Indo Gulf Industries Ltd. vs U.P. State Industries ...
2003 Latest Caselaw 382 Del

JUDGMENT

Vikramajit Sen, J.

1. In respect of this Suit for the grant of a declaration and mandatory injunction and for the recovery of compensation of Rs. 81,40,000/-, two Preliminary Objections have been raised which I propose to dispose off by these Orders. The first assault to the consideration of the Suit is that this Court ought not to exercise territorial jurisdiction over the dispute. The second challenge is that the Suit is barred by limitation and, therefore, deserves to be dismissed.

2. The contention of Mr. P.N. Lekhi, learned senior counsel for the Plaintiff, is that these Preliminary Objections are what he terms in his inimitable style as 'defense oriented', in that the averments in the Written Statement would have to be necessarily considered in some detail before the question can be decided. He rightly contends that at this stage of the proceedings the Plaint should primarily be looked at. He has contended that on a perusal of paragraphs 21 and 22 of the Plaint it will be palpably clear that this Court has territorial jurisdiction over the dispute since the Order dated 26.5.1984, which is the pivotal event in this Suit, was received by the Plaintiff in Delhi. It is his submission that the acceptance was made at Delhi and, therefore, the whole cause of action has arisen in territories over which this Court holds sway.

3. Mr. Sandeep Aggarwal, learned counsel for Defendant No. 2, has countered these arguments with vehemence. He has drawn attention to the fact that the situs of Defendant No. 1 is Kanpur and of Defendants No. 2 and 3 is Lucknow. Whilst Defendant No. 4 is located in Delhi, paragraph 62 of the Plaint specifically avers that it is a proforma party and no relief is claimed against it. It is further contended by him that the prayers in the Plaint relate to immovable property located in Jhansi, Uttar Pradesh and, therefore, this Court ought not to exercise jurisdiction over such a dispute. He also argues that the documents by which the rights of the Plaintiff came into existence is the allotment letter dated 26.5.1984 which was issued by Defendant No. 3 to Defendant No. 1. Accordingly, the cause of action has not arisen in Delhi. He has further contended that even if the Plaintiff's acceptance was issued in Delhi, the contract would be complete only on this communication reaching these Defendants, both of whom are outside Delhi. Attention has also been drawn by him to the fact that the Plaintiff had previously filed a Writ Petition in this Court bearing Writ Petition No. 3131/1996 which has been dismissed for want of territorial jurisdiction.

4. The following reliefs have been prayed for in the Plaint and they need to be reproduced in extensio since the decision on both the preliminary Issues rests on their careful construction.

"1. It is therefore most humbly PRAYED that this Hon'ble Court may be pleased to declare that Defendants Nos.1, 2 and 3 have acted in violation of Government Order No. 4260 Bha-V/xviii-11/221, Bha-78 dated 26.5.1984 as they have failed to determine and assess the economic rent in accordance with the said Government Order and the legitimate expectation arising out of the said Government Order stand frustrated and also be pleased to declare the demand for the Economic Rent as communicated by Defendant No. 1 vide its letters No. 4336 dated 22.7.1996 and Notice No. 1344 dated 22.7.1996 is not only contrary to the said Government Order dated 26.5.1984 but also contrary to the assurances, promises and representations held out by the said Defendants Nos.1, 2 and 3 and further declare that no further market value in excess to the market value assessed by the Collector, Jhansi can be claimed in respect of 50 acres of land on which the plant of the Plaintiffs is situated and also declare that no interest is consequently payable either on the Economic Rent or market value by the Plaintiffs as demanded by the said Defendant No. 1. AND

2. Consequently this Hon'ble Court may be further pleased to declare that the market value of 50 acres of land having already been paid, there is no balance due in respect of the said area of land either by way of premium or market value. AND

3. The Hon'ble Court may also be pleased to direct Defendants No. 1, 2 and 3 to fix the Economic Rent not only in consonance with the promises, assurances and representations held out but also in accordance with the terms and conditions contained in the Government Order No. 4260 Bha-V/xviii-11/121 Bha-78 dated 26.5.1984 and may be further pleased to issue a permanent injunction in favor of Plaintiffs and against Defendants Nos. 1, 2 and 3 not to interfere with the peaceful enjoyment and possession of the Plaintiffs of 706 acres of land situated in Village Sukhwa, Koti, Pritipura and Naya Kahera, Pargana and Tehsil Jhansi, District Jhansi, Uttar Pradesh on which the Plaintiffs have set up the Plant to manufacture Industrial Explosive. AND

