T. Vaiphei, J.@mdashThese revision petitions involving a common question of law on territorial jurisdiction to try the suits at Guwahati were heard together and are now being disposed of in this judgment. The petitions are directed against the orders dated 14.3.2000 passed by the Ld. Civil Judge (Senior Division) No. 1, Kamrup, Guwahati in M.S. No. 165 of 1997 and M.S. No. 200 of 1997.
2. The suits arose out of the same transaction. A brief history of the suits as are material for disposal of these petitions may be noticed at the very outset. The case of the Petitioner-Plaintiff is that pursuant to the telephonic discussion with the Respondents for purchase and supply of C.R. Hard coils, it placed an order for supply of 425 MT of C.R. full hard coils of 0.22 thickness in 895 mm width at the rate of Rs. 22,350/- per MT on terms and conditions with specifications stipulated therein. According to the Petitioner, the Respondents accordingly supplied 175.315 MT of the coils to it but on inspection by its Quality Control Officer, it was found that these goods were defective and not in accordance with the specification, etc. stipulated in the supply order. Due to the defects in the coils supplied, the galvanized sheets manufactured out of those materials had to be sold at discounted prices, thereby rendering the Petitioner to suffer a loss of Rs. 258,076.95. Several letters were sent by the Petitioner to the Respondents to make good the losses but the same proved futile. The other case of the Petitioner is that as per the terms and test certificate, challan in original with 2 copies and original Excise Gate pass with transporter''s copy while despatching the goods, which were necessary for availing of MODVAT benefit on the excise duty payable on the materials being manufactured from the coils purchased. It is the case of the Petitioner that the said documents were not sent to it contrary to the terms of the said supply order. Repeated requests said to have been made by the Petitioner did not prove fruitful with the result that the MODVAT benefit could not be claimed by it. This, according to the Petitioner, caused a loss of Rs. 1,69,117.00 to it.
It was under the aforesaid circumstances that the two suits were filed by the Petitioner against the Respondents. Money Suit No. 165 of 1997 was instituted by the Petitioner against the Respondents for recovery of Rs. 2,58,076.95 P. for damages for breach of contract arising out of the supply of the said defective goods while Money Suit No. 200 of 1997 was instituted for recovery of Rs. 1,69,117.00 from the Respondents as damages for breach of contract arising out of omission to send the said documents.
3. The Respondents resisted the suits and filed their written statements. In the written statements, they denied any liability of the claims of the Petitioner and made assertions of facts, all of which are not relevant for the purpose of disposal of those cases. However, the contentions made by the Respondents as are relevant for disposal of these revising petition are as follows:
(i) The supply order was placed at Indore which was received at Indore by the Respondents where they resided and carried on business and where their office was located.
(ii) The goods were supplied at Pithampore as per order ex-factory.
(iii) Money was payable at Indore and was paid at Indore.
(iv) Their factory is situated at Pithampur, Dhar District, Madhya Pradesh.
According to the Respondents, the aforesaid facts and circumstances prove that no cause of action for the suits either wholly or in part arose at Guwahati where the suits were instituted. It was, therefore, submitted that the plaint be returned to the Petitioner for presentation to the proper court. The Respondents also prayed that the issue relating to the jurisdiction of the court to try the suit be determined as preliminary issue. This was objected by the Petitioner, who also filed its objection in which it claimed that inasmuch as the contract having been entered at Guwahati, both the supply order and the acceptance thereof having been made at Guwahati and also the payment of the goods having been made by the Petitioner at Guwahati through the State Bank of India, New Guwahati Branch, the trial Court at Guwahati has the territorial jurisdiction to entertain the suit. It was the contention of the Petitioner that the aforesaid facts and circumstances disclosed the accrual of the cause of action, at least, in part at Guwahati.
