JUDGMENT

A.M. Ahmadi, CJI. - M/s. Cholamandlam Investments & Finance (P) Ltd. with its registered office at Madras filed a suit being CS No. 1161 of 1991, in the High Court of Madras against M/s. Radhika Synthetics Ltd. seeking a decree for a sum of Rs. 65,82,850 with interest amounting to Rs. 62,75,778 on the allegation that the amount was due under a hire-purchase agreement dated 26-4-1989 and a supplemental agreement dated 1-6-1989. The plaintiff further contends that it had earlier filed CS No. 716 of 1990 in the High Court of Madras in which an Advocate Commissioner was appointed to seize the machinery that was the subject-matter of the agreement and that thereafter on negotiation between the parties, two further supplemental agreements, both dated 19-10-1990, were executed and in view of the supplemental agreements, CS No. 716 of 1990 was withdrawn. The present suit before the Madras High Court was filed as the defendant M/s. Radhika Synthetics Ltd., failed to pay the installments from November 1990 onwards. As per the schedule annexed to the agreement dated 26-4-1989, the machinery was to be supplied by M/s. Primatex Machinery Private Limited, Dombivli, Thane. M/s. Radhika Synthetics Limited had certain complaints about the machinery supplied to them. About that M/s. Cholamandlam Investments & Finance (P) Ltd. contend in the suit that they were only the financiers and were not concerned with any defect in the machinery supplied by M/s. Primatex Machinery Private Limited. In para 12 of the suit in the Madras High Court, it is stated that the cause of action for the suit arose partly at Madras where the monies are due and payable under the original agreement as well as the supplemental agreements.

2. M/s. Cholamandlam Investments & Finance (P) Ltd., filed some interim applications presumably under Order 38 Rule 5 of the Code of Civil Procedure for attachment before judgment. It appears from the record that M/s. Radhika Synthetics Limited filed a counter-affidavit in response to the application under Order 38 Rule 5 of the Code of Civil Procedure. Copy of the counter-affidavit is on record. The objections to the application under Order 38 Rule 5 all relate to the plaintiffs responsibility for supplying defective machinery. No objection about the jurisdiction was taken therein.

3. Radhika Synthetics Limited filed Suit No. 692 of 1992 in the High Court of Bombay against M/s. Cholamandlam Investments & Finance (P) Ltd. for recovery of Rs. 2,56,00,000 with interest holding them responsible for failure to commerce the production unit for which the hire-purchase agreement between M/s. Radhika Synthetics Limited and M/s. Cholamandlam Investments & Finance (P) Ltd. were executed. Coming to jurisdiction M/s. Radhika Synthetics Limited in their suit allege that M/s. Cholamandlam Investments & Finance (P) Ltd. had agreed to install the machinery at the premises of M/s. Radhika Synthetics Limited at Bombay, that defective machinery was supplied by the defendants at Bombay, that the agreement was executed at Bombay, that the plaintiffs suffered loss and damages at Bombay and that all the material part of cause of action has arisen at Bombay. M/s. Radhika Synthetics further contend in their suit that they have obtained leave under clause 12 of the Letters Patent from the High Court of Bombay.

4. The transfer petition filed by M/s. Cholamandlam Investments & Finance (P) Ltd. was opposed by M/s. Radhika Synthetics and Another inter alia on the ground that M/s. Cholamandlam Investments & Finance (P) Ltd. has an office in Bombay, that the entire documentation was done at Bombay, that the payments made by M/s. Radhika Synthetics Limited were made at Bombay and were received by M/s. Cholamandlam Investments & Finance (P) Ltd. at Bombay, that the entire cause of action arose at Bombay. In reply to this on behalf of M/s. Cholamandlam Investments & Finance (P) Ltd. it was stated in the rejoinder that their office in Bombay is a small forwarding