4. This Hon'ble Court may further pleased to declare that the Plaintiffs have suffered a loss of Rs. 81,40,000.00 (Rupees eighty one lakh forty thousand only) because of the failure on the part of Defendants Nos. 1, 2 and 3 to take steps to fix the Economic Rent and to execute the Lease Deed in respect of 50 acres of land whereby the Plaintiffs were disabled to mortgage the land and the plant and the machinery as security for the loan advances by the Defendant No. 4 and other financial institutions to the Plaintiffs. AND

5. To pass a decree for a sum of Rs. 81,40,000.00/- (Rupees eight one lakh forty thousand only) in favor of the Plaintiffs and against the Defendants Nos. 1, 2 and 3 to compensate the Plaintiffs because of the default of the said Defendants together with interest on the aforesaid amount at the rate of 18 % per annum from the date of the filing of this Suit till the date of realisation.

6. Award the cost of this Suit in favor of the Plaintiffs and against the Defendants Nos. 1, 2 and 3. AND

7. Pass such other further Orders/Directions which this Hon'ble Court may deem fit and proper in favor of the Plaintiffs and against the Defendants."

5. Sections 16 and 20 of the C.P.C. are re-produced for facility of reference:-

" 16. Suits to be instituted where subject-matter situate.-- Subject to the pecuniary or other limitations prescribed by any law, suits,--

(a) for the recovery of immovable property with or without rent or profits,

(b) for the partition of immovable property,

(c) for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property,

(d) for the determination of any other right to or interest in immovable property,

(e) for compensation for wrong to immovable property,

(f) for the recovery of movable property actually under distraint or attachment, shall be instituted in the Court within the local limits of whose jurisdiction the property is situate:

Provided that a suit to obtain relief respecting, or compensation for wrong to, immovable property held by or on behalf of the defendant may, where the relief sought can be entirely obtained through his personal obedience, be instituted either in the Court within the local limits of whose jurisdiction the property is situate, or in the Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides, or carries on business, or personally works for gain.

Explanation.-- In this section " property" means property situate in [India].

......

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 a 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 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.

Explanation -- A corporation shall be deemed to carry on business at 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."

6. Sections 4 and 5 of the Indian Contract Act read thus:

"4. Communication when complete.-- The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete, --

as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor;

The communication of a revocation is complete, --

as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it;

as against the person to whom it is made, when it comes to his knowledge .

Illustrations

(a) A proposes, by letter, to sell a house to B at a certain price.

The communication of the propose is complete when B receives the letter.

(b) B accepts A's proposal by a letter sent by post.

The communication of the acceptance is complete.

as against A when the letter is posted;

as against B when the letter is received by A.

(c) revokes his proposal by telegram.

The revocation is complete as against A when the telegram is dispatched. It is complete as against B when B receives it.

B revokes his acceptance by telegram. B's revocation is complete as against B when the telegram is dispatched, and as against A when it reaches him.

5. Revocation of Proposals and acceptance. -- A proposal may be revoked at any time before the communication of its acceptance is complete as against the proposer, but not afterwards.

An acceptance may be revoked at any time before the communication of the acceptance is complete as against the acceptor, but not afterwards.

Illustrations

A proposes, by a letter sent by post, to sell his house to B.

B accepts the proposal by a letter sent by post.

A may revoke his proposal at any time before or at the moment when B posts his letter of acceptance, but not afterwards.

B may revoke his acceptance at any time before or at the moment when the letter communicating it reaches A, but not afterwards."

