Dessee Veerabhadrayya Venkata Subbayya vs Biswanath Jagadish Prasad

Jaganmohan Reddy, J.—This Civil Miscellaneous Appeal is against the order of the First Additional Subordinate Judge, Vijayawada, directing the return of the plaint under Order VII, Rule 10 for presentation to the proper Court on the ground that that Court has no jurisdiction to entertain it. The defendant has also filed a Memorandum of Cross-objections against the direction to pay half costs of the plaintiff.

The plaintiff, a registered firm carrying on business at Vijayawada, placed an order on the defendant carrying on business at Ganganagar, for the supply of 600 bags of Bengal gram and 200 bags of Bengal Gram dal at Rs. 10/- and Rs. 12/- per maund respectively. The plaintiff''s agent one Venkata Rangaiah, had gone to Ganganagar to acquaint himself with the business there, as one of its previous agents had taken a job elsewhere, and at that time Rs. 500/- were paid to the defendant at Ganganagar. Subsequently, when a Hundi for Rs. 5000/- was drawn on the plaintiff payable to the defendant through the Bank of Bikaner, the plaintiff honoured the same and paid the amount. Later a sum of Rs. 10, 000/-was sent to the defendant by the plaintiff through a telegraphic money Order. In this wav the plaintiff in all paid Rs. 15,500/- to the defendant, but the defendant has falsely set up a payment of Rs. 10,000/- to Rangaiah out of the amount of Rs. 15,500/-. It is the plaintiff''s case that Rangaiah had no authority to receive payment, nor is the plaintiff bound by any such payment to Rangaiah.

The defendant said that Rangaiah came to Ganganagar representing himself as the partner of the plaintiff and accompanied by one Veeraraghavaiah. They both agreed with the defendant''s firm that the plaintiff would purchase goods from Ganganagar market and other places under the agency of the defendant''s firm, that the defendant''s firm would charge commission at 0-12-0 per cent and interest at the rate of 9 per cent per annum; that the agent shall score the goods on behalf of the plaintiff''s firm that the agent would have a lien over the goods till full price was paid, and that all the expenses for storing etc. should be borne by the plaintiff''s firm. In the month or April and May 1951, Rangaiah purchased from the market through the agency of the defendant 740 bags of gram dall at Rs. 15/- per maund and 480 bags of gram from Ganganagar market and another 480 bags of gram from Sadulshahar Mandy at Rs. 11-12-0 per maund and at that time Rangaiah paid Rs. 500/- as cash deposit and Rs. 5000/- by means of a Hundi drawn by Veeraraghavayya on the plaintiff''s firm. On 3-5-1951 Rangaiah borrowed Rs. 10,000/- from the defendant which he required for some other business and signed the defendant''s account-book in token of the receipt of that amount. As there was a fall in the price of gram and gram dall, the defendant''s firm drew a Hundi for Rs. 5000/- on the plaintiff''s firm but it was dishonoured by the plaintiff''s firm, and they started to make several allegations to avoid the consequences of the loss. The defendant''s case was that the plaintiffs firm became liable to pay Rs. 12,858-1-0 apart from interest.

Several issues were framed as to what are the true terms of the contract between the parties, whether the defendant committed breach of the contract, to what damages, if any, is plaintiff entitled, is the alleged payment of Rs. 10,000/- by the defendant to Rangaiah true and binding on the plaintiff, is the plaintiff entitled for the suit money on the ground of fraud alleged in para 4 of the rejoinder and whether the Court has jurisdiction to try the suit.

On the issues of what were the terms of the contract between the parties, the Subordinate Judge held that the understanding was for the purchase of such quantity of gram and gram dall as was required by the plaintiff; that there was no agreement with regard to any fixed price, but that the price was to be the prevailing market rate at the time of the purchase, that the amount of Rs. 15,500/- was paid as advance and not towards price to be discharged ultimately in the patties for goods purchased by the defendant for the plaintiff; that it would appear probable and true that the understanding between the parties was that the defendant should provide the wagons by indenting for the same and that the place of delivery was Ganganagar, though the defendant in order to keep a lien on them, consigned the goods in their name sending the railway receipt with a Hundi. The finding of the learned Subordinate Judge on this last aspect is put in this way: that as a licence was required for export at Ganganagar for this commodity, which licence the defendant had but the plaintiff had not, there would be risk in the plaintiff paying the amount before the receipt of the goods and the defendant would loose all control even before payment. Therefore the parties hit upon a course to satisfy all the exigencies of the situation. As such, the Subordinate Judge concluded:

that could be well achieved by the plaintiff taking delivery at Ganganagar itself through its representative and at the same time to see that the goods were sent from that place to this place in the name of the defendant, sending the railway receipt with a hundi. It is that that appears to have been hit, upon by these parties though neither is interested to state wholly now. Therefore, on the above evidence, I am inclined to think that in fact the delivery of goods was agreed to be at Ganganagar to be transported in the defendant''s name.

