IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 18.06.2010 CORAM: THE HONOURABLE MRS.JUSTICE ARUNA JAGADEESAN A.No.3028/2005, 372/2005 and A.No.3027/2005 in CS.No.309/2005 ORDER :
ARUNA JAGADEESAN, J.
This application is filed by the 2nd Defendant, The National Small Industries Corporation Limited (herein after referred to as NSIC) represented by its Chairman to reject the plaint in so far as the 2nd Defendant is concerned on the ground that there is no cause of action to sue it within the jurisdiction of this court.
2. The 1st Respondent/Plaintiff is a registered Small Scale Unit supplying electric cables to the 1st Defendant, Tamil Nadu Electricity Board, Chennai and applied for financial accommodation to the 2nd Defendant. The 2nd Defendant, being a Government of India Undertaking and promoting small scale Industries in India, agreed to extend the financial assistance to the Plaintiff under the Bill Discounting Scheme. Pursuant to it, the Plaintiff executed an agreement with the 2nd Defendant dated 19.7.2000, agreeing to repay the amount advanced within a period of 90 days and also agreed to invoke the UP Public Money Recovery Act, 1972 in case of default. Accordingly, the Plaintiff supplied electric cables to the 1st Defendant and the bills were discounted by the 2nd Defendant.
3. It appears from the Document No.16 filed along with the plaint that due to defective supply, the goods were rejected and the purchase orders were shortlisted and cancelled by the 1st Defendant by letter dated 29.8.2001. According to the 2nd Defendant, the Plaintiff was due and payable to the 2nd Defendant a sum of Rs.71,53,718/- under the Bill Discounting Scheme. A recovery certificate was issued dated 1.9.2004 as per plaint Document No.28 for the recovery of a sum of Rs.78,69,089/- and the citation was issued for the recovery of the said sum by the Tahsildar, Gautambudh Nagar, Uttar Pradesh for the properties covered under the Recovery Certificate situated in Gautambudh Nagar, Uttar Pradesh.
4. The Plaintiff herein had filed a Writ Petition in WP.No.43495/2004 in the High Court of Allahabad to quash the recovery certificate dated 1.9.2004 and the same had been dismissed by the Division Bench of the Allahabad High Court. As against the same, a Special Leave Petition in SLP.No.4003/2005 had been filed in the Honourable Supreme Court and the same was also dismissed. In the mean while, the Plaintiff had filed the present suit against the 1st Defendant for a decree for a sum of Rs.86,15,524.34/- with interest at 15.75% p.a. from the date of the plaint till the date of realisation on 30.8.2004. The plaint has been returned for certain compliance in the year 2004 itself and again on various dates and finally on 21.3.2005.
5. In SLP.No.4003/2005, the Honourable Supreme Court while dismissing the special leave petition had given liberty to the Plaintiff to file an application for impleadment of the Respondents 4 and 5 in the said petition namely NSIC, Delhi and NSIC, Noida in the suit pending in this court. Based on the said observation made by the Honourable Supreme Court, the Plaintiff had re-presented the plaint by including a cause of action that is by order dated 11.3.2005 the Honourable Supreme Court has given liberty to the Plaintiff for impleadment of the 2nd Defendant. Thus relief is sought for against the 2nd Defendant in the suit for decree of permanent injunction restraining the 2nd Defendant from initiating any action against the Plaintiff or its Directions under Section 3 of the Uttar Pradesh Public Moneys (Recovery of Dues) Act 1972 or any other provision of law in respect of the amount due by the 1st Defendant under the bills raised on the 1st Defendant by the Plaintiff and discounted with the 2nd Defendant till such amount is paid by the 1st Defendant.
6. According to the applicant/2nd Defendant, the Plaintiff has suppressed the material document i.e. the agreement dated 19.7.2000, based on which the Bill discounting facility was extended and bills amounting to Rs.71,53,718/- were paid in advance under the agreement and still remain unpaid. It is further stated that the Plaintiff has averred that the cause of action for the 2nd Defendant has arisen on the basis of the orders passed by the Honourable Supreme Court giving liberty to the Plaintiff to file an application for impleadment of the 2nd Defendant, but the said permission pertained only to the parties that i.e NSIC, Delhi and NSIC, Noida, being the 4th and 5th Respondents in the special leave petition. It is also pointed out by the applicant that the reference made by the Honourable Supreme Court is in relation to the suit in CS.No.452/2004 filed by the Plaintiff against the Tamil Nadu Electricity Board which was pending on the date of passing of the order by the Honourable Supreme Court dated 11.3.2005.