7. On facts, the question to be answered is whether it is correct to assert that the contract in question came into being in Delhi. Mr. Lekhi's argument is so predicated, and he has argued that consequently Section 20 is clearly attracted. As has been seen the Government Order dated 26.5.1984 ubiquitously referred to in the plaint, was exchanged between two governmental organisations located in the State of Uttar Pradesh, in which there is no mention of the Petitioner although the offer made to the Plaintiff emanates there from. Trite as it my be to state the cause of action comprises a bundle of facts. This aspect must always be kept in mind. While dealing with this essential feature the Plaintiff has given a virtual history in paragraph 60 of the plaint. Remarkably, this narration commences with events in 1980. The Apex Court has repeatedly directed that it is the Courts duty to read pleadings in a holistic rather than pedantic manner. When so done it would be apparent that the Plaintiff's grievance is founded on the notices dated 27.2.1996 and 22.7.1996. As pleaded in the last sentence of this extraordinary lengthy paragraph, "the cause of action finally arose on 21.8.1998 when Defendant No. 1 again threaten recovery of its illegal demand and re-entry." In the event, this is a double-edged weapon since it my save the Plaintiff against the assault on grounds of limitation but may force him to succumb to the objection on the absence of territorial jurisdiction of this Court.

8. Mr. Aggarwal has emphasised the objection taken by Defendant No. 1, (which was not represented during the arguments) in its Written Statement that CW No. 3131 of 1996, has been dismissed on the grounds that this Court does not possess territorial jurisdiction over the dispute. The relevant portions of the Order dated 21st January, 1999 reads thus-

" It is noteworthy that the land in question is situate in the State of Uttar Pradesh. The agreement dated December 17, 1984 in regard to the allotment of land was executed by and between the first respondent and the first petitioner in the state of U.P. The Order dated May 26, 1984 by virtue of which the second respondent accorded permission to the first petitioner to set up an industrial unit was also passed in the State of U.P. It is also disputed that the industrial unit has been constructed by the petitioners on the land in question in the State of Uttar Pradesh. Therefore the cause of action, if any, has mainly and substantially arisen in the State of Uttar Pradesh. The factors that the registered office of the first petitioner is in Delhi and the impugned communications were sent to the registered office merely determine the location of the first petitioner, but it does not detract from the fact that the failure to comply with the impugned communications has consequence at a place where the land is located and where the factory has been set up. This is clear from the impugned communication dated February 27, 1996 which required the first petitioner to pay Rs. 53,00,739.90 as economic rent due up to January 1, 1996 and Rs. 31,80,383.64 as interest due on economic rent in respect of 50 acres of land situate at Jhansi , failing which face the consequence of ouster there from. In the circumstances, this Court can not assume jurisdiction under Article 226 of the Constitution.

In Sector Twenty One owners Welfare Association vs. Air Force Naval Housing Board & Ors. , a Division Bench of this Court relying upon the various judgments held that a trivial or insignificant part of the cause of action arising at a particular place would not be enough to confer writ jurisdiction on the court to entertain the lis. The Division Bench noticed from the various decisions that the emphasis had shifted from the residence or location of the person or authority sought to be proceeded against to the situs of the accrual of cause of action wholly or in part. In this regard, it held as follows :-

"13. The law as reflected by the above-said decisions is that the emphasis has shifted from the residence or location of the person or authority sought to be proceeded against to the situs of the accrual of cause of action wholly or in part. It is also clear that a trivial or insignificant part of the cause of action arising at a particular place would be not enough to confer writ jurisdiction; it is the cause of action mainly and substantially arising at a place which would be determinating action mainly and substantially arising at a place which would be determinating factor of territorial jurisdiction. So also it shall have to be kept in view who are the real persons or authorities sought to be proceeded against or against whom the writ to be issued by the Court would run. Joining to proforma or anciliary parties and certainly not the joining of unnecessary parties, would be relevant for the purposes of Article 226(1).

14. Reverting back to the case at hand, it is clear that the cause of action has wholly arisen in NOIDA within the State of U.P. The principal and substantial grievance of the petitioner-association is against the respondents No. 2 and 3 though incidentally, the respondent No. 1 may also be required to be bound by the writ. The reverse is not correct. The writ, if any, to be issued by the Court would not serve any purpose if issued against respondent No. 1 alone. In the matter of registration of the sale deed-cum-sub-lease deed merely because a document can be registered at Delhi by virtue of Section 30(2) of the Registration Act, territorial jurisdiction in the Courts at Delhi cannot be inferred. Moreover, the petitioner-association is already having some litigation before the Courts of U.P. And at one point of time the Delhi High Court had declined to entertain the petitioner-association's writ for want of territorial jurisdiction in Delhi."

