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Suits for Recovery of Money: Rethinking on Territorial Jurisdiction

Pattabhi Rama Rao Kovuru*

Introduction

Globalization has it’s impact, both negative and positive, on all the spheres of human life.
The whole world is narrowed into a global village. At the same time globalization is resulting in the
alienation of people by bringing them together.1 Globalization is increasing the mobility of the
public in several folds. People are moving from one place to another distant place, more easily than
earlier without hesitation. The geographical barriers are being quickly effaced. A variety of
business and employment opportunities are beckoning the people from one end to the other end of
the country. Because of these changes few laws and legal principles became obsolete and are not
suiting the requirement of the present day needs. One legal principle that falls in the category of
such principles which needs immediate consideration is the law relating to place of suing contained
in sections 19 and 20 of the Code of Civil Procedure, 1908 (hereafter referred to as CPC). 2 As per
section 19 of the CPC, for recovery of compensation to wrongs done to him or movables or money
due, the suitor requires to sue either at the place where the cause of action arises or where the
defendant resides. For example a man who is travelling in train and slapped by a railway employee
during the journey shall first find out the place where he was slapped or where the perpetrator
resides, if he is intending to move the civil court for compensation for wrong done to him and file
the suit in that court, which has territorial jurisdiction of the place where he was slapped or his

1 *Assistant Professor, National Judicial Academy, India. The author is grateful to Ms. Nidhi Gupta and R K
Chamarti, Faculty, NJA, for their comments and suggestions.
Yash Ghai, Universalism and Relativism: Human Rights as a Framework for Negotiating Inter Ethnic Claims, 21
CARDOZO L. REV. 1095, 1096 (2000).
2 Sections 19 and 20 of CPC read as follows:
19. Suits for compensation for wrongs to person or movables.
Where a suit is for compensation for wrong done to the person or to movable property, if the wrong was done within the
local limits of the jurisdiction of one Court and the defendant resides, or carries on business, or personally works for
gain, within the local limits of the jurisdiction of another Court, the suit may be instituted at the option of the plaintiff in
either of the said Courts.

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 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.
perpetrator resides. Section 20 of the CPC, governs the law relating to the territorial jurisdiction for
filing suits for recovery of money3, according to which such suits can be filed either at the place
where the defendants reside or where the cause of action arises. If A and B resided in Bhopal for
some time and during that period A borrowed money from B and later A was transferred to Chennai
and B shifted his residence to Shimla , for recovery of the money due B can file a suit either at
Bhopal or in Chennai, but not at Shimla. This law relating to the territorial jurisdiction is resulting
in hardship in the path of justice due to changed rate of mobility of the people and it is to be
amended to facilitate the holder of the right (the plaintiff) to file the suit at the place where he
resides. One and half century of judicial scholarship on this issue did not exhibit unanimity on this
aspect, but analysis of the judgments fortifies the central thesis of the paper that the creditor shall be
enabled to file the suit at the place of his residence.

Common Law Origins

The idea of facilitating the creditor to file the suit at his pace of residence is neither new nor
alien to the jurisprudential thought. It can be found in the common law doctrine “the debtor shall
seek for the creditor” (referred to as the common law principle at some places in this paper) and
also that this doctrine was considered by the courts in our country in several cases. Development of
this principle in England was described in one of the cases decided by the High Court of Calcutta in
the year 19354 as follows:

In the case of "The Elder" L.R. (1893) P. 119, Bowen, L. J., observed thus:
The general rule is that where no place of payment is specified either expressly, or
by implication, the debtor must seek his creditor. In Haldane v. Johnson (1853) 8 Ex
689, it was held that a covenant for payment of rent when no particular place of
payment is mentioned is analogous to a covenant to pay a sum of money in gross on
a day certain, in which case it is incumbent upon the covenantor to seek out the
person to be paid and pay or tender him the money. In the judgment, in that case, the
conclusion to the same effect, arrived at, on the authorities, by Parke, B., in Poole v.
Tunbridge (1837) 2 M & W 223, is relied upon. Most of the cases are collected in
Fessard v. Magnier  (1865) 18 CBNS 286, which is very instructive on the subject.5

The position of law on the point of jurisdiction is stated as follows in Halsbury Laws.6

