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Report No. 144

2.5.2. Question for consideration.-

One of the questions which has arisen is whether a suit for money can be filed at the place where the creditor resides, carries on business or personally works for gain. This question is itself linked up with a question of substantive law, that is to say, the rule that the debtor must find out the creditor. Can this rule of substantive law be invoked for the purpose of giving competence into a court having jurisdiction at the place where the creditor resides, carries on business or personally works for gain, in cases where the loan was advanced elsewhere?

2.5.3. Three views seems to prevail on the subject:-

(i) The above rule can be invoked to give territorial competence to the court within the local limits of whose jurisdiction the creditor resides or carries on business, unless the agreement indicates to the contrary.

(ii) The above rule yields an important material for constructing the contract, but does not itself give competence to the court.

(iii) The creditors' residence etc. is only one factor to be considered.

2.5.4. In 1927, the Privy Council stated that it is the duty of the debtor to find out the creditor to make payment, if the agreement does not fix a place for payment.1 The Privy Council was construing section 49 of the Indian Contract Act and, as a matter of construction of the contract at is use in the particular case, it held that the contract impliedly fixed a particular place for payment. The case was decided on an interpretation of the contract. But the judgment contains dicta as to the legal position to the effect that the debtors' duty is to find the creditor.

1. Soniram v. R.D. Tata, 1927 AIR 156.

2.5.5. The dicta of the Privy Council have been construed differently by different High Courts, which is one reason why the conflict of views has arisen with reference to section 20.

2.5.6. The view of the High Court of Andhra Pradesh is that the above rule applies to India.1

1. Maira v. Noore Mohammad, AIR 1956 AP 231 (233, 234), para. 19 (review of case law) (Gopalakrishnan Nair, J.)

2.5.7. This is also the view of the Gujarat High Court.1

1. Shobhasing v. Saurashtra Iron Foundary, AIR 1968 Guj 276 (277, 278), para. 2 (N.K. Vakil, J.) (reviews cases).

2.5.8. According to a ruling of the Calcutta High Court1 also, where no place of payment is fixed by the contract and the money to be paid is a liquidated sum, the general rule mentioned above applies. In the Calcutta case certain money as due from the defendant (the State of Punjab) to the plaintiffs (a company). The court took note of the fact that the plaintiffs all along had their registered office in Calcutta and the bills were also sent from a office to the defendant, though the company had temporary arrangement at Nangal (which was in the Punjab at that time), during the progress of the work out of which the claim of the plaintiff arose. The High Court of Calcutta held that the suit at Calcutta was competent.2

1. State of Punjab v. A.K. Raha (Engineer) Ltd., AIR 1964 Cal 418 (420, 421), paras. 4 & 5 (Bachawat & A.K. Mukherjee, JJ.).

2. North Bengal et. Zamindary Co. Ltd. v. Surendia Nath, ILR (1957) 2 Cal 6; Cf. Jagdish v. Sentimovee, AIR 1961 Cal 321 (reviews case law), following Drexel v. D., (1961) 1 Ch 25 (26).

2.5.9. The High Courts of Allahabad and Patna fall in the second category. According to the Allahabad High Court,1 the rule that the debtor must seek the creditor, while not applicable as such in India, can be considered as a factor for determining the intention of the parties as to the place of payment. On that basis, the High Court held that in the circumstances of the case, the reasonable inference could be drawn that payment was to be made at the place of business of the plaintiff at Kalpi, where the plaintiff carried on business and could give a discharge for the money, or where he would have an agent who could give such a discharge.

1. Manohar Oil Mills v. Bhawani, AIR 1971 All 326 (327), paras. 4 and 5.

2.5.10. The Patna High Court1 takes a view substantially similar to Allahabad. It holds the English rule as to the obligation of the debtor to seek the creditor as not applicable to India, but also holds that it is permissible to take recourse to the English rule for the purpose of construing the terms of a contract, in order to find out whether the parties, by necessary implication, intended that the payment should be made at the creditor's place of business.

1. lohri Mull v. Hira La!, AIR 1961 Pat 1981 (199), para. 3 (V. Ramaswamy, C.J. and R.K. Choudhary, J.).

2.5.11. However, according to the Punjab High Court1 (which represents the third view), the English rule on the subject is not, as a matter of law applicable in India to determine the forum for instituting the suit by the creditor. The creditor's place of residence or business is only one factor to be taken into account. This means that such place does not, in itself, confer jurisdiction on the court at such place of residence or business (of the creditor).

1. Hira 141v. Baijyanath, AIR 1960 Punj 450 (453, 455), paras. 9, 15, 22 (FB) (Dulat, Dua and Bishan Narain, JJ.)

Conflicting Judicial Decisions pertaining to the Code of Civil Procedure Back

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