In O.N.G.C. vs. Utpal Kumar Basi and others, , where certain works were to be executed in the State of Gujarat, the advertisement inviting tenders was published in the Times of India, which was read by the contractor at Calcutta, the contractor submitted the offer from Calcutta, made representation from Calcutta, received a reply at Calcutta and challenged the action of ONGC in rejecting its tender before the Calcutta High Court by way of a writ petitioner which was entertained by the High Court, the Supreme Court held that the Calcutta High Court had no jurisdiction to deal with the matter. While setting aside the decision of the Calcutta High Court, the Supreme Court observed as follows:-

8. From the facts pleaded in the writ petition, it is clear that NICCO invoked the jurisdiction of the Calcutta High Court on the plea that a part of the cause of action had arisen within its territorial jurisdiction. According to NICCO, it became aware of the contract proposed to be given by ONGC on reading the advertisement which appeared in the Times of India at Calcutta. In response thereto, it submitted its bid or tender from its Calcutta office and revised the rates subsequently. When it learnt that it was considered ineligible it sent representations, including fax messages, to EIL, ONGC, etc. at New Delhi, demanding justice. As stated earlier, the Steering Committee finally rejected the offer of NICCO and awarded the contract to CIMMCO at New Delhi on January 27, 1993. Therefore, broadly speaking, NITCO claims that a part of the cause of action arose within the jurisdiction of the advertisement in Calcutta, it submitted its bid or tender from Calcutta and made representations demanding justice from Calcutta on learning about the rejection of its offer. The advertisements itself mentioned that the tenders should be submitted at New Delhi and that a final decision whether or not to award the contract to the tenderer would be taken at New Delhi. Of course, the execution of the contract work was to be carried out at Hazira in Gujrat. Therefore, merely because it read the advertisement at Calcutta and submitted the offer from Calcutta and made representations from Calcutta would not, in our opinion, constitute facts forming an integral part of the cause of action. So also the mere fact that it sent fax messages from Calcutta and received a reply thereto at Calcutta would not constitute an integral part of the cause of action. Besides the fax message of January 15, 1993, can not be construed as conveying rejections of the offer as that fact occurred on January 27, 1993, We are, therefore, of the opinion that even if the averments in the writ petition are taken as true, it cannot be said that a part of the cause of action arose within the jurisdiction of the Calcutta High Court.

12. Notwithstanding the strong observations made by this Court in the aforesaid decisions and in the earlier decisions referred to therein, we are distressed that the High Court of Calcutta persists in exercising jurisdiction even in cases where no part of the cause of action arose within its territorial jurisdiction. It is indeed a great pity that one of the premier High Courts of the country should appear to have developed a tendency to assume jurisdiction on the sole ground that the petitioner before it resides in or carries on business from a registered office in the State of West Bengal. We feel all the more pained that notwithstanding the observations of this Court made time and again, some of the learned Judges continue to betray that tendency only recently while disposing of appeals arising out of SLP Nos.10065-66 of 1993, Aligarh Muslim University & Anr. Vs. M/s. Vinny Engineering Enterprises (P) Ltd. & Anr., this Court observed:

"We are surprised, not a little, that the High Court of Calcutta should have exercised jurisdiction in a case where it had absolutely no jurisdiction."

In that case, the contract in question was executed at Aligarh, the construction work was to be carried out at Aligarh, the contracts provided that in the event of dispute the Aligarh Court alone will have jurisdiction, the arbitrator was appointed at Aligarh and was to function at Aligarh and yet merely because the respondent was a Calcutta based firm, it instituted proceedings in the Calcutta High Court and the High Court exercised jurisdiction where it had none whatsoever. It must be remembered that the image and prestige of a Court depends on how the members of that institution conduct themselves. If an impression gains ground that even in cases which fall outside the territorial jurisdiction of the Court, certain members of the Court would be willing to exercise jurisdiction on the plea that some event, however trivial and unconnected with the cause of action had occurred within the jurisdiction of the said Court, litigants would seek to abuse the process by carrying the cause before such members giving rise to avoidable suspicion. That would lower the dignity of the institution and put the entire system to ridicule . We are greatly pained to say so but if we do not strongly deprecate the growing tendency we will, we are afraid, be failing in our duty to the institution and the system of administration of justice. We do hope that we will not have another occasion to deal with such a situation.

