Bombay High Court
Dena Bank Ltd. vs Ironside Ltd. on 31 March, 1986
JUDGMENT Desai, J.
1. Although formally this is an Order Passed in notice of motion dt, 20th Dec., 1966 in Summary suit No. 436of 1966, the decision and the observations will also govern simiar question arising in summary Suit No. 534 or 1966. We are informed that theposition in the twosuits is identical. This Notice of motion was made returanble before a single judge but by an order dt. 13th april, 1967 the Motion was referred to a Division Bench as the single Judge felt that the could be a conflict between certain decisions of this court. Anyway be opined that the matter was od sufficient importance towarrant a decision by the Division Bench. The Motion had subsequently been assigned to this Bench by the hon'ble the Acting Chief Justice.
2. By the notion the defendant seek to set aside andrevoke the leave granted to the plaintiffs under Cl. XII of the letter Patent. This leave was granted by anorder made on 123 th Aug., 1966 In order to appreciate the rival contentions, a few facts pertaining to the nature of the claim in thesuit may be stated.
3. The plaintiffs are Dena Bank and they have filed the summary suit against Ironside Lte., a Company registered under the Indian companies Act and having its registered office at 110, Cannon Street, London EC-4, England It is theagreed position that the defendants donot have any office at all in India, The claim of the plaintiffs in the suit is indicated in Para 3 of the Plaint and Para 4 of the Plaint deals with the question of juridiction.
4. According to Para 3 of the plaint a Bill of Exchange was drawn of the defendants By Steel (1957) Private Ltd. in the amount of $ 101,849.10.11. The date of this Bill is 16 the Dec., 1963. According to the said para the Said Steel (1957) Private Ltd. discounted the Bill which they had drawn on the defendants with the plaintiff Bank of 24 th Feb., 1964 therefore, holders indue course for the value of the soad Bill. According to the planit, further, the Billwas thereafter submitted to the defendants which event took place admitteedly in England and the said bill was accepted in England by the defendants. This acceptance took place on 9the March, 1964 asthecopy of the original document whichis annexed as exhibit "A' to the plaint would seem to suggest. The due date on which the defendants as acceptors promised to make payment was 17 th May, 1964 but according to the plaintiff when the bill was presented for payment to the defendant the amount due thereon wasnot paid. This was also admittedly in England. There have been certain part payments made leter on for which credit had been given followed by correpondence inwhichthedefendants made certain proposals to which the defendants made certain proposald toclear off their liability. However, a balance of $ 98, 967 12.07 equivalent to Rs. 20,72,624.67 remained outstanding whichamount according to the plaintiffs is due and payable by the defendants to the plaintiffs as acceptors.
5. We now come to Para 4 of the Plaint which is the jurisidiction clause. Accordings to the plaintiffs, the said Bill of Exchange was drawn in Bombay. The same was fiscounted with the plaintiffs inbOmbay. Accordingly the platiffs in submitt that a part of the cause of action had a risen in Bombay. The plaintiff had separetely sought leave under Cl. XII of the Letters Patent and, therefore, indicate in Para 4 that with such leave being granted, the High court would have jurisdiction to entertain any try the suit.
6. the Plaint was filed on 5the Aug., 1966 and a Petition under Cl. XLL of the letters Patent dt. 12th Aug., 1966 was made. The very same factsd are recited in the Petition In the Petition accordingly the plaintiff sought leave made Cl. XLL of the letters Patent. Necessary leave appears to have been granted on 19 the Aug., 1966 and the fact of such order being made is found inscribed on the Plaint The question is hwether such leave is liablit to be revoked and is would be liable to be revoked if no part of thecause of action could be said tohave arisen within the limits of the Ordinary Jurisdiction of this court?
