Abdul Gafoor vs Sensmal and others

Dave, J.—The point which has been referred to this Court is "whether an assignment would give cause of action to the Court where the assignment was made, though otherwise that Court would have no jurisdiction to entertain the suit with respect to the debt which was assigned."

It would be proper to set out briefly the facts which have given rise to the question before us. A money suit was filed by the plaintiffs Sensmal Suganlal who are non-petitioners Nos. 1 and 2 in this revision application in the Court of Munsif, Merta. Their case was that the defendant Abdul Gafoor who is petitioner in this Court owed a debt to defendants Nos. 2 and 3 who are non-petitioners Nos. 3 and 4 in this Court and that he executed a document in their favour on Falgun Sudi 5, Smt. 2005, whereby he promised to pay off the debt in two instalments. According to the plaintiffs, this debt was assigned by defendants Nos. 2 and 3 to them in consideration of a cash amount which they had obtained from them.

The defendant-petitioner traversed the claim on several grounds. One of his objections was that he ant defendants Nos. 2 and 3 were all residents of Khejarla, that transactions between them had taken at Khejarla and therefore the Munsif Merta had no territorial jurisdiction to try the case. The plaintiffs'' assertion was that the debt was assigned to them by defendants Nos. 2 and 3 at Indavad and therefore the Munsif Merta had certainly jurisdiction to entertain the suit. It is not in dispute that Khejarla is beyond the jurisdiction of the Munsif Merta while Indavad is within the jurisdiction of that Court.

The trial Court framed issue No. 5 regarding its jurisdiction and decided it in favour of the plaintiffs. The defendant thereupon presented a revision application to this Court. The matter came for hearing before a Single Bench. Since it was thought that the point involved in revision was one of importance and there was difference of opinion amongst some High Courts it was referred to a Division Bench. The same point was once considered in the case of - ''Misrimal v. Moda'', 1951 RLW 433 (A), by a Division Bench of this Court, but it was left undecided at that time.

It has been urged by learned counsel for the petitioner that his client and non-petitioners Nos. 3 and 4 are all residents of Khejarla, that the transactions between them took place at Khejarla, that the debt, if any, was also payable at that place and therefore if non-petitioners Nos. 3 and 4 had brought a suit against the petitioner they could not file it in the court of Munsif, Merta. It is urged that by assigning the debt to the non-petitioners Nos. 1 and 2, the non-petitioners Nos. 3 and 4 could not create a new forum for this case. According to learned counsel, the cause of action did not arise within the jurisdiction of Munsif, Merta and therefore he was not competent to entertain or decide this case. In support of his contention he has referred to the case of - ''Jupiter General Insurance Co. Ltd. v. Abdul Aziz'', AIR 1924 Rang 2 (B).

Learned counsel for the non-petitioners on the other hand contends that since the assignment of the debt took place at Indavad within the jurisdiction of the Munsif, Merta, a part of the cause of action arose within the jurisdiction of that court and therefore under S. 20, Civil P.C. the trial court''s decision about its jurisdiction is quite correct. The relevant portion of S. 20, Civil P.C. on which both the parties rely runs as follows:

S. 20: Subject to the limitations aforesaid every suit shall be instituted in a Court within the local limits of whose jurisdiction - (c) the cause of action, wholly or in part, arises.

It is abundantly clear from the said provisions that if the cause of action arises either wholly or in part within the territorial jurisdiction of a certain court that court would be competent, to try a case. The real question for decision, therefore, is whether assignment of a debt gives rise to a cause of action in part. The answer to this question would defend upon the meaning which may be given to the term ''cause of action''. This term has not been defined in the CPC itself. It has however been a subject of interpretation in numerous cases. In some cases it has been used in a restricted sense and in others in a wider sense. In Halsbury''s Laws of England, Third Edition, Volume 1, page 6, this expression has been explained as follows:

The popular meaning of the expression ''cause of action'' is that particular act on the part of the defendant which gives the plaintiff his cause of complaint. There may, however, be more than one good and effective cause of action arising out of the same transaction. Strictly speaking "every fact which is material to be proved to entitle the plaintiff to succeed, every fact which the defendant would have a right to traverse", forms an essential part of ''the cause of action'' which "accrues" upon the happening of the latest of such facts.

