Dena Bank Ltd. vs Ironside Ltd.

Desai, J.—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 similar question arising in summary Suit No. 534 or 1966. We are informed that the position in the two suits is identical. This Notice of motion was made returnable 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 to warrant a decision by the Division Bench. The Motion had subsequently been assigned to this Bench by the hon''ble the Acting Chief Justice.

By the notion the defendant seek to set aside and revoke the leave granted to the plaintiffs under Cl. XII of the letter Patent. This leave was granted by an order made on 123 th Aug., 1966 In order to appreciate the rival contentions, a few facts pertaining to the nature of the claim in the suit may be stated.

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 the agreed position that the defendants do not 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 jurisdiction .

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 induce course for the value of the road Bill. According to the plaint ,further, the Bill was thereafter submitted to the defendants which event took place admittedly in England and the said bill was accepted in England by the defendants. This acceptance took place on 9the March, 1964 as the copy of the original document which is 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 was not paid. This was also admittedly in England. There have been certain part payments made letter on for which credit had been given followed by correspondence in which the defendants made certain proposals to which the defendants made certain proposed to clear off their liability. However, a balance of $ 98, 967 12.07 equivalent to Rs. 20,72,624.67 remained outstanding which amount according to the plaintiffs is due and payable by the defendants to the plaintiffs as acceptors.

We now come to Para 4 of the Plaint which is the jurisdiction clause. According to the plaintiffs, the said Bill of Exchange was drawn in Bombay. The same was discounted with the plaintiffs in Bombay .Accordingly the plaintiffs in submit that a part of the cause of action had a risen in Bombay. The plaintiff had separately 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.

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 facts 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 whether such leave is liability to be revoked and is would be liable to be revoked if no part of the cause of action could be said to have arisen within the limits of the Ordinary Jurisdiction of this court?

Mr. Chagla had fairly pointed out that a single Judge of this court (Harilaa Kania J.,) had in Canera Industiral and Banking Syndicate Co. V. Narayan Venkatesh where the facts were similar held that a part of the cause of action would arise within the limits of the Original Jurisdiction to try the suit. The aforesaid decision is reported in The Canara Industrial and Banking Syndicate Co. Ltd. Vs. Narayan Venkatesh Shenoy, in the aforesaid 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 dishonored 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 on appearance but defendant No. 2 defended the suit and contended that the court had no jurisdiction to try the suit .this was supported on the basis that his liability had arisen only on acceptances of the Bills at Calicut and that as against him to part of the cause of action had 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 payees in Bombay and that as that material fact took place in Bombay part of the cause of action must be held to have 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.

Mr. Cooper appearing on behalf of the plaintiff drew out attention to S. 33 of the Negotiable Instruments Act and suggested to us that the said statutory 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 defendants'' had to he named as the drawees. Since only the named drawees could bind themselves by an acceptance .Thus, according to counsel''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 inconsequential but had to be considered to be material part of the cause as action which would justify the seeking and the granting of the leave unde Cl. XII of the Letters Patent.

Mr. Chagla submitted that thet later decision of Kania J. In The Canara Industrial and Banking Syndicate Co. Ltd. Vs. Narayan Venkatesh Shenoy, was not in accordance with his earlier decision in Damji Hirji Vs. Mahomedalli Essabhoy, . 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 in Bombay in the name of the firm. For the purpose of carrying on its business the firm 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 the firm 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 in Bombay .Upon this fats it was held that the whole cause of action had arisen in Bombay within the jurisdiction 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 between the parties. The mere signing of a negotiable instrument wa mere preparation according to the court and not an offer or part of the contractual relationship.

a number of English and Indian decisions have been cited in support of the decision in Damji Hirji''s case. The decisions in Chapman C. Cottrell (1965) 34 LJ Exch 186 and Winyer V. Round (1863) 1 Mad HCR 202 would seem to rest one point above noted ,However it is interesting to refer to the case of Roghoonath Misser v. Gobindnarain. ilr(1895) 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 on business at Mirzapur and Calcutta was endorsed at Calcutta by the payee to a firm at Calcutta and dishonoured by the drawers ''firm at Bombay After obtaining leave under Cl. XII of the Letters Patent suit was brought in the Calcutta High Court by the endorsee to recover the amount of te hundi. It seems to have been held by the Calcutta high court that the siad Court had jurisdiction because the end horsemint in favour of the plaintiff took place in Calcutta 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 material part of the cause of action would seem to arise within the limits of Original Jurisdiction of this Court on a two fold consideration, First because the Bill of Exchange was drawn by Steel (1957) Private Lte, in Bombay and secondly by the fact that it was endorsed infavour to the plaintiffs in Bombay. On a consideration of the factual position in Damji Hirji Vs. Mahomedalli Essabhoy, it will be required to observe that the facts in the said case are totally different form the said case case are totally different form the facts before us which facts are very similar If not identical with the facts in The Canara Industrial and Banking Syndicate Co. Ltd. Vs. Narayan Venkatesh Shenoy, and it is the latter decision which would seem to govern and would seem to us to be the proper decision to follow and apply to the facts which we are considering.

We are unable to accept the contention of Mr. Chagla that it was unnecessary for the court to consider the drawing of the instrument in the instant case and the the court should only restrict the consideration for the purposes of the case to the acceptance .The general principles regarding completion or conclusion 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.

It may be mentioned in conclusion that the affidavit made in support of the Notice of Motion of Defendants have also submitted that they were non-resident foreigners and they would be put to great hardship inconvenience and expense if made to defend this suit in Bombay .However no particular or details about this allegation of hardship or on convenience have been given in the affidavit of the Director and secretary of the defendants. It is also stated in the said affidavit that all the material evidence in suit is available in London. This is a suit on a negotiable instrument and ordinarily the presumptions in the said Act would govern the controversy unless rebutte, We fail, there forum to see without the necessay particulars which again are absent in the said affidavit what this material evidence can be which is wholly according to the defendants available in London. We are not at all impressed with the pleas taken in para 10 of the said affidavit. The further vis-a-vis the defendants would have to be governed by English law does not appear to be relevant to the plea 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 an opinion that the question of the correct law to be applied is totally different form the point whether this court would no would no have jurisdiction and a the answer to the latter point must depend only on consideration of the plea whether a material part of the cause of action would be said to have arisen within the l,imits of the Original Jurisdiction. It our opinion the point at issue does not call not further elaboration. Counsel inform us that apart form the above two decisions of which one was directly on the Pont viz., The Canara Industrial and Banking Syndicate Co. Ltd. Vs. Narayan Venkatesh Shenoy, they were not able to find any other authorities having a bearing on the question.

In conclusion we ,,may finally indicate one more point which was urged by Mr. Cooper appearing on behalf of the plaintiffs which was in support of the contention that endorsement and payment of consideration of the bill infavour of the plaintiff would also be required to be treated as material part of the cause of action. Undoubtedly 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 rebuttable presumption and the court can if so advised, call upon the plaintiff to prove consideration. That the Bill has been discounted with the plaintiff in Bombay for consideration may be required to be 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 and there 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.

In the result, the Notice of Motion will stand dismissed but the parties are directed to bear their respective costs thereof.

At that stage, Mr. Desai states 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 transferred to the list of Long Causes and that the defendants should have unconditional leave to defend the suit .Accordingly on the plaintiffs statement and application as aforesaid we direct that te suit be transferred to List of Long Causes. This will obviate the plaintiffs taking out Summons for Judgment, the defendants putting in their affidavit in reply indicating their defence If any, and the order being thereafter passed. We direct that the defendant will file their written statement within ................ Today Usual Order for discovery and inspection thereafter.

Order accordingly.