Firm Jagan Nath Kuthiala Arhti vs Firm Khushi Ram Behari Lal

Kapur, J.—This is an appeal against an order of the learned Senior Subordinate Judge, Simla, returning the plaint for presentation to another Court. The suit was for recovery of Rs. 10,725-6-6 on the basis of breach of contract to supply goods ordered by the Plaintiffs and on the basis of a promise of the Defendants to refund Rs. 10,000 paid to them by the Plaintiffs and for interest. In para. 10 of the plaint, the transaction was based on three grounds: (a) that the cause of action arose at Simla where the goods were to be delivered to the Plaintiffs on payment of the balance of the price; (b) that after the Defendants repudiated the contract to supply goods to them, the relation between the Plaintiffs and Defendants became that of creditor and debtor, and under the law it was the duty of the Defendants to pay the money to the Plaintiffs at Simla; (c) that the Defendants also promised to send Rs. 10,000 to Simla.

The learned Judge has held that the Court at Simla had no jurisdiction on the ground

(1) that it had not been proved that the goods were to be delivered and paid for at Simla,

(2) that the goods were "bought F.O.R." and that the freight was to be paid by the Plaintiffs and

(3) that as the commission charges and freight had to be paid by the Plaintiffs and the Defendants were only commission agents no part of the cause of action arose at Simla.

In appeal the first point taken by Mr. Roop Chand is that the railway receipt for the goods was to be sent to Simla and the price was also to be paid at Simla. The goods were ordered by a letter dated 16-6-1947 in which the Defendants were asked to purchase wheat and send it to Simla. It was stated there that a bill for the price should be drawn through a bank and that the bank charges would be paid by the Plaintiffs. In a letter dated 24-6-1947, P. 14, sent by the Defendants to the Plaintiffs it is stated that the railway receipt would be sent in the name of the Plaintiffs but the price should be paid in advance. In the letter P. 7 dated 21-7-1947 the Plaintiffs wrote to the Defendants that the goods should be sent to Simla and that they had already sent the money. In the next letter P. 17 dated the 25th July, the Defendants wrote back saying that the goods would be sent from Abbaspur and for the balance of the price of the goods a bill would be drawn. On 30th July the Defendants wrote to the Plaintiffs saying that wheat had been purchased and would be sent when its turn on the list of priority was reached, and it was also said that the despatch had been delayed as the priority was of the fourth class and things under first class permits were being despatched. Some other correspondence ensued which it is not necessary to refer to excepting the letter of 11-8-1947 Ex. P. 2 where the Defendants said that the goods could not be sent as the authorities had stopped export of wheat from Lyallpur that the goods would have to be sold to some mill there and that the Defendants could send the money by draft or cheque. To this the reply of the Plaintiffs was that the money should be sent by means of a draft and the permit should also be sent back. It may be pointed out here that a permit for the sending of the wheat had been sent by the Plaintiffs to the Defendants. Subsequently a Hundi was drawn for Rs. 10,000 on 19-8-1947, but that was never presented to the Defendants and was, therefore, never paid. On 22-8-1947 the Defendants wrote to the Plaintiffs that they should draw a Hundi for Rs. 10,000 on them and they could not send a draft as that would be lost in transit. The Plaintiffs went into the witness-box and said that there was an agreement that goods were to be delivered in Simla and the price was also to be paid in Simla. In cross-examination, however, he stated that the Defendants had to purchase the goods and charge commission and other expenses from the Plaintiffs. The contract was entered into by means of correspondence and there was revocation of the contract. It was also admitted by the Plaintiff in the witness-box that he was to pay the railway freight and bank commission.

