S.S. Subramani, J.@mdashThe second defendant in C.S. No. 1453 of 1993 on the file of this court is the appellant before us. Respondents Nos.
1 and 2 herein, as plaintiffs, filed the above suit, against the two defendants for the following reliefs :
..... to pass a decree and judgment jointly and severally against defendants Nos. 1 and 2 -
(a) for the recovery of Rs. 23,03,471 (rupees twenty-three lakhs three thousand four hundred and seventy-one) with interest at 24.75 per cent.
per annum from the date of plaint till the date of realisation;
(b) cost of the suit; and
(c) grant such further or other reliefs ...
2. It is the case of the plaintiffs that they got acquainted with the first defendant herein some time in the year 1987-88 and were dealing with it for
some time. Though they were acquainted during that period, the business transaction was not that much, and it is said that some time during the
year 1991, the first defendant company requested the plaintiffs to supply fresh consignments of cut and polished diamonds. Since there has been
no transaction between the plaintiff and the first defendant after 1987-88 and there had been lapse of time and considering the precious value of
the diamonds to be supplied, they requested their bankers, namely, the Bank of Baroda, to obtain a fresh banker''s report with regard to the
financial capacity to pay for the first defendant-company. It is said that they wanted to get a report regarding the reputation, average balance
maintained by the first defendant, how it can repay the price, its credit facilities, etc. It is said that on such request, the Bank of Baroda requested
the second defendant, appellant herein, to send a banker''s report about the first defendant company on the lines requested by it. It is said that on
getting the request, the second defendant (appellant) sent a report on September 25, 1991, explaining the financial status and viability of the first
defendant-company. In that report, it is said that the first defendant-company was good to the extent of U.S. dollars 1,00,000 under 90 days D.A.
basis since the appellant was holding a debenture for U.S. dollars 1,00,000. It is said that plaintiff acted on the report made by the second
defendant and sent consignments on various dates, the value of which comes to 51,996.15 U.S. dollars. The said consignments consisted of
invoices and airway bills negotiated by the Bank of Baroda and the consignee in all the suit transactions was the second defendant-bank, ""National
Westminister Bank, 22, Frederick Street, Birmingham, U.K. - account P.R. Bushell Jewellers Ltd., Michael House, 48, Carver Street,
Birmingham, West Midlands, B1 3 AS, J.K."". It is said that after sending the consignments, the second defendant was also informed about the
same an in the messages sent to it, it was clearly specified that the second defendant should deliver the suit consignments to the first defendant
company on the latter giving an undertaking to deposit the sale proceeds with the second defendant within 90 days from the date of delivery of the
consignments. It is said that the plaintiffs relied on the credit report given by the second defendant that the first defendant was good for payment. It
is further averred that the first defendant company and the second defendant-bank failed to pay the balance on the respective dates and when the
first defendant was contacted, they gave evasive replies. Even a personal visit by one of the directors of the plaintiffs to the United Kingdom was
not fruitful. It is alleged by the plaintiffs that on further enquiry, they came to know that the first defendant was in insolvent circumstances and the
first defendant itself was a debtor to the second defendant to the tune of pound sterling 351,000 as on December, 1991. It is said that the first
defendant was not in a position to pay the creditors and the entire plant and machinery including fixtures and fittings of the first defendant were
being sold in view of its strained financial circumstances. It is said that even on amount which was due to the plaintiff towards the price of the
consignment sent to it was adjusted by the second defendant towards its outstandings and the second defendant who is the banker of the first
defendant, was fully aware of the insolvent circumstances, and in spite of the same, the plaintiff was informed that the first defendant was in a
capacity to pay. It is said that the second defendant has acted negligently and fraudulently in representing to the plaintiffs about the financial position
of the second defendant. It is further said that but for the information given by the second defendant on September 25, 1991, the plaintiffs would
not have transacted with the first defendant. The suit is, therefore, laid against the two defendants, the first defendant being the consignee, for
recovery of the amount for the value of the consignment sent to it and against the second defendant for misrepresenting to the plaintiff as to the
financial status of the first defendant and for the alleged loss sustained by it. The plaintiff claims the value of the consignment as the loss sustained by
it and, therefore, wanted the second defendant to be made liable for the alleged loss.
