2011 (4) TMI 1487 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the suit against the 2nd defendant on the Original Side of the Madras High Court.

Summary:

Issue 1: Maintainability of the suit against the 2nd defendant on the Original Side of the Madras High Court

Whether suit against 2nd defendant/2nd respondent State Bank of India, Tirupur is maintainable on the Original Side of the Madras High Court is the point arising for consideration in this appeal, which arises out of an order of learned single Judge dated 7.7.2010 in Application No.805 of 2010 in C.S.D.No.12201 of 2008 declining to grant leave to sue the 2nd respondent.

The appellants/plaintiffs filed the suit in C.S.D.No.12201 of 2008 for recovery of a sum of Rs. 40,90,020.95 with interest at the rate of 18 percent per annum. The appellants availed loan/credit facilities from the 2nd respondent/2nd defendant and provided securities including equitable mortgage of properties in Chennai and Tirupur. Due to market slump, the appellants defaulted, leading to a One Time Settlement with the 2nd respondent Bank. The appellants settled their dues and closed the account on 21.7.1998. Subsequently, a foreign buyer went into liquidation, and the appellants' claim was accepted by the Norway Company, which paid Rs. 19,64,183 to the 2nd defendant Bank. The appellants claimed this amount, but the Bank adjusted it towards their claim.

The appellants filed W.P.No.10294 of 2000 seeking certiorarified mandamus to quash the Bank's communication and release the amount with interest. The writ petition was dismissed, and the appellants were directed to approach the Civil Court. The appellants then filed the suit in C.S.D.No.12201 of 2008 against the 2nd defendant for recovery of Rs. 40,90,020.95 with interest.

The 2nd defendant resisted the grant of leave, contending that the major part of the cause of action arose in Tirupur, where the transactions occurred. The learned single Judge held that the major part of the cause of action arose in Tirupur, and the suit was not maintainable on the Original Side of the High Court.

The appellants argued that part of the cause of action arose in Chennai, where the Head Office approved the One Time Settlement. The respondents contended that the transactions were with the Tirupur Branch, and no part of the cause of action arose in Chennai.

For determining jurisdiction, the averments in the plaint are considered. Clause 12 of the Letters Patent states that suits can be instituted where the cause of action arose wholly or in part. The expression "cause of action" means every fact necessary for the plaintiff to prove to support their right to judgment. The Supreme Court in various cases emphasized that the cause of action must include some act done by the defendant giving the plaintiff the right to claim relief.

The learned single Judge rightly held that the suit is not maintainable on the Original Side of the Madras High Court as the integral facts constituting the cause of action arose in Tirupur. The appeal is dismissed, giving liberty to the appellants/plaintiffs to move the concerned Court.

In the result, the Appeal is dismissed giving liberty to the appellants/plaintiffs to move the concerned Court. However, there is no order as to costs.