Magma Fincorp Ltd vs Orbit Motors Private Ltd on 5 August, 2010

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Calcutta High Court

Magma Fincorp Ltd vs Orbit Motors Private Ltd on 5 August, 2010

The Court : The defendant has applied for revocation of leave granted under Clause 12 of the Letters Patent on the principal ground that no part of the plaintiff's alleged cause of action, as pleaded in the plaint, has arisen within jurisdiction. There is an alternative case of forum non 2 conveniens that has been made out. At the hearing it is the first limb which is pressed more than the other.

Paragraph 23 of the plaint refers to paragraphs 3, 5 and 6 thereof as being relevant for the purpose of clause 12 of the Letters Patent. In addition, the plaintiff says that the averments at paragraphs 10, 14, 15 and 19 also refer to some part of the cause of action having arisen within jurisdiction. However, it appears that the plaintiff did not found the basis for invoking the territorial jurisdiction of this Court on the averments in the plaint other than those in paragraphs 3, 5 and 6 thereof .

Paragraphs 3, 5 and 6 of the plaint read as follows :

"3. Since year 2001, the plaintiff at the request of the defendant agreed to provide finance to customers purchasing Maruti Cars from the defendant inter alia on the following terms and conditions:-

a) The plaintiff at Magma House, 24, Park Street, Kolkata, within jurisdiction would provide finance to customers of the defendant through its offices in Orissa to the extent of the "loan amount" specified by the defendant. 3

b)     The defendant would obtain payment of the

       "Margin Money" directly from its customer and

       hand over a money receipt therefor to its

       customer.

c)     The customer in turn would approach the

plaintiff with the money receipt consequent to which the plaintiff would grant finance to the customer in terms of agreements to be entered into between the plaintiff and the concerned customers.

d) On execution of necessary agreement and documents, the plaintiff would issue a delivery order permitting to defendant to deliver the vehicle to the customer and subject to the defendant ensuring, inter alia, the following were sent to the plaintiff.

(i) Documents confirming the asset cost and the margin money obtained by the defendant from the customer;

(ii) Original invoice recording sale to the customer under finance from the plaintiff; 4

(iii) Duplicate key of vehicle;

(iv) Copy of Registration Certificate (showing registration in the name of the purchaser under finance from the plaintiff);

(v) Signed delivery order evidencing receipt of the vehicle by the customer.

5. The plaintiff issued Delivery Orders mentioned in annexure "A" hereof and released diverse payments aggregating to Rs.40,66,648/= from February 26, 2006 to May 15, 2008 to the defendant being the aggregate of the amounts financed. Payments as aforesaid were made by the plaintiff at 24, Park Street, Calcutta within the jurisdiction aforesaid through its bankers, M/s. Axis Bank, Shakespeare Sarani Branch, Calcutta within the jurisdiction aforesaid to the defendant at Palmposh Road, Rourkella outside jurisdiction. Details of the total asset cost, loan amount and the amounts financed (which was paid by the plaintiff to the defendant as aforesaid) and the Margin Money 5 paid directly by the customer to the defendant are also set out in Annexure "B" hereof.

6. In relation to the aforesaid, the plaintiff from time to time between February 26, 2006 to May 15, 2008 issued 17(number) several Delivery Orders mentioning the amounts financed and recording the Margin Money received by the defendant as mentioned in the money receipt and requiring the defendant to, inter alia, make over the following documents to the plaintiff:-

(i)     Assets Cost Rs._______

(ii)    Initial payment/ Margin Money of _______

        received by you and credited to your account.

(iii)   The   Original       Invoice,   raised   as    'Sold   to

        ___________ under finance arrangement with

        MAGMA SHRACHI FINANCE LIMITED 24,

        PARK STREET, KOLKATA-700 016'

(iv)    Duplicate Key

(v)     Money Receipt in respect of (ii) above.
                                         6


                       (vi)    Delivery Order duly signed evidencing receipt

                               of vehicle by the customer

(vii) Copy of Registration Certificate is retained by you & sent to us for our records.

(viii) Other relevant papers, if any.

Delivery Orders as aforesaid were issued after approval by the plaintiff at Magma House, 24, Park Street, Kolkata within jurisdiction."