3. Both the defendants are beyond the jurisdiction of this court since both of them are having their offices in Birmingham, the United Kingdom. The
plaintiff, therefore, filed Application No. 5301 of 1993 to grant leave to sue against defendants Nos. 1 and 2. As per order dated September 28,
1993, a learned single judge of this court granted ex parte leave to the plaintiff.
4. The second defendant, after receipt of notice, filed Applications Nos. 6268 and 6269 of 1994. Application No. 6268 of 1994 was to revoke
the leave granted, and the other application was to reject the plaint under Order 7, rule 11 of the Civil Procedure Code, 1908.
5. In support of both the applications, a common affidavit was filed, wherein it has been stated that the plaintiff cannot rely on the message given by
the second defendant on September 25, 1991, in view of its confidential nature and the same was intended only for the private use of the Bank of
Baroda. It is further said that the said confidential information was given to the Bank of Baroda on the express understanding that neither the
second defendant nor its officials were to be held responsible, and without responsibility to any one. It is also stated therein that the second
defendant-bank is not a credit reference agency within the terms of section 145(8) of the Consumer Credit Act. It is further stated that the
plaintiffs'' bankers at Madras has sent certain telex messages to the second defendant is Birmingham asking it to act as an agent as regards delivery
of consignment against undertaking and collection of payments from the first defendant since the payment has to be made and received at
Birmingham, England. It is also said that the goods were despatched from Bombay, which is also outside the jurisdiction of this court. Even
payments were to be credited in favour of the Bank of Baroda as its account with the Bank of New York at No. 48, Wall Street, New York, and
even the amounts which the Bank of Baroda had to receive were only through their agents, viz., the Bank of New York. It is also said that both the
defendants are residing outside the jurisdiction of this court and are carrying on their business in the United Kingdom. Liquidation proceedings have
been initiated against the first defendant in England and the plaintiffs who are one of the creditors, cannot maintain an action, and the same amounts
to misjoinder of cause of action. It is also said that the court has to invoke the doctrine of forum non convenience. It is said that since both
defendants are carrying on business at England, credit information was received at England and the banker''s report was also made at England and
all the documents pertaining to various transactions between the first defendant and the second defendant inter se were also at England and the sale
proceeds are also to be made at England and all persons who have connection with the transactions are also permanent English residents and
liquidation proceedings are also pending in England, this court has no jurisdiction to entertain the suit. For these reasons, the second defendant
prayed that the leave granted may be revoked.
6. A counter was filed by the plaintiffs opposing the applications filed by the second defendant, on the ground that the cause of action has arisen
within the jurisdiction of this court and, therefore, the applications cannot be sustained.
7. The learned judge, after hearing both the parties, came to the conclusion that the leave granted cannot be revoked. In the order, it was further
stated that every part of the cause of action has arisen within the jurisdiction of this court and, therefore, the leave granted is not liable to be
revoked. Application No. 6268 of 1994 was, therefore, dismissed. Consequently, the other application, viz., Application No. 6269 of 1994 for
rejection of the plaint, was also dismissed.