3 Since, such suits are not mentioned in sections 15 to 19 and 21 of the CPC which deal with place of suing.
4 Smt.Tulsiman Bibi vs.Abdul Latif Mia AIR1936Cal97
5 See, L N Gupta vs. Tara Mani, AIR1984 Delhi49 (Paragraphs 5 and 6) and Sailum Eswaraiah vs. Thakur Devi
Singh, AIR 1953 Hyd 289 (FB) (Paragraph 2) for the details on the growth of this rule in England.
6 Halsbury Laws of England, Volume II, p 1956
Where no place for performance is specified either expressly or by
implication from the nature and terms of the contract and the surrounding
circumstances and the act is one which requires the presence of both parties for
completion the general rule is that the promiser must seek out the promisee and
perform the contract wherever he may happen to be. This rule applies not only to
contracts for payment of money but to all promises too the performance of which the
concurrence of the promisee is necessary (emphasis by the author).

Thus, in England the common law rule has enough force of law. Though India was not a
British Colony, East India Company which was established during the reign of queen Elizabeth -I
in the year 1600, stepped into India with a Charter Conferring powers on it to trade and
subsequently by another charter issued by the British Government in the year 1661 the company
was conferred the rights to administer the Justice to Indians and Judge all the persons living under
them in all cases, Civil and Criminal, according to the laws of England and execute Judgments 7.
Later by the statute of 1726, the British introduced the English Common Law in India. 8 Though
many Common Law principles were incorporated in the statutes drafted by the English rulers for
application to Indian territories the principle of common law that “debtor shall seek for his creditor”
and the creditor9 can file the suit where he resides, is not incorporated into Indian law. However in
several cases the Indian courts considered this principle to determine territorial jurisdiction for
entertaining the suits for recovery of money due under negotiable instruments or contracts and for
recovery of compensations to wrong done to a person and his moveable property. In few cases the
courts have relied upon the common law doctrine stated above whereas in some cases they have
refused to apply this doctrine. But in all cases the courts have presumed that this principle
existed/exists in England.10

Since the response of the Indian courts, before as well as after the independence, on
application of this principle is not uniform and huge divergence in the opinions of the courts can be
noticed, it is interesting to examine how the common law principle was dealt with during the British
rule and in the later period. Therefore, the judgments of the courts during British period and
thenceforth are examined separately.

Response of the British Indian Courts

7 Quoted in T.S.Venkatesa Iyer’s The Law of Contracts Vol.2(1984) Asia Law House, Hyderabad at p.3.
8 See, M C Setalwad, The Common Law in India (The Hamlyn Lectures, Twelfth Series) (1960) for details on the
growth of common law in India.
9 The person who suffered damage and the person to whom and to who's movables the wrong is done. See, National
Sugar Industry, Madras vs. Narala Venkaiah 1994(3) ALT 276 for a discussion on the meaning of the word
creditor.
10 See, observation by the larger bench of the High Court of Punjab & Haryana in Firm Hiralal Giridhari Lal Vs.
Baijnath Hardial Khatri AIR1960P&H 450 (paragraph 2)on the assumption of the existence of this rule.
One of the earliest judgments on this subject is the judgment of Desouza vs. Coles11 (1866)
of the Madras High Court in which Holloway,J., considered the question elaborately and held that
the defendants need to pay the price of indigo seed supplied to them by the plaintiff at his residence
and the court at the place of the plaintiff has jurisdiction to entertain the suit. The High Court of
Calcutta considered this judgment at length in Gopee kisto Gossamee vs. Nil Comul
Banerjee12(1874) and accepted it. The High Court of Bombay in Dhunjisha Nusserwanji v. A.B.
Forde13, (1887) held that in the absence of stipulation in the contract itself, the intention of the
parties to it was to guide the Court in determining the place of its performance and if it is the place
of the plaintiff the suit can be entertained at that place. In Motilal Pratabchand vs. Surajmal
Joharmal14(1906) Tyabji, J., of the Bombay High Court held that where no specific contract exists
as to the place where the payment of the debt is to be made, it is clear, it is the duty of the debtor to
make the payment where the creditor is.

