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  • Coyajee, J.
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Smart Summary

Summary of the Opinion

Factual and Procedural Background

The plaintiffs brought a suit to recover a specified amount from the defendant under a contract for transporting certain teak logs from the Kanara forests to Marmagoa and onward from Marmagoa to Karachi. The plaintiffs sent an offer by letter from Bombay to the defendant at Belgaum. The defendant accepted the offer by posting a letter from Belgaum, which was received by the plaintiffs in Bombay. The plaintiffs allege in paragraph 13 of the plaint that the contract was finally concluded in Bombay when the acceptance was communicated to and received by them.

Previously, leave under Clause 12 of the Letters Patent had been granted by Tendolkar J. The defendant filed the present summons asking that that leave be revoked on the ground that no part of the cause of action arose in Bombay and therefore the Bombay Court lacked jurisdiction even with leave. The court in this opinion examined prior authorities bearing on whether part of the cause of action arose in Bombay and ultimately held that the leave was properly granted. The summons by the defendant was discharged with costs.

Legal Issues Presented

  1. Whether a part of the cause of action in a suit on contract arose in Bombay (where the offer originated) so as to justify the grant of leave under Clause 12 of the Letters Patent to sue in the Bombay Court.
  2. Whether an acceptance posted by the offeree outside the forum is a continuing act until it reaches the offeror such that a part of the cause of action arises at the place where the acceptance is received (i.e., whether posting acceptance at Belgaum excludes Bombay as a locus for a part of the cause of action).
  3. Whether earlier decisions (including those holding that acceptance is complete where posted) control jurisdictional questions as to where a part of a cause of action arises for the purposes of instituting suit.

Arguments of the Parties

Plaintiffs' Arguments

  • The plaintiffs allege that the contract was finally concluded in Bombay when the acceptance posted from Belgaum was communicated to and received by the plaintiffs in Bombay (see para 13 of the plaint).
  • Implicitly, the plaintiffs rely on the proposition that a part of the cause of action arises where the acceptance is delivered/communicated, not solely where it is posted.

