2004 (6) TMI 620 - SC - Indian Laws

Whether the learned Judges erred in revoking leave under clause 12 of the Letters Patent in view of the clear assertions made in the plaint and the assertions in a plaint must be assumed to be true for the purpose of determining whether leave is liable to be revoked on a point of demurrer ?

Summary

Issues:
Revocation of leave under clause 12 of the Letters Patent based on jurisdictional grounds.

Analysis:
The case involved the revocation of leave granted under clause 12 of the Letters Patent to file a suit against the respondent in the Calcutta High Court. The Division Bench revoked the leave on the basis that no part of the cause of action as pleaded in the plaint had arisen within the original jurisdiction of the Court. The suit was filed by the appellants against the respondent, alleging non-payment under a letter of credit issued by the respondent. The appellants claimed jurisdiction of the Calcutta High Court based on the location of the UCO Bank branch where the documents were presented and payment was to be received. The respondent argued that the letter of credit required payment 'at sight' in Germany, not in Calcutta, and that UCO Bank was only an advising bank, not authorized to accept the documents. The Division Bench accepted the respondent's contentions and revoked the leave granted.

The appellants argued that the assertions made in the plaint should be assumed true for the purpose of determining the revocation of leave. They contended that the Division Bench erred in revoking leave as the allegations in the plaint supported the jurisdiction of the Calcutta High Court. The Division Bench failed to consider that the alleged grounds formed part of the cause of action. The appellants also highlighted the balance of convenience, stating that defending the suit in Calcutta would not be inconvenient for the respondent, while prosecuting the suit in Germany would cause significant expenses for the appellants.

The respondent relied on banking laws and previous court decisions to argue that there was no valid presentation of documents at the UCO Bank in Calcutta and that payment under the letter of credit was to be made in Germany. The Court noted that determining the role of UCO Bank and the validity of the presentation was a mixed question of law and fact that required evidence. The Court emphasized that such matters could not be decided on an application for revocation of leave under clause 12 of the Letters Patent. Ultimately, the Court held that the revocation of leave was not justified, and the Division Bench's decision was set aside, with instructions for the High Court to expedite the suit proceedings.

In conclusion, the Court found that the Division Bench erred in revoking the leave granted under clause 12 of the Letters Patent based on jurisdictional grounds. The Court emphasized the importance of considering the assertions in the plaint as true and highlighted the balance of convenience in determining the appropriate jurisdiction for the suit. The Court directed the High Court to proceed with the suit expeditiously.