However, in Puttappa Manjaya vs. Veerabhadrappa15 (1905) the Bombay High Court did
not favour application of this principle in India. This judgment contains a forcible argument against
application of the common law principle and the reasoning of the court was based on section 49 of
the Indian Contract Act, 187216 (Act. No.IX of 1872 hereafter referred to as “Contract Act” for
brevity). Sir Lawrence Jenkins C.J., opined that when the contract is silent about the place of the
performance the promisor (debtor) shall apply to the creditor requesting him to fix the place of
performance. However, there is nothing in the Contract Act or in any other statute which states what
is to be the position when the promisor fails to fulfill the duty imposed upon him by this section 17
and regarding the course that is open to the plaintiff when the borrower did not make any such
application. Even if such request is made by the borrower it can be easily visualised that the creditor
will choose the place of his comfort for performance so that in case of non performance he can file
the suit at that place. In Raman Chettiar vs. Gopalachari  18 (1908) which is a case under the Code
of Civil Procedure, 1882, Madras High Court held that the common law rule does not apply in

11 3 Mad.H.C.Rep 384. View taken in this case was dissented by Phear,J. of the High Court of Calcutta, in Harjiban
Das vs. BhagwanDas MANU/WB/0046/1871 :7 B.L.R. 102 which was reversed in an appeal, the judgment of
which was reported in MANU/WB/0083/1871 :7 B.L.R. 535 on a finding that the defendant carried on business in
Calcutta where the suit was filed. See, S G Clark vs. James Mill (1874) 14 B.L.R.367: MANU/WB/0017/1874 in
which Desouza was approved by the same High Court in which Harjiban Das is not referred to.
12 (1874) 22 W R 79 cited in Tulsiman Bibi vs. Abdul Latif Mia, AIR 1936Cal97.
13 (1887) 11 Bom. 649
14 (1906) 30 Bom. 167
15 (1905) 7 Bom. L.R. 993
16 Section 49. Place for the performance of promise, Where no application to be made and no place fixed for
performance.--When a promise is to be performed without application by the promisee, and no place is fixed for the
performance of it, it is the duty of the promisor to apply to the promisee to appoint a reasonable place for the
performance of the promise, and to perform it at such a place.
17 As opined by Alfred Henry Lionel Leach, C.J. in M. Ramalinga Aiyar vs.T.K. Jayalakshmi (1941)1MLJ784
18 I.L.R.(1908) Mad. 223
India. In Sewaram Gokaldas vs.Bajrangdat Hardwar Potdar19 (1916) the Bombay High Court in
case relating to the hundies opined that unless it is proved that the payment shall be made at the
place of residence of the plaintiff the suit has to be filed either at the place of the transaction or at
the place where the defendant resides. Thus in this case the court has refused to apply the principle
of common law that the debtor shall seek for the creditor. However the High Court of Allahabad in
Sri Narain v. Jagannath20 (1917), Bangali Mal vs. Firm Gangaram Ashrafi Lal 21(1923) , Gokul
Das vs. Nathu22 (1926) and Bhagauti Shukul v. Chandrika Prasad23(1933)  held that in the absence
of contract to the contrary the borrower ought to seek out the lender for the payment.

The Privy Council in Bansilal Abirchand vs. Ghulam Mahbub Khan24 (1925), though it did
not specifically deal with the general application of the principle was sceptical of it’s application in
India. Blanesburgh, J (speaking for himself, Viscount Finlay and Carson JJ.) held that the
determination of jurisdiction “turns solely upon the question whether, in this case, within the
meaning of Section 20(c) of the C.P.C., the cause of action wholly or in part arose within the local
limits of the Civil Judge of Secunderabad.” In the above case the plaintiff was a resident of
Secunderabad, then a British cantonment and the defendant was the resident of Hyderabad, which
was in a different jurisdiction since it was under Nizam’s rule. The court further observed thus:

“Even by British law the duty of a debtor to find and pay his creditor is only
imposed upon him when the creditor is within the realm. And the plaintiff has not
contended that if there be any such duty at all imposed by Indian Law upon a debtor
it extends in this respect further than in England. Accordingly, so far as the
principal-debtor is concerned there is no obligation upon him, either express or
implied, to make any payment to the plaintiff at Secunderabad.”

