PREMCHAND ROYCHAND Vs. MOTI LALL AGARWALA

JUDGEMENT

(1.) FACTS . -Premchand Roychand and Sons (plaintiffs) were share -brokers and members of the Native Share and Stock Brokers' Association in Bombay. One Moti Lall (defendant) was a share -broker in Delhi. There were communications between the plaintiffs and the defendant beginning from 6 -9 -1946, in regard to the purchase by the defendant of 110 shares and they culminated in an agreement for sale by the plaintiffs to the defendant of 110 shares at the rate of Rs. 310 per share on 4 -10 -1946. The transfer books of the company were to be closed on 17 -10 -1946, and the defendant was obviously desirous that the shares purchased by him should be transferred to the names of his purchasers before the transfer books were thus closed, so that there would be no difficulty in the matter of the purchasers acquiring the bonus shares which were about to be issued by the company. He therefore addressed on 4 -10 -1946, a letter to the plaintiffs asking them to send the share certificates and the transfer forma immediately to him to enable his purchasers to get the shares transferred to their several names by the 15th idem. He stated that in that event he would be retiring the draft drawn by the plaintiffs against the shares promptly. He proceeded to state however that if those shares were not delivered to him in time, his purchasers would accept delivery of the same along with the bonus shares. The plaintiffs replied on 8 -10 -1946, intimating to the defendant that he should arrange to have the shares transferred to his purchasers' names before the closing of the transfer books of the company so that there would be no question of refunding the dividend and delivering the bonus shares to the purchasers in case of non -registration of the shares in time. The plaintiffs had sold these shares to the defendant as if they were their own shares though in fact they were shares belonging to Sir Kikabhai Premchand Trust Funds. These shares were deposited for safe custody with the Bank of India, Ltd., and on 8 -10 -1946, the plaintiffs sent instructions to the Bank of India, Ltd., to hand over these shares to the National Bank of India, Ltd., through whom they drew a draft on the defendant for the price thereof. The National Bank of India, Ltd., drew the relative draft on 10 -10 -1946, and these shares did not reach Delhi till about 14 -10 -1946, with the result that the defendant found it difficult to have the shares transferred to the names of his purchasers before the transfer books of the company were closed and to retire the draft which had been drawn by the plaintiffs on him for the price thereof. Communications were exchanged between the plaintiffs and the defendant in the course of which the plaintiffs insisted upon the defendant taking delivery of the shares and retiring the draft immediately. The defendant, however, kept on suggesting to the plaintiffs that the plaintiffs should draw upon him a draft for the price of the shares after receipt of the bonus shares and his purchasers would in that event accept delivery of both the main and the bonus shares and he would arrange to retire the draft. The plaintiffs, however, would have nothing to do with that suggestion and the only thing which they had to say in their communications dated 17 -10 -1946, and 18 -10 -1946, was that the draft which they had drawn against the defendant should be retired immediately, that they would send the bonus shares and the dividend on receipt thereof from the company, and that if the draft was not retired, they would sell the shares at the best rate available in the market. The same position was reiterated on 21 -10 -1946, also. The plaintiffs, however, on the same day made an alternative suggestion to the defendant that if the defendant was not agreeable to adopt that course the plaintiffs would ask the bank to return the draft and draw again when the bonus shares were ready, but that they would charge the defendant interest at the rate of 6 per cent. till delivery was taken by him. This was the stand taken up by them consistently throughout the correspondence which followed. Their letter dated 21 -11 -1946, also reiterated their demand for interest in the said alternative event, and as a matter of fact in the statement of account which they furnished to the defendant along with their attorneys' letter dated 19 -5 -1947, they in fact included interest at 6 per cent. per annum on the price of these shares from 15 -10 -1946, up to 15 -5 -1947. The defendant did not send any reply to the communication which had been addressed by the plaintiffs to him on 21 -10 -1946, but persisted in the attitude which he had taken up that it would only be on the receipt of the main shares and the bonus shares by him that he would retire the draft which the plaintiffs were to draw upon him for the price thereof. These were the respective stands taken up by both the parties from and after 21 -10 -1946. The communications which were exchanged between the parties in November 1946, December 1946 and the later dates did not make any difference to the position. Even though the plaintiffs in November 1946 and December 1946 stated that they would draw upon the defendant for the full price of the shares as against the main shares and the bonus shares which would be delivered by them after the bonus shares were received, they really meant to include in the full price the interest at 6 per cent. which they had intimated earlier they would charge the defendant. As a matter of fact the defendant protested against the plaintiffs claiming interest in this manner in his letter dated 10 -12 -1946, where he stated:

(2.) COUNSEL for the plaintiffs, however, argued that this was a case not under the Civil Procedure Code, but under clause 12, Letters Patent, and what the Court had got to consider was not where the contract was made but whether a part of the cause of action had in fact arisen in Bombay. He contended that even though ordinarily a contract could be said to have been made in the place where the offer was accepted, there was a difference which obtained when you came to consider whether a part of the cause of action in a suit on contract did arise within jurisdiction. He relied upon the observations of Fulton J., in Dobson and Barlow v. Bengal Spinning and Weaving Co., 21 Bom. 126 where the learned Judge observed (p. 134):

(3.) I have therefore come to the conclusion that no part of the cause of action arose in Bombay, and even with leave under Clause 12, Letters Patent, which the plaintiffs obtained from this Court this Court has no jurisdiction to entertain this suit against the defendant, the defendant having all along resided and carried on business in Delhi, the contract having been made in Delhi by reason of the acceptance of the offer by his telegram dated 4 -10 -1946, in Delhi, and the breach thereof as I will state hereafter having also taken place in Delhi. The fact that the plaintiffs attempted to sell and did sell these shares in Bombay on 14 -6 -1947, is a matter of no consequence The resale also was as I will state hereafter not binding on the defendant and it would not afford to the plaintiffs any cause of action which they could ventilate against the defendant in this Court. [The rest of the judgment is not material for purposes of reporting - Ed.] Appeal dismissed.