Banarsi Dass Mohan Lal vs Canara Bank

Hemant Gupta, J.—Plaintiff is in second appeal, aggrieved against the judgment and decree passed by the first appellate Court whereby its suits for recovery was dismissed in appeal on account of territorial jurisdiction.

Plaintiff-appellant filed the suit for recovery alleging therein viz. receipt No. 13540 dated 7.6.1974, Bill No. 107/74 dated 6.6.1974 with Hundi No. 108/74-75 dated 7.5.1974 for Rs. 6093/- contained an endorsement in favour of plaintiff by M/s. M.S. Oswal Hosiery with the instructions to the Bank to send money to the plaintiff at Ludhiana vide letter dated 8.6.1974, It is pleaded that even though the Hundi has been endorsed in favour of the plaintiff but still the payment has not been made to the plaintiff and, thus, filed the suit for recovery of the amount of Hundi.

The Bank filed the written statement and averred that the relevant goods and the other related documents have already been delivered to M/s. M.S. Oswal Hosiery and the liability of the defendants stands discharged as the claim of the Principal i.e. M/s. M.S. Oswal Hosiery stands satisfied. It also pleaded that the Court at Ludhiana has no territorial jurisdiction to try the suit, it is pleaded by the Bank that the customers at Hyderabad did not receive the goods and other related documents and the same was sent to the owner i.e. M/s. M.S. Oswal Hosiery.

Parties went to trial on the following issues:

Whether the plaintiff is a registered partnership firm and Banarsi Dass is the registered partner of the firm? -OPP

Whether the plaintiff is entitled to recover a sum of Rs. 6,093/- from the defendant? -OPP

Whether the plaintiffs entitled to the interest? If so, at what rate and to what extent? -OPP

Whether the plaintiff has a locus standi to file the present suit? -OPP

Whether M/s. M.S. Oswal Hosiery, Ludhiana is a necessary party? -OPD

Whether the suit is not competent? -OPD

Whether this Court has no territorial jurisdiction? -OPD

Relief.

Learned Trial Court decreed the suit of the plaintiff holding that the plaintiff is entitled to recover a sum of Rs. 6093/- from the defendants along with interest at the rate of 12% per annum from 15.10.1974 to 19.10.1976 as well as future interest at the rate of 12% per annum from 20.10.1976.

Plaintiff in evidence has produced evidence in respect of issue No. 1 to prove that it is a registered partnership firm and is entitled to file a suit plaintiff has also produced Exhibit P2, letter of the defendants-Bank at Hyderabad sent to the plaintiff firm wherein the reference has been made in respect of receipt C.R. No. 13540 dated 7.6.1974, Bill No. 107/74 dated 6.6.1974 and Hundi for Rs. 6093/- No. 108/74-75 dated 7.6.1974. A perusal of the said letter shows that the Bank has requested M/s. M.S. Oswal Hosiery, Ludhiana to return said documents to them. The Bank has also requested the plaintiff to approach M/s. M.S. Oswal Hosiery, Ludhiana so that the matter can be amicably settled. In addition to the said letter, plaintiff has also produced letter dated 8.6.1974 (Mark A) requesting the Bank to remit the payment by the demand draft at their Ludhiana Office. Exhibit PI dated 1.10.1974 is the advice from Canara Bank to the plaintiff informing that the Bank is holding Bill in the sum of Rs. 6,093/- at the risk of the plaintiff.

On the other hand, defendants have examined Gur Parshad, a partner of M/s. M.S. Oswal Hosiery, Ludhiana. He admitted that the documents were endorsed by his firm in favour of the plaintiff for consideration. However, he asserted that his firm returned the consideration to the plaintiff and documents were returned by his firm as the amount had already been paid. He produced letter Ex. R1, written by him, to the defendant-Bank bearing his signatures.

Learned Trial Court examined the oral and documentary evidence to return a finding that the Hundi was endorsed by M/s. M.S. Oswal Hosiery, Ludhiana in favour of the plaintiff and that the Bank in its letter dated Ex. P2 has admitted that due to some oversight, G.R, Bill and Hundi were wrongly sent to M/s. M.S. Oswal Hosiery, instead of returning the same to the plaintiff. In fact, a reading of Exhibit P.I dated 1.10.1974 itself shows that the Bank was aware of the endorsement in favour of the plaintiff and for that reasons, the advice was sent to the plaintiff. The document Ex. R1, written by Gur Parshad to the Bank is a document not referred to by the Bank in the written statement nor referred to in any earlier communications. The said document does not bear any acknowledgement on behalf of the plaintiff. Thus, such document cannot be used against the plaintiff. It was found by the learned Trial Court that the plaintiff is a holder of Hundi in due course as the Hundi was endorsed for consideration and, therefore, the plaintiff has locus standi to file the suit, the issue of jurisdiction was decided in favour of the plaintiff holding that the defendant-Bank had to collect the money on these documents from Hyderabad and send back to the plaintiff at Ludhiana and, therefore, the Ludhiana Court has jurisdiction to entertain the present suit.