Two years later, Soniram Jeet Mul vs. R.D.Tata and Company Ltd25 (1927) the Privy
Council got an occasion to deal with the question again while construing section 49 of the Contract
Act. Though this case was decided in the light of provisions of the Contract Act, the judgment
indicates the legal position to the effect that, it is duty of the debtor to find the creditor. This

19 AIR 1916 Bom227


20 AIR 1917 All 128
21 AIR 1923 All465
22 AIR 1926 All477
23 AIR 1933 All 147
24 AIR1925 PC290
25 AIR 1927 PC 156; See, Firm Hiralal Giridhari Lal vs Baijnath Hardial Khatri AIR1960P&H450 and
Sailum Eswaraiah vs Thakur Devi Singh, AIR 1953 Hyd 289 (FB) in which it was opined that this case was
decided on facts of the case and terms of the contract involved in the contract and it did not lay down any law that
the common law principle is applicable to India or that in the absence of the agreement regarding the place of
performance, the contract shall be performed at the place of the plaintiff. This judgment was distinguished by the
Bombay High Court in Jivatlal Purtapshi vs. Lalbhai Fulchand Shah AIR1942Bom251 opining that the common
law rule is not applicable to the cases of negotiable instruments.
judgment has become an oft cited decision by those who rely upon the principle that the debtor shall
seek for his creditor. The Privy Council expressly disapproved the judgment of Bombay High
Court in Puttappa Manjaya26and approved the judgments in Motilal Pratabchand27 and Dhunjisha
Nusserwanjee.28 In K.S.P.L.A Annamalai Chettiar vs .S. Dam Hnin U 29
(1935) the High Court of
Rangoon relying on the judgments of Nathubai Ranchchod vs.Chhabildas Dharaam Chand30 (1935)
and Venkatachalam Pillai vs. Rajabbali M Sajun31(1935) laid down that the common law rule can
be applied in India. Smt.Tulsiman Bibi vs.Abdul Latif Mia32 (1936) is a land mark judgment the
High Court of Calcutta, supporting the application of the common law principle to the Indian cases.
In this case, in a suit filed by the plaintiff for recovery of proper dower from her husband, RC
Mitter,J., assertively stated that the common law principle is applicable in India and observed thus:

There cannot be any doubt according to the principles of English law that under
these circumstances the obligation of the debtor is to seek out the creditor and pay
him, that is to say, the place of residence of the plaintiff is to be taken as the place of
performance (and)………So far as I am aware the Courts of this country from early
times have considered the said principle to be so applicable and there are decisions
or observations of Judges of nearly all the High Courts.

In Chunilal Mayachand vs. E.E. Millard33 (1938) the debtor agreed to pay the amount borrowed
under a promissory note, either at Poona, Bombay and elsewhere and the Bombay High Court did
not find it difficult to hold that the court at Bombay has jurisdiction to entertain the suit. Srilal
Singhania vs. Anant Lal Mondal34(1940) is a case in which the High Court of Calcutta following
the judgment of Viscount Sumner in Soniram Jeet Mul35 held that the plaintiff, the holder in due
course of a promissory note, could file the suit at the place of his residence or business of the
original holder who lost his interest in the instrument after indorsing it in favour of the plaintiff.

In Messrs. Dalsukh Nathmal Firm Kampte vs.Motilal Balchand Parwar 36 (1938) Vivian
Bose J., of High Court of Nagpur considered the principle and held that it is clear that the ordinary

26 7 Bom LR 993
27 [1906] 30 Bom. 167
28 ILR 11 Bom 649; See, also Champak Lal Mohan Lal vs. Nectar Tea Co. 1933 Bom 179 where Rangnekar, J., has
followed the judgment in Soniram Jeetmul, AIR 1927 PC 156 .
29 AIR 1935 Rangoon 251
30 AIR 1935 Bom 283
31 AIR 1935 Mad 663; See, also Audinarayana Rao Naidu v. Lakshminarayana Rao   AIR 1940 Mad 588 where the
Madras High Court applied the common law principle.
32 AIR 1936 Cal97
33 AIR 1938 Bom278
34 AIR 1940 Cal443 ;See, the judgment in Jivatlal Purtapshi vs. Lalbhai Fulchand Shah AIR1942Bom251 in which
the Bombay High Court did not approve this judgment.
35 AIR 1927 PC 156.
36 AIR1938Nag262 ; See, also Gopikisan Sheonarain v. Jeetmal Govardhandas AIR 1935 Nag 144 where in it was
held that the common law principle cannot be applied in India.
rule under which the debtor must seek his creditor does not apply in the case of a negotiable
instrument. In M. Ramalinga Aiyar vs.T.K. Jayalakshmi37 (1941) Somayya J., concurring with the
separate judgment given by Alfred Henry Lionel Leach, C.J expressed his doubt on the common
law principle that the debtor shall seek for his creditor thus:

The question whether the Common Law Rule of England is to be applied to a


country of vast distances as India has to be considered with care and it is not
necessary to go into that question now. (Emphasis by the author)

Thus the response of the British Indian courts on application of the common law principle
that the debtor shall seek for his creditor is a hotchpotch of positive and negative indications. Two
Privy Council judgments38 during this period contradict each other. High Courts of Calcutta and
Allahabad exhibited consistency, favouring application of the common law principle in a number of
cases, where as the Bombay and Madras High Courts rendered several contradicting
contemporaneous judgments on this issue.

Nub of the scholarship in the judgments favouring the application of the common law
principle is that where there is no agreement regarding the place of performance in the contract the
common law principle that the debtor shall seek for his creditor applies and the debtor has to make
payment to the creditor at his place of residence or business and on failure the creditor can sue him
there. On the other hand the courts refused the application of the principle mainly on two grounds,
firstly, that in such circumstances section 49 of the Contract Act comes in to play according to
which the debtor shall ask the creditor to fix the place for making the payment and secondly, on the
ground that the common law rule does not apply as specific rules are provided by the statute (CPC).
The first ground based on section 49 of the Contract Act may give the money lender more freedom
to fix the place of performance anywhere and he need not restrict it to his own place. 39 Yet another
theory developed was that this principle has no application to the cases of negotiable instruments.

Post Independence Era

37 (1941)1MLJ784
38 Bansilal Abirchand vs. Ghulam Mahbub Khan, AIR1925PC290 and Soniram Jeet Mul vs. R.D.Tata and Company
Ltd AIR 1927 PC 156
39 The inconsequentiality of this provision was highlighted in Soniram Jeet Mul vs. R.D.Tata and Company Ltd AIR
1927 PC 156
After independence, in Sailum Eswaraiah vs. Thakur Devi Singh 40 full bench of the
High Court of Hyderabad got an early opportunity to deal with the common law principle
requiring the debtor seeking for his creditor . The court undertook extensive survey of the
precedents existing by that time and expressly disagreed with its own judgments in London
Trading Company vs. Madanlal41 and Kanyalal vs. Shiv Narayana42 in which application of
the common law principle was favoured, holding that the opinion of the court in both the
judgments is obiter. The court did not approve it’s judgment in Lakshminarayan vs. Sultan
Jehan Begum43 also since this judgment was rendered basing on the obiter of the two
judgments referred to above. According to the full bench of the High Court of Hyderabad,
Soniram Jeet Mul44 did not approve the incorporation of the common law principle, but on
facts and the terms of contract involved in that case, it was decided that the court at the
business place of the plaintiff has got jurisdiction to entertain the cause. It was further
observed that Smt.Tulsiman Bibi45 wrongly interpreted the judgment in Bansilal Abirchand46
and therefore cannot be relied upon. The court relied upon the judgments in Dalsukh
Nathmal Firm Kampte47and Piyara Singh vs. Bhagwandas48 in which the courts have
declined to apply the principle. Despite elaborate consideration of the issue the court
restricted it’s opinion on application of the principle to the promissory notes observing that:

We do not, however, propose to extend the scope of our discussion to the general
question as it does not arise on the facts of this case. It is, in our view, clear that the
weight of the authority is against the view that the common law rule of the debtor
following the creditor applies to promissory notes. Having considered all these
cases, we are also of the same view for the reasons stated by us.

