JUDGMENT
1. By this Chamber Summons, the defendant prays that leave granted by this court under clause 12 of the Letters Patent, in favour of the plaintiff, by order dated 8-9-2001, to institute the above numbered suit be revoked and consequently, the plaint be returned to the plaintiff for presentation before the appropriate court. The plaintiff’ presented the above numbered suit before the authorised officer of this court on 20-7-2001 for the following reliefs :-
“(a) that the defendant be ordered and decreed to pay to the plaintiff the sum of Rs. 5,00,00,000 (Rupees five crores only) which has been paid by the plaintiff on the Demand dated 19-2-2001 to the income-tax authorities on account of the tax liabilities of the defendant ‘ together with interest thereon at the rate of 12 per cent per annum from the date hereof till payment and/or realisation as per particulars of claim Exhibit W- 1 hereto.
(b) that the defendant be ordered and decreed to pay to the plaintiff the sum of Rs. 96,16,74,416 (Rupees ninety six crores sixteen lacs seventy four thousand four hundred and sixteen only) being the balance amount which has been demanded from the plaintiff by the Demand dated 19-2-2001 or such other amount as the plaintiff is required to pay to the income-tax authorities on account of the tax liabilities of the defendant, together with interest thereon at the rate of 21 per cent per annum from the date hereof till payment and/or realisation as per particulars of claim Exhibit W- 1 hereto.
(c) that the defendant be ordered and decree to pay to the plaintiff the sum of Rs. 132,65,21,397 (Rupees one hundred and thirty two crores sixty five lacs twenty one thousand three hundred and ninety seven only) which has been demanded from the plaintiff by the Demand dated 27-3-2000 or such other amount as the plaintiff is required to pay to the income-tax authorities on account of the defendant, together with interest thereon at the rate of 21% p.a. from the date hereof till payment and/or realisation as per particulars of claim Exhibit X hereto.
(a) for costs;
(e) for such further and other reliefs as the nature of and circumstances of the case may require.”
2. A formal application for leave under clause 12 was moved, which was granted on 8-9-2001. Thereafter, the suit came to be numbered on 13-9-2001 and, the plaintiff was served on the defendant on 1-10-2001. Upon service, the defendant entered appearance through Advocate by filing Vakalatnama of the Advocate, on 9-10-2001. Along with the Plaint, the plaintiff had also moved for interim relief as prayed in the Notice of Motion. However, the first Notice of Motion came to be withdrawn in January 2003 with liberty to file fresh Application.
Pursuant to the liberty, another Notice of Motion was filed in February 2003, which is stated to be pending for hearing. In the meantime, on 17-3-2003, the present Chamber Summons has been filed for the relief as mentioned earlier.
3. Mainly three contentions have been raised in support of the relief prayed in the Chamber Summons. Firstly, it is argued that no part of cause of action has arisen in Mumbai. If it is so, this court has no jurisdiction and no leave under clause 12 could have been granted. It is next contended that the leave as granted by this court ought to be revoked on the doctrine of “Forum Convenience” of the defendant. It is lastly contended that the plaintiff has first lodged the Suit on 20-7-2001 without obtaining prior leave under clause 12 of the Letters Patent; whereas, leave has been granted subsequently on 8-9-2001, which was impermissible. It is contended that leave under clause 12 has been granted essentially on the facts stated in Para 30 of the Plaint, which reads thus :-
“30. The defendant had an office in Bombay till September 1996 but now no longer carries on business in Mumbai. The Wet Lease Agreement dated 22-10-1995 was executed in Mumbai. The Agreement has been in operation all over India including in Mumbai. Payments under the Wet Lease Agreement dated 22-10-1995 have been made at Mumbai. The tax deduction at source was made in Mumbai by the plaintiff. Thus a material part of the cause of action has arisen in Mumbai. The plaintiff submits that with leave under clause XII of the Letters Patent this Hon’ble court will have jurisdiction to entertain, try and dispose of this suit.”