The question similar to the one before us had arisen in the case of - ''Read v. Brown'', (1839) 22 QBD 128 (C). In that case the plaintiff had brought an action in the Mayor''s Court as assignee of a debt alleged to be due in respect of the price of goods sold and delivered to the defendant by the assignor. The sale and delivery had taken place outside the city of London, but the debt was assigned in writing to the plaintiff within the city of London. It was held that the assignment of the debt was part of the cause of action and that the cause of action having arisen in part within the city of London the Mayor''s Court had jurisdiction over the case. The question posed and the observation made by Lord Esher, M.R. in that case may be quoted below to show the line of reasoning behind the decision. It was observed as follows:

What is the real meaning of the phrase "a cause of action arising in the City?" It has been defined in - ''Cooke v. Gill'', (1873) 8 CP 107 (D) to be this: every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. It does not comprise every piece of evidence which is necessary to prove each fact but every fact which is necessary to be proved. It has been suggested today in argument that this definition is too broad, but I cannot assent to this, and I think that the definition is right.

If that is so, the question arises whether the plaintiff, in order to be entitled to succeed in his action, would not be bound to prove the assignment to him of the debt; not merely whether he would be bound to prove it in an action in the Mayor''s Court, but whether he would be bound to prove it in any court in which he might sue, and whether an allegation of the assignment might not have been traversed by the defendant. I cannot bring myself to entertain a doubt that the assignment is a fact which the defendant might traverse; and if that be so, the plaintiff would be bound to prove it.

It has been urged by the petitioner''s learned counsel that the above noted case ''Read v. Brown (C)'' was taken into consideration by the learned Judges of the Rangoon High Court in the case of - Jupiter General Insurance Co. Ltd. v. Abdul Aziz (B),'' but it was not followed. It is true that the meaning given to the expression ''cause of action'' in ''Read v. Brown (C)'' was not followed because it was considered to be contrary to the intention of the framers of the Code of Civil Procedure. It was pointed out by the learned Judges in that case that the result of the adoption of that ruling in India would be that if A, a merchant in Rangoon, owed B, another merchant in Rangoon, a debt contracted in Rangoon and payable in Rangoon and if B assigned that debt to C in Karachi, C could sue A in Karachi and that such a result was in the opinion of the learned Judges not contemplated by the Code. It cannot be denied that if the view expressed in ''Read v. Brown (C)'' is followed some defendants in certain cases are likely to be put to inconvenience, but in our opinion, the consideration of convenience or inconvenience should not come in the way of giving correct interpretation to the provisions of law. In the first place the learned Judges of the Rangoon High Court had a different type of case before them. The question before that Court was whether a suit against the Insurance Company could be brought at Pegu where the property insured was situated though the contract of insurance was entered into at Rangoon and the payment under the contract was also to be made at Rangoon.

There was no question of assignment of a debt before that Court and therefore it did not discuss further whether assignment of a debt was or was not a part of the pause of action. Moreover the Court went into the previous history of legislation and held that although the Explanation III to S. 17 of the Code of 1882 was omitted in the CPC of 1908, the present section should be read as if that Explanation was still there. In our opinion, the section should be read as it stands at present and not as what according to our wishes, it should have been.

In the case of - Harnathrai Binjraj Vs. Churamoni Shah and Others, it was observed as follows:

It might have been more satisfactory if the rule were otherwise i.e. that an assignee in taking an assignment of a debt should take such assignment with only such right of suing as the assignor had and could sue where the assignor could sue and nowhere else. I do see difficulties in the present system under which an assignor can create Jurisdiction in any place where the CPC applies but I do not think it would be right for me to attempt to change it.

This, in our opinion, if we may say so with respect, is a more correct approach in interpreting the law. In spite of visualising the inconvenience to the defendants it was held in the said case that in a suit by an assignee the assignment of a debt is a part of the cause of action.

