INDIAN BANK v. RAMASWAMY L — 1977 DIGILAW 7 (KAR)

( 1 ) THE short question, which is common to these five appeals, that arises for determination is as to whether the Court at Bangalore had territorial jurisdiction to entertain and try the five suits out of which the aforesaid appeals have arisen. ( 2 ) IT is unnecessary to detail all the facts, as it would suffice to take notice only of such acts as will directly bear upon the question aforesaid. These facts which are not in dispute, can be stated thus : Indian Bank with its Head Office at Madras, the appellant in all the aforesaid five appeals, was the plaintiff in all the suits. It had sanctioned a loan of Rs. 60,000 to defendant-1, a repatriate from Burma, his application for such loan, having been sponsored by Deft-5-the Repatriates Co-op Finance Development bank Ltd, Madras, of which Defts-1 to 4 were members. Each defendant is joined as one of the defendants to. all the separate five suits filed against them. The plaintiff-Bank had forwarded the said application of Deft-1 alcng with the 'sanction ticket' to its Branch Office at Bangalore, with a direction to pay the loan amount to Deft-1. The loan amount thus came to be paid to Deft-1 at Bangalore, after a hypothecation deed had been executed by Deft-1 on 18-6-1970. The promissory note had been executed at Madras on 15-6-1970 by Deft-1 to which Defts-2 to 4 had also joined. A deed of guarantee was also executed at Madras on 15th June 1970 by deft-5 binding itself to the plaintiff-Bank to pay one-third of the undischarged loan along with interest thereon. Deft-1 and his co-obligants- defts-2 to 4, were to re-pay the Joan amount in 30 equal instalments of rs. 2,000 each with interest thereon at Bangalore Branch. Certain instalments were so paid by Deft-1. But, thereafter Deft-1 having defaulted in performing his part of the contract in regard to the re-payment of the loan amount, this led the plaintiff-Bank to file the aforesaid five separate suits against Defts-1 to 4 and Deft-5. The defendants of the other suits were jcined to each suit as co-defendants. ( 3 ) ONLY Defts-1 to 5 conlested the said five suits, while the others were proceeded ex parte. The aforesaid two defendants, in their respective written statements, had admitted the facts narrated above and which had been alleged by the piaintiff-Bank in its plaint. The defendants of the other suits were jcined to each suit as co-defendants. ( 3 ) ONLY Defts-1 to 5 conlested the said five suits, while the others were proceeded ex parte. The aforesaid two defendants, in their respective written statements, had admitted the facts narrated above and which had been alleged by the piaintiff-Bank in its plaint. They, however, inter alia, raised an objection regarding the territorial jurisdiction of the Bangalore court which led to the raising of an issue by the trial Court regarding its territorial jurisdiction which forms the issue No. 4. The trial Court treated. the said issue as a preliminary one and a finding adverse to the pjaintiff thereon led to the passing of the order under appeals which required the returning of the plaint to. the plaintiff for being presented to a competent Court. ( 4 ) THE learned Counsel for the appellant has canvassed before me the proposition that the Bangalore Court had the territorial jurisdiction to try the suits in question, inasmuch as a part of cause of action arose in Bangalore on account of the fact that the loan amount was paid to defendant-1 at Bangalore and Deft-1 was to. effect re-payment thereof at Bangalore. That the facts that the loan amount was paid to Deft-1 at Bangalore and that the loan amount was to be re-paid by Deft-1 at Bangalore, are not in dispute, as the same stand admitted by the contesting Defendants 1 and 5. 4a. No authority is required for the proposition that payment of the contracted loan amount and the re-payment thereof pertain to the performance of the loan contract and the cause of action do arise at a place not only where a contract is concluded but where performance thereof takes place. "4b. Mr. M. P. Chandrakantha Raj Urs, learned Counsel for the only contesting respondent, has, however, contended that the said principle of law no longer holds good in view of the following observations of the supreme Court in State of Bihar v. Oriental Coal Co Ltd, AIR. 1972 SC. 373. : this takes us to the question whether the High Court of Calcutta had territorial jurisdiction to entertain the plaintiff's suit. 1972 SC. 373. : this takes us to the question whether the High Court of Calcutta had territorial jurisdiction to entertain the plaintiff's suit. We have earlier come to the conclusion that under law, the