A full bench of the High Court of Punjab in Firm Hiralal Giridhari Lal vs. Baijnath Hardial
Khatri49 did not mince the words in holding that this English rule on the subject is not, as a matter of
law applicable in India to determine the forum for institution of the suit by the creditor. S. S. Dulat
J., in his separate, but concurring judgment observed thus:

40 AIR 1953 Hyd 289 (FB)


41 19 DLR 154
42 29 DLR 630
43 AIR 1951 Hyd 132
44 AIR 1927 PC 156
45 AIR 1936 Cal97
46 AIR 1925PC290
47 AIR 1938Nag262
48 AIR 1951P&H 33; See, also Prem Nath v. Kaudoomal Rikhiram AIR 1958 P&H 361 where in it was held that the
common law principle is not applicable in India.
49 AIR 1960 P&H 450
On principle, I can find no justification for importing into the Indian Contract Act or
into the Code of Civil Procedure a rule of law which is not to be found in either
statute, either because it is a rule of English common law or because it is in itself a
good and just rule.

Bishan Narain, J., in the above case went a step forward when he observed that:

Neither in England nor in this country has this rule ever been so construed as to
lead to the conclusion that its incorporation in the agreement conclusively proves
that the payment is to be made at creditor's place of residence or business or raises
an irrebuttable presumption to that effect.

Dur, J., accepted existence of such a rule in England, but he gave reasons for non application of the
rule in our country. He said:

In a small country like England the Courts there may have considered it just and
convenient that, in the absence of any agreement, a debtor should, as a general rule,
seek out his creditor, if within the realm in order to make the payment of the debt to
him, but in a big country like ours, to impose an obligation on a debtor, at the time
of making payment, to seek out his creditor, wherever he may be in the whole length
and breadth of this Union, may, not infrequently, operate as an unjust, inconvenient
and inequitable rule, particularly when the applying this rule jurisdiction is sought
to be conferred on a Court within the local limits of whose jurisdiction the creditor-
plaintiff happens to reside at the time of the institution of the suit.

There are other cases in which the courts have refused to apply this doctrine. In Johri Mull
vs. Hira Lal50, the High Court of Patna expressed the opinion that the rule as to the obligation of the
debtor to seek the creditor is not applicable to India, though it can be a rule of evidence to infer the
place of performance of the contract. Similarly in Manohar Oil Mills vs. Bhawanidin51, the High
Court of Allahabad stated that this rule has no application in our country but it can be considered
only for inferring the intentions of the parties as to the place of payment. In Jagadish Chandra
Sikdar vs. Smt. Santimoyee Choudhuri52 the High Court of Calcutta considered the issue at length
and declined to apply the common law principle.

50 AIR 1961 Patna 198


51 AIR 1971 All 326
52 AIR 1961 Cal. 321; See, Janata Bank vs. Shyampur Sugar Mills Ltd. (1981)1 Bangladesh Legal Decisions 248 in
which the High Court of Bangladesh relied upon this judgment . See, also, Ramji Gokul vs.Harilal Jetha (1967)
ILR 1Cal 253
In Bharumal vs. Sakhawatmal53, Chagla C. J. and Dixit, J. speaking for the Division Bench
of the High Court of Calcutta pointed out that the common law rule is a “reasonable rule” and it is
in conformity with justice and equity because it recognises the obligation of the debtor to pay his
debt and that obligation can only be discharged by the debtor going to his creditor and repaying the
amount. Relying on this judgment, in Maria Munisa Begum vs Noore Mohammad Saheb54 the
High Court of Andhra Pradesh, after an exhaustive reviewing of the case law on this subject opined
that the doctrine of the debtor finding the creditor applies to the Indian cases. Later, N.K.Vakil J.,
of the Gujarat High Court also expressed similar opinion in H.S.Shobha Singh vs. Saurashtra Iron
Foundry and Steel Works Pvt. Ltd 55. In State vs. Rajaram56, the High Court of Andhra Pradesh
applied the principle that the debtor shall seek for the creditor and in that case the suit was filed at
the place of the residence of the plaintiff for return of the security money payable by the
government and it was held that since the payment shall be made at the place of plaintiff's residence
and the court at that place has jurisdiction.

The application of this doctrine of the debtor finding the creditor was considered by two
judges of the High Court of Andhra Pradesh in National Sugar Industry, Madras vs. Narala
Venkaiah57 and Rajasthan State Electricity Board and others vs. M/s.Dayal Wood works 58. In
National Sugar Industry,59 Somasekhara, J., observed thus:

1. The doctrine that a debtor must seek his creditor is a well known proposition of the
common law rule in England which is equally applicable in this country also.
2. Although there is no support for such a principle, it may not be totally inconsistent
with the established principles regarding jurisdiction.
However, Somasekhara, J., appears to have expressed scepticism as to the application of the
doctrine in India, when in the same judgment, it was observed.