It is in these circumstances that I have to determine as to what was the nature of the contract between the parties and what was the relationship between them. The Defendants were a firm of commission agents. An order had been sent to them to purchase goods and they agreed to do so if the money was paid to them. Part of the money was paid and for the balance the Plaintiffs agreed to pay if a Hundi was drawn on them, they being responsible for bank charges. Rupees 10,000 was paid to the Defendants by the Plaintiffs by way of advance in relation to their purchasing and despatching of grain. The method of payment then was that instead of paying the whole of the amount at Lyallpur as was suggested in the letter of the Defendants dated 24-6-1947 (Ex. P. 14) part of the money was paid and part of the money was to be paid through a bank. In other words, instead of a man going from Simla to Lyallpur and handing over the money in cash money was paid partly in cash and partly was to be paid through a bank against Hundies drawn. This was nothing more than a method of payment. There is no direct evidence excepting the bald statement of the Plaintiff himself that the goods were to be delivered in Simla and the price was to be paid there. The course of correspondence which I have referred to above on the other hand shows that the price was to be paid in Lyallpur and the goods also were to be delivered in Lyallpur. In the same letter, Ex. P. 14 the Defendants said that the railway receipt would be sent in the name of Plaintiffs. In other words, after the goods had been purchased they would be handed over to the common carrier, the railway. The arrangement that goods were to be sent to the Plaintiffs through the railway and the railway receipt was to be in the name of the consignee was never altered at any stage. At no stage had the Defendants agreed that they would deliver the goods in Simla or received the payment in Simla. The fact that freight was to be paid by the Plaintiffs and bank commission was also to be paid by them showed that the delivery and the payment were both agreed to be made at Lyallpur. The Respondents have submitted in this Court that this was not a case of price which was to be paid against a railway receipt. The correspondence shows that this contention is well-founded.

In the present case, as I have said before, the relationship of the parties was of principal and commission agent. In the present case, in my opinion, no part of the cause of action arose at Simla. The suit such as the present one against an agent arises at the place where the goods were to be supplied or the money was to be paid. The rule has been laid down in Salig Ram v. Ghuha Mal 34 ALL. 49 : 11 I.C. 712 where the Plaintiffs who were grain dealers at Hathras asked the Defendants commission agents at Karachi, to send two wagon loads of juar. They sent Rs. 600 in advance and another Rs. 600 by means of a Hundi. The railway receipt was on the Plaintiff''s instructions sent value payable for the balance due to the Defendant. For some reason, it was not delivered to the Plaintiffs and the grain was not delivered till very late and as the price of juar had fallen the Plaintiffs brought a suit for compensation on account of the negligence of the Defendants and instituted the suit at Hathras. It was held that the suit was not cognizable at Hathras because the cause of action had arisen at Karachi. It was observed at p. 52:

The latter was the Appellant''s agent, and it was his duty to purchase the grain at Karachi, to place it on the railway at Karachi, and despatch it to the Plaintiff''s address.... It is thus quite clear that the Defendant''s neglect or misconduct or both, took place, if at all, at Karachi. In the course of the transaction he had nothing to do outside Karachi. He had not contracted to deliver at Hathras, but merely to place the goods on the rails at Karachi and to post the railway receipt there also. We fail to see that the cause of action, i.e., the Defendant''s alleged neglect or misconduct which resulted in loss, occurred anywhere else but at Karachi.