In the circumstances, it appears to me that the cause of action has substantially and materially arisen in the State of Uttar Pradesh and therefore this Court will not entertain the writ petition. Accordingly, the writ petition is dismissed. "

However I cannot view this dismissal as res judicata as Mr. Aggarwal strongly suggests for the simple reason that while exercising its extraordinary powers, bestowed by Article 226 of the Constitution, a discretion to entertain a writ petition or to decline from doing so, is available to the Writ Court, but in deciding a civil suit this optional latitude is wholly absent. The reasoning, however, must be taken into consideration.

9. Mr. Lekhi has drawn attention to the letter dated June 2, 1984 dispatched by Defendant No. 1 to the Plaintiff in New Delhi and to its reply by the Plaintiff in terms of its letter dated June 18, 1984, by which the offer of Defendant No. 1 was accepted by the Plaintiff. In this factual background he has contended that on the application of Section 4 of the Contract Act the contract was completed in New Delhi; therefore a part of the cause of action arose there and hence by virtue of Section 20, this Court has territorial jurisdiction over the dispute. Mr. Lekhi has, however, not reflected on Section 5 at all. The Hon'ble Supreme Court had occasion to consider this fascinating legal nodus in Bhagwandas Goverdhandas Kedia v. M/s. Girdharlal Parshottamadas and Co., . The following paragraphs are indeed topically instructive:

"5. By a long and uniform course of decisions the rules is well settled that mere making of an offer does not form part of the causes of action for damages for breach of contract which has resulted from acceptance of the offer : see Baroda Oil Cakes Traders v. Purushottam Narayandas Bangulia, . The view to be contrary expressed by a single Judge of the Madras High Court in Sepulchre Brothers v. Khushaldas Jagjivan Das Mehta, 2nd (1942) Mad 243 : (AIR 1942 Mad 13), cannot be accepted as correct.

6. The principal contention raised by the defendants raises a problem of some complexity which must be approached in the light of the relevant principles of the common law and statutory provisions contained in the Contract Act. A contract unlike a tort is not unilateral. If there be no "meeting of minds" no contract may result. There should, therefore, be an offer by one party, express or implied, and acceptance of that offer by the other in the same sense in which it was made by the other. But an agreement does not result from a mere state of mind; intent to accept an a offer does not given rise to a contract. There must be intention to accept and some textural manifestation of that intent by speech, writing or other act, and acceptance must be communicated to the offeror, unless he has waived such intimation or the encores of negotiations implies an agreement or the course of negotiations implies an agreement to the contrary.

7. The Contract Act does not expressly deal with the place where a contract is made. Sections 3 and 4 of the Contract Act deal with the communication, acceptance and revocation of proposals. By S. 3 the communication of a proposal, acceptance of a proposal, and revocation of a proposal and acceptance, respectively, are deemed to be made by any act or omission of the party proposing, accepting or revoking, by which he intends to communicate such proposal, acceptance or revocation, or which has the effect of communicating it. Section 4 provides:

"The communication of a proposal is complete when it comes to the knowledge of the person to whom it is made.

The communication of an acceptance is complete, -

as against the proposer, when it is put in a course of transmission to him, so as to be out of the power of the acceptor;

as against the acceptor, when it comes to the knowledge of the proposer.

The communication of a revocation is complete, -

as against the person who makes it, when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it.

as against the person to whom it is made, when it comes to his knowledge".

