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Biratnagar Jute Mills Ltd. Vs. Lalta Prasad Goenka - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtKolkata High Court
Decided On
Case NumberAppeal No. 241 of 1961
Judge
Reported inAIR1966Cal302
AppellantBiratnagar Jute Mills Ltd.
RespondentLalta Prasad Goenka
Appellant AdvocateGinnwalla, ;S.K. Bose and ;R.N. Gupta, Advs.
Respondent AdvocateSachin Chowdhury, ;Gouri Mitter and ;Ajit Sarkar, Advs.
DispositionAppeal dismissed
Excerpt:
- masud, j.1. the only point urged by the defendant appellant in this appeal against the judgment and decree of ray, j. is that the suit should have been dismissed inasmuch as the defendant company did not carry on business within the original jurisdiction of the calcutta high court on the date of the institution of the suit and as such, the trial court had no jurisdiction to decide it. the suit was instituted for the recovery of rs. 8,05,545 for interest and cost in connection with certain transactions between the parties in raw jute as a result whereof the defendant became liable to pay to the plaintiff a sum exceeding rs. 12,00,000. as the defendant could not pay the sum as set out in paragraph 2 of the plaint, it was agreed that the defendant would issue in favour of the plaintiff.....
Judgment:

Masud, J.

1. The only point urged by the defendant appellant in this appeal against the judgment and decree of Ray, J. is that the suit should have been dismissed inasmuch as the defendant company did not carry on business within the original jurisdiction of the Calcutta High Court on the date of the institution of the suit and as such, the trial court had no jurisdiction to decide it. The suit was instituted for the recovery of Rs. 8,05,545 for interest and cost in connection with certain transactions between the parties in raw jute as a result whereof the defendant became liable to pay to the plaintiff a sum exceeding Rs. 12,00,000. As the defendant could not pay the sum as set out in paragraph 2 of the plaint, it was agreed that the defendant would issue in favour of the plaintiff debentures for a sum of Rs. 6,00,000 and hundies for a sum of Rs. 6,00,000. It was further agreed according to the plaintiff that defendant would pay the balance in cash and that all the payments should be made by the defendant to the plaintiff in Calcutta within the original jurisdiction of the Calcutta High Court. Pursuant to the said agreement the defendant company on or about 18th October, 1952 issued 600 debentures of the value of Rs. 1,000 each in favour of the plaintiff in his business of Babulal Mohanlal. The defendant company according to the paragraph 3 of the plaint duly delivered the said debentures to the plaintiff at the plaintiff's place of business at No. 60A, Kali Krishna Tagore Road, Calcutta. The defendant company also drew Hundies for a sum of Rs. 6,00,000 in favour of the plaintiff and payable to the plaintiff in Calcutta within the same jurisdiction. The said debentures provide, inter alia, us follows:

(a) The principal sum of Rs. 1,000 on each of the said debentures would be repaid to the plaintiff by the end of 10th October, 1957.

(b) The principal sum of Rs. 1,000 on each of the debentures would carry interest at the rate of 7 per cent per annum,

(c) The said interest would be paid every six months, i.e. at the end of the month or Chaitra-Aswin Nepali. Sambat, and interest would be paid on production of interest coupons attached to the said debentures.

(d) On maturity of debentures an application would have to be filed with the defendant company by the end of the month Aswin 2014 (Nepalese Sanibat) for payment of the said debentures interest coupon due thereon.

(e) At least two months before the date of payment of debenture money the registered holders would be informed by registered post or through personal service.

