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Issues Involved:
1. Jurisdiction of the Court 2. Cause of Action 3. Duty of Care and Liability of the Second Defendant 4. Forum Non-Conveniens Detailed Analysis: 1. Jurisdiction of the Court: The primary issue was whether the High Court of Madras had jurisdiction to entertain the suit against the second defendant, a bank based in the United Kingdom. The plaintiffs argued that the cause of action arose within the jurisdiction of the court due to the telex messages sent and received in Madras. The court examined whether the defendants, who were beyond its territorial jurisdiction, could be sued in Madras. It was noted that both defendants were carrying on business outside India, and the transactions and communications pertinent to the case occurred primarily in the United Kingdom. 2. Cause of Action: The plaintiffs claimed that the cause of action arose in Madras because the Bank of Baroda, acting on their behalf, sent a telex from Madras requesting a financial report about the first defendant. The second defendant's response, received in Madras, was alleged to be misleading and led the plaintiffs to supply goods to the first defendant. The court scrutinized whether these actions constituted a sufficient cause of action within its jurisdiction. It was determined that the plaintiffs' reliance on the telex messages did not establish a cause of action in Madras, as the significant events and transactions occurred outside India. 3. Duty of Care and Liability of the Second Defendant: The plaintiffs alleged that the second defendant acted negligently and fraudulently by providing a misleading financial report about the first defendant. The court referred to established legal principles, including those from the case of Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., which stated that a bank could be liable for negligence if it provided information without a disclaimer of responsibility. In this case, the second defendant explicitly stated that the information was given "in confidence and without responsibility." The court concluded that this disclaimer absolved the second defendant of liability, as the plaintiffs accepted the information under these terms. 4. Forum Non-Conveniens: The doctrine of forum non-conveniens was considered, which allows a court to dismiss a case if another forum is more appropriate for the parties and the interests of justice. The court noted that all relevant documents, witnesses, and the liquidation proceedings of the first defendant were in the United Kingdom. It would be inconvenient and unfair to require the second defendant to contest the suit in India. Consequently, the court found that the High Court of Madras was not the appropriate forum for this case. Conclusion: The court ultimately decided that it did not have jurisdiction to entertain the suit against the second defendant. The leave granted to the plaintiffs to sue the second defendant was revoked, and the appeals were allowed. The court emphasized that the significant events and transactions occurred outside India, and the second defendant had no duty of care towards the plaintiffs under the given circumstances. The order of the learned judge was set aside, and the suit against the second defendant was dismissed without any order as to costs.
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