JUDGEMENT 9 Law. Rep. 69 Ind. App. 1 ( 1941- 1942) State Aided Bank of Travancore, Limited V. Dhrit Ram 70 Appeal (No. 5 of 1941) from a decree of the High Court in its appellate jurisdiction (March 13, 1940) affirming a decree of that court in its ordinary original civil jurisdiction (July 20, 1939). The following facts are taken substantially from the judgment of the Judicial Committee. The appellant (defendant) (hereafter called the bank) was a company incorporated according to the laws of the State of Travancore and, apart from a branch office in the State of Cochin, had its head and only office at Alleppey in that State. It had no branches elsewhere. In September, 1936, the respondent (plaintiff), who resided in, and was in permanent employment in, Bombay, wrote to the Bank at Alleppey asking for the rate of interest allowed on fixed deposit. On September 5, 1936, the bank wrote back stating that their present rates of interest for deposits of six months, one year, and two or more years were 4 per cent., 5 per cent, and 5^ per cent., respectively. "Remittance may be made towards credit of our account "with the National City Bank of New York, Bombay, and the "same will be accepted by us at par, and interest allowed "from the date on which credit will be afforded to our account "at that end. Enclosed please find the necessary opening "forms for fixed deposit account, which please return duly "completed and signed on remittance being made/ On October i, 1936, the respondent paid Rs.i 1,000 to the account of the bank in the National City Bank of New York, Bombay, filled up the banks opening form, and wrote to the bank at Alleppey enclosing the executed form and also the specimen signature card, and requesting the issue of a fixed deposit receipt for two years in his name. The opening form was in the following terms — Place Bombay. Dated 1.10. 1936. The Manager, The State Aided Bank of Travancore Ltd., Alleppey. Dear Sir, Please receive the sum of Rs. Eleven thousand only sent herewith as per detail below— Cash Notes. Cheque, Bills, etc. 11,000 credited to your account in the National City Bank of New York, Bombay. The opening form was in the following terms — Place Bombay. Dated 1.10. 1936. The Manager, The State Aided Bank of Travancore Ltd., Alleppey. Dear Sir, Please receive the sum of Rs. Eleven thousand only sent herewith as per detail below— Cash Notes. Cheque, Bills, etc. 11,000 credited to your account in the National City Bank of New York, Bombay. Total Rs.11,000 as a fixed deposit repayable 24 months after, bearing interest at the rate of 5^ per cent, per annum as per your Rules and issue a receipt in the name of Mr. Dhrit Ram, Senior Auditors Chief Auditor office, G. I. P. Railway, Bombay V. T. The specimen signatures are also attached. Yours faithfully, Signature —Dhrit Ram. Full Address as given above. If the deposit is in more than one name, please say if it is a joint or either survivor deposit. Specimen Signature. 9 Law. Rep. 69 Ind. App. 1 ( 1941- 1942) State Aided Bank of Travancore, Limited V. Dhrit Ram 71 1. 1. Dhrit Ram. 2. 2. Dhrit Ram. 3. 3. Dhrit Ram. On October 6 the Bank wrote enclosing the deposit receipt "with effect from the 1st inst." The deposit receipt was in the following form — THE STATE AIDED BANK OF TRAVANCORE LIMITED Interest to run from 1.10. 1936 DEPOSIT RECEIPT Due on 1.10. 1938. and payable ½ yearly on 2nd July and 2nd January ALLEPPEY, 6th October, 1936 Rs. 11,000/-As of 1st October, 1936. No. 10/229. FOR THE STATE AIDED BANK OF TRAVANCORE LTD. Sd. MANAGER. Ented, Sd. Accountant. Interest will cease at the expiration of two years when this receipt must be sent in for payment or renewal endorsed by the Depositor. No notice will be issued by the Bank. A similar transaction took place in March, 1937, when similar documents passed. The deposit in that case was for Rs.4000 for one year at 5J per cent. Interest was paid by the bank to the depositor on four occasions at the fixed terms by sending him a cheque on a bank in Bombay, only in one case on the New York Bank. In March, 1938, when the second deposit of Rs.4000 became due the Bank was in difficulties, and a correspondence followed, the respondent asking for payment, the bank putting him off. In March, 1938, when the second deposit of Rs.4000 became due the Bank was in difficulties, and a correspondence followed, the respondent asking for payment, the bank putting him off. Later in 1938, creditors petitions were presented to the Travancore Court for winding up the bank, while the bank obtained time from the court for the purpose of obtaining its approval to a scheme 9 Law. Rep. 69 Ind. App. 1 ( 1941- 1942) State Aided Bank of Travancore, Limited V. Dhrit Ram 72 of arrangement all proceedings against the bank were stayed meanwhile. On March 3, 1939, the court at Alleppey having before it proof of duly advertised meetings of creditors, and that the scheme of arrangement had been approved by a majority of more than three-fourths in value of the creditors present in person or by proxy, approved the scheme and declared it binding on the bank and all its creditors. In substance the creditors were given fully paid preference shares of Rs.50 nominal value on the full amount due to them, with an option to take 25 per cent, in cash, and a charge on all the then assets of the bank to secure the repayment of their debts. The action out of which this appeal arose was commenced by the respondent in Bombay on December 15, 1938, to recover the two sums of Rs.11,000 and Rs.4000. The bank pleaded (inter alia) that the respondent was bound by the scheme of arrangement and the orders passed by the Travancore courts, and was not entitled to maintain or to continue the suit. The trial judge (Wadia J.) held that the respondent was a Bombay creditor, not bound by the law of Travancore or of Cochin, and that the scheme of arrangement was not binding on him. He accordingly made a decree in favour of the respondent. On appeal the Appellate Court (Beaumont C. J. and Kania J.) were of opinion that the contract was performable in Bombay ; that the law of British India governed the performance of the contract, and that the respondent was not bound by the scheme of arrangement sanctioned under a different system of law. The appeal was therefore dismissed. 