2. The said debentures matured on or about 16th October, 1957 and the principal sum of Rs. 6,00,000 under the said debentures became due and payable by the defendant to the plaintiff together with Rs. 63,000 being the interest on the said principal sums. No payment was made in respect of the said debentures and the plaintiff has claimed a sum of Rs. 8,05,545 particulars of which are stated as below;

(a)Principal amount of the said debentures...Rs. 6,00,000(b)Unpaid amount of the three interest coupons...Rs. 63,000(c)Interest on Rs. 6,63,000 from 17th October 1957 to 11th November, 1960, at the rate of Rs. 7% per annum...Rs. 1,42,545

Total :...Rs. 8,05,545

3. The plaintiff has not claimed sums due under or in respect of the said Hundies in this suit, The main defence in the written statement was that the suit should be dismissed inasmuch as the defendant company at the relevant time did not carry on any business at No. 178, Harrison Road, Calcutta as stated in the plaint and that no part of the cause of action had arisen within the original jurisdiction of the Calcutta High Court. The learned trial Judge came to the conclusion that no part of the cause of action had arisen within the original jurisdiction of this court but he held that the court had jurisdiction to decide the suit inasmuch as the defendant carried on business within the jurisdiction of the trial court at the time when the suit was filed The learned trial Judge did not, however, accept the plaintiff's claim for Rupees1,42,545 but passed a decree for Rs. 6,63,000, interest on judgment on the principal sum of Rs. 6,00,000 and interim interest at the stipulated rate of Rs.7 % on Rs.6,00,000.

4. Ray, J. having accepted the contention of the appellant that no part of the cause of action had arisen within the jurisdiction of the trial court, the learned counsel for the appellant has reiterated before us the only other contention that the defendant did not carry on business within the jurisdiction and the learned trial Judge had, therefore, no jurisdiction to decide the suit. He has urged that the defendant company did not have any office at No. 178. Harrison Road, Calcutta on 15th November. 1960 when the suit was instituted. He has contended that between October. 1956 and November, 1960 the defendant company had its only Calcutta office at the said premises No. 31/1 Lansdowne Road. Calcutta, outside the original jurisdiction of the Calcutta High Court. He has relied upon six letters dated 2041-56, 4-1-57, 28-1-58, 9-12-58, 22-3-60 and 31-10-60 to substantiate his contention that the defendant company's office was shifted from premises No. 178, Harrison Road, Calcutta to premises No. 31/1 Lansdowne Road Calcutta. He has also referred to us a letter from Central Telegraph Office, Calcutta to the defendant's Calcutta representative dated 10th October, 1956 to show that the new place of business of the defendant company was at No. 31/1, Lansdowne Road, Calcutta. Those documents certainly show that between October, 1956 and November. 1960 the defendant Company's Calcutta representative J. H. Shah has been transacting some business of the defendant company from 31/1. Lansdowne Road, Calcutta but Mr. Shah's answers to questions 153 to 155 show that there was neither any record showing the receipt or despatch of those letters nor the covers or the letters were available. Further. ' excepting the letter dated 20-11-56 which was really an inter-departmental letter, all the other five letters were written to Mr J. H. Shah. the Calcutta representative of the defendant company by Messers. Irving R. Beody & Co. (Inc.) which happened to be the defendant company's agent in New York (vide Shah's evidence Q.60). Further the said letter dated 10-10-56 addressed by A. C. De for the Chief Superintendent. Central Telegraph Office, Calcutta to the representative of the defendant company (Ext.9) had been disclosed by the defendant before the trial Judge but the original or the copy of the company's own letter No. PT. 56 dated 4-10-56 referred to in the said letter dated 10-10-56 was not produced. The letter dated 4-10-56 would have shown whether the defendant company had changed the company's place of business or whether the change of the address was referable to his personal residence. In this connection, reference may be made to Mr. Shah's answers to question 55 where he has stated:

'Sometime in October 1 wrote a letter to register ray address at 30/1. Lansdowne Road in place of 178, Harrison Road'.

The said letter dated 1040-56 from the office of the Central Telegraph, Calcutta also states:

