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Judgment
Krishnan, J.—This is an appeal against the order of the learned City Civil Judge returning the plaint in O.S. No. 530 of 1920 on his file to be
presented to the proper Court. The learned Judge held that no part of the cause of action arose within his jurisdiction and therefore passed that
order. The suit was brought by the receivers on behalf of a firm in Madras called Kuppuswami Naidu and Company against the defendants, a firm
carrying on business in Calcutta, for a certain sum of money which they claimed, had been overpaid to the defendants'' firm. Among the pleas
raised by the defendants'' firm one was that the Court in Madras had no jurisdiction to try the suit and that the suit was properly triable only by the
Court in Calcutta, where they carried on business and where, according to them, the whole cause of action arose.
It is not denied that the defendants do not reside, or carry on business, or work for gain in Madras but the plaintiffs rely entirely for their
contention that the suit lies here on the ground that part of the cause of action arose within the jurisdiction of the Madras Court. u/s 20 (c) of the
CPC a suit can be brought where the cause of action arises at least in part, and the question we have to decide is whether the cause of action in
this suit has arisen at least in part in Madras.
Kuppuswami Naidu and Co. had dealings with the Calcutta firm and the way in which the dealings were carried on was that, on the orders of
Kuppuswami Naidu and Co.., the Calcutta firm was to send by rail to several places all over the presidency named by the Madras Firm (plaintiffs).
The contract was made in Calcutta; but the arrangement as regards payments as stated by the defendants'' firm itself in their written statement was
that the money was to be paid either in cash in Calcutta or by hundis drawn by defendants in Calcutta on the plaintiffs'' firm in Madras. The learned
City Civil Judge held that this arrangement about payment was an arrangement which was tantamount to payment in Calcutta itself but we are
unable to agree with the learned Judge on the point. When a firm outside Madras draws hundis on a firm in Madras which under the contract, the
Madras firm has to honour and pay when presented to them in Madras, the payment cannot be considered to be made when the hundi is
negotiated by the firm outside Madras but only when the payment is actually made by the firm in Madras on the hundi. Negotiation of the hundi is
only a provisional method of realising money from persons who are willing to accept the hundi for a small profit and to take the trouble of
presenting the hundi to the drawee and recovering the money from him. If the hundi is dishonoured the endorsee will of course have recourse to the
drawer of the hundi who had endorsed it over to him. So that the receiving of the money from an endorsee cannot be treated as payment towards
the contract. The payment becomes complete only when the buyer, in this case the Madras firm, actually makes payment on that hundi, and such
payment is clearly a payment made in Madras. It is true that, in the first three instances, the money was actually paid by the Madras firm through an
agent of theirs in Calcutta to the defendant; but that arrangement does not seem to have been persisted in and subsequent payments were all made
by the system of the Calcutta firm drawing hundis in their own favour and endorsing them to some hundi broker and obtaining money from him, that
broker taking the trouble of presenting the . hundis to the Madras firm and receiving payment. It may also be mentioned that one other arrangement
about the payment was that payment to be made only on the delivery of the railway receipts. These railway receipts were to be attached to the
hundis and presented to Kuppuswami Naidu and Co., in Madras along with the hundis when payments of the hundis were demanded from them;
so that the presentation of the railway receipt in Madras was also a part of the performance of the contract, and was a necessary condition to be
performed before money could be demanded from the Madras firm.
In these circumstances, it seems to us clear that a part of the cause of action must be held to have arisen in Madras both as regards the
presentation of the railway receipts and as regards the payment on hundis; and it would follow that the City Civil Court had jurisdiction to try the
suit, u/s 20 (c) of the Civil Procedure Code.
The learned City Civil Judge has relied upon a case reported in Mylappa Chettiar v. Aga Mirza Mohamed Shirazee (1) which he thinks is a case
on all fours with the present one, but there is a fundamental difference between that case and the present one which the learned judge has
overlooked. There, although payment was by hundis, the arrangement was that the hundi was to be drawn and presented to the National Bank of
Mandalay along with the bill of lading taken in the name of the consignor himself; it was to be endorsed over to the branch of the National Bank at
Mandalay and handed over along with the hundi to them, they were to make payment of the amount claimed to the consignor at Mandalay. The
learned Judges find as a fact in that case that the National Bank was merely acting as the agent of the Madras Bank who were themselves only the
agents of the consignee at Negapatam and, when the bill of lading was endorsed over to the National Bank and received by that Bank and money
was paid to meet the hundi drawn on the Bank, the transaction was complete so far as the consignor was concerned as the National Bank was
found to have been acting merely as agents of the Negapatam merchant. It was on that ground that the learned Judges in that case held that the
payment should; be taken to be one made in Mandalay and not in Negapatam and that, so far as payment was concerned, the cause of action did
not arise in Negapatam, but in Mandalay. Here, as we have already stated, all that the Calcutta firm did was to draw the hundi on the Madras firm
and discount it in the manner usual among merchants with some exchange bank or firm which took hundis on discount, without being freed from the
liability of having to repay the money paid in case the hundi is dishonoured. The Calcutta firm was entitled to discount the hundi with whomsoever it
pleased. There is no evidence that Nantaramdas Atmaramdas, the firm which actually negotiated these hundis for the Calcutta firm, were acting as
agents of the Madras merchants at all. This case is therefore very clearly distinguishable from the case in The Firm of A.M. Mylappa Chettiar by
Partners of the Firm of that Name Vs. Aga Mirza Mohamed Shirazee, Managing Proprietor of the Firm, .
The Bombay case referred to by the learned Judge, Motilal v. Surajmal ILR (1904) B 167 is a case where the principles are no doubt stated by
Tyabji, J., but according to those principles if the payment has to be made at a particular place, part of the cause of action will arise there.
It will be further noticed that the main claim in this suit is really for the amount that had been overpaid by Kuppusami Naidu and Co., to the
defendant company. That payment was actually made in Madras. The hundi having been drawn for a larger sum than the Calcutta firm was entitled
to draw it for was presented in Madras and to save it from being dishonoured the Madras firm paid the excess amount here in Madras, and it is
mainly for that amount that the present suit is brought.
It is therefore clear to us that the cause of action did arise in Madras and that the plaint should not have been returned for being presented to
another Court but that the learned judge should have tried the suit himself. We therefore set aside the order of the learned Judge and direct him to
take the plaint on to his file and dispose of the case according to law.
As regards costs ,the respondent will pay the appellants costs in this Court. All costs in the lower Court will be disposed of by the City Civil
Judge in his final judgment.