4. According to the defendant, now it is conceded that the fact that the Wet Lease Agreement dated 22-10-1995 was made in Mumbai, is incorrect; as the same was executed in Delhi. Insofar as the second statement of fact made, that the Agreement has been in operation all over India including in Mumbai, contends learned counsel for the defendant that, that fact is not relevant for considering the cause of action for institution of the Suit and therefore, of no consequence. Insofar as the third fact stated that, payment was made under the Wet Lease Agreement at Mumbai, even this is incorrect; as now it is accepted that the payments have been made in London. The fourth and last fact stated in Para 30 that, tax deduction at source was made in Mumbai by the plaintiff, cannot be relevant fact for deciding the cause of action for institution of the Suit ‘ for which reason, the same will be of no avail. On this argument, it is contended that no part of cause of action has arisen in Mumbai. It is also contended that the fact that the tax deduction at source was made at Mumbai was unilateral act of the plaintiff and is of no avail in deciding the cause of action. Reliance is placed on the decision of our High Court in Crown Frozen Foods v. Silver Frozen Foods (2002) 6 Bom. C.R. 771, in particular, Paragraphs 12 and 13 thereof to buttress this contention. Reliance is then placed on Madanlal Jalan v. Madanlal AIR 1949 Cal. 495 (paras 11 and 22), Karan Chand Thapar &Bros. v. Inder Mohan Kapoor AIR 1972 Cal. 82 (paras 5, 7 & 8), and Union of India v. Kuppuswamy Naicker AIR 1978 Cal. 211, to contend that the leave as granted by this court be revoked on the doctrine of ‘Forum Convenience’ of the defendant. Reliance is also placed on decisions in Transasia Bio Medicals Ltd. v. Revijay Clinical Laboratory & Hospital (2002) 5 Bom. C.R. 1 (paras 3 and 4), Noorjahan v. Sadrunnisa 1993 (1) Bom. C.R. 501, Rhoda Jal Mehta v. Homi Framfroze Mehta 1989 Mh. L.J. 124 and Devidatt Ramniranjandas v. Shriram Narayandas (1934) 34 Bom. L.R. 236, to contend that leave under clause 12 is a condition precedent for receiving, trying and determining the Suit, such as the present one. It is contended that there is no difference between lodging, filing or admitting the plaint and, in the present case, plaint has been lodged before obtaining leave of the court, which is impermissible. In such a case, the court has no option but to return the plaint to the plaintiff for presentation before the appropriate court.
5. On the other hand, counsel for the plaintiff submits that there is no substance in the grievance made that no part of the cause of action has arisen in Mumbai. According to him, on reading the plaint as a whole, it is more than clear that part of the cause of action has arisen in Mumbai, for which reason, this court, in exercise of powers under clause 12 could grant leave to proceed with the plaint such as the present one. Reliance is placed on the decisions of the Apex Court in Smt. Bismillah v. Janeshwar Prasad (1990) 1 SCC 207 (para 9) and Abdulla Bin Ali v. Galappa AIR 1985 SC 577 (para 5) to contend that Plaint must be read as a whole. It is then argued that what constitutes cause of action is also no more res integra. Reliance is placed on decisions in A.B.C Laminart (R) Lid. v. A.P. Agencies, Salem (1989) 2 SCC 163 (para 12) and Navinchandra N. Motfithia v. State of Maharashtra (2000) 7 SCC 640 (paras 18 to 20) to buttress the above principle. Reliance was also placed on the decision in Adcon Electronics (P) Ltd. v. Daulat (2001) 7 SCC 698 (para 9) as to the purport of clause 12 of the Letters Patent and it was argued that in the facts of the present case, court had rightly invoked that power while granting leave tinder clause 12. It was argued that on reading the Plaint as a whole, it is obvious that the case made out by the plaintiff is that the plaintiff was required to pay the amount towards tax dues of the defendant, and having paid that amount, the plaintiff was entitled to ask for reimbursement of the same having regard to the legislative scheme of the provisions of Income- tax Act. In other words, it is a case of reimbursement or for restitution of the amount paid by the plaintiff by virtue of provisions of the Income Tax Act and it can be safely assumed, at least on the basis .of pleadings at this stage that, material part of the cause of action has arisen in Mumbai. Insofar as the argument advanced on behalf of the defendant that leave already granted by this court should be revoked on the doctrine of ‘Forum Convenience’ of the defendant, even the same is devoid of merits. Learned counsel contends that the only case made out in this behalf can be culled out from Para 14 of the affidavit in support of the Chamber Summons. Even reading the said Paragraph liberally, the same was not enough, as it does not provide for foundation to invoke that doctrine. Para 14 of the affidavit reads thus
“14. Strictly without prejudice to the above and in the alternative, I submit that in any event, the Plaint ought to be returned to the plaintiff for presenting to the appropriate court because of the undue hardship that will be caused to the defendant in defending the above Suit in this Hon’ble court. I say that admittedly the defendant is not carrying on any business in India. I verily believed that the plaintiff has filed the above Suit in this Hon’ble court only with a view to harass the defendant and coerce it into succumbing to the plaintiff’s unlawful demands. 1 say that the defendant has a very good defence on merits, which it has been advised not to disclose at present, and will be hardpressed to canvass the same if the above Suit is allowed to be tried in this Hon’ble court. I say that no prejudice or hardship will be caused to the plaintiff if the Plaint is returned to it for presentation to the appropriate court. I say that the balance of convenience is in favour of the defendant. I say that even in this view of the matter, on applying the doctrine of forum convenience, the leave ought to be revoked and the Plaint returned to plaintiff for presentation to the appropriate court.”
