Magnum International Trading ... vs Export Credit Guarantee ...
2000 Latest Caselaw 1110 Del

JUDGMENT

S.K. Agarwal, J.

1. This order will dispose of the preliminary objection raised by the learned counsel for defendant that the suit is liable to be rejected as no part of the cause of action wholly or in part arose within the territorial jurisdiction of this court.

2. Brief facts are : that the plaintiff filed a suit for recovery of Rs. 2,71,18,467/- against the defendant alleging therein that the plaintiff is engaged in the business of export. The plaintiff secured an export order dated 11th August, 1988 from "SUDOIMPORT, Moscow, for supply of vessels from July 1990 to March, 1991. For executing this order the plaintiff placed two separate orders dated 20.8.88 with a format "Singapore" which was to design the equipment, partially build 6 vessels under the contract and to deliver unfinished/incomplete vessels in India between January, 1990 to September, 1990. The payments for this were to be made at different stages. The defendant- Government of India Undertaking, incorporated under the Ministry of Finance, was operating a scheme providing Exchange Fluctuation Risk Cover (for shor EFRC) in respect of certain export transactions. The plaintiff vide its letter dated 10.10.88 applied to defendant for grant of EFRC for any fluctuation in the value of US Dollars in terms of Indian Rupee to check against any loss on this account under its contract with the firm at Singapore.

3. The defendant vide its letter dated January 18, 1989 offered to the plaintiff to provide EFRC against the premium of Rs. 41,77,748/- . Copy of the statement on the basis of which premium was worked out and copy of the proposed agreement to be executed containing terms and conditions was also enclosed with the letter. This offer was valid only for 30 days.

4. The plaintiff by its letter dated 30th January, 1989 to the defendant intimated its acceptance and requested for EFRC and cheque for Rs. 41,77,748/- towards premium was also sent. It is alleged that the plaintiff suffered losses and lodged the claim with defendant under EFRC. The defendants only paid part of the claim and the suit amount is claimed to still due and payable by the defendant.

5. Defendants have filled the written statement inter alia denying their liability also raised the preliminary objection that this court has no jurisdiction to entertain and dispose of this suit; that the agreement dated 28th March, 1989 on which the suit is based was executed at Bombay, the consideration for the contract was paid and received at Bombay and performance of the contract was to be at Bombay. Plaintiffs filed the replication denying the averments made in the written statement pleading that this court has the jurisdiction to entertain and dispose of this suit.

6. I have heard the learned counsel for the parties and have been taken through the record.

7. Learned counsel for the defendant argued that bare reading of the agreement dated 28th March, 1989 between the parties reveals that the agreement was made at Bombay, the consideration of the contract was made and received at Bombay and the acceptance of the contract was also at Bombay therefore, this Court has no territorial jurisdiction to entertain and dispose of the suit. Learned counsel for the plaintiff argued to the contrary. In order to appreciate the rival contentions it is necessary to refer to some of the correspondence exchanged between the parties.

8. On 18th January, 1989, Manager of the defendant company wrote a letter to the plaintiff company referring to their proposal dated 10th October, 1988 for grant of EFRC offering to provide the same on the terms and conditions set out in the EFRC agreement. The letter reads:-

"Dear Sirs,

Re : Your proposal dated 10.10.1988 for Exchange Fluctuation Risk Cover -Export Linked Imports.

Please refer your letter No. 2603/88 dated 28.12.88 on the subject.

We have gone through your proposal dated 10.10.88 for issue of Exchange Fluctuation Risk Cover Agreement for Export Linked Import Contract. We are pleased to offer you cover on the terms and conditions set out in the Exchange Fluctuation Risk Cover Agreement which we presume you have read. The reference rate fixed under the agreement for the purpose of calculating the amount of loss or gains shall be US $ 6.665 per Rs. 100/-Details of our cover are given in the enclosed premium calculation sheet."

Please note that this offer is valid for a period of 30 days only from the date of this letter and is subject to withdrawal or amendment at any time before the agreement is issued.

If your accept the offer, please write to us accordingly, alongwith the premium of Rs. 41,77,748/- and a 'Letter of Authority' to your bankers in duplicate as per specimen enclosed duly completed by you and counter signed by them. On receipt of your letter, accepting the terms of cover, premium and the Letter of Authority, as mentioned above, the agreement shall be issued."

