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2007 DIGILAW 2116 (MAD)

South Indian Bank Ltd. & Others v. M. M. T. C. Ltd. & Others

2007-07-10

V.RAMASUBRAMANIAN

body2007
Judgment : V. Ramasubramanian, J. While Application No.1763 of 2004 has been filed by the first defendant in the suit, seeking revocation of leave to sue, granted to the plaintiff to institute the present suit, the Application No. 2979 of 2007 has been filed by the plaintiff seeking leave under Order II Rule 2 of Code of Civil Procedure to file a suit against defendants 2 to 4 on the file of the District Court, Coimbatore. Application No.2980 of 2007 has been taken out by the plaintiff for giving up defendants 2 to 4 as parties to the present suit. Original Application No. 998 of 2006 has been taken out by the plaintiff for an interim injunction restraining the first defendant from disposing of the properties belonging to defendants 2 to 4 pending disposal of the suit. 2. The plaintiff in the suit is the Minerals and Metals Trading Corporation Limited, known as M.M.T.C. Limited, which is a Government of India undertaking. The first defendant in the suit is The South Indian Bank Limited, represented by its Regional Manager, Chennai. The second defendant is a partnership firm, to fulfill their commitments, the plaintiff invoked both the Bank Guarantees by a letter dated 21. 2003 and claimed the amounts due from the first defendant bank. But the first defendant bank sent a reply dated 13. 2003 denying the liability to pay on the ground that the claim was lodged alter the expiry date. Therefore, the plaintiff filed the above suit C.S.No.317 of 2003, seeking recovery of a sum of Rs.43,48,973/- together with interest on the guaranteed amount of Rs.41,50,000/-. Apart from seeking a decree for money as against the first defendant, the plain-tiff also sought a decree against the defendants 2 to 4 for a sum of Rs.45,27,857/-. 3. Since the defendants 2 to 4 were residing outside the jurisdiction of this Court and the plaintiff sought a relief as against the defendants 2 to 4 also, the plaintiff obtained leave to sue in A. No. 1672 of 2003. 4. Along with the suit, the plaintiff took out an application in O.A.No.407 of 2003 seeking an interim order of injunction restraining the first defendant bank from handing over any securities belonging to the other defendants, which were deposited with the first defendant. On 24. 2003, an interim injunction was granted in the said application. 4. Along with the suit, the plaintiff took out an application in O.A.No.407 of 2003 seeking an interim order of injunction restraining the first defendant bank from handing over any securities belonging to the other defendants, which were deposited with the first defendant. On 24. 2003, an interim injunction was granted in the said application. The interim order, the notice in the application as well as the papers were served on the first defendant on 5. 2003 and the first defendant entered appearance through counsel on 16. 2003. 5. Subsequently, the plaintiff took out another application in A.No.5467 of 2003 seeking a direction to the first defendant bank to deposit the amount of Rs.43,48,973/-. Thereafter, the first defendant came up with the application in A.No.1763 of 2004 seeking revocation of the leave granted on 4. 2003 in A.No.1672 of 2003. This application for revocation of leave was filed by the first defendant on 4. 2004. 6. The application for revocation of leave has been taken out by the first defendant bank on the short ground that the entire cause of action for the suit arose only at Coimbatore and that all the defendants were carrying on business only at Coimbatore. As a matter of fact, the plaintiff itself has an office at Nos.167 and 172, DPF Street, Papanaickanpalayam, Coimbatore — 37. The defendants 2 to 4, even as seen from the cause title in the plaint, carry on business at Coimbatore. The entire transaction for the supply of gold was not only entered into between the plaintiffs branch at Coimbatore with the defendants 2 to 4 at Coimbatore, but also the actual act of supply of gold, failure to fulfill commitments etc. took place only at Coimbatore. The first defendant bank has a branch at Raja Street, Coimbatore, and it was that branch of the first defendant bank at Coimbatore, which issued the Bank Guarantees at the instance of the defendants 2 to 4 in favour of the plaintiff. Thus in essence, all the parties (including the plaintiff. the first defendant and defendants 2 to 4) carry on business at Coimbatore and they entered into the transaction out of which the present suit arises only at Coimbatore. Therefore, according to the learned counsel for the first defendant bank, the leave to sue granted should be revoked and the plaintiff should prosecute bar suit only at Coimbatore. 