In another case - ''Madanlal Jalan v. Madanlal'', AIR 1949 Cal 495 (F) a suit was filed toy an assignee of a claim founded on account stated in writing. Leave was granted to the plaintiff under cl. 12 of the Letters Patent to institute the suit in the High Court of Calcutta. The defendants presented an application for revocation of that rule. It was urged before that Court that no cause of action had arisen within the jurisdiction of that Court on account of the assignment but the view expressed in ''Cooke v. Gill (D)'' and ''Read v. Brown (C)'' was followed. It was held that the cause of action for the purpose of the jurisdiction of the court was an expression of wider import and that cause of action had arisen at Calcutta on account of assignment. The judgment refers to a number of previous decisions of that High Court and other High Courts in support of the view taken therein. The applicant''s learned advocate has not referred to any later case of that High Court expressing a contrary opinion.

The Madras High Court has also taken a similar view in the matter. In the case of - ''M. Magamma v. M. Sathiraju'', AIR 1917 Mad 221 (G) it was held by a Division Bench that an assignment of a promissory note by a payee is a part of the cause of action within the meaning of S. 20(c), C.P.C. and the assignee can sue on it in the court having jurisdiction where the assignment took place. In that case it was argued from the opposite side that the term ''cause of action'' should be taken to mean the cause of action on the document sued upon irrespective of the rights of the plaintiff under it, or in other words the cause of action as it existed when the right to sue on the note arose for the first time and in that case the plaintiff''s assignment will not be a part of it. This argument was repelled by the learned Judges. It was observed by Krishnan J. that

this suggestion cannot be accepted. The term has to be read with reference to the suit instituted by the plaintiff, dealt with under S. 20; it must then mean plaintiff''s cause of action.

In the case of - AIR 1933 940 (Lahore) a promissory note which was payable in the Montgomery District was assigned to the plaintiff in the Multan District. When the suit was instituted in Multan District an objection was raised by the defendant on the ground that the promissory note was payable in Montgomery District. It was held that the assignment having taken place in Multan District the cause of action arose in part in that District and the suit was therefore triable there.

In the case of - ''Seth Wadhumal v. Noor Ahmad'', AIR 1933 Sind 179 (I) also it was held that a voluntary assignment" affords a valid cause of action to the assignee to sue his assignor and the original debtor or either of them in the court within whose jurisdiction the assignment is made.

The same view seems to prevail in Nagpur High Court. In the case of - ''Gopal Ghuriamal v. T.G.S. Narayanan'', AIR 1953 Nag 192 (J) a promissory note was assigned to the plaintiff and it was held that where the right of the plaintiff depend upon the assignment in his favour, the assignment would constitute part of the cause of action and the Court within whose jurisdiction the assignment took place would have jurisdiction to entertain the suit.

Thus there is a string of authorities of various High Courts in India as mentioned above in favour of the view that an assignment of a debt is itself a part of the cause of action and therefore a suit can be brought in the court within whose jurisdiction the assignment has been made. We are also of opinion that the expression ''cause of action'' means all that bundle of facts which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. In the case of assignment of a debt the plaintiff will be bound to prove that the debt was assigned in his favour by the assignor and therefore the assignment is a part of the cause of action. If such assignment is made within the jurisdiction of a court that court would be competent to entertain and decide the suit.

The contrary opinion expressed in the case of AIR 1924 Rang 2 (B) gives a very restricted meaning to the term "cause of action". This term has been borrowed from the English Law. If the legislature in India wanted to give it a different meaning, it could define the term accordingly. Since it has not been defined in a different sense, it would be more proper to give it the same meaning in which it has been understood and. interpreted by the learned Judges in England. The majority of Judges in India have also interpreted the term in the same sense and, therefore, we do not see good reasons to depart from that view. In the first place, we do not think that an assignment of debt would be made by a creditor and accepted by a transferee simply to harass a debtor. Such a case, if any, would be very rare. Moreover, even if there be some such case, it is for the legislature to think about the remedy.

Our answer to the reference, therefore, is that in a suit brought by an assignee of a debt, the cause of action partly arises because of the assignment of debt and therefore the Court within whose territorial jurisdiction the assignment is made would be competent to entertain and decide the suit subject of course to the pecuniary and other limitations.