Chittaranjan Mukherji vs Barhoo Mahto

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Not extracted

Decision Date: 5 May 1950

Coram: Patanjali Sastri

In this matter the Court considered an appeal that arose from an application filed by the respondent to revoke the leave previously granted to the appellant for instituting a suit in the original side of the Calcutta High Court. The appellant had sought a declaration that the partnership he claimed to have formed with the respondent had been dissolved, and, alternatively, he had asked for a dissolution of the partnership together with an order for accounts and other consequential relief. According to the plaint, the partnership had been created orally in Calcutta around January 1944 on certain terms, and those terms were subsequently affirmed by a letter addressed by the respondent to the appellant on 14 December 1944. The appellant instituted the suit on 17 February 1947. Shortly thereafter, on 3 March 1947, he applied for a temporary injunction to restrain the respondent from realizing or withdrawing monies that were alleged to be due under contracts undertaken on behalf of the partnership, and he also sought the appointment of a receiver to take charge of the partnership’s entire assets. The respondent entered his appearance on 11 March 1947, and with his consent the learned Judge Ormond issued an order appointing two joint receivers to collect the sum of Rs 21,000 that was admittedly due to the partnership from the Garrison Engineer, Eastern Command, Tollygunge. The receivers were to hold the amount pending final disposal of the appellant’s application for injunction and for a receiver. The application was dismissed on 25 April 1947, but the order directed that the joint receivers should continue to hold the Rs 21,000 and should also take charge of all the books of account of the partnership business.

The respondent applied on 16 April 1947 for an extension of time to file his written statement, and the extension was granted. He ultimately filed the written statement on 29 April 1947, wherein he pleaded, inter alia, that the partnership in question related only to the military contracts that he had undertaken and did not include the other contracts he had performed. He further asserted that if the accounts were taken of the military contracts, the appellant, who he claimed had withdrawn large sums from the partnership funds, would be liable to pay substantial amounts to the respondent. The respondent also denied the authenticity of the 14 December 1944 letter relied upon by the appellant as evidence that the partnership covered all contracts undertaken by the respondent. Instead, he produced a deed of partnership dated 3 April 1946, which he said embodied the terms of a partnership that had been constituted on 1 November 1943. He maintained that the agreement and the partnership deed had been executed in Bihar. The respondent contended that the Calcutta court lacked jurisdiction to entertain the suit because no part of the cause of action arose in Calcutta, and that the leave obtained by the appellant had been based on false allegations and therefore should be revoked. The present application for revocation of the leave was filed by the respondent on 2 May 1947. The appellant, inter alia, argued that the application for revocation was inspired by observations made by Justice Clough in his judgment dismissing the appellant’s application for the appointment of a receiver, wherein Justice Clough expressed dissatisfaction with the appellant’s bona fides in filing the suit in Calcutta.

The respondent filed an application on 2-5-1947 seeking revocation of the leave previously granted to the appellant to sue in Calcutta. The appellant argued that the application was prompted by the observations of Justice Clough, who had dismissed the appellant’s request for the appointment of a receiver. Justice Clough had expressed that he was not convinced of the appellant’s bona-fides in bringing the suit before the Calcutta court. When the matter came before the judge hearing the revocation application, he stated that his earlier remarks had been made without a full appreciation of the facts. He further observed that, because the appellant claimed ordinary residence in Calcutta and that the agreement had been executed there, it was impossible to deem Calcutta an inconvenient forum for him. Accordingly, the judge held that the plaintiff could not be said to have acted mala-fide merely to harass the defendant. Turning to the question of balance of convenience, the judge considered all the circumstances and concluded that the balance did not weigh so heavily against a Calcutta trial as to justify revoking the earlier leave. He also noted that the respondent had exploited the suit to obtain an order he thought would be to his advantage. Because the proceedings had already caused expenses that could have been avoided by a stay, the judge found it too late to revoke the leave even if such a revocation might otherwise have been appropriate. Following that order, the respondent filed an appeal on 21-8-1947 and, on the same day, sought a stay of the suit pending the disposal of the appeal. The stay was granted on 18-12-1947. The appeal was heard by the Chief Justice and Justice Mukherjea, who set aside Justice Clough’s judgment and directed that the leave granted under Clause 12 of the Letters Patent be revoked. They further ordered that the plaint filed by the appellant be removed from the file. They also allowed the appellant to institute a fresh suit in the appropriate court in the State of Bihar on the same cause of action. The appellate judges examined the balance of convenience in some detail and concluded that, prima facie, it would be more convenient for the suit to be tried by any court in Bihar. They observed that for the respondent, having the suit tried in Calcutta would be harassing and vexatious. In their view, there was no substantive merit in the respondent’s contentions based on his delay in applying for revocation and his acquiescence in the proceedings. Counsel for the appellant challenged the correctness of this conclusion, arguing that the appellate bench had misunderstood the true position.

