JUDGMENT
Badar Durrez Ahmed, J.
1. By virtue of the order dated 11.12.2007, the following issue was directed to be treated as the preliminary issue:
(1) Whether this Court has no territorial jurisdiction to try and determine the suit? (OPD)
2. The counsel for the parties were heard on this preliminary issue. The plaintiff has instituted this suit against the defendant on the ground that the defendant had placed purchase orders on the plaintiff for supply of electrical equipments which had to be delivered to the defendant at its factory at village and P.O. Dagori, Tehsil Belha, District Bilaspur, M. P. (now Chhattisgarh). The plaint alleges that the defendant had initially issued letters of intent, which contained the terms of the supply to be made by the plaintiff to the defendant and the price and delivery conditions etc. The letters of intent were confirmed by purchase orders, which were placed by the defendant on the plaintiff. Details of the purchase orders have been set out in Paragraph 6 of the plaint. It is the case of the plaintiff that as against the said purchase orders, which were accepted by the plaintiff, supplies had been made to the defendant. The defendant had taken delivery of the said supplies and had made part payments in respect thereof but not the entire sums. The plaintiff has further alleged that the defendant had acknowledged that out of all these transactions a sum of Rs. 24,35,837.10 was admittedly outstanding and due from the defendant to the plaintiff. According to the plaintiff this acknowledgment and admission is contained in the minutes of the meeting held between the representatives of the plaintiff and the defendant at Dagori, Bilaspur on 12.08.1995. It was also contended that apart from the said sum of Rs. 24,35,837.10, a further sum of Rs. 5.20 lacs was also due from the defendant on account of the supply of VCBs subsequent to the meeting of 12.08.1995.
3. The defendant, on the other hand, has resisted this suit on the ground that nothing was due and payable by the defendant to the plaintiff. While the defendant has not denied that purchase orders were placed by the defendant on the plaintiff for supply of materials, it was contended that the material was required to be supplied as per stringent specifications and that it was also the essence of the purchase orders that the material should be supplied within a specific period so as to enable the defendant to use it at an appropriate time during the installation and commissioning of its plant at Bilaspur. It is contended by the defendant that the material that was supplied by the plaintiff to the defendant was not of the desired specification and it was also not supplied as per schedule. It was also stated in Paragraph 6 of the written statement that the material that was delivered beyond schedule was not received by the defendant and, in fact, the carrier was not permitted to unload the material which was late delivered at the site. It is also alleged that the defendant suffered losses as a result of the conduct of the plaintiff, which the defendant had quantified at Rs. 10 crores and the defendant sought to reserve its right to file a suit for damages and compensation against the plaintiff for the same. Of course, till date no such suit has been filed. The defendant, therefore, contended that it is not liable to pay any money as claimed by the plaintiff or at all.
4. This is the sum and substance of the dispute between the parties. However, the limited question that has to be considered at this stage is with regard to this Court’s jurisdiction over the matter. In Paragraph 15 of the plaint it is alleged that the defendant has an office in Delhi and also carries on its business at Delhi. It is further alleged that the defendant placed purchase orders at Delhi, which were sent to the plaintiff at Delhi. The payments were to be made at Delhi and, in fact, part payments were made at Delhi. The defendant, in Paragraph 15 of the written statement, has denied that the purchase orders were placed by the defendant on the plaintiff at Delhi. It is also stated that the suit, as it appears from the averments made in the plaint, is based essentially on the purchase orders placed by the defendant on the plaintiff, for supply of material as also on the alleged minutes of the meeting held between the parties wherein the plaintiff has alleged that the defendant acknowledged its liability. It was contended on behalf of the defendant that each of the purchase orders, placed by the plaintiff on record, clearly specifies that the material was to be consigned to the defendant at its plant at village Dagori, District Bilaspur, M.P (now Chhattisgarh). Consequently, it was stated that the defendant did not acquiesce to the jurisdiction of this Court for the purposes of the present dispute.
