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Chunilal Mayachand v. E.E. Millard
Factual and Procedural Background
This is an appeal from a decision of Engineer J. The suit is on a demand promissory note dated 28 January 1937 by which the maker promised to pay Messrs Chunilal Khupchand & Co. Rs. 1,000 with interest, the note stating "Money payable either in Poona, Bombay or elsewhere." On 28 July 1937 the creditor, through his attorneys in Bombay, gave notice demanding payment to the plaintiff in Bombay (at his residence or at the attorneys' office). The narrow procedural question before the Court was whether leave to sue should be granted under Clause 12 of the Letters Patent on the ground that the cause of action, or part of it, accrued in Bombay. The learned Judge below refused leave; the present appeal challenges that refusal.
Legal Issues Presented
- Whether, for the purposes of Clause 12 of the Letters Patent, a cause of action on a demand promissory note accrues wholly or in part in Bombay when the creditor makes a demand for payment in Bombay.
Arguments of the Parties
Plaintiff's Arguments
- The creditor's demand for payment in Bombay (by letter dated 28 July 1937) means the cause of action arose wholly or in part in Bombay, thereby supporting leave under Clause 12.
Opposing Argument (as relied on by the learned Judge below)
- The learned Judge refused leave relying on an earlier decision (O.C.J. Appeal No. 7/1936) which, in his view, showed that where payment is stipulated to be in one of several places (here Poona, Bombay or elsewhere) the debtor has the option to pay at any of those places and thus it cannot be said the money was payable in Bombay for purposes of jurisdiction.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| O.C.J Appeal No. 7/1936 | The Court held that where a contract required payment either in Bombay or Bulsar the purchaser had an option to pay at either place and, having elected to pay in Bulsar, the cause of action did not arise in Bombay. | The Court in the present case distinguished this decision as being of an entirely different character and held it inapplicable to a demand promissory note where the option as to place of demand lies with the creditor. |
| OCJ Suit No. 226/1931 (unreported, Kania J.) | Held that where the creditor has demanded payment in Bombay that demand fixes the place of payment and makes it unnecessary for the promisor to apply to the promisee to fix a place for payment under Section 49 of the Contract Act. | The Court agreed with and followed this unreported decision, holding that the creditor's demand in Bombay fixed the place of payment and thus that part of the cause of action arose in Bombay. |
Court's Reasoning and Analysis
The Court identified the sole issue as whether leave under Clause 12 should be granted because the cause of action accrued in Bombay. The note was payable on demand and expressly stated payment could be at "Poona, Bombay or elsewhere." The learned Judge below had refused leave relying on O.C.J. Appeal No. 7/1936, treating the place-clause as giving the debtor an option to pay at any of the listed places. Beaumont C.J. reasoned that the present case differs because a demand promissory note vests the option as to place of payment with the creditor who may demand payment at such place as he chooses; therefore the creditor's demand for payment in Bombay fixed the place of payment. Beaumont C.J. further observed that the clause listing Poona, Bombay or elsewhere effectively makes the note payable anywhere, so the creditor's demand is the operative act fixing place and obviates any necessity for the promisor to apply under Section 49 of the Contract Act. Blackwell J. agreed, stating the option rests with the creditor in a demand note and that the demand of 28 July 1937 fixed Bombay as the place of payment. Both judges concluded the cause of action (or part of it) arose in Bombay and that the learned Judge below was wrong to apply the prior appeal decision to these facts.
Holding and Implications
APPEAL ALLOWED
Holding: The Court held that, in the case of this demand promissory note, the creditor's demand for payment in Bombay fixed the place of payment and consequently the cause of action or part of it arose in Bombay; leave under Clause 12 of the Letters Patent should be granted.
Implications: The direct effect is that leave to sue under Clause 12 is to be granted and the Court has jurisdiction because part of the cause of action arose in Bombay. The opinion does not purport to announce broader principles beyond its application to demand promissory notes and the facts before the Court.
Beaumont, C.J:— This is an appeal from a decision of Engineer J., and the only question is whether leave to sue should be given under Cl. 12 of the Letters Patent on the ground that the cause of action or part of the cause of action accrued in Bombay. The suit is a suit on a promissory note payable on demand. The note so far as is material is in these terms:
On demand I promise to pay to Messrs Chunilal Khupchand & Co., or order the sum of Rupees one thousand only (Rs. 1000) with interest at the rate of 1 per cent, per mensem for value received in cash. Money payable either in Poona, Bombay or elsewhere.
2. It is dated 28th January 1937 and on 28th July 1937, the creditor, by his at tourneys, gave notice to the debtor demanding payment to the plaintiff in Bombay at his residence at New Hanuman Lane, or at the attorneys' office, the office of the attorneys also being in Bombay. So that one has a demand for payment in Bombay and the plaintiff's contention is that consequently the cause of action arose wholly or in part in Bombay.
3. There can be no doubt that if the money is payable only in Bombay that does give this Court jurisdiction. The learned Judge refused to give leave under Cl. 12 because, relying on a decision of this Court, he considered that the debtor had an option to pay either in Poona, or in Bombay or elsewhere and therefore it could not be said that the money was payable in Bombay. But in the decision on which the learned Judge relied, viz. O.C.J Appeal No. 7/1936,1 the Court was dealing with a contract for sale of goods and under that contract moneys had to be paid by the purchaser either in Bombay or Bulsar and the Court held that gave an option to the purchaser to pay either in Bombay or at Bulsar and as he had elected to pay in Bulsar it could not be said that the cause of action arose in Bombay. But that case is quite different from the present. Here the cause of action is on a promissory note payable on demand and the option, I think, lies with the creditor to demand payment at such place as he chooses. Moreover the place of payment specified in the note being Poona, Bombay or elsewhere, the stipulation as to place really amounts to nothing at all, since it provides that the promissory note is pay able anywhere. So that we have to deal with a promissory note payable on demand at any place and I agree with the unreported decision of Kania J., in OCJ Suit No. 226/19312 to which we have been referred, that since the creditor has demanded payment in Bombay, that fixes the place of payment and makes it unnecessary for the promisor to apply to the promisee to fix a place for payment under Section 49 of the Contract Act. In my opinion in this case the moneys are payable in Bombay and that being so, the cause of action or part of the cause of action arose in Bombay and leave under Cl. 12 of the Letters Patent should be granted.
Blackwell, J.:— I also am of opinion that in the case of a demand promissory note such as that before us in this case the option rests with the creditor and not with the debtor as to the place of payment. Having regard to the terms of the note, it was clearly, in my opinion, payable any where and there was an option with the creditor to make a demand upon the debtor to pay him at such place as he chose. The plaintiff made such a demand by his letter of 28th July 1937 and in my opinion the demand being a demand for payment in Bombay the place of payment was fixed once and for all. That being so, I think that the cause of action thereupon arose in Bombay and this Court has jurisdiction. The learned Judge baaed his opinion upon an unreported decision of the Appeal Court, OCJ Appeal No. 7 of 1936, but I entirely agree with the learned Chief Justice that was a case of an entirely different character. I think, with respect to the learned Judge, that he was wrong in attempting to apply the facts of that case to the present and was wrong in thinking that notwithstanding the demand made by the creditor the option was still with the debtor according to that judgment. With respect to him I think that judgment has no application to the facts of this case and I agree that leave should be granted.
R.M/R.K
4. Appeal allowed.
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