Shimoga Oil Mills v. Radhakrishna Oil Mills Kadiri

Vasudevamurthy, J.:— The plaintiff as proprietor of a concern called the ‘Shimoga Oil Mills’ brought a suit in the name of the Mills against the defendants who are proprietors of an Oil Mill in Kadiri in Ananthapur District, for recovery of Rs. 3,282/-. The suit was dismissed by the Subordinate Judge and the plaintiff has appealed.

2. The case for the plaintiff is that on 29-6-1947 the defendants agreed to supply 1,224 bags of groundnut seeds at Rs. 134/- per candy. The defendants received Rs. 3,000/- as advance but failed to deliver the goods though more than 2 months elapsed and in spite of repeated demands and though waggons had been available for making the supply. The plaintiff had therefore cancelled his order on 2nd and 5th September 1947 and asked for refund of the advance with interest which he has now claimed in this suit while reserving to himself a right to sue for damages for non-delivery later. The defendants admitted the agreement and receipt of the advance. They however pleaded that time was not of the essence and they had to supply the goods only when waggons or ‘empties’ were made available by the Railway, that they had registered an application for the necessary wagons immediately after the agreement and that when the waggons were made available they had asked the plaintiff to send a representative of his to supervise the despatch of the goods, that the plaintiff had failed to send a representative though he was bound to do so and had wrongfully concelled the contract and claimed refund of the advance. The defendants subsequently sold the goods by public auction with notice to plaintiff. The same had resulted, in a loss of Rs. 12,344/- which they were entitled to set off against the advance. They also reserved to themselves the right to sue for damages. The suit brought by the plaintiff in the name of Shimoga Oil Mills was not maintainable and the Shimoga Court could not try the suit as no part of the cause of action had arisen within its jurisdiction.

3. The learned Subordinate Judge held that time was not the essence of the contract as delivery was to be made only when waggons were made available by the Railway, that the defendants had tried unsuccessfully to secure the waggons and were in no way to be blamed if they could not get them earlier; and they had shown themselves to have been ready and willing to perform their part of the contract. He also held that the suit could not properly be filed in the Shimoga Court. He was not inclined to uphold the objection of the defendants as to maintainability though on some other ground he held that the plaintiff could not sue. He however held in favour of the plaintiff that there was neither an agreement nor any custom of trade that the plaintiff should send a representative to Kadiri to arrange for taking delivery of the goods.

4. Sri M.K Srinivasa Iyengar, the learned counsel for the appellant, has taken us in detail through the evidence including the correspondence between the parties. (Then after discussing the evidence His Lordship proceeded:) We think therefore that the plaintiff is entitled to recover the advance with interest on it by way of damages at 9 per cent which does not appear to be excessive. The defendants have had the use of his money and wrongfully withheld it. The plaintiff has however not shown how he is entitled to Rs. 25/- for notice charges and this must be disallowed.

5. It is next contended by Sri Ganesha Rao, the learned counsel for the respondents, that the plaintiff's suit is not maintainable. The ground he urges is not the one taken in the written statement viz., that the plaintiff could not have sued in the name of the Mills. This has been found against him and rightly, as the name of the concern as well as the plaintiff as its proprietor both appear in the cause title and the objection has therefore no substance at all. He has however tried to support the view of the Subordinate Judge based on an admission in the evidence of the plaintiff that his concern had after the date of the contract been converted into a limited liability company with some one else as Managing Director. But the plaintiff has not been asked, and there is no evidence, showing that the suit claim has been taken over by the Company. The plaintiff who is a party to the contract is entitled to sue on it in the absence of even any plea much less proof that he has ceased to have any rights to claim its performance.

6. It is next strenuously contended that the Shimoga Court has no jurisdiction to try the suit. If the suit had been governed by the present Code of Civil Procedure as extended into Mysore on 1-4-51 the question could have been disposed of more easily. The defendants would have had to show that there had been a failure of justice consequent on the suit having been brought in the Shimoga Court. It is represented for the defendants that Rs. 3,000/- was received at Kadiri, the delivery was to be F.O.R Kadiri which meant that the moment the goods were put on rails there, the contract would be completed; that the breach, if any, of that contract was also in Kadiri and that nothing was done or intended to be done at Shimoga in the course of the performance of the contract. For the appellant, it is urged that the railway receipt was to be delivered through a Bank against payment at Shimoga according to the contract and it is argued that this constitutes a part of the plaintiff's cause of action giving jurisdiction to the Shimoga Court to try the suit under S. 20 Cl. (c) C.P.C