assessments made by the assessing authority are valid assessments and therefore it cannot be said that the payments made by the plaintiff were made under any mistaken impression of the law. Hence in our opinion the fact that the cheques issued by the plaintiff were encashed in Calcutta could not have afforded any cause of action for filing the suit in Calcutta high Court. "the facts in Oriental Coal Co's case (1) were that this company had its registered office at Calcutta. It was a registered dealer under the Bihar sales Tax Act, 1947. It paid certain advance sales-tax amount to Bihar sales-tax authorities by cheques drawn on the Oriental Bank of Commerce ltd, Calcutta, which were encashed at Calcutta. The balance amount of sales-tax was also similarly paid. The decision of the Asst Superintendent of Sales-tax was, however, reversed in appeal by the Asst Commr of sales-tax, in view of the Supreme Court's decision in Bengal Immunity co Ltd v. State of Bihar, (1955) 2 SCR. 603 . Then the company claimed the amount back, although in the meantime the Parliament had invalidated the effect of bengal Immunity Co's case by passing the Sales-tax Laws (Validation) act. When the sales-tax authorities declined to refund the amount in question, the said company filed a suit on the original side of the Calcutta high Court claiming the said sum with interest and costs. When the sales-tax authorities declined to refund the amount in question, the said company filed a suit on the original side of the Calcutta high Court claiming the said sum with interest and costs. In the plaint, the plaintiff put forward three different grounds as affording it a cause of action to institute the suit on the original side of the Calcutta High Court, viz, (1) that the payments in question were made by the company under a bona fide mistake of law, viz, that it was liable to pay sales-tax to the defendant during the periods in question, hence it had a right to get back that amount and as the cheques in question were encashed at Calcutta, a part of the cause of action arose in Calcutta; (2) that its appeal to the asst Commr of Sales-tax was heard in Calcutta and the order of the appellate authority was received at Calcutta, therefore, a part of the cause of action on that basis also arose in Calcutta; and (3) that its registered office was situated in Calcutta and it being the duty of the debtor to find out the creditor and pay the debt, it was open to the plaintiff to sue the defendant in Calcutta. Their Lordships found that in view of the Sales-tax laws (Validation) Act, which was given retrospective operation, no refund was due to the plaintiff-company, and further, the refund of the sales-tax amount, according to the Bihar Sales Tax Rules, 1949, could be had by a dealer only through one of the Government treasuries and that in view of the above, the entire cause of action in respect of the claim for refund on the basis of the appellate authority's order arose only within the State of bihar and no part of that cause of action arose outside Bihar. ( 5 ) IN the aforesaid observations that have been relied upon on behalf of the respondent, their Lordships, in my view, had nowhere enunciated the principle that the place of payment of the amount in performance of the loan contract does not give rise to a cause of action at the place of payment. ( 5 ) IN the aforesaid observations that have been relied upon on behalf of the respondent, their Lordships, in my view, had nowhere enunciated the principle that the place of payment of the amount in performance of the loan contract does not give rise to a cause of action at the place of payment. In fact, the real ratio of the said decision finds embedded in the further observation of their Lordships to the following effect :" Assuming, but not deciding that, the fact of encashment of cheques in Calcutta gave rise to a cause of action at Calcutta for a claim based on the ground that the payments were made on a mistaken impression of law but that circumstance cannot be said to give rise to a cause of action for the suit on the ground that the plaintiff is entitled to the refund of the amounts because of the appellate authority order. In our judgment the High Court failed to keep apart the two questions namely the claim for the return of the amount paid on the basis that it was paid under a mistaken impression of law and the claim made in pursuance of the order of the appellate authority. The payments made by the plaintiff by cheques have nothing to do with the appellate authority's order. They have not been made on the basis of that order. They were made on the basis of the original assessments. The only ground on