Partly allowed

The Cotton Corpn.of Indialtd. v. the Co-Op Textile Mills Ltd.

Bombay HC2 Aug 2005S/1652/1980

Case brief

AI extract

What is this about?

The High Court of Bombay disposed of preliminary issues regarding jurisdiction, limitation, and maintainability in a contract dispute. While holding the court had jurisdiction and the suit was not time-barred, the court ruled the suit was not maintainable because the defendant Cooperative Society was incorporated under U.P. law, necessitating a prior statutory notice under Section 117 of the U.P.

What the court decided

AI extract

The Cotton Corpn.of Indialtd. Vs the Co-Op Textile… — Company and Corporate | Bombay HC (2005)

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 IN THE HIGH COURT OF JUDICATURE AT BOMBAY

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 ORDINARY ORIGINAL CIVIL JURISDICTION

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 SUIT NO.1652 OF 1980

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 The Cotton Corporation of India
 Ltd. .. Plaintiffs
 Vs.

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 The Co-operative Textile Mills
 Ltd. .. Defendants

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 Mr.R.C.Shah i/b M/s.Divekar & Co. for the
 plaintiffs

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 Mr.S.V.Shetty for the defendants

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 CORAM : S.U.KAMDAR, J

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DATED : 02.08.2005

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ORAL JUDGMENT:

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 1. The present suit is filed for the recovery
 of sum of Rs.15,78,006.49 alongwith interest
 thereon @ 20% p.a. Some of the material facts of
 the present case briefly enumerated are as under:

¶13

 2. By letter dt.11.4.77, the All India
 Federation of Cooperative Spinning Mills Ltd.
 requested the plaintiffs to book for and on their
 behalf 500 bales of Guatemala Cotton and 500 bales

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 of Sudan Cotton and this was confirmed by the
 defendants by their letter dt.18.4.77. Thereafter
 the defendants applied to the Textile Commissioner
 Government of India, Bombay for import of the said
 goods being 500 bales of Sudan Cotton.
 Subsequently, thereafter the plaintiffs sent a
 Contract bearing no.G/655 dated 12.5.77 in standard
 form to the defendants for the purpose of their
 signature. Clause 33 of the said contract reads as
 under:

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 "33. If the duplicate copy of this agreement
 is not returned by the Mills duly signed
 within seven days from the receipt of this
 agreement, it will be deemed to have been
 accepted by the mill."

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 3. It is the case of the plaintiffs that
 inspite of the aforesaid terms and conditions of
 the contract, the defendants did not return the
 duplicate copy duly signed by them and thus, there
 is a concluding and binding contract between the
 plaintiffs and the defendants. Pursuant thereto,
 the plaintiffs imported the said goods being 500
 bales of Sudan Cotton at the price of Rs.5150/- per

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 candy CIF Bombay. It was agreed under the said
 contract that the defendant will also be liable to
 make payment of various other charges and the same
 will be paid by the defendants to the plaintiffs on
 handing over all documents such as Bill of Lading,
 Insurance Policy, Invoice etc. On 19.8.77, the
 plaintiffs informed the defendants that out of 500
 bales 474 bales of Sudan Cotton were shipped by the
 foreign shippers and asked the defendants to make
 arrangement for taking delivery of the said bales
 at Bombay. However, in place of accepting the
 delivery thereto, the defendants by their letter
 dt.6.9.77 cancelled the said contract for purchase
 of 500 bales of Sudan Cotton and refused to take
 delivery thereof. Subsequently, on 15.9.77, the
 plaintiffs informed the defendants that it is not
 possible to cancel the contract and insisted that
 the defendants must take delivery of the goods. By
 letter dt.24.9.77 defendants expressed their
 inability to purchase the said material owing to
 their financial difficulties. It is the case of
 the plaintiffs that the said goods arrived in
 Bombay but the defendants did not take delivery and
 therefore, the said goods were cleared by the

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 plaintiffs from the customs. By letter dt.3.10.77,
 plaintiffs called upon the defendants to take
 delivery of the said goods within 15 days from the
 receipt of the letter failing which it was stated
 that the plaintiffs will sell the goods and will
 hold the defendants liable for loss suffered by
 them in respect of the said transaction.