1941. Oct. 16, 17. Pritt K.C. and R. J. T. Gibson for the appellant bank. The appeal was therefore dismissed. 1941. Oct. 16, 17. Pritt K.C. and R. J. T. Gibson for the appellant bank. If the proper law of the discharge of the contract is Travancore law a discharge by that law gives a good defence, or, conversely, if the proper law of the discharge of the contract is not that of Travancore a discharge by that law would be no defence. The proper law of the contract is to be determined by ascertaining the intention of the parties, which is to be gathered by considering the whole circumstances of the transaction, and the place of making and the place of performance of the contract are only elements, and not in themselves conclusive ; New Zealand Loan and Mercantile Agency Company, Ld. v. Morrison ([ 1898] A. C. 349.), Gibbs & Sons v. Societe Industrielle et Commerciale des Metaux (( 1890) 25 Q. B. D. 399.), and Jacobs, Marcus & Co. v. Credit Lyonnais (( 1884) 12 Q. B. D. 589.). This contract was plainly intended to be discharged in Travancore. It was a Travancore borrowing in Travancore. The Travancore bank having borrowed money from the respondent in Bombay, he was given the convenience of paying it in Bombay and was told by the bank that when he wanted the money repaid he must send the deposit receipt to the bank in Travancore, the only place where the bank carries on business. That indicated that the payment must be made where the deposit receipt must be sent in Joachimson v. Swiss Bank Corporation ([ 1921] 3 K. B. 110, 119.). The domicile of your business with your bank is at the particular branch or office of the bank with which you have dealt Rex v. Lovitt ([ 1912] A. C. 212.), Clare & Co. v. Dresdner Bank ([ 1915] 2 K. B. 576,). What the parties did in the way of paying and receiving interest makes no difference. The contract of deposit was made in Travancore, and was to be performed there, and was governed by the law of Travancore. The respondent was a Travancore creditor, and was bound by the orders of the Travancore court and by the scheme of arrangement sanctioned by that court. Sir Thomas Strangman K.C. and Khambatta for the respondent. The contract of deposit was made in Travancore, and was to be performed there, and was governed by the law of Travancore. The respondent was a Travancore creditor, and was bound by the orders of the Travancore court and by the scheme of arrangement sanctioned by that court. Sir Thomas Strangman K.C. and Khambatta for the respondent. It is conceded that there was an offer by the bank to take the money either in Travancore or in Bombay, but if the terms of the business provided that if the money was deposited in Bombay it would be repaid there, and if in Travancore it would be repaid there, could it be said that the money would not be repayable in Bombay ? The problem is to ascertain the intention of the parties in the light of all the circumstances. The contract of deposit was made in Bombay and repayment was to be made there, and the proper law of the contract 9 Law. Rep. 69 Ind. App. 1 ( 1941- 1942) State Aided Bank of Travancore, Limited V. Dhrit Ram 73 was that of British India. The respondent was not therefore bound by the scheme of arrangement. [On the question of ambiguity in an instrument reference was made to W. T. Lamb & Sons v. Goring Brick Co., Ld. ([ 1932] 1 K. B. 710.) and Watcham v. East Africa Protectorate ([ 1919] A. C. 533, 537.).] Khambatta followed, and on the point of extravagance of offer referred to Carlill v. Carbolic Smoke Ball Co. ([ 1893] 1 Q. B. 256, 268-9.), and on the question of intention to Hamlyn & Co. v. Talisker Distillery ([ 1894] A. C 202, 212.). No reply was required. Nov. 6. The judgment of their Lordships was delivered by Lord Atkin, who, after stating the facts, continued The dispute involves a relatively simple question arising in the business of banking. There was a difference of opinion in Bombay as to the documents constituting the contract, the trial judge holding that the banks letter of September 5 was an offer accepted by the respondent by paying the money to the New York Bank and sending the opening form. There was a difference of opinion in Bombay as to the documents constituting the contract, the trial judge holding that the banks letter of September 5 was an offer accepted by the respondent by paying the money to the New York Bank and sending the opening form. The Chief Justice quite rightly thought that the letter of September 5 was merely a quotation of business terms, and that the contract was made by the offer by the respondent in the opening form accepted by the bank by the issue of the deposit receipt. He therefore held, and their Lordships have no doubt rightly held, that the contract of deposit was made at Travancore. If the plaintiff is bound by the scheme of arrangement it would afford, as pleaded, a good defence to the present action, which was commenced in Bombay on December 15, 1938, to recover the two