The first clause of the agreement that is pleaded at paragraph 3 of the plaint records that the plaintiff in Calcutta was to provide finance to the customers of the defendant through the plaintiff's offices in Orissa. There is nothing else of relevance in paragraph 3 for the purpose of territorial jurisdiction. Paragraph 5 refers to payments in respect of the transactions having been made by the plaintiff at Park Street within jurisdiction through the plaintiff's bankers at Shakespeare Sarani within jurisdiction. Paragraph 6 refers to various documents and other properties that the defendant was apparently liable to make over to the plaintiff. One of the documents was to be an invoice which was to record that there was a finance arrangement with the plaintiff and the plaintiff's recorded address therein would be its Park Street, Calcutta address. At the foot of 7 paragraph 6 of the plaintiff it has been pleaded that the delivery orders were issued after approval by the plaintiff at the plaintiff's office within jurisdiction.

At paragraph 10 of the plaint it has been said that sums have become due and payable by the defendant to the plaintiff at the plaintiff's office within jurisdiction. Paragraph 14 claims that demands have been made by the plaintiff on the defendant from the plaintiff's office or elsewhere within jurisdiction. Paragraph 15 speaks of the plaintiff, at its office within jurisdiction being entitled to the specific delivery of certain documents. Paragraph 19 says that the defendant has acted in breach of the obligation owed to the plaintiff at the plaintiff's Calcutta office for which the plaintiff has apparently suffered loss and damage.

The plaintiff has also relied on a judgment reported at AIR 1981 Delhi 90 and has particularly placed paragraph 11 of the report where a Full Bench decision of the Madras High Court has been referred to.

It is the case of the plaintiff that if one of the documents that the plaintiff seeks from the defendant was to have recorded therein that the finance had been provided for the relevant transaction by the plaintiff at its Calcutta office, the situs of such office which was required to be recorded in the document may be made the basis for invoking the territorial jurisdiction of the Court where an action for non-delivery of such 8 document is instituted. The plaintiff contends that it is in-built into the clause of the agreement recorded in the first sub-paragraph of paragraph 3 of the plaint that an obligation was owed by the defendant to the plaintiff and such obligation was to be discharged at the plaintiff's office in Calcutta within jurisdiction.

The plaintiff says that it is without dispute that a plaintiff has the choice of forum and if an infinitesimal part of the cause of action arises within the jurisdiction of a particular Court, the plaintiff should not be shooed away from such forum. The plaintiff says that the defendant's application is unfounded since it proceeds to discredit the plaintiff's claim on merits rather than accepting the statements as true and correct as it has to be in the challenge of a nature of a demurrer.

Setup for Microsoft Internet Explorer 3.02.lnk The judgment that the plaintiff has relied on did not turn merely on the fact of payment being made in Delhi. Paragraph 11, indeed, records that if payment had been made through a bank at a particular place and received by another through its bankers at another place, it would not imply that the place where the payment had been made through the original banker would be irrelevant for the purpose of invoking the territorial jurisdiction of the Court. However, as would be evident from the previous paragraphs of the judgment, the agreement in that case had been 9 entered into in Delhi and the parties held meetings and signed minutes in Delhi. Though the payment had been made by the plaintiff in that case through its bankers in Delhi, it was but one of the factors that weighed with Court and was not the key issue on which the question of jurisdiction turned.

The averments in paragraphs 3, 5 and 6 are irrelevant for the purpose of invoking the territorial jurisdiction of this Court. At the highest, the term of the agreement which is reflected in paragraph 3(a) of the plaint only recorded the address of the plaintiff's office. However, the release of the payment from the plaintiff's end was to be, on the plaintiff's showing in such clause, "through its offices in Orissa."

