w w w . L a w y e r S e r v i c e s . i n



M/s.Murthy Hosiery Mills represented by its Managing Partner Miller R.T.Murthy & Another v/s The State Bank of India represented by its Chief General Manager & Another


Company & Directors' Information:- GENERAL MILLS INDIA PRIVATE LIMITED [Active] CIN = U15510MH1995PTC094741

Company & Directors' Information:- J G HOSIERY PRIVATE LIMITED [Active] CIN = U18101TZ2001PTC009707

Company & Directors' Information:- K D S HOSIERY PRIVATE LIMITED [Active] CIN = U18101PB2001FTC024327

Company & Directors' Information:- J M HOSIERY MILLS PRIVATE LIMITED [Active] CIN = U17299PB2000PTC023753

Company & Directors' Information:- R M H HOSIERY PRIVATE LIMITED [Active] CIN = U17125DL2007PTC167271

Company & Directors' Information:- P T M HOSIERY PVT LTD [Active] CIN = U52322WB1994PTC062394

Company & Directors' Information:- T I MILLER LIMITED [Amalgamated] CIN = U31501TN1960PLC004309

Company & Directors' Information:- M G HOSIERY PRIVATE LIMITED [Active] CIN = U17124TZ2002PTC010195

Company & Directors' Information:- THE INDIA COMPANY PRIVATE LIMITED [Active] CIN = U74999TN1919PTC000911

Company & Directors' Information:- J J HOSIERY MILLS PRIVATE LIMITED [Active] CIN = U45203WB2000PTC091570

Company & Directors' Information:- G N GENERAL MILLS PRIVATE LIMITED [Strike Off] CIN = U15311DL1981PTC012466

Company & Directors' Information:- O K HOSIERY MILLS PVT LTD [Active] CIN = U99999DL1980PTC010979

Company & Directors' Information:- D D HOSIERY PVT LTD [Active] CIN = U18101WB1973PTC028694

Company & Directors' Information:- M. B. HOSIERY PRIVATE LIMITED [Active] CIN = U18101WB2008PTC125110

Company & Directors' Information:- R R HOSIERY PRIVATE LIMITED [Active] CIN = U18101MH1984PTC034394

Company & Directors' Information:- INDIA CORPORATION PRIVATE LIMITED [Active] CIN = U65990MH1941PTC003461

Company & Directors' Information:- K K HOSIERY PRIVATE LIMITED [Active] CIN = U18204MH2014PTC251777

Company & Directors' Information:- B B HOSIERY PRIVATE LIMITED [Strike Off] CIN = U74999MH2015PTC267158

Company & Directors' Information:- M C S HOSIERY PRIVATE LIMITED [Strike Off] CIN = U51311WB2001PTC093781

Company & Directors' Information:- THE INDIA HOSIERY MILLS LTD [Strike Off] CIN = U17121WB1949PLC018383

Company & Directors' Information:- MILLER & CO. INDIA PRIVATE LIMITED [Strike Off] CIN = U74900DL1998PTC094217

Company & Directors' Information:- S P HOSIERY PVT LTD [Strike Off] CIN = U51311PB1985PTC006113

    O.S.A.NO.48 of 2011

    Decided On, 07 April 2011

    At, High Court of Judicature at Madras

    By, THE HONOURABLE MRS. JUSTICE R. BANUMATHI & THE HONOURABLE MR. JUSTICE V. PERIYA KARUPPIAH

    For the Appellants: Muthumani Duraisami Sr.Counsel for Kandhan Duraisami, Advocate. For the Respondents: K. Sankaran, Advocate.



Judgment Text

(Prayer: Original Side Appeal filed under Order XXVI Rule 1 of the O.S.Rules read with Clause 15 of the Letters Patent against the order dated 7.7.2010 made in Application No.805 of 2010 in C.S.D.NO.12201 of 2008 on the file of this Court.


R. BANUMATHI, J.


Whether suit against 2nd defendant/2nd respondent ? State Bank of India, Tirupur is maintainable on the Original Side of the Madras High Court is the point arising for consideration in this appeal, which arises out of an order of learned single Judge dated 7.7.2010 in Application No.805 of 2010 in C.S.D.No.12201 of 2008 declining to grant leave to sue the 2nd respondent.


