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TMI Blog2004 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... lause 12 of the Letters Patent, in favour of the plaintiff, by order dated September 8, 2001, to institute the above numbered suit be revoked and consequently, the plaint be returned to the plaintiff for presentation before the appropriate court. The plaintiff presented the above numbered suit before the authorised officer of this court on July 20, 2001, for the following reliefs: (a) that the defendant be ordered and decreed to pay to the plaintiff the sum of Rs. 5,00,00,000 (rupees five crores only) which has been paid by the plaintiff on the demand dated February 19, 2001, to the income-tax authorities on account of the tax liabilities of the defendant, together with interest thereon at the rate of 12 per cent, per annum, from the date hereof till payment and/or realisation as per particulars of claim exhibit whereto. (b) that the defendant be ordered and decreed to pay to the plaintiff the sum of Rs. 96,16,74,416 (rupees ninety six crores sixteen lakhs seventy four thousand four hundred and sixteen only) being the balance amount which has been demanded from the plaintiff by the demand dated February 19, 2001, or such other amount as the plaintiff is required to pay to the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which was impermissible. It is contended that leave under clause 12 has been granted essentially on the facts stated in para. 30 of the plaint, which reads thus: "30. The defendant had an office in Bombay till September, 1996, but now no longer carries on business in Mumbai. The wet lease agreement dated October 22, 1995, was executed in Mumbai. The agreement has been in operation all over India including in Mumbai. Payments under the wet lease agreement dated October 22, 1995, have been made at Mumbai. The tax deduction at source was made in Mumbai by the plaintiff. Thus a material part of the cause of action has arisen in Mumbai. The plaintiff submits that with leave under clause XII of the Letters Patent this hon'ble court will have jurisdiction to entertain, try and dispose of this suit." According to the defendant, now it is conceded that the fact that the wet lease agreement dated October 22,1995, was made in Mumbai, is incorrect; as the same was executed in Delhi. In so far as the second statement of fact made, that the agreement has been in operation all over India including in Mumbai, contends learned counsel for the defendant that, that fact is not relevant for cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to him, on reading the plaint as a whole, it is more than clear that part of the cause of action has arisen in Mumbai, for which reason, this court, in exercise of powers under clause 12 could grant leave to proceed with the plaint such as the present one. Reliance is placed on the decisions of the apex court reported in Smt. Bismillah v. Janeshwar Prasad [1990] 1 SCC 207 (para. 9) and Abdulla Bin Ali v. Galappa, AIR 1985 SC 577 (para. 5) to contend that the plaint must be read as a whole. It is then argued that what constitutes cause of action is also no more res integra. Reliance is placed on the decisions reported in A.B.C. Laminart P. Ltd. v. A.P. Agencies [1989] 2 SCC 163 (para. 12) and Navinchandra N. Majithia v. State of Maharashtra [2000] 7 SCC 640 (paras. 18 to 20) to buttress the above principle. Reliance was also placed on the decision reported in-Adcon Electronics P. Ltd. v. Daulat [2001] 7 SCC 698 (para. 9) as to the purport of clause 12 of the Letters Patent and it was argued that in the facts of the present case, the court had rightly invoked that power while granting leave under clause 12. It was argued that on reading the plaint as a whole, it is obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dation laid by the defendant to invoke the doctrine of "forum convenience", the said argument was unavailable to the defendant. Reliance was placed on the decisions of the apex court in Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hiralal, AIR 1962 SC 527 (para. 34) and Ramji Dayawala and Sons P. Ltd. v. Invest Import, AIR 1981 SC 2085 (paras. 28 and 29) to contend as to in what circumstances the court could invoke such a doctrine and, merely because of distance or expenses, by itself, cannot be a ground, which perhaps is a feeble attempt made on behalf of the defendant. In so far as the argument regarding no suit can be lodged without obtaining prior leave of the court and no post-facto grant of leave is permissible, learned counsel placed reliance on the decision of our High Court reported in Union Bank of India v. Sunpac Corporation, AIR 1986 Bom 353 and Ramgopal Chunilal v. Ramsarup Baldevdass [1934] 36 Bom LR 84 to contend that this argument clearly overlooks the marked difference between the terms "lodging/filing/presentation" of the plaint on the one hand and "acceptance/admission" of the plaint on the other. The latter is "receiving" the plaint and the former is not. To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion 'cause of action' is generally understood to mean a situation or state of facts that entitles a party to maintain an action in a court or a Tribunal; a group of operative facts giving rise to one or more bases for suing; a factual situation that entitles one person to obtain a remedy in court from another person. (Black's Law Dictionary) 19. In Stroud's Judicial Dictionary, a 'cause of action' is stated to be the entire set of facts that gives rise to an enforceable claim: the phrase comprises every fact, which, if traversed, the plaintiff must prove in order to obtain judgment. 