8. It is against the common order, that these two appeals are preferred by the second defendant.
9. Before we consider the merits of the contentions raised by either party, it is better to extract that portion of paragraphs 31 of the plaint in which
the plaintiffs have stated as to how the cause of action has arisen any whey the suit was filed before this court. The relevant portion reads thus :
The cause of action for the above suit arose at Madras within the jurisdiction of this court on September 20, 1991, from where and when the
Bank of Baroda, 53-55, Rajaji Salai, Overseas Branch, Madras - 600 001, for and on behalf of and as the banker and agent of both the plaintiffs
be telex of that date of the second defendant requested for a financial report about the first defendant company who was a customer of the second
defendant; the telex being sent from Madras; on September 25, 1991, when the plaintiffs bank and agent, viz., Bank of Baroda, Overseas Branch,
Madras - 600 001, received at Madras telex reply from the second defendant giving a financial report about their customer, the first defendant; the
cause of action arose at Madras when the plaintiffs acted on the said report, dated September 25, 1991, received at Madras; the cause of action
arose at Bombay on October 1, 1991, October 21, 1991 and on November 18, 1991, ""respectively when the three consignments of cut and
polished diamonds were sent from Bombay by air. The cause of action also arose at Madras within the jurisdiction of this court on October 7,
1991, and October 21, 1991, and November 19, 1991, when the plaintiffs'' banker sent to the second defendant test telex message giving
instructions to the second defendant as to the conditions on which the suit consignments are to be delivered to the first defendant; again at Madras
from where the plaintiffs'' banker and agent sent telex message to the second defendant authorising it to deliver consignments to the first defendant
against their written undertaking to deposit with the second defendant the proceeds within 120 days from the date of delivery instead of 90 days; at
Madras where the amounts are finally receivable by the plaintiffs'' bank/agent, viz., Bank of Baroda, Madras - 600 001. The cause of action for
the suit against the second defendant arose at Madras on September 25, 1991, within the jurisdiction of this court where and when the plaintiffs''
bank and agent, namely, the Bank of Baroda received a report from the second defendant about the financial position of the first defendant and on
which report the plaintiffs acted believing the same to be true and supplied the goods on credit to the first defendant and sent the documents from
Madras to the second defendant. The said report turned out to be false and fraudulent and male fide one. Since the report was received at Madras
and since the plaintiffs acted on the report from Madras, this court has jurisdiction to entertain the case...
10. From a reading of the above paragraph, it is clear that the main reason for instituting the suit before this court is the request made by the
plaintiff through its bankers for getting a report of the first defendant company and the telex message sent on behalf of the second defendant to the
plaintiffs''s bankers, namely, Bank of Baroda (Overseas Branch), Madras, whereby a goods report was given about the first defendant, which
persuaded the plaintiffs to act on the same. It is further clear that the plaintiffs thereafter cam to know about the falsity of the report and
consequently suffered damages. While seeking leave before this court, in Application No. 5301 of 1993, the plaintiffs have extracted paragraph 31
of the complaint. Admittedly, both the defendants are carrying on the business outside India. So, unless the plaintiffs are successful in their attempt
in showing that the cause of action or part of it has arisen within the jurisdiction of this court, the suit cannot be sustained here. Whether the
allegations in paragraph 31 are sufficient cause of action for instituting the suit in this court is the only point to be considered in these appeals.
11. The first document relied on in the plaint is dated September 20, 1991. It is a telex message sent by the Chief Manager, Bank of Baroda,
Overseas Branch, Madras, to the second defendant (appellant). It is not disclosed that the same is sent at the instance of the plaintiffs. It is better
to extract the entire message. It reads thus :
To
National Westminister Bank Plc., Birmingham, Frederick Street, U.K.
We would appreciate your providing us with any credit information you have on file or can develop on our behalf in respect of PLK Bushell
Jewellers Ltd., Michael House, 48, Graver Street, Birmingham, Westmidlands, B1 3 AS (U.K.) who we understand are banking with you. Our
particular interest is the subject''s background ownership financial responsibility and reputation average balances maintained their manner of
meeting payments type and tenor of facilities extended and your experience and opinion. You may be assured that any information provided will be
used appropriately and with discretion. Please also advise whether the party will be considered good for drawing up to U.S. dollars 100,000
under 90 days D.A. basis.
In reply quote our ref. ''Advances dept.'' DJN/RAS"".
12. On September 25, 1991, the section defendant sent a reply to the Bank of Baroda thus :
Re. P & R Bushell Jewellers Ltd.
Banker''s report :
If you refer to P and R B. (J) Limited, properly constituted private limited company and should prove good for the amount and purpose of your
enquiry. The bank holds a debentures. U.S. dollars 100,000 under 90 days D.A.
This information is for your private use only and is given in confidence on the express understanding that neither the bank nor any of its officials is to
be responsible. And where the information has been obtained from another bank or informant. Without responsibility on the part of themselves or
their officials.
To avoid delay in future please transmit you requests for status reports to 48209 or 48120.