7. the first defendant and defendants 2 to 4) carry on business at Coimbatore and they entered into the transaction out of which the present suit arises only at Coimbatore. Therefore, according to the learned counsel for the first defendant bank, the leave to sue granted should be revoked and the plaintiff should prosecute bar suit only at Coimbatore. 7. Faced with such an opposition from the first defendant bank, the plaintiff has come up with three applications namely: a) O.A. No. 998 of 2006, seeking an interim injunction restraining the first defendant from disposing of the properties belonging to defendants 2 to 4. b) A. No. 2979 of 2007, seeking leave to a separate suit on the same cause of action against defendants 2 to 4 under Order II Rule 2 of Code of Civil Procedure on the file of the District Court, Coimbatore and c) A. No. 2980 of 2007 to delete the defendants 2 to 4 as parties to the present suit. O.A.No.1768 of 2004 8. Let me take up the application for revocation of leave first, since a decision on this application would decide as to whether the other applications are to be taken up for disposal on merits or not. 9. As stated above, the short ground on which the first defendant batik seeks revocation of leave to sue originally granted to the plaintiff, is that all the parties are at Coimbatore and the entire cause of action also arose at Coimbatore. But Mr. K.C. Ramamoorthy, learned counsel for the plaintiff contended that by virtue of Clause 12 of the Letters Patent, the present suit is maintainable on the tile of this Court, irrespective of the fact that no part of the cause of action arose within the jurisdiction of this Court. In other words, the learned counsel for the plaintiff has conceded the fact that the entire cause of action arose at Coimbatore with all parties having their offices at Coimbatore entering into the transaction in question at Coimbatore. But still the plaintiff according to the learned counsel, is entitled to file a suit on the file of this Court if the defendant at the time of institution of the suit dwells or carries on business or personally works for gain within its limits. Clause 12 of the Letters Patent reads as follows: "12. But still the plaintiff according to the learned counsel, is entitled to file a suit on the file of this Court if the defendant at the time of institution of the suit dwells or carries on business or personally works for gain within its limits. Clause 12 of the Letters Patent reads as follows: "12. Original Jurisdiction as to Suits : And We do further ordain that the said High Court of Judicature at Madras, in exercise of its ordinary original civil jurisdiction, shall he empowered to receive, try and determine suits of every description if, in the case of suits for land or other immovable property, such land or property shall be situated, or, in all other cases, if the cause of action shall have arisen, either wholly, or, in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court or if the defendant at the time of the commencement of the suit shall dwell or carry on business or personally work for gain, within such limits; except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause at Madras, in which the debt or damage, or value of property sued for does not exceed hundred rupees." .10. Since the case on hand is only a suit for recovery of money and not a suit for land and also since the first defendant bank has its regional office at Anna Salai, (Thermal -2 within the jurisdiction of this Court, the present suit would fall within Clause 12 of the Letters Patent. In support of the said contention, Mr. K.C. Ramamoorthy, learned counsel for the plaintiff relied upon a decision of the Supreme Court in Food Corporation of India v. Evdomen Corporation AIR 1999 SC 2352 : (1999) 2 SCC 446 . After considering the effect of Clause 12 of the Letters Patent with reference to the provisions contained in the Code of Civil Procedure relating to jurisdiction of a Chartered High Court, the Supreme Court held in Paragraph 8 of the said Judgment as follows: ."8. However, under Section 120 of the Civil Procedure Code, Sections 16, 17 and 20 of the Civil Procedure Code do not apply to a High Court in the exercise of its original civil