However, such a rule shall be applied with caution .................the rule appears to be
exceptional, having due regard to the facts and circumstances of that case.

53 AIR 1956 Bom 111


54 AIR 1965 A.P.231: The court wrongly cited, Jagadish Chandra Sikdar vs. Smt. Santimoyee Choudhuri AIR 1961
Cal. 321 for application of the common law principle in India. See, Mohammed Ibrahim vs. Jaithoon Bivi Ammal,
AIR 1951 Mad 831 in which the facts of the case are nearer to the facts of the present case Madras High Court
applied the principle where as in M. Ramalinga Aiyar vs.T.K. Jayalakshmi (1941)1MLJ784 another similar case the
same High Court refused apply the principle.
55 AIR 1968 Guj. 276
56 AIR 1966 A.P.233
57 1994(3) ALT 276
58 AIR 1998 A.P.381
59 1994(3) ALT 276
In the above case, Somasekhara, J., referred to the judgment in Maria Munnisa Begum60. Despite
considering the question of the application of the common law doctrine of debtor must seek his
creditor positively the court left the question open by rendering the judgment basing on section 21
of the CPC as well as on the principle that no failure of justice occasioned on the defendants by
reason of the place of suing. Four years later, B.S. Raikote J., of the High Court of Andhra Pradesh
while deciding Rajasthan State Electricity Board and others vs. M/s.Dayal Wood works61
considered this doctrine at length, but without referring to National Sugar Industry.62 In this case
B.S. Raikote J., laid down the rule with a little more certainty than in National Sugar Industry.63 It
was observed by B.S. Raikote J., that the principle that the suit can be filed where the creditor
resides is in accordance with the principles of justice and equity and this rule is applicable to this
country also, although it cannot be invoked in the case of negotiable instruments.64 Yet the
judgment of the Court is based on some other concessions but not entirely on the common law
principle under discussion. However, B.S.Raikote J., reviewed a number of the precedents on this
common law principle. National Sugar Industry and Rajasthan State Electricity Board paved a
clear road for application of the principle in all cases where there is no agreement regarding the
place of performance of the contract. One can find the fervour of the High Court of Calcutta for
application of this doctrine in the following judgments, which are quite assertive. In State of
Punjab vs. A.K.Raha (Engineers) Ltd65 it was observed:

Where no place of payment is specified in the contract either expressly or impliedly,


the debtor must seek the creditor; the obligation to pay the debt involves the
obligation to find the creditor and to pay him at the place where he is when the
money is payable.

More assertive is the judgment in S.P. Consolidated Engineering Co. (P) Ltd., vs. Union of India66
in which it was observed:

The English common law rule that a debtor must seek the creditor is universal in its
application since it is founded on Justice and equity. It is surely not a technical rule
of English Law, wrongly made applicable to India. It is a beneficent rule, inflexible
and is of universal application. The rule cannot be said to be nothing more than a
presumption rebuttable by contrary evidence. When there is evidence to indicate the

60 AIR 1965 A.P.231


61 AIR 1998 A.P.381
62 1994(3) ALT 276
63 Ibid.
64 See, infra the text to foot notes 72 to 80
65 AIR 1964 Cal. 418
66 AIR 1966 Cal. 259
place where the parties to a contract intended that the debt was payable, then the
court will hold that such place of payment has been indicated in the contract itself,
though not expressly but by implication. The occasion applying this rule as a rule of
justice equity and good conscience, would arise only when the court finds that no
place of payment is expressly stated in the contract nor is it possible to find such
place of payment indicated in the contract by necessary implication, on the relevant
evidence on record.

Recently Bombay High Court in Deccan Chronicle Holdings Ltd and Future Corporate Resources
Ltd vs. Aviotech Pvt Ltd67 relying on State of Punjab vs. A.K.Raha (Engineers) Ltd68 held that the
common law principle of debtor seeking the creditor is applicable in determining the jurisdiction of
the court.

