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TMI Blog1996 (6) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... re dealing with it for some time. Though they were acquainted during that period, the business transaction was not that much, and it is said that some time during the year 1991, the first defendant company requested the plaintiffs to supply fresh consignments of cut and polished diamonds. Since there has been no transaction between the plaintiff and the first defendant after 1987-88 and there had been lapse of time and considering the precious value of the diamonds to be supplied, they requested their bankers, namely, the Bank of Baroda, to obtain a fresh banker's report with regard to the financial capacity to pay for the first defendant-company. It is said that they wanted to get a report regarding the reputation, average balance maintained by the first defendant, how it can repay the price, its credit facilities, etc. It is said that on such request, the Bank of Baroda requested the second defendant, appellant herein, to send a banker's report about the first defendant company on the lines requested by it. It is said that on getting the request, the second defendant (appellant) sent a report on September 25, 1991, explaining the financial status and viability of the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same, the plaintiff was informed that the first defendant was in a capacity to pay. It is said that the second defendant has acted negligently and fraudulently in representing to the plaintiffs about the financial position of the second defendant. It is further said that but for the information given by the second defendant on September 25, 1991, the plaintiffs would not have transacted with the first defendant. The suit is, therefore, laid against the two defendants, the first defendant being the consignee, for recovery of the amount for the value of the consignment sent to it and against the second defendant for misrepresenting to the plaintiff as to the financial status of the first defendant and for the alleged loss sustained by it. The plaintiff claims the value of the consignment as the loss sustained by it and, therefore, wanted the second defendant to be made liable for the alleged loss. 3. Both the defendants are beyond the jurisdiction of this court since both of them are having their offices in Birmingham, the United Kingdom. The plaintiff, therefore, filed Application No. 5301 of 1993 to grant leave to sue against defendants Nos. 1 and 2. As per order dated Septe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gland and all the documents pertaining to various transactions between the first defendant and the second defendant inter se were also at England and the sale proceeds are also to be made at England and all persons who have connection with the transactions are also permanent English residents and liquidation proceedings are also pending in England, this court has no jurisdiction to entertain the suit. For these reasons, the second defendant prayed that the leave granted may be revoked. 6. A counter was filed by the plaintiffs opposing the applications filed by the second defendant, on the ground that the cause of action has arisen within the jurisdiction of this court and, therefore, the applications cannot be sustained. 7. The learned judge, after hearing both the parties, came to the conclusion that the leave granted cannot be revoked. In the order, it was further stated that every part of the cause of action has arisen within the jurisdiction of this court and, therefore, the leave granted is not liable to be revoked. Application No. 6268 of 1994 was, therefore, dismissed. Consequently, the other application, viz., Application No. 6269 of 1994 for rejection of the pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the jurisdiction of this court where and when the plaintiffs' bank and agent, namely, the Bank of Baroda received a report from the second defendant about the financial position of the first defendant and on which report the plaintiffs acted believing the same to be true and supplied the goods on credit to the first defendant and sent the documents from Madras to the second defendant. The said report turned out to be false and fraudulent and mala fide one. Since the report was received at Madras and since the plaintiffs acted on the report from Madras, this court has jurisdiction to entertain the case... 10. From a reading of the above paragraph, it is clear that the main reason for instituting the suit before this court is the request made by the plaintiff through its bankers for getting a report of the first defendant company and the telex message sent on behalf of the second defendant to the plaintiffs's bankers, namely, Bank of Baroda (Overseas Branch), Madras, whereby a goods report was given about the first defendant, which persuaded the plaintiffs to act on the same. It is further clear that the plaintiffs thereafter cam to know about the falsity of the repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . And where the information has been obtained from another bank or informant. Without responsibility on the part of themselves or their officials. To avoid delay in future please transmit you requests for status reports to 48209 or 48120. 13. It is also seen from other documents that the consignments were sent from Bombay to Birmingham. Instructions are given in various invoices to remit the proceeds with the Bank of New York at No. 48, Wall Street, New York (U.S.A.) account Bank of Baroda (Overseas Branch), Madras. 14. As per document No. 15, dated November 22, 1991, the Bank of Baroda (Overseas Branch), Madras, authorised the second defendant to deliver the consignment to the first defendant against their written undertaking to deposit with it the proceeds within 120 days from the date of delivery instead of 90 days. The exact wording in the telex message reads thus : ..... You are now authorised to deliver consignment to above drawees against their written undertaking to deposit with you the proceeds within 120 days from the date of delivery instead of 90 days. 15. All the other documents filed along with plaint related only to the financial posi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e interested in subject-matter and that he is liable to be called upon to answer the plaintiff's demand. 