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 4. However, defendant still did not take
 delivery of the goods. Accordingly, the plaintiffs
 sold the said goods and after adjustment of the
 amount received towards the sale proceeds, it is
 the case of the plaintiffs that the plaintiffs have
 suffered loss of Rs.15,78,006.49. Plaintiffs have
 also claimed interest @ 20% p.a. in respect of the
 said claim under the terms of the contract.
 Defendants have filed written statement and has
 interalia contested the claim on merits. It is the
 case of the defendants that there is no concluded
 contract as they have not executed the same by
 putting their signatures thereon. It is also
 contended that letter dt.15.3.77 was issued without
 any authority and thus, not binding on the
 defendants. Defendants have also denied the

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 liability to make payment. Defendants have also
 raised various issues such as issue of limitation,
 issue of territorial jurisdiction of this court and
 issue that whether the suit is maintainable under
 s.117 of the Uttar Pradesh Co-operative Societies
 Act, 1965. Pursuant to the aforesaid, issues were
 framed which are as under:

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 1. Whether the suit filed by the plaintiffs
 is bad and liable to be dismissed as the
 plaintiffs have not obtained leave under
 Clause XII of Letters Patent alleged by the
 defendants in paragraph 1 of the written
 statement?

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 2. Whether the suit of the plaintiffs is

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 not maintainable as no notice under section
 117 of the U.P.Co-operative Societies Act,
 1965 was given before filing of the suit as
 alleged in paragraph 2 of the written
 statement?

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 3. Whether the Hon’ble Court has no

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 jurisdiction to entertain and try this suit?

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 4. Whether the suit of the plaintiffs is
 barred by the law of Limitation?

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 5. Whether the defendants prove that the
 letter dated 15th March 1977 placing the
 order of cotton with the plaintiffs is not
 binding on the defendants as the signatory of
 the said letter was not authorised to do so
 under the Bye-Laws of the defendants as
 alleged in paragraph 6 of the written
 statement?

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 6. Whether the plaintiffs prove that there
 was a concluded valid and binding contract
 bearing No.G/655 dated 12th May 1977 for the
 sale and supply of 500 bales of Sudan cotton
 by the plaintiffs to the defendants?

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 7. Whether the plaintiffs prove that the
 defendants committed breach of the contract
 by refusing to take delivery of 500 bales of
 cotton?

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 8. Whether the defendants prove that the
 plaintiffs committed breach of the contract
 as alleged in paragraph 8 of the written
 statement?

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 9. Whether the plaintiffs prove that the
 plaintiffs suffered loss of Rs.15,78,006.49
 on account of breach of contract on the part
 of the defendants and that the plaintiffs are
 entitled to claim the said loss and interest
 thereon as claimed by the plaintiffs in the
 plaint?

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 10. What reliefs?

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 5. By my order dt. 19.07.2005 I directed the

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 parties that issues no.1 to 4 will be tried as
 preliminary issues and accordingly I have heard the
 matters on preliminary issue being issues no.1 to
 4. This preliminary issue falls in three parts.
 Issue no. 1 and 3 pertains to the territorial
 jurisdiction of the court. Issue no.4 pertains to

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 the limitation and Issue No.2 pertains to
 maintainability of suit for non-service of notice.
 In so far as Issue No.4 pertaining to limitation is
 concerned, the learned counsel for the plaintiffs
 has drawn my attention that the cause of action in
 the present case arises only when the defendants
 repudiated the contract by letter dt.6.9.77. The
 said letter dt.6.9.77 has been produced before me.
 He has also contended that the suit is lodged in
 this court on 4.9.80. Thus, the suit is within
 time. I therefore, hold the issue of limitation in
 favour of the plaintiffs and against the
 defendants.

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 6. In so far as the issue of jurisdiction is
 concerned, the only contention advanced by the
 defendant is that because the registered office of
 the defendants is situated in the State of U.P.,
 this court could not have jurisdiction to entertain
 the present suit without obtaining leave u.s.12 of
 the Letters Patent. On the other hand, the learned
 counsel for the plaintiffs has pointed out para 7
 of the plaint and it has been contended that in the
 said para the whole of cause of action has arose

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 within the territorial jurisdiction of this court.
 The said para 7 of the plaint reads as under:

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 "7. The said contract was signed by the
 plaintiffs in Bombay and the moneys were to be
 paid in Bombay. The delivery of the said
 cotton was to be made in Bombay and the whole
 cause of action has arisen in Bombay. The
 contract in terms provides that it shall be
 subject to the exclusive jurisdiction of Civil
 Courts in Bombay. The plaintiffs, therefore,
 submit that this Hon’ble Court has
 jurisdiction to entertain and try the suit.