In so far as the factum of payment is concerned, he held that it can be taken from the evidence that the payments were agreed to be made, excluding the advance payments made towards the price by the plaintiff on receipt of the railway receipt through a bank to the defendant at plaintiff''s cost.

We are not here concerned with the findings on the several issues, except that which deals with the jurisdiction of the Court to entertain the suit. On that issue (which is No. 4) the finding of the learned Subordinate Judge is that the place where the contract was concluded was Gangsnagar and that the payment of Rs. 500/- was made at Gangsnagar and the further payments of Rs. 5000/- under a hundi and Rs. 10,000/- sent by telegraphic transfer were also deemed to have been made at Ganganagar because the plaintiff bore the bank charges in regard to these payments relying on a Punjab case of Firm Jagannath, Kuthiala Arhti v. Firm Kushiram Rehari Lal, AIR 1951 P&H 378. This view, according to him, was also supported by the case of G. Venkatesha Bhat and Others Vs. Kamlapat Motilal and Others, . In these circumstances he held that the cause of action arose at Ganganagar and therefore the Court had no jurisdiction to entertain the suit.

The place where a suit should be instituted is governed by Sec. 20, C. P. C. which is as follows:

Subject to the limitation aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction:

a. the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides , or carries on business, or personally works for gain; or

b. any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or

c. the cause of action, wholly or in part, arises.

The explanations to the section are omitted as they are not relevant on the facts of the case. The facts of the case confine the question to clause (c) as to whether the cause of action wholly or in part arises within the jurisdiction of Vijayawada Court. By "cause of action" is meant, the whole bundle of material facts, which it is necessary for the plaintiff to prove in order to entitle him to succeed in the suit. Clause (c) of Sec. 20, which has been substituted for Explanation III under the Code of 1882 confers jurisdiction upon a Court where the cause of action wholly or partly arises. The old Explanation III indicated the place where the cause of action arose in respect of contracts, viz., the place where the contract was made, the place where the contract was to be performed or performance of the contract, any money to which the suit relates was expressly or impliedly payable. But this explanation has been held not to have materially altered the law and consequently in the Code of 1908 that explanation was dropped and clause (c) was substituted, so that now even where the cause of action partly arises within the jurisdiction of one Court, that Court would have jurisdiction such for instance, the place where the money is paid or the place where the contract is to be performed.

The learned Subordinate Judge while holding that the goods were to be delivered at Ganganagar, nonetheless advanced a theory, which is not the case of either party, in that the defendant was to keep control of the goods until they reached Vijayawada and for that reason the railway receipt in which the defendant was both the consignor and consignee accompanied by the hundi, was sent to a Bank. In our view, this inference is wholly unwarranted and the two conclusions drawn by him are mutually exclusive because the defendant cannot deliver the goods at ''Ganganagar and the same time consign the goods in his name. Further, the Subordinate Judge disposes of the very material question that the defendant disposed of the goods at Ganganagar and that, therefore, there was no delivery to the plaintiff at Ganganagar with the observation "whether this claim is legal or not is a different question.'''' The only explanation that is possible in the manner in which the goods were sent is that they were to be delivered by the defendant at Vijayawada on payment of money by the plaintiff at Vijayawada, so that not only is the place of delivery of goods but the place of payment of money also is Vijayawada.

In so far as the payment of previous advances were concerned, except for Rs. 500/- both Rs. 5000/- and Rs. 10,000/- were paid at Vijayawada by the plaintiff-the first amount by honouring a hundi drawn on him and payable at Vijayawada through the defendant''s bankers, the Bank of Bikaner. In other words, the Bank of Bikaner were the agents of the defendant which received payment at Vijayawada through its agent. Learned advocate for the respondent Shri Venkatarama Sastry argued that the hundi was drawn by the plaintiff''s clerk. Whoever may be the person who drew the hundi, it was payable to the defendant and the bank through which it was negotiated was acting as the banker of the defendant. It is further argued that because the plaintiff paid the bank charges also, relying on the decision of Kapur, J. in AIR 1951 P&H 378 and of G. Venkatesha Bhat and Others Vs. Kamlapat Motilal and Others, to which a reference has already been made the Subordinate Judge held that the money must be deemed to have been paid at Ganganagar.