13. It is also seen from other documents that the consignments were sent from Bombay to Birmingham. Instructions are given in various invoices to
remit the proceeds with the Bank of New York at No. 48, Wall Street, New York (U.S.A.) account Bank of Baroda (Overseas Branch),
Madras.
14. As per document No. 15, dated November 22, 1991, the Bank of Baroda (Overseas Branch), Madras, authorised the second defendant to
deliver the consignment to the first defendant against their written undertaking to deposit with it the proceeds within 120 days from the date of
delivery instead of 90 days. The exact wording in the telex message reads thus :
..... You are now authorised to deliver consignment to above drawees against their written undertaking to deposit with you the proceeds within
120 days from the date of delivery instead of 90 days.
15. All the other documents filed along with plaint related only to the financial position of the first defendant. It explains that the first defendant is in
great financial strain and huge amounts are due from it to various creditors including the second defendant. For considering the cause of action, the
only relevant documents are the three telex messages extracted above.
16. What is meant by ""cause of action"" is now decided by the Supreme Court in the decision in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P.
Agencies, Salem, . In paragraphs 11 and 12 of the judgement, their Lordships said thus (at page 170 of [1989] 2 SCC) :
A cause of the action is a bundle of facts which taken with the law applicable to them gives the plaintiffs a right to relief against the defendant. It
must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the
actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove
such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the
defendant a right a immediate judgement must be part of the cause of action. But it 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 plaintiff.
17. In Bahadur Singh v. N.S. Sultan Husain Khan, AIR 1922 Oudh 171, it was held as follows :
Though the cause of action has no relation to the defence which may be set up by the defendant, yet it would be an error to suppose that it has no
relation to the defendant and his acts preceding the suit. ''A cause of action'' is not a theoretical term entirely, picked up from text books and
placed on a plaint. In a cases of torts, the right of the plaintiff and its infringement by the defendant will generally make up the ''causes of action''. In
Williams v. Morland [1824] 2 B & C 910 cited by Bowen, L.J. in Brundsden v. Humphrey [1885] 14 QB 141, Littledale J. said ''generally
specking, there must be temporal loss or damage accruing from the wrongful act of another in order to entitled a party to maintain an action on the
case'', Order 7, rule 5 (Act V of 1908), is based on the same principle. It is as follows : ''The plaint shall show that the defendant is or claims to be
interested in subject-matter and that he is liable to be called upon to answer the plaintiff''s demand.
18. The above decision was followed by our High Court in the decision reported in In Re: D. Lakshminarayana Chettiar and Another, . At page
604 of the report, their Lordship said thus :
A cause of action is something more than a ground of title. It not only includes the facts necessary to support the plaintiff''s title, but also the facts
which entitled him to relief against a particular defendant"".
19. After extracting the decision in Bahadur Singh''s case, AIR 1922 Oudh 171, their Lordships further held thus (at page 604) :
It would be seen from the aforesaid decisions that though under Act 8 of 1859 this court was inclined to take the view that the unity of title was
synonymous with cause of action, the later decisions clearly laid down that cause of action was something more than unity of title and that it would
include not only the right of the plaintiff but also the facts disclosing the infringement of that right.
20. The Full Bench decision of this court was followed in Nagumilli Narayanamurthy v. Gudimetla Gangaraju, AIR 1958 AP 451, wherein a
Division Bench of that High Court held thus :
''Cause of action'' is a bundle of essential facts which the plaintiff has to prove in order to sustain his action. This connotes that both the right to sue
and cause of action are the same and the cause of action is synonymous with the right to sue.
21. We have already said that under Order 7, rule 5 of the Civil Procedure Code, 1908, the plaint shall say that the defendant is or claims to be
interested in the subject-matter that he is liable to be called upon to answer the plaintiff''s demand. Only if the defendant is liable to be called upon
to answer the plaintiff''s demand, it can be said that there is a cause of action against the defendant.
22. In Law of Banking by Lord Chorley, sixth edition (1974), at page 248, the learned author has said that the giving of information as to the
financial position of their customers, which is commonly called a bank ""opinion"" is part of the everyday business of banking. While considering the
same, the learned author has also discussed the extent of the banker''s liability, and has said thus :
If, as a result of such unduly favorable information, the inquiring party is led to take up business which he would not be have otherwise accepted
and thereby suffers loss, the question will inevitably arise whether he is entitled to compensation from the banker. An analysis of the legal position,
however, shows that his chance of success is problematical.
