AI Structured Summary
Not yet generated for this judgment
Judgment
P.V. Rajamannar, Officiating C.J.
This is an appeal from the judgment and order of Kunhi Raman, j., made in the exercise of Ordinary Original Civil Jurisdiction revoking the leave
which he had granted to the appellant to institute a suit against the respondents on the Original Side of this Court for the recovery of a sum of Rs.
7,923-4-8 with interest thereon as damages for the breach of two contracts for the supply of glassware. On the 6th December, 1945, that learned
Judge made an ex parte order granting leave to the appellant to institute the suit. The ground on which the application was made by the appellant
for leave was that the breach, viz., the failure of the respondents to supply the goods in accordance with the contracts, took place at Madras. The
respondents'' application for revocation of the leave was made on the ground that no part of the cause of action arose within the limits of the
original jurisdiction of this Court. The learned Judge agreed with the respondents'' contention and held that the entire cause of action arose at
Calcutta and no part of the cause of action arose at Madras. He therefore revoked the leave to sue which he had granted. Plaintiff the appellant in
this appeal.
The suit was instituted in respect of two contracts dated 8th December, 1942 and 1st March, 1943, in and by which the defendants contracted
to supply to the plaintiff certain glassware. It is common ground that the terms of these contracts are substantially to be found in a letter dated 8th
December, 1942, written by Ist defendants to the plaintiff. It runs as follows:
Acknowledging receipt of your valued order through your agent, Mr. B. P. Gupta, for 225 gross 12 oz. Powa bottles at Rs. 16 per gross, F.O.R.
Calcutta. The goods will be despatched by himself. As regards payment, your agent informed us that he will pay not less than 25 per cent, before
the goods are despatched, and if possible more; and for the balance we will send the railway receipt through Nedungadi Bank, Ltd., Broadway,
Madras. The goods will be supplied on or before the 28th of the current month.
There is a postscript which is not material. The contracts were admittedly entered into at Calcutta. The question for decision therefore resolves
itself into whether any part of the performance of the contracts is contemplated at Madras. The construction placed by the respondents on the
contracts is set out in paragraph 3 of the affidavit filed by them in support of their application for revocation. The respondents therein stated that the
agent of the plaintiff-appellant Mr. Gupta should himself take delivery of the goods at Calcutta and despatch the same to his principal, the plaintiff,
at Madras, and that this term was specifically fixed in view of the great difficulty then experienced in the securing of railway wagons and that it was
accordingly understood and agreed that the plaintiff himself should pay at once 25 per cent. or more of the price of the goods that he may take
delivery of the goods at Calcutta, arrange for railway wagons, put them on the rails himself, get the railway receipt for the goods so railed and hand
over such receipts to the defendants as security for and to enable the defendants to recover the balance of the price. The appellant in the counter-
affidavit filed by him admitted the allegations contained in this paragraph but controverted the legal effect of the terms of the contract. According to
him the essence of the contract was that the goods should be in the control and custody of the defendants and the terms of the contract stipulated
for the retention of the right of disposal over the goods until money was paid at Madras through the Nedungadi Bank, Ltd., Broadway, Madras.
The learned advocate for the appellant referred us to several decisions in which contracts for the sale of goods were construed for the purpose
of determining when, according to their terms, the property in the goods passed from the seller to the buyer. We do not consider that any useful
purpose will be served by a detailed examination of all these decisions because ultimately the decision of this case must depend upon the
construction of the terms of the contracts in question which have to be gathered from the letter abovementioned.
It cannot be denied and it needs no authority to support the proposition--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. "" Performance of the contract "" may consist in
delivery as well as payment of the price. It therefore becomes necessary to find out under the terms of the contracts in suit if either delivery of the
goods or payment of the price is contemplated to take place at Madras. As we understand the implication of the agreement between the parties
contained in the letter above mentioned, the terms which can be deduced from it are as follows:
The price is fixed F.O.R. Calcutta. The delivery of the goods is at Calcutta itself. The goods are to be delivered to the plaintiff or his agent, to be
despatched to the plaintiff''s place of business at Madras. The right to payment arises simultaneously with the delivery of the goods to the plaintiff
through his agent, but the method of payment was provided thus :-An amount not less than 25 per cent of the price and if possible more had to be
paid before the goods were allowed to be despatched and the balance due was allowed to be paid by arranging to send the railway receipt
through the Nedungadi Bank, Ltd., Broadway, Madras.
The legal effect of these terms, in our opinion, was to provide for the passing of the property from the seller to the buyer at the time when the
goods were delivered to the plaintiff''s agent against payment of not less than 25 per cent of the price. Thereafter the relationship between the
parties ceased to be that of vendor and purchaser and became converted into that of creditor and debtor. For such balance as remained due, a
pledge as it were was created by the agent delivering the railway receipt to the defendants-vendors who provided for the discharge of the loan by
sending the railway receipt to the Nedungadi Bank, Ltd, Broadway, Madras, to be handed over to the plaintiff on discharge of the loan. It does
not appear to us that it was an essential term of the contracts that payment was and had to be made at Madras. If the plaintiff was able to do so,
he could pay the entire amount at Calcutta itself at or about the time of the despatch of the goods. As a matter of fact it appears from the affidavit
filed on behalf of the respondents that in respect of two consignments in 1943, the entire price was paid in Calcutta itself. There is no term in the
contract similar to a term to be found in other contracts specifically providing for payment at a particular place. The view that we take of the
contracts in suit is that payment was really to be made at Calcutta but for the convenience of the plaintiff he was allowed to pay as much as he
could at Calcutta, but not less than 25 per cent. of the price, and for the balance it was agreed that he would be treated as a debtor on the security
of the goods represented by the railway receipt. We therefore hold that it is not a term of the contracts that either delivery or payment of the price
was to be at Madras.