4. It would appear that the trial court postponed the settlement of the other issues and proceeded to take up the jurisdictional question as preliminary issue. After hearing the parties, the trial court passed the impugned orders on the same day in the manner indicated earlier holding, inter alia, that no part of the cause of action in the instant suits arose at Guwahati. The Ld. Civil Court recorded the findings that the Petitioner was silent on the point of place where the oral agreement was made or where the raw materials were received; the raw materials was received at Pithampur as ex-factory price but there was no statement in the plaint to the effect that the payment was made by the Petitioner at Guwahati through the letter of credit and through the State Bank of India, New Guwahati Branch; even though it was accepted that the goods were received at Guwahati, in terms of the provisions of Section 39(1) of the Sale of Goods Act, 1930 (hereinafter called "the Act" for short), the delivery of goods having been made by the Respondents to a carrier at Pithampur for transmission to the Petitioner at Guwahati, the delivery was said to have been made at Pithampur and not at Guwahati and, as such, the cause of action arose not at Guwahati but at Pithampur where the goods were received Ex. factory price. At the oulset, it may be observed that the Ld. Civil Court apparently overlooked the contents of the written objection dated 18.1.2000 filed by the Petitioner.
5. For better appreciation of the controversy involved in these cases, it may, at this stage, be appropriate to refer to the provisions of Section 20 of Code of Civil Procedure, which read thus:
20. Other suits to be instituted where Defendants reside or cause of action arises-Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction-
(a) The Defendant, or each of the Defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) Any of the Defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the Defendants who do not reside, or carry on business, or personally work for gain, as aforesaid acquiesce in such institution; or
(c) The cause of action, wholly or in part, arises.
6. A cursory look at the foregoing provisions shows that Section 20 is a general Section covering all personal actions, which cover suits relating to person or moveable property including law of contract, and the same is subject to the provisions of Sections 16-19. They provide that such personal actions shall be instituted in a Court within whose local jurisdiction- (a) The Defendant actually resides or carries on business or personally works for gain; or (b) Any of the Defendants (where there are more than one) actually resides, etc. and either the leave of Court has been taken or the other Defendants acquiesce, or (c) the cause of action or a part of it arises. Since the Respondents in the instant cases do not admittedly reside or carry on business, etc. at Guwahati, the trial Court will at Guwahati have the jurisdiction to try the suits only if the cause of action for the suits or a part thereof arose at Guwahati. In other words, if no part of the cause of action arose at Guwahati, the trial Court will have no jurisdiction to entertain the suit.
7. "Cause of action" means the whole of the material facts, which it is necessary for the Plaintiff to allege and prove in order to succeed. The cause of action has no relation whatever to the defence which may be set up by the Defendant, nor does it depend upon the character of the relief prayed for by the Plaintiff. It refers entirely to the ground, set forth in the plaint as the cause of action, or, in other words, to the media upon which the Plaintiff asks the court to arrive at a conclusion in his favour (see Chand Kaur v. Partap Singh (1888-88) 15 IA 156 quoted with approval by the Apex Court in
8. The next question to be determined against the aforesaid backdrop is: where did the cause of action arise in the instant suits? As noticed earlier, the place where the cause of action arose must be determined on the basis of the averments made in the plaint, the truth or otherwise thereof being immaterial and not on the basis of the defence set up by the Respondents. The case of the Petitioner as evident from the plaint, and which is not disputed by the Respondents, either, is as follows:
(1) A telephonic discussion was between the Petitioner and the Respondent No. 2 for purchase and supply of the said hard coils, but no averments were made by the Petitioner that the said telephonic discussion included the agreement/contract for supply of the said goods.
(2) In pursuance of the said telephonic discussion, the Petitioner by the letter No. AAL/R2/Metalman/96/7310 dated 8.1.96 placed order for supply of the said hard coils on the terms and conditions and specifications stipulated thereon.
(3) The challan-cum-Excise Gate Pass No. 1039 dated 25.1.96 and dated 25.1.1996 filed by the Petitioner show that the goods were sent through the trucks of Popular Carriers at Pithampur as per order Ex-Factory Pithampur, District-Dhar (MP).
(4) The letter-dated 8.1.96 further shows that the Petitioner had requested the Respondents to arrange transportation of the goods through them.
