to the words used in the passage which I have just quoted from the judgment, the judgment goes no farther than saying that Section 49 does not preclude the application of the rule and does not get rid of inferences which should justly be drawn from the terms of the contract itself or from the necessities of the case. 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.

Without considering, in what cases the rule might be conveniently applied in India, it is, in my opinion, clear that it should not be applied in the present case.

Somayya, J., while agreeing said:

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 he Judicial Committee used it in Soniram Jeetmull v. R.D. Tata and Co., Ltd.,2 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 and it is not necessary to go into that question now.

11. The position as a result of the scrutiny of the various decisions examined above may be summarised thus. Barring the earlier Bombay decisions, there has been a pronounced disincilination on the part of the Indian Courts to apply to this country unreservedly the general maxim that a debtor should find and pay his creditor. It might, in some cases, strictly arising out of the relationship of debtor and creditor, be useful to invoke it as a matter of inference or of implication; but in the other cases and particularly in cases where the relationship is one of agency the place of payment has to be determined independently of any such general maxim with reference to the terms of the contract, the circumstances attending on it and the necessities of the case and having regard also to the statutory provisions contained in the Civil Procedure Code and in Section 49 of the Indian Contract Act.

12. I have adverted already to Ex. P-I and Ex. P-4 which contain an undertaking on the part of the defendant to pay or remit the net sale proceeds to the plaintiff. If the defendant had applied to the plaintiff for appointing a place for the payment, there can, in the circumstances, be little doubt that he would have appointed his own place of business. That does not necessarily mean that the defendant would have to proceed to Rajahmundry with the account or with the money and deliver it there. According to commercial usage the account copy or the money could be sent by post or according to any of the recognised commercial methods. Nevertheless the obligation was on the part of the defendant to pay the money to the plaintiff at the place where he carried on his business and not on the part of the plaintiff to come to Madras and realise his dues. This appears to me to be the necessary inference arising from the nature of the contract relating to payment and from the necessities of the case. The learned District Munsiff believed he had no jurisdiction because he found that the contract had been concluded at Madras with the posting of the acceptance, its performance was to be at Madras because the auction had to be held here and its alleged breach was at Madras too as the sale contrary to the directions of the plaintiff took place at Madras. He however ignored the fact that the performance of the contract included the last stage of it viz., the rendering of the proper account and the payment of the moneys realised by the sale less the commission and expenses--an aspect which has been rightly stressed by the learned District Judge. I agree with the learned District Judge that by necessary implication the defendant both in Ex. P-I and Ex. P-4 agreed to make the payment of the moneys due to the plaintiff at Rajahmundry. In this view, part of the cause of action arose at Rajahmundry and therefore the District Munsiff's Court of Rajahmundry had jurisdiction under Section 20 (c) of the Civil Procedure Code to try the suit.

13. In the result the civil revision petition is dismissed with costs.


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