18. The above decision was followed by our High Court in the decision reported in Lakshminarayana Chettiar, In re, AIR1954Mad594 [FB]. At page 604 of the report, their Lordship said thus : A cause of action is something more than a ground of title. It not only includes the facts necessary to support the plaintiff's title, but also the facts which entitled him to relief against a particular defendant . 19. After extracting the decision in Bahadur Singh's case, AIR 1922 Oudh 171, their Lordships further held thus (at page 604) : It would be seen from the aforesaid decisions that though under Act 8 of 1859 this court was inclined to take the view that the unity of title was synonymous with cause of action, the later decisions clearly laid down that cause of action was something more than unity of title and that it would include not only the right of the plaintiff but also the facts disclosing the infringement of that right. 20. The Full Bench decision of this court was followed in Nagumilli Narayanamurthy v. Gudimetla Gangaraju, AIR 1958 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if there be fraud, no action will lie on a false and fraudulent representation as to the character, conduct, credit, ability, trade or dealings of any person unless it be made in writing, and in the case of company unless the writing be under the company's seal. Even if the 'opinion' be given in writing, it will be a difficult question whether the bank is liable for the fraudulent conduct of their servant the bank manager, who will, probably, have been responsible for giving it. The words of the Act require that the writing should be 'signed by the party to be charged' and, therefore, it seems that the bank could not be made liable. The manager himself will, of course, be personally liable for his own fraudulent conduct, but only if statement was signed, and if fraud can be proved against him. Actions against individual bank officers are very unusual, however; the reason is presumably to be found in the fact that the officer in question may often not be sufficiently substantial to justify proceedings. Lord Haldane when giving the opinion just mentioned evidently took the view that the banker was not under any duty of care, as opposed to honesty towards the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r in the expectation that it will be relied upon, may be under liability towards any person who does rely upon it unless when giving the opinion the banker expressly disclaims responsibility. Accordingly, a bank does owe a duty to exercise care in giving opinions and will be liable if it fails to do so, unless when giving the opinion it is made clear that the opinion is given without responsibility. 25. In Hedley Byrne and Co. Ltd. v. Heller and Partners Ltd. 1964 AC 465 (HL), the facts of the case are as follows : The plaintiffs, advertising agents, inquired through their bankers, the National Provincial Bank Ltd., Bishopsgate, as to the credit of their clients, Easipower Ltd., who banked with the defendant merchant bank. Satisfactory replies were given to two such inquiries, and the plaintiffs, relying on these replies, place orders for advertising space in connection with which, on the subsequent liquidation of Easipower Ltd., they lost more than Pounds 17,000. They brought an action against the defendant bank alleging that the replies had been given negligently. 26. One of the inquiries was made and replied to in writing. The reply began with the words : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anker's reference - no such relationship arises; that, in any event a bank could safeguard itself by giving the information without responsibility . 33. In this connection, it may also be noted that the second defendant-bank has no duty towards the plaintiff. At the most, it can be said that it has only a general duty of common honesty and that duty, of course, applies to all cases. But where a mere inquiry is made by one banker of another, who stands in no special relation to him, in the absence of special circumstances from which a contract to be careful can be inferred, there is no duty excepting the duty of common honesty (see Robinson v. National Bank of Scotland [1916] 53 S.L.R. 390 (HL)). 34. In Paget's Law Banking', at pages 157 and 158, the learned author further says thus : In recent years there has grown up a practice which varies from what had been the normal practice. The inquiry may be addressed direct to the bank of whose customer information is being sought, with a request that the reply be given through the inquirer's own banker. Whatever be the practical merits or demerits of such a practice it is hard to see that the legal posit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiffs. 38. The plaintiffs also say that the cause of action has arisen at Madras since the amount is payable at Madras. The document No. (15) filed by the plaintiffs itself speaks against it. It is seen therefrom that the second defendant is authorised to deliver the goods to the first defendant on getting an undertaking to deposit the proceeds at Birmingham, U.K. So, even the payment has to be made only in England and not in India. It is also clear from the other various invoices produced in this case that the goods were dispatched from Bombay with a direction to remit the proceeds at the Bank of New York, 48, Walls Street, New York, in the account of the Bank of Baroda, Overseas Branch, Madras. So payment has to be made with the agent of the Bank of Baroda at New York. It will be equivalent to making payment to the Bank of Baroda. That payment had also to be made outside India. So, we find that on the basis of the letter dated March 25, 1991, the action of the defendants has not given a cause of action and the various transactions which are the subject-matter of the suit have also taken place only outside the jurisdiction of this court. The other averments relate only to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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