In terms S. 4 deals not with the place, but with the completion of communication of a proposal, acceptance and revocation. In determining the place where a contract takes place, the interpretation clauses in S. 2 which largely incorporate the substantive law of contract must be taken into account. A person signifying to the other his willingness to do or abstain from doing anything, with a view to obtaining the assent of that other to such act or abstinence is said to make a proposal: Clause (e). When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be accepted. A proposal when accepted, becomes a promise : Cl. (b) and every promise and every set of promises, forming the consideration for each other is an agreement: Cl. (e). An agreement enforceable at law is a contract: Cl. (k). By the second clause of S. 4 the communication of an acceptance is complete as against the proposer, when it is put in a course of transmission to him so as to be out of the power of the acceptor. This implies that where communication of an acceptance is made and it is put in a course of transmission to the proposer, the acceptance is complete as against the proposer: as against the acceptor it becomes complete when it comes to the knowledge of the proposer. In the matter of the communication of revocation it is provided that as against the person who makes the revocation it becomes complete when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it and as against the person to whom it is made when it comes to his knowledge. But S. 4 does not imply that the contract is made qua the proposer at one place and qua the acceptor at another place. The contract becomes complete as soon as the acceptance is made by the acceptor and unless otherwise agreed expressly or by necessary implication by the adoption of a special method of intimation. When the acceptance of offer is intimated to the offeror.

8. Acceptance and intimation of acceptance of offer are, therefore, both necessary to result in a binding contract. In the case of a contract which consists of mutual promises, the offeror must receive intimation that the offeree has accepted his offer and has signified his willingness to perform his promise. When parties are in the presence of each other the method of communication will depend upon the nature of the offer and the circumstances in which it is made. When an offer is orally made, acceptance maybe expected to be made by an oral reply, but even a nod, or other act which indubitably intimates, even if the offeree has resolved to accept the offer a contract may not result. But on this rule is engrafted an exception based on grounds of convenience which has the merit not of logic or principle in support, but of long acceptance by judicial decisions. If the parties are not in the presence of each other, and the offeror has not prescribed a mode of communication of acceptance, insistence upon communication of acceptance of the offer by the offeree would be found to be inconvenient, when the contract is made by letters sent by post. In Adams v. Lindsell, (1818) I B and Ald 681, it was ruled as early as in 1818 by the Court of King's bench in England that the contract was complete as soon as it was put into transmission. In Adas' case (1818) 1 B and Ald 681, the defendants wrote a letter to the plaintiff offering to sell a quantity of wool and requiring an answer by post. The plaintiff accepted the offer and posted a letter of acceptance, which was delivered to the defendants nearly a week after they had made their offer. The defendants, however, sold the goods to a third party, after the letter of acceptance was posted but before it was received the defendants. The defendants were held liable in damages. The Court in that case is reported to have observed that "if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notification that the defendants had received their answer and assented to it. And so it might go on ad infinitum"

The rule in Adams' case (1818) 1 B and Ald 681, was approved by the House of Lords in Dunlop v. Vincent Higgins (1848) 1 HLC 381. The rule was based on commercial expediency, or what Cheshire calls "empirical grounds". It makes a large inroad upon the concept of consensus, "a meeting of minds" which is the basis of formation of a contract. It would be futile, however, to enter upon an academic discussion, whether the acceptation is justifiable in strict theory, and acceptable in principle. The exception has long been recognised in the United Kingdom and in other countries where the law of contracts is based on the common law of England, Authorities in India also exhibit a fairly uniform trend that in case of negotiations by post the contract is complete when acceptance of the offer put into a course of transmission to the offeror: see Baroda Oil Cakes Traders case, and cases cited therein. A similar rule has been adopted when the offer and acceptance are by telegrams. The exception to the general rule requiring intimation of acceptance maybe summarised as follows. When by agreement, course of conduct, or usage of trade, acceptance by post or telegram is authorised, the bargain is struck and the contract is complete when the acceptance is put into a course transmission by the offeree by posting a letter or dispatching a telegram."

10. In American Pipe Company vs. State of Uttar Pradesh AIR 1983 Calcutta 186, a Division Bench of that Court did not consider the receipt of acceptance of an offer in Calcutta as sufficient for that Court to exercise territorial jurisdiction " because the acceptance having been posted in U.P. brought the contract into creation". In M/s. Progressive Constructions Ltd. v. Bharat Hydro Power Corporation Ltd., , Hon'ble Mr. Justice R.C. Lahoti (as his Lordship then was) held that a concluded contract has come into existence despite non-signing of a formal contract, and more importantly for the present purposes, that the place of contract is the place at which acceptance of the proposal is posted and the place at which acceptance is delivered does not create any cause of action. In his perspicuous judgment his Lordship has considered all the precedents on the issue. It is apparent, however, that the attention of the Court was not drawn to Section 5 of the Indian Contract Act. This interesting question has also been cogitated upon by the Hon'ble Supreme Court in ABC Laminart vs. A.P. Agencies, , the relevant passage being the following paragraph:

"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 breach, 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 of action. A suit on a 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 form 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. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have (been) performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears. The above are some of the connecting factors."