Signed

In response to the above letter of the defendants the plaintiff from Delhi wrote a letter on 30th January, 1989 indicating their acceptance and sent a cheque of Rs. 41,77,748/- towards the premium requesting that necessary EFRC may be issued as per the exchange rates prevalent on 19th August, 1988. The letter reads:-

BY REGISTERED A/D

Ref. No. 2622/89 January 30, 1989

Export Credit Guarantee Corporation of India Limited Dalamal House

206, Jamnalal Bajaj Bajaj Marg Nariman Point Bombay-400021

ATTN : Mr.J.PArora, Manager

Dear Sir,

SUB : EXCHANGE FLUCTUATION RISK COVER - EXPORT LINKED IMPORTS

We have.....

We are accepting your offer with the undermentioned reservations and enclose our cheque of Rs. 41,77,748/- as premium as worked out by you and letter of authority to our bankers in duplicable as per draft given by you duly counter signed by them.

xxxxx

Thanking you,

Yours Cordially,

for Magnum Int'I Trading Co. P. Ltd.

(Director)

Encl : Cheque for Rs. 41,77,748/-

On 10th April 1989, Assistant Manager of the defendant company sent two sets of EFRC agreement dated 28th March, 1989 in respect of the export linked import transactions requiring the plaintiffs to retain the original sets and to return a duly signed copy thereof to them which reads:-

10th April, 1989

M/s. Magnum International Trading Co. Pvt. Ltd. 48/1, Commercial Centre Malchal Marg, Chanakyapuri, New Delhi -110021.

REGISTERED A.D.

"Dear Sirs,

Re : Exchange Fluctuation Risk Cover Agreement No. EFR:ELI:01:89 dated 28.31989 for Export linked Import Transaction

Please refer your telex No. Nil dated 3.4.89 on the subject.

We are pleased to enclose herewith two sets of Agreements No. No. EFR:ELI:0l:89 dated 28.3.1989 in respect of your export linked import transaction. You may retain the original agreement and return the copy to us duly signed. The premium of Rs. 41,77,748/- remitted by you has been adjusted towards issue of the above agreement.

Thankingyou,

Yours faithfully,"

(M.RAMAKRISHNAN ASSISTANT MANAGER)

ENCL : a.a

9. Learned counsel for defendant in support of his contention placed reliance on the observations made by the Supreme Court in Rhagwan das Goverdhandas Kedia v. Girdharlal Parshottamdas and Co, and Ors., , that mere making of offer does not form part of cause of action. There cannot be any dispute to this preposition, but the facts here are quite different. As per the settled law the jurisdiction of the court in the matter of contract will depend upon the situs of the contract, Supreme Court in A.B.C. Laminart Pvt. Ltd. and Anr. v. A.P. Agencies, held:-

"15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its berach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause fo action. A suit on a the contract therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not from cause of action in a suit for damages for breach of contract. Ordinarily acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated."

10. In this case letter dated 18th January, 1989 written by the defendant clearly shows that the defendant offered to the plaintiff to provide EFRC against exchange fluctuation risk subject to the terms and conditions set out in the letter. This offer was accepted by the plaintiff by their letter dated 30th January, 1989 from Delhi. A cheque of Rs. 41,77,748/- as premium worked out by/the defendants was also sent from Delhi, There is ho dispute about this. Thereafter on 10th April, 1989 two sets of agreement dated 28th March, 1989 were sent by the defendant from Bombay to Delhi asking the plaintiff to Keep the original with them at Delhi and send duly signed one copy back to Bombay. Bare reading of the letter dated 18.1.89 shows that the defendants had offered to provide to the plaintiffs EFRC as per the terms and conditions contained in Agreement. The plaintiffs accepted the offer of the defendants subject to certain reservations and also sent cheque in the sum of Rs. 41,77,748 towards the premium. The agreement dated 28th March, 1989 was got prepared at Bombay and was sent by the defendant from Bombay to Delhi and the same was signed by the plaintiff in Delhi, thus even execution of the contract was completed in Delhi. Therefore, it cannot be said that no part of cause of action had arisen in Delhi. Section 20(c) of CPC itself provides every suit shall be instituted in a court within local limits of whose jurisdiction the cause of action wholly or in part arises.

11. For the foregoing reason, I am of the considered view that part of cause of action arose at Delhi and this court has the territorial jurisdiction to try the suit.