Application of the Rule to the cases of Negotiable Instruments

Another important question is whether this doctrine can be applied to the cases based on the
negotiable instruments. Most of the cases for recovery of money are based on promissory notes and
again there is a cleavage of judicial opinion as to the applicability of this doctrine for such suits.
There is considerable reluctance for application of this doctrine. The High Court of Bombay opined
that section 49 of the Contract Act, and common law rule that the debtor must seek out his creditor
in order to pay him does not apply to the cases of negotiable instruments 69 The High Court of
Kutch70 a full bench of High Court of Hyderabad71 and another full bench of the High Court of
Madhya Bharat72 have also specifically ruled out the application of the common law principle of
debtor seeking out his creditor in such cases. There are judgments in which it was held that the
plaintiff could sue at his place for some other reasons, such as the delivery of the promissory note
took place there73 and the demand for repayment can be made where no place of payment is
stipulated.74 The High Court of Andhra Pradesh in Rajasthan State Electricity Board75 expressly
ruled out the application of the common law doctrine under consideration to negotiable instruments,
but this expression is only an obiter. The requirement of the presentation of a negotiable instrument
under section 64 of the Negotiable Instruments Act, 1881(hereafter referred to as NI Act) is being

67 MANU/MH/0174/2013
68 AIR 1964 Cal. 418
69 Jivatlal Purtapshi vs Lalbhai Fulchand Shah, AIR 1942 Bom 251
70 Manket Devji vs Ratna Bhai, AIR 1950 Kutch 66
71 Sailum Eswaraiah vs Thakur Devi Singh, AIR 1953 Hyd 289 (FB)
72 J.N.Sahni vs State of Madhya Bharat, AIR 1954 Madhya Bharat 184 (FB)
73 Mohamad Ishaq Khan vs Munammad Islam Ullah Khan, AIR 1915, Lah 481; See, also Arunachalam Chettiar vs
Murugappa Chettiar, AIR 1956 Mad 629.
74 Dorabji Nowarosjee Pajnigar vs Jamshedji Pestonji Mehtha AIR 1936 Bom 218; See, also Chunnilal Maya
Chand vs. E.E.Millard, AIR 1938 Bom. 278
75 AIR 1998 A.P.381at p.389
thought of as an impediment to invoke the doctrine of debtor shall seek for his creditor. In
Ramasubrahmanian vs Ranganath76Subramanian Poti J., of the Kerala High Court observed that
the place of presentment indicated in section 70 of the N I Act would apply necessarily only to a
case where presentment is contemplated. If presentment is not a requirement even without such
presentment the claim would be valid and such a case is one contemplated by the exception in
section 64 of the N I Act .In the above case the High Court of Kerala expressed the opinion that
when section 49 of the Contract Act, is not applicable and in the absence of agreement regarding the
payment at specified place, the common law doctrine of the debtor seeking for the creditor is
applicable. In Manohar Oils77 also similar opinion was expressed, by the High Court of Allahabad.
In the above cases it was stated that the common law doctrine applies not as a rule of law but as a
rule of evidence. M.L. Jain J., of the High Court of Delhi in L.N.Gupta Vs. Taramani78 questions
and asserts:

What is a rule of evidence, if it is not a rule of law? I, therefore, agree that the
common law rule should be invoked in such cases not merely as a rule to help locate
a forum but as a part of the law relating to contractual obligations where the statute
is silent.
In the above judgment M.L. Jain J., held that the rule that the debtor must find his creditor is
applicable to promissory notes payable on demand in which the place of payment is not mentioned
or where the alternative places are mentioned 79 In Jose Paul Vs Jose80, a Division Bench of Kerala
High Court without any hesitation applied the doctrine of debtor shall seek for his creditor in a case
based on negotiable instrument, more precisely, a promissory note, in order to determine
jurisdiction and in doing so the Division Bench relied upon the judgment in Ramasubrahmanian.81
82
In Srilal Singhania it was held that the common law rule applies to promissory notes only when
no place for payment is specified.

Summation

The above are the some judgments in which the courts have considered the question of
application of the common law doctrine of debtor seeking the creditor and after the survey of case
law the views expressed therein can be summarized as follows:

76 1978 Ker LT 906, quoted in Jose Paul AIR 2002 Ker 39 and also in L.N.Gupta, AIR 1984 Del.49
77 AIR 1971 All 326
78 AIR 1984 Del.49
79 Ibid, at p.53
80 AIR 2002 Ker 39
81 1978 Ker LT 906