6. It is contended that since there is no foundation laid by the defendant to invoke the doctrine of ‘Forum Convenience’, the said argument was unavailable to the defendant. Reliance was placed on the decisions of the Apex Court in Manohar Lal Chopra v. Rai Bhadur Rao Raja Seth Hiralal AIR 1962 SC 527 (para 34) and Ramji Dayawala & Sons (A) Ltd. v. Invest Import AIR 1981 SC 2085 (paras 28 and 29) to contend as to in what circumstances the court could invoke such a doctrine and, merely because of distance or expenses, by itself, cannot be a ground, which perhaps is a feeble attempt made on behalf of the defendant. Insofar as the argument regarding no suit can be lodged without obtaining prior leave of the court and no post-facto grant of leave is permissible, learned counsel placed reliance on the decision of our High Court in Union Bank of India v. Sunpac Corpn, 1986 Mh. LJ. 237 and Ramgopal Chunilal v. Ramsarup Baldevdas, (1934) 35 Bom. L.R. 84 to contend that this argument clearly overlooks the marked difference between terms ‘lodging/filing/presen-tation’ of the Plaint on the one hand and “acceptance/admission” of the plaint on the other. The latter is “receiving” the Plaint and the former is not. To buttress this submission, learned counsel has drawn analogy also from the provisions of order IV rule 1 of the Code of Civil Procedure, 1908 and rule 986 of the High Court (Original Side) Rules. It is next contended that since the concerned Judge has already exercised discretion in favour of the plaintiff and having regard to the pleadings on record a formidable case having been made out by the plaintiff, it will be inappropriate to revoke leave already granted. It is lastly contended that having regard to the relevant dates, as established from the record, it is obvious that the present Chamber Summons is not a bona fide application, but is an afterthought only to thwart the hearing of the Notice of Motion filed by the plaintiff, which has matured for hearing. This allegation is made in the reply affidavit filed on behalf of the plaintiff, which has remained uncontroversial, as no rejoinder has been filed. Reliance is also placed on the decision of the Apex Court in Chittaranjan Mukherji v. Barhoo Mahta AIR 1953 SC 472 (para 6) to contend that it was obligatory on the part of the defendant to take out such application at the earliest opportunity and Dot the manner in which it has been done in the present case especially when the defendant entered appearance in the Suit on 9-10-2001 and more so, the defendant is contesting three other Suits in India. This argument is canvassed not only to reject the Chamber Summons on the ground of delay but also on the ground that it is not bona fide.
7. Having considered the rival submission, I would first proceed to address the issue as to whether no part of the cause of action has arisen in Mumbai. I find substance in the argument canvassed on behalf of the plaintiff that, to decide this issue, the court is obliged to examine and read the plaint as a whole and not answer the issue only on the basis of Para 30 of the plaint. Reliance is rightly placed on the decisions of the Apex Court in the cases of Smt. Bismillah (supra) and Abdulla Bin Ali (supra) to support this position. The next question is, what is the meaning of cause of action. As rightly contended, this question is no more res integral The Apex Court in the recent decision in the case of Navinchandra N. Majithia (supra) (paras 18 to 20) has dealt with the aspect and has observed thus:
“18. In legal parlance the expression ’cause of action’ is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a court or a Tribunal: a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person. (Black’s Law Dictionary)
19. In Stroud’s Judicial Dictionary a ’cause of action’ is stated to be the entire set of facts that gives rise to an enforceable claim: the phrase comprises every fact, which, if traversed, the plaintiff must prove in order to obtain judgment.
20. In Words and Phrases'(4th Edn.) the meaning attributed to the phrase cause of action’ in common legal parlance is existence of those facts which give a party a right to judicial interference on his behalf.” (p. 647)
8. Reliance is also rightly placed on the decision of the Apex court in the case of A.R C. Laminart (P.) Ltd. (supra). In Para 12, the court has stated the legal position thus:-
“12. A 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. 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 f acts, 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 to immediate judgment 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 the plaintiff. (p. 170)
It was argued on behalf of defendant that the above observations in the case of A.B C Laminart (P.) Ltd. (supra) for from coming to the aid of the plaintiff, will help the Defendant. The Apex court contends learned counsel for the defendant, has observed that cause of action must include “some act done by the defendant” since in the absence of such an act, no cause of action can possibly accrue, Emphasis was placed on this dictum of the Apex Court. However, to my mind, this observation will be of no avail to the defendant. Inasmuch as, in the fact situation of the present case, on reading the plaint as a whole, I am inclined to accept the argument canvassed on behalf of the plaintiff that foundation to assert that part of the cause of action or material part of the cause of action has arisen in Mumbai has been laid. I shall refer to this aspect of the matter a little later. This view is reinforced on fair reading of the plaint and as mentioned earlier, on reading the same as a whole. In para 2 of the Plaint, it is averred as follows :-
“2. It is pertinent to note that during the currency of both the Wet Lease Agreements the plaintiff deducted tax at source from the remittances to the defendant. This was one of the conditions of both the Wet Lease Agreements. During the term of the Wet Lease Agreement dated 22-10-1995 the plaintiff deducted tax at the rate of 2.7596 as per the Orders (NOCs) of the income-tax department under section 195(2) of the Income Tax Act. The plaintiff deposited these amounts with the authorities as per law. Article 11. 1 of the Wet Lease Agreement dated 22-10-1995 inter alia provided that the plaintiff was entitled to deduct from the amounts payable to the defendant all sums which had been paid by the plaintiff to the Indian revenue authorities for tax liabilities of the defendant.”
In para 9 of the plaint, it is averred as follows:
“9. The income-tax department requested the plaintiff to provide complete details of the payments made to the defendant up to the first week of September 1996 to enable them to arrive at the amount of tax liability of the defendant. The plaintiff gave this information by its letter dated 28-12-1999. The income-tax department issued an order dated 30-12-1999 directing the plaintiff to remit the retire amount of US $ 23,634,581 into the government treasury on the ground that the defendant had failed to pay its taxes while it was carrying on business in India.”
