Oral Judgment:
1. Mentioned. Not on Board. Taken on Board.
2. By an order dated 23rd August 2012, this Court (Coram: Smt. R.S. Dalvi, J.) granted Leave under Clause XII of the Letters Patent Act, 1866 to the Plaintiff, to file the above suit before this Court. The Defendant No.5 â Deccan Chronicle Holdings Limited â has now taken out the above Chamber summons praying that the said leave granted on 23rd August 2012 be revoked.
3. Briefly set out, the relevant facts are as under:
4. The Plaintiff is a Company duly incorporated and registered under the Companies Act, 1956 and having its Registered Office at Mumbai. The Plaintiff inter alia renders financial services including providing short term loans to its customers. The Defendant No. 1 is a Private Limited Company and a subsidiary of Defendant No.5. Defendant No.1 inter alia carries on the business of air transport services and chartered aviation services. The Defendant No. 1 had availed of certain short term facilities from Defendant No. 7 - Future Capital Holdings Ltd. The said facilities have been fully disbursed and advanced to the Defendant No.1 by the Defendant No.7. The Defendant Nos. 2, 3 and 4 are individuals and the Directors of Defendant No.1. The Defendant Nos. 2 to 4 are being sued as Personal Guarantors, as also to enforce the securities provided by them for repayment of the short term facilities given to Defendant No.1. The Defendant No.5 is a Listed Company, incorporated under the provisions of the Companies Act, 1956 and having its Registered Office at Secunderabad, Andhra Pradesh. The Defendant No.5 has also guaranteed repayment under the loan facilities given by Defendant No.1 and also provided/agreed to provide security for such repayment as stated hereinafter. The Defendant No.6 is a Depository Participant under the Depositories Act, 1996. Certain shares of Defendant No. 5 which were /are owned and held by Defendant Nos. 2 to 4 and have been provided as security for repayment under the loan facilities advanced to Defendant No. 1 are held by Defendant No. 6 as the Depository Participant. Defendant No. 7 is a Company incorporated under the Companies Act, 1956 and also provides financial services.
5. The loan facilities, for which recovery is sought in the present suit, were originally provided to Defendant No.1 by Defendant No.7. However, under a Deed of Assignment dated 3rd August 2012 , the said loan facilities and all the receivables, rights and benefits of the Defendant No. 7 thereunder and in respect of all guarantees and securities, have been duly and validly assigned to the Plaintiff and according to the Plaintiff, it is entitled in its own right to all the reliefs claimed in the suit. However, without prejudice and in the alternative, the Plaintiff has submitted that the reliefs be granted to the Plaintiff and/or Defendant No. 7 as this Court deems fit.
6. Since Defendant No.1 has failed and neglected to pay the amounts due to the Plaintiff in relation to the Loan Facility Agreement dated 12th July 2012, the present suit is filed by the Plaintiff, inter alia, for the following reliefs:
â(a)This Hon'ble Court be pleased to declare that a sum of Rs. 52,08,64,102/- (Rupees Fifty two crores eight lacs sixty four thousand one hundred and two) as per the particulars at âExhibit LLLâ hereto is outstanding, due and payable to the Plaintiff or alternatively to Defendant No.7 or such of them jointly or severally as this Hon'ble Court may find entitled thereto by the Defendant No.1 to 5 jointly and severally, along with further interest thereon @ 20% per annum from the date hereof till payment or realization thereof.
(b) This Hon'ble Court be pleased to order and decree the Defendant No. 1 to 5, jointly and severally to pay to the Plaintiff or alternatively to Defendant No. 7 or such of them as this Hon'ble Court may find entitled thereto, a sum of (Rupees Fifty two crores eight lacs sixty four thousand one hundred and two) as per the particulars of claim at Exhibit âLLLâ hereto along with further interest @ 20% per annum thereon till payment or realization thereof.
(c) This Hon'ble Court be pleased to declare that there exists a valid and subsisting mortgage by deposit of title deeds created by the Defendant No.3 in favour of the Plaintiff of the properties described at Exhibit âKKâ hereto, and that the repayment of the amounts claimed herein are duly secured by such mortgage.
(d) That the mortgage by deposit of title deeds referred to in prayer c above be enforced by an under the orders and directions of this Hon'ble Court by sale of the said properties described at Exhibit âKKâ hereto, and the net sale proceeds thereof be paid over to the Plaintiff or alternatively to Defendant No.7 in or towards satisfaction of the amounts claimed herein.
(e) This Hon'ble Court be pleased to declare that there exists a valid and subsisting mortgage of the properties of the Defendant No.2 and 5 described at Exhibit âWâ hereto and that repayment of the amounts claimed herein are duly secured by such mortgage.
(f) This Hon'ble Court be pleased to declare that there exists a valid and subsisting mortgage of the properties of the Defendant No.1 described at Exhibit RR hereto and that repayment of the amounts claimed herein are duly secured by such mortgage.
(g) Without prejudice and in the alternative to prayer (e) above, and only in the event that it is held that a valid effective mortgage by deposit of title deeds has not been created on any of the properties at Exhibit âWâ and âRRâ, then this Hon'ble Court be pleased to order and decree Defendant Nos. 2 and 5 specifically to perform the Agreement to create a mortgage in favour of the Plaintiff by deposit of the original title deeds with respect to the properties against their respective names described at Exhibit âWâ and âRRâ.
(h) Without prejudice and in the alternative to prayer (f) above, and only in the event that it is held that a valid and effective mortgage by deposit of title deeds has not been created in respect of any of the properties as described in Exhibit âWâ and âRRâ, then this Hon'ble Court be pleased to order and decree Defendant No. 1 to specifically to perform the Agreement to create a mortgage in favour of the Plaintiff by perfecting its title to the said properties at Exhibit âWâ and âRRâ hereto and depositing the original title deeds thereof with the Plaintiff by way of equitable mortgage of the properties at Exhibit âWâ and âRRâ hereto.
(i) That on such mortgages being created as per prayers (g) and (h) above, this Hon'ble Court be pleased to declare that the amounts claimed herein are duly secured by the said mortgages;
(j) That the said mortgages referred to in prayers (e) and (f) above or, on the mortgages referred to in prayers (g) and (h) above being created of the properties described at Exhibit âWâ and âRRâ hereto, the same be enforced against the Defendant Nos. 1, 2 and 5 by sale of the said properties described at Exhibit âWâ and âRRâ hereto under the orders and directions of this Hon'ble Court and the net sale proceeds thereof be paid over to the Plaintiff in or towards satisfaction of the amounts claimed herein;
(k) That without prejudice and strictly in the alternative to the prayers (g) and (h) and in the event of specific performance being refused, this Hon'ble Court may be pleased to order and decree the Defendant Nos. 1, 2 to 5 to pay to the Plaintiff damages quantified at Rs. 300,00,00,000/-;
(l) That in the event of specific performance being refused, this Hon'ble Court be pleased to declare that the Plaintiff has a valid and subsisting first charge upon the properties set out at Exhibit âWâ and âRR hereto belonging to the Defendant Nos. 1, 2 and 5 for payment of the amounts claimed herein;
(m) That this Hon'ble Court be pleased to enforce such charge by sale of such properties at Exhibit âWâ and âRRâ hereto under the orders and directions of this Hon'ble Court, and the net sale proceeds thereof be paid over to the Plaintiff in or towards satisfaction of its claims herein;
(n) â¦. ⦠â¦
(o) â¦. ⦠â¦
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(r) That if, on the sale of the mortgaged properties the amount realized is not sufficient to satisfy the Plaintiff's claim herein and there is any deficiency in such amount realized, then a personal decree be passed against the Defendant Nos. 1 to 5 jointly and severally for payment of such deficient amount;
(t) That pending the hearing and final disposal of the suit,
(i) This Hon'ble Court be pleased to appoint the Court Receiver of this Hon'ble Court as Receiver of the properties set out at Exhibits KK, W and RR hereto as well as the shares described at Exhibit KKK hereto, with all powers under Order XL of the CPC including the power to take possession of and sell the same, realize the sale proceeds thereof and pay over the sale proceeds to the Plaintiff in or towards satisfaction of the Plaintiff's dues claimed herein;
(ii) This Hon'ble Court be pleased to restrain the Defendant Nos. 1 to 5 by an order and injunction from in any manner dealing with, disposing of, selling, alienating, parting with possession of or creating any encumbrances or third part, right, title or interest in the properties set out at Exhibits KK, W and RR hereto and the shares set out at Exhibit KKK hereto or any thereof;
(iii) This Hon'ble Court be pleased to pass an order and injunction restraining Defendant No. 6 from allowing any transfer, sale, creation of any encumbrance or third party right, title or interest in respect of the said shares set out at Exhibit KKK hereto or any part thereof;
(iv) That Defendant No. 6 be ordered and directed to provide the Plaintiff with the full and complete details of the number of shares of the Defendant No. 5 available in the DP Accounts of the Defendant Nos. 2 to 4 herein and of any shares transferred out from their accountsâ
7. After filing of the above suit, the Plaintiff filed a Petition before this Court seeking leave under Clause 12 of the Letters Patent, to enable the Plaintiff to file the above suit against the Defendants and others before this Court. In support of its contention namely that the Plaintiff is entitled to file the suit before this Court with leave under clause 12 of the Letters Patent granted to them by this Court, the Plaintiff in clause 5 of the Petition stated as under:
â5. The Plaintiffs are situated within jurisdiction. The Plaintiff states that, in terms of the Loan Agreement under which the amounts are presently outstanding and due to the Plaintiff, repayment of the loan amounts was to be made to the Defendant No. 7 now to the Plaintiff in Mumbai. The Plaintiff has its Bank Account in Mumbai into which such repayment amounts were/are to be deposited/paid. As per clause 25.1 (e) of the Facility Agreement dated 17th January 2012, all payments are to be made to such accounts as specified by the Facility Agent. The Facility Agent is Defendant No.7 who has specified the Defendant No.1 to make payments under the Facility Agreement dated 17th January 2012 in Mumbai from time to time by raising invoices which clearly prescribes that the remittance has to be made to the account of Defendant No. 7 in HDFC Bank in Worli, Mumbai. It is submitted that this clearly establishes that even under the Facility Agreement dated 17th January 2012, payment has been made by Defendant No.1 and received by the Plaintiff in Mumbai and hence the said Facility Agreement dated 17th January 2012 has been performed in Mumbai. This material part of the cause of action has arisen in Mumbai, and with leave of this Hon'ble Court being granted under Clause XII of the Letters Patent, this Hon'ble Court has jurisdiction to entertain, try and dispose of the present suit since Defendant Nos. 1 to 5 are not in Mumbai.â
This Court by its order dated 23rd August 2012, granted leave under clause 12 of the Letters Patent to file the above suit in this Court.
8. The Defendant No.5 is the only Defendant who has taken out the above Chamber Summons praying that the ex parte order passed by this Court dated 23rd August 2012, granting leave under clause 12 of the Letters Patent to the Plaintiff to file the suit in this Court be revoked.
9. Mr. Sawant, the learned Advocate appearing for the Defendant No.5 has submitted that on a plain and meaningful reading of the averments in the plaint it is evident that the same is for determination of right, title and interest in and possession of immovable properties situated outside the territorial jurisdiction of this Court. It is submitted that the Plaintiff has sought relief in respect of immovable properties and possession through Court Receiver, which are admittedly situated outside the territorial jurisdiction of this Court. The Plaintiff on the basis of averments in the plaint is in substance seeking the relief of possession and sale of immovable properties, appointment of Court Receiver, deposit of title deeds and creation of charge in respect thereof. It is submitted that since the Plaintiff avers that they have come to know that certain properties claimed by the Plaintiff are encumbered , the relief sought in the Plaint therefore also relates to title and rights of third parties. It is submitted that though the Plaintiff has sought specific performance for creation of mortgage in respect of the immovable properties, however the relief in substance read along with the averments is in the nature primarily and substantially to seek an adjudication upon the title to the said immovable properties and/or a determination of their right and interest therein. It is therefore submitted that a reading of the plaint shows that it is in the nature of a suit relating to âsuit for landâ. It is submitted that therefore the averments in the plaint show that the Plaintiff is seeking determination of the Plaintiff's title to the land and its possession under the purported mortgage created in respect of the said immovable properties. It is submitted that if the reliefs claimed by the Plaintiff are granted, the same would directly affect the title to or possession of land, as the Plaintiff has sought a relief for sale of immovable properties. It is submitted that the reliefs sought by the Plaintiff are only against Defendant Nos. 1 to 5 who are admittedly situated and carrying on business outside the territorial jurisdiction of this Court.
10. It is further submitted on behalf of Defendant No.5 that under the Loan Agreement dated 12th July 2012 executed by and between Defendant Nos. 1 to 4 and the Defendant No.7 there is a specific clause (clause No. 25), whereunder the parties have agreed in case of dispute to submit only to the jurisdiction of the Court in the City of Hyderabad. It is submitted that the Plaintiff claims that under a purported Deed of Assignment dated 3rd August 2012 from Defendant No. 7 all right, title and interest of Defendant No.7 under the said Loan Agreement are assigned to the Plaintiff. If that be so the Plaintiff will have to submit to the jurisdiction of the Court in the City at Hyderabad. It is submitted that the Plaintiff in its plaint and in the application seeking leave under Clause 12 of the Letters Patent has suppressed the fact that they are seeking substantial relief in respect of land/immovable properties which are situated outside Mumbai and are beyond the territorial jurisdiction of this Court. The Plaintiff has also failed to disclose that there was no complete or valid assignment in favour of the Plaintiff particularly at the time when leave was sought, more so when the alleged document of assignment was neither adequately stamped as per the laws of Maharashtra nor registered; there was no consideration paid under the said Deed of Assignment and the Defendant No. 5 had not been informed by Defendant No.7 or the Plaintiff of any assignment as alleged. The Plaintiff therefore cannot rely upon clause 25 (1) (e) of the Facility Agreement dated 17th January 2012, for payments to be made into the Account of Defendant No. 7 in HDFC Bank, Worli, Mumbai, because that account does not belong to the Plaintiff and there is no other nominated account of the Plaintiff in Mumbai for payment. It is therefore submitted that the Plaintiff has wrongly invoked the provisions of Clause 12 of the Letters Patent and has further wrongly obtained leave under clause 12 of the Letters Patent from this Court. It is therefore submitted that the leave granted to the Plaintiff under clause 12 of the Letters Patent by an order of this Court dated 23rd August 2012, be revoked.
11. In support of his contention that the present suit is a âsuit for landâ, the learned Advocate for Defendant No. 5 has relied on the decision of the Hon'ble Supreme Court in the case of AdconElectronics Pvt. Ltd. vs. Daulat and another (2001) 7 SCC 698)wherein it is held that a âsuit for landâ is a suit in which the relief claimed relates to title to or delivery of possession of land or immovable property; whether a suit is a âsuit for landâ or not has to be determined on the averments in the plaint, with reference to the reliefs claimed therein; in cases where the relief relates to adjudication of title to land or immovable property or delivery of possession of the land or immovable property, it will be a âsuit for landâ. In a suit for specific performance of an agreement for sale of the suit property, wherein relief of delivery of the suit property has not been specifically claimed, as such it cannot be treated as a âsuit for landâ. The learned Advocate for the Defendant No. 5 has also relied on a decision of the Hon'ble Division Bench of this Court in the case of WimcoLtd., Mumbai vs. Matoshree Shelters Pvt. Ltd., Mumbai and another (2009 (5) Mh. L. J. 615)wherein the Division Bench has reiterated the above findings of the Hon'ble Supreme Court in AdconElectronics Pvt. Ltd. (supra).
12. Mr. Virag Tulzapurkar, the learned Senior Advocate appearing for the Plaintiff has submitted that whilst deciding an application seeking revocation of leave granted under Clause 12 of the Letters Patent, the merits of the case are irrelevant. It is further submitted that the present suit is not a âsuit for landâ, as the suit is for recovery of debt/loan and for enforcement of Defendant No.5's guarantee i.e. inter alia enforcement of the mortgage of the immovable properties created by the Defendants. It is submitted that there is no relief for possession of any immovable property claimed in the plaint and the interim prayer is for the Court Receiver being appointed to take possession of the mortgaged properties and to sell the same which were misconstrued to mean that the suit is a suit for land. It was further argued that merely because there is an interim prayer for the Receiver to take possession of the mortgaged property, it does not mean that the same is a suit for land. In support of this contention the Learned Senior Advocate for the Plaintiff relied on the decision of the Full Bench of this Court in the case of HatimbhaiHassanally vs. Framroz Dinshaw (1927 BLR XXIX 498).
13. Referring to the recitals and clauses 1, 18, 20, 24 and 25 of the Deed of Guarantee executed by Defendant No.5 dated 12th July, 2012, it is submitted on behalf of the Plaintiff that by the said Guarantee, the Defendant No.5 has guaranteed performance of Defendant No.1's obligation which includes the obligation to make payment in Mumbai.
14. It was further submitted on behalf of the Plaintiff that clause 25 of the Loan Agreement dated 12th July 2012 specifies that the Court and Tribunal of Hyderabad have non-exclusive jurisdiction to hear the disputes arising out of the Loan Agreement. In view thereof, there is no bar against the Plaintiff to institute the suit in a Court of competent jurisdiction which is the Bombay High Court. Relying on the decision of the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem (1989) 2 SCC 163)it is submitted that a material part of the cause of action has arisen in Mumbai and therefore the Plaintiff has rightly sought and obtained leave under Clause 12 of the Letters Patent.
15. The learned Senior Advocate appearing for the Plaintiff has further submitted that the common law principle of the 'debtor seeks the creditor' would apply to the facts and circumstances of this case. In support of his contention he relied on the decision of the learned Single Judge of the Calcutta High Court in A.K. Raha (Engineers) Ltd. v. State of Punjab5 wherein it is held that the debtor must seek the creditor and pay him at his residence and in absence of a contract specifying the place of payment, the place of payment must be deemed to be the place where the creditor resides and the Court at that place has jurisdiction to entertain the suit. It is therefore submitted on behalf of the Plaintiff that this Court has jurisdiction to hear and entertain the present suit with leave granted under Clause 12 of the Letters Patent. It is submitted that leave was correctly granted and the Chamber Summons filed for revocation of leave granted under Clause 12 be dismissed.
16. I have considered the submissions advanced on behalf of the Plaintiff as well as the submissions advanced on behalf of Defendant No.5. I am in agreement with the submission advanced on behalf of the Plaintiff that in deciding an application seeking revocation of leave granted under Clause 12 of the Letters Patent to the Plaintiff, the merits of the case are irrelevant and am therefore not dealing with the same as to whether the Deed of Assignment executed by Defendant No.7 in favour of the Plaintiff is valid or not. The same is also not relevant since the Plaintiff has sought reliefs in the plaint in its favour or in the alternative in favour of Defendant No.7 who has originally granted facilities to Defendant No.1, and in whose favour the Agreements including the security agreements have been executed by the Defendants. The finance/term loan agreement dated 12th July 2012 executed by and between the Plaintiff Future Corporate Resources Ltd. (FCH) as âlenderâ and the Defendant No.1 Aviotech Pvt. Ltd. as âborrowerâ is annexed and marked as Exhibit-Y to the Plaint. Clause 5 of the said agreement pertains to repayment of loan and payment of interest. Clause 5.1 of the said agreement provides that Defendant No. 1 (borrower) shall repay to the Plaintiff (FCH/lender) at the place and on the dates stipulated in the Schedule annexed to the Agreement. In Schedule II of the said agreement, the terms and conditions of the loan facility are set out. The relevant condition pertaining to place, at which payment is to be made as agreed under the said Schedule is reproduced hereunder:
âPlace at which payment is to be made â Mumbaiâ Clause 25 of the said agreement pertains to jurisdiction and is reproduced hereunder:
â25. Parties irrevocably agree that only the Courts and tribunals of competent jurisdiction at Hyderabad, India shall have non-exclusive jurisdiction in relation to any dispute or difference between the parties including any question as to whether or not any dispute or difference shall have arisen.â
17. Defendant No.5 has admittedly executed the Deed of Guarantee dated 12th July, 2012 in favour of the Defendant No.7. Recitals (ii) and (iii) of the said Guarantee are reproduced hereunder.
â(ii)By a rupee term facility agreement dated 12th July 2012 (hereinafter referred to as the Facility Agreement) entered into between the Borrower, and the Original Lender, the Lender has extended to the Borrower a rupee term loan facility in the aggregate amount of Rs. 50,00,00,000/- (Rupees Fifty crores only) (hereinafter referred to as the Facility), the commitment of the Lender being as indicated against the name of the original Lender, upon the terms and subject to the conditions including as to the creation of the security interests therein mentioned.
(iii) It is one of the conditions of the Finance Documents that the Guarantor should provide a irrevocable and unconditional guarantee in favour of the Lender to secure the facility granted (or intended to be granted) by the Lender under the Finance Documents (the âSecured Obligations) which guarantee shall be valid and effective until the secured obligations have been fully discharged (the âGuarantee) andâ¦â
Clauses 1, 18, 20, 24 and 25 of the said Irrevocable Deed of Guarantee are relevant and reproduced hereunder:
â1. The Guarantor hereby, unconditionally, irrevocably and without any qualifications whatsoever guarantees to and covenants with the Lender that in the event of Borrower not performing or observing any of the terms and conditions of the Finance Documents or if the Borrower commits any breach of any of the terms and conditions thereof or if the Borrower commits any default in timely payment of any amount payable by the Borrower to the Lender under the Finance Documents or any events of defaults subsists under the Finance Documents, then and in that event and without prejudice to any other rights and remedies of the Lender under the Finance Documents to take any other action, without any demur or protest and notwithstanding any intimation and or direction by the Borrower to the contrary, to pay to the Lender, the sum due and payable by the Borrower to the Lender under the Finance Documents.
The Guarantor hereby unconditionally, irrevocably and without any qualifications whatsoever guarantees to and covenants with the Lender, that the Guarantor will pay sums as may be due and payable by the Borrower to the Lender under the Finance documents.â
18. The Guarantor is fully aware of all the terms and conditions contained in the Finance documents. It is hereby expressly agreed that the Lender shall be at liberty at any time to procure or obtain any other documents from the Borrower for further effectually securing to the Lender, the repayment of the Loan Amounts payable by the Borrower to the lender as stated in the Finance Documents and the Guarantor shall not be released and/or discharged by the exercise by the Lender of its liberty with reference to the matters aforesaid.
20. In order to give effect to the guarantees herein contained, the Lender shall be entitled to act as if the Guarantor was the Principal Debtor to the Lender for the payment of any amount payable under the Finance Documents and guaranteed by the Guarantor as aforesaid to the Lender.
24. Notwithstanding anything contained in this Guarantee or any other agreement, the Lender shall be entitled to assign and transfer this Guarantee to any person whatsoever, without the prior consent of the Guarantor. The Guarantor further agrees and acknowledges that in the event of the assignment, transfer, sale, securitization or novation of the Loan amount or any part of the dues payable under the Finance Documents by any of the Obligors, the beneficial interest in this Guarantee shall stand transferred, sold, assigned, securitized or novated as the case may be in favour of the new Secured Party.
25. The Guarantor specifically agrees and confirms that this Guarantee and all matters concerning same or arising therefrom or relating thereto, shall be governed by and construed in all respects with the Indian Laws and any matter or issues arising hereunder or any dispute hereunder shall, at the option/discretion of the Lender, be subject to the exclusive jurisdiction of the Courts of New Delhi. This shall not however limit the rights of the Lender to take proceedings in any other Court of competent jurisdictionâ
18. From the aforesaid clauses it is clear that the Guarantor (Defendant No.5) has agreed that the lender shall be entitled to act as if the Guarantor was the principal debtor to the lender for the repayment of any amount payable under the Finance Documents and guaranteed by the Guarantor. The Guarantor is fully aware of all the terms and conditions contained in the Finance Documents and the Guarantor has unconditionally, irrevocably and without any qualifications whatsoever guaranteed to pay to the lender such sums as may be due and payable by the borrower to the lender under the Finance Documents. It is therefore clearly established that Defendant No.5 has by the Irrevocable Deed of Guarantee dated 12th July 2012 guaranteed performance of Defendant No. 1's obligation under the Finance Documents which includes making payment in Mumbai. From the aforesaid facts, it is clear that the monies were due and payable by Defendant No.5 in Mumbai and that invoices were raised by Defendant No. 7 designating the account in Mumbai into which the monies were payable. As per clause 25.1 (e) of the Facility Agreement dated 17th January 2012 all payments are to be made to such accounts as specified by the Facility Agent. The Plaintiff is the assignee of Defendant No.7 the original lender and the Plaintiff has thus stepped into the shoes of Defendant No.7. Thus, the fifth Defendant has to make payment to the Plaintiff in Mumbai. As held by the Hon'ble Supreme Court in A.B.C. Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem (1989) 2 SCC 163), a part of the cause of action arises where the money is expressly or impliedly payable under a contract. Since Defendant No.5 has under clause 25 of the Deed of Guarantee agreed that in the event of any dispute, the lender shall be entitled to take out proceedings in any court of competent jurisdiction, since a material part of the cause of action has arisen in Mumbai, the Plaintiff has rightly sought and obtained leave under clause 12 of the Letters Patent.
19. The Learned Advocate for the Plaintiff also correctly submitted that the Common Law principle of the 'debtor seeks the creditor' applied in the facts and circumstances of the case and reliance was placed on the decision of the learned Single Judge of the Calcutta High Court in A.K. Raha (Engineers) Ltd. v. State of Punjab (AIR 1961 Calcutta 166)wherein the learned Judge in paragraph 7 held as follows:
âThe other ground, however, taken by Mr. Deb has substance. It has been held by Lord Williams, J. in the case of Srilal Singhania v. Anantlal, AIR 1940 Cal. 443, that in the case of a promissory note payable on demand but silent as to the place of payment, the common law rule applies and it being necessary for the debtor to seek out his creditor and pay him at his residence, in the absence of any agreed place of payment, the place of payment must be deemed to be the place where the creditor resides and the court at that place has jurisdiction to entertain the suit on the promissory note. That this common law rule applies to India has also been recognised in a decision of this Court in the case of Smt. Tulsimani Bibi v. Abdul Latif, 40 Cal WN 392 : (AIR 1936 Cal 97), in the decisions of the Bombay High Court in the case of Dhunji Shah v. A.B. Forde, ILR 11 Bom 649 at p. 656, in the case of Motilal v.Surajmal, ILR 30 Bom 167, in a decision of the Madras High Court in the case of Ramlinga Iyer v. Jayalakshmi, AIR 1941 Mad. 695 and in the decision of the Rangoon High Court in the case of Annamalai Chettyar v. Daw Hnin U, AIR 1936 Rang 251. In the absence of any agreed place of payment, it must be held that the common law rule applies and the plaintiff's dues are payable at the Plaintiff's Calcutta office. This Court has, in consequence, jurisdiction to entertain the suit, provided previous leave under clause 12 of the Letters Patent has been obtained. In the instant case, previous leave under clause 12 of the Letters Patent has been obtained.â
The learned Single Judge of the Calcutta High Court has therefore held that the debtor must seek the creditor and pay him at his residence, and in absence of the contract specifying the place of payment, the place of payment must be deemed to be the place where the creditor resides and the Court at that place has jurisdiction to entertain the suit. It was further held in the said case that Common Law rule was applicable and leave under Clause 12 of the Letters Patent was rightly granted. In the present case not only is the place of payment stated to be in Mumbai, but even if that were not so, on Common Law principle of debtor seeking the creditor, the Court would have jurisdiction to entertain this suit, with leave under Clause 12 of the Letters Patent.
20. In response to the submission of Defendant No.5 that a reading of the plaint in the present suit and the reliefs claimed therein shows that it is in the nature of a suit relating to âsuit for landâ, Mr. Tulzapurkar, the Learned Senior Counsel for the Plaintiff whilst refuting the said allegation of Defendant No.5 has relied upon a Full Bench judgment in the case of HatimbhaiHassanally vs. Framroz Dinshaw (1927 BLR XXIX 498), wherein a Seven Judge Bench of this Court (five concurring and two dissenting) held by majority that where there is a mortgage of immovable property which is sought to be enforced by the Suit, such suit is not a suit for land but is for the recovery of a debt. It was further held that the suit by the mortgagee of land to enforce his mortgage by sale is not a suit for land within the meaning of Clause 12 of the Letters Patent, and that a suit can be maintained in the High Court by seeking leave under Clause 12 even when the mortgaged properties are situated outside the limits of the Bombay High Court, if a part of the cause of action has arisen within its jurisdiction. The relevant paragraphs of the said judgment are reproduced hereunder:
âPer Marten C.J.
â75. Summarising, then, my conclusions on the whole case, I would hold that just as the primary element in a mortgage is the debt and not the security, so the primary or substantial object of a mortgage suit is the payment of the debt, and that the sale sought for is merely ancillary to the main or final end, viz. The payment of the mortgage debt. Consequently, in my judgment a mortgage suit of that nature is not a suit for land within the meaning of cl. 12 of the Letters Patent, any more than an administration suit is. If that opinion, which is in accordance with the past practice of this Court for some fifty-four years prior to India Spinning and Weaving Co. Ltd. v. Climax Industrial Syndicate, is in fact erroneous, then I am content to err in company with Sir Charles Sargent, Sir Charles Farran and Sir Basil Scott in this Court, and I believe in company with Sir Lancelot Sanderson in the High Court of Calcutta. Further, as it would seem to me, the judgments of Sir Lawrence Jenkins and Sir Victor Coutts-Trotter support that practice, rather than the reverseâ
Per Blackwell J.
âThe first question submitted in this appeal for the consideration of this Full Bench is whether a suit brought by a mortgage of land to enforce his mortgage by sale is âa suit for landâ within the meaning of cl. 12 of the Letters Patent. The second and third questions submitted involve (inter alia) a further consideration, namely, whether this Court has an equity jurisdiction arising independently of cl. 12 of the Letters Patent.â
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âThe next question arising in this appeal is, what is the true nature of a suit to enforce a mortgage by sale? In regard to this question, I have had the advantage of reading the judgment of the learned Chief Justice. If I may say so, he has dealt with the matter so fully, and to admirably, that I feel that I could not usefully add one word. I, therefore, content myself by saying that I agree with his judgment upon this part of the case.â
Per Patkar, J.
âIn view of the importance of the questions submitted for decision to the Full Bench and in deference to the lengthy arguments at the bar I would make a few observations. The first question to be decided is âWhether a suit brought by a mortgagee of land to enforce his mortgage by sale is a 'suit for land' within the meaning of cl. 12 of the Letters Patentâ. It would, therefore, be necessary to determine the intrinsic nature of the suit brought by the mortgagee of land to enforce his mortgage by sale. The mortgagee's interest in such a suit comprises (1) the right to sue the mortgagor personally for the mortgage debt, and (2) the right to realise the debt by sale of the mortgaged property. In Halsbury's Laws of England,Vol. XXI, para 124, a mortgage is said to consist of two things: âIt is a personal contract for a debt and an estate pledged as a security for the debt. Every mortgage implies a debt and a personal obligation by the mortgagor to pay itâ. For the purposes of the Civil Procedure Code mortgage debt according to the trend of judicial opinion in the different High Courts is considered to be a debt within the meaning of Order XXI, rule 46, and not immovable property within the meaning of Order XXI, rule 54. See Tarvadia Bholanath v. Bai Kashi (1901)I.L.R. Bom. 305 s.c. Bom. L.R. 18); Karimunnissa v. Phul Chand (1893) I.L.E. 15 All. 134); Kasinath Das v. Sadasiv Patnaik (1893) I.L.R. 20 Cal. 805); Nataraja Iyer v. The South Indian Bank of Tinnevelly (1911) I.L.R. 37 Mad. 51). When the mortgagee's rights are attached as debt under Order XXI, rule 46, and eventually sold, the rights of the auction-purchaser of the mortgage debt in execution of a decree against the mortgagee are the same as those of the judgment-debtor mortgagee, viz. The right to sue the mortgagor for a personal decree against him and also the right to realise the debt by sale of the mortgaged property. What then was the conception of a mortgage suit when cl. 12 of the Letters Patent was enacted? Regulation IV of 1827, s. 26, says:
âThe law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government applicable to the case; in the absence of such Acts and Regulations, the usage of the country in which the suit arose; if none such appears, the law of the defendant; and, in the absence of specific law and usage, justice, equity, and good conscienceâ Macpherson in his Law of Mortage, 7th Edition at pp.1 and 3, has referred to the several authorities and laid down that the Mahomedan law and Hindu Law recognized no distinction between mortgagees of land and pledges of other property. The principles of justice, equity and good conscience are interpreted to mean principles of English law applicable to a similar state of circumstances: Waghela Rajsanji v. Shekh Masludin (1887) L.R. 14 I.A. 89, 96); Shivrao v. Pundlik (1902) I.L.R, 26 Bom. 437, 441 s.c. Bom. L.R. 90); Kripa Sindhu Mukherjee v. Annada Sundari Debi (1907) I.L.R. 36 Cal. 34, 58 F.B.); Maharaja of Jeypore v. Rukmini Pattamahadevi (1919) 21 Bom. L.R. 655, 663 P.C.). At the time of enactment of cl. 12 of the Letters Patent, the principles of English law would apply, and if the principles of English law applied it is clear that the right of a mortgagee is not a right in rem but can be enforced by the personal obedience of the mortgagor. But normally that would be a common law action. The mortgagee in the suit for foreclosure may, after decree absolute is made, get the land; but in a suit for sale, with which we are concerned in this case, he has to apply to the Court for leave to bid which may be refused, his right to bring the property to sale may be defeated by payment by the mortgagor, and generally it is the stranger auction-purchaser who gets the land. The mortgagee gets his money and the surplus is paid to the mortgagor. Their Lordships of the Privy Council in the case of Anundo Moyee Dossee v. Dhonendro Chunder Mookerjee (1871) 14 M.L.A. 101, 109)thus described the effect of the decree for sale (p. 109):...â
Per Taleyarkhan, J.
âI have had the advantage of perusing â if I may say so â the able and exhaustive judgment of my Lord the Chief Justice, and I agree with him in answering the first question referred to the Full Bench in the negative.
But, though I hold that a suit for sale of mortgaged property is not a suit for land within the meaning of cl. 12 of the Letters Patent, I do not do so on either of the two grounds on which that conclusion was based in Holkar vs. Dadabhai (1890) I.L.R. 14 Bom. 353)â
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âI prefer to rest my opinion on the broad ground that a suit by a mortgagee for the realisation of the monies advanced by him to the mortgagor by the sale of the mortgaged property is substantially a suit for the recovery of the mortgaged debt, and as such it is not a suit for land within the meaning of cl. 12 of the Letters Patentâ
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âIt follows from my answer to question No.1, namely, that a suit brought by a mortgagee of land to enforce his mortgage by sale is not a suit for land within the meaning of cl. 12 of the Letters Patent, that questions Nos. 2 and 3 should be answered in the affirmative.â
21. I have gone through the averments in the present suit and the reliefs prayed for. In fact, the reliefs have been set out hereinabove. From the said reliefs it is clear that the Plaintiff has first sought a declaration that a sum of Rs. 52,08,64,102/- (Rupees Fifty two crores eight lacs sixty four thousand one hundred and two) along with interest thereon is due and payable to the Plaintiff by Defendant Nos. 1 to 5 jointly and severally and has also sought a decree as per the particulars of claim at Exhibit-LLL to the Plaint. The Plaintiff has thereafter sought a declaration that there exists a valid and subsisting mortgage by deposit of title deeds, and that repayment of the amounts claimed in the suit are duly secured by such mortgage. Without prejudice and in the alternative, the Plaintiff has prayed that in the event it is held that a valid effective mortgage by deposit of title deeds has not been created, then in that event, the Defendants be ordered and decreed to specifically perform the agreement to create a mortgage in favour of the Plaintiff by deposit of the original title deeds with respect to the properties and that on such mortgages being created, the Court be pleased to declare that the amounts claimed in the plaint are duly secured by the said mortgages, and the said mortgages be enforced against the Defendants by sale of the properties under the order and directions of the Court. In the event of specific performance being refused, this Court be pleased to declare that the Plaintiff has a valid and subsisting first charge upon the properties for payment of the amounts claimed in the suit and that the Court be pleased to enforce such charge by sale of such properties. If on such sale the amounts realized is not sufficient to satisfy the Plaintiffs claim, then a personal decree be passed against the Defendants jointly and severally for payment of such deficient amount. The Plaintiff has pending the hearing and final disposal of the suit sought appointment of Court Receiver with power to take possession of and sell the mortgaged property and pay the sale proceeds so realized to the Plaintiff in or towards satisfaction of the Plaintiffs dues claimed therein.
22. From the reliefs as prayed, it is therefore clear that the above suit is filed by the Plaintiff only for recovery of debt. For the purpose of recovering the said debt, the Plaintiff has sought to enforce the mortgage if already created and in the event of the Court coming to the conclusion that the mortgage needs to be created, then directing the Defendants to specifically perform the agreement to create a mortgage and for the purpose of enforcing the mortgage to sell the properties and pay the sale proceeds to the Plaintiff so that the said payment may be appropriated towards the claim amount. There is no issue of determination of title pertaining to the suit properties raised in the present suit and/or possession of the properties. Seeking an interim relief pending the suit i.e. appointment of a Court Receiver to take possession only for the purpose of selling the mortgaged properties and handing over the sale proceeds to the Plaintiff for appropriation towards their dues cannot be said to be a suit for possession of the immovable property. In view thereof, the decisions in the case of AdconElectronics Pvt. Ltd. (supra) and WimcoLtd., Mumbai (supra) are of no assistance to Defendant No. 5 in the facts and circumstances of the present case and the present suit as filed cannot be termed as a âsuit for landâ. Full Bench decision of this Court in HatimbhaiHassanally (supra) squarely applies to the facts and circumstances of the present case. As stated earlier, the decision of the Honble Supreme Court in A.B.C. Laminart Pvt. Ltd. (supra) would also apply to the facts and circumstances of the present case. Since it is clearly established that a part of the cause of action has arisen in Mumbai and therefore this Court with leave granted under Clause 12 of the Letters Patent to the Plaintiff to file the present suit, would have jurisdiction to try and entertain the above suit. The question therefore of revoking the leave under clause 12 of the Letters Patent granted by this Court to the Plaintiff by its order dated 23rd August 2013 does not arise. The Chamber Summons is therefore dismissed.