(1) There will be probably be no contractual relationship between the banker and the person to whom he gives the information, and, therefore,
there is no contractual duty to take care that the opinion given is not misleading. Accordingly, should it turn out to be misleading, and the person in
question thereby suffer damage he has no right of action against the banker for breach of contract.
(2) There remains the possibility of an action in tort. Lord Haldane said in Banbury v. Bank of Montreal [1918] AC 626 that the only duty on the
banker in such a cases is that ''of common honesty'', which in more precise language means that he must not be fraudulent. Any misrepresentation
as to the customer''s financial position which has been made innocently will not be actionable as such. In practice the chance of fraudulent
misrepresentation is slight but, even if there be fraud, no action will lie on a false and fraudulent representation as to the character, conduct, credit,
ability, trade or dealings of any person unless it be made in writing, and in the case of company unless the writing be under the company''s seal.
Even if the ''opinion'' be given in writing, it will be a difficult question whether the bank is liable for the fraudulent conduct of their servant the bank
manager, who will, probably, have been responsible for giving it. The words of the Act require that the writing should be ''signed by the party to be
charged'' and, therefore, it seems that the bank could not be made liable. The manager himself will, of course, be personally liable for his own
fraudulent conduct, but only if statement was signed, and if fraud can be proved against him. Actions against individual bank officers are very
unusual, however; the reason is presumably to be found in the fact that the officer in question may often not be sufficiently substantial to justify
proceedings.
Lord Haldane when giving the opinion just mentioned evidently took the view that the banker was not under any duty of care, as opposed to
honesty towards the person for whom he provided the information about his customer. And this was certainly the view generally taken at that time.
In the post-war period, however, the opinion became widely held that when a businessman gives information or advice, in respect of matters on
which he has or should have competent knowledge, to another person who he knows is likely to act upon it, he ought to be held responsible for
the exercise of due care in the matters, and this opinion was emphatically accepted by the House of Lords, laid it down that the law was to the
effect just stated, overruling the earlier decisions to the contrary.
There is, however, nothing to prevent the person who makes the statement disclaiming responsibility for its accuracy or validity. And if he does so,
no action will lie against him should it in fact turn out to be untrue.
23. In Paget''s Law of Banking, ninth edition (1982), at page 160, the learned author has said thus :
In the light of recent developments in the law relating to confidentiality, the customary intimation by one banker to another that the opinion is given
for the latter''s use only may be an embarrassment to the receiving banker when the opinion is passed on as distinct from being used by the
receiving banker for his own purposes, such as taking up a reference on a prospective customer or a guarantor. The practice is so well established
that it may eliminate the effect of the stricture, but it might well behove bankers to dispense with a precaution which is so regularly ignored.
24. In Sheldon''s Practice and Law of Banking, tenth edition (1978), while considering the banker''s opinion, the learned author has stated thus :
The position now would appear to be as follows : there can be no cause of action founded on innocent misrepresentation, but, if there exists a
duty, then there may be an action for negligence or breach of duty. There can be no negligence where there is no duty. It used to be thought that in
the absence of any special relationship between an inquirer and a bank giving a reference, a bank did not owe a duty towards the inquirer to
exercise reasonable care in answering the inquiry. In 1963, however, the House of Lords decided in the case of Hedley Byrne and Co. Ltd. v.
Heller and Partners Ltd. [1964] AC 465 that a banker who gives an opinion on the standing of a customer in the expectation that it will be relied
upon, may be under liability towards any person who does rely upon it unless when giving the opinion the banker expressly disclaims responsibility.
Accordingly, a bank does owe a duty to exercise care in giving opinions and will be liable if it fails to do so, unless when giving the opinion it is
made clear that the opinion is given without responsibility.
