1 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE3D DAY OF MARCH, 2017 BEFORE THE HON' BLE MR. JUSTICE B. VEERAPPA R MISCELLANEOUS FIRST APPEAL No.6239/2010 (CPC) BETWEEN: CANARA BANK, CANCARD DIVISION, (CONSUMER BANKING DIVISION) NO.14, NAVEEN COMPLEX, M.G. ROAD, BANGALORE-560001. REPD. BY ITS OFFICER, SRI. L.V. SHIVASWAMY. (BY SMT. DEVIKA, ADVOCATE FOR SRI U. R. NAYAK, ADVOCATE) AND: SRI. GIRIJA PRASAD GUPTA, S/O SRI. YOGI PRASAD GUPTA, AGED ABOUT61YEARS, FLAT ‘A’ 1ST FLOOR, MAINAK APARTMENT, 50, BAGULATI1T LANE, KOLKATA-7000007. SECOND ADDRESS: No.171-A, PROPRIETOR, M/S NEW STYLE, MAHATMA GANDHI ROAD, KOLKATA-7000007. (RESPONDENT SERVED) ... ... APPELLANT ... RESPONDENT2THIS MISCELLANEOUS FIRST APPEAL IS FILED UNDER ORDER
43RULE1a) OF CPC, AGAINST THE ORDER
DATED:
15. 02.2010, PASSED IN S.C.NO.937/09 ON THE FILE OF THE XIII ADDITIONAL SMALL CAUSES JUDGE AND MEMBER, MACT, AND COURT OF SMALL CAUSES, BANGALORE, ORDER
ING TO RETURN THE PLAINT U/O7RULE10OF CPC, WITH A DIRECTION TO PRESENT THE SAME BEFORE THE COURT HAVING JURISDICTION TO TRY THE SAME. THIS MISCELLANEOUS FIRST APPEAL COMING ON FOR HEARING THIS DAY, THE COURT DELIVERED THE FOLLOWING: JUDGMENT
This Miscellaneous First Appeal is filed by the plaintiff-Bank against the order dated 15th February, 2010 made in S.C.No.937/2009 on the file of the XIII Additional Small Causes Judge & Member, MACT., Bangalore returning the plaint under Order VII Rule 10 of the Code of Civil Procedure, 1908 with a direction to present the same before the Court having jurisdiction to try the same.
2. The present appellant, who is plaintiff before the Court below, had filed a suit against the defendant in S.C.No.937/2009 for recovery of money contending that the defendant had availed membership of Cancard 3 Visa under the plaintiff’s Cancard Scheme, on the basis of which, it had issued Cancard Visa bearing No.4543- 6302-00917003. The benefit under the Cancard Visa is that the Cancard Holder by complying with the requirement laid down in Cancard can purchase goods or avail services at or from any of the various approved member establishments spread over in India and Nepal and the defendant had agreed to the terms and conditions of the Cancard Scheme. He had also agreed to make payment within 15 days from the date of statement and the Cancard Holder was liable to pay service charges-cum-interest at the rate of 2.5% per month. He also had made use of the Cancard from time to time but failed to make payments. Hence, the plaintiff issued legal notice dated 29.11.2008 demanding payment of outstanding liability of Rs.71,841/-. The cause of action for the suit arose when the defendant had applied for membership of Cancard Visa on 8.3.2006 when Visa Card was renewed 4 on the other dates when he had made use of the same, etc.
3. The defendant filed his written statement admitting the membership of Cancard Visa under the Cancard Visa Scheme but denied that he had failed to make payments within 15 days from the date of monthly statement and that the Cancard Holder has to pay 10% of outstanding amount. He had also denied the fact that he is liable to pay a sum of Rs.71,641/- and other charges to the plaintiff. It is his specific contention that he had not agreed for payment of interest at the rate of 2.5% per month; that he is the permanent resident of Kolkatta and had used the Cancard in Kolkatta only and therefore, filing of the suit at Bangalore is not maintainable since the Court has no jurisdiction to entertain the suit. Hence, he sought for dismissal of the suit. 5 4. Based on the aforesaid pleadings, the trial Court framed the following issues: “1) Whether defendant proves that this Court has no jurisdiction to entertain and try the suit?.
2) Whether the plaintiff bank is entitled to recover Rs.71,841/- together with court cost and current and future interest at the rate of 2.5% p.m. compounded monthly?.
3) What order?.” 5. In order to establish the case, the plaintiff examined its Officer as P.W.1 and got marked the documents Exs.P.1 to P.5.
6. After hearing both parties, the Trial Court held that the defendant has proved that the Court at Bangalore has no jurisdiction to entertain and try the suit and the plaintiff is not entitled for the relief sought for. Accordingly, by the impugned order dated 6 15.2.2010 returned the plaint to the plaintiff under Order VII Rule 10 of the Code of Civil Procedure with a direction to present the same before the Court having jurisdiction to try the same. Hence, the present appeal is filed.
7. The respondent though served has remained unrepresented.
8. I have heard the Learned Counsel for the appellant.
9. Smt. Devika for Sri U.R. Nayak, learned Counsel for the appellant has contended that the impugned order passed by the trial Court suffers from want of exercise of jurisdiction in not appreciating the matter with proper judicial discretion and the Court below misinterpreting Section 20 of the Code of Civil Procedure has returned the plaint to be presented before the appropriate Court and hence, the order of the 7 Court below is perverse and opposed to the well established principles of law. She further contended that the Court below has failed to notice para-3 of the plaint wherein it is stated that the plaintiff at Bangalore office scrutinized the application submitted by the defendant and on 8.3.2006 issued a Cancard Visa to the defendant and at para-8 that the Court at Bangalore has jurisdiction to try the suit, but the same has not been considered by the Court below.
10. The learned Counsel further contended that the Court below has proceeded to pass the impugned order/judgment mainly relying upon the provisions of Section 20(a) of the Code of Civil Procedure without considering the provisions of Section 20(c) and explanation of the Code of Civil Procedure. She also contended that the Court below has failed to notice that the provisions of Clause-29 of the terms and conditions of Cancard Visa which states that “the issues may, 8 however, at its option, institute any such suit or proceedings against the Card Holder at any place where the Card Holder resides or carries on business or works for gain or maintains his/her/its account with any branch of the issuer or in the city where the Head Office of the issues is situated”, etc., and hence, the impugned order passed by the Court below is erroneous. Therefore, she sought to set aside the impugned order passed by the trial Court by allowing the appeal.
11. Having heard the learned Counsel for the appellant, the only point that arises for consideration in the present appeal is: “Whether the Court below is justified in returning the plaint to the plaintiff under Order VII Rule 10 of the Code of Civil Procedure with a direction to present the same before the Court having jurisdiction to try the same?. 9 12. I have given my thoughtful consideration to the arguments advanced by the learned Counsel for the appellant and perused the entire material on record carefully.
13. It is the specific case of the plaintiff-bank that the defendant availed the membership of Cancard Visa under its Cancard Scheme which was issued to the defendant by it; that the defendant had agreed to the terms and conditions of the Cancard Scheme and had also signed the agreement; that the plaintiff at Bangalore Office scrutinized the application submitted by the defendant and the said Cancard was issued on 8.3.2006 and therefore, the Court at Bangalore has jurisdiction to try the suit.
14. The specific contention of the defendant in his written statement is that he is the permanent residence of Kolkatta and has used the Cancard in Kolkatta only. Since the Cancard Visa is processed and issued at 10 Burra Bazaar Branch, Kolkatta by the plaintiff- appellant, the Court at Bangalore has no jurisdiction to entertain the case.
15. In view of the rival contentions urged in the plaint and the written statement, it is appropriate to refer the provisions of Section 20 of the Code of Civil Procedure, which reads as under: “20. Other suits to be instituted where defendants reside or cause of action arises- Subject to the limitations aforesaid, every suit shall be instituted in 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 11 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. 1[* * *]. 2[Explanation]..-A corporation shall be deemed to carry on business at its sole or principal office in3[India]. or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.” 16. By a plain reading of Section 20 of the Code of Civil Procedure, it is clear that every suit shall be instituted in a Court within the local limits of whose jurisdiction – the defendant, or each of the defendants, where there are more than one, at the time of the 12 commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carried 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 works for gain, as aforesaid acquiesce in such institution; or the cause of action, wholly or in part, arises. The explanation to the said provisions clearly indicates that a Corporation shall be deemed to carry on business as 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.
17. The scope and principle of the clauses (a), (b) & (c) of Section 20 of CPC., are independent to each other. The principle underlying Section 20(a) and (b) is 13 that the suit to be instituted at the place where defendant can defend the suit without undue trouble.
18. The learned Counsel for the appellant strenuously contended that in view of the provisions of Section 20 of the Code of Civil Procedure, the Court at Bangalore has jurisdiction in terms of the agreement entered into between the parties i.e., clause-29 of the agreement. Though the said agreement was not marked, by perusal of the terms and conditions of the agreement governing Cancard Visa 1994, it makes it clear that the issuer may, however, at its option, institute any such suit or proceedings against the Card holder at any place where the card holder resides or carries on business or works for gain or maintains his/her/its account with any branch of the issuer or in the city where the Head Office of the issuer is situated. 14 19. Even assuming that a contract has been entered into between the parties, the same is again contrary to the provisions of Section 28 of the Indian Contract Act which reads as under: “28. Agreements in restraint of legal proceedings, void - [Every agreement,- (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or b) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent.]. 15 Exception 1 : Saving of contract to refer to arbitration dispute that may arise: This section shall not render illegal contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subject shall be referred to arbitration, and that only the amount awarded in such arbitration shall be recoverable in respect of the dispute so referred. Exception, 2 : Saving of contract to refer questions that have already arisen : Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration. Exception, 3 : Saving of a guarantee agreement of a bank or a financial institution.- This section shall not render illegal a contract in writing by 16 which any bank or financial institution stipulate a term in a gurantee or any agreement making a provision for guarantee for extinguishment of the rights or discharge of any party thereto from any liability under or in respect of such guarantee or agreement on the expiry of a specified period which is not less than one year from the date of occurring or non-occurring of a specified event for extinguishment or discharge of such party from the said liability. Explanation.- (i) In Exception 3, the expression “bank” means- (a) a “ banking company” as defined in clause(c) of section 5 of the Banking Regulation Act, 1949 (10 of 1949). (b) “a corresponding new bank” as defined in clause (da) of section 5 of the Banking 17 Regulation Act, 1949 (10 of 1949); (c) “ State Bank of India” constituted under section 3 of the State Bank of India Act 1955, (23 of 1955) (d) “a subsidiary bank” as defined in clause (k) of section 2 of the State Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959); (e) “a Regional Rural Bank” established under section 3 of the Regional Rural Banks Act,1976 (21 of 1976); (f) “a Co-operative Bank” as defined in clause (cci) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); (g) “a multi-state co-operative bank” as defined in clause (cciiia) of section 5 of the Banking Regulation Act, 1949 (10 of 1949); and 18 (ii) In Exception 3, the expression “a financial institution” means any Public financial institution within the meaning of section 4A of the Companies Act, 1956 (1 of 1956).].
20. In view of the aforesaid provisions of the Indian Contract Act, it is clear that it is not open for the parties by agreement to confer the jurisdiction on any Court which it did not otherwise possess under the provisions of Section 20 of the Code of Civil Procedure. The parties cannot agree to vest jurisdiction in a court which does not have the jurisdiction. Such an agreement would be against the statute and thus, would be hit by the provisions of Sections 23 and 28 of the Indian Contract Act.
21. My view is fortified by the dictum of the Hon’ble Supreme Court in the case of M/s. Patel Roadways Limited –vs- M/s. Prasad Trading Company 19 reported in AIR1992SC1514wherein at paragraphs-9, 12, 13, 14 and 15 it has been held as under: “9. Clauses(a) and (b) of Section 20 inter alia refer to a court within the local limits of whose jurisdiction the defendant inter alia "carries on business". Clause (c) on the other hand refers to a court within the local limits of whose jurisdic- tion the cause of action wholly or in part arises. It has not been urged before us on behalf of the appellant that the cause of action wholly or in part arose in Bombay. Consequently clause (c) is not attracted to the facts of these cases. What has been urged with the aid of the Explanation to Section 20 of the Code is that since the appellant has its principal office in Bombay it shall be deemed to carry on business at Bombay and consequently the courts at Bombay will also have jurisdiction. On a plain reading of the Explanation to Section 20 of the Code we find an apparent fallacy 20 in the aforesaid argument. The Explanation is in two parts, one before the word "or" occurring between the words "office in India" and the words "in respect of" and the other thereafter. The Explanation applies to a defendant which is a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will "be deemed to carry on business" at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a princi- pal office at one 21 place and has also a subordinate office at another place. The words "at such place" occurring at the end of the Explanation and the word "or" referred to above which is disjunctive clearly suggest that if the ease falls within the latter part of the Explanation it is not the Court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office". “12. We would also like to add that the interpretation sought to be placed by the appellant on the provision in question renders the explanation totally redundant. If the intention of the legislature was, as is said on their behalf, that a suit against a corporation could be instituted either at the place of its sole or principal office (whether or 22 not the corporation carries on business at that place) or at any other place where the cause of action arises, the provisions of clauses (a), (b) and (c) together with the first .part of the explanation would have completely achieved the purpose. Indeed the effect would have been wider. The suit could have been instituted at the place of the principal office because of the situation of such office (whether or not any actual business was carried on there). Alternatively, a suit could have been instituted at the place where the cause of action arose under clause (c) (irrespective of whether the corporation had a subordinate office in such place or not). This was, Therefore, not the purpose of the explanation. The explanation is really an explanation to clause (a). It is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry on business. This, it is clarified, will be the place where the 23 principal office is situated (whether or not any business actually is carried on there) or the place where a business is carried on giving rise to a cause of action (even though the principal office of the corporation is not located there) so long as there is a subordinate office of the corporation situated at such place. The linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that, in the case of a corporation, for the purposes of clause (a), the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. If the intention was that the location of the sole or principal office as well as the location of the subordinate office (within the limits of which a cause of action arises) are to be deemed to be places where the corporation is deemed 24 to be carrying on business, the disjunctive "or" will not be there. Instead, the second part of the explanation would have read "and in respect of any cause of action arising at any place where it has a subordinate office, also at such place".
13. As far as we can see the interpretation which we have placed on this section does not create any practical or undue difficulties or disadvantage either to the plaintiff or a defendant corporation. It is true that, normally, under clauses (a) to (c), the plaintiff has a choice of forum and cannot be compelled to go to the place of residence or business of the corporation and can file a suit at a place where the cause of action arises. If a corporation desires to be protected from being dragged into litigation at some place merely because a cause of action arises there it can save itself from such a situation by an exclusion clause as has 25 been done in the present case. The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship if, in spite of the corporation having a subordinate office at the place where the cause of action arises (with which in all probability the plaintiff has had dealings), such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation's place of business, not an additional one.
14. There may be only one extra- ordinary situation in which this 26 interpretation may cause an apparent anomaly. This is where the plaintiff has also his/its place of business at the same place as the corporation but the cause of action has arisen at some other place. The above interpretation would preclude him from filing a suit in that place of business common to both parties and compel him to go to a court having jurisdiction over the place where the cause of action has arisen. But this is not really a hardship because such plaintiff must have had some nexus or connection with the place since some part of the cause of action had arisen there; if he can have dealings with the corporation at such a place giving rise to the cause of action, there is no reason why he should find it disadvantageous or difficult to file a suit at such place. Equally, the corporation, having a subordinate office at the place, will suffer no disadvantage. 27 15. In this view of the matter since in the instant two cases clause (c) is not attracted to confer jurisdiction on courts at Bombay and the appellant has admittedly its subordinate offices at the respective places where the goods in these two cases were delivered to it for purpose of trans- port the courts at Bombay had no jurisdiction at all to entertain the suits filed by the respondents and the parties could not confer jurisdiction on the courts at Bombay by an agreement. Accordingly no exception can be taken to the findings in this behalf recorded by the trial court and the High Court in these two cases.” 22. The contention of the learned Counsel for the appellant that in view of clause (c) of Section 20 of the Code of Civil Procedure that, the Court at Bangalore had jurisdiction to entertain a suit, cannot be accepted. To explain the meaning of ‘cause of action’ under Section 20(c) of the Code of Civil Procedure ‘Cause of 28 action’ consists of bundle of facts which give cause to enforce the legal injuries for redress in a court of law. The 'cause of action' means, therefore, every fact, which if traversed, 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 facts which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendants. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise.
23. Admittedly in the present case, even assuming that the cause of action arises as alleged in the plaint, the plaintiff has not produced any material document to show that some act done by the defendant at Bangalore. In the written statement, it is specifically contended that the defendant is permanent resident of Kolkatta, who used Cancard in Kolkatta only and there 29 are branches of plaintiff-bank in Kolkatta and Cancard of the defendant was processed and issued by the plaintiff-bank at Kolkatta and that the defendant has not done any act at Bangalore and therefore, there is no cause of action for the suit at Bangalore. In view of the same, the plaintiff has not produced any material document to show that the cause of action arose for the plaintiff at Bangalore. Therefore, this Court is of the view that the contention of the plaintiff-appellant cannot be accepted, in view of the dictum of the Hon’ble Supreme Court in the case of Board of Trustees, Calcutta Port –vs- Bombay Flour Mills Pvt. Ltd. reported in AIR1995SC576wherein at para-4 it has been held as under:
4. It is seen that the cause of action had arisen at Calcutta when the goods were imported and they were unloaded at Shed No.3, Netaji Subhas Docks of the appellant and the liability of payment had also arisen and on its 30 failure to clear the goods the respondent instituted the suit in District Court at Bharatpur, Rajasthan. No part of the cause of action arose at Bharatpur. The appellant's office is at Calcutta. Under s.20 CPC the only court competent to take cognizance of the action is the appropriate court at Calcutta. The order passed by the District Court, Bharatpur in the suit filed by the respondent, is without jurisdiction and is void. when the appellant approached the High Court it has dismissed the case. Therefore High Court has committed manifest error of law in refusing to interface with such an obviously illegal and void order. Therefore, the impugned order passed by the High Court of Rajasthan and district Court, Bharatpur are set aside. The appeal is accordingly allowed. No costs as none appears in the court.
24. The Trial Court considering the entire material on record has recorded a finding of fact that it 31 is not in dispute that the defendant is residing at Kolkatta; that P.W.1 had admitted in his cross- examination that the Cancard has been handed over to the defendant at Kolkatta; Ex.P.1 – application for Cancard Visa clearly indicates that the same was issued at Burra Bazaar Branch, Kolkatta; that the entire transaction has taken place at Kolkatta. Merely because the plaintiff – bank has got branch at Bangalore, it does not give right to the plaintiff-bank to institute suit at Bangalore. The plaintiff has not produced any material before the Court to show that the transaction between the plaintiff and defendant has taken place in Bangalore. In view of clear provisions of Section 20 of the Code of Civil Procedure, it has held that the plaintiff cannot maintain a suit before that Court and that Court has no jurisdiction to entertain and try the suit. Therefore, the trial Court by impugned order has returned the plaint to the plaintiff under Order 7 Rule 10 of the Code of Civil Procedure with a 32 direction to present the same before the Court having jurisdiction to try the same. The same is in accordance with law and accordingly, the point raised in the appeal is answered in the affirmative.
25. The appellant has not made out any ground to interfere with the impugned order passed by the trial Court in exercise of the power of appellate jurisdiction under Order 43 Rule 1(a) of the Code of Civil Procedure, 1908. Accordingly, Miscellaneous First Appeal is dismissed. Nsu/- Sd/- Judge