The second sentence in paragraph 5 of the plaint refers to payments in respect of the transactions being released by the plaintiff at its Park Street office and the payments being made through its bankers at Shakespeare Sarani. But these are not integral to the plaintiff's cause of action and inconsistent with the clause of the agreement that the finance would be provided to customers of the defendant through the plaintiff's office in Orissa. Albeit the agreement being an oral agreement, there is no term pleaded that the payments were to be made from a specific place or through a specific banker. If at all, the plaintiff's Orissa office or offices may have been relevant; but even then not integral to the cause. Say, for 10 instance, that the payments were made by the plaintiff from its branch office in Tirucherapalli, if it had any office at such place, and the payments were cleared by the banker of such branch office in Kohima; it could not then have been said, in the absence of any specific term in the contract pleaded, that in making payment in such manner, the plaintiff had acted in breach of the agreement. Ordinarily, the accidental or incidental payment of money from a particular place cannot be made the basis of invoking the territorial jurisdiction of a Court in the present kind of action. It was not crucial, or even relevant, to the transaction between the parties herein that the payment should be made from the Park Street office of the plaintiff or that the money should be released by the Shakespeare Sarani bankers of the plaintiff.

Paragraph 6 of the plaint, again, refers to a document which had merely to record the address of the plaintiff. That a document of which specific delivery is sought was to record a particular address of the plaintiff, would not, despite it being a key document, be a part of the plaintiff's cause of action in the matter of invoking the territorial jurisdiction of the Court where the suit for specific delivery of the document is filed. Further, the agreement pleaded did not oblige the plaintiff to issue delivery orders from its Park Street office for such matter to be of any significance for launching the present action. 11

Despite the plaintiff's failure to include the averments other than those in paragraphs 3, 5 and 6 of the plaint as the basis for invoking the jurisdiction of this Court, since the averments in paragraphs 10, 14, 15 and 19 of the plaint have now been cited, such statements need to be seen.

Paragraph 10 makes a vague assertion that the moneys had become due to the plaintiff at the Park Street office. This cannot be a part of the plaintiff's cause of action in the suit, whether for specific delivery of the documents sought or for the alternative unliquidated claim in damages.

Paragraph 14 of the plaint refers to demands made by the plaintiff which, without any other factor, would not be relevant for the purpose of territorial jurisdiction. If this were a relevant consideration, a mischievous plaintiff would be able to oppress a defendant by making a demand from a distant place. At paragraphs 15 and 19, the plaintiff has said it was entitled to delivery of the documents within jurisdiction and that the defendant was liable to discharge its obligation to the plaintiff at the plaintiff's said office in Calcutta. The agreement that has been pleaded at paragraph 3 of the plaint does not allude to the defendant's obligation to ensure delivery of the documents at the Park Street office and does not reveal otherwise that if the documents had been made over to the Orissa 12 office of the plaintiff, which has been referred to in the initial clause of the agreement, there would have been any breach on the part of the defendant.

The averments in the plaint clearly do not make out that any part of the plaintiff's cause of action has arisen within jurisdiction.

The question of forum non conveniens need not be addressed since it is found that the Court had no authority to receive the action. However, since the ground has been taken, it needs to be looked into. For a plaintiff to be asked to carry the action to another Court notwithstanding this Court having authority to receive it, an overwhelming case of inconvenience has to be made out to the extent it would be oppressive to the defendant to face trial in this Court. There is only a paragraph as a footnote to the plaintiff's petition which has been expended on such cause. No case of facts has been made out to meet the high test of an overwhelming case which is required on such count.

The leave granted under Clause 12 of the Letters Patent in C.S. No. 295 of 2009 is revoked on the ground that no part of the plaintiff's cause of action has arisen within jurisdiction. G.A. No. 1036 of 2010 succeeds. The defendant will be entitled to costs assessed at 1000 GM.

In view of this order, the plaintiff's interlocutory application, G.A. No. 3507 of 2009 fails. It is not necessary to visit the merits of such matter once it has been found that this Court had no authority to receive 13 the suit. It is only observed that the fact that an ad-interim order had been made on the plaintiff's application should not weigh with any other forum where the plaintiff's present claim is carried.

There will be no order as to costs in G.A. No. 3507 of 2009. The plaintiff prays for a stay of the operation of the order revoking the leave granted under Clause 12 of the Letters Patent and, consequently, of the order of dismissal of the plaintiff's application. Such prayer is declined.

Urgent certified photocopies of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.

(SANJIB BANERJEE, J.) sg.

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Calcutta High Court