25. In Hedley Byrne and Co. Ltd. v. Heller and Partners Ltd. 1964 AC 465 (HL), the facts of the case are as follows :
The plaintiffs, advertising agents, inquired through their bankers, the National Provincial Bank Ltd., Bishopsgate, as to the credit of their clients,
Easipower Ltd., who banked with the defendant merchant bank. Satisfactory replies were given to two such inquiries, and the plaintiffs, relying on
these replies, place orders for advertising space in connection with which, on the subsequent liquidation of Easipower Ltd., they lost more than
Pounds 17,000. They brought an action against the defendant bank alleging that the replies had been given negligently.
26. One of the inquiries was made and replied to in writing. The reply began with the words :
CONFIDENTIAL
For your private use and without responsibility on the part of the bank of its officials.
27. The other inquiry was made by telephone, but it was agreed by the parties that a similar disclaimer of responsibility was accepted by the
inquiring bank.
28. On the above facts, McNair J., held as follows :
.... that the bank had in fact been negligent, but he considered that, quite apart from the effect of the disclaimer, if any, he was bound by precedent
to hold that a bank was not liable for damage resulting from mere statements of this kind, however negligently made. His judgement was affirmed
by the Court of Appeal"".
29. In that case, the decision of the House of Lords is as follows :
.... that if a person such as a banker upon receiving a request for information or advice in circumstances that show that his skill or judgment is
being relied upon, gives that information or advice without a clear disclaimer of responsibility, he accepts a legal duty to exercise proper care in
doing so even though he is not under any contractual or fiduciary obligation to the inquirer, and if he is negligent an action for damages will lie.
30. In the circumstances of the present case, the bank''s disclaimer was held to be sufficient to free from liability. Lord Devlin said (at p. 533) :
A man cannot be said voluntarily to be undertaking a responsibility if at the very moment when he is said to be accepting it he declares that in fact
he is not.
31. And Lord Morris said (at page 504) :
They stated that they only responded to the inquiry on the basis that their reply was without responsibility. If the inquirers chose to receive and act
upon the reply they cannot disregard the definite terms upon which it was given. They cannot accept a reply given with a stipulation and then reject
the stipulation.
32. Commenting on the above decision, Paget in Law of Banking, ninth edition, at page 161, has stated thus :
What emerges from the decision is that there may be special relationship between two parties deriving neither from contract nor from fiduciary
responsibility, but from a relationship of proximity, which will give rise to a duty to take care in giving a reference, but that in the majority of
banking cases - at least of those similar to the present case, which was the common case of banker''s reference - no such relationship arises; that,
in any event a bank could safeguard itself by giving the information without responsibility"".
33. In this connection, it may also be noted that the second defendant-bank has no duty towards the plaintiff. At the most, it can be said that it has
only a general duty of common honesty and that duty, of course, applies to all cases. But where a mere inquiry is made by one banker of another,
who stands in no special relation to him, in the absence of special circumstances from which a contract to be careful can be inferred, there is no
duty excepting the duty of common honesty (see Robinson v. National Bank of Scotland [1916] 53 S.L.R. 390 (HL)).
34. In Paget''s Law Banking'', at pages 157 and 158, the learned author further says thus :
In recent years there has grown up a practice which varies from what had been the normal practice. The inquiry may be addressed direct to the
bank of whose customer information is being sought, with a request that the reply be given through the inquirer''s own banker. Whatever be the
practical merits or demerits of such a practice it is hard to see that the legal position is materially different...
35. The learned author further says, at page 158, that the information given is usually accompanied by an intimation that it is given in confidence
and without responsibility on the parts of the banker and bank officers and such a disclaimer of responsibility absolves the bank of any action.
36. Even though a request was made by the Bank of Baroda, Overseas Branch, Madras, stating that the information will be used properly and
with discretion, the second defendant was very definite when it gave the information. It safeguarded itself by saying that it could be used only for
the proper use of the Bank of Baroda and that the same is given in confidence on the express understanding that neither the bank nor any of its
officials is to be held responsible. The second defendant has also said that such information is given without responsibility on its part or its officials.
