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TMI Blog2008 (5) TMI 741X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is sought for the maturity value of the fixed deposit and the interest thereon. The suit progressed to trial and final arguments when an objection as to the jurisdiction of this Court to receive the action was taken. 3. The order of the learned Single Judge of August 7, 2008 records that the belated challenge to the maintainability of the suit in this Court was entertained as a preliminary issue. The order proceeds to trace that the defendant bank contended that as it was the plaintiffs case that the fixed deposit had been fraudulently encashed at the banks branch elsewhere in Calcutta outside the ordinary original jurisdiction, the suit could not have been brought on the original side of this Court. Before the suit court, the bank urged that the banks zonal office had no nexus with the plaintiffs cause of action and this Court was incompetent to receive the suit. The order recounts that counsel for the plaintiff had relied on a Division Bench judgment reported at 2002 (1) Cal LJ 366 (Steel Authority of India Ltd. v. Dinesh Kumar Jaiswal) for the principle that when a defendant carried on business within jurisdiction, the plaintiff would be entitled to institute the suit in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndant. 5. At the outset it is necessary to notice the limited scope of the matter at hand. The endeavour in the reference is not to answer the preliminary issue in the suit but only to resolve the conflict, if any, between the judgments of co- ordinate jurisdiction rendered in the Steel Authority and the Oriental Bank matters. The effect of the answer in this reference may have a bearing on the preliminary issue in the suit but the facts pertaining to the suit are of little consequence at this stage. 6. The plaintiff has laboured to demonstrate that the Steel Authority case answers to the proper interpretation of clause 12 of the Letters Patent and that the Oriental Bank verdict does not. The plaintiff says that clause 12 makes no distinction between a corporation simpliciter and a body corporate which may be a bank; that the constitution or nature of business of the defendant, if it were an incorporeal entity, is hardly to be factored into the consideration. 7. Both parties rely on the judgments reported at AIR 1955 SC 590 (Delhi Cloth and General Mills Co. Ltd. v. Harnam Singh ors.), AIR 1956 Calcutta 33 (Hansraj Bajaj v. The Indian Overseas Bank Ltd.) and AIR 1982 Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of action against the bank: Joachimson v. Swiss Bank Corporation, 1921-3 KB 110, quoted with approval by Lord Reid in Arab Bank Ltd. v. Bavclays Bank 1954 AC 495 at p.53]. The rule is the same whether the account is a current account or whether it is a case of deposit. The last two cases refer to a current account; the Privy Council case AIR 1942 PC 6 was a case of deposit. Either way, there must be a demand by the customer at the branch where the current account is kept, or where the deposit is made and kept, before the bank need pay, and for these reasons the English Courts hold that the situs of the debt is at the place where the current account is kept and where the demand must be made. (45) We have stressed the word primarily because the rules we have set out relate to the primary obligation. If the bank wrongly refuses to pay when a demand is made at the proper place and time, then it could be sued at its head office as well as at its branch office and, possibly, wherever it could be found, though we do not decide that. But the reason is that the action is then, not on the debt, but on the breach of the contract to pay at the place specified in the agreement: see W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent context in the Agencia case, while construing the Goa, Daman and Diu (Banks Reconstruction) Regulations 1962, the Supreme Court opined that the Regulations proceeded on the basis that branches of a bank must be regarded as entering into and carrying on transactions identifiable as theirs and such transactions were distinct from those carried on by the head office. But such opinion is restricted to the provisions of the Regulations that were under consideration. The enunciation of the law at paragraph 14 of the report, however, is without reference to the Regulations and is the general pronouncement of the law touching upon the rudiments in the matter of the authority of a civil court to receive and try any action relating to a banking transaction. 11. The Hansraj Bajaj case that the defendant puts up as its sheet-anchor merits a detailed consideration. 12. The plaintiff in that suit had sought recovery of money equivalent to the value of an alleged undischarged and outstanding demand draft that was issued by the defendant banks offshore branch at Penang in Malaysia. The territorial jurisdiction of this Court had been invoked on the basis of the bank having its head offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the parties. That is both the primary and the ultimate purpose. If therefore conditions exist which defeat that primary purpose, the Courts have declined to proceed with a suit even where they have a jurisdiction to determine it. As will be plain from this analysis of objectives, this jurisdiction is an inherent jurisdiction of the Court. In this country, the jurisdiction to stay a competent suit is exercised under Section 151, Civil Procedure Code, which recognises such inherent judicial power by providing: Nothing in this Code shall be deemed to limit or otherwise affect the inherent power of the Court to make such orders as may be necessary for the ends of justice or to prevent abuse of the process of the Court. In other words, the jurisdiction to stay an otherwise competent suit is to be exercised only for the ends of justice or to prevent abuse of the process of the Court. This view is well settled and supported by such authorities in India as Bhagat Singh Bugga v. Jagbir Sawhney, AIR 1941 Calcutta 670; - Jethabhai Versey Co. v. Amarchand Madhavji Co., AIR 1924 Bombay 90. This jurisdiction is to be sparingly exercised and within the strict limits of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Judge had seriaous reservations as to whether a suit arising out of a banking transaction concerning a branch and unconnected to the head office of the bank, could be instituted in a court exercising jurisdiction over the head office of the bank. 14. In the Hansraj Bajaj case it is only a doubt. In the Agencia judgment rendered several decades later the law seems to have been settled, but again such nuance is irrelevant in the context of the present reference and in assessing the rationale in the Oriental Bank judgment in a suit where the territorial jurisdiction of this Court was invoked on the situs of the zonal office of the bank and not its head office. 