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2010 (1) GCD 568 (Guj) (DB)
Hon’ble Mr. Chief Justice K.S. Radhakrishnan &
Hon’ble Mr. Justice Akil Kureshi
Madhya Pradesh State Electricity Board
Versus
Shree Bharat Co-operative Bank Ltd. & Ors.
Letters Patent Appeal No. 309 of 20091—Decided on 11/05/20092
[Indian] Contract Act — Sections 3 and 4 — M.P. Reorganisation Act, 2000 — Electricity (Supply) Act, 1948 — Section 66 — Constitution of India, 1950 — Article 226(2) — Writ Petition — Seeking payment of amount of interest and the principal of MPEB Bond — Direction by Single Judge of High Court of Gujarat to M.P. State Electricity Board and State of M.P. to jointly and severally make payment — Jurisdiction — Contention of petitioner that petitioner-Bank is situated in State of Gujarat and the application submitted by Bank was accepted by MPEB through SBI Capital Markets having Office in Gujarat is not acceptable in view of the fact that material essential or integral part of the cause of action arose in the State of M.P. and not in the State of Gujarat.
Held :
For the purpose of deciding whether facts averred by the petitioner would or would not constitute a part cause of action, one has to consider whether such fact constitutes a part of the cause of action. Even if a small fraction of the cause of action arises within jurisdiction of the Court, the Court may have territorial jurisdiction to entertain the suit/petition but the same by itself may not be considered to be determinative factor compelling the Court to decide the matter on merits. [Para 9]
The mere fact that the petitioner had submitted an application and paid the money through SBI Capital Markets Ltd., having its office in the State of Gujarat will not confer jurisdiction on Gujarat High Court to entertain the petition raising the claim against the MPEB and State of Madhya Pradesh. Offer was made by the petitioner-bank which was accepted by the MPEB at their Head Office at Jabalpur, State of Madhya Pradesh. The allotment was made by the MPEB from its Head Office situated at Jabalpur. Letter of allotment was issued from Jabalpur by Registered Post to the petitioner. Bond certificates were issued by the Madhya Pradesh Electricity Board from Jabalpur. Contract was, therefore, concluded at Jabalpur and the major portion of the cause of action arose at Jabalpur. The material, essential or integral part of the cause of action arose in the State of Madhya Pradesh and not in State of Gujarat. [Para 10]
Since the material essential and integral part of the cause of action arose in the State of Madhya Pradesh, this Court has no jurisdiction to entertain the claim of the petitioner-Bank. Further, several such claims are pending consideration in various Courts in the State of Madhya Pradesh. In fact one of such claims was raised before the High Court of Judicature at Bombay, being Summary Suit No. 3454 of 2006 and connected matters wherein the question of jurisdiction was considered and the Court took the view that it has no jurisdiction to entertain the application. Further, Court is of view that it would be advisable that all such similar claims be consolidated and be heard by the Court in the State of Madhya Pradesh to avoid conflicting directions. [Para 11]
Law Laid Down :
Even if a small fraction of cause of action accrues, Court has to decide whether such facts constitute material essential or integral part of cause of action to entertain petition for decision.
K.S. Radhakrishnan, CJ.—Madhya Pradesh State Electricity Board (for short ‘MPEB’) has come up with this Letters Patent Appeal aggrieved by the directions of the learned Single Judge directing the Board as well as the State of Madhya Pradesh to jointly and severally to make payment of requisite amount of interest and the principal on the MPEB Bond as per the Scheme within period of three months from receipt of the order and also for consequential relief.
2. Special Civil Application No. 128 of 2005 was preferred by the first respondent-original petitioner-Shree Bharat Co-operative Bank Ltd seeking directions to the Respondent No. 2 to 6, more particularly, Madhya Pradesh Electricity Board and the State of Madhya Pradesh to make payment of interest and principal amount due from 30th June, 2000 till date as per the Schedule and as per the private placement in MPEB Bonds (1)-98 and also to make payment of interest and two installments of principal amount at the rate of 66% due as on 31.12.2004 as promised and guaranteed by the Respondent Nos. 2, 4, 5 and 6 to the tune of Rs. 2,00,25,000/- (Rupees Two Crores and Twenty Five Thousand only) and also for other consequential reliefs.
3. Petitioner-Bank has invested Rs. 1.50 crores in the Bonds offered by the Madhya Pradesh Electricity Board guaranteed by the Respondent No. 5 and 6 mentioned in Memorandum at Annexure-A under the Resolution dated 29.10.1998. On invitations made by the Board, petitioner bank had applied for 150 Bonds each having value of Rs. 1,00,000/- on 21.11.1998 vide application No. SR 001759 under Option I mentioned in the Memorandum stating coupon rate payable at the rate of 15 % per annum payable semi annually. Copy of the application dated 21.11.1998 for 150 bonds submitted in the office of the Respondent No. 4-SBI Capital Markets Ltd. at Ahmedabad is produced at Annexure-C. Petitioner-Bank then tendered Account Payee Demand Draft of Rs. 1.5 crores payable at Ahmedabad. Petitioner-Bank later received a letter dated 23.11.1998 from the Respondent No. 4 regarding acceptance of application form No. 1759 along with the amount of Rs. 1.50 crores. Petitioner had also received an allotment letter dated 01.12.1998 from the Respondent No. 2 stating that 150 bonds worth Rs. 1.50 crores were allotted in favour of the petitioner. Petitioner-Bank however submits that the Respondent Nos. 2 to 6 had not acted as per the promise and guarantee given in the Memorandum and had stopped payment of interest after 30.06.2000. According to the petitioner, amount of interest accrued from 01.07.2000 to 31.12.2004 comes to Rs. 1,01,25,000/- and the principal amount due as on date at the rate of 66 % comes to Rs. 99,00,000/-. Thus, according to the petitioner, total amount as on the date due to the petitioner from the Respondent Nos. 2 to 6 comes to Rs. 2,00,25,000/-. Petitioner written several letters to the respondents but the same were not responded nor the respondents paid the said due amount.
4. Learned Counsel Mr. K.K. Pandey appearing for the writ petitioner submitted that on the facts and in the circumstances the learned Single Judge was justified in giving directions to the respondents jointly and severally to make payment as per the terms and conditions of the memorandum as well as the contract executed between the parties. Learned Counsel submitted as per Section 3 read with Section 4 of the Indian Contract Act, the contract would be completed, when the communication of acceptance comes to the knowledge of the party and therefore, contract was concluded in the State of Gujarat. Learned Counsel referred to several decisions in support of his contention. Reference was made to Morgan Stanley Mutual Fund vs. Kartick Das, II (1994) CPJ 7 (SC), Hamza Haji vs. State of Kerala, 2006 (0) GLHEL SC 37753 and R.S.D.V. Finance Co. Ltd. vs. Shree Vallabh Glass Works Ltd., AIR 1993 SC 2094.
5. Learned Sr. Counsel Mr. Mihir Thakor appearing with Ms. Lilu Bhaya for the appellant has submitted
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