7. Mr. Chagla had farily pointed out that a singel Judge of this court (Harilaa Kania J.,) had in Canera Industiral and Banking Syndicate Co. V. Narayan Venkatesh where thefacts were similar held that a part of the cause of action would arise within the limits of the Original Jurisdictionk to try the suit. The aforesaid decision is reported in 43 Bom LR 916: AIR 1942 Bom 15 in the afforesaid suit, the 1st defendant drew in Bombay on the 2nd defendant who was residing at Calicut five Bills of Exchange in favour of the Bombay Branch of the plaintiff Bank. They were presented to the 2nd defendant who accepted them but on the due date dishounoured them. The plaintiffs filed a suit the High court of Bombay for leave under Cl. XII of the Patent of recover the amount due under the Bills form both the defendants. Defendant No. 1 did not enter onappearance but defendant No. 2 defended the suit and contended that the court had no jurisdicition totry thesuit. this was supported on the basis that his liability had arisen only onacceptances of the Bills at Calicut and that as against him to part of the cause of actionhad arisen in Bombay. It was held that in order to give rise to the liability of defendant No. 2 as drawee the plaintiffs had to establish that the Bills of Exchange were draw by defendant No. 1 on defendant No. 2 in favour of the plaintiff who were the paryees in Bombay and that as that material fact took place inBombay part of thecause of action must be held tohave arisen in Bombay. Accordingly it was held that the court had jurisdiction it was held that the court had jurisdiction to try suit with leave obtained under Cl. XII of he letters Patent.
8. Mr. Cooper appearing onbehalf of the plaintiff drew out attention to S. 33 of the Begotiable Instruments Act and suggested to us that the said statutroy provision was not the basis of the aforesaid decision although not indicated therein. In the case before, us the Bill were undoubtedly drawn in Bombay. In the Bills the defendents had to he named as the drawees. Since onlythe named drawees could bind themselves by an acceptanc. Thus, accordings tocounsel's submission the drawing the making of the Bills would seem to constitute an important fact which had to be established before the plaintiff could succeed in the suit. It is a part of the bundle of facts which would constitute the cause of action. In view of the provisions contained in S. 33, this cannot be regarded as immaterial or inconsequentialbut had to be considered to be material part of the cause as action which would justify theseeking and the granting of the leave unde Cl. XII of the Letters Patent.
9. Mr. Chagla submitted that thet later decision of Kania J. In Canara Industrial and Banking Syndicate v. Narayan Venkatesh, (AIR 1942 Bom 15) was not in accordance with his earlier decision in Damji Hirji v. Mahomedalli Essebhoy, AIR 1939 Bom 461: 41 Bom LR 959. In this case a firm owned ginning factories and presses at different places in Bombay Presidency but none of them was in Bombay itself. The firm, however, rented a room inbOmbay in the name of the firm. For the purpose of carrying on its business thefirm borrowed money on hudis. Interest on the loans taken by the firm was paid in Bombay and at the rented room a Clerk maintained books of account in which the loance interest and repayments were duly entered. The said Clerk also purchased goods and part of machinery on behalf to thefirm as per instructions given by the firm to him. However, hundis in the form of promissory notes were signed outside Bombay. After these were signed the humdis were sent to the firm's Mehta at Bombay and the thereafter delivered the hundis to the payees in Bombay. the hundis were thereafter endorsed by these payees in favour of the plaintiff at his residence inBombay. Upon thes fats it was held that the whole cause of action had ariseninBombay within the jurisdiciton of the High Court. (Underlining supplied) /what would seem to explain the basis of this decision was that a person may sign a promissory note or a negotiable instrument in his won house and keep it there without incurring any obligation to anyone at all. According to the Court and rightly so it is only when such a document is tendered to the payee and accepted by him that there would arise a contract betweenthe parties. The mere signing of a negotiable instrument wa mere preparation according to the court and not an offer or part of the contrctual relationship.
10. a number of English and Indian decisions have been cited insupport of the decision in Damji Hirji's case. The decisions inChapman C. Cottrell, (1965) 34 LJ Exch 186 and Winyer V. Round (1863) 1 Mad HCR 202 would seem to rest onte point abovenoted, However it is interesting to refer to the case of Roghoonath Misser v. Gobindnarain. (1895) ILR 22 Cal 451, which has also been noted and referred to by the single judge, In Roghoobath's case a hundi drawn in Benaras on the drawers' firm in Bombay in favour of a firm which carried onbusiness at Mirzapur and Calcutta was endorsed at Calcutta by the payee to a firm at Calcutta and dishonoured by thedrawers' firm at Bombay After obtaining leave under Cl. XII of the Letters Patentna suit was brought in the Calcutta High Court by the endorsee to recover theamount of te hundi. It seems to have been heldby the Calcutta high court that the siad Court had jurisdiction because theend orsement in favour of the plaintiff took place in Clacutta and that this also constituted material part of the cause of action. The last mentioned decision would seem to be of assistance to the plaintiff's before us and would suggest that the materialpart of thecause of action would seem toarise within the limits of Original Jurisdiction of this Court on a two fold consideration, First because the Billof Exchange was drawn by Steel (1957) Private Lte, in Bombay and secondly by thefact that it was endorsed infavour to the plaintiffsin Bombay. On a consideration of the factual position in Damji Hirji's case (AIR 1939 Bom 461) it will be required to observe that the facts in the said case are totally different formthe said case case are totally different form the facts before us which facts are very similar If not identical with the facts in Canara Industrial and Banking sysndicate's case (AIR 1942 Bom 15) and it is the latter decision which would seem to govern and would seem to us to be thepreper decision tofollow and apply to thefacts which we are considering.