jurisdiction. However, under Section 120 of the Civil Procedure Code, Sections 16, 17 and 20 of the Civil Procedure Code do not apply to a High Court in the exercise of its original civil jurisdiction. Jurisdiction of the Bombay High Court to entertain a suit under its ordinary original civil jurisdiction is determined by clause 12 of the Letters Patent of the Bombay High Court. Under clause 12 of the Letters Patent, a place where the defendant, or each of the defendants where there are more than one at the commencement of the suit carry on business would be a place where the Court would have jurisdiction. Therefore, under clause 12 of the Letters Patent of the Bombay High Court the Bombay High Court would have jurisdiction over the subject-matter of the dispute in the present ease because the appellant does carry on business in Bombay." .11. But it is seen from the facts of the said case that the said case arose out of a charter party agreement entered at Delhi where the principal office of Food Corporation of India was situate. In pursuance of the said agreement a cargo was brought and discharged at Pradeep Port at Orissa. Certain disputes arose which were referred to arbitration. The arbitration took place in Bombay. The Arbitrators pronounced the award at Bombay and the award was filed into Bombay High Court. Therefore, the said case was not one, where no part of the cause of action arose within the jurisdiction of the Bombay High Court. The parties submitting themselves to an arbitration at Bombay itself gave raise to a cause of action, apart from the fact that the appellant also bad a place of business in Bombay. 12. The aforesaid decision was quoted with approval in a recent Judgment of the Supreme Court in Jindal Vijayanagar Steel (JSW Steel Ltd.) v. Jindal Praxair Oxygen Co. Ltd., (2006) 11 SCC 521 . In the said case, the Supreme Court again dealt with the import of Clause 12 of the Letters Patent and held in Paragraphs 39 and 40 as follows: ‘"39. Under clause 12 of the Letters Patent/the Bombay High Court would have jurisdiction to entertain and try an arbitration petition even if no cause of action has arisen within its jurisdiction, provided the respondent has an office at Mumbai. 40. Under clause 12 of the Letters Patent/the Bombay High Court would have jurisdiction to entertain and try an arbitration petition even if no cause of action has arisen within its jurisdiction, provided the respondent has an office at Mumbai. 40. This Court in Food Corporation case while considering the definition of "Court" under Section 2(c) of the 1940 Act has held that: .(i) jurisdiction of a Chartered High Court is to be determined by clause 12 of the Letters Patent; .(ii) by virtue of Section 120 C.P.C., 1908, the provisions of Section 20 C.P.C. do not apply to Chartered High Courts (such as Bombay) exercising original civil jurisdiction; (iii) that under clause 12 of the Letters Patent, the Bombay High Court would have jurisdiction over the subject-matter of arbitration if the respondent has an office in Mumbai, regardless of the fact that no cause of action may have arisen at Mumbai. By such judgment this Honble Court merely expressed the law as it stands and as is ex facie clear from the applicable statutes/provisions of law." 13. Again Jindal Vijayanagar Steel (JSW Steel Ltd) v. Jindal Praxair Oxygen Co. Ltd. (supra), case was one where the Supreme Court pointed out some important aspects in Paragraph 65 of its Judgment. It was recorded by the Supreme Court in Paragraph 65 that the parties in he said case had chosen Mumbai as the situs of arbitration proceedings under clause 17.2 of the agreement and that the agreement itself was approved by the Board Proceedings of the company at Mumbai. There was a settlement agreement adopted at a meeting of the Board of Directors of both companies at Mumbai. Thus, the Supreme Court found on facts, even in Jindal Vijayanagar Steel JSW Steel Ltd.) v. Jindal Praxair Oxygen Co. Ltd. (supra), case that a part of the cause of action arose within the jurisdiction of the Bombay High Court. 