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MADRAS HIGH COURT
RAMASWAMI
G.Venkatesha Bhat
Versus
M/s. Kamlapat Motilal and others
A.A.O. No. 409 of 1954
Decided On : 31 August, 1956
JURISDICTION - CONTRACT - PLACE OF MAKING, PERFORMANCE, PAYMENT, REVOCATION, AND DEBTOR-CREDITOR RELATIONSHIP - DETERMINATION OF JURISDICTION IN SUIT FOR BREACH OF CONTRACT.
Fact of the Case:
The plaintiffs, merchants from Mangalore, Cannanore, and Tellicherry, entered into a contract with the defendants, a partnership firm from Cawnpur, for the purchase of 800 bags of sugar. The contract was negotiated through correspondence, with the plaintiffs sending offers and the defendants sending acceptances. The plaintiffs sent an advance of Rs. 8000/- towards the price of the goods, but the goods were not dispatched due to restrictions imposed by the Railway authorities and the Central Government. The defendants canceled the contract and returned the advance amount. The plaintiffs filed a suit in Mangalore for recovery of damages for breach of contract, the advance amount sent, interest, and costs.
Finding of the Court:
The court held that the suit should have been instituted in Cawnpur, where the contract was made and was to be performed, and where the place of payment was impliedly agreed to be. The court found that the place of making the contract was Cawnpur, as the acceptance of the offer was communicated there. The place of performance was also Cawnpur, as the sugar was to be delivered at the railway siding of the Majhulia Sugar Factory. The place of payment was also Cawnpur, as there was no agreement to sell the sugar on credit and the defendants would not have let go of their control over the sugar until they received full payment.
Issues: 1. Where was the contract concluded - in Mangalore on 13-3-1951 as alleged by the plaintiff or in Cawnpur on 14-3-1951 as contended by the defendant? 2. If the contract was concluded by acceptance on 14-3-1951 at Cawnpur, has this Court jurisdiction to try the suit? 3. Has any part of the cause of action arisen within the jurisdiction of this court?
Ratio Decidendi: The court applied the principles of contract law and the provisions of the Code of Civil Procedure to determine the jurisdiction of the suit. The court held that the place of making the contract, the place of performance, and the place of payment were all in Cawnpur. The court also held that the plaintiffs could not rely on the cancellation of the contract as a cause of action to sue in Mangalore, as they had not treated the cancellation as a breach of contract and had continued to insist on the performance of the contract. The court further held that the Common Law rule that the debtor must find the creditor did not apply in this case, as the suit was not confined to the return of the advance amount but included a claim for damages.
Final Decision: The court dismissed the appeal and upheld the decision of the lower court that the suit should have been instituted in Cawnpur.
JUDGMENT :- This is an appeal preferred against the decree and judgment of the learned Subordinate Judge of South Kanara in O. S. No. 83 of 1952.
2. The facts of this case have been fully set out in the judgment of the lower court and need not be recapitulated.
3. The controversy between the parties in the lower court and here relates to the question of jurisdiction viz., whether the suit should be instituted in Mangalore as the plaintiffs contend or in Cawnpur as the defendants contend it should have been done.
4. In order to understand this controversy the following relevant facts may be borne in mind. The plaintiffs are four merchants of whom two are conducting business at Mangalore, one is carrying on business at Cannanore and one is carrying on business at Tellicherry. The defendants consist of two partnership firms carrying on business at Cawnpur in the United Provinces dealing in sugar.
5. On 5-1-1951 under Ex. B-1 the first plaintiff approached the first defendant requesting the latter to give him a firm selling offer for 5000 bags or available quantity of free market sugar for April 1951 or suitable delivery indicating the rate, grade and time of delivery and at the same time expressing his readiness to abide by any terms and conditions imposed on him. In Ex. B-2 dated 12-1-1951 the first defendant acknowledged Ex. B-1 and informed the first plaintiff that sugar had not yet been released for open market sale but that the first plaintiffs name was however being registered for future reference.
In Ex. B-3 dated 9-2-1951, the first plaintiff again renewed his original request. It is evident that no reply was sent to Ex. B-3. Then on 10-3-1951, the first plaintiff again wrote to the first defendant mentioning that a radio announcement had been made regarding the release order given to sugar mills and asking for a selling offer for 5000 bags on commission basis. That letter followed the telegram Ex. B-5 sent by the first plaintiff on the same day. On 12-3-1951 the first defendant sent the telegram Ex. A-1 to the first plaintiff to the following effect: "Received. Market rate 56 subject to confirmation. Lal Moti" the next telegram which was sent by the first plaintiff himself is Ex. B-6 dated -13-3-1951. Ex. B-6 acknowledged Ex. A-1 and then proceeded to mention that the first plaintiff wanted 800 bags of D27 or better grade sugar subject to immediate despatch, that he wanted a commission of 1 per cent to be allowed, that he wanted confirmation and that he was willing to send an advance of Rs. 10/- per bag.
The further recitals in Ex. B-6 that he proposed to send further orders and that others were offering to sell at Rs. 55/- per maund are not relevant for the purpose of this case. On receipt of Ex. B-6 the first defendant sent back the telegram Ex. A-2 dated 14-3-1951 followed up by the letter Ex. B-3 dated 15-3-1951. Therein the first defendant accepted the offer of the first plaintiff, asked him to send the advance to the second defendant, asked him to wire destination details and informed him that commission would be allowed to him at 1% only in respect of this particular consignment. The first plaintiff was also invited to make further offers subject to the first defendants acceptance.
The subsequent correspondence between the parties only throws light upon the manner in which the parties understood the different terms of the contract. It is important to emphasise here that during the course of the subsequent correspondence the first plaintiff has been consistently mentioning the date of the suit contract as 14-3-1951. The total cost of the 800 bags of D-27 grade at Rs. 56/- per maund amounted to Rs. 1,23,200.
Towards that price the first plaintiff admittedly sent an advance of Rs. 8000/- by telegraphic transfer to the second defendant on 19-3-1951. But the goods, however, were not despatched and there has been subsequent correspondence and finally on 27-6-1951 Messrs. Sugar Dealers Cawnpur, intimated that the contr
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