7. The learned counsel for the applicant strenuously contended that by suppressing the said fact, in order to stall the recovery proceedings initiated under the Uttar Pradesh Public Moneys (Recovery of Dues) Act 1972, the Plaintiff has added the 2nd Defendant in the suit originally filed by them against the 1st Defendant, knowing fully well that the civil court’s jurisdiction is ousted under the provision of the Uttar Pradesh Public Moneys (Recovery of Dues) Act 1972. He would further submit that the supply of goods by the Plaintiff to the 1st Defendant and passing of bills are between the Plaintiff and the 1st Defendant and there is no contractual liability between the 2nd Defendant and the 1st Defendant. He would submit that that the orders of the Honourable Supreme Court are flouted, inasmuch as the orders pertain to the impleadment of NSIC, Delhi and NSIC Noida and it cannot be extended to the inclusion of NSIC, Anna Salai, Chennai, as not even a part of cause of action had arisen at the said branch office.
8. On the other hand Mr.A.P.S.Kasthuri Rangan, the learned counsel for the 1st Respondent/Plaintiff contended that the correspondences dated 30.3.2002 and 30.4.2002 would disclose that there is a right for the applicant to receive payments due by the 2nd Defendant to the Plaintiff and further the suit bills have been discounted and presented for payment to the 2nd Defendant. He submitted that since the bills are to be discounted at Chennai and amounts thereof are payable in Chennai, a part of cause of action as against the 2nd Defendant had arisen within the jurisdiction of this court. He would submit that till the dues payable by the 1st Defendant to the Plaintiff are determined and the amount against the discounted bills are first realised, the provisions of the Uttar Pradesh Public Moneys (Recovery of Dues) Act 1972 cannot be invoked.
9. It is relevant to note that originally the Plaintiff has filed this suit against the 1st Defendant for recovery of money and the 2nd Defendant has been added after the suit was returned for certain compliance. It might be noted that after adding the 2nd Defendant, the suit has been filed without obtaining leave under clause 12 of the Letters Patent. Even as per the averment made by the 1st Respondent/Plaintiff in paragraph 4 of the counter affidavit, only a part of cause of action had arisen as against the 2nd Defendant within the jurisdiction of this court.
10. Clause 12 of the Letters Patent which speaks about the original jurisdiction as to suits, runs as follows:-
“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 Causes at Madras, in which the debt or damage, or value of the property sued for does not exceed one hundred rupees.”
11. The words “shall be empowered to receive, try, and determine… 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 origin jurisdiction of this court” clearly stipulate that in case only a part of cause of action arises within the jurisdiction of this court, a leave has to be obtained before institution of the suit. The granting of such leave is a condition precedent to the court to entertain the suit under Clause 12 of the Letters Patent and such leave has to be obtained at the time of institution of the suit. Inasmuch as no such leave has been obtained by the Plaintiff, which cannot be asked for or obtained at this stage, the suit must be held to be not maintainable in so far as the 2nd Defendant is concerned. Indisputably, the 2nd Defendant has been added after presenting the plaint and when it was returned for compliance of certain return and the cause of action has not arisen wholly within the jurisdiction of this court as against the 2nd Defendant and therefore, leave must have been obtained under Clause 12 of the Letters Patent. As no leave has been obtained, the suit against the 2nd Defendant would be held to be non est.
12. From a reading of the plaint, it appears that the 2nd Defendant is impleaded in the suit on the basis of the liberty purportedly given by the Honourable Supreme Court in SLP.No.4003/5. At the outset, the reference made in the order of the Honourable Supreme Court is in relation to a suit in Cs.No.452/2004 wherein the Plaintiff has been given liberty to make appropriate application for seeking impleadment of NSIC more particularly NSIC, Delhi and NSIC, Noida indicating their rank in the SLP petition as Respondents 4 and 5 and further it is observed that such application on being filed, is to be heard and decided by the court seized by the said civil suit on merits. It cannot be extended to the 2nd Respondent having its office at Anna Salai, Chennai whose inclusion admittedly is not by way of impleadment. The argument advanced by the learned counsel for the 1st Respondent/Plaintiff that as this suit is of similar nature, the said liberty given by the Honourable Supreme Court could be extended to this suit cannot be countenanced at all. The observation made therein by the Honourable Supreme Court was limited to the scope of the suit filed by the 1st Respondent/Plaintiff in an another suit in CS.No.452/2004 which was pending on the file of this court.