2. The appellants/plaintiffs filed the suit in C.S.D.No.12201 of 2008 for recovery of a sum of Rs.40,90,020.95 with interest at the rate of 18 percent per annum.


3. Case of appellants/plaintiffs is that the appellants/plaintiffs are sister concerns and that they are the partnership firms having registered place of business at Tirupur and carrying on business in export of garments at Tirupur. The appellants are engaged in the manufacture and export of hosiery products. In the course of their business, the appellants availed number of loan/credit facilities from the 2nd respondent/2nd defendant. For availing facilities, appellants have provided primary securities such as stock and receivables, bills, etc., apart from collateral securities by creating equitable mortgage of their immovable properties situated at Chennai and Tirupur by depositing the title deeds.


4. Due to the slump in the market during 1994, the plaintiffs could not retain the credit facilities availed by discounting all the bills from the respondents/defendants and the appellants committed default in repaying the amount due and the accrued interest thereon. The outstanding for the 1st appellant as on 31.12.1997 was Rs.1.702 Crores and for the 2nd appellant was Rs.1.8229 Crores and in all, both of them have to pay total sum of Rs.3.0031 Crores to the 2nd respondent Bank. The appellants negotiated with the 2nd respondent for One Time Settlement. One Time Settlement was arrived at and the 2nd respondent Bank agreed to receive a sum of Rs.2.1250 Crores out of the said total sum of Rs.3.0031 Crores payable by the appellants. The proposal of the appellants to sell the property at Royapettah, Chennai was approved and the properties were sold and appellants settled their dues to the 2nd defendant. Finally, all the dues were settled as per One Time Settlement and the plaintiff's account was closed on 21.7.1998. UNIPRINT ? BERIT AND DENNIS DOHERTY at Norway, who is one of the foreign buyers of the appellants, went in liquidation at Norway. The appellants filed the claim for the same with the Administrator of the Company in Norway. The Company's advocate in Norway sent a letter to the appellants that their claims have been accepted. The Administrator of the Norway Company is also said to have sent letter dated 24.6.1998 to the appellants asking the appellants to confirm in writing that the amount can be paid to the State Bank of India/2nd defendant. An amount to the tune of NOK 339,178,23 equivalent to Indian Rupees 19,64,183 had been received by the 2nd defendant/Overseas Branch on 26.4.1999 and credited to the accounts of the appellants.


5. According to State Bank of India, the appellants by their communication dated 4.7.1998, interalia stated that the Bank is a rightful creditor to receive the said claims. In the above circumstances, the respondents/defendants received the said sum of Rs.19,64,183/- and adjusted towards their claim.


6. Case of appellants is that the appellants only expressed their consent to make payment to the State Bank of India and the appellants are entitled to receive the amount. Further case of appellants is that factum of money received by the defendants from Norway Court was not even informed to the appellants by the defendants and therefore appellants wrote a letter to the 2nd defendant - Bank to issue a Pay Order for the money received by the defendants with interest. The 2nd defendant informed appellants that during the course of negotiation for arriving at a settlement of the claim, Bank has never agreed to give up their rights to realise the amounts due from pending bills and one such pending bill was that of the foreign customer of the plaintiffs viz., UNIPRINT ? BERIT AND DENNIS DOHERTY at Norway.


7. Alleging that the Bank had unjustly withheld the amount of Rs.19,64,183/- with subsequent interest, appellants have filed W.P.No.10294 of 2000 seeking certiorarified mandamus to quash the communication of the Bank dated 27.1.2000 and to direct the defendants to release the sum of Rs.19,634,183/- with interest at the rate of 18 percent per annum. By the Order dated 27.9.2005, the learned single Judge held that whether the appellants are entitled to the discounted amount from the Norway Court towards bills of exchange or not is a disputed question of fact and dismissed the writ petition giving liberty to the appellants to approach the Civil Court questioning the claim of the respondents/defendants. The Writ Appeal preferred by the plaintiffs in W.A.No.2079 of 2005 also came to be dismissed with observation that the appellants are at liberty to approach the Civil Court. Alleging that the respondents/defendants have no right to appropriate the money credited into the 2nd defendant Bank, plaintiffs have filed suit in C.S.D.No.12201 of 2008 against the 2nd defendant for recovery of Rs.40,90,020.95 lakhs with interest.