In the first case, wheat was to be sent to the plaintiff through railway and the railway receipt was to be in the name of the plaintiff consignee and the freight was to be paid by the plaintiff. In such circumstances unless the money paid to the defendant, he could not send the goods to the plaintiff as consignee. Once the railway receipt is issued in the name of the plaintiff as the consignee the property in the goods passes to him at the Place where the defendant hands over the goods to the railway, so that it is only against the payment of the money that the goods are consigned. In the circumstances, when the money was sent by the plaintiff to the defendant (the net amount of the goods after the deduction of bank charges) it was paid for at the place. In that case it was held that the relationship of the parties was that of principal and commission agents. No part of the cause of action arose at S as the wheat was to be supplied and the price was to be paid at L and the Court at S had no jurisdiction to entertain the suit.

The Full Bench case of the Madras High Court in K.E.P.V. Venkatachalam Pillai Vs. Rajaballi M. Sajun, , was sought to be distinguished by Kapur, J., on the ground that the plaintiff could not get possession of the goods without paying for them at Tuticorin, and also because the goods were to be paid for by hundis and against bills of lading in favour of the defendant. Alter stating this, Kapur, J., observed at p. 381:

........ In the case now before me, the goods were to be paid for at Lyallpur. Part of the Price had as a matter of fact been paid there. The balance instead of being paid in Lyallpur as was demanded by the defendants was to be paid by the plaintiffs to a bank for its being paid to the defendants at Lyallpur. This is clear from the fact that they were to pay the commission.''''

The real question, therefore, is where were the goods to be paid for and delivered. In the Full Bench case referred to above, the plaintiff who was a resident of Tuticorin, sued the defendant who carried on business at Rangoon, to recover damages on account of shortfall and inferiority of quality of certain goods sold by the latter to him. It appeared that the goods purchased by the plaintiff were to be paid for by hundis and against bills of lading in favour of the defendant at Tuticorin by honouring the bills at the particular place. In this case it was held that part of the cause of action arose at Tuticorin and the Court of that place had jurisdiction to try the suit and the fact that the defendant obtained payment by endorsement of the hundis at Rangoon would not deprive the Tuticorin Court of its jurisdiction to try the suit. Beasley, C. J., observed at p. 506 (of Mad LJ) : (at p. 664 of AIR):

It is a common thing for vendors to discount the bills in the place where they carry on business. Nevertheless the place of payment is the place where the bills are presented and where they are either met or dishonoured.

This Full Bench judgment is binding on us and the principle enunciated therein is also in consonance with the commercial practice. The case in (S) G. Venkatesha Bhat and Others Vs. Kamlapat Motilal and Others, does not go counter to the proposition enunciated by the Full Bench. The learned Judge there held that the performance of the contract is part of the cause of action and a suit in respect of breach can always be filed at the place where the contract should have been performed or its performance completed and that in cases of contract of sale of goods the place where the goods have to be delivered is the place of performance and the Court of that place will have jurisdiction to entertain the suit in respect of non-delivery in accordance with the contract.

A recent Bench of the Madras High Court in Messrs. General Papers Ltd. v. Pakkir Mohideen and Bros., 1958 Mad LJ 294 : (AIR 1958 Mad 482), has also adopted a similar principle. There the contract to supply the goods was entered into at Madras and the goods were to be despatched by railway to the Sattur Railway station and the entire Price and the charges were to be paid by the buyers at Tenkasi to the Bank to whom the railway receipt was sent by the sellers consigning the goods to self and not to the buyers. The goods were destroyed by fire during transit and it was held that by consigning the goods to self and sending the railway receipt to the bank which must in the circumstances be held to be the agent of the sellers directing the bank to deliver the railway receipt duly endorsed to the buyers after the buyers had paid the money, the sellers had reserved the right of disposal over the goods and they were still the owners of the goods. It was further held that though the contract was made at Madras and the defendants were not living within the jurisdiction of the Court of the Subordinate Judge of Tirunelveli and the goods were to be delivered at a place outside the jurisdiction of that Court, the Subordinate Judge''s Court had still jurisdiction to try the suit as part of the cause of action viz., the place where the money under the contract was payable, was within its jurisdiction. Unless there are any other circumstances to show that the property in the goods passed to the buyers immediately the goods were placed on the rail, the fact that the goods were consigned to self to be delivered to the buyers only after they have paid their price and bank commission and got the railway receipt endorsed in their favour, would show that the goods were to be delivered to the buyers at that place and that the property in the goods would pass to them at that place. As part of the cause of action would arise at that place where the payment is made, the Court in that place would have jurisdiction. Panchapakesa Ayyar, J., at p. 299 (of Mad LJ) : (at p. 486 of AIR) observed that

in the present case the appellants, the sellers, by their act, clearly intend that the property should pass to the plaintiffs-buyers only after they had paid the price, the bank''s commission and the overdue interest, if any, at Tenkasi, and got the railway receipt taken in the appellant''s name, endorsed by the bank, as the appellants'' agent, in their favour.''''