14. Interestingly, the attention of the Supreme Court was drawn while dealing with Jindal Vijayanagar Steel (JSW Steel Ltd) v. Jindal Praxair Oxygen Co. Ltd (supra) case, to the fact that the Supreme Court had taken a different view in Patel Roadways Ltd. v. Prasad Trading Company AIR 1992 SC 1514 : (1991) 4 SCC 270 , than the view taken in Food Corporation of India v. Evdomen Corporation (supra). Ltd (supra) case, to the fact that the Supreme Court had taken a different view in Patel Roadways Ltd. v. Prasad Trading Company AIR 1992 SC 1514 : (1991) 4 SCC 270 , than the view taken in Food Corporation of India v. Evdomen Corporation (supra). The discussion regarding the said contention is found in paragraphs 41 and 42 of the Judgment of the Supreme Court, which are extracted as follows: "41. The appellant, in the present case, concedes that by virtue of the judgment of Food Corporation of India v. Evdomen Corporation (supra) ease the Bombay High Court would have jurisdiction to entertain and try Section 9 petition. However, the appellant contends, the judgment in Food Corporation of India v. Evdomen Corporation (supra) case is per incuriam requiring reconsideration and should be referred to a larger Bench of this Court since it failed to consider the judgment of this Court in Patel Roadways Ltd v. Prasad Trading Company (supra). 42. This Court in Patel Roadways Ltd v. Prasad Trading Company (supra) case held: .(i) An action can be filed in a Court where a subordinate office of the defendant is situated if a part of the cause of action has arisen thereat. .(ii) No action would lie in a Court within whose jurisdiction the principal office of the defendant is situated if no cause of action has arisen thereat." 15. In paragraph 44, the Supreme Court explained the ratio of the decision in Patel Roadways Ltd v. Prasad Trading Company (supra) case as follows: "44. It is ex facie clear from the Section that a suit can be filed where a part of the cause of action arises or where the principal office is located meaning thereby that what their Lordships in Patel Roadways Ltd. v. Prasad Trading Company (supra) case held was that a suit can be filed where a subordinate office is situate if a part of the cause of action arises or otherwise only where the principal office is situate." 16. But in paragraph 47, the Supreme Court held that the decision in Patel Roadways Ltd. v. Prasad Trading Company (supra) case did not arise out of clause 12 of the Letters Patent but arose out of a question of jurisdiction of a City Civil Court governed by Section 20 of Code of Civil Procedure. 17. But in paragraph 47, the Supreme Court held that the decision in Patel Roadways Ltd. v. Prasad Trading Company (supra) case did not arise out of clause 12 of the Letters Patent but arose out of a question of jurisdiction of a City Civil Court governed by Section 20 of Code of Civil Procedure. 17. Thus, from the law laid down by the Supreme Court in Food Corporation of India v. Evdomen Corporation (supra), followed by Jindal Vijayanagar Steel (JSW Steel Ltd) v. Jindal Praxair Oxygen Co. Ltd. (supra) it appears that under Class 12 of the Letters Patent, this Court would have jurisdiction to try a suit if the defendant resides or carries on business or has a place of business within its territorial jurisdiction even if no part of the cause of action arose within its jurisdiction, but unfortunately the plaintiff in this case could not come up with a suit for recovery of money, only as against the first defendant Bank. The plaintiff instituted the same as against the defendants 2 to 4 also all of whom carry on business as w ell as reside only at Coimbatore. The prayer in the plaint is also not merely for recovery of a sum of Rs.48,43,973 from the first defendant Bank but also alternatively for recovery of a sum of Rs.45,27,857/-from the defendants 2 to 4, Thus, the plaintiff has made one prayer for recovery of money against the first defendant-Bank and an alternative prayer for a decree against the defendants 2 to 4. In view or the fact that the amount for which a decree is sought for against defendants 2 to 4 is higher than the amount for which a decree is sought for against the first defendant, the plaintiff has actually valued the suit and paid Court Fee only for the alternative prayer made as against defendants 2 to 4. In other words, it is seen from the relevant paragraph of the plaint relating to valuation of the suit for the purposes of Court Fees and jurisdiction, that the plaintiff adopted the value of the claim made against defendants 2 to A, as the value of the suit and paid Court Fees only on the said claim. In other words, it is seen from the relevant paragraph of the plaint relating to valuation of the suit for the purposes of Court Fees and jurisdiction, that the plaintiff adopted the value of the claim made against defendants 2 to A, as the value of the suit and paid Court Fees only on the said claim. Therefore, the decisions relied upon by the learned counsel for the plaintiff could be applied both ways in the sense that in respect of the plaintiffs claim as against the first defendant, it would be covered by Class-12, but in respect of the claim as against the defendants 2 to 4, Class-12 of the Letters Patent itself would oust the jurisdiction of this Court. 