Defendant's Arguments

  • The defendant contended that no part of the cause of action arose in Bombay because the acceptance was posted at Belgaum and, relying on a decision of Bhagwati J. in Premchand Roychand & Sons v. Moti Lall (AIR 1951 Bom 249), argued that where acceptance is posted outside the forum the cause of action does not arise within the forum and leave under Clause 12 should be revoked.
  • The defendant relied on the principle (as stated by Bhagwati J.) that an offer is not made within the jurisdiction until it is received by the party to whom it is addressed and that therefore jurisdiction cannot be based on the place of posting when the recipient resides or carries on business outside the forum.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Premchand Roychand & Sons v. Moti Lall, AIR 1951 Bom 249 Held that if an offer is received outside the forum and acceptance is there, no part of the cause of action arose within Bombay; the offer was not "made" within Bombay for jurisdictional purposes (Bhagwati J.'s reasoning). The defendant relied on this co‑ordinate‑court decision to argue revocation of leave. The court considered it binding in principle but found it did not directly cover the issue of continuing acceptance as discussed in the present case and therefore distinguished it.
Dobson v. Bengal Spinning and Weaving Co., 21 Bom 126 Fulton J.'s view that the act of concurrence (acceptance) is part of the cause of action and, thus, where acceptance occurs is relevant to where the cause of action arose. Quoted in argument (as authority for the view that making of the offer/acceptance may form part of the cause of action). The court noted this authority but observed that later authorities point to a different position.
Clarke v. Knowles (1918) 1 KB 128 English authority relied upon by Bhagwati J. to support his position (i.e., denial that offer emanation from within jurisdiction necessarily establishes offer as "made" there). Mentioned as one of the authorities Bhagwati J. relied upon; the court recorded that Bhagwati J. relied on such authorities but ultimately distinguished them on the facts and issues here.
In re Perianna Mudali, AIR 1942 Mad 31 A prior Madras decision cited in the context of conflicting Madras authorities. Not followed by Bhagwati J. (he considered it overruled by a later Madras division bench). The present court refers to that discussion as background to the conflicting Madras authorities.
Manilal v. Venkatachalapathy, AIR 1943 Mad 471 Division bench holding: a contract is made where the offer is accepted and, where acceptance is by post, it is accepted at the place where the letter of acceptance is posted (thus locating the cause of action there). Bhagwati J. treated this division bench decision as overruling Patanjali Sastri J.'s reasoning; the present court observed that Manilal did not engage with the specific question whether acceptance is a continuing act until received and therefore did not preclude adopting Patanjali Sastri J.'s reasoning.
Kamisetti Subbiah v. K. Venkataswamy, 27 Mad 355 Stated that the contract is concluded where the letter of acceptance is posted (under former CPC S.17, Expl.3) — a position tied to prior procedural law. The court noted that Explanation 3 has been repealed and that Kamisetti did not address whether acceptance continues until reaching the offeror; thus it does not decide the question now before the court.
Supulchre Bros. v. Khushal Das, AIR 1942 Mad 13 Held that although acceptance is complete as against the acceptor when posted, it is a continuing act until it reaches the person to whom it is communicated; thus a part of the cause of action arises both where acceptance is posted and where it is delivered/received. The court identified this as the main judgment dealing with the point and expressly adopted Patanjali Sastri J.'s reasoning that acceptance may be treated as occurring also where it is received, thereby supporting jurisdiction in Bombay.
Evans v. Nicholson (1875) 32 LT 778 Authority for the proposition that posting an acceptance is complete as against the acceptor but that the act may be continuing until it reaches the offeror (Lord Justice Coleridge's reasoning). Referenced by Patanjali Sastri J. and relied upon by the present court as supporting the view that acceptance can be treated as taking place also where it reaches the offeror.
Halsbury's Laws of England, Vol. VIII (cited) Recognises the principle (citing Lord Coleridge) that when offer and acceptance occur through post a part of the cause of action arises where the acceptance is posted and a part where it is delivered. Used to support the proposition that established legal treatises recognise the dual‑location view of cause of action in postal acceptances; cited as confirming Patanjali Sastri J.'s approach.
Engineering Supplies Ltd. v. Dhandhania & Co., AIR 1931 Cal 659 Observation (Rankin C.J.) that the ordinary law of contract does not determine the place where a contract is made; place-of-contract may be a matter of procedure or private international law, not settled by the Contract Act. Quoted to show caution against deriving jurisdictional conclusions solely from the law of contract and to support a more fact‑sensitive approach to where a part of the cause of action arises.
Pokhar Mal v. Khanewal Oil Mills, AIR 1945 Lah 260 Division bench holding that jurisdiction attaches where the acceptance is posted; posting acceptance concludes the contract and the acceptance does not subsist until it reaches the offeror. The court considered this contrary decision but rejected its reasoning for failing to consider authorities that treat acceptance as a continuing act; the present court found the reasoning unsatisfactory for the present issue.
Dhanmal Marwari v. Jankidas Baijnath, 49 Cal W.N 123 Held that in suits arising out of contract a part of the cause of action arises where the offer is made even if the contract is concluded elsewhere; such suits may be brought where the offer originated (S.20(c) CPC context). The court relied on this Calcutta division bench decision as supportive authority for the proposition that part of the cause of action may arise where the offer is made, bolstering the court's conclusion that Bombay was a valid forum.
Read v. Brown (1888) 22 Q.B.D 128; Cooke v. Gill (1873) 8 C.P 107 Cases discussed in Dhanmal Marwari in relation to whether making of an offer can be regarded as part of the cause of action in contract suits. The court noted these were among the authorities considered in Dhanmal Marwari to support the view that offer-making may form part of the cause of action that must be proved by the plaintiff.