Their Lordships of the Supreme Court in The Commissioner of Income Tax, Madhya Pradesh and Bhopal, Nagpur Vs. Bhopal Textiles Ltd., Bhopal, observed that a railway receipt is a document of title to the goods and the railway receipt was still the property of the seller till payment for it was received and it was handed over. The fact of payment to the bank as agent of the sellers determines the place where the money can be said to be received by the sellers. In that case, where the seller company who was outside the taxable territories, handed over the railway receipt to the bank and asked the bank not to hand over the railway receipts to the buyers unless payment Was received, it was held sufficient to make the bank an agent of the company. It was held that the money was received by the branches of the bank at Agra, Allahabad and Delhi and the income, profits or gains must be deemed to have been received in the taxable territories by or on behalf of the seller within the meaning of section 4 of the Indian income tax Act.

The cases cited By Mr. Venkatarama Sastry, viz. Koka Audinarayana Rao Naidu Vs. Bhavaraju Lakshminarayana Rao, M. Ramalinga Iyer Vs. T.K. Jayalakshmi and Another, AIR 1928 297 (Lahore) and Sunder Lal and Another Vs. Jai Narain and Others, have no bearing on the subject, because these were cases involving the taking of account between the agent and the principal and a suit for account against the agent must be at the place where the agent resides. Varadachariar, J. in the first of the cases held that:

it is only as one of the legal incidents arising out of the relationship of principal and agent that Sec. 213 provides that an agent is bound to render accounts to the principal. This cannot be read as if there was an express contract between the parties to render accounts so as to support the inference that the intention must have been to render the account at the principal''s place. It is also noteworthy that the Section imposes the duty ''on demand'' by the principal. If anything, these words suggest that the demand should be made on the agent at his place of business". Consequently where the principal sues the agent for accounts, it cannot be said that the cause of action arises where the principal resides. Incidently, Varadachariar, J. rejected the contention that the principle that the debtor is bound to seek out his creditor and pay his debt is inapplicable in this country, even for the purposes of determining the local jurisdiction of the Courts.

The second case M. Ramalinga Iyer Vs. T.K. Jayalakshmi and Another, decided by a Bench consisting of Leach, C. J. and Somayya J. does not assist the respondent, in that it was held that in the first place the terms of the contract should be looked at and if they do not help, the Court must have regard to the necessities of the case in deciding whether the rule of the debtor seeking out the creditor should he applied or not. The decision in AIR 1928 297 (Lahore) is also a suit against a Commission agent where the agreement was by correspondence and it was held that the suit must he instituted at the place where the commission agent resides. The case in Sunder Lal and Another Vs. Jai Narain and Others, is also a case where the suit was held to be a suit in substance against a commission agent for accounts for the goods purchased for the plaintiff and which had not been disposed of according to the plaintiff''s directions. Such a suit could not therefore, be maintained in a Court in whose jurisdiction the plaintiff resides, but must be at the place where the agent resides. All these cases turn upon the principle that the cause of action for accounts against a commission agent arises where the agent resides and not at the place where the principal resides. This principle has no application to the present case where the cause of action arose at the place where the principal resides and the goods were delivered at Vijayawada and money was paid at Vijayawada.

Learned advocate Shri Venkatrama Sastri argued that even so, the appellant cannot have any cause of action to seek for the refund of the monies which are deemed to have been paid at Ganganagar. We do not consider this contention as sound for the reason that once a part of the cause of action arises, the Court has jurisdiction to determine all the issues arising in the suit. Even the assumption that the sums of Rs. 5000/- and Rs. 10,000/- paid by the plaintiff were not paid at Vijayawada is also unwarranted. Merely because bank commission was paid by the plaintiff, it does not indicate that the amount was not paid in Vijayawada. We have already adverted to the fact of the hundi for Rs. 5000/- being drawn on the plaintiff which was honoured at Vijayawada through the bankers who were acting as the agents of the defendant; as such, the money was paid to the defendants'' agents at Vijayawada.

In so far as the last contention of the learned advocate for the respondent viz., that the English Common law principle that the debtor should seek the creditor is inapplicable in India, is concerned, we do not consider it necessary to go into that question, as, when we have come to the conclusion that part of the cause of action arose within the jurisdiction of the Vijayawada Court, that is an end of the matter.

In the view, we have taken, we find that the Vijayawada Court has jurisdiction to entertain the suit. We accordingly allow the appeal and dismiss the memorandum of cross-objections; set aside the order of the Subordinate Judge returning the plaint for presentation to proper Court and direct him to entertain the suit and dispose of it in accordance with law. The costs will abide the result of the suit.