11. We are unable to accecpt the contention of Mr. Chagla that it was unnecessary for the court to consider the drawing of the instrument in tnhe instant case and the the court should only restrict the consideration for the purposes of the case to the accetance. The general priniciples regarting completion or ocnculsion of the contract at the place where the acceptance is made would seem to have to application and would also seem to us to be irrelevant ot the point under consideration.
12. It may be mentioned in conclusion that the affifavit made insupport of the Notice of Motion of Defendants have also submitted that they were non-resident foreigners andthey would be pput togreat hardship iniconvenience and expencse if made todefend this suit inBombay. However no particular or details about this allegation of hardship or onconvenience have been given in the affidavit of the Director and secretary of the defendants. It is also stated in the said affidavit that all thematerial evidence in suit is available in London. This is a suit on a negotiable instrument and ordinarily the presumptiions in the said Act would govern the controversy unless rebutte, We fail, there fore,m to see without thenecessay particulars which again are absent in the said affidabit what this meteial evidence can be which is whooly according to the defendants available in London. We are not at allimpressed with the pleas taken in para 10 of thesiad affidavit. The further vis-a-vis the defendants would have to be governed by English law does not appear to be relevant to theplea of jurisdiction or rather want of jurisdiction. Without expressing any firm or final opinion or whether there is nay substance in the plea we can express anopinion that the question of the correct law to be applied is totally different form the point whether thiscourt would no would no have ljuriddiction and athe answert to the latter point must depend only ona consideration of the plea whether a meterial part of the cause of action would be said tohave arisen within the l,imits of the Original Jurisdiction. It our opinion the point at issue does not callnot further elaboration. Counsel inform us that apart form the above two decisions of which one was directly on thepont viz., Canara Industialand Banking Syndicate case (AIR 1942 Bom 15) they were not able tofind any other authorities having a bearing on the question.
13. In conclusionwe, ,may finally indicate one more point which was urged by Mr. Cooper appering on behalf of the plaintiffs which was insupport of the contention that endorsement and payment of consideration of the bill infavour of the plainitff would also be required to be treatedas material part of the cause of action. Unidoubtedly by reason of the presumption of contained in the Negotiable Instruments Act, the plaintiff as Holders in due course would be entitled to the benefit of te presumption of consideration but this is a rebuttble presumption and the court can if so advised, call upon the plaintiff to prove consideration. That the Bill has been dicounted with the plaintiff in Bombay for consideration may be required tobe proved at the trial and must also, therefore, be regarded to a certain extent as material part of the cause of action. It that be so the plaintiffs were entitled to seek leave under Cl. XII of the Letters Patent andthere was no error on the part of the Court in granting such leave.The leave granted accordingly need not be revoked. The suit therefore, will have now to go on in the regular manner.
14. In the result, the Notice of Motion will stand dismissed but the parties are directed tobear their respective costs thereof.
15. At that stage, Mr. Desai stetes that in view of the fact that the moneys have been deposited and that there is an attachment before judgment made by the plaintiffs against the moneys deposited in court, the plaintiffs are agreeable that the suit be trasferred to the list of Long Causes and that the defendants should have unconditional leave to defend thesuit. Accordingly on the plaintiffs statement and application as aforesaid we direct that te suit be transferred toth List of Long Causes. This will obviate the plaintiffs taking out Summons for Judgment, the defendants putting in their affidavit inreply indicating their defence If any, and the order being thereafter passed.We direct that the defendant will file their writtenstatement within ................ Today UsualOrder for discovery and inspection thereafter.
16. Order accordingly.