Court's Reasoning and Analysis

The court proceeded by examining the competing strands of authority and how they bear on whether part of the cause of action arose in Bombay. The key analytical steps, as set out in the opinion, are:

  1. Recognition of the central factual posture: the plaintiffs made an offer from Bombay which was communicated to the defendant at Belgaum, and the defendant accepted by posting a letter from Belgaum which was received in Bombay.
  2. Consideration of Bhagwati J.'s decision in Premchand Roychand, which held that an offer made by a party within jurisdiction is not "made" within that jurisdiction until received by the offeree, and where the offeree resides outside jurisdiction the cause of action does not arise within the forum. The court acknowledged the binding nature of co‑ordinate court decisions but examined whether that decision directly covered the specific question before it.
  3. Identification of the specific point of distinction: whether posting an acceptance abroad is a completed act for all jurisdictional purposes or whether acceptance is a continuing act until the acceptance reaches the offeror so that a part of the cause of action arises at the place of receipt (Bombay).
  4. Examination of authorities addressing continuity of acceptance. The court highlighted Patanjali Sastri J.'s reasoning in Supulchre Bros. v. Khushal Das that, although acceptance is complete as against the acceptor upon posting, it is nevertheless a continuing act until it reaches the offeror and therefore may be treated as made also where it is received. The court noted that Evans v. Nicholson and Halsbury's support this view.
  5. Distinguishing and evaluating other authorities: the court observed that the Manilal division bench and Kamisetti decisions take the position that acceptance is complete where posted (and therefore locus is where posted), but found that those decisions did not confront the continuous‑acceptance argument in the way Patanjali Sastri had. The Lahore decision in Pokhar Mal was noted as consistent with the "posting is decisive" view, but the court found its reasoning did not engage with the continuing‑acceptance authorities.
  6. Reliance on supporting authority from the Calcutta division bench (Dhanmal Marwari) which held that in contracts a part of the cause of action may arise where the offer is made and that such suits may be brought in the Court at the offeror's place, supporting the proposition that causes of action in contract can be "split" across locations.
  7. Application of these principles to the facts: concluding that because the acceptance was a continuing act until it reached the plaintiffs in Bombay, and because the offer originated in Bombay, a part of the cause of action did in fact arise in Bombay. Consequently, leave under Clause 12 had been properly granted by the earlier Judge.
  8. The court therefore discharged the defendant's summons challenging the grant of leave and ordered costs against the defendant.

Holding and Implications

Holding:

The summons by the defendant is discharged; the leave granted under Clause 12 of the Letters Patent is rightly granted.

Implications:

  • Direct effect on the parties: the Bombay Court's grant of leave under Clause 12 stands, allowing the plaintiffs to proceed in Bombay; the defendant's challenge to revoke that leave was dismissed and the summons discharged with costs.
  • On precedent and broader doctrine: the court expressly adopted the reasoning of Patanjali Sastri J. (Supulchre Bros. v. Khushal Das) that acceptance by post may be treated as a continuing act that also takes place where it is received. The court distinguished Bhagwati J.'s co‑ordinate decision as not directly covering the continuous‑acceptance point and therefore did not treat it as controlling for the issue at hand. The opinion does not state that it establishes a new binding precedent beyond applying and preferring the reasoning it accepted; it confined its conclusion to the facts and authorities discussed and upheld the leave in this case.
B/R.G.D
Summons discharged.
Show full summary ...

    Bombay Steam Navigation Co. Ltd. v. Union Of India

    In this summons which is taken out by the defendant it is asked that the leave granted by my brother Tendolkar J. under cl. 12 of the Letters Patent should be revoked.

    2. The plaintiffs have filed this suit to recover a certain amount from the defendant under a contract. The offer was made from Bombay to the defendant at Belgaum by letter by the plaintiffs to transport certain logs of teak wood from the Kanara forests to Marmagoa and from Marmagoa to Karachi. The offer of the plaintiffs was accepted by the defendant by their officer's letter posted to Belgaum. It is contended that in those circumstances no part of the cause of action has arisen in Bombay and therefore leave should not have been given. The plaintiffs in para 13 of the plaint say that the said contract was finally arrived at in Bombay when the acceptance of the offer was communicated to and received by the plaintiffs in Bombay.