(5) The invoice No. IMPL/PTH/CRS/1039/95-96 dated 25.1.1996 shows that the goods were consigned by the Respondents to the State Bank of India, New Guwahati Branch A/c M/s Assam Asbestos Ltd. Bonda, Narengi, Guwahati, Assam.
9. It is well settled that in suits arising out of contract the cause of action arises at any ofthe following place- (1) The place where the contract was made; (2) The place where the contract was to be performed or performance thereof completed; (3) The place where the performance of the contract any money to which the suit relates was expressly or impliedly payable. A suit on a contract of sale of goods may be filed at the place where goods are deliverable or the price payable. The core issue in the case at hand, therefore, is whether the goods in question were to be deliverable or the price thereof was payable at Guwahati. Drawing my attention to Section 39(1) of the Sale of Goods Act, 1930, the learned Counsel for the Respondent vehemently argued that the delivery of the goods having made to the Popular Carrier at Pithampur as per order ex-factory, the property of the goods passed to the Petitioner at Pithampur and, as such, no part of the cause of action arose at Guwahati where the suits were instituted. Strong reliance is placed by him upon the decision of this Court in M/s Auto Engineering Works v. Bansal Trading Co. and Ors. 1998(1) GLT 181 and Sasa Musa Sagar Works Ltd. v. Chunilal Churaric AIR 1975 Gau 34. On the other hand, Mrs. M. Hazarika, the learned Counsel for the Petitioner submits that payment for the supply of the goods having been made at Gauhati through the State Bank of India, New Guwahati Branch, a part of the cause of action for the suit arose at Guwahati, after all, the settled law is that even if a small fraction of cause of action occurs within the jurisdiction of a Court, that Court will have jurisdiction in the matter. No doubt, the letter dated 8.1.1996 shows that the transportation of the goods had to be arranged by the Respondents and that the goods were accordingly delivered by the Respondents to Popular Carrier at Pithampur (M.P.) as desired by the Petitioner. At this stage, it will be beneficial to refer to and reproduce hereinbelow the provisions of Section 23(2) and Section 39(1) of the Sale of Goods Act.
23(2). Delivery to carrier: Where, the pursuance of the contract, the seller delivers the goods to the buyer or to a carrier or other bailee (whether named by the buyer or not) for the purpose of transmission to the buyer, and does not reserve the right of disposal, he is deemed to have unconditionally appropriated the goods to the contract.
39. Delivery to carrier or wharfinger: (1) Where, in pursuance of a contract of sale, the seller is authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer, or delivery of the goods to a wharfinger for safe custody, is prima facie deemed to be a delivery of the goods to the buyer.
2. Unless otherwise authorized by the buyer, the seller shall make such contract with the earlier or wharfinger on behalf of the buyer as may be reasonable having regard to the nature of the goods and the other circumstances of the case. If the seller omits so to do, and the goods are lost or damaged in course of transit or whilst in the custody of the wharfinger, the buyer may decline to treat the delivery to the carrier or wharfinger as a delivery to himself, or may hold the seller responsible in damages.
10. A combined reading of the aforesaid provisions abundantly makes clear that although Section 39(1) creates a fiction for the purpose of Section 39(2) to fix on whom the loss is to fall and it merely reinforces the legal principle incorporated in Section 23(2) that where goods are delivered to a carrier for transmission to the buyer, the carrier is presumed to be the buyer''s agent. Therefore, if goods are ordered by a person to be delivered through a common carrier to the person who orders them, then, prima facie, the moment the goods are delivered to the carrier, the carrier becomes the agent of the vendee and such delivery means delivery to the vendee. If there is a binding contract between the vendor and the vendee, then there can be no doubt that the property passes to the vendee by such delivery to the earlier. In the instant case, the applicability of Section 39(1) could have been placed beyond controversy if the transaction had consisted only of the delivery of the goods to the public carrier. This is not, however, so. The invoice dated 25.1.1996 shows that the goods were consigned to the State Bank of India, New Guwahati Branch A/c M/s Assam Asbestos Ltd. Bonda, Narengi, Guwahati, Assam (India) 781 026 thereby making it clear that the payment was to be made at Guwahati. This further shows that title to the goods were to pass to the Petitioner only after the Bank of Guwahati made the payment on behalf of the Petitioner. Therefore, it cannot be said that the delivery in the instant case was made to the Popular Carrier for delivery to the Petitioner.
