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1927 Supreme(SC) 34
PRIVY COUNCIL [ON APPEAL FROM THEEAST INDIES]
VISCOUNT SUMNER, LORD ATKINSON, AND LORD CARSON.
SONIRAM JEETMULL, A FIRM - Appellant
Versus
R. D. TATA AND COMPANY, LIMITED - Respondents
On appeal from the High Court at Rangoon.
Decided On : Mar. 29. 1927.
Solicitors for appellants:Bramall & Bramall. Solicitors for respondents: Stoneham & Sons.
Section 49 of the Indian Contract Act, 1872, does not prevent courts from inferring the place of performance from contract terms or circumstances. The duty to pay a creditor includes the duty to find them, allowing jurisdiction where the creditor is located if implied by the contract.
Headnote:(A) Indian Contract Act, 1872 - Section 49 - Place of performance of contract - Jurisdiction of Court - Where no place of payment is expressly fixed in a contract, the court can infer the place of performance from the terms of the contract or the necessities of the case - The obligation to pay a creditor includes the obligation of finding the creditor to make the payment - Section 49 does not preclude inferences drawn from the contract itself or the circumstances of the case regarding the place of performance.
(B) Jurisdiction - Cause of action - If a part of the contract is performable within the local limits of the court's jurisdiction, the court has jurisdiction to entertain the suit.
Facts of the case:
A firm agreed to indemnify a company against losses resulting from the failure of constituents to pay debts in a specific region. The company sued the firm in a court where the company had a branch and where the underlying transactions took place, although the firm did not reside or carry on business within those local limits. The firm contested the jurisdiction, arguing that since no place of payment was fixed, the statutory requirement for the promisor to apply to the promisee for the appointment of a reasonable place of performance under the relevant contract law had not been satisfied, and therefore no part of the contract was performable in that jurisdiction.
Findings of Court:
The court found that the contract implied that payment should be made where the creditor is located. Since the business transactions occurred in the jurisdiction where the suit was filed and the creditor maintained a branch there, it was inferred that payment was to be made in that jurisdiction.
Issues: Whether the absence of an express agreement on the place of payment, coupled with the failure of the promisor to apply for the appointment of a reasonable place under Section 49 of the Indian Contract Act, 1872, precludes the court from inferring the place of performance from the contract's terms or the nature of the business for the purpose of determining jurisdiction.
Ratio Decidendi: Section 49 of the Indian Contract Act, 1872, does not override inferences that can be justly drawn from the terms of a contract or the necessities of the case. The obligation to pay a creditor inherently involves the obligation of finding the creditor. Where the business transactions and the creditor's branch are located in a specific jurisdiction, it can be inferred that the contract is performable there, satisfying the requirements for jurisdiction.
Result: Appeal dismissed with costs.
Legal Category Hierarchy
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practice and procedure
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civil procedure
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jurisdiction
- territorial jurisdiction
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jurisdiction
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civil procedure
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contract law
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performance of contract
- place of performance
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performance of contract
Judgement
Appeal (No. 123 of 1926) by special leave from a decree of the High Court in its appellate jurisdiction (February 8, 1926), affirming a decree of that Court in its original jurisdiction.
The appellants were a firm carrying on business in Calcutta. The respondents were a limited company whose registered office was in Bombay, carrying on business at Calcutta, Bombay, Rangoon, and elsewhere; in 1919 they had taken over, and had since continued, the business of Tata Sons & Co.
By a contract made in Calcutta in 1911 the appellants agreed to assist Tata Sons & Co. in securing constituents to purchase and/or sell grain in Rangoon, on constituents accounts, as common agents only; and that they would make good any undisputed claim which Tata Sons & Co. might lose owing to the failure or suspending payment of constituents; in consideration Tata Sons & Co. agreed to pay the appellants one-quarter of the commission they received.
In 1924 the respondents sued the appellants in the High Court at Rangoon to recover under the agreement the amount of two unsatisfied judgments which they had obtained against a Calcutta firm.
The High Court, on an ex parte application, granted leave under cl. 10 of the Charter to bring the suit. Under that clause the High Court has jurisdiction where a defendant does not reside or carry on business within the local limits of the jurisdiction, if the cause of action arises wholly, or, with leave of the Court, in part within those limits.
The appellants by their written statement objected that the rule did not give jurisdiction in the suit; that question was directed to be tried as a preliminary issue.
Chari J. overruled the objection, and his judgment was affirmed on appeal by Rutledge C. J. and Maung Ba J.
1927. March 29. Dunne K.C., and E. B. Raikes for the appellants. The only part of the cause of action which it can be suggested arose in Rangoon was failure to pay there. The High Court appears to have based its judgment on the English rule that a debtor must seek his creditor. That rule, however, does not apply in India, s. 49 of the Indian Contract Act, 1872, having been substituted for it Puttappa Manjaya v. Virabhadrappa.(7 Bom. L. Repr. 993.) The steps prescribed by that section were not taken to fix the place of payment.
[Lord Sumner referred to Dhunjisha Nusserwanji v. A. B. Fforde (( 1887) I. L. R. 11 B. 649.) and Motilal v. Surajmal .(( 1904) I. L. R. 30 B. 167.)]
Those decisions were earlier than the decision relied on and were each by a single judge; the second is commented on in Pollock & Mullas Indian Contract Act at p. 301. The recent judgment of the Privy Council in Bansilal Abirchand v. Ghulam Mahbub Khan (( 1925) L. R. 53 I. A. 58.) did not decide whether the English rule applies in India. Further the respondents registered office was at Bombay, and having regard to s. 72 of the Indian Companies Act, 1913, if any contract as to the place of payment was to be implied, it was to pay at Bombay.
Sir George Lowndes K.C. and Kenelm Preedy for the respondents were not called upon.
The judgment of their Lordships was delivered by
VISCOUNT SUMNER. This is an appeal by special leave from the High Court of Rangoon, which affirmed a decision of the Court below, overruling an objection to the jurisdiction taken by the appellants. It was imposed upon the parties, as a term of the special leave, that the pleadings between the parties, the judgments and the order of the Court in India should be the sole material for this argument. The appellants were sued in Rangoon by R. D. Tata & Co., Ld., who have a business branch there, for payment of sums of money, due upon the failure of constituents to satisfy debts due to Messrs. Tata, Sons & Co., which sums the defendants had undertaken to make good to them. Judgment had been obtained, and there was no dispute about the amounts or validity of these debts or about their being due from the original debtors, but Messrs. Jeetmull, who carry on business in C