    3. The facts of this case are very simple. The offer was made by post from Bombay to enter into a particular contract. The offer was communicated to the defendant at Belgaum and the defendant accepted the offer at Belgaum by posting a letter which was received by the plaintiffs in Bombay. The defendants rely upon the judgment of my brother Bhagwati J. in the case of — Premchand Roychand & Sons v. Moti Lall, AIR 1951 Bom 249 (A). In that case the plaintiffs who were carrying on business as sharebrokers in Bombay offered to sell to the defendant who was a share-broker residing and carrying on business in Delhi certain shares. The said offer was communicated to the defendant by telegram which was received by him in Delhi and he accepted the offer by telegram. The performance of the contract by sending the share certificates together with the relative transfer forms and also the draft to the defendant was to be in Delhi. It was held by Bhagwati J. that no part of the cause of action had arisen in Bombay and even with leave under cl. 12 of the Letters Patent, which the plaintiffs had obtained, the Court at Bombay had no jurisdiction to entertain the suit. The learned Judge said that the true principle was that even though the offer might have emanated from a place within jurisdiction it could not be said to have been made until that offer had been received by the party to whom it had been made. If the party to whom the offer was thus communicated resided or carried on business outside jurisdiction, the offer could not be said to have been made within jurisdiction. That is the substance of the learned Judge's reasoning. It was contended in that case that even though ordinarily a contract could be said to have been made at the place where the offer was accepted there was a difference which obtained when considering whether a part of the cause of action in a suit on contract did arise within jurisdiction, and the judgment of Fulton J. in — ‘Dobson v. Bengal Spinning and Weaving Co.’, 21 Bom 126 (B), was quoted to the effect, viz. (p. 134):

    “…But if the making of the contract be part of the cause of action it appears to follow that the act of concurrence of either party which is essential to the contract is itself a part of the cause of action, for without such act of concurrence the contract cannot come into existence.”

    4. Bhagwati J. held that this judgment of Fulton J. was dated as far back as 1896 and there have been further authorities both in England and in India which are contrary to the position enunciated in that judgment, and he relied upon the case of — ‘Clarke v. Knowles’, (1918) 1 KB 128 (C). Bhagwati J. after referring to certain Indian decisions proceeded to say that if the party to whom an offer is thus communicated resides or carries on business outside jurisdiction, the offer cannot be said to have been made within jurisdiction. A certain judgment of Patanjali Sastri J. now the Chief Justice of India, reported in — ‘In re Perianna Mudali’, AIR 1942 Mad 31 (D), was not followed on the ground that decision was overruled by the decision of the Madras High Court in — ‘Manilal v. Venkatachalapathy’, AIR 1943 Mad 471 (E). This in short is the decision of Bhagwati J. that is relied upon. It is contended that this judgment being a judgment of a Court of co-ordinate jurisdiction I am bound by this decision.

    5. I would be bound by this decision and I am most reluctant to differ from any judgment of a Court of co-ordinate jurisdiction unless that decision does not directly cover the point argued before me as in this particular case. And that point is placed in the following manner: If is stated that part of the cause of action must depend on the definition of cause of action, viz., all the bundle of facts which the plaintiff must aver for the purpose of establishing his case, and on that basis it is further argued that although the offer was made by post from Bombay and reached the defendant at Belgaum the letter of acceptance posted at Belgaum was a continuous acceptance until it reached the party in Bombay and as there must be a concurrence conveyed to the other party and therefore there is a part of the cause of action which has in fact arisen within the jurisdiction of this Court, viz., at Bombay.

    6. The decision in — ‘Kamisetti Subbiah v. K. Venkataswamy’, 27 Mad 355 (F), only went to the extent of saying that the contract would be concluded at the place where the letter of acceptance was posted and that was the position under the Code of Civil Procedure of 1882, S. 17, Expl. 3. That Explanation 3 has now been repealed and deleted from the Code of Civil Procedure, but even otherwise that decision does not go further and consider the point, viz., whether the letter of acceptance although the acceptance was posted at Belgaum the acceptance thereof continues until it reaches the other party in Bombay. That point although incidentally referred to in the judgment of Bhagwati J. has not been dealt with by him as I shall presently show.