The popular carrier as carrier was, to my mind, to transmit the goods from Pithampur to Guwahati but what is significance to notice is that the consignment was despatched to Guwahati where delivery is to be made against payment of the goods through the State Bank of India, New Guwahati Branch. In my considered view, the authorities on which reliance were placed by the Counsel of the Respondent cannot be pressed into service in support of the proposition that in such circumstances the Court at Guwahati had no jurisdiction to entertain the suit.
11. In
In a suit for damages for breach of contract the cause of action consists of the making of the contract and its breach. Such a suit can, therefore, be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. In such a contract performance of the contract consists not only of delivery of the goods but also where the price would be payable on such delivery. Title to the goods would not and the delivery too could not be taken until the price was paid in terms of the contract which was an integral part of the performance of the contract.
12. Again in Appanna and brOrs. v. Subbarayu AIR 1957 A.P. 530, it was held by a Single Bench of the Andhra Pradesh High Court that a part of the cause of action for the suit for damages for breach of contract arises where the payment of the price is to be made because that is a part of the performance of the contract. The proposition of law was founded on the following facts.
A, merchant at C entered into a contract with B, a firm carrying on business at P, for purchase of a member of bags of horse-gram and paid a certain sum as advance. Under the terms of the contract B was to load the goods in wagon and the railway receipt was to be sent to B''s banker at C who could deliver the railwaiy receipt to A on payment of the balance of the value of the goods. A part of the price was also to be paid by a hundi drawn on A. In a suit for breach of contract committed by B." It was held that "the property in the goods did not pass to A the moment they were delivered to the common carrier but it remained with B till delivery of the receipt was taken on payment of the full price. A part of the cause of action arose at C where the goods bought were to be paid for either by hundi or against railway receipt. Hence, the Court at C had jurisdiction to entertain the suit.
13. The aforesaid decisions, with which I am respectful agreement, show that the cause of action for a suit on breach of contract arise not only where the goods were to be delivered but also where the price would be payable on such delivery. Section 39(1) of the Sale of Goods Act has no application in case of consignment by a seller through Bank to be delivered against payment made to it by a buyer. The Section merely lays down that delivery by a seller to a carrier is prima facie delivery to the buyer. But circumstances may exist which may prevent such delivery to the buyer. In the instant case, those circumstances are the prior payment ofthe price of the goods by the Petitioner through the State Bank of India, New Guwahati Branch before taking delivery of the goods from the popular carrier. It was only when payment was made at Guwahati that title to the goods passed to the Petitioner. Therefore, the conclusion is inevitable that the price of the goods was paid at Guwahati. I have carefully gone through the decisions in M/s Auto Engineering Works (supra) and Sasa Musa Sagar Works (supra) and examination of those decisions does not indicate that the prices of the goods involved in the suits were payable at the places where the suits were instituted. Consequently, the facts in those cases are, in my considered view, clearly distinguishable. In that view of the matter, I have no alternative but hold that the trial court failed to exercise its jurisdiction or has acted with material irregularity in returning the plaints.
14. The offshoot of the aforesaid discussions is that the two revision petitions are allowed. The impugned orders dated 14.3.2000 in M.S. No. 165 of 1997 and M.S. No. 200 of 1997 are accordingly quashed. The suits stand restored to the file of the learned Civil Judge (Senior Division) No. 1, Kamrup, who shall now proceed with the same in accordance with law. Since the suit have been pending since 1997, the learned Civil Judge shall now proceed with the trial and dispose of the same as early as possible, preferably, within a period of six month from today. No cost. Send down the records immediately.