'Your change of address from 178 Harrison Road to 30/1, Lansdowne Road has been noted against your abbreviated address 'Biratco'. According to the oral evidence of the defendant's witness, Jugal Kishore Newatia, the Secy, of the defendant company and J. H. Shah, the Calcutta representative of the company, the defendant's office was supposed to have been shifted to premises No. 31/1, Lansdowne Road, Calcutta since Oct. 1956. It appears from the answers to question of Mr. Shah s evidence that in 1948, he was residing and also having his office at No. 1, Collin Place. Howrah. In answer to question 35-36. Mr. Shah stated that during the same period i.e. 1948 and 1953, they also had an office at No. 178, Harrison Road where goods purchased on behalf of the company were stored. Mr. Shah has also deposed in answer to question 47 that in March, 1953 he shifted the office to 178. Harrison Road. He later said that since October 1956, the company shifted its office from 178, Harrison Road to 30/1, Lansdowne Road. The said premises No. 30/1, Lansdowne Road, Mr. Shah has admitted, had not been taken on rent by him in the name of the company. It was let out in the name of his brother but he was paying the rent. In answer to question 288 Mr. Newatia has stated that the company had nothing to do with the rent of 30/1, Lansdowne Road but he has added in answer to question 286:

'Mr, Shah had been living there for a long time and since the time our office has gone there we have been giving rent with his allowances.'

It is obvious that if the company used to pay rent for premises No. 30/1, Lansdowne Road the best evidence to prove the same was to produce the books of account of the company. But unfortunately, the books of account were not produced. Mr. Newatia has stated that the said flat at 30/1, Lansdowne Road is a family quarter and is situated in a residential area. According to him, the company occupies only one room whereas other four rooms were occupied by Mr. Shah's family members which would include also his brother as stated by him in answer to Q. 26. The fact that the Calcutta representative of the defendant company had shifted his residence to No. 30/1, Lansdowne Road, Calcutta and had been continuing correspondences on behalf of the defendant company with the Company's Head Office or Agent's in New York does not by itself prove that the defendant company had no business interest at No. 178, Harrison Road, Calcutta or stopped all business activities there. It is quite possible that the said Calcutta representative found it convenient to do some part of the defendant company's business from his residence particularly the work in respect of attending to letters and correspondences of the company It is true that the respondent himself has admitted in paragraph 13 of his petition verified on 15th November 1960 that the defendant company had practically stopped carrying on business at No. 178, Harrison Road, Calcutta. But that again does not lead to the conclusion that the defendant company had no business interest at the said premises In fact, in answer to question 49, Mr. Shah has stated that the export business had stopped except one or two shipments made towards the end of 1960. There is no documentary evidence to show that the premises No. 178, Harrison Road, Calcuttahad been given up by the defendant company. It is true that the burden of proof initially lies on the plaintiff to show that the defendant was carrying on business within the jurisdiction of the Calcutta High Court, But it cannot be contended that even after a prima facie case has been made out by the plaintiff the burden of proof does not shift to the defendant at all, The plaintiff has stated in his evidence that the defendant company was carrying on business at No. 178, Harrison Road. Calcutta and all his transactions with the defendant company were transacted from the same place. The plaintiff has also categorically stated that one day prior to the institution of the suit the plaintiff personally went to the defendant's place of business at No. 178, Harrison Road, Calcutta and demanded payment of his dues. As the defendant is not contesting the plaintiff's case on merits and has virtually accepted the plaintiff's claim, it was all the more necessary for the defendant to produce all natural and possible evidence to show that there was no business activity of the defendant company at No. 178, Harrison Road, Calcutta. It was not difficult for the defendant to produce evidence showing that they had surrendered the tenancy at No. 178, Harrison Road, Calcutta. They could have also produced the resolution of the Board of Directors of the company showing the circumstances under which the change of office from 178, Harrison Road to 31/1, Lansdowne Road was instituted. Similarly, the production of income tax records and the books of account of the company from the assessment year 1957-58 would have corroborated the appellant's contention. Existence of all these documents was in the special knowledge of the defendant company and non-production of those documents raises a presumption that the contents of the said documents would go against the defendant company's case. There is another aspect of the case which would make it difficult to believe that the defendant had no business activity at No. 178, Harrison Road Calcutta. Kadha Kissan Chameria, a well-known business man was interested in the affairs of the company and he had his gaddi at No. 178, Harrison Road, Calcutta. There is nothing to show that the said Radha Kissen Chameria severed his connection with the defendant company between 1956 and 1960 and therefore, it is improbable that he has allowed the place of business of the defendant company to be shifted from 178, Harrison Road, Calcutta to 30/1, Lansdowne Road. Thus, on examination of all the oral and documentary evidence, in our opinion, it is not correct to say that the defendant company had stopped its business activity between October, 1956 and November 1960 at No. 178. Harrison Road, Calcutta.

