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1953 Supreme(Pat) 98
PATNA HIGH COURT
Narayan and Ahmad JJ.
Kodo Minerals Steatite Mine & Mill-owners
Versus
Rohtas Industries Ltd.
Civil Revision No. 679 of 1951 ;
Decided On : MAY 15, 1953
The cause of action for a suit for damages for breach of contract consists in the making of the contract and of its breach, and consequently such a suit may be filed at the place where the contract was made or at the pace where it should have been performed but for the breach which had occurred.
Headnote:
JURISDICTION - CIVIL PROCEDURE CODE, 1908 - SECTION 20 - CAUSE OF ACTION - CONTRACT - BREACH - PLACE OF PERFORMANCE - PAYMENT - PLACE OF PAYMENT - JURISDICTION OF COURT.
Fact of the Case:
Plaintiffs, Rohtas Industries Limited, placed an order with the defendants, Kodo Minerals Steatite Mine and Mill-owners, for the supply and delivery of soap-stone bricks at Dalmianagar. The plaintiffs advanced Rs. 5000/- and the agreement was that the goods would be inspected by an expert of the plaintiffs before being loaded into the wagon. The plaintiffs' expert found the bricks mostly damaged and declared them unfit for use. The defendants promised to replace the defective bricks, but the same worthless goods were loaded in the wagon without giving an opportunity to the plaintiffs' expert to inspect them again. When the goods arrived at Dalmianagar it was detected that the same useless bricks had been loaded. The plaintiffs filed a suit for the recovery of Rs. 18,000/- on account of an alleged breach of contract. The defendants contested the claim and also raised the plea that the Sasaram Court had no jurisdiction to try the suit as no part of the cause of action had arisen within the jurisdiction of the Sasaram Court.
Finding of the Court:
The court held that the Sasaram Court had the jurisdiction to try the suit as the cause of action arose within its jurisdiction. The court found that the breach of contract occurred at Dalmianagar where it was discovered that the goods required and for which there had been the contract had not really been sent to Dalmianagar. The court also found that the contract was completed at Dalmianagar when the plaintiffs sent a letter accepting the defendants' conditions, one of which was that an advance of Rs. 5000/- would be paid to enable the defendants to take up the work in hand. The court further found that the payment of Rs. 5000/- was made at Dalmianagar as the cheque was sent from Dalmianagar.
Issues: 1. Whether the Sasaram Court had the jurisdiction to try the suit? 2. Whether the cause of action arose within the jurisdiction of the Sasaram Court? 3. Whether the breach of contract occurred at Dalmianagar? 4. Whether the contract was completed at Dalmianagar? 5. Whether the payment of Rs. 5000/- was made at Dalmianagar?
Ratio Decidendi: 1. The cause of action for a suit for damages for breach of contract consists in the making of the contract and of its breach, and consequently such a suit may be filed at the place where the contract was made or at the pace where it should have been performed but for the breach which had occurred. 2. In this case, the breach of contract occurred at Dalmianagar where it was discovered that the goods required and for which there had been the contract had not really been sent to Dalmianagar. 3. The contract was completed at Dalmianagar when the plaintiffs sent a letter accepting the defendants' conditions, one of which was that an advance of Rs. 5000/- would be paid to enable the defendants to take up the work in hand. 4. The payment of Rs. 5000/- was made at Dalmianagar as the cheque was sent from Dalmianagar.
Final Decision: The court dismissed the application filed by the defendants challenging the jurisdiction of the Sasaram Court to try the suit.
Narayan, J.
1. This application is directed against an order of Mr. M. A. Rahman, 1st Additional Subordinate Judge of Sasaram, by which he held that the Sasaram Court had the jurisdiction to try Title Suit No. 7 of 1951 which is a suit for the recovery of Rs. 18,000.00 on account of an alleged breach of contract. The plaintiffs, Rohtas Industries Limited, are a Company incorporated under the Indian Companies Act, and they have got their head-office at DalmianagaV/s. The defendants have been described as Kodo Minerals Steatite Mine and Mill-owners, and they carry on their business in the Madhya Pradesh with their head-office at Katni. The plaintiffs placed order with the defendants for supply and delivery at Dalmianagar of 20 tons of soap-stone bricks and certain conditions were laid down with regard to the sale and the purchase.
2. The case put forward by the plaintiffs was that they had advanced Rs. 5000.00 and that the agreement was that the goods would be inspected by an expert of the plaintiffs before being loaded into the wagon. The plaintiffs engineer went to Katni Rupaund for the inspection of the soap-stone bricks which were ready for despatch at the Rupaund station on 1-3-1949, and the expert found the bricks mostly damaged and declared them unfit for use. When these facts were brought to the notice of the defendants they promised to replace the defective bricks, but in spite of the assurance given the goods were not changed and were insecuredly loaded in the wagon. There was no fresh inspection of the goods that were loaded into the wagon at Rupaund station, and when the goods reached Dalmianagar they were found to be worthless. The plaintiffs have alleged that besides the advance of Rs. 5000.00 they have paid another sum of Rs. 3000.00 to the defendants. The claim is for the recovery of Rs. 10,000.00 as compensation and Rs. 8000.00 which represents the amount of advance paid to the defendants in two instalments. (2) The defendants filed a written-statement contesting the claim on various pleas, and they also put forward the plea that the Sasaram Court had no jurisdiction to try the suit as no part of the cause of action had arisen within the jurisdiction of the Sasaram Court. The issue regarding jurisdiction was tried by the learned Subordinate Judge as a preliminary issue, and he came to the conclusion that the Court at Sasaram had the territorial jurisdiction to try the suit.
3. In my opinion, the conclusion arrived at by the learned Subordinate Judge is correct. According to Sec.20, Civil P. C., a suit can be instituted in a Court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises. As was pointed out by a Bench of this Court in -- Arthur Butler and Co., Ltd. V/s. District Board of Gaya, AIR 1947 Pat 134 (A) though, explanation III to sec. 20 which existed in the old Code has now been deleted, the tests which had been mentioned in that Explanation are still good tests. Explanation III was as follows : "In suits arising out of contract, the cause of action arises within the meaning of this section at any of the following places, namely:
(1) the place where the contract was made;
(2) the place where the contract was to be performed or performance thereof completed
:
(3) the place where in performance of the contract any money to which the suit relates was expressly or impliedly payable." According to Sec.20 (c) as it stands now, suits may be instituted where the cause of action arises, wholly or in part, and the term "cause of action" is to be construed with reference rather to the substance than to the form of action. Cause of action is a bundle of essential facts which it is necessary for the plaintiff to prove before he can succeed in the suit. Jt refers entirely to the grounds set forth in the plaint as the cause of action, or, in other words, to the media upon which the plaintiff asks the Court to arrive at a conclusion in his favour. The Judicial Committee in -