7. It has sought to be made out by the respondents that the contract was silent as to the locale of the Bank through which the R.R was to be delivered. The Subordinate Judge is of the view that it might be a Bank at Kadiri, while for the appellant it is contended it must mean a Bank at Shimoga. Neither party has let in any independent evidence in this matter. The defendants have not expressly pleaded that the R.Rs also had to be delivered at Kadiri. But there is very little doubt that the well-known and usual practice of the trade in such cases is to present the R.R through a Bank at the place of the buyer where he has to pay and take delivery of the R.R against payment, unless it is expressly agreed otherwise. Nobody has suggested in this case that the plaintiff had a Bank account of his own at Kadiri where he could have arranged for payment nor is it explained how and through whom the plaintiff who is in Shimoga was expected to pay and get the R.R into his own hands if the defendants merely handed over the R.R to their own Bank at Kadiri.

8. It must therefore be held that the R.Rs had to be tendered by the defendants and delivered through a Bank of their own choice in Shimoga against payment. Cause of action has been defined as meaning every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to the judgment of the Court, it is in other words a bundle of essential facts which the plaintiff must prove before he can succeed in the suit. See Mulla's C.P.C 11th edition, page 118. Under explanation 2 to S. 20, C.P.C it is enough if the cause of action arises even in part within the jurisdiction of the court to enable a suit to be filed therein. The performance of a contract is part of the cause of action and a suit in respect of breach can always be filed at the place where the contract should have been performed or its performance completed. See Mulla's C.P.C page 120, also ‘Bhuttacharya & Co. v. Canpore Woolen Mills Co. Ltd.’, 13 Ind Cas 943 (2) (Cal) and ‘Champaklal Mohanlal v. Nectar Tea Co.’, 57 Bom. 306.

9. It has been so held in ‘39 Mys H.C.R 784 : 12 Mys LJ 367’, relied on for the appellant where the words “wholly or in part” which were newly substituted in the explanation to Section 20, C.P.C have been considered as more comprehensive in character than even the explanation 3 under the same section in the old Code. In that case, the goods had been delivered at Rampura on the N.W Railway at owner's risk to be despatched to Shimoga. Payment had-been made at Bombay. But still it was held by this Court that the buyer could maintain a suit for damages at Shimoga where the goods were found to be damaged and not according to the quality stipulated.

10. The plaintiff sued for the refund of the price which the defendant had collected at Bombay and interest on it by way of damages. It was held by Shankaranarayana Rao J. that a suit may be instituted where even a part of the cause of action arises; and where a right and infringement thereof have both to be proved before the plaintiff can get his relief, the cause of action arises partly where it was infringed. If the R.R in the present case had to be delivered at Shimoga after despatch of goods to that place it can be said that the performance could not be complete until the R.R was tendered at Shimoga. The plaintiff can also validly complain that he has not received such an R.R at all and therefore treat the omission as a Breach of a part of the contract and infringement of his right affording him a cause of action.

11. Moreover, that case also supports the alternative contention put forward for the appellant in this case that subsequent to the original contract the defendants had made a counter offer to refund the advance as per Ex. B-8*. The plaintiff can be said to have accepted this counter offer at Shimoga and applied for refund as per Ex. XIII†. Such acceptance amounts to another contract which must be deemed to have been made at Shimoga, as observed in ‘12 MVS LJ 367’. It has been held in ‘5 Mys LJ 69’ that a contract by correspondence is made at the place where the letter of acceptance is posted. See also ‘Mahomed Esuff v. M. Hateem & Co.’, 153 Ind Cas 111 (Mad) and ‘Kamisetti Subbiah v. Venkataswami’, 27 Mad 355. How far that acceptance is enforceable against the defendants and if they could not cancel their offer in Ex. B-8 has not been expressly relied on by the plaintiff but it cannot be said that this circumstance has no significance at all in determining the plaintiff's rights and remedies.

12. It has also to be observed that the plaintiff initiated the suit transaction by asking for rates by telegram Ex. I on 23-6-47, the defendants quoted rates offering 100 tons at Rs. 138/- a ton and the plaintiff accepted the defendant's offer by wire on 26-6-47 as per Ex. II which reads as follows: “Received, confirmed hundred tons, send our person with deposit tomorrow night”. Though neither of the counsel have referred us to these exhibits, probably because they are not printed, the effect of this acceptance, made at Shimoga of the defendants' offer and which concluded the contract cannot be ignored; and Ex. A would then be merely a memorandum of the detailed terms of that contract recorded in Kadiri.