11. In Baroda Oil Cakes Traders v. Parshottam Narayandas Bagulia and Another, , a Division Bench of that Court, by reference to Section 4 of the Indian Contract Act, opined that "the communication of an acceptance is complete against the proposer when it is put in the course of transmission to him, so as to be out of the power of the acceptor. This necessarily means that as soon as the acceptance is posted or sent by telegram....... the acceptance is complete against the proposer, and so far as he is concerned the contract is concluded. It is true that in a sense the act of acceptance is a continuous act and it becomes complete so as to bind the acceptor when the acceptance comes to the knowledge of the proposer. But so far as the making of the contract is concerned, the proposer is bound as soon as the acceptance is posted and, subject to the right of the acceptor to revoke his acceptance, the contract is completed as soon as the acceptance is posted. In other words, the communication of the acceptance to the proposer cannot be said to be such an integral part of the completion of the contract as to constitute a part of cause of action in a suit on the said contract. Even if the acceptance does not reach the proposer for the reason that it is lost or misplaced in transit, the contract would be complete and for its breach the proposer would be entitled to sue for damages." As I see it with all respect to Hon'ble Division Bench, it is Section 5 (and not the preceding one) which determines the point and place at which the contract comes into existence. It stipulates that the proposal can be revoked till such time as its acceptance is not complete as envisaged in the preceding Section. Section 5 further accepts and preserves right of the acceptor to revoke his acceptance at any time before the acceptance reaches the proposer. If this right of revocation can be enjoyed and exercised by he acceptor, it is certainly arguable that the contract comes into being only once the acceptance reaches the proposer.

12. However, even assuming that the contract came into existence in Delhi, where the proposal of the Defendants was accepted by the Plaintiff, this factor is of little assistance to the Plaintiff. It is indeed a double edged weapon inasmuch as if the cause of action on which the Suit is founded is predicated on this event, which took place in 1984, the Suit is palpably barred by the principles of limitation. The right to sue on this cause of action is extinguished after three years. However, as I have already observed, even where the pleadings are needlessly verbose and irrelevant annals of the relations of the parties are narrated upon, the Court is expected to locate the roots of the controversy. If this exercise is undertaken it will be seen that the cause of action in the present dispute is not the creation of the contract but the demand for charges which the Plaintiff believes are not only exorbitant but are contrary to the contract between them. The spring board of the cause of action is also the threatened re-entry. This portion of bundle of facts arose three years prior to the filing of the present Suit. Therefore, the Preliminary Objection that the Suit is liable to be dismissed on the grounds of being barred by the principles of limitation, is rejected.

13. The natural sequel to this rejection is that the other Preliminary Objection must be decided in favor of the Defendants viz. that this Court ought not to exercise territorial jurisdiction over the dispute. As has been stated in paragraph 60 of the Plaint "the cause of action thereafter accrued on the dates when the Plaintiffs received the Notices dated 27.2.1996 and 22.7.1996 whereby Defendant No. 1without fixing the economic rent as stipulated in the Government Order created an illegal and arbitrary demand and threatened re-entry and also on the date when the said illegal demand was became payable. The cause of action finally arose on 21.8.1998 when Defendant No. 1 again threaten recovery of its illegal demand and re-entry." The threat arose in Kanpur, U.P. where Defendant No. 1 is located. It does not extend to Delhi although its effect might have been felt in Delhi. Moreover, where immovable property is in question, it is not Section 20 which is the relevant provision but Section 16 of the C.P.C. The assailed threat is inextricably connected with the immovable property which is located outside the ordinary original civil jurisdiction of this Court.

14. For these reasons, the Plaint is liable to be returned to the Plaintiff who is intimated of this decision accordingly. The Plaintiff shall indicate within thirty days in terms of Order VII Rule 10A the Court in which it proposes to present the Plaint after its return.

15. Renotify on 14.5.2003.