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1973 Supreme(AP) 26
Andhra Pradesh High Court
Judges : A.GOPAL RAO, A.V.KRISHNA RAO, V.MADHAVA RAO
Central Warehousing Corporation New Delhi - Appellant
Versus
Central Bank of India Ltd., Hyderabad - Respondent
Decided On : 03-07-73
Headnote:
WAREHOUSE RECEIPT - JURISDICTION - TERRITORIAL - CORPORATION - SUBORDINATE OFFICE - EXPLANATION II TO SECTION 20 OF THE CODE OF CIVIL PROCEDURE, 1908 - INTERPRETATION - HYDERABAD WAREHOUSES REGULATION, 1358 FASLI - APPLICABILITY - NOTICE - RULE 16 OF THE WAREHOUSING RULES - APPLICABILITY - LIMITATION ACT, 1963 - APPLICABILITY - DECREE - MODIFICATION.
Fact of the Case:
The plaintiff, Central Bank of India Limited, Hyderabad, filed a suit against the defendants, K. V. Rathnam and the Central Warehousing Corporation, New Delhi, for recovery of a sum of Rs. 29,267.88, alleging that the 1st defendant had opened a cash credit key loan account with the plaintiff bank and had pledged the stocks of paddy, rice, etc., stored in the warehouse of the corporation as security for the loan. The 1st defendant remained ex parte, while the corporation contested the suit, raising various pleas, including lack of territorial jurisdiction of the City Civil Court, Hyderabad, and the maintainability of the suit without exhausting the remedies provided under the Hyderabad Warehouses Regulation, 1358 Fasli, and the rules made thereunder.
Finding of the Court:
The court held that the City Civil Court, Hyderabad, had territorial jurisdiction to try the suit as the cause of action had arisen within its jurisdiction, and that the corporation had a subordinate office in Hyderabad, as evidenced by the issuance of warehouse receipts to depositors, the maintenance of an office with warehouseman and other employees, and the conduct of business in accordance with the Hyderabad Warehouses Regulation. The court also held that the suit was maintainable without exhausting the remedies provided under the Hyderabad Warehouses Regulation and the rules, as the depositor was not seeking to go behind the certificate issued regarding the weight, quality, or grade of the goods evidenced by the receipts, and there was no agreement between the depositor and the corporation to refer all matters arising out of the deposit of goods to arbitration. The court further held that the suit was not barred by limitation, as it was instituted within the limitation period prescribed under the Limitation Act, 1963. However, the court modified the decree passed by the lower court to reflect the direction in the judgment regarding interest, which was to run from the date of the decree only.
Issues: 1. Whether the City Civil Court, Hyderabad, had territorial jurisdiction to try the suit against the 2nd defendant? 2. Whether jurisdiction of the City Civil Court is barred in view of the special provisions and machinery provided under the Hyderabad Warehouses Regulation and the Rules made thereunder? 3. Whether the suit is maintainable without the plaintiff first exhaustive the remedies provided under the Hyderabad Warehouses Regulation and the Rules provided thereunder and without giving notices under the Warehouse Regulation, Rules and the conditions of storage? 4. Whether the plaint discloses any cause of action against the 2nd defendant? 5. Had defendant No. 1 defrauded defendant No. 2 as regards quality and quantity of the commodity stored in the warehouse and if so, the plaintiff cannot claim damages? 6. Whether warehouseman acted outside the scope of this authority in issuing the warehouse receipts? 7. Whether the suit is not maintainable for the reasons mentioned in paras 6 and 11 of the written statement? 8. Whether the suit is barred by limitation? 9. Whether Sri T. Rajagopalachari is a necessary party to the suit?