Averments in Para 9 will have to be understood in the context of the document Exhibit F. Reliance was placed on Paragraphs 6 to 8 of the said document Exhibit F. The same reads thus:-
“6. In view of such a good profitability of the venture the earlier NOC issued by I.T. department dated 9-9-1996 requires to be assessed. In any case it was at best only tentative tax deduction subject to a final determination of income at the time of assessment of income of Caribjet after its return of income was filed. It was issued on the presumption that the agreement was to continue and the non-resident was to file its return of income in India and tax liability as and when determined, in future was to be paid by Caribjet. Now the ground situation has changed drastically. No further operations are to be carried out by Caribjet and whatever payments are received by Caribjet would be beyond the reach of Indian Tax Laws in absence of an appropriate Deduction of Tax at Source.
7. At this stage it becomes very significant to examine the track record of Caribjet in complying with Indian Tax Laws. In this connection the concerned assessing officer having jurisdiction over non-residents viz. Assistant Commissioner Cir. 2(1) was requested to let this office know if Caribjet had filed its return of income for the payments received by it from Air India from 22-10-1995 till September 1996 upto which the agreement was in force. Assistant Commissioner Cir. 2(1), Mumbai after examining records from his office vide his office letter No. AC. Cir. 2(1) Misc./99-2000, dated 29-12-1999 has replied as under:
‘Kindly refer to the verbal discussion we had on 27-12-1999 and query raised by you whether M/s. Caribjet Incorporated is filing Return of income in this charge or not. On going through the records, it is found that M/s. Caribjet Incorporated has not filed return of income for any assessment year in this charge. This is for your information and necessary action at your end.’
This means that Caribjet has not filed its return of income for the ,payments received by it from Air India in Financial Year 1995-96 (or AN. 1996-97). This background shows that after having been given a TDS authorisation at the rate of 2.75% of the gross receipts being received, Caribjet did not file its return of income. This in a way went against the principle and philosophy of tax deduction at source which is only tentative. The TDS authorisation does not have a finality of determination of income as is the case in assessment. As Caribjet did not file its return of income, definite assessment of taxable income could not be done. This meant the TDS deducted @2.75% practically becoming the total tax collected from Caribjet from the entire transaction. The entire transaction has been claimed to yield 44.31% net profits from the total revenues received from Air India by Caribjet in its submission before the Arbitration Tribunal as has been further elaborated elsewhere in this order. This means on account of final assessment of income not taking pace a major chunk of income of Caribjet went untaxed in India. This is against the premise on which original TDS authorisation was given @ 2.75%. As final assessment could not be made additional demand could not be raised.
8. Therefore, the entire payment having been made by Air India to Caribjet till date has to be added to the payment now awarded by Arbitration Tribunal and the sum total would be the total receipts of Caribjet arising from this particular agreement. Appropriate and adequate credit would be given for the tax deduction amount till now @ 2.75% for payments made till first week of September 1996.”
It will be useful to revert to Para 11 of the Plaint, which reads thus:
“The Deputy Commissioner by his summons dated 24-1-2000 called upon the plaintiff under the provisions of section 131 of the Income Tax Act to produce details of the payments made to the defendant from 1994-95 upto 1998-99 (which includes the tenure of the Wet Lease Agreements dated 16-11-1994 and 22-10-1995) and also called upon the plaintiff to produce copies of all Agreements entered into with the defendant.”
Para 12 of the Plaint reads thus:
“The Deputy Commissioner by his order dated 9-2-2000 issued under section 281B of the Income Tax Act directed the plaintiff not to remit any monies to the defendant or to deposit any monies in the escrow ,account or any other account in India and also provisionally attached the said amounts payable under the quantum Award.”
Para 14 of the plaint reads thus :-
“The Deputy Commissioner by his order dated 27-3-2000 issued under section 226(3) directed that the regular assessments of the defendant for the years 1995-96, 1996-97 and 1997-98 had been completed and the tax liability had been assessed at Rs. 132.65 crores (US $28.22 million) and directed the plaintiff to remit this money immediately.”
Para 15 of the Plaint reads thus :-
“Another Order dated 27-3-2000 was also issued by the income-tax department under section 226(3) of the Income Tax Act calling upon the plaintiff to pay to the income-tax authorities the amount payable to the defendant which amounted to Rs. 132,65,21,397 (US $ 28.22 million) and prohibiting the plaintiff from making payment of any sums even in future to the defendant.”