5. No case has been cited before us by the learned Counsel for the appellant and respondent. But it seems to us that carrying on business must involve two conditions: (1) existing of a business and (2) discharging its normal activities. Now, discharge of normal activities must not only include transactions of business giving rise to profit or loss but also discharge of all obligations, statutory or otherwise. A company does not cease to carry on busmen in a particularplace until and unless all its activities are completely closed. If a company practically closes its business activities but continues to keep up the show of business either for the purpose of revival of its business activity at a time in future or for the purpose of tiding over lean time or for permanently closing the business, it must be held to carry on business within the meaning of Clause 12 of the Letters Patent, 1865. Thus, unless there is evidence to show that the business is completely closed in a particular place, it does not cease to be 'carrying on business'. In the instant case, we are not satisfied that the business activities of the company were completely stopped at No. 178, Harrison Road, Calcutta or about November, 1960. According to Mr. Shah (q.41-43), the nature of the work the defendant company was carrying on from its Calcutta office has been stated as follows:

'I was doing all export works: looking after the shipments of incoming goods; making shipments, preparing customs documents, negotiating documents and having money remitted to the mills.

Other works were purchase of stores and the spares and other things required for the mills.... Also some imported spares that used to come from foreign countries used to be cleared and despatched to the mill from here which I was looking out.'

6. He has added in answer to question 44 that by purchase of stores he meant generally all stores required for the running of the mills. When he was asked to explain what does he mean by purchase of all stores in Q.44, he has given the following answer:

'Generally all stores required for the running of the mills. Whatever stores the mills required, they sent indent to Calcutta representative and I used to place orders and used to bring them down to my place; sometimes it was sent and despatched by the suppliers themselves.'

7. Similarly, when Mr. Newatia was asked to explain what kind of business the company was carrying on from 1950 till today, he stated that they had to purchase stores and also to send information of sales to the office. He also stated that the defendant company used to buy and sell goods at Calcutta and after buying goods at Calcutta the company sent the goods (vide Qs. 213-216). Again, in answer to Q. 160 he has said that the exact works of the company were to buy stores from the market and then to transport them either by rail or by truck. In answer to Qs. 228-238, he has also referred to the contracts entered into by the Calcutta office of the company. In answer to Qs. 278-280, he has stated that in 1961, the stores which would include machinery parts that arc required for machinery in the mills and the parts which go out of order were used to be kept at No. 30/1, Lansdowne Road. And Mr, Shah, in answer to Q. 40. has stated that the stores used to be kept in his garage at No. 30/1, Lansdowne Road where there is a small room in the garage. In answer to Q. 49, Mr. Shah has himself admitted that the export business of the defendant company has not completely stopped even towards the end of 1960, It is difficult to believe that all these business activitieswere transacted from only one room at No. 30/1, Lansdowne Road, Calcutta.

8. In the absence of the original Minute Book of the Board of Directors of the company (vide Newatia Qs. 202-204), the trade licence of the Calcutta office (vide Newatia Q. 292), the books of account, the printed bills, the letter heads of the Calcutta office covering a period between 1956 to 1960 and any other contemporaneous documents from third parties or independent source, we are unable to accept the appellant's contention that the defendant company was not carrying on business at No. 178, Harrison Road, Calcutta.

9. For all the reasons stated above, in our opinion, the appellant's contention must fail. The appeal is accordingly dismissed with costs.

10. Cross-objection to this appeal has been tiled by the respondent, but the learned Counsel for the respondent did not want to proceed with the matter and as such, the cross-objection is also dismissed with costs.

P.B. Mukharji, J.

11. I agree that the appeal should be dismissed with costs and so also the cross-objection as proposed by my learned brother. The cardinal point in this appeal is whether the defendant company appellant before us 'carries on business' within the jurisdiction of this Court under the meaning of that expression used in clause 12 of the Letters Patent.

12. There is and can be no cut and dried universal definition of 'business'. What is business depends on the facts of each case. Carrying of business, therefore, can have no exclusive legal definition.