8. The 2nd defendant is State Bank of India, Tirupur Branch from whom the appellants/plaintiffs had availed credit facilities and had transactions. Along with the suit, appellants filed A.No.805 of 2010 seeking leave of the Court to file the suit against the 2nd defendant, who is situated at Tirupur. In the said application, notice was ordered and defendants have entered appearance through counsel and filed counter resisting the grant of leave contending that the 2nd defendant is having office outside the jurisdiction of Original Side of the High Court and merely because the 1st defendant is having Office at Chennai, it would not enable the appellants to seek leave of the Court for institution of the suit in the High Court.


9. Upon consideration of the rival contentions, the learned single Judge held that the averments of the plaint and a perusal of the documents available on record would show that "the major part of cause of action has arisen only at Tirupur, where the plaintiffs maintained accounts with the 2nd respondent Bank and all the transactions were only with 2nd respondent Bank at Tirupur." Pointing out that the amount received from Norway has also been credited only by the Overseas Branch at Tirupur and appropriation from that amount was also done only by the 2nd respondent Bank at Tirupur, the learned single Judge held that major part of cause of action has arisen only at Tirupur and appellants have no case to maintain the suit on the Original Side of the High Court.


10. Challenging the impugned order, the learned Senior Counsel for the appellants Mr.Muthumani Doraisamy drew our attention to various correspondences, which makes reference to "appropriate authority" ? Head Office. The learned Senior Counsel has submitted that the One Time Settlement proposal was also emanated only from the Head Office at Chennai and when the 1st defendant ? Head Office is situated in Chennai, part of cause of action has arisen in Chennai and therefore the suit is well maintainable in the Original Side of the High Court.


11. Drawing our attention to the correspondence dated 14.10.1997 containing the compromise proposal, the learned Senior Counsel submitted that the said correspondence would show that the property of which equitable mortgage was created in favour of the 2nd defendant Bank was situated at Royapettah, Chennai. It was further submitted that only with the intervention of the Head Office, accounts were settled and the settlement was approved by the Head Office. Since part of cause of action has arisen at Chennai, as per Clause 12 of the Letters Patent the learned single Judge ought to have granted leave to file suit against the 2nd defendant.


12. The learned counsel for the respondents submitted that the Bank had all transactions only with the 2nd respondent Bank at Tirupur and entire cause of action arose outside the jurisdiction of Original Side of Madras High Court. The learned counsel would further submit that no part of cause of action has arisen in Chennai to fall within the ambit of "part of cause of action" to attract the jurisdiction of the Original Side of High Court.


13. The learned counsel for respondents would further submit that creation of equitable mortgage over the Royapettah property and approval of One Time Settlement by the Head Office cannot be said to be integral part of cause of action to attract the jurisdiction of the High Court. In support of his contention, the learned counsel placed reliance on a judgment of this Court in the case of SOUTH INDIAN BANK LTD. VS. M.M.T.C.LTD., ((2007) 5 MLJ 303).


14. In Paragraph No.17 of the plaint, it is averred that that even though the 2nd respondent Bank is located at Tirupur, all the Overseas transactions have taken place only through the Head Office - 1st respondent/1st defendant and 1st respondent is a decision making authority over the 2nd respondent and therefore major part of cause of action for the suit arose only at Chennai and therefore the suit is well maintainable on the Original Side of High Court.


15. We are conscious that to consider the question of jurisdiction, the averments contained in the plaint alone should be looked into. While considering jurisdiction, the facts pleaded by the plaintiffs are to be taken as true. In Abdullah Bin Ali and Ors. Vs. Galappa and Ors. 1985(2) SCC 54, it was held that there was no denying the fact that the allegations made in the plaint decide the forum and that jurisdiction does not determine upon the defence taken by the defendants in the written statement.


16. For the purpose of determining the jurisdiction of the Court and to entertain the suit on the Original Side of this Court, Clause 12 of Letters Patent is applicable. As per Clause 12, for personal actions, suit shall be instituted in a Court "where the cause of action arose wholly or in part or at the time of commencement of the suit, the plaintiff carries on business or personally work for gain within such limits." Clause 12 of the Letters Patent reads as follows:


"Original jurisdictions as to suits.?And we do further ordain that the said High Court of Judicature at Madras, in exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try, and determine suits of every description if, in the case of suits for land or other immovable property, such land or property shall be situated, or in all other cases, if the cause of action shall have arisen, either wholly, or, in case the leave of the Court shall have been first obtained, in part, within the local limits of the ordinary original jurisdiction of the said High Court: or if the defendant at the time of the commencement of the suit shall dwell or carry on business, or personally work for gain, within such limits; except that the said High Court shall not have such original jurisdiction in cases falling within the jurisdiction of the Small Cause Court at Madras, in which the debt or damage, or value of the property sued for does not exceed hundred rupees.?