Para 15 of the plaint makes reference to Exhibit-J which is letter sent by Deputy Commissioner to the Principal Officer dated 27-3-2000, informing the plaintiff that regular assessment under section 143(3), read with section 147 of the Income Tax Act have been complied in the case of M/s. Caribjet Incorporated for the relevant assessment years and served on the authorised representative of the assessee Arthur Andersen & Co. By this letter, the plaintiff was directed to pay the amount due to the assessee in Government Treasury towards the regular tax liability of the defendant under section 226(3) of the Income Tax Act immediately. Reliance can usefully be made also to averments in Para 22 and part of Para 23, which read thus :-
“22. The Deputy Commissioner issued a demand notice dated 19-2-2001 calling upon the plaintiff to pay the tax on the quantum Award dated 15-11-1999 amounting to Rs, 101,16,74 ‘ 416 (US $ 21,5 million) within three days of the service of the said demand treating the plaintiff as an ‘assessee-in-default’. The plaintiff also requested the income-tax department for time to pay the tax and the dropping of penalty proceedings and for a stay of recovery proceedings. The Chief Commissioner of Income-tax by an order dated 23-2-2001 refused the plaintiff’s request that penalty proceedings should not be initiated against the plaintiff and also rejected a stay of any of the recovery proceedings.
23…. The Deputy Commissioner also issued a show-cause notice dated 15-3-2001 calling upon the plaintiff to show cause as to why it should not be treated as an agent of the defendant under section 163 of the Income Tax Act.”
In Para 23, reference is made to letter-cum-show-cause notice issued by the Deputy Commissionerdated 15-3-2001 addressed to the Principal Officer of the plaintiff, stating that prima facie, the amount received by the defendant from the plaintiff under the Award was taxable in India. The plaintiff was called upon to show cause why the Plaintiff should not be treated as an agent of the defendant under section 163 of the Income Tax Act.
Averments in Paras 25 and 26 are also of some significance. The same read thus:
“25. In the circumstances the plaintiff submits that the plaintiff and defendant are bound by the terms of the Wet Lease Agreement including clause 11.1 thereof. It is submitted that the plaintiff has complied with all the terms under the said Wet Lease Agreement and the provisions of the Income Tax Act, 1961. The plaintiff submits that it has deducted tax at source from the payments it has made to the defendant and has paid over these sums to the tax authorities. Apart from the provisions of clause 11. 1 of the Wet Lease Agreement, the plaintiff has been forced to pay to the income-tax department taxes due from the defendant. The plaintiff has also paid its own taxes and filed its own income-tax returns as per law and there is no dispute in respect thereof. The plaintiff submits that the income-tax authorities are now taking action against the plaintiff for the unpaid tax dues of the defendant and thus if the plaintiff is made to pay these amounts the plaintiff is entitled to recover the same from the defendant, the plaintiff submits that the defendant was and is bound and liable to pay the relevant tax to the income-tax authorities and if the same is recovered from the plaintiff then the defendant is bound and liable to pay the same to the Plaintiff, the Plaintiff submits that under the terms of the said Wet Lease Agreement the Plaintiff is entitled to recover all sums paid to the revenue authorities on behalf of the Defendant from out of the amounts it may be liable to pay to the defendant. It is submitted that the Plaintiff has already had to deposit a sum of Rs. 5 crores merely to lift the attachment on its assets and to be allowed to proceed with the hearing of its Appeal on merits. The Plaintiff has also paid the sum of Rs. 10,46,52,267 by its challan dated 29-9-2000 as mentioned above as the tax deducted at source by the Tribunal on the amount of the Quantum Award dated 15-11-1999. The plaintiff submits that the entire demand of Rs. 101,16,74,416 (Rupees one hundred and one crores sixteen lacs seventy four thousand four hundred and sixteen only) has admittedly been made by the income-tax authorities for the tax payable by the defendant and recovery proceedings in respect thereof have been started against the plaintiff only because the defendant has no presence in India and because it does not have any assets within India. The plaintiff submits that all amounts which have been paid or which may be paid in future by it to the income-tax authorities for the tax liabilities of the defendant result of the defendant’s tax liabilities and all sums for which a demand has been made or is likely to be made by the income-tax authorities for the tax dues of the defendant. The income-tax department have issued proceedings, against the plaintiff to assess the plaintiff as a representative assessee in this transaction, to which the plaintiff has already made submission. The plaintiff apprehends that in the event that the defendant does not pay its tax liabilities in India, the plaintiff would be assessed as a representative assessee and the entire tax due and payable on the assessment of the defendant of its operation in India would become payable by the plaintiff under sections 160 and 161 of the Income Tax Act, 1962.
26. The plaintiff submits that the defendant be ordered and decreed to pay to the plaintiff the sum of Rs. 5,00,00,000 (Rupees five crores only) which has been paid by the plaintiff on the demand dated 19-2-2001 to the income-tax authorities on account of the tax liabilities of the defendant together with interest thereon at the rate of 21 per cent per annum from the date hereof till payment and/or realisation as per particulars of claim.”
