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Bhargava And Co. v. Jagannath

Allahabad High Court
Apr 26, 1919
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Summary of Opinion (Muhammad Rafiq and Walsh, JJ.)

Factual and Procedural Background

The dispute arose from a contract for the sale of cloth (suitable for tents) between two firms doing business respectively at Agra and Delhi. The purchasers (plaintiffs) sued the vendors (defendants) in the Subordinate Judge's court at Agra for damages, alleging defective performance of the contract. The defendants objected to the court's jurisdiction on the ground that the contract was made at Delhi and was to be performed outside the Agra jurisdiction.

The Subordinate Judge, with no objection from either party to the course adopted, decided to determine the jurisdictional objection before dealing with the merits. Evidence was taken and an elaborate judgment was delivered holding that the contract was made at Agra and that the suit was cognizable in Agra. An order dated 2nd February, 1919 (and noting a hearing date referenced as 6th February, 1918 in the order text) stated: “This case coming on for disposal on the 6th of February, 1918, it is ordered that the case is cognizable by this Court.” No appeal was taken from that order.

The defendants applied to this Court in revision. Muhammad Rafiq and Walsh, JJ., concluded the application must be granted and proceeded to review whether the Subordinate Judge had rightly assumed jurisdiction. The Court ultimately quashed the order and directed that the plaint be returned for presentation to the proper court; the applicants were awarded costs. The opinion is delivered as an exercise of revisional jurisdiction in what the Court described as exceptional circumstances.

Legal Issues Presented

  1. Whether an objection to jurisdiction, which has been tried and decided by a subordinate court by way of evidence and an elaborate judgment, amounts to a "case decided" within the meaning of section 115 of the Code of Civil Procedure so as to permit revisional interference.
  2. Whether the Subordinate Judge at Agra had jurisdiction to entertain the suit—i.e., whether the contract was in fact made at Agra (making the suit cognizable there) or was made at Delhi (excluding Agra jurisdiction).
  3. Whether the High Court should exercise its discretionary revisional jurisdiction to quash the subordinate court's order on jurisdiction in this exceptional preliminary/interlocutory matter.

Arguments of the Parties

Plaintiffs' Position

  • The plaintiffs alleged that the contract had been made in Agra and that the defendants' performance was defective, which justified their suit for damages in the Subordinate Judge's court at Agra.
  • According to plaintiffs' evidence, their clerk completed an acceptance form at Agra with the purchasers' firm name and price, and an offer at Re. 1-12-0 was signed by a member of the plaintiffs' firm.

Defendants' Position

  • The defendants contended that the court at Agra lacked jurisdiction because the contract was made at Delhi and was to be performed outside the Agra jurisdiction.
  • The defendants (through the evidence of Keshab Deo) maintained that the broker (Kanhaiya Lal) had no authority to complete a binding contract on their behalf and that the contract was completed only when the defendants themselves signed acceptance at Delhi after the broker's report/telegram.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Balkrishna Udayar v. Vasudeva Ayyar (Privy Council) Supports view that an objection to jurisdiction decided after evidence and judgment may constitute a "case decided" under section 115 CPC. Relied upon as sufficient justification for treating the subordinate court's jurisdictional decision as a "case decided" enabling revisional interference.
Rashmoni Dasi v. Ganada Sundari Dasi Expresses the principle that a revisional court examining evidence does so to determine whether the subordinate court assumed jurisdiction it did not possess. Quoted to explain the scope of revisional inquiry into evidence when the question is whether a subordinate court exceeded its jurisdiction.
Bihari Lal v. Baldeo Narain (June, 1918) Reasoning that a revisional court may look into evidence to see if subordinate court assumed jurisdiction improperly. The Court approved and adopted the reasoning of that judgment in reaching its decision in the present matter.

Court's Reasoning and Analysis

The Court proceeded in two linked strands of reasoning: (1) whether the subordinate court's decision on jurisdiction could be treated as a "case decided" under section 115 CPC so as to permit revisional interference, and (2) whether, on the evidence before the Subordinate Judge, there was any justification for his finding that the contract had been made at Agra (and therefore that Agra had jurisdiction).

On the first point, the Court held that where a jurisdictional objection is dealt with by hearing evidence and by the delivery of a careful, thorough judgment followed by a formal order, that amounts to a decision which falls within the meaning of section 115. The Court cited the Privy Council decision in Balkrishna Udayar v. Vasudeva Ayyar and the reasoning in Rashmoni Dasi and Bihari Lal v. Baldeo Narain to support the proposition that a revisional court may look into evidence for the limited purpose of determining whether the subordinate court assumed jurisdiction it did not possess.