which the High Court has come to the conclusion that the plaintiff is entitled to claim refund of the amount paid is because of the fact that the appellate authority had decided the appeals in its favour. " ( 6 ) IN fact, there cannot be two opinions on the point that part of causa of action in this case arose at Bangalore and by virtue of the provision of clause (c) of S. 20 CPC. the Bangalore Court had jurisdiction to entertain the suit against the defendants. ( 7 ) MR. " ( 6 ) IN fact, there cannot be two opinions on the point that part of causa of action in this case arose at Bangalore and by virtue of the provision of clause (c) of S. 20 CPC. the Bangalore Court had jurisdiction to entertain the suit against the defendants. ( 7 ) MR. Urs has, however, argued that so far as Deft-5 was concerned, no cause of action arose against it at Bangalore, as the guarantee deed under which it had obligated itself to the plaintiff-Bank, was executed at madras and in case of default in discharging of the debt by Defts-1 to 4, it was to satisfy its obligation to the plaintiff-Bank at Madras under the deed of guarantee. It was further contended by Mr. Urs that not only the bangalore Court lacked territorial jurisdiction to entertain a separate suit against Deft-5, it also lacked jurisdiction to implead Deft-5 to the Other suits and to proceed to try the said suits against the said defendant. In support of his aforesaid submissions, he placed reliance on the following observations in Bengal and North Western Rly v. Sadram Bhairodan, ILR, 40 Cal. 895. :" The fact that the Court has jurisdiction against the Steamer Coy does not give jurisdiction against the Railway Coy. The fallacy of the argument, it appears to me, lies in the use oi the words ' the Court has jurisdiction over the suit'. Such jurisdiction as the Court has is over the suit as regards the Steamer Coy. This does not give jurisdiction over the Railway Coy, and in my opinion, Order I, Rule 3, has no bearing on the case. That rule of the Order is a provision which relates to a joinder of parties and it assumes the existence of a suit in a proper forum, the Court having jurisdiction to try the suit. If the Court has such jurisdiction, then Order I, Rule 3, may come into play. "the aforesaid observations were approvingly quoted in Kurivalli Lingayya setty v. Sitharam Agarwala, AIR. 1955 Mad 595. and in New India Assurance Co Ltd v. T. K. Nanjunda Setty and Sons, (1963) 2 Myslj. 513. which decisions have also been pressed into service on behalf of Respondent-5. "the aforesaid observations were approvingly quoted in Kurivalli Lingayya setty v. Sitharam Agarwala, AIR. 1955 Mad 595. and in New India Assurance Co Ltd v. T. K. Nanjunda Setty and Sons, (1963) 2 Myslj. 513. which decisions have also been pressed into service on behalf of Respondent-5. ( 8 ) THERE is no quarrel with the principle enunciated in the aforesaid three decisions, but the ratio thereof is not attracted to the facts of the present case as the same is clearly distinguishable on facts. ( 9 ) IN Bengal and North Western Raiway Co's case (3) the facts were that two bales of piece of goods had been allegedly delivered at Calcutta to the River Steam Navigation Co Ltd and the India General Steam navigation and Railway Co Ltd for 'carriage, despatch and delivery vy transmission ' to Bhupatishi, a station on the Bengal and North Weatern Rly, and the goods had not been delivered to the consignee at the said Railway station. The suit was for recovery of the value of the goods. To thp suit that was filed at Calcutta Court both the River Steam Navigation Co Ltd, and the North Western Fly Co Ltd were impleaded as defendants. It was found as a fact that the River Steam Co had not acted as the agent of the north Western Rly Co, nor the said Railway Co had its office within the jurisdiction of the Calcutta Court, nor the Railway Station where the goods were sought to be delivered was within the jurisdiction of the Calcutta court. It seems that the Steamer Co had delivered the goods to the Railway co and so. a decree against the Railway Co alone had been passed on the original side of the Calcutta Court by the learned single Judge. That judgment was reversed by a Division Bench of that Court with the observation already noticed. It is clear from the facts of that case there was no case of joint liability to the plaintiff on the part of the Steamer Co and the railway Co. Only one of them, in the circumstances, could have been liable to the plaintiff. That judgment was reversed by a Division Bench of that Court with the observation already noticed. It is clear from the facts of that case there was no case of joint liability