13. Sri S.D Ganesha Rao, the learned counsel for the respondents has relied strongly on a case reported in ‘Parthasarathy Gupta v. Calcutta Glass & Silicate Works (1936) Ltd.’, AIR 1949 Mad 145 and on S. 20 of the Sale of Goods Act and urged that the property in the goods must be deemed to have passed to the plaintiff immediately the contract was signed. He argues that the goods were admitted by plaintiff to be ready goods which were then in the railway station.

14. The goods being thus ascertained goods only the payment of their value remained to be made by the plaintiff. This would mean that thereafter the relationship of the parties was merely one of creditor and debtor (with the creditor at Kadiri). There is, no doubt, some sort of loose admission that some ground-nuts of the defendants were in the Railway Station at the time of Ext. A but it is not shown that the entire quality agreed to be supplied was there. It is not also alleged by defendants that it had been weighed and separately stored against the contract and continued to remain in the Railway station alone for more than 3 months thereafter during all the time covered by the correspondence.

15. It is very improbable that the contracted goods had been ascertained and kept separate in the station during all this long period. The facts of the case in ‘AIR 1949 Mad 145’ are quite different and have no application to the present case. In that case it was found as a question of fact that both delivery and payment had to be made at Calcutta and not in Madras where the suit was filed. On the other hand there are some observations in it to the effect that it is undeniable that a part of the cause of action to sustain a suit for damages for breach of contract would certainly arise at the place where performance of the contract is provided; and that performance of a contract may consist in delivery as well as payment. The learned Judges therefore found it necessary to find out if either delivery of goods or payment of price was contemplated to be made in Madras.

16. There is another case reported in the same volume at page 858 which fully supports the plaintiff and whose facts are almost identical with the present case. In that case, the plaintiffs, a firm at Madras, booked orders for some goods from the defendants who were the manufacturers at Mirzapore. The contract was for despatch of goods F.O.R Mirzapore at earliest booking day after the railway receipt to be negotiated through the Bharat Bank Ltd. The defendants failed to despatch the goods and the plaintiffs cancelled the contract and sued for damages in Madras. It was held on an objection regarding jurisdiction that as the parties had agreed that the railway receipt should be sent to the Bharat Bank, which in the context could only mean the Bharat Bank at Madras, against payment by the defendant the court at Madras had undoubted jurisdiction to try the suit. To a similar effect are cases in ‘Venkatachalam v. Rajaballi’, AIR 1935 Mad 663 (FB); ‘Lakshmipathi v. Mahomed Ghani’, AIR 1947 Mad 83 and ‘Ramlal v. Bhola Nath’, 42 All 619 : AIR 1920 All 6 where it has been held that the Court of the place where payment of the price is to be made has also jurisdiction to try a suit arising out of a contract.

17. Even if we accept the other contention of Sri S.D Ganesha Rao viz., that the relationship of the parties was that of debtor and creditor, the plaintiff who had made the deposit with the defendants and who was seeking for its return was in the position of a creditor, and precedent is not wanting to hold that a suit for its recovery can be brought in the place where the creditor resides. See ‘Champaklal Mohanlal v. Nectar Tea Co.’, 143 Ind Cas 335 (Bom), where in a similar case of deposit Rangnekar J. held that the deposit being a debt the defendant was bound to return it to the plaintiff at the latter's place and hence the Court there had jurisdiction to try a suit for its refund. We, therefore, hold that on the facts and in the circumstances of this case, the Shimoga Court had jurisdiction to try this suit. It may also be observed that though the defendants took the objection as regards jurisdiction in their written statement, they do not appear to have been serious in pressing it. A preliminary issue was not taken and it was not pressed before the trial began on merits. They went fully into evidence and examined their witnesses. It is not shown how in any way, they have been prejudiced by the trial having taken place in Shimoga. This may not be strictly a very relevant circumstance in this case which was governed by the Mysore Code of Civil Procedure and if the objection as to jurisdiction was more clear, we might have felt compelled to uphold it.

18. In the result, this appeal is allowed with costs. The judgment and decree of the Subordinate Judge are set aside and there will be a decree in favour of the Plaintiff for Rs. 3257/- with costs and current interest.

B/D.H

Appeal allowed.