18. It is only on account of Class 12 of the Letters of Patent operating as a double edged weapon in the present case that the plaintiff has come up with two applications in A. Nos. 2979 and 2980 of 2007 for deleting the names of the defendants 2 to 4 from the present suit and for instituting a separate suit as against the defendants 2 to 4 on the file of the District Court, Coimbatore. Such a duplication and multiplication of the number of legal proceedings, the amount of Court Fees paid etc., could have well been avoided by the plaintiff instituting the present suit directly in the District Court Coimbatore, as against all the four defendants. As a matter of fact even if those two applications are allowed and the plaintiff is permitted to institute a separate suit against defendants 2 to 4 before the District Court, Coimbatore, the plaintiff may not be entitled to two decrees for recovery of money, one against the first defendant and another against the other defendants. Therefore, eventually, the plaintiff will have to seek a transfer of either of the suits for the purpose of joint trial, so as to have one decree either against the first defendant or against the defendants 2 to 4. Therefore. I am constrained to revoke the leave granted earlier to the plaintiff to institute the present suit on the file of this Court. 19. Therefore. I am constrained to revoke the leave granted earlier to the plaintiff to institute the present suit on the file of this Court. 19. There are two strong reasons, in addition to what is stated above, for me to revoke the leave and they are as follows: (a) In an application for leave to sue, the Court is concerned about its own jurisdiction to entertain the suit. At that stage, the Court is obliged to address itself to the question of jurisdiction, only with reference to the averments contained in the plaint, the cause of action pleaded, the valuation and reliefs prayed for. If the plaintiff herein had not impleaded the defendants 2 to 4 and if he had not sought for any decree against the defendants 2 to 4 even in the first instance, the plaintiff need not have sought leave at all to institute the suit, since Class 12 would have come into play in all force. The plaintiff was constrained to seek leave, de hors the fact that the first defendant Bank has an Office here, only because of the impleadment of the defendants 2 to 4 and the relief sought for against them. Therefore, the plaint, as it originally was, at the time of seeking leave to sue, will have to be looked into for the purpose of deciding the question as to whether the leave should be revoked or not. If the plaint as on the date of its institution is examined, it contained a prayer for relief against three out of four defendants, who are residents of Coimbatore and against whom, no part of the cause of action arose at Chennai. Therefore, the question of jurisdiction cannot now be decided post facto, after permitting the plaintiff to delete the defendants 2 to 4 and to give up the claim made against them. In other words, the contention now raised with regard to Class 12, does not have legs to stand on its own, in the light of the plaint as it was originally made. It is only because of this that the plaintiff has come up with a pair of crutches in the form of the applications for giving up the defendants 2 to 4, so as to make the contention stand up. .(b) It is not in every case that this Court is bound to grant leave. It is only because of this that the plaintiff has come up with a pair of crutches in the form of the applications for giving up the defendants 2 to 4, so as to make the contention stand up. .(b) It is not in every case that this Court is bound to grant leave. The Court should also take note of "Forum Convenience" as between the parties to the litigation. If irrespective of the place where the entire cause of action arose, a suit can be instituted against a person in any place where he has business establishments, it would lead to disastrous consequences. The first defendant Bank has branches all over India. The present suit, if the contention of the learned counsel for the plaintiff is accepted, could be instituted in any Court from Kashmir to Kanyakumari, wherever the first defendant has a branch, despite the entire cause of action for the suit arising only at Coimbatore. It is only in order to avoid such unintended consequences that the Court is empowered to refuse leave, even if it has jurisdiction to try a suit. This is how the concept of forum convenience developed. 