On the second point, the Court examined the factual material that had been placed before the Subordinate Judge. The key factual matrix (as summarized by the Court) was:

  • A broker (Kanhaiya Lal) procured from the defendants two blank, typewritten forms (offer and acceptance) and went to Agra where an offer at Re. 1-12-0 was obtained and the plaintiffs' clerk filled the acceptance form.
  • The defendants had earlier told the broker they were ready to sell at a higher price (Re. 1-13-0 or Re. 1-12-6), and there was nothing to show the defendants had authorized the broker to complete a binding contract on any terms he might negotiate.
  • The broker wired the defendants that he had "sold" but then personally went to Delhi to report; he was rebuked for using the word “sold” and explained it as a commercial licence to prevent defendants disposing of the goods elsewhere.
  • Testimony by Keshab Deo (of the defendants' firm) and documentary/internal evidence showed the defendants actually signed the acceptance at Delhi on the day after the telegram (dated 8th August) and that the same initials appeared on the acceptance stamp and against the price—indicating the defendants themselves completed the contract at Delhi.

The Court found the Subordinate Judge had materially misdirected himself: he had confused negotiations and preparatory documents with the completion of a binding contract. The Court emphasized that it was implausible for a reasonable business firm to empower a broker with blank, signed forms carrying a carte blanche authority to insert any price and conclude a binding contract. The internal documentary evidence (date of signature and matching initials) confirmed that the defendants signed and completed the contract at Delhi, which meant the Agra court lacked jurisdiction.

Because the subordinate court had ignored the critical documentary and testimonial indications that the contract was completed at Delhi, the revisional Court concluded the Subordinate Judge had assumed jurisdiction which he did not possess. Given the exceptional circumstances and the presence of a decisive jurisdictional issue that had been treated as finally determined by the subordinate court, the High Court exercised its discretionary jurisdiction to quash the order.

Holding and Implications

APPLICATION ALLOWED; ORDER QUASHED.

Direct consequences applied by the Court:

  • The order (dated in the opinion as the order of 10th February) of the Subordinate Judge holding the Agra court cognizable of the suit was quashed.
  • The plaint was directed to be returned for presentation to the proper court (i.e., the court having jurisdiction, which the analysis shows to be outside Agra).
  • The applicants (defendants in the original suit) were awarded the costs of this revision application.

The Court expressly declined to lay down any general proposition as to how revisional jurisdiction should be exercised in relation to preliminary or interlocutory orders; it described the circumstances as exceptional and framed its decision narrowly. Thus, no new general rule or binding precedent beyond the specific result in this case was announced.

Application allowed.
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Muhammad Rafiq and Walsh, JJ.:— We have come to the conclusion that this application must be granted. The circumstances of the case are exceptional and the form in which the matter comes before us is also exceptional. We do not propose to lay down any general proposition as to what ought or ought not to guide this Court in interfering in revision with what may be called preliminary, interlocutory or subsidiary orders made by the courts below. In this particular case a substantial dispute has arisen with regard to a contract made between two business men carrying on business respectively at Agra and Delhi. The purchasers under the contract, having reason, as they allege, to complain of the performance of the contract, sued the vendors for damages in the Subordinate Judge's court at Agra. The defendants were the vendors carrying on business at Delhi, and at the earliest possible opportunity they took the objection that, inasmuch as the contract was made at Delhi and was by its terms to be performed outside the Agra jurisdiction, the court at Agra had no jurisdiction to entertain the suit at all. Thereupon, without objection by either party, the Subordinate Judge entertained that objection as a matter wholly independent of the merits of the suit which he had to determine, if it turned out that it was within his jurisdiction to determine, and evidence was called on both side; and considerable argument took place on either side and eventually an elaborate judgment-was written upon the sole but important question “is the suit cognizable by this court.” The learned Judge himself says it was thought proper to decide the question of jurisdiction first. He decided that question in favour of the plaintiffs on the ground that the contract was made in Agra. An order was drawn up on the 2nd of February, 1919, in the following terms:— “This case coming on for disposal on the 6th of February, 1918, it is ordered that the case is cognizable by this Court.” It is not contended that there is an appeal from that order. We have come to the conclusion that it is impossible to say that such an objection, dealt with in the way this objection was dealt with, by what really amounted to a trial, by a very careful and thorough judgment, ending in a formal order of the court, is not a case decided in which no appeal lies within the meaning of section 115 of the Code of Civil Procedure. We think sufficient justification for taking that view is to be found in the recent decision of the Privy Council in Balkrishna Udayar v. Vasudeva Ayyar.

We do not desire to depart in any way from the general rule which has been laid down that an application of this kind in revision ought not to be treated as an appeal; that findings of fact bearing upon an issue properly before a court cannot be and ought not to be reviewed by the court exercising revisional jurisdiction, but, without discussing the cases upon the point, we think the trend of authority in the various High Courts in India is to this effect—it cannot be more clearly stated than in the language of Mr. Justice Mookerji, in the case of Rashmoni Dasi v. Ganada Sundari Dasi—that “when a court as a court of revision looks into evidence, it does so with a view to determine whether the subordinate court has assumed a jurisdiction which it did not possess.” The same view has been recently given effect to by a judgment of Mr. Justice Ryves, as he was then, sitting in this Court in June, 1918, in a case reported in Bihari Lal v. Baldeo Narain, the reasoning in which we entirely approve and adopt.