Counsel for the appellant contended that the view expressed by the learned judges – that a trial in Bihar would obviate the need to call any evidence to establish the place where the contract was entered into and would render the testimony of handwriting experts unnecessary – was based on a misunderstanding of the factual matrix. The appellant maintained that the oral contract, which he alleged had been concluded in Calcutta, had to be proved irrespective of the forum in which the suit was heard. Accordingly, he would be required to summon witnesses residing in Calcutta to testify about the existence and terms of that oral agreement. In the same vein, the appellant asserted that the handwriting experts would still be indispensable to examine the authenticity of the respondent’s signature on the letter dated 14-12-1944. The genuineness of that letter was denied by the respondent, and the document formed a crucial piece of evidence for the appellant to define the true scope of the partnership, a matter that was heavily contested. Further, counsel highlighted that the learned judges had overlooked the respondent’s own statements in his application, wherein he acknowledged that much of his evidence would have to be taken on commission because he intended to examine Railway and Military officers to establish that he was not present in Calcutta in either January 1944 or December 1944. Most of those officers, the respondent admitted, were now posted outside Bihar. Consequently, the conclusion that the balance of convenience favoured a trial in Bihar was, according to counsel, erroneous. While this criticism was not without merit, the Court observed that the judgment under appeal did not address these specific aspects. Nevertheless, the Court found it unnecessary to reopen the balance-of-convenience analysis. Considering the delay in filing the application for revocation and the respondent’s conduct throughout the proceedings, the Court held that the leave originally granted should not be revoked.

The suit had been instituted on 17-2-1947, and the respondent entered his appearance on 11-3-1947. Rather than complaining that leave to file the suit in Calcutta had been improperly granted – a grievance that could have been raised at the earliest opportunity – and seeking a stay of all proceedings until that issue was resolved, the respondent instead used the pending suit to obtain a consent order. That order appointed the solicitors of both parties as joint receivers tasked with collecting and holding the sum of Rs 21,000 owed by the military authorities at Tollygunge. The respondent acknowledged that immediate recovery of that sum was essential because the Department of the Garrison Engineer, Eastern Command, Tollygunge, was to be abolished as of 31 March 1947. Having secured this advantage, the respondent then opposed the appellant’s application for injunction and for the appointment of a receiver in other respects, and his opposition was dismissed on 25-4-1947. The Court noted that this particular proceeding would not have arisen, and the appellant would not have incurred the ancillary expenses, had the application for revocation been filed and all proceedings stayed shortly after the respondent’s appearance on 11 March. The respondent’s actions therefore demonstrated a strategic use of the suit rather than a timely challenge to the jurisdictional question.

In this case, the Court noted that the application for revocation was filed after the appearance on 11 March. There is considerable force in the suggestion that the application was an after-thought prompted by the observation of Justice Clough in his order dated 25-April-1947, in which he stated that because both parties were residents of Muzaffarpur in Bihar, the suit had been filed in Calcutta with a view to harass the respondent. The Court then explained that the learned Judge later clarified, in his order refusing revocation, that his earlier observation was based on a misapprehension. He had not appreciated that the appellant had alleged in his plaint that he was residing in Calcutta and that the December 1944 letter had actually been delivered to him at Calcutta. Even when the respondent filed his application for revocation on 2-May-1947, he made no attempt to obtain a stay of the further proceedings in the suit. On the contrary, he himself applied for discovery and inspection of the plaintiff’s documents on 2-July-1947 and obtained an order on 7-July-1947. The appellant had, a few days earlier, obtained a similar order concerning the respondent’s documents. It was only when the inspection of the documents was nearing completion that the respondent appealed on 21-August-1947 against the order of Justice Clough rejecting the application for revocation, and he succeeded in obtaining a stay of further proceedings in December 1947. The Court therefore found that the respondent had not merely acquiesced in the steps taken by the appellant to advance the suit, thereby incurring considerable expenses, but, in the language of Justice Clough, had “made use of the existence of the suit” to obtain interlocutory reliefs which he believed would be to his own advantage, relying on the Court which he now contended should not try the suit. The Court was of the opinion, agreeing with Justice Clough, that the proceedings had been allowed to progress to a stage where it would cause grave injustice if the Court were to hold that the appropriate forum was Bihar and not Calcutta and consequently revoke the leave on that ground. Consequently, the appeal was allowed and the respondent’s application for revocation of leave was dismissed with costs throughout.