Aggrieved against the said judgment and decree, the Bank filed an appeal. The first appellate Court upheld the findings recorded by the learned Trial Court on issue No. 1 regarding the firm being registered and, thus, competent to file the suit as well finding on issue Nos. 2 and 3. In fact, there was no opposition to the conclusion recorded by the Trial Court on issue No. 2. However, the learned first appellate Court reversed the finding on issue No. 7 pertaining to territorial jurisdiction of the Court. The first appellate Court held that the mere stand that the documents were sent from Ludhiana to defendant-Bank at Hyderabad would not attract the territorial jurisdiction at Ludhiana as the amount was to be collected from the purchaser i.e. M/s. Piara Lal, Abid Road. Hyderabad and, therefore, the Ludhiana Court has no jurisdiction.

Mr. Puri, learned Counsel for the appellant has vehemently argued that the finding recorded by the learned first appellate Court on issue No. 7 is incorrect. It is contended that the amount of Hundi was to be remitted by the defendants at Ludhiana. The consignor i.e. M/s. M.S. Oswal Hosiery was also to receive the amount of Hundi at Ludhiana after collecting the same from the purchaser at Hyderabad. Plaintiff is holder of Hundi in due course for consideration which fact is in the knowledge of the Bank, therefore, the Ludhiana Court has jurisdiction to entertain and try the present suit.

In view of the arguments raised by the learned Counsel, the following substantial question of law arises for consideration:

Whether the sending of amount at Ludhiana would confer the territorial jurisdiction on the said Court.

A perusal of the finding recorded by the first appellate Court would show that the issue of territorial jurisdiction has not been dealt with in proper manner. The Hundi was sent to Hyderabad for collecting the amount from M/s. Piara Lal Abid Road, Hyderabad but the amount was to be sent by Bank either to the consignor i.e. M/s. M.S. Oswal Hosiery or to the plaintiff, holder of Hundi, in due course. A perusal of the pleadings of the parties shows that the property in the good receipts and other documents was admitted by the respondent-Bank as that of M/s. M.S. Oswal Hosiery, Ludhiana. It is further clear from the written statement that it was a stand of the Bank that the relevant good receipts and other documents have already been delivered to M/s. M.S. Oswal Hosiery, Ludhiana. The jurisdiction of Ludhiana Court was disputed on the ground that the goods under the alleged goods receipt were received by the defendant-Bank at Hyderabad for collection from the customer. But the fact that the amount after collection was to be remitted to M/s. M.S. Oswal Hosiery at Ludhiana is not disputed even in the written statement. Thus, on the basis of the pleadings and evidence, it is apparent that the amount of the goods receipt after collecting the value from the customer at Hyderabad were required to be handed over to the consignor at Ludhiana.

In view of the fact that the amount was to be accounted for by the defendant at Ludhiana, the learned Counsel for the appellant relied upon a Full Bench judgment of this Court reported as Firm Hira Lal Girdhari Lal and Another Vs. Baij Nath Hardial Khatri, to contend that Ludhiana Courts will have territorial jurisdiction. It has been held by this Court that where the territorial jurisdiction is to be determined on the ground that the price of the goods was payable within its jurisdiction, the Court should find as a fact whether the money was agreed expressly or impliedly to be paid within its territorial jurisdiction. If the Court comes to the conclusion that the amount sought to be recovered was payable within the jurisdiction of the Court then it should proceed to entertain the suit. The opinion of the Court is reproduced below:

"24. Where the territorial jurisdiction is to be determined on the ground that the price of the goods was payable within its jurisdiction, the Court should find as a fact whether the money was agreed expressly or impliedly to be paid within its territorial jurisdiction. To find this fact the Court is entitled to take into consideration the contract, its attending circumstances, the creditors ordinary place of residence of business and the course of dealings between the parties including all the other factors relevant in a given case. If the Court comes to the conclusion that on the facts and circumstances established in the case the amount sought to be recovered was payable within the jurisdiction of the Court then it should proceed to entertain the suit, otherwise it has no jurisdiction to do so on the basis of this ground."

The reasoning that the Bank was carrying on business at Hyderabad and the cause of action positively accrued at Hyderabad is not sustainable. The documents were handed over to the Bank at Ludhiana for collecting the proceeds from the purchaser at Hyderabad and for remitting the amount at Ludhiana. Therefore, the cause of action has arisen to the plaintiff at Ludhiana i.e. within the territorial limits of the Trial Court, in view of the judgment mentioned above. Thus, the finding recorded by the first appellate Court is not sustainable.

Consequently, the present appeal is allowed. Judgment and decree passed by the first appellate Court is modified by setting aside the finding on issue No. 7 and that of the Trial Court is restored with no order as to costs.