5. In this background, it was contended by the learned Counsel for the defendant that all deliveries under each of the purchase orders were to be made at Bilaspur. He submitted that, in fact, all deliveries were made at Bilaspur and such of the deliveries, as were accepted by the defendant, were accepted at Bilaspur. He further submitted that all the payments that were made by the defendant in respect of the supplies made by the plaintiff were made at Bilaspur to the representatives of the plaintiff, who had come to Bilaspur. The said payments were made by cheques. He submitted that the contract was clearly to be performed at Bilaspur and, therefore, when the plaintiff alleges non-performance, the place of non- performance would also be Bilaspur. Since the plaintiff has instituted this suit on account of alleged non-performance of the contracts, evidenced by the purchase orders, the only place where the cause of action has arisen is village Dagori, Bilaspur, Chhattisgarh. Consequently, he submitted, no part of the cause of action has arisen within the territorial limits of this Court and, therefore, the plaint ought to be returned. The learned Counsel for the defendant made a further submission that, in any event, the tenor of the plaint indicates that the case of the plaintiff is founded upon the alleged acknowledgment / admission of liability as contained in the minutes of the meeting of 12.08.1995. That meeting, admittedly, was held at the defendant’s plant at village Dagori, Bilaspur, Chhattisgarh. He further submitted that, therefore, even the cause of action founded on the basis of that meeting did not arise within the limits of this Court.
6. The learned Counsel for the plaintiff submitted that this Court has jurisdiction inasmuch as, apart from the place of performance of the contract as also the place of making payments, the situs of the contract has also to be considered for the purposes of considering the question of cause of action. He submits that the contract between the parties emerged by the defendant issuing letters of intent to the plaintiff, which carried the terms of payment, the price, the delivery schedule, packing instruction etc. This was followed by confirmatory purchase orders. He submitted that in each of the cases, the confirmatory purchase order had been sent by the defendant to the plaintiff. On receipt of the purchase order and acceptance of the same, the plaintiff made supplies of the goods under each of the purchase orders. In this background, he submitted that the place at which the contract was made would be of material significance. He referred to page 1 of the documents file, which is a letter of intent dated 15.05.1993, which had been issued by the defendant to the plaintiff. The said letter of intent contains a statement at the end of the letter to the following effect:
This letter of intent is subject to detailed work outs by M. N. Dastur & Company Limited and will be confirmed to you in the form of a detailed confirmatory purchase order, which shall be issued to you shortly.
7. By a letter dated 22.12.1993, which is at page 26 of the documents file, the defendant wrote to the plaintiff requesting it to treat the letter of intent dated 15.05.1993 as their purchase order with certain under-noted amendments. The other purchase orders are also set out at page 28 (22.12.1993), page 30 (22.12.1993) and page 32 (04.02.1994). Each of the purchase orders has been issued by the defendant from its corporate office at Amba Deep, 12th Floor, 14, Kasturba Gandhi Marg, New Delhi to the plaintiff at 4A, Ring Road, I. P. Estate, New Delhi. Each of the purchase orders contains the following instruction towards the end:
Please acknowledge receipt of this letter of intent and return the duplicate copy duly signed and stamped as token of acceptance of the same.
8. The learned Counsel for the plaintiff submitted that since the purchase orders were placed by the defendant on the plaintiff at Delhi and the same were also accepted by the defendant at Delhi, the contract between the parties was struck at Delhi and, therefore, this Court would have jurisdiction to entertain the present suit.
9. I have considered the arguments advanced by the learned Counsel for the parties and have given deep thought to the matter. The Supreme Court in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies referred to erstwhile Explanation III to Section 20(c) of the Code of Civil Procedure, 1908 (hereinafter referred to as the ‘CPC’). The said Explanation III had stipulated that in suits arising out of contract the cause of action arises within the meaning of the section at any of the following places, namely:
(1) the place where the contract was made;
(2) the place where the contract was to be performed or performance thereof completed;
(3) The place where in performance of the contract any money to which the suit relates was expressly or impliedly payable.
After noting the said erstwhile Explanation III, the Supreme Court observed in Paragraph 14 of the said decision that the said explanation has now been omitted “but nevertheless it may serve as a guide”. In this context, the Supreme Court in Paragraph 15 of the said report held:
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors.