sums of Rs.11,000 and Rs.4000. There appears to have been no evidence before the court as to the terms of the banks constitution as a company, as to the meaning of the State aid referred to in its title, or as to the provisions of the company law in Travancore. It is conceded, however, that by the law of Travancore the order of the court makes the scheme of arrangement binding on all creditors wherever situate and—apart from the question of jurisdiction of the Bombay High Court, which will be mentioned later— the only question argued in the courts in India and before us was whether the contract between the parties was governed by Travancore law. Their Lordships therefore proceed to determine the case on this footing, and express no opinion on any question that might arise as to the effect of a scheme of arrangement valid by the law of the domicile of such a company as this. The law which governs a contract depends on the intention of the parties, express or implied. There is no intention expressed in these documents, and the courts are left to infer the intention by reference to considerations where the contract was made and how and where it was to be performed. The learned Chief Justice, though he came to the conclusion that the contract was made at Travancore, was of opinion that it was to be performed, i.e., discharged, at Bombay. Their Lordships cannot agree. The learned Chief Justice, though he came to the conclusion that the contract was made at Travancore, was of opinion that it was to be performed, i.e., discharged, at Bombay. Their Lordships cannot agree. With the greatest respect to the Chief Justice, he does not appear to have given sufficient weight to the fact that this is a banking transaction entered into at the only office of the bank where in ordinary matters banking business of this kind has to be completed. The decisions in Rex v. Lovitt ([ 1912] A. C. 212,) and in Joackimson v. Swiss Bank Corporation ([ 1921] 3 K. B, 110.) establish in the case of fixed deposit and current account, respectively, where payment is to be made. In the present case the terms of the deposit receipt, which plainly form part of the contractual documents providing that the receipt must be sent in for payment, i.e., to Travancore, point strongly to payment at Travancore where, it must be remembered, the books of the bank are, and where the signature card is kept, and where any cross-claims by the bank would be known. The Chief Justice appeared to think that because payment of the deposit was made to the banks agents in Bombay it was reasonable to hold that repayment was to be made by the same means as the original payment. But in the meantime the depositor might have changed his residence to other parts of India, or abroad, and the bank might have changed its agents in Bombay, or ceased to have any. It would seem remarkable that as a matter of legal right the bank could refuse to repay the depositor at Travancore, or the depositor, if at Travancore, insist on being paid in Bombay. The initial quotation of business terms in the letter of September 5, 1936, that remittance might be made to credit of the appellant bank at the National City 9 Law. Rep. 69 Ind. App. 1 ( 1941- 1942) State Aided Bank of Travancore, Limited V. Dhrit Ram 74 Bank of New York, 3 and "will be accepted by us at par,1 can presumably only mean that the payment will be treated as a payment to the bank at Travancore. The fact that the interest payments were made by a cheque on Bombay appears to have very little bearing. The fact that the interest payments were made by a cheque on Bombay appears to have very little bearing. No doubt as a matter of banking facilities such payments would so be made, just as it is highly probable that if the bank had continued a prosperous existence it would have paid off the deposits in a similar manner. But this throws no appreciable light on the strict legal position. When consideration is being given to the question, what law did the parties intend to govern the contract? It seems proper to bear in mind that the promisor is a bank incorporated under Travancore law with, apparently, some connection with the State of Travancore, and governed as to its business by any law of Travancore that may affect banking, including laws, if any, as to interest, limitations on borrowing, legal tender and the like. It seems highly improbable that such an institution would contemplate making contracts part of which would be governed by the law of Travancore and part by the law of the place of residence of its customers or debtors. But, whatever importance should be attached to this, their Lordships come to the conclusion that not only the place where the contract was made but also the place where the contract was to be performed was Travancore, and that the law of that State governs the transaction. The appellant, therefore, was protected by the terms of the scheme of arrangement. It has become unnecessary on this view to discuss the question of jurisdiction. It is, indeed, possible that the controversy between the parties might be resolved by reference to the banks rules, referred to in the opening form, and apparently, therefore, incorporated in the contractual terms whether the respondent saw them or not. But on the rules being tendered in evidence the trial judge rejected them, but whether because the respondent had not received them, or on the ground that they were not formally proved by any bank witness to be the rules referred to, is not clear. No objection was taken to the judges decision, and the rules were not referred to in argument before the Appellate Division or this Board.