9. On fair reading of the aforesaid averments in the plaint, to my mind, it is more than clear that the case made out by the plaintiff is that the defendant was liable to pay the tax dues as adjudicated by the income tax authority in respect of the transaction under the Wet Lease Agreement dated 22-10-19951 which liability had arisen within the jurisdiction of this court. The act complained of is one of failure of the defendant to discharge its liability arising under the provisions of the Income Tax Act. Besides, under the Wet Lease Agreement the plaintiff was authorised by the defendant to deduct certain amounts payable b the defendant towards its tax liability arising under the provisions of they Income Tax Act. More than that, it was on account of express provisions in the Income Tax Act the plaintiff was obliged to pay the requisite amounts for and on behalf of the defendant towards its (defendant) tax liability and claim reimbursement or restitution thereof. Accordingly, it is asserted that the act done by defendant is in furtherance of the Wet Lease Agreement and on account of the those acts, some of which are also performed within the jurisdiction of this court, the liability of the defendant to pay income-tax under the provisions of the Income Tax Act had arisen; and having failed to discharge that liability, that amount became recoverable from the plaintiff by operation of law, on conjoint reading of sections 159 to 163 of the Income Tax Act, and within the jurisdiction of this court. Taking any view of the matter, all requirement of clause 12 are attracted in the fact situation of the present case. In other words, the plaintiff, in law, was obliged to deduct the necessary amount before making payment to the defendant in terms of the said Wet Lease Agreement. Whereas, the Plaintiff failed to do so, for which reason, the income-tax department could legitimately and in fact have claimed the amount from the plaintiff. The plaintiff, however, has persuaded the Income-tax department to accept part of the payment as interim arrangement. The relief as claimed in the Suit as filed is, therefore, on the basis that the plaintiff is entitled for reimbursement or restitution of the amount already paid by the plaintiff, which otherwise was payable by the defendant in law. The amount had become payable in Mumbai and in fact, has been paid in Mumbai. The defendant had its office in Mumbai till September 1996 and the Wet Lease Agreement was in operation all over in India, including in Mumbai. The fact that the amount claimed from the plaintiff by the income-tax authorities was in the capacity of assessee in default or as agent or representative of the defendant would make no difference. On conjoint reading of the aforesaid averments, to my mind, it is obvious that part or material part of the cause of action has arisen in Mumbai. Moreover, the application for leave clearly sets out the relevant facts and asserts that the plaintiff has paid a sum of Rupees Five Crores to the Tax Authorities in Mumbai on behalf of the defendant and wishes to recover the same and such other amounts, as the plaintiff may be called upon to pay to the Tax of the tax liability of the defendant. It that is so, authorities, on account this court was obviously empowered to grant leave to institute Suit tinder clause 12 of the Letters Patern.
10. That takes us to the purport of the clause 12 of the Letters patent. The, same has been considered by this court on several occasions. It will be useful to straightaway advert to the decision of the Apex Court in the case of Adcon Electronics (P.) Ltd. (supra). In Para 7, the court has reproduced clause 12 of the Letters Patent. In Para 9, the purport of the said provision has been considered which reads thus:
“9. Thus, it is, clear that under clause 12 of the Letters Patent, the High Court in exercise of its ordinary original jurisdiction will have power to receive, try and determine: (a) suits for land or other immovable property if such property is situated within the local limits of original jurisdiction of the High Court; (b) if prior leave of the court has been obtained and the cause of action has arisen in part within the local limits of the ordinary original jurisdiction of the High Court, or (c) if the defendant dwells or carries on business or personally works for gain within such limits.” (p. 702)
The interpretation placed by the Supreme Court on clause 12 of the Letters Patent is the consistent view, in the fact situation of the present case, therefore, the plaintiff had rightly obtained leave under clause 12 before proceeding with the Suit. The argument canvassed on behalf of the defendant that it was impermissible to first lodge the plaint and then to obtain leave later on, will be dealt with a little later. Viewed in the above perspective, to my mind, leave under clause 12 has been rightly invoked in the fact situation of the present case.
11. Insofar as the grievance of the defendant regarding doctrine of ‘Forum Convenience’ of the Defendant, in my opinion, it is rightly argued on behalf of the plaintiff that no case justifying the invocation of the said doctrine has been made out by the Defendant, except, the bald averments made in Para 14 of the affidavit in support of the Chamber Summons. Even on fair as well as liberal reading of Para 14 of the affidavit in support, all that can be said is that, the grievance made is one of undue hardship to be caused to the Defendant on the ground that the defendant was not carrying on any business in India. That is not enough. insofar as the averment that the plaintiff has filed Suit only with a view to harass the defendant and force him into succumbing to the plaintiff’s unlawful demands, except this, no specifics are provided in the affidavit. On the other hand, the record clearly establishes that the defendant is already contesting three other Suits in India. The defendant had Office at Mumbai in India, till September 1996. Merely because some inconvenience will be caused to the defendant, that by itself, cannot be a ground for invoking the doctrine of ‘Forum Convenience’ of Defendant. Reliance has been rightly placed on the decisions of the Apex Court in Manohar Lal Chopra’s case (supra) and in the case of Ramji Dayawala & Sons (R) Ltd. (supra). it is relevant to note that in the case of Manohar Lal Chopra (supra) in Para 34, the court has expounded that the mere fact that the court is situate at a long distance from the place of residence of the respondent, is not sufficient to establish that the Suit has been filed in that court in order to put the respondent to trouble and harassment and to unnecessary expense. In the case of Ramji Dayawala & Sons (P.) Ltd. (supra) in Para 28′ the court has considered the settled legal position. Applying the principle stated therein, to my mind, the argument canvassed on behalf of the defendant to invoke doctrine of ‘Forum Convenience’ of Defendant, cannot be countenanced. 11 is rightly Submitted on behalf of the plaintiff that even in the decision of the Calcutta High Court pressed into service in the case of Madanlal Jalan (supra), the court accepted the complaint made in that case that the Suit was filed in that court only to harass the other side, but yet declined to revoke the leave granted under clause 12 of the Letters Patent, as can be discerned from the observations from Paras 24, 25(a) and 29 of the Judgment. Even in another case of Calcutta High Court in Karam Chand Thapar & Bros. (supra), the statement of law expounded in the said decision in Para 2 is that, to succeed in an application for revocation of leave on the ground of balance of convenience, a strong case has to be made out. in other words, mere balance of convenience would not be enough, but it must be such that it is over whelming in favour of the suit being heard by a court other than the court granting the leave, which is lacking in this case.