(underlining added)
Construing the above observations made by the Supreme Court, it is apparent that part of the cause of action would arise where the contract is to be performed. Part of the cause of action would also arise where any money is expressly or impliedly payable under the contract. And, part of the cause of action would definitely arise where the contract was made. Insofar as the performance of the contract is concerned, it is abundantly clearly from the facts and circumstances available on record that it was to be performed at village Dagori, Bilaspur, Chhattisgarh. It is also abundantly clear that the money was, if not expressly, impliedly payable, under the contract between the parties, at the point of delivery, which was again at village Dagori, Bilaspur, Chhattisgarh. Therefore, there can be no quarrel with the fact that part of the cause of action, both on account of performance/ non-performance and payment of money, arose at village Dagori, Bilaspur, Chhattisgarh.
10. The question, therefore, that remains to be considered is where was the contract made? It is apparent that the purchase orders placed by the defendant were in the nature of proposals as understood under Section 7(2) of the Indian Contract Act, 1872. For a proposal to result in a contract, it requires the acceptance on the part of the person to whom the proposal is made, in this case, the plaintiff. Each of the purchase orders carried the statement that the plaintiff was to acknowledge receipt of the purchase order and return a duplicate copy duly signed and stamped as token of its acceptance of the same. Unfortunately, neither of the parties have placed on record any such acknowledgment on the part of the plaintiff. However, the fact remains that both the parties recognized that the contracts had been concluded between them. Therefore, this Court is left to infer from the circumstances as to where the acceptance of the offer/ proposal was made by the plaintiff. Some assistance can be taken of the provisions of Section 7(2) of the Indian Contract Act, 1872 which, inter alia, stipulates:
If the proposal prescribes a manner in which it is to be accepted, and the acceptance is not made in such a manner, the proposer may, within a reasonable time after the acceptance is communicated to him, insist that his proposal shall be accepted in the prescribed manner, and not otherwise; but, if he fails to do so, he accepts the acceptance.
11. It is, therefore, clear that where the proposal prescribes the manner in which it is to be accepted, and the acceptance is not made in such manner, the proposer has the option to insist on the acceptance being made in the desired manner and not otherwise. However, if the proposer fails to indicate that the acceptance must be made in the manner indicated, then he is deemed to have accepted the acceptance or in other words, the proposer cannot raise any objection subsequently that the proposal had not been accepted in the manner indicated. In the present case, there is no averment made by the defendant in his written statement and, in fact, there is nothing on record to show that the defendant raised any objection with regard to the manner in which the proposals of the defendant, in the form of purchase orders, were accepted by the plaintiff. The inference that can be drawn from this is that the purchase orders were accepted by the plaintiff in the manner stipulated in the purchase orders themselves. This is a presumption which the court can draw in terms of Section 114 of the Indian Evidence Act, 1872. This being the position, the inescapable conclusion is that the proposal and the acceptance were both done at Delhi. This is so because the purchase orders were issued by the defendant from its corporate office at Delhi and were sent to the plaintiff at its office at Delhi. It has already been inferred that the plaintiff accepted the said proposal / purchase order by sending an acknowledgment thereof to the defendant. Since the purchase order was issued by the corporate office at Delhi, it is obvious that the acknowledgment of the same would also have been sent to the corporate office of the defendant at Delhi. In other words, the contract was made at Delhi. Consequently, in view of the clear position of law stated in A.B.C Laminart Pvt. Ltd. (supra), since the contract was made in Delhi, a part of the cause of action would also have arisen at Delhi and this Court would have jurisdiction to entertain this suit. This preliminary issue is decided accordingly in favor of the plaintiff and against the defendant.
12. The result being that the suit has to be proceeded with in respect of the other issues. The parties are directed to file the list of witnesses within two weeks. The evidence shall be by way of affidavits in the first instance. Cross-examination shall be conducted before the Joint Registrar. The plaintiff shall file its evidence affidavits within four weeks of the filing of the list of witnesses.
List before the Joint Registrar on 24.04.2008 for fixing further dates of trial.