So, if the plaintiff wants to rely on the banker''s report, naturally they have to accept the conditions on which the information is given. The plaintiff
cannot ignore those conditions and put forward a claim that the second defendant acted negligently or dishonesty, for, it has given the information in
confidence and without responsibility. If we take the second defendant - appellant''s letter with the above condition it cannot be said that the action
of the second defendant will constitute a cause of action for the plaintiffs. So, on the basis of the this letter alone, the plaintiffs cannot sue.
37. As stated by the Supreme Court in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, it is the action of the defendant that
gives the plaintiff a cause of action and on the materials produced, the plaintiff must have a right to sue, and that must have arisen within the
jurisdiction of this court. The documents which the plaintiff rely upon must entitle them to sue and entitle them to get a relief against the defendant.
The plaintiffs must further show that the letter dated March 25, 1991, has infringed their right. When the right to sue and cause of action are
synonymous, we have to hold that the letter dated September 25, 1991, will not the plaintiffs a right to sue the defendants. The letter dated
September 20, 1991, issued by the plaintiff''s bankers will not give any cause of action, for it is only a request on behalf of the plaintiffs.
38. The plaintiffs also say that the cause of action has arisen at Madras since the amount is payable at Madras. The document No. (15) filed by the
plaintiffs itself speaks against it. It is seen therefrom that the second defendant is authorised to deliver the goods to the first defendant on getting an
undertaking to deposit the proceeds at Birmingham, U.K. So, even the payment has to be made only in England and not in India. It is also clear
from the other various invoices produced in this case that the goods were dispatched from Bombay with a direction to remit the proceeds at the
Bank of New York, 48, Walls Street, New York, in the account of the Bank of Baroda, Overseas Branch, Madras. So payment has to be made
with the agent of the Bank of Baroda at New York. It will be equivalent to making payment to the Bank of Baroda. That payment had also to be
made outside India. So, we find that on the basis of the letter dated March 25, 1991, the action of the defendants has not given a cause of action
and the various transactions which are the subject-matter of the suit have also taken place only outside the jurisdiction of this court. The other
averments relate only to the correspondence or letters sent by the second defendant. That will not be a cause of action for the suit. In this suit, as
against the first defendant the claim is restricted to the price or value of the diamonds sold to it. That is based on a contract. But so far as the
second defendant is concerned, i.e., the appellant herein, it is not a contracting party. As stated already, the only allegation is that it gave a message
on September 25, 1991, and the plaintiff acted on it. Even if for argument''s sake it is taken that the second defendant was plaintiffs'' agent, that is
also only to deliver the goods to the first defendant and receive the proceeds at Birmingham. To that extent, an agency is created. That also will not
give a cause of action for the plaintiffs to file at suit before this court. The question of infringement of the plaintiffs'' right also may not arise as
against the second defendant. Even if we consider the suit as one for damages for tortious liability, the plaintiffs have no right or claim as against the
second defendant.
39. It is contended by learned counsel for the plaintiffs that the suit as against the second defendant is in the nature of recovery of damages on the
ground of fraudulent misrepresentation and misappropriation. Even if we accept that there is such a case in the plaint, the alleged fraudulent act is
only in England. For that reason also, the suit cannot be entertained by this court.
40. Since both the defendants are outside India and since we hold that no part of the cause of action has arisen within the jurisdiction of this court,
the plaintiffs are not entitled to get any relief against the second defendant in this case.
41. Even while granting leave, this court is bound to consider the forum non-convenience. In paragraph 5 of the affidavit filed in support of the
applications, the second defendant has stated the reason why leave should not be granted. It is the said therein that both the defendants are
carrying on business outside India, and even the credit report was received in England, and all the documents pertaining to the correspondence are
in England. The defendants are also permanent residents of England and even as against the first defendant, liquidation proceedings are pending
only in England. If the second defendant is asked to contest the suit before this court, naturally, it will be put to great difficulties. Taking into
consideration these facts also, we feel that this is a fit case where leave to sue as against the second defendant has to be revoked.
42. In the result, the order of the learned judge is set aside, and we hold that this court has no jurisdiction to entertain the suit as against the second
defendant, and the leave granted by the learned judge is liable to be revoked, and is accordingly revoked. The appeals are allowed, however,
without any order as to costs.
