The main legal point established in the judgment is that the cause of action must have arisen in the specific jurisdiction where the suit is filed, and the integral facts constituting cause of action are crucial in determining the maintainability of the suit.

R. BANUMATHI, J.

Whether suit against 2nd defendant/2nd respondent – State Bank of India, Tirupur is maintainable on the Original Side of the Madras High Court is the point arising for consideration in this appeal, which arises out of an order of learned single Judge dated 7.7.2010 in Application No.805 of 2010 in C.S.D.No.12201 of 2008 declining to grant leave to sue the 2nd respondent.

2. The appellants/plaintiffs filed the suit in C.S.D.No.12201 of 2008 for recovery of a sum of Rs.40,90,020.95 with interest at the rate of 18 percent per annum.

3. Case of appellants/plaintiffs is that the appellants/plaintiffs are sister concerns and that they are the partnership firms having registered place of business at Tirupur and carrying on business in export of garments at Tirupur. The appellants are engaged in the manufacture and export of hosiery products. In the course of their business, the appellants availed number of loan/credit facilities from the 2nd respondent/2nd defendant. For availing facilities, appellants have provided primary securities such as stock and receivables, bills, etc., apart from collateral securities by creating equitable mortgage of their immovable properties situated at Chennai and Tirupur by depositing the title deeds.

4. Due to the slump in the market during 1994, the plaintiffs could not retain the credit facilities availed by discounting all the bills from the respondents/defendants and the appellants committed default in repaying the amount due and the accrued interest thereon. The outstanding for the 1st appellant as on 31.12.1997 was Rs.1.702 Crores and for the 2nd appellant was Rs.1.8229 Crores and in all, both of them have to pay total sum of Rs.3.0031 Crores to the 2nd respondent Bank. The appellants negotiated with the 2nd respondent for One Time Settlement. One Time Settlement was arrived at and the 2nd respondent Bank agreed to receive a sum of Rs.2.1250 Crores out of the said total sum of Rs.3.0031 Crores payable by the appellants. The proposal of the appellants to sell the property at Royapettah, Chennai was approved and the properties were sold and appellants settled their dues to the 2nd defendant. Finally, all the dues were settled as per One Time Settlement and the plaintiff's account was closed on 21.7.1998. UNIPRINT – BERIT AND DENNIS DOHERTY at Norway, who is one of the foreign buyers of the appellants, went in liquidation at Norway. The appellants filed the claim for the same with the Administrator of the Company in Norway. The Company's advocate in Norway sent a letter to the appellants that their claims have been accepted. The Administrator of the Norway Company is also said to have sent letter dated 24.6.1998 to the appellants asking the appellants to confirm in writing that the amount can be paid to the State Bank of India/2nd defendant. An amount to the tune of NOK 339,178,23 equivalent to Indian Rupees 19,64,183 had been received by the 2nd defendant/Overseas Branch on 26.4.1999 and credited to the accounts of the appellants.

5. According to State Bank of India, the appellants by their communication dated 4.7.1998, interalia stated that the Bank is a rightful creditor to receive the said claims. In the above circumstances, the respondents/defendants received the said sum of Rs.19,64,183/- and adjusted towards their claim.

6. Case of appellants is that the appellants only expressed their consent to make payment to the State Bank of India and the appellants are entitled to receive the amount. Further case of appellants is that factum of money received by the defendants from Norway Court was not even informed to the appellants by the defendants and therefore appellants wrote a letter to the 2nd defendant - Bank to issue a Pay Order for the money received by the defendants with interest. The 2nd defendant informed appellants that during the course of negotiation for arriving at a settlement of the claim, Bank has never agreed to give up their rights to realise the amounts