13. The appellant in this case is Biratnagar Jute Mills Ltd. incorporated in Nepal, under the Nepal Company Law and having its registered office at Biratnagar, Nepal outside the jurisdiction of this Court. The point for decision is, does it can on business within the jurisdiction of this Court. It is a jute company.

14. Its business is in jute. A part of its business is to export jute, to make shipments of jute at Calcutta and also to recieve imported goods at Calcutta. Shipment of export and receipt of goods by consignment have to be done through the Custom House in Calcutta within the jurisdiction of this Court, It has a part of the buying and selling of goods in Calcutta within the jurisdiction of this Court.

15. Another part of its business is buying stores and spares for the jute mill which is in Nepal outside the jurisdiction of this Court. These stores are necessary for running the jute mill. Such stores include spare parts, coal and articles for the purpose of running of the jute mill at Biratnagar. It is in evidence that buying of such stores, coal and articles and sending them from Calcutta to Biratnagar are within the jurisdiction of this Court.

16. Then again the significant fact in this appeal is that this appellant company maintains banking accounts with the Central Bank of India Ltd, at 71, Jamunalal Bajaj Street, Calcutta, Netherland Trading Society, 18A, Brabourne Road, Calcutta and State Bank of India, Strand Road, Calcutta--all within the jurisdiction of this Court. It is pleaded in paragraph 6 of the plaint and is, in fact, admitted in paragraph 6 of the written statement. The fact that between the appellant and the respondent no transaction was carried through these Banks is irrelevant. What is important for the jurisdiction of this Court is that defendant carries on business within such jurisdiction, and not that the transaction in suit between the parties thereto must have been carried out or within such jurisdiction. That fact is important only to show that the appellant company carries on business within the jurisdiction of this Court by maintaining these banking accounts. The banking accounts are a part of the business of the appellant company. No business can be run without a normal banking account and payment through the Bank in the shape or form must be held to be a part of the business in this context. That business is carried on within the jurisdiction of this Court. Indeed, in this connection Exhibit 13, a letter dated 20th November, 1956 by the appellant company addressed by the General Manager to the Calcutta representative Mr. Shah contains specific directions which makes the point clear beyond all doubts. These directions are as follows:

'This is to inform you that our Board of Directors have resolved in their meeting held on 11th November, 1956 to direct you not to transact any business of any other Company's Drafts or cheques through the current Account maintained by you in the Calcutta Banks in the name of the mill.

Only the cheques and drafts etc. concerning Messrs. Biratnagar Jute Mills Ltd. will be transacted.

So you are requested to follow the instructions carefully in future.'

17. Now what does this letter show? This letter shows that the appellant company admittedly maintained accounts within the jurisdiction of this Court, in the Calcutta Banks in the name of the mill. It also shows that business has to be transacted through these Calcutta Banks and the only restriction imposed is that business of any other Company's Drafts or cheques through the current account should not be carried on. But the other part of the business, therefore, is carried on through these Banking accounts within the jurisdiction of this Court. The letter further directs careful attention to this fact.

18. Apparently the evidence shows that the appellant company has customers in Calcutta from whom money is collected on printed bills and letter heads. In answer to question 234 onwards it is admitted that the appellant company has printed bills and they have been in the use of the Calcutta office. Similarly there are printed letter head forms. All this is a part of the business. It need be mentioned here that neither the printed bills nor letter heads had been produced or disclosed by the appellant at the trial. The inference is irresistible that had they been produced, they would have plainly shown that the Defendant Company carries on business within the jurisdiction of this Court.

19. Lastly, the fact that the appellant company has to have a Calcutta representative itself shows that the appellant company carries on business in Calcutta. Some argument was developed on the ground that this Calcutta representative lives somewhere in South Calcutta at 31/1, Lansdowne Road, Calcutta and therefore, the business was carried on outside the jurisdiction of this Court. The residence of this Calcutta representative is immaterial. He may live outside the original jurisdiction of this Court. The material question is: Does the appellant company carry on business within the jurisdiction of this Court and not whether its Calcutta representative resides within the jurisdiction of this Court. It is impossible to hold that while the appellant company has to appoint a Calcutta representative, yet because some how or other he lives outside the limits of the original side jurisdiction of this Court, therefore the business follows his residence, which is wholly contradicted by the facts on the record and as stated above.