12. Taking overall view of the matter, to my mind, no case for invoking the doctrine of ‘Forum Convenience’ of the defendant has been made out in the present case.
13. That takes me to the next argument that no post facto grant of leave permissible. Indeed, reliance was placed on several decisions on behalf of the defendant to buttress this submission. I shall mainly deal with the decisions of our High Court and on the same reasoning, the other decisions relied upon on behalf of the defendant, will be of no avail. Reliance was placed on the decision in the case of Crown Frozen Foods (supra). Although, the question regarding circumstances in which leave under clause 12 ought to be granted has been considered in this case, but the main contention that fell for consideration of’ this court was whether the case made out by the plaintiff that the loans were sanctioned or sanctioning of advance in favour of defendant, was done at Mumbai, can be the basis to hold that part of the cause of action has arisen in Mumbai? The court was mainly concerned with this aspect and the same has, been dealt with in Para 12 of the decision. The court found that unilateral act of internal sanctions of the plaintiff cannot be considered as part of cause of action has arisen within the Jurisdiction of this court. To my mind, this decision is of no avail to the, defendant on the point under consideration. 1 have already dealt with the question as to whether in the present case, part of cause of action has arisen within the jurisdiction of this court; and answered the same against the defendant. The next decision relied by the defendant is in the case of Transasia Bio-Medicals Ltd, (supra). The opinion expressed in this Judgment is that there can be no question of granting post facto leave. There can be no dispute that, the said proposition, is the view, which has prevailed since long. Even so, this decision will be of no avail in the present case, as would be explained a little later, The next decision is in the case of Manubhai V Shah v. Hiralal K. Bhakta (2000) 2 Bom. C.R. 445. The question considered in this Judgment is whether the pleadings regarding jurisdiction are curable. The court has taken the view that it is not possible to accept the stand that such a defect can be cured by adducing evidence and by amending the pleadings. So understood, even this decision will be of no avail to the present case. Much emphasis was placed on the decision in the case of Noorjahan (supra). This decision mainly relies on the observations made by another Single Judge in the case of Rhoda Jal Mehta (supra). Insofar as Noorjahan’s case (supra) is concerned, the issue examined by the court was in relation to the following facts. Suit was instituted by the Plaintiff in “December 1984”. When the suit reached for hearing and final disposal on ’28-9-1992″, the question came up for consideration whether the plaint could be received by the court in absence of leave under clause 12, as part of cause of action had arisen outside the jurisdiction of this court. In that context, the court has restated the legal position that ex-post facto leave cannot be granted and grant of leave is a condition precedent for “receiving” the Suit. As mentioned earlier, this decision adverts to the observations made in the case of Rhoda Jal Mehta (supra). However, what is relevant to note is that, the observation so made in that case, was not the point in issue at all. Moreover, in Rhoda Jal Mehta’s case (supra), the question was: whether the plaint filed and received by the court without grant of prior leave under clause 12, though such a leave was necessary, ought to be dismissed or returned to the plaintiff? The court has answered that issue, relying on several decisions referred to in the Judgment, that there is no question of dismissing the Plaint but the appropriate order that can be made is only to return the plaint to the plaintiff to enable him to present the same before the appropriate court. Indeed , in Para 9 of this decision, reference is made to another Judgment of this court of Single Judge in the case of Union Bank of India (supra) and the learned Judge went on to comment on that decision and observed that in his view, there was no difference between lodging of a Plaint’ and “admitting a Suit” with reference to the expression “power to receive” occurring in clause 12 of the Letters Patent. As mentioned earlier, that was not the matter in issue before the court in Rhoda Jal Mehta’s case (supra) and those observations cannot be said to be the ratio of that decision. For, the only issue was, whether the Suit should be dismissed or the Plaint should be returned to the Plaintiff. Reliance was also placed on the decision of the Division Bench in the case of Devidatt Ramniranjandas v. Shriram Narayandas 1931 35 Born. L.R. 236. Emphasis was placed on observations at page 250, which reads thus:
“Clause 12 of the Letters Patent provides that the High Court of Judicature at Bombay in the 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 (omitting unnecessary words) the land is situate, 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 civil jurisdiction has no jurisdiction even to receive a plaint where a part of the cause of action only shall have arisen within the local limits of its jurisdiction unless leave of the court shall have been first obtained.”