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 7. No part of the claim made in para 7 has

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 been controverted by the defendants in written
 statement. However, in so far as clause 12 is
 concerned, it has been contended that even if it is
 so because the defendants is residing outside the
 territorial jurisdiction of this court then in that
 event leave is required to be obtained. I am
 unable to accept the contention of the learned
 counsel for the defendants. Clause 12 of the

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 Letters Patent reads as under:

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 "12. Original jurisdiction as to suits - And
 We do further ordain that the said High Court

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 of Judicature at Fort William in Bengal
 (Madras)(Bombay), in the exercise of its
 ordinary ordinary civil jurisdiction, shall
 be empowered to receive, try and determine
 suits of every description if, in the case of
 suits for land or other immovable property,
 such land or property shall be situated or in
 all other cases if the cause of action shall
 have arisen, either wholly, or, in case the
 leave of the Court shall have been first
 obtained, in part, within the local limits of
 the ordinary original jurisdiction of the
 said High Court, or if the defendant at the
 time of the commencement of the suit shall
 dwell or carry on business, or personally
 work for gain, within such limits; except
 that the said High Court shall not have such
 original jurisdiction in cases falling within
 the jurisdiction of the Small Cause court at
 (Madras),(Bombay), Calcutta, in which the
 debt or damage or value of the property sued
 for, does not exceed one hundred rupees.

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 8. Under clause 12 of the Letters Patent if

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 person is carrying on business outside the
 territorial jurisdiction of the court but if any
 substantial proof of cause of action has arose
 within the territorial jurisdiction of the court
 then in that event this court will have
 jurisdiction on leave being obtained under clause
 but in a case where whole of the cause of action
 arose within the territorial jurisdiction of this
 court, then in that event this court shall have
 jurisdiction irrespective of the fact that
 defendants reside or carry on business outside the

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 territorial jurisdiction of this court and in such

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 cases there is no need to obtain a leave under
 clause 12. The learned counsel for the plaintiffs
 has further drawn my attention to the fact that by
 virtue of Clause 32 of the said contract exclusive
 jurisdiction is vested with this court. The said
 clause 32 of the contract reads as under:

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 "32. This agreement shall (subject to the
 provision for Arbitration) be subject to the
 exclusive jurisdiction of Civil Courts in
 Greater Bombay."

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 9. In the present case, the whole of the cause
 of action arose within the territorial jurisdiction
 of this court and in light of clause 32 of the
 contract, I am of the opinion that this court shall
 have jurisdiction to entertain and try the present
 suit. Accordingly, I answer the said issue no.1
 and 3 also against the defendants and in favour of
 the plaintiffs.

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 10. This leads me to the next contention which
 has been advanced by the learned counsel for the

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 defendants. The learned counsel for the defendants
 has drawn my attention to s.117 of the Utter
 Pradesh Cooperative Societies Act, 1965 and it has
 been contended that in absence of notice as
 contemplated u.s.117 no suit shall be instituted
 against Cooperative Society or any of its officers
 in respect of any act relating to the constitution,
 management or the business of the society until the
 expiration of two months next after the notice is
 served and delivered to the Registrar. It is an
 admitted position before me that no such notice as
 contemplated u.s.117 has been issued by the
 plaintiffs to the Registrar. In the present case,
 the learned counsel for the plaintiffs however has
 contended that the provisions of s.117 are not
 applicable. In the present case he has drawn my
 attention to the provision of ss.2 of s.1 of the
 said Act which reads as under:

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 "(2) It extends to the whole of the State of
 Uttar Pradesh."

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 11. It provides that the Act extends to th
 whole of the State of U.P. It has been contended

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 that in the light of the aforesaid position the act
 has no application in the State of Maharashtra and
 therefore, no notice is required to be given. The
 learned counsel for the plaintiffs has in support
 of the aforesaid contention relied upon the
 Judgment of the Apex Court in the case of Gwalior
 Dugdha Sangh Sahakari Ltd. Vs. G.M.Govt. Milk
 Scheme, Nagpur and Others reported in (2003) 7
 Supreme Court Cases 529 particularly para 3
 thereof. The said para 3 of the aforesaid judgment
 reads as under:

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 "3. It is not disputed that the agreements
 were entered into and executed at Nagpur which
 is outside the territorial jurisdiction of the
 State of Madhya Pradesh. Section 1 of the Act
 provides that the provisions of the Act would
 be applicable to the Whole of Madhya Pradesh.
 Since the operation of the Act is intra-State
 and cannot be applied beyond the territory of
 the State of Madhya Pradesh, it must be held
 that Section 64 of the Act is not applicable."

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 12. Section 117 of the U.P.Co-operative
 Societies Act, 1965 reads as under:

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 "117. Notice necessary in suits - No

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 suit shall be instituted against a
 co-operative society or any of its officers in
 respect of any act relating to the
 constitution, management or the business of
 the society until the expiration of two months
 next after notice in writing has been
 delivered to the Registrar, or left at his
 office, stating the cause of action, the name,
 description and place of residence of the
 plaintiff and the relief which he claims; and
 the plaint shall contain a statement that such
 notice has been so delivered or left.