We find ourselves unable to accept the contention of the appellant that it was intended by the parties that the respondents should retain the
ownership of the goods until the balance of the price was paid by clearing the railway receipt through the Nedungadi Bank, Ltd., Broadway,
Madras. It is impossible that after a payment of at least 25 per cent. of the price the seller should still be held to have the power of disposal of the
goods. We think it reasonable to hold that by the very fact of payment of part of the price, the parties contemplated that the property in the goods
should pass to the buyer who would undoubtedly be liable for the balance.
The decision in The Ford Automobiles India Ltd. Vs. The Delhi Motor and Engineering Co., was relied upon by the advocate for the appellant
but the facts of that case are so entirely different from the facts of the present case that we are unable to derive much assistance from the elaborate
judgment of Mulla, J., in that case. There the plaintiffs appointed the defendants as their agents for the sale of their cars and consigned certain cars
to the Bombay, Baroda and Central India Railway for carriage from Bombay to Ambala. The consignment was made at owner''s risk; the railway
receipt was made out in the name of plaintiffs as consignees and endorsed by them in blank. The plaintiffs sent the receipt through their bankers
along with a bill for the price of the cars to be recovered from the defendants, against the railway receipt. It was held that the property in the cars
did not pass to the defendants on delivery to the railway company. But in the present case as already pointed out there was delivery of the goods
at Calcutta itself to the plaintiff''s agent and it was the plaintiff''s agent that thereafter despatched the goods to the plaintiff''s place of business at
Madras after payment of a part of the price. On the facts and evidence before him, the learned Judge in the The Ford Automobiles India Ltd. Vs.
The Delhi Motor and Engineering Co., , held that a seller retained a jus disponendi in the goods but it is difficult for us to infer such an intention in
the present case. The decision of the Full Bench of this Court in Venkatachallam Pillai v. Sajun (1934) 68 M.L.J. 504 was based on the finding
that it was provided in the contract that payment for the goods was to be made at Tuticorin. There was no term in the contract which was the
subject-matter of that decision for payment of a part of the price before the despatch of the goods and no provision made for the discharge of the
liability for the remainder by sending the railway receipt to a bank. In that case a contention was raised that because the defendant by endorsement
of the hundies had obtained payment at Rangoon, the place of the contract, it deprived the Court of Tuticorin of jurisdiction though Tuticorin was
the place at which the goods had to be paid for. The learned Judges overruled that contention because the contract specifically provided that the
payment was to be made at Tuticorin. The decision of Horwill, J., in V. Lakshmipathi Naidu, sole proprietor of the Nilgiri Potato Supply Co. Vs.
M.E. Mohamed Ghani, does not carry the matter further. All that the learned Judge decided in that case was that a suit on a contract for sale of
goods may be filed at the place where the goods were deliverable or the price payable. Ram Lal v. Bhola Nath ILR (1920) All. 649 was a case in
which goods were sent by value-payable parcel post. Clearly in such a case the ownership of the goods can be presumed to be with the seller till
the parcel is accepted by payment.
Having regard to the terms of the contract, explicit and implicit, from the letter of 8th December, 1942, we hold that no part of the
performance is contemplated to take place at Madras and therefore even a part of the cause of action did not arise in Madras. We agree with the
learned Judge that leave ought not to have been granted and that it was rightly revoked.
It was further contended by the learned advocate for the appellant relying upon the observations of Rankin, C.J., in Secretary of State for India
in Council v. Golabrai Paliram ILR (1931)Cal. 150, followed in Hajee Adam Abdul Shakoor v. Ali Mohamed Ebrahim Shakoor I.L.R(1940) 1
Cal. 497 that when questions of difficulty arise as to the jurisdiction, they should not be dealt with on an application for revocation of leave to sue
but should be determined at the trial by the framing of a preliminary issue. This aspect apparently was not pressed in the Court below. We are
unable to find any question of difficulty or importance in this case which cannot be properly dealt with on application for revocation of leave to sue.
For the respondents it was urged that even if a part of the cause of action arose at Madras, on the ground of balance of convenience the learned
Judge was right in revoking the leave. There is no trace of this ground in the affidavit filed by them in support of their application; nor is it the
ground on which the learned Judge revoked the leave to sue. We are unable to accept this contention of the respondents.
As we have held that no part of the cause of action arose within the limits of the original jurisdiction of this Court, the learned Judge was right in
revoking the leave granted to the plaintiff ex parte. We therefore dismiss the appeal with costs.