1960 (10) TMI 105 - HC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of the Delhi Court.
2. Binding nature of the foreign judgment.
3. Appointment of an arbitrator and the resulting award.
4. Issuance of the cheque by the defendants.
5. Allegation of a blank cheque being forged.
6. Authority of Chandmal to issue the cheque.

Detailed Analysis:

1. Jurisdiction of the Delhi Court:
The court held that the Delhi Court, being a foreign court, had jurisdiction to decide the suit as the defendants had submitted to its jurisdiction by appearing through counsel and seeking leave to defend. The principle established is that voluntary submission to the jurisdiction of a foreign court makes its judgment binding.

2. Binding Nature of the Foreign Judgment:
The judgment of the Delhi Court was not considered binding as it was not given on the merits of the case. The court emphasized that a judgment given without investigating or considering the matters in controversy cannot be held to be given on the merits. The Delhi Court's decision under Order 37, Rule 2, C.P.C., was based on the defendants' failure to appear and thus was not on the merits.

3. Appointment of an Arbitrator and the Resulting Award:
The trial court found that S.P. Singh was appointed as an arbitrator and gave an oral award that the defendants should pay Rs. 17500/- to the plaintiff. The court noted that although an oral award is not enforceable under the Arbitration Act, it is not inherently illegal and can form a good consideration for a negotiable instrument if acted upon.

4. Issuance of the Cheque by the Defendants:
The court found that the cheque for Rs. 17500/- was issued by Chandmal in favor of the plaintiff in settlement of the partnership accounts. The trial court's finding that the cheque was issued was upheld, and it was concluded that the cheque was supported by lawful consideration.

5. Allegation of a Blank Cheque Being Forged:
The defendants' claim that a blank cheque was given to the plaintiff, which was then forged for Rs. 17500/-, was rejected. The court found no evidence to support the allegation and noted that it was unlikely for a shrewd businessman like Chandmal to issue a blank cheque under the circumstances.

6. Authority of Chandmal to Issue the Cheque:
The trial court held that Chandmal had no authority to bind his father Gehrilal by issuing the cheque. However, the appellate court disagreed, finding that Chandmal had the authority to issue the cheque on behalf of the partnership firm, thereby binding Gehrilal.

Conclusion:
The appellate court partly allowed the appeal, setting aside the trial court's judgment and decreeing the plaintiff's suit for Rs. 17480/- with interest at six percent per annum from the date of the promissory note until realization. The court also awarded three-fourths of the costs to the plaintiff, while the defendants were to bear their own costs. The suit was maintainable on the basis of the original cause of action and the cheque issued, despite the oral award not being enforceable under the Arbitration Act.