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 13. On the other hand, the learned counsel for
 the defendants has drawn my attention to the
 Judgment of the learned single Judge of this court
 in the case of Gurudev Developers Vs. Kurla Konkan
 Niwas Co-op.Hsg.Society reported in 2000(3) Mh.L.J.
 Pg.131 and another judgment of the single Judge in
 the case of Suprabhat Co-operative Housing Society
 Ltd. and another Vs. M/s.Span Builders and
 another reported in 2002 C.T.J. 3933 and has
 contended that the provision of s.117 of the
 U.P.Co-operative Societies Act, 1965 which is in
 parameteria to Section 164 of the Maharashtra
 Co-operative Societies Act, 1960, are mandatory and
 binding and on non-compliance thereof, suit is
 liable to be dismissed.

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 14. I have considered the aforesaid aspects
 after hearing both the parties in the present case.
 It is an admitted position in this case that no
 notice as contemplated u.s.117 is given. The only
 issue which requires to be considered is whether
 the said provision of s.117 are applicable to the
 proceedings which are instituted in this court. If
 such provisions are applicable then obviously the
 provisions are couched in a mandatory language and
 the aforesaid two judgments of the single judge of
 this court delivered relying upon earlier Division
 Bench Judgment of this court holds that such
 provisions are mandatory and in absence thereof
 suit is liable to be dismissed.

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 15. In my opinion, the provision of s.117 would
 apply to the present case. I am of the opinion
 that only because the suit is filed outside
 territorial jurisdiction of the the State of U.P.
 the provisions cannot be made applicable. The
 provision of s.117 only provides for issuance of
 notice. Such issuance of notice does not have any
 extra territorial jurisdiction. The question
 whether the act would apply in the other states or

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 not would depend upon different facts of the case

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 where the operation of the said act can be given
 effect to or not by the Court within the state. I
 am of the opinion that non-service of notice has
 nothing to do with any extra territorial
 jurisdiction and thus, the said principle is not
 applicable to the cases for issuance of notice.
 The judgment which has been cited by the plaintiffs
 of the Apex Court is totally irrelevant on the
 facts and circumstances of the present case. That
 was the judgment under which the contention was
 raised that the provision of s.64 of Madhya Pradesh
 Co-operative Societies Act, 1960 are applicable in
 respect of suit instituted in Nagpur. The
 provision of s.64 of the said Act provided for a
 forum for determination of a dispute between the
 parties. It is clear that s.64 of the Act is
 equivalent to s.91 of the Maharashtra Co-operative
 Societies Act 1960.This provision are provided for
 a forum for adjudication of the disputes. It is
 well settled that if the cause of action does not
 arise within the territorial jurisdiction of the
 forum or a court then such court could not have
 jurisdiction to entertain and try the suit. The

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 forum created under a state statue obviously cannot
 determine the disputes which are arose outside the
 territorial jurisdiction of such a forum.

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 16. In the light of the aforesaid fact the Apex
 court has held that since the entire cause of
 action has arose in Nagpur which is outside the
 state of Madhya Pradesh provision of s.64 which
 provides for resolution of dispute under the Act by
 a forum of Registrar of Co-op.Society would not be
 applicable because the suit or a proceeding is
 required to be filed at Nagpur where s.64 does not
 apply nor any forum u.s.64 of the M.P.Act has been
 constituted. This, does not mean that the
 provision of s.117 of the said Uttar Pradesh
 Co-operative Societies Act would not be applicable
 in the present case. The said act merely provides
 for issuing notice to the Registrar and notice can
 be issued even by instituting a suit in this court.
 Apart therefrom the provision of s.117 does not
 restrict that notice is only required to be issued
 in cases where suits or proceedings are instituted
 in the State of U.P. In my opinion by relying on
 the Apex Court Judgment, it is not possible to hold

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 that suit is maintainable even without issuing a
 notice u.s.117 of the Uttar Pradesh Co-operative
 Societies Act. In the light of the aforesaid
 position in law I hold that suit is not
 maintainable for want of notice under Uttar Pradesh
 Co-operative Societies Act, 1965 and therefore suit
 is liable to be dismissed as not maintainable.

The Cotton Corpn.of Indialtd. v. the Co-Op Textile Mills Ltd.

Case brief

What is this about?

What the court decided

The Cotton Corpn.of Indialtd. v. the Co-Op Textile Mills Ltd.

Case brief

What is this about?

What the court decided

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