15. Thence to the two judgments which are in apparent conflict. In the Steel Authority case, paragraph 8 of the report captures the essence of the Division Bench view and reliance is placed on the Supreme Court opinion in the Food Corporation of India judgment which has also been cited in this case: 8. If the plaintiff can show that the defendant carries on business within the jurisdiction of this Court, then where did the cause of action arise is wholly besides the point In this respect a recent judgment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reported in AIR 1955 Supreme Court 590 and in the case of Agencia Commercial International Ltd. Ors. v. Custodian of the Branches of Banco Nacional Ultramarino reported in AIR 1982 Supreme Court 1268 clearly support the above proposition. In the case of Delhi Cloth General Mills Co. Ltd. (supra), it was, inter alia, held that the situs of the debt is at the branch/place where the account is kept and where the demand must be made. 17. In another Supreme Court judgment reported at AIR 2000 SC 2181 (Vimal Chandra Grover v. Bank of India), the appeal arose from an order passed by the National Consumer Redressal Commission holding that there was no negligence on the part of the respondent bank in dealing with its security of pledged shares of the appellant. On a consideration as to the nexus between the constituent of a branch of a bank and the head office of the bank, the Supreme Court noticed the Agencia dictum at paragraph 20 of the report: 20. In Agencia Commercial International Limited v. Custodian of the Branches of Banco Nacional Ultramarino, (1982) 2 SCC 482 : (AIR 1982 SC 1268 ) this Court held that branch of the Bank in which account is maintained by the customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efendants reside or cause of action arises. Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction- (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. Explanation. A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. 20. There are three limbs to clause 12 of the Letters Patent: the first limb covers suits for land or other immovable property, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more than one defendant, either of the last two limbs of clause 12 of the Letters Patent has to be satisfied in respect of each defendant in the suit for the action to be launched on the original side of this Court. For the purpose of the matter under consideration the portion of clause 12 that is relevant may be read as follows : the said High Court of Judicature at Fort William in Bengal, in the exercise of its ordinary original civil jurisdiction, shall be empowered to receive, try and determine suits if the Defendant at the time of the commencement of the suit shall dwell, or carry on business, or personally work for gain within such limits 21. This limb of clause 12 will cover a suit which is not a suit for land (or other immovable property) and where the jurisdiction of this Court on its original side is not invoked on the basis of the cause of action having arisen in part or in whole within the area falling within the ordinary original jurisdiction, but the jurisdiction is founded solely on the defendant being located within the ordinary original jurisdiction at the time of commencement of the suit. 22. Subject to the limitations in Sections 15 to 19 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der an old Act would show that the practice was on correct understanding of the law. No usage or practice developed under clause 12 of the Letters Patent of 1865 is shown, ascribing any meaning by contemporary opinion to the words relevant in the present context. In its applicable limb, clause 12 permits a suit to be instituted against a corporation in this Court if such corporation carries on business within its jurisdiction. There is no express distinction in clause 12 of the Letters Patent between a banking corporation and other corporations or bodies corporate. 26. Of the decisions relied upon at the Bar there is only the Hansraj Bajaj decision of 1956, which is of considerable vintage but rendered closer to modern times than when clause 12 first appeared. Again, the Hansraj Bajaj judgment accepts that a suit against a bank in relation to a transaction at an outside branch could be received by this Court if the head office of the bank were within jurisdiction, with the caveat that it is an overstretched jurisdiction although within the technical limits of the law. 27. Communis opinio is evidence of what the law is. If in at least three judgments of the Supreme Court, al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstance, if his transactions pertain to the Kohima branch of the bank which may have another branch or an office in Kozhikode. The situation would be no different under clause 12 of the Letters Patent. 30. The Steel Authority case did not consider a banking transaction and the Oriental Bank case did not consider the case of any defendant other than a bank where the matters complained of concerned a branch of the bank other than the regional office that had been cited to attract jurisdiction. There is, therefore, no scope for conflict between the two Division Bench judgments. 31. As the reference was made only for the purpose of resolving the perceived conflict between the said two judgments, it is not necessary to venture into the uncharted territory of what the law may be, and how the relevant limb of clause 12 of the Letters Patent would come to be construed, with the proliferation of at- par cheques encashable at every branch of the bank or upon appreciation of the increasing banking transactions on the internet which makes indistinct the traditional banking practice of yore. 32. The reference is disposed of by holding that there is no conflict between the judgments ren ..... X X X X Extracts X X X X X X X X Extracts X X X X
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