    7. The main judgment dealing with this point is the judgment of Patanjali Sastri J. in the case of — ‘Supulchre Bros. v. Khushal Das’, AIR 1942 Mad 13 (G). In that case it was laid down that although an acceptance is complete as against the offeror as soon as the letter or telegram is posted, it is a continuing act until it reaches the person to whom it was communicated and may thus be taken to be made also at the place where it is received. When an offer is made and accepted through post or by telegram, a part of the cause of action is where the offer is posted or sent and a part where it is delivered. It must be noted that as against the acceptor the contract is concluded the moment he posts the letter of acceptance and makes the acceptance beyond his own reach. The question is whether a part of the cause of action does arise where the acceptance is communicated.

    8. After considering the case cited before me the learned Judge at p. 14 observed that it was argued that there was no real analogy between the receipt of an offer and the receipt of an acceptance; for, while the former was an essential step in the making of a contract as there could be no acceptance unless the offer was received, the receipt of acceptance was not necessary to complete the contract which was concluded as soon as the letter of acceptance was posted, which latter proposition was as indicated by the Judge settled by a long course of decisions. The learned Judge, however, held that there is authority for the view that although acceptance is complete as against the proposer as soon as the letter containing it is posted it is a continuing act until it reaches the person to whom it is communicated and may thus be taken to be made also at the place where it is received. He relied for that on the decision in — ‘Evans v. Nicholson’, (1875) 32 LT 778 (H), and he quoted the words of Lord Justice Coleridge at p. 14. In that case Lord Justice Coleridge observed as follows; after stating that the normal proposition is that the offer is accepted where the acceptance is posted and that concludes the contract, he proceeded to observe (p. 780):

    “…It has been pointed out, indeed, and with perfect truth, that the cases referred to have stopped at this point with laying down as law that a contract is complete when its terms are accepted, and that the acceptor need not wait till the other party receives his letter notifying his acceptance. But, then, that was all that was necessary to decide in all those cases …; and the courts there needed not go on and say whether the acceptance was a continuous act; still, all the reasoning in the cases upon which the judgments are founded, though the judgments are themselves confined to the points necessary to be decided, is applicable to the further preposition which we are now considering, viz., that the acceptance continues to be an act done by the person accepting in a uniform and unbroken course of dealing until it reaches the other person to whom it is notified. And in my opinion, although complete when he sends it off by post and made then as against him, it is none the less made also when it reaches the mind of the offeror by reason of its having also been made before … and so, to apply the proposition to the facts in this case, I should say that, although an account was undoubtedly stated at Copthorne, wherever that may be, it was none the less stated again when the letter containing the admission was received in the City.”

    9. In those circumstances it was held that there was a part of the cause of action also at the place where the acceptance is communicated to the offeror. The learned Judge, Patanjali Sastri J., thereafter states that the decision in that case was based on general principles applicable to all contracts and has been so recognised in Halsbury's Laws of England, Vol. VIII at p. 191 (Hailsham Edition) where this judgment of Lord Coleridge is cited as an authority for the proposition that when an offer is made and accepted through post, a part of the cause of action does arise where the letter of acceptance of the offer is posted and a part where it is delivered.

    10. Bhagwati J. declined to accept the reasoning in this case on the ground that this case was overruled by the decision of the division bench of the Madras High Court in the case of — ‘Manilal v. Venkatachalapathy (E)’. That case laid down that a contract is made where the offer is accepted and an offer when accepted by post is accepted at the place where the letter of acceptance is posted and therefore the cause of action arises there. That proposition is not a preposition to which an exception can be taken, but this division bench judgment does not proceed further to consider the reasoning where the acceptance is a continuous acceptance and a part of the cause of action arises where the acceptance is communicated to the offeror, because this judgment of the division bench merely recites former decisions of the division benches of that Court and held that Patanjali Sastri J. sitting as a single Judge should have followed these judgments which were binding on him as well as on the division bench hearing the appeal. And there is no discussion or dissent on the question agitated before Patanjali Sastri J. and decided by him.