20. This leads to the consideration of the question already dealt with by my learned brother about the alleged shifting of the appellant Company's business from No. 178, Harrison Road, to 31/1, Lansdowne Road, Calcutta. My learned brother has already dealt with the facts in this case. I need only point out to some additional features about the appellant's case of shifting the company's premises from No, 178, Harrison Road to 31/1, Lansdowne Road, Calcutta. The place at 30/1, Lansdowne Road, Calcutta is a flat in a house. It is not taken in the name of the appellant company. It is not even in the name or Mr, Shah, me Calcutta representative of the company. It is in the name of Mr. Shah's brother. Evidence was led on behalf of the appellant company to suggest that the appellant company bears the rent. No records or accounts have been produced to support that fact and this version of the appellant company must, therefore, be rejected. There is no sign hoard even round about the house at 31/1, Lansdowne Road, Calcutta to indicate that the appellant company carries on business there. The evidence on behalf of the appellant company on this point can hardly be believed. At one stage an attempt was made to show that there was only one room in the flat in the Landsdowne Road which was used for the office. Then it was changed to a garage where stores were kept and thereafter the garage became smaller still and became a room in the garage. We have no hesitation in rejecting that evidence on record. No Board resolution of the defendant company has been produced to show that shifting took place from No. 178, Harrison Road Calcutta to No. 31/1, Lansdowne Road, Calcutta. No trade licence has been produced to prove that it is so. Even the Articles and the Memorandum of the appellant company have not been produced to show the nature of business it is supposed to carry on lest they would show that they include Calcutta within its area of business. In that context of fact the letters written by the American company addressed to the residence of the Calcutta representative Mr. Shah do not convince us of the fact that the appellant company does not carry on business within the jurisdiction of this Court.

21. On this record of facts, I have no hesitation in holding that the appellant company carries on business within the Jurisdiction of this Court within the meaning of the expression used in clause 12 of the Letters Patent.

22. In conclusion, it is necessary to emphasise that this is only a suit for money and nothing else. It is not a suit on the debentures. No doubt, the debentures have been mentioned and so were the Hundies. But the suit is a suit on the original consideration of money lent and advanced. This point is important, because a pleading was made in the written statement to suggest in paragraph 8 thereof that this dispute about the debentures led to some proceeding in the Court of Nepal and that the plaintiff was unsuccessful there. Be it said that no issue was raised at the trial on the point whether a suit for money would be brought without exhausting the reliefs provided by the debentures or the Hundies. In those circumstances, no question of the applicability of Section 68(2) of the Transfer of Property Act arises in this appeal. That Section provides that 'where a suit is brought under Clause (a) or Clause (b) of Sub-section (1), the Court may, at its discretion, stay the suit and all proceedings therein notwithstanding any contract to the contrary, until the mortgagee has exhausted all his available remedies against the mortgaged property or what remains of it, unless the mortgagee abandons his security, and if necessary, re-transfers the mortgaged property'. The question of mortgage is relevant because it is a case of debentures which mortgaged the property and assets of the appellant company. No relief was claimed on this ground by the appellant at the trial. No issue was raised by the appellant at the trial and no argument has been advanced by the appellant's Counsel before us on this point. In other words it is not a 'suit for land' within the meaning of clause 12 of the Letters Patent of this Court. In these circumstances, no further question arises about the effect of Order 2, Rule 2 of the Civil Procedure Code mid with order 34, rule 14 of the same Code.

23. I, therefore, agree that both the appeal and the cross-objection should be dismissed with costs. There will be a certificate or two Counsel in the appeal but no such certificate in the case of cross-objections.

24. Interim stay of the order for twoweeks but if deposit of the full amount is madewith the respondent's solicitor Messrs. T.Banerjee & Co. to be held by them free fromlien and subject to further orders of this Court,the stay will be extended for six weeks. Indefault the stay will stand vacated.


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