to the plaintiff on the part of the Steamer Co and the railway Co. Only one of them, in the circumstances, could have been liable to the plaintiff. In that case, if the Steamer Co had not delivered the goods to the Railway Co, then the Steamer Co alone would have been liable and if the Steamer Co had delivered the poods to the Railway Co, then the Railway Co alone would have been liable. So, in either case, the suit had to be brought in the light of the above facts. If only the steamer Co was liable, the question of joining the Railway Co as a defendant in the suit would not arise or vice versa. If the Steamer Co had acted as the agent of the Railway Co or the railway Co as the agent of the Steamer Co, then the decision in that case in my opinion, would have been otherwise. ( 10 ) IN Kurivalli Lingayya Setty's case (4) also the facts were clearly distinguishable from the facts of the present case. There, one merchant was cheated by Deft-1 in that case. He initiated criminal action against Deft-1. Deft-1 was convicted and s sum of Rs 7,000 that was found on his person wes got deposited in the Magistrate's Court at Adoni. Later on, Deft-2 obtained a decree in a gum of Rs. 10,000 against Deft-1 at Guntur and in execution thereof, Deft-1 in collusion with Deft-2 got attached the sum of rs. 7,000 which was in deposit in the Court of the Magistrate at Adoni. The plaintiff on coming to know about the said fraud, filed a suit for recovery of Rs. 7,000 against Deft-1 at Bellarv Sub Court to which Deft-2 was joined as one of the defendants . Deft-2 raised an objection as to the propriety of his being impleaded as co-defendant in the suit against Deft-1. His plea prevailed with the High Court on the ground that to the first fraud Deft-2 was not a party. Deft-2 was involved only with regard to the attachment of Rs. 7,000 in execution of the decree against Deft-1 at Guntur. Deft-2 raised an objection as to the propriety of his being impleaded as co-defendant in the suit against Deft-1. His plea prevailed with the High Court on the ground that to the first fraud Deft-2 was not a party. Deft-2 was involved only with regard to the attachment of Rs. 7,000 in execution of the decree against Deft-1 at Guntur. The said act having taken place at Guntur, the cause of action against deft-2 arose only at Guntur and therefore, that fact constituted a separate cause of action for a suit against Deft-2 which could have been filed only at Guntur He could not have been joined as a defendant along with deft-1 in a suit arising out of a cause of action against Deft-1 at another place, for to the said cause of action, Deft-2 was not in any manner connected with defendant-1. ( 11 ) IN New India Assurance Co's case (5), the facts were quite different from the facts obtaining in the present case, as in that case one of the clauses in the insurance policy had clearly envisaged the jurisdiction of a given Court which was not the Court where the suit in that case was filed. ( 12 ) IN the present case, the contesting Respt-5 stands in the position of a guarantor of the performance of their part by Defts-1 to 4 under the loan contract relating to the re-payment of the loan amount. The contesting respt-5 therefore, stood in a position very different from the position of the defendants in the aforesaid three cases on which Mr. Urs has relied upon and who had contested the territorial jurisdiction of the Court in these cases, for in the present suits unlike those cases, joint or several decrees could be obtained by the plaintiff agajnst Respt-5-Bank. When such is the case, it is open to the plaintiff to implead the surety as co-defendant to a suit in a Court which was competent to try the suit against the principal debtors. ( 13 ) FOR the reasons aforesaid, it is held that the Court at Bangalore has jurisdiction to try all the suits, because to all the suits the principal debtors and the surety i. e. Respt-5-Bank, are parties. ( 13 ) FOR the reasons aforesaid, it is held that the Court at Bangalore has jurisdiction to try all the suits, because to all the suits the principal debtors and the surety i. e. Respt-5-Bank, are parties. In the result, the appeals are allowed, the orders of the trial Court under appeal are set aside and the cases are remitted back to the trial Court for decision on merits and for the trial of the other issues in the suits in accordance with law. ( 14 ) IN the circumstances of the given cases, the parties are directed to bear their own costs. ( 15 ) IN view of the decision in the appeals, it is unnecessary to pronounce upon and decide the applicatin filed by the appellant for additional evidence under Order 41, Rule 27 CPC. --- *** --- .