    11. In this connection I may refer to the observations of Chief Justice Rankin in the case of — ‘Engineering Supplies Ltd. v. Dhandhania & Co., AIR 1931 Cal 659 (I) where the learned Chief Justice observed that it is a confusion to say that, if you want to know where a contract was made, the answer will be found in the law of contract. The learned Judge observed as follows (p. 663):

    “…That is the last thing you will find in the law of contract. The law of contract will inform you what the necessary conditions are which have to be fulfilled before two parties come under a legal obligation to each other in respect of their negotiations. Thus I believe, the Indian Contract Act nowhere says anything about the place where the contract is made and it is no part of the ordinary law of contract, though it may be part of a doctrine of private international law or of some rule of procedure, to say that where persons in two different places do something out of which the contract arises, the contract is to be deemed to have been made in one place rather than in the other. We must avoid the idea that actions on contract are of a few limited types, that the causes of action can only be broken up into certain groups of facts, that it is possible to attain any more precise definition of ‘cause of action’, which will be of general application than the definition upon which the learned Judge has proceeded.”

    12. My attention has been drawn to the decision in the case of — ‘Pokhar Mal v. Khanewal Oil Mills’, AIR 1945 Lah 260 (J), where it was held by the division bench that jurisdiction is to be assumed to be where the letter of acceptance is posted and that mere posting of the offer would not be regarded as part of the cause of action so as to entitle the plaintiff to sue in the Court where the offer is posted, and the moment the letter of acceptance was placed in the post-box the offer had been accepted and the contract concluded. It was reasoned that as a complete contract came into existence by the posting of the letter of acceptance there could be no question of the acceptance subsisting until the letter reached the other side and that therefore the mere receipt by the plaintiff of the letter of acceptance at the other end could not be said to form part of the cause of action.

    13. I am afraid I am unable to accept the reasoning inasmuch as none of the decisions which have been discussed have laid down that the posting of the acceptance was an act which continued until the acceptance reached the offeror and in that event that being a part of the cause of action the offeror could maintain that a part of the cause of action was within the jurisdiction of the Court from where the offeror made the offer. None of the judgments I have referred to above were referred to in that decision of the Lahore High Court and this point has not been considered. The reasoning I have adopted is supported by a decision of a division bench of the Calcutta High Court reported in — ‘Dhanmal Marwari v. Jankidas Baijnath’, 49 Cal W.N 123 (K), where it was held that in the case of suits arising out of contract, a part of the cause of action arises where the offer is made, although the contract may be concluded elsewhere and, accordingly, such a suit may be brought in a competent Court at the former place under S. 20(c) of the Code of Civil Procedure.

    14. The learned Judges after discussing the definition of cause of action and the cases reported, viz. — ‘Read v. Brown’, (1888) 22 Q.B.D 128 (L), and — ‘Cooke v. Gill, (1873) 8 C.P 107 (M), observed (p. 128):

    “Applying this definition, there is no reason why in a suit for damages for breach of contract, the making of the offer which upon acceptance eventually becomes the contract, should not be regarded as forming part of the cause of action. The first fact which the plaintiff in such a suit will have to prove before he can succeed is the making of the contract, and the offer is as much an essential element of it as the acceptance. This, was in fact the view indicated by Fulton J. in — “Dobson v. Bengal Spinning and Weaving Co.” (B).

    and that view was also approved of by Chief Justice Rankin in — ‘AIR 1931 Cal 659 (I)’.

    15. In these circumstances I have come to the conclusion that the leave granted has been properly granted inasmuch as a part of the cause of action did arise in Bombay from where the offer was made and where the acceptance was communicated which was a continuing acceptance until it reached the offeror at Bombay. This point has not been directly covered by the judgment of Bhagwati J. and Mr. Justice Bhagwati's statement that the judgment of Sastri J. has been overruled is only correct to the extent that the division bench of the Madras High Court held that Patanjali Sastri J. should have followed the division bench judgments which were binding on the said Judge as well as on the division bench of the Madras High Court, but did not enter into the question agitated and discussed by Mr. Patanjali Sastri and that reasoning is open to me to adopt and I respectfully accept the reasoning set out in great detail in that case. I, therefore, hold that leave granted under Cl. 12 of the Letters Patent is rightly granted and the summons will stand discharged with costs.

    B/R.G.D
    Summons discharged.
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    Comments

    Bombay Steam Navigation Co. Ltd. v. Union Of India
    (Mar 10, 1952)