20. In Kusum Ingots and Alloys Ltd. v. Union of India and Another AIR 2004 SC 2321 : (2004) 6 SCC 254 , the Supreme Court considered the question of jurisdiction of a High Court under Article 226 of the Constitution when the cause of action arose within the jurisdiction of more than one High Court. Even while holding that a High Court will have jurisdiction to try a case even if a small fraction of a cause of action accrues within the jurisdiction of that Court the Supreme Court held that the Court would be entitled to refuse to exercise the jurisdiction by invoking the doctrine of forum conveniens. In paragraph 30 of the said judgment, the Supreme Court held as follows: "Forum conveniens 30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoicing the doctrine of forum conveniens.” .21. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoicing the doctrine of forum conveniens.” .21. A Division Bench of this Court applied the doctrine of forum conveniens in Parameswari Veluchamy v. T. R. Jayaraman (2001) Supl MLJ 641 : 2002 (1) CTC 134 , in paragraph 21 of which, it was held as follows: ."21. Moreover, considerations of convenience are very germane while determining the question of grant, refusal or revocation of leave. Almost all the properties, the documents relating thereto and the witnesses who have knowledge of the same are outside the city of Madras." 22. Therefore, I am of the considered view that in all fairness, the plaintiff should prosecute the suit only before the appropriate Court at Coimbatore, as against ail the defendants herein, instead of giving up the defendants 2 to 4 in the present suit and instituting a fresh suit before the District Court, Coimbatore, which would only lead to multiplicity of proceedings, on the same cause of action. .23. Mr. K.C. Ramamurthi, learned counsel for the plaintiff raised one last objection viz., that the first defendant did not seek revocation of the leave at the earliest point of time and that therefore, the application for revocation should he rejected. In support of his said contention, the learned counsel for the plaintiff relied upon the judgment of the Division Bench of this Court in P.T. Ummer Koya, Hon. Secretary, All India Chess Federation, Naju Rivage, V.K. Krishna Menon Road. Panniyakara, Calicut v. Tamil Nadu Chess Association, represented by its Hon. Secretary, Manuel Aaron, Hall No.75, Jawaharlal Nehru Stadium, Chennai and Others (2005) 3 CTC 86. But the said decision by the Division Bench of this Court, which followed the earliest decision of the Supreme Court in Chittaranjan Mukherji v. Barboo Mahto AIR 1953 SC 472 , is based upon the principle that a person who has acquiesced himself to the jurisdiction of a Court, is not entitled to seek revocation of the leave after considerable lapse of time. A person, who participates in the proceedings and who invites some interlocutory orders may not be entitled later on to question the jurisdiction of the Court. But in the present case the first defendant did not participate in the proceedings. A person, who participates in the proceedings and who invites some interlocutory orders may not be entitled later on to question the jurisdiction of the Court. But in the present case the first defendant did not participate in the proceedings. Though the first defendant sought several adjournments in the applications for injunction, the first defendant came up with the application for revocation of leave before filing his first written statement of defence. Therefore, the time allowed by the first defendant to lapse, did not amount to acquiescence on his part or a surrender to jurisdiction of this Court. Hence, I am unable to accept the above contention of the learned counsel for the plaintiff. 24. In the result, applications A.Nos.2979 and 2980 of 2007 are dismissed. Application No.1763 of 2004 is allowed and the leave to sue originally granted in A.No.1672 of 2003 on 4. 2003 is revoked. Consequently, the suit C.S.No.317 of 2003 along with the application for injunction O.A.No.998 of 2006 are directed to be returned to the plaintiff for presentation to the appropriate Court at Coimbatore, having jurisdiction to try the suit. No costs. Application allowed.