This case was followed in J.M.V. Rowther v. K.M.M. Rowther 55 I.C. 266 : AIR 1920 L.B. 48. There the Defendant, was employed by the Plaintiff as his agent in Tiruvaloor. The letter of employment was addressed to the Defendant, at the same place and was accepted by the Defendant, by letter through the post. It was held that the contract was clearly to be performed at Tiruvaloor and as the suit was based upon a contract of agency the cause of action took place at the place where the agent resided. The same was held in Mylappa Chettiar v. Agha Mirza Mahomed 37 M.L.J. 712 : AIR 1920 Mad. 177. The Plaintiff in that case was a trader at Negapatam and offered to buy timber from the Defendant at Mandalay who accepted the offer. Under the terms of the contract, the Defendant shipped the timber from time to time at Mandalay, took the bills of lading in his own-name and drew from a bank at Mandalay such sums of money as were due to him in respect of the timber shipped, by handing over the bills of lading to the bank who in their turn passed it on to the Plaintiff through another bank with whom the Plaintiff had dealings. The Defendant made default in sending the timber as agreed and a suit for damages was brought at Negapatam. On an objection being taken to the jurisdiction, it was held that no part of the cause of action arose at Negapatam. It was held that the bank in Madras and that at Mandalay were the agents of the Plaintiff and that in fact and in law the delivery of the goods was made at Mandalay and the payment was also made there. In Bhamboo Mal v. Ram Narain 9 Lah. 455 : AIR 1928 Lah. 297, it was held that a suit by a principal against a commission agent who has agreed to execute an order placed with him by correspondence must be instituted at the place where the commission agent carries on his business and that a principal cannot sue him at the place from where he sent the order. In this case the Plaintiff belonged to Rawalpindi and the Defendant to Srinagar in Kashmir. The Plaintiff sued for recovery of money paid to the latter as commission agent for the purchase of dry apricots which the Defendant had failed to deliver. Reliance in this case was placed on Asa Ram-Kalu Ram v. Bakhshi Ram-Kanahyia Ram 1 Lah. 203 : AIR 1919 Lah. 26 and Prithi Singh-Jamayat Rai v. Harsukh Das Jhog Mal 75 I.C. 849 : AIR 1924 Lah. 593.

The Appellant relies on a F.B. judgment of the Madras H.C. in Venkatachalam Pillai v. Rajaballi M. Sajun AIR 1935 Mad. 663 : 156 I.C. 1041 F.B., where it was held that in a case where payment for goods purchased by the Plaintiff or on his behalf by somebody else was to be made at Tuticorin by bills drawn against and presented to the Plaintiff at the same place, then part of the cause of action arose at that place and, therefore, a suit for an amount due for short fall in goods ordered and for damages lies in a Court in that place. In this case the question whether the Plaintiffs and the Defendants were principal and agent was not taken into account. It was held that goods were to be paid for by Hundis and against bills of lading in favour of the Defendant at Tuticorin by honouring the bills at a bank in that place and as the Plaintiff could not get possession of the goods without paying for them at Tuticorin the case could be tried at Tuticorin. This case in my opinion can be distinguished on the ground already given above and because the goods were to be paid for by Hundis and against bills of lading in favour of the Defendant. 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 Plaintiffs also relied on Motilal v. Suraj Mal 30 Bom. 167 : 6 Bom. L.R. 1038 but, there, instructions were sent to the Defendants from Bombay, accounts were rendered to the Plaintiff at Bombay, and demand was made from Bombay to the Defendants. In the peculiar circumstances of that case under Clause 12, Letters Patent, leave was given to sue at Bombay. I do not think that that case has any application to the facts of the present case. The Appellants then submitted that there was an express promise to pay the money at Simla by draft. In reply the Respondents submitted that they never promised to pay the money at Simla. All they offered was that they could send the money either by draft or by cheque. In either case the bank charges would have had to be paid by the Plaintiffs and that makes all the difference, for the money would then be paid at Lyallpur and not at Simla.

Lastly, it was submitted that the contract was revoked and the revocation was accepted at Simla and reliance was placed on a judgment of the Patna H.C. in Dhanraj Mills limited Co. Vs. Narsingh Prasad Boobna and Others, where it was held that when there has been renunciation or disclaimer of a contract, the renunciation or disclaimer takes place when and where it is communicated to the other party to the contract. In the first place, it is not proved that there has been any renunciation or repudiation of a contract. In the letter of the Defendants, Ex. P. 2 dated 11-8-1947 it was said that the goods could not be sent as permission to send had been revoked by the officials of the Food Department and that the goods would be sold to some mill in Lyallpur and Defendants asked whether the money should be sent by draft or by cheque. If there was anything at all, it was frustration of the contract, but it is not necessary for me to express any opinion on this point. At any rate there was no renunciation or repudiation of contract by the Defendants. They were never unwilling to perform their part of the contract. All they said in the letter was that due to circumstances beyond their control the goods could not be sent out of Lyallpur.

I am of the opinion, therefore, that the learned Senior Subordinate Judge rightly came to the conclusion that he had no jurisdiction. The appeal, therefore, fails and is dismissed with costs.