We have, therefore, to consider whether on the evidence before the learned Judge there was really anything which could justify him in holding that he had jurisdiction to entertain this suit on the ground that the contract was made at, Agra. We have come to the conclusion that there is nothing. As a matter of fact, with certain unimportant exceptions, we do not differ from his conclusions of fact, but the learned Judge unfortunately wholly misdirected himself and confused the negotiations with the bargain, and the terms of the contract with a binding acceptance. The facts as sworn to may be simply stated. One Kanhaiya Lal, who is said to be a broker or agent for the defendants, was endeavouring to obtain a purchaser for this cloth, which is suitable for use as tents, for the defendants at Delhi from persons in Agra. It may here be observed that it has been assumed that he was an agent of the defendants. There is not a scrap of evidence to that effect except the bare statement of the plaintiff and that statement is consistent with the broker being, as they often are, agent for both parties. He may have been an agent for the purchasers; he may have been an agent for the vendors; he may have been an agent for both parties. Like most brokers he was extremely anxious about earning his commission, as is made clear by the evidence; but it is not clear from whom he expected to receive it. The best test of a man's employment is the question who is liable to pay his commission. It may be assumed for the purpose of this inquiry only, that he was the agent of the defendants. He had an interview with one of the members of the defendants' firm in Delhi and having represented that there were purchasers of this dusuti at Agra he obtained from them two typewritten forms. This method of making a contract is one very commonly adopted among mercantile people; one document constitutes the offer and the other constitutes the acceptance, both of them being left blank, both as regards the name of the purchaser and the contract rate, neither of which were known at that time. He was told that the defendants were ready to sell at Re. 1-13-0 or Re. 1-12-6 per ??? and he went to Agra with these two documents. Eventually he obtained an offer for Re. 1-12-0 from the present plaintiffs. That offer was signed by Banke Lal, a member of the plaintiffs' firm, addressed to the defendants at Delhi and the blank for the price was filled in with Re. 1-12-0 per ???. At the same time, according to the plaintiffs' evidence, which we see no reason to discredit upon this point, the plaintiffs' clerk filled in upon the other form intended for acceptance the name of the plaintiffs' firm as purchasers and the price. It is to be observed that this price was less than the price which the defendants had told Kanhaiya Lal they were prepared to accept, and there is not a scrap of evidence, indeed everything in the case including the documents points to the contrary, that the defendants authorized Kanhaiya Lal to complete a binding contract on their behalf on any terms that he was able to negotiate. This conclusion, we understand, the learned Judge came to as a matter of law or inference. What invalidates the finding to our mind is that it is absolutely out of the question, that the defendants armed their agent with documents formally signed by them as binding contracts with the price left blank and with carte blanche authority to fill them up for any price which he saw fit to arrange, Such a proceeding is almost incredible on the part of a reasonable business firm. What actually happened is testified to by the direct evidence of Keshab Deo, one of the members of the defendants' firm, and is confirmed in every possible way by the documentary evidence. Having arranged this price with the plaintiffs and confident that he would persuade the defendants to accept it, he wired to the defendants at Delhi that he had sold. The learned Judge attaches great importance to this telegram. So do we but we think it points exactly in the opposite direction to that in which the learned Judge thinks it ought to be taken, so far as Kanhaiya Lal was concerned he had sold in the sense that he had arranged a sale for his principals, but he had no authority to complete the contract, and if he bad, there would have been no necessity for his journey to Delhi. He went to Delhi personally to report what he had done. He was at once rebuked by his principal for having used the word “sold” in the telegram. His explanation was that it was a piece of commercial licence to prevent the defendants disposing of the goods anywhere else, and he then, and, we are satisfied, for the first time, at that interview disclosed to the defendants the price at which he had arranged to sell. The defendants not unnaturally pointed out that it was not the price which they had told him they were willing to accept. According to Keshab Deo he made an almost piteous appeal to them in his own interest as well as in the interest of the defendants to close the bargain and the bargain was then accepted. There are to our minds two pieces of internal evidence upon the document itself which the learned Judge has wholly left out of view which conclusively show the truth of this story. The signature of the vendors, the accepting firm, is dated the 8th of August, the day after the telegram, the day after the blanks had been filled in at Agra, the day of Kanhaiya Lal's interview with his principals at Delhi. The second point is that the writing of the signature of the name of the firm, across the stamp accepting the contract is the same as the initials of G.S.B, against the price which had been filled in the contract. The plaintiffs' clerk made a feeble attempt to claim that these intitials had been put there by him but receded from that position on looking at the document. We are satisfied that the terms were initialled by the same person who signed the document. Under these circumstances the learned Judge having wholly ignored the importance of the fact that the document was in fact signed and the contract completed by the defendants themselves as principals, has therefore failed to investigate the question where and under what circumstances that which alone would mate the contract a binding contract in law at all took place. He has assumed jurisdiction over a matter which, if he had properly applied himself to the facts, he was bound to hold he had no jurisdiction to try.

Revision is a discretionary jurisdiction, but, in an important matter of this kind, if the law enables us to do it, it is to the best interests of the parties themselves and of the, public that if these preliminary questions of jurisdiction can be finally determined by an authoritative decision before a large expenditure of time and money over prolonged litigation, it is better that it should be done, and we, therefore, quash the order of the 10th of February, and direct the plaint to be returned for presentation to the proper court. The applicants must have their costs of this application.

Application allowed.