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2012 DIGILAW 488 (KAR)

Malaprabha Co-Operative v. Buildmet Pvt. Ltd.

2012-06-14

N.K.PATIL, S.N.SATYANARAYANA

body2012
Judgment :- 1. Defendant in O.S.No.6949/1991 on the file of the Additional City Civil Judge, Bangalore, has come up in first appeal impugned the Judgment and Decree dated 18.08.2003 passed in the said case. 2. Brief facts leading to this appeal are as under: Appellant herein is defendant and respondent is plaintiff in O.S.No.6949/1991, which was filed for recovery of amount due in a sum of Rs.13,93,226/-together with interest at 18% p.a., from the date of the suit till realisation on the ground that the said amount is due from the defendant on account of construction of factory by the plaintiff for and on behalf of defendant – Society at the place of its work in Saundatti, Belgaum District. 3. The facts which are not in dispute are that the defendant-Society decided to get the building constructed within the premises of its factory and in that behalf a tender was called. Plaintiff tendered its offer to take up the construction work on 24.04.1986. Subsequently, after mutual discussion between the parties the said tender was accepted and the work was awarded to plaintiff in terms of letter dated 08.07.1986. The nominal value of the work was estimated at Rs.1,65,40,000/-. In that behalf, an agreement was also entered between the parties on 09.07.1986, which is at Ex.P-2. It is also not in dispute that the terms and conditions under which the contract finalised was under letter dated 27.05.1986, which was made as part of the agreement and produced at Ex.P-5. It is seen that the building was completed on 29.02.1988 and final bill for Rs.19,65,000/-was submitted on 27.05.1986. It is stated that in spite of several request, the said amount was not paid and thereafter a joint meeting was held on 09.11.1989 between the parties, wherein it was decided that the final bill was required to be passed by the defendant. In spite of this, it is stated that a sum of Rs.7,44,649-82 remained in arrears towards the balance work which was carried out by plaintiff and out of that a sum of Rs.1,49,160/-being the tax deducted at source, the same was given deduction and after applying interest at 18% to the same, the amount due works out to Rs.13,93,226/-. A suit was filed for recovery of the same. 4. A suit was filed for recovery of the same. 4. It is seen that in the said suit, after service of notice, defendant entered appearance and took up contention that the suit is not maintainable in view of the fact that notice is not issued under Section 125 of the Act and also on the ground that the suit is initiated in the Court, which has no territorial jurisdiction to decide. It was also contended in the written statement that in terms of agreement dated 09.07.1986 produced at Ex.P-2 and the letter containing terms and conditions produced at Ex.P-5, plaintiff ought to have sought for referring the matter to arbitration, instead of filing a suit for recovery. Subsequently on appreciation of pleadings of both the parties, the Trial Court proceeded to frame six issues and out of which the relevant issues are issue Nos.3 and 4. 5. In the said proceedings, on behalf of plaintiff, one Sri.H.N.Varadarajan, Director of plaintiff adduced evidence as P.W.1 and in support of their case produced and marked in all 20 documents as Exs.P-1 to P-20. On behalf of defendant, one Sri.M.N.Raddi, First Division Clerk of defendant – Society adduced evidence as D.W.1 and in support of their case produced and marked in all 24 documents as Exs.D-1 to D-24. On appreciation of pleadings and evidence in the light of oral and documentary evidence available on record, the Court below decreed the suit answering issue Nos.3 and 4 in the negative, i.e., in favour of plaintiff. Defendant being aggrieved by the Judgment and Decree, has come up in this appeal challenging the finding of Trial Court, particularly on issue No.4 with regard to territorial jurisdiction in entertaining the suit filed by plaintiff for recovery of the aforesaid amount on the ground that contract between the parties for construction of building within defendant’s factory premises was entered into within the territorial jurisdiction of Saundatti Court and as such filing of suit for recovery of the amount said to be due under the contract in the Court at Bangalore is not maintainable and as such the Judgment and Decree passed by the City Civil Court, Bangalore, is required to be set aside. 6. In this proceeding, on service of notice, respondent – plaintiff has entered appearance. 6. In this proceeding, on service of notice, respondent – plaintiff has entered appearance. After hearing the counsel appearing for both parties and on going through the grounds of appeal, points that arise for consideration in this appeal are as under: 1. Whether the Court below was justified in holding that the City Civil Court, Bangalore, has jurisdiction to entertain the claim of plaintiff for recovery of Rs.13,93,226/-from the defendant in terms of agreement that was entered into vide Ex.P-2? 2. Whether the finding of the Court below on the aforesaid issue No.4 is sustainable in law? 7. On re-appreciation of pleadings, oral and documentary evidence available on record, it is seen that the tender for construction of building was called for by the defendant – Society from its office situated at Saundatti in Belgaum District. It is also seen that the tender for accepting the contract was submitted within the territorial jurisdiction of the said Court. The contract was also entered between the parties and the same was executed within the jurisdiction of Saundatti vide Ex.P-2 and the terms and conditions which was agreed between the parties which was made as part of the agreement Ex.P-4 is the only document, which is written by plaintiff from its office and addressed to defendant. Except this document, all other documents are executed by the parties within the territorial jurisdictional Court at Saundatti. In that view of the matter, the finding of Trial Court on Issue No.4 to the effect that there are several correspondence taken place between plaintiff and defendant, some of them originating from the branch office of plaintiff, which is situated at Bangalore and therefore the plaintiff has cause of action to initiate the suit within the territorial jurisdiction at Bangalore, cannot be sustained. The finding of the Trial Court to that effect is contrary to Section 20 of CPC and also Section 4(2) and 4(3) of the Contract Act, 1872 as held by this Court in the matter of M/s. Republic Medico Surgical Company, Bangalore Vs. Union of India and another reported in AIR 1980 KARNATAKA 168, which reads as under: “The contract is completed when an offer made is accepted. It is the acceptance that gives rise to the cause of action and not merely an offer. Union of India and another reported in AIR 1980 KARNATAKA 168, which reads as under: “The contract is completed when an offer made is accepted. It is the acceptance that gives rise to the cause of action and not merely an offer. Hence, even though an offer is made from Bangalore, it cannot be said that a part of the cause of action arises in Bangalore. In a suit the cause of action will consist of making of the contract and its breach at the place where it is to be performed. Therefore, a suit for breach of contract can, at the option of the plaintiff be brought either at the place where the contract was made or at the place where the breach was committed. It can also be said that the place where money is to be paid or goods are to be supplied are also the places where parts of the cause of action arise, but certainly not the place where offer is made.” which position is accepted by the decision of the Apex Court in the matter of C.V.Subba Rao Vs. B.Ramachandra Rao reported in AIR 1966 SC 543 . It is seen that mere making of an offer does not form part of the cause of action for suit for damage for breach of contract which has resulted from acceptance of the offer in terms of the ratio laid down by the Apex Court. 8. In that view of the matter, this Court find that the finding of the Trial Court on issue No.4 is not sustainable and the same is required to be set aside. Consequently the Judgment and Decree dated 18.08.2003 passed in O.S.No.6949/1991 on the file of Additional City Civil Judge, Bangalore (CCH-14), is required to be set aside. 9. Accordingly the appeal is allowed. Consequently Judgment and Decree dated 18.08.2003 passed by the Court below in O.S.No.6949/1991 is set aside. No order as to costs.