13. Admittedly, the agreement dated 19.7.2000 between the Plaintiff and the 2nd Defendant was entered into at Noida and the address of the Plaintiff’s registered office is given as N.3150, Lal Darwaza, Sita Ram Bazar, Delhi and at NOIDA. The execution of the said agreement is admitted by the 1st Respondent/Plaintiff at paragraph 3 of the counter affidavit filed by them. The Plaintiff has agreed to the terms and conditions which specifically states that the dues under the agreement shall be recovered as arrears of land revenue under Uttar Pradesh Public Moneys (Recovery of Dues) Act 1972 and sub clause (3) of Section 3(1) of the said Act bars a civil suit.
14. Even according to the Plaintiff, the 2nd Defendant namely NSIC, has initiated action against the Plaintiff under Section 3 of the said Act and sought to recover as arrears of land revenue. It is not disputed that the recovery certificate which has been issued and referred in the cause of action paragraph has been issued under Section 3 of the said Act 1972 and the same had been issued at Noida, UP and not within the jurisdiction of this court. The fact that the 2nd Defendant is having its office at Chennai cannot clothe any right on the Plaintiff to file a suit, as no cause of action had arisen at Chennai.
15. In a recent judgement of the Honourable Supreme Court rendered in the case of Sonic Surgical Vs. National Insurance Company Limited [2010-1-SCC-135], after referring to its decision reported in the case of Union of India Vs. Adani Exports Limited [2002-1-SCC-567], their Lordships observed as follows:-
“5. Placing reliance on a decision of this Court in Union of India Vs. Adani Exports Limited [2002-1-SCC-567] wherein paragraph 40 of the said judgement it has been observed as under:-
“40(iv) In Adani Exports the learned Judges in paragraph 13 set out the facts pleaded by the Petitioner to give rise to cause of action conferring territorial jurisdiction on the Court at Ahmedabad. One of the facts pleaded is that non granting and denial utilisation of the credit in the passbook will affect the business of the Respondents at Ahmedabad. This fact is not pleaded in the case in hand.
Even then the learned Judges held that those facts are not sufficient to furnish a cause of action as they are not connected with the relief sought for by the Respondents.
Here also the relief is against the orders of approval and this High Court has no territorial jurisdiction to grant that relief. Therefore, the communication to the effect that the Petitioners’ representation against the orders of approval is rejected is of no consequence.
The Supreme Court, further dealing the concept of Article 226(2) and relying on the decision in ONGC Vs. Utpal Kumar Basu [1994-4-SCC-711] explained the concept of cause of action in paragraph 17 at AIR P.130 of the Report and the relevant extracts wherefrom are excerpted below (SCC Public Prosecutor.573-74).
“17…. It is clear from the above judgement that each and every fact pleaded by the Respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court’s territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis or the dispute involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned.
18…. The non granting and denial of credit in the passbook having an ultimate effect, if any, on the business of the Respondents at Ahmedabad would not also, in our opinion, give rise to any such cause of action to a court at Ahmedabad to adjudicate on the actions complained against the Appellants.”
6. We respectfully agree with the view taken by the Calcutta High Court in the aforesaid decision of IFB Automotive Seating [AIR-2003-Cal-80]. Hence, in our opinion, no part of the cause of action in the present case arose at Chandigarh.”
16. In view of the settled position of law, as no cause of action had arisen, the plaint is liable to be rejected as against the applicant/2nd Defendant.
17. In view of the reasons stated above, I am of the considered view that the present suit cannot be maintained in so far as the applicant/2nd Defendant is concerned and the plaint as regards to the applicant/2nd Defendant is rejected. The application in A.No.3028/2005 stands allowed accordingly. Consequently, the order of interim injunction granted against the applicant/2nd Defendant by order dated 13.07.2005 by this court is vacated and the application in A.No.372/2005 is dismissed and application in A.No.3027/2005 is allowed.
18.02.2010
Srcm
ARUNA JAGADEESAN, J.
Srcm
Pre-Delivery Order in
A.No.3028/2005, 372/2005
and A.No.3027/2005
in CS.No.309/2005
18.02.2010