Ratio Decidendi: 1. The territorial jurisdiction of a court to try a suit is determined by the provisions of Section 20 of the Code of Civil Procedure, 1908. Clause (c) of Section 20 provides that a suit can be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises. 2. Explanation II to Section 20 of the Code of Civil Procedure, 1908, provides that a corporation shall be deemed to carry on business at its sole or principal office in India or in respect of any cause of action arising at any place where it has also a subordinate office. 3. A subordinate office of a corporation is an office where the corporation conducts business and has an administrative presence, as evidenced by the issuance of receipts, the maintenance of an office with warehouseman and other employees, and the conduct of business in accordance with the relevant regulations and rules.
Final Decision: The appeal was dismissed with costs, subject to the modification of the decretal portion of the court below to reflect the direction in the judgment regarding interest, which was to run from the date of the decree only.
( 1 ) THIS appeal is posted before us on a reference by our learned brothers Kondaiah and Lakshmaiah JJ. Though the question according to the learned Judges, related to the territorial jurisdiction of the courts at Secunderabad to entertain the suit out of which this appeal arose and the contention was based solely on the interpretation of the provisions of Explanation II to Section 20 of the Code of Civil Procedure, the Division Bench felt that on a consideration of the entire facts and circumstances the whole appeal was fit to be referred to a Full Bench.
( 2 ) THIS appeal is from the judgment of the Chief Judge, City Civil Court, Hyderabad at Secunderabad rendered in O. S. No. 49 of 1967. The 2nd defendant is the appellant. The plaintiff obtained a decree for money against defendants 1 and 2. The 1st defendant remained exparte.
( 3 ) THIS suit came to be tried along with a number of other suits instituted by the plaintiff. In all the suits, the present appellant was the 2nd defendants. By consent of parties evidence was recorded in O. S. No. 14/66 and the suits were disposed of by a common judgment of the court below on 24/09/1968.
( 4 ) THE plaintiff in O. S. No. 49 of 1967 out of which this appeal arises is the Central Bank of India Limited, Hyderabad. The 1st defendant is K. V. Rathnam who is a resident of Varni village in Nizamabad District in Andhra Pradesh. The 2nd defendants is the Central Ware-housing Corporation, New Delhi. The suit was for recovery of a sum of Rs. 29,267. 88 seeking a decree jointly and severally against both the defendants together with future interest at 6 per cent, per annum from the date of suit till realisation. The facts necessary for the disposal of this appeal may now be stated.
( 5 ) IN this judgment the plaintiff respondent will be referred to as the Bank and the 2nd defendant - appellant as the corporation. The case of the plaintiff is that on 26-7-1962 the 1st defendant opened a cash credit key loan account in his name in the Pathargatti Branch of the Bank with a view to secure cash credit facilities from the Bank. To that end he undertook to give security of paddy, rice etc. , belonging to him and stored in the warehouse of the corporation by pledging the said stocks in favour of the Bank. The bank thereupon granted to the 1st defendant a credit facility to a maximum limit of Rs. 30,000. 00 on the security of the stocks of paddy, rice etc. , then stored in the warehouse of the corporation and also to be stored in future. The 1st defendant had executed the necessary documents including a document of a pledge of goods, in favour of the Bank agreeing to pay the interest as stipulated in the agreement with the Bank. The practice followed by the Bank in connection with the pledge of goods by a customer and deliver to the Bank receipts issued by the warehouseman incharge of the corporation which would show the date of deposit of the goods, the quality, quantity, rate and value of the stocks of rice, paddy etc,. Deposited by the customer in the corporations Warehouse. It is on the strength of the receipts issued by the warehouseman that the bank advanced loans from time to time to the customer. As per this practice the 1st defendant as customer was handing over the warehouse receipts issued by the warehouseman of the corporation from time to time and was obtaining loans from the bank. The 1st defendant also was making payments from time to time to the Bank which were duly credited in the usual and ordinary course of the transactions. The Bank relving upon the truth and correctness of the particulars contained in the warehousemans receipts was advancing moneys on the strength of such receipts to the 1st defendant. It would appear that certain differences and discrepancies in the quantities and the qualities of the stocks deposited with the corporation in its warehouses and the receipts issued by the warehouseman of the corporation came to light. The plaintiff had issued
