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1997 Supreme(Guj) 155
Gujarat High Court
Judgename :J.N.Bhatt, M.H.Kadri
OIL AND NATURAL GAS COMMISSION - Appellant
Versus
MODERN CONSTRUCTION - Respondent
C.A. 1451 of 1994
Decided On : 03/18/1997
Headnote:(a) Civil Procedure Code, 1908 - Sec. 20 - Place of sueing - Contract Act, 1872 - Sec. 4 - Suit arising out of breach of contract - Contract stands conducted at the place where offer is accepted and communication sent - O.N.G.C. accepted offer at Surat and sent telegram to contractor at Mansa - Held, Court at Mansa has no jurisdiction.
In the present case, the suits came to be filed on the basis of allegation of breach of contract. The plaintiff- contractor in all the three suits contended that making of the contract being part of cause of action had occurred within the territorial jurisdiction of Mansa at Mesana Civil Court. The said Court had territorial jurisdiction. The Trial Court on examining the facts and circumstances held in favour of the plaintiff- contractor and held that part of cause of action arose at Mansa, on the ground that communication of acceptance of offer came to be received by the contractor, at Mansa. With due respect, this finding is not proper, correct and legal. In view of the facts of the present case, communication of acceptance of offer becomes complete qua proposer at the time when intimation or communication is sent if it is sent by post or telegram, as in the present case. It will be complete at the moment when it is posted or communicated by telegram from the place of sending telegram. This proposition of law appears to have not been, properly, examined and appreciated by the Trial Court which has resulted into miscarriage of justice and, therefore, in our opinion, the finding of the Trial Court with regard to issue pertaining to jurisdiction is required to be quashed and set aside.
[Para 16]
The contract became concluded qua proposer like that-contractor not upon receipt of intimation of telegram at Mansa sent from Surat by O.N.G.C. Cause of action, therefore, arose not at Mansa but at Surat or Bombay as contract became concluded on despatch of acceptance of offers by telegram. It is admitted fact that acceptance of tender offers of the contractor was made by O.N.G.C. and communication thereof was sent from Surat by telegram which came to be received at Mansa by the contractor. In the circumstances, considering the provisions of Sec. 20(c) of the CPC and provisions of Sec. 4 of the Contract Act, part of cause of action arose at Surat or Bombay and not at Mansa.
[Para 22]
(b) Civil Procedure Code, 1908 - Secs. 15 to 20 - Place of sueing - Contract Act, 1872 - Sec. 4 - Contract - Cause of action for breach thereof - Principles stated.
The Court vitally concerned with the cause of action founded upon the contracts. In suits arising out of contract, the cause of action arises within the meaning of Sec. 20(c) of the CPC out of any of the following places :
(i)
the place where the contract was made;
(ii)
the place where the contract was to be performed or came to be performed;
(iii)
the place where in performance of the contract any money due thereunder expressly or impliedly has to be carried out.
In suit for damages for breach of contract, cause of action consists of making of contract and of its breach so that suit may be filed either at the place where contract was made or at the place where it could have been performed or where breach of contract occurred. In suit for damages for breach of contract, the venue for filing suit on contract is determined on the aforesaid aspects and principles. It may also be clarified that suit on contract can be filed at a place where cause of action has arisen in whole or in part of the cause of action.
[Para 21]
( 1 ) WHAT is the correct interpretation and applicability of the provisions of S. 20 (c) of the Code of Civil Procedure, 1908 (C. P. C.) and S. 4 of the Indian Contract Act, 1872 (Act) are the legal questions in focus in this batch of Civil Appeals.
( 2 ) WHICH is the place of making of contract ? Whether the communication of acceptance of offer is complete at a place from where and when it is sent by telegram ? Whether part of cause of action for breach of contract arises at the place of transmission, i. e. , sending communication or place of receipt of it when made by a letter or telegram ? These are the important questions raised for our consideration and adjudication in three Civil Appeals against three impugned judgments and decrees recorded in Special Civil Suit Nos. 60, 61 and 62 of 1996 by the learned Civil judge (Senior Division) at Mehsana, in favour of the plaintiff-contractor.
( 3 ) THE conspectus of relevant material facts may be stated at the outset : the appellants are the original defendants against whom the aforesaid suits for damages for breach of contract and refund of security amount came to be filed in the Court of the learned Civil Judge (Senior Division) at Mehsana by the respondent who is the common original plaintiff. The parties are hereinafter referred to as plaintiff-contractor and defendants -O. N. G. C. for the sake of convenience and brevity as they were arraigned in the trial Court.
( 4 ) THE plaintiff is a registered partnership firm engaged in the construction work having office at Mansa, in Mehsana District. Defendant No. 1 is the Oil and natural Gas Commission which is a statutory body established by the Oil and Natural gas Commission Act, 1951 (Central Act No. 4 of 1949 (o. N. G. C. ). Defendant nos. 2, 3 and 4 were the officers of the O. N. G. C. at the relevant time. O. N. G. C. invited offers by tender notice for construction work as O. N. G. C. was desirous of getting constructed cement godown, site office premises and warehouses for L. P. G. plant at Kawas-Hajira in Surat District, (10 kms. from City of Surat ).
( 5 ) THE plaintiff-firm made offers pursuant to the said tender notice. The offers in respect of three construction works of O. N. G. C. made by the plaintiff-firm were accepted by and on behalf of O. N. G. C. and work orders were issued alongwith execution of former agreement on stamp papers on 9-2-1984 in respect of the three construction works. Works were to be executed within a stipulated time ranging from four to six months, after shifting the date for commencement, thereof, on 1-6-1984.
( 6 ) IN view of disputes between the parties, the plaintiff-firm filed the aforesaid three suits in the Court of the learned Civil Judge (Senior Division) at Mehsana inter alia contending that the department concerned of O. N. G. C. failed to perform reciprocal contractual obligations and there was, therefore, breach of contract. Since final bills were also not settled, the plaintiff-firm had prepared final bills and had sent them to Surat office of O. N. G. C. by a covering letter. However, the final bills could not be finalised and paid. In short, the plaintiff claimed recovery of damages by filing the three suits alleging breach of contract on the part of O. N. G. C. Relevant other particulars relating to the three suits and resultant three appeals are articulated in the following tabular form : s. No. No. of Amount Amount decreased. No. of suit. claimed Rs. Appeal 1. 60/86 1,50,616 91,115. 75 1453/94 2. 61/86 2,58,757 2,43,542 1452/94 3. 62/86 4,09,147 3,10,245 1451/94 the dispute revolves round as to who was responsible for breach of contract and whether the plaintiff-firm was entitled to claim damages and if yes, to what extent in view of the pleadings between the parties. The claims made in the suit by the plaintiff-contractor came to be resisted by O. N. G. C. by filing written statements inter alia contending that there was no breach of contract on the part of t