In clause 12, what is emphasised is, whether cause of action has arisen in Chennai wholly or in part. Cause of action must include some act which gives plaintiff the right to claim relief.


17. The expression 'cause of action' is defined in Mulla's Code of Civil Procedure:

The 'cause of action' means every fact which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant.


18. In South-East Asia Shipping Co. Ltd. vs. Nav Bharat Enterprises Pvt. Ltd. and Ors. (1996) 3 SCC 443 it was reiterated that primacy has to be given to the place where the cause of action has in fact arisen. Cause of action must include some act done by the defendant which gives the plaintiff the right to claim relief. In that case, the respondents had filed a suit on the original side of the Delhi High Court for perpetual injunction against the appellant from enforcing a bank guarantee executed at Delhi and transmitted for performance to Bombay. The admitted position was that the contract was executed at Bombay and performance of the contract was also to be carried out in Bombay. In an appeal by Special Leave, the Supreme Court relying upon a judgment in ABC Laminart v. A.P. Agancies, AIR 1989 (2) SCC 163 held as follows (SCC page : 444-445, paras 3 and 4):


"3. It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. cause of action means, therefore, every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim 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 would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give right to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained."


19. In Rajasthan High Court Advocates' Association vs. Union of India and Ors. (2001) 2 SCC 294, the Apex Court emphasised that it was the infraction of the right or the immediate occasion for the action which was the necessary constituent of "cause of action" and determined the place where the "cause of action" arises. The following observations of the Supreme Court are relevant: (SCC page-304, para 17):


"The expression "cause of action" has acquired a judicially-settled meaning. In the restricted sense cause of action means the circumstances forming the infraction of the right or the immediate occasion for the action. In the wider sense, it means the necessary conditions for the maintenance of the suit, including not only the infraction of the right, but the infraction coupled with the right itself. Compendiously the expression means every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court. Every fact which is necessary to be proved, as distinguished from every piece of evidence which is necessary to prove each fact, comprises in? cause of action?. It has to be left to be determined in each individual case as to where the cause of action arises."


20. Considering the situs of cause of action in respect of entertaining writ petitions under Article 226 and considering the scope of Section 20(c) C.P.C. in KUSUM INGOTS & ALLOYS LTD. VS. UNION OF INDIA AND ANOTHER, ((2004) 6 SCC 254), the Supreme Court laid down the touchstone for conferment of jurisdiction on the Court: (SCC, page 261 para 18)


"The facts pleaded in the writ petition must have a nexus on the basis whereof a prayer can be granted. Those facts which have nothing to do with the prayer made therein cannot be said to give rise to a cause of action which would confer jurisdiction on the court."


Observing that the expression "cause of action" is not defined in any statute, the Apex Court in Kusum Ingots (supra) emphasized that the material facts which are imperative for the suiter to allege and prove constitute the cause of action; and that the expression "material facts" is also known as integral facts.


21. The learned Senior Counsel for appellants contended that when part of cause of action has arisen at Chennai the appellants have the right to invoke the Original Side of the jurisdiction. It was further contended that the appellants have filed the suit ? C.S.D.No.12201 of 2008 on the premise that State Bank of India is having its Head Office in Chennai and that the 1st respondent is a decision making authority over the 2nd respondent/2nd defendant. It is further averred that being the Head Office/Administrative Head, the 1st defendant has granted approval for One Time Settlement.


22. In order to entertain the suit on the Original Side of High Court, the plaint must disclose that cause of action, wholly or in part, has arisen at Chennai within the jurisdiction of the Original Side of High Court. The plaint must also disclose the integral facts pleaded in support of the cause of action do constitute cause conferring jurisdiction upon the Court to decide the suit. As per Clause 12, if defendant carries on business in Chennai, Suit on Original Side is maintainable, but pre-eminence has to be given where substantial part of cause of action has arisen.


23. The plaintiffs have filed the suit for recovery of money, which is said to have been sent by the Administrator of the Norway Company. The said amount was credited to the Overseas Branch of the State Bank of India at Tirupur on 24.6.1998 and the same was appropriated by the 2nd respondent. The suit for recovery of money is mainly based on the credit facilities availed by them from 2nd respondent. The 1st respondent - Head Office is only said to have routed the Overseas Transaction and is said to have approved One Time Settlement. While examining the plaint averments, in our considered view, the facts averred in the plaint disclose that the entire transaction was only with the 2nd respondent.


24. Primacy has to be accorded where the cause of action substantially arise. The facts/averments pleaded against the 1st respondent ? Head Office have no material bearing in the suit for recovery of money from the 2nd respondent - Tirupur Branch. The averments made against the 1st respondent that it has approved the One Time Settlement proposal and that it routed all the Overseas transactions cannot be said to be material facts giving rise to a cause of action, which would confer jurisdiction on the Original Side of the Madras High Court.


25. The State Bank of India has got branches throughout the State of Tamil Nadu. For all the Branches in the State of Tamil Nadu, the 1st respondent is the Head Office ? decision making authority. But to say that the Original Side of Madras High Court will have jurisdiction to entertain the suit in respect of all the branches of State Bank of India throughout the State on the ground that the 1st respondent ? Head Office is the decision making authority would amount to stretching the arms beyond the logical ends. We are afraid that by accepting such contention, Original Side of High Court would be overstepping its limits in assuming jurisdiction over all such transactions.


26. Mere fact that the 1st respondent is the decision making authority over the 2nd respondent and that it has approved One Time Settlement would not constitute an integral part of cause of action to confer jurisdiction. It is not every fact pleaded by the litigant that gives rise to a cause of action and only such facts as are necessary to adjudicate upon the lis would constitute a cause of action conferring territorial jurisdiction.


27. Learned Senior Counsel Mr.Duraisami has contended that where the part of cause of action has arisen in Chennai, the plaintiffs have right to file the suit in the Original Side of Madras High Court. It was further submitted that where the part of cause of action has arisen, it would be open to the plaintiffs, who are dominus litus to have their forum conveniens. Drawing our attention to the impugned order, the learned Senior Counsel contended that even the learned single Judge has observed that major part of cause of action has arisen in Tirupur meaning thereby that part of cause of action

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has arisen in Chennai. It was further argued that even if a fraction of cause of action has arisen in Chennai, it would confer jurisdiction upon the Original Side of Madras High Court, even if fraction of cause of action has arisen. 28. There is no force in the contention that the appellants/plaintiffs are entitled to invoke jurisdiction of Original Side of the High Court of Madras. In our considered view, location of the Head Office at Chennai and Head Office granting approval for one time settlement are so trivial and are not material facts/integral facts constituting cause of action. 29. In KUSUM INGOTS & ALLOYS LTD. VS. UNION OF INDIA AND ANOTHER, ((2004) 6 SCC 254), the Supreme Court held that even if it was found that part of cause of action has arisen within the jurisdiction of the Court, the Court may refuse to exercise its discretionary jurisdiction on the principle of 'forum conveniens'. In Para No.30, on forum conveniens, the Supreme Court held as under: "Forum conveniens 30. We must, however, remind ourselves that even if a small part of cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merit. In appropriate cases, the Court may refuse to exercise its discretionary jurisdiction by invoking the doctrine of forum conveniens. (See Bhagat Singh Bugga v. Dewan Jagbir Sawhney, (AIR 1941 Calcutta 670); Madanlal Jalan v. Madanlal, (AIR 1949 Calcutta 495); Bharat Coking Coal Ltd. v. Jharia Talkies & Cold Storage (P) Ltd., (1997 CWN 122); S.S.Jain & Co. v. Union of India ((1994) 1 CHN 445) and New Horizons Ltd. v. Union of India, (AIR 1994 Delhi 126). 30. Applying the ratio of the various decisions, in our considered view, the integral facts constituting cause of action has arisen only in Tirupur and the learned single Judge rightly held that the suit is not maintainable on the Original Side of the Madras High Court. We do not find any reason warranting interference with the order of the learned single Judge. 31. In the result, the Appeal is dismissed giving liberty to the appellants/plaintiffs to move the concerned Court. However, there is no order as to costs.
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