In this Judgment, the main issue considered by the court was whether leave under clause 12 is a condition precedent, and the same should be obtained prior to receiving the Plaint. It will be appropriate to advert to the opinion expressed by Sir John Beaumont, Kt., Chief Justice at Page 239, which reads thus:
“In my judgment the words of clause 12 of the Letters Patent are quite clear and make the obtaining of leave a condition precedent to the entertainment by this court of a suit in which the cause of action arises in part outside the jurisdiction, and the condition is not one which it is competent for a court to ignore or for the parties to waive.” (Emphasis here italicised in print supplied)
14. The question in the present case, however, is, whether the plaint as “lodged” on 20-7-2001 can be said to be improper “presentation”, in absence of leave under clause 12 of the Letters Patent taken from this court ? In the present case, admittedly, leave under clause 12 has been granted only on 8-9-2001. It is also not in dispute that the suit came to be numbered thereafter on 13-9-2001. It is consequent to numbering, the suit can be said to have been “admitted/accepted”. The question, therefore is: whether even ‘lodging/filing /presentation’ of the Plaint before the authorised officer of this court is impermissible? The direct authority on this issue is in the case of Union Bank of India (supra). This very question has been considered, and I would adopt the same as having been rightly answered. The marked distinction between the terms lodging/filing/presentation” of the Plaint and of “admission/acceptance” and the later alone results in “receiving” of the Plaint, has been noted in this decision. It will be apposite to quote Paras 4 and 5 of this decision. The same read thus
“4. The Code itself, therefore, envisages two stages-first, of the presentation of the plaint, and the next, of the admission of the plaint. The suit is not admitted to the register of the suits and a number given to it, merely on the presentation of the plaint. After the presentation, the plaint is scrutinized. If there are any defects in the same, the plaintiff is required to remove them. The removal of defects is a matter of procedure. It is only after the defects are removed that it becomes eligible for an entry and a number, in the register of suits. One of the defects can be the absence of leave of the court to institute the suit where it is necessary, including leave under clause 12 of the Letters Patent. So long, therefore, as the plaint is not admitted and entered in the register of suits, all defects including that of the absence of leave under the said clause, can be removed without returning the plaint. There is no question of returning the plaint which is not admitted. it simply remains under objection till it is admitted.
5. It is the confusion between the two stages viz., of the presentation of the plaint and of its admission to the register of suits after the removal of the defects if any, which is responsible for the faulty procedure adopted by the office. In some cases this procedure may affect the period of limitations which under the Limitation Act runs from the date of the presentation of the plaint and not from the date of its admission. A reference in this behalf can usefully be made to Ramgopal Chunilal v. Ramsarup Baldevdas.”
15. I would adopt the view taken in the aforesaid decision, which in turn, is supported by the Division Bench Judgment of this court in Ramgopal Chunilal’s case (supra). The same Judges constituted the Division Bench of this court, which decided the case of Devidatt Ramniranjandas (supra) on which strenuous emphasis was placed by the defendant. At page 87 of the decision, the court has noted the distinction between terms “presentation” of the plaint and “admission or receipt of the Suit. The same reads thus :
“I think, that the argument of the appellant really involves a confusion between ‘presentation of the plaint’ and ‘admission or receipt of the suit’. To my mind, the plaint, even where leave is required, is presented when it is handed over by the plaintiff or his agent to the proper officer in the Prothonotary’s office must see that the plaint is in order and admit it under order IV, rule 2, and he cannot admit the plaint until the leave of the Judge has been obtained. But, to my mind, the obtaining of the leave of the Judge and the admission of the plaint does not affect in any way the presentation of the plaint for the purposes of the Indian Limitation Act.”
16. My attention is also invited to recent unreported decision of this court in the case of Nat Steel Equipment (P.) Ltd. v. Bangalore Heart Hospital & Research Centre & Frank C. Spenccer Centre (Summary Suit (Lodging) No. 213 of 1999 dated 11-3-19991, which has followed the view taken in the case of Union Bank of India (supra).
17. On the above reasoning, I have no hesitation in taking the view that the f act the plaint was “lodged/filed/presented” before the authorised officer of this court prior to obtaining leave under clause 12 of this court, will make no difference; whereas, it is only upon numbering of the suit, the suit can be said to have been “received” by this court – and as it is not disputed that before that event had happened, this court had already granted leave under clause 12. Accordingly, there is no substance in the argument canvassed on behalf of the defendant that the plaint be returned to the plaintiff, placing reliance on the decisions of this court as referred to above, which have no application to the point in issue.
18. For the reasons already mentioned hereinbefore, it is not necessary for me to elaborate on the other aspects emphasised on behalf of the plaintiff that the present Chamber Summons is not bona fide and is an afterthought only to thwart the progress of the Notice of Motion or that the defendant has acquiesced or waived the objection having taken the same after long gap. of more than 17 months after entering appearance. Besides, this court already having exercised discretion by granting leave under clause 12, having regard to the facts of the present case, there is no tangible reason to revoke the said order of granting leave.
19. In the circumstances, Chamber Summons dismissed with costs.