1. This is an appeal against an order of the learned City Civil Judge returning the plaint in O.S. No. 530 of 1920 on his file to be presented to the proper Court. The learned Judge held that no part of the cause of action arose within his jurisdiction and therefore passed that order. The suit was brought by the Receivers on behalf of a firm in Madras called Kuppusami Naidu & Co., against the defendants, a firm carrying on business in Calcutta, for a certain sum of money which, they claimed, had been overpaid to the defendants' firm. Among the pleas raised by the defendants' firm, one was that the Court in Madras had no jurisdiction to try the suit and that the suit was properly triable only by the Court in Calcutta where they carried on business and where, according to them, the whole cause of action arose.
2. It is not denied that the defendants do not reside, or carry on business, or work for gain in Madras, but the plaintiffs rely entirely for their contention that the suit lies here on the ground that part of the cause of action arose within the jurisdiction of the Madras Court. Under Section 20(c) of the Code of Civil Procedure a suit can be brought where the cause of action arises at least in part, and the question we have to decide is whether the cause of action in this suit has arisen at least in part in Madras.
3. Kuppusami Naidu & Co. had dealings with the Calcutta firm and the way in which the dealings were carried on was that on the orders of Kuppusami Naidu & Co., the Calcutta firm was to send by rail rice to several places all over the Presidency named by the Madras firm (plaintiffs). The contract was made in Calcutta; but the arrangement as regards payments, as stated by the defendants' firm itself in their written statement, was that the money was to be paid either in cash in Calcutta or by hundis drawn by defendants in Calcutta on the plaintiffs' firm in Madras. The learned City Civil Judge held that this arrangement about payment was an arrangement which was tantamount to payment in Calcutta itself; but we are unable to agree with the learned Judge on the point. When a firm outside Madras draws hundis on a firm in Madras which under the contract the Madras firm has to honour and pay when presented to them in Madras, the payment cannot be considered to be made when the hundi is negotiated by the firm outside Madras but only when the payment is actually made by the firm in Madras on the hundi. Negotiation of the hundi is only a provisional method of realising money from persons who are willing to accept the hundi for a small profit and to take the trouble of presenting the hundi to the drawee and recovering the money from him. If the hundi is dishonoured, the endorsee will of course have recourse to the payee of the hundi who had endorsed it over to him. So that the receiving of the money from an endorsee cannot be treated as payment towards the contract. The payment becomes complete only when the buyer, in this case the Madras firm, actually makes payment on the hundi, and such payment is clearly a payment made in Madras. It is true that, in the first three instances, the money was actually paid by the Madras firm through an agent of theirs in Calcutta to the defendant; but that arrangement does not seem to have been persisted in and subsequent payments were all made by the system of the Calcutta firm drawing hundis in their own favour and endorsing them to some hundi broker and obtaining money from him and that broker taking the trouble of presenting the hundis to the Madras firm and receiving payment. It may also be mentioned that one other arrangement about the payment was that payment was to be made only on the delivery of the railway receipts. These railway receipts were to be attached to the hundis and presented to Kuppusami Naidu & Co., in Madras along with the hundis when payments of the hundis were demanded from them; so that the presentation of the railway receipt in Madras was also a part of the performance of the contract, and was a necessary condition to be performed before money could be demanded from the Madras firm.
4. In these circumstances it seems to us clear that a part of the cause of action must be held to have arisen in Madras both as regards the presentation of the railway receipts and as regards the payment of hundis; and it would follow that the City Civil Court had jurisdiction to try the suit, under Section 20(c) of the Civil Procedure Code.
5. The learned City Civil Judge has relied upon a case reported in Mylappa Chettiar v. Aga Mirza Mohamad Shirazee : (1919)37MLJ712 , which he thinks is a case on all fours with the present one, but there is a fundamental difference between that case and the present one which the learned Judge has overlooked. There, although payment was by hundis, the arrangement was that the hundi was to be drawn and presented to the National Bank of Mandalay along with the bill of lading taken in the name of the consignor himself; it was to be endorsed over to the branch of the National Bank at Mandalay and handed over along with the hundi to them; they were to make payment of the amount claimed to the consignor at Mandalay. The learned Judges find as a fact in that case that the National Bank was merely acting as the agent of the Madras Bank who were themselves only the agents of the consignee at Negapatam and, when the bill of lading was endorsed over to the National Bank and received by that Bank and money was paid to meet the hundi drawn on the bank, the transaction was complete so far as the consignor was concerned as the National Bank was found to have been acting merely as agents of the Negapatam merchant. It was on that ground that the learned Judges in that case held that the payment should be taken to be one made in Mandalay and not in Negapatam and that, so far as payment was concerned, the cause of action did not arise in Negapatam, but in Mandalay. Here, as we have already stated, all that the Calcutta firm did was to draw the hundi on the Madras firm and discount it in the manner usual among merchants with some exchange bank or firm which took hundis on discount, without being freed from the liability of having to repay the money paid in case the hundi is dishonoured. The Calcutta firm was entitled to discount the hundi with whomsoever it pleased. There is no evidence that Nandaramdas Atmaram, the firm which actually negotiated these hundis for the Calcutta firm, were acting as agents of the Madras merchants at all. This case is therefore very clearly distinguishable from the case in Mylappa Chettiar v. Aga Mirza Mohamad Shirazee : (1919)37MLJ712 .
6. The Bombay case referred to by the learned Judge, Motilal v. Surajmal I.L.R.(1906) 30 Bom. 167 is a case where the principles are no doubt stated by Tyabji, J., but according to those principles if the payment has to be made at a particular place, part of the cause of action will arise there.
7. It will be further noticed that the main claim in this suit is really for the amount that had been overpaid by Kuppusami Naidu & Co., to the defendant company. That payment was actually made in Madras. The hundi having been drawn for a larger sum than the Calcutta firm was entitled to draw it for, was presented in Madras and to save it from being dishonoured the Madras firm paid the excess amount here in Madras, and it is mainly for that amount that the present suit is brought.
8. It is therefore clear to us that the cause of action did arise in Madras and that the plaint should not have been returned for being presented to another Court but that the learned Judge should have tried the suit himself. We therefore set aside the order of the learned Judge and direct him to take the plaint on to his file and dispose of the case according to law.
9. As regards costs, the respondent will pay the appellants costs in this Court. All costs in the lower Court will be disposed of by the City Civil Judge in his final judgment.