20. In Words and Phrases (4th edition), the meaning attributed to the phrase 'cause of action' in common legal parlance is existence of those facts which give a party a right to judicial interference on his behalf." Reliance is also rightly placed on the decision of the apex court in the case of A.B.C. Laminart P. Ltd. [1989] 2 SCC 163. In para. 12, the court has stated the legal position thus: "12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. Article 11.1 of the wet lease agreement dated October 22, 1995, inter alia, provided that the plaintiff was entitled to deduct from the amounts payable to the defendant all sums which had been paid by the plaintiff to the Indian revenue authorities for tax liabilities of the defendant." In para. 9 of the plaint, it is averred as follows: "9. The Income-tax Department requested the plaintiff to provide complete details of the payments made to the defendant up to the first week of September, 1996, to enable them to arrive at the amount of tax liability of the defendant. The plaintiff gave this information by its letter dated December 28, 1999. The Income-tax Department issued an order dated December 30, 1999, directing the plaintiff to remit the entire amount of US $23,634,581 into the Government treasury on the ground that the defendant had failed to pay its taxes while it was carrying on business in India." The averments in para. 9 will have to be understood in the context of the document exhibit F. Reliance was placed on paragraphs 6 to 8 of the said document exhibit F. The same reads thus: "6. In view of such a good profitability of the venture the earlier NOC issued b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Caribjet did not file its return of income, definite assessment of taxable income could not be done. This meant the TDS deducted at 2.75 per cent, practically becoming the total tax collected from Caribjet from the entire transaction. The entire transaction has been claimed to yield 44.31 per cent, net profits from the total revenues received from Air India by Caribjet in its submission before the Arbitration Tribunal as has been further elaborated elsewhere in this order. This means on account of final assessment of income not taking place a major chunk of income of Caribjet went untaxed in India. This is against the premise on which original TDS authorisation was given at 2.75 per cent. As final assessment could not be made additional demand could not be raised. 8. Therefore, the entire payment having been made by Air India to Caribjet till date has to be added to the payment now awarded by the Arbitration Tribunal and the sum total would be the total receipts of Caribjet arising from this particular agreement. Appropriate and adequate credit would be given for the tax deduction amount till now at 2.75 per cent, for payments made till first week of September, 1996." It will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to averments in para. 22 and part of para. 23, which reads thus: "22. The Deputy Commissioner issued a demand notice dated February 19, 2001, calling upon the plaintiff to pay the tax on the quantum award dated November 15, 1999, amounting to Rs. 101,16,74,416 (US $21.5 million) within three days of the service of the said demand treating the plaintiff as an 'assessee-in-default'. The plaintiff also requested the Income-tax Department for time to pay the tax and the dropping of penalty proceedings and for a stay of recovery proceedings. The Chief Commissioner of Income-tax by an order dated February 23, 2001, refused the plaintiff's request that penalty proceedings should not be initiated against the plaintiff and also rejected a stay of any of the recovery proceedings. 23. ... The Deputy Commissioner also issued a show cause notice dated March 15, 2001, calling upon the plaintiff to show cause as to why it should not be treated as an agent of the defendant under section 163 of the Income-tax Act." In para. 23, reference is made to letter-cum-show-cause notice issued by the Deputy Commissioner of Income-tax dated March 15, 2001, addressed to the Principal Officer of the plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndred and one crores sixteen lakhs seventy four thousand four hundred and sixteen only) has admittedly been made by the income-tax authorities for the tax payable by the defendant and recovery proceedings in respect thereof have been started against the plaintiff only because the defendant has no presence in India and because it does not have any assets within India. The plaintiff submits that all amounts which have been paid or which may be paid in future by it to the income-tax authorities for the tax liabilities of the defendant result of the defendant's tax liabilities and all sums for which a demand has been made or is likely to be made by the income-tax authorities for the tax dues of the defendant. The Income-tax Department have issued proceedings against the plaintiff to assess the plaintiff as a representative asses-see in this transaction, to which the plaintiff has already made submission. The plaintiff apprehends that in the event that the defendant does not pay its tax liabilities in India, the plaintiff would be assessed as a representative assessee and the entire tax due and payable on the assessment of the defendant of its operation in India would become payable by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Department could legitimately and in fact have claimed the amount from the plaintiff. The plaintiff, however, has persuaded the Income-tax Department to accept part of the payment as interim arrangement. The b relief as claimed in the suit as filed is, therefore, on the basis that the plaintiff is entitled for reimbursement or restitution of the amount already paid by the plaintiff, which otherwise was payable by the defendant in law. The amount had become payable in Mumbai and, in fact, has been paid in Mumbai. The defendant had its office in Mumbai till September, 1996, and the wet lease agreement was in operation all over in India, including in Mumbai. The fact that the amount claimed from the plaintiff by the income-tax authorities was in the capacity of assessee in default or as agent or representative of the defendant would make no difference. On conjoint reading of the aforesaid averments, to my mind, it is obvious that part or a material part of the cause of action has arisen in Mumbai. Moreover, the application for leave clearly sets out the relevant facts and asserts that the plaintiff has paid a sum of rupees five crores to the tax authorities in Mumbai on behalf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hamber summons. Even on a fair as well as a liberal reading of para. 14 of the affidavit in support, all that can be said is that, the grievance made is one of undue hardship to be caused to the defendant on the ground that the defendant was not carrying on any business in India. That is not enough. In so far as the averment that the plaintiff has filed the suit only with a view to harass the defendant and force him into succumbing to the plaintiff's unlawful demands, except this, no specifics are provided in the affidavit. On the other hand, the record clearly establishes that the defendant is already contesting three other suits in India. The defendant had an office at Mumbai in India, till September 1996. Merely because some inconvenience will be caused to the defendant, that by itself, cannot be a ground for invoking the doctrine of "forum convenience" of the defendant. Reliance has been rightly placed on the decisions of the apex court in Manohar Lai Chopra, AIR 1962 SC 527 and in the case of Ramp Dayawala and Sons P. Ltd., AIR 1981 SC 2085. It is relevant to note that in the case of Manohar Lai Chopra, AIR 1962 SC 527 in para. 34, the court has expounded that the mere fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her the case made out by the plaintiff that the loans were sanctioned or sanctioning of advance in favour of the defendant, was done at Mumbai, can be the basis to hold that part of the cause of action has arisen in Mumbai? The court was mainly concerned with this aspect and the same has been dealt with in para. 12 of the decision. The court found that the unilateral act of internal sanctions of the plaintiff cannot be considered as part of the cause of action having arisen within the jurisdiction of this court. To my mind, this decision is of no avail to E the defendant on the point under consideration. I have already dealt with the question as to whether in the present case, part of the cause of action has arisen within the jurisdiction of this court; and answered the same against the defendant. The next decision relied by the defendant is in the case of Transasia Bio-Medicals Ltd. [2002] 5 Bom CR 1. The opinion expressed in this judgment is that there can be no question of granting post facto leave. There can be no dispute that, the said proposition is the view which has prevailed since long. Even so, this decision will be of no avail in the present case, as would be explained a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between "lodging of a plaint" and "admitting a suit" with reference to the expression "power to receive" occurring in clause 12 of the Letters Patent. As mentioned earlier, that was not the matter in issue before the court in Rhoda Jal Mehta's case, AIR 1989 Bom 359 and those observations cannot be said to be the ratio of that decision. For, the only issue was, whether the suit should be dismissed or the plaint should be returned to the plaintiff. Reliance was also placed on the decision of the Division Bench in the F case of Devidatt Ramniranjandas v. Shriram Narayandas [1932] 34 Bom LR 236; AIR 1932 Bom 291. Emphasis was placed on the observations at page 250, which read thus: "Clause 12, Letters Patent, provides, that the High Court of Judicature at Bombay in the exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try and determine suits of every description, if in the case of suits for land (omitting unnecessary words) the land is situate, or in all other cases, if the cause of action shall have arisen either wholly, or in case the leave of the court shall have been first obtained, in part, within the local limits of the ordinary orig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the register of the suits and a number given to it, merely on the presentation of the plaint. After the presentation, the plaint is scrutinized. If there are any defects in the same, the plaintiff is required to remove them. The removal of defects is a matter of procedure. It is only after the defects are removed that it becomes eligible for an entry and a number, in the register of suits. One of the defects can be the absence of leave of the court to institute the suit where it is necessary, including leave under clause 12 of the Letters Patent. So long, therefore, as the plaint is not admitted and entered in the register of suits, all defects including that of the absence of leave under the said clause, can be removed without returning the plaint. There is no question of returning the plaint which is not admitted. It simply remains under objection till it is admitted. 5. It is the confusion between the two stages, viz., of the presentation of the plaint and of its admission to the register of suits after the removal of the defects, if any, which is responsible for the faulty procedure adopted by the office. In some cases this procedure may affect the period of limitations w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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