BANK OF INDIA, LTD Vs. RUSTOM FAKIRJI COWASJEE

JUDGEMENT

(1.) HIS Lordship, after stating the facts and the contentions of the parties, proceeded.] A number of issues were raised on behalf of the defendant. Although none of them have been given up, it is clear that the case of estoppel pleaded in the original written statement has lost its importance since the defendant has not been examined and there is no evidence on which that plea can be seriously supported. The principal questions that arise for my determination are those relating to jurisdiction, consequences of non -presentment of the promissory note for payment and the question whether the defendant has been discharged from his liability as guarantor by any act or omission or conduct of the plaintiffs bank.

(2.) IT was argued that a part of the plaintiffs' cause of action in this suit arose out side the jurisdiction of this Court, and since no leave had been obtained under Clause XII of the Letters Patent for filing this suit, this Court has no jurisdiction to entertain and try this suit. It was stressed that the promissory note and the continuity letter were signed by the defendant, not in Bombay but at Delhi, and that fact constituted a part of the cause of action of the plaintiffs bank. This argument was on the assumption that the suit was founded simply on these two documents and was a suit to hold the defendant liable simply as the maker of the promissory note. Now, as I have already observed, the suit is to enforce a claim against the defendant as a surety. The contract of guarantee -which is always a tripartite agreement -took place when along with the airline company's letter of June 5, 1947, a copy of the resolution, the promissory note, and the continuity letter were handed over to the plaintiffs bank. This was in Bombay. Moreover, all these documents purport to have been executed or made in Bombay. This is not a suit on a promissory note simpliciter. The position, in my opinion, is different in a transaction of guarantee. I a promissory note and a continuity letter are given as security by way of guarantee for repayment of a loan to a third party as part of the tripartite agreement, the contract of guarantee takes place where the guarantor gives his promise to perform the obligation or discharge the liability of the third person in case a default is made. The question that the Court puts to itself in such a case is : Where did the defendant (guarantor) agree with the plaintiff (creditor) to perform the promise or discharge the liability of the third party (principal debtor)? On the evidence before me it is clear that the defendant handed over the promissory note to Vijay singh Govindji at Delhi and constituted him his agent to hand over the promissory note and the continuity letter to the airline company who after endorsing these documents handed over the same to the plaintiffs bank in Bombay. Therefore, in any view of the matter, the defendant's promise of guarantee to the plaintiffs bank to discharge the liability of the airline company was made in Bombay and not at Delhi. It is the place where this promise was made that can be said to be the place where that part of the plaintiffs' cause of action arose. So much for the place where the promise of guarantee was made. Indisputably the place of performance of the entire contract was Bombay. For all these reasons I am unable to accept the contention that a part of the plaintiffs' cause of action in suit had arisen outside the jurisdiction of this Court.

(3.) REFERENCE was made in the judgment to an earlier decision of the same Court where a similar view had been expressed. Reference was also made in the judgment of the learned Chief Justice to two other decisions as supporting the principle that 'a contract is binding on the promisor in the sense in which he intended, at the time of making it, that it should be received by the promises.' It was argued by Mr. Kolah on behalf of the defendant that the Madras decision only lays down that when a promissory note purports to have been made at a particular place only a presumption arises that it was made at that place, which presumption it was said can be rebutted by evidence showing that it was in fact made at some other place. I do not agree that this is the ratio decidendi of the Madras decision. The decision goes much further than that and lays down the proposition that a contract is binding on the promisor in the sense in which he intended at the time of making it that it should be received by the promises. I am in respectful agreement with this view expressed by Sir Subramaniam Iyer. I do not, however, intend to be understood to say that it is open to the parties to a contract, which is being executed by both of them in one place, to say that the contract shall be deemed to have been made in some other place; for that may well have the effect of an attempt to confer jurisdiction on some other Court which it otherwise would not have. But no such question arises in the present case. So, even if this is to be regarded as a case in which the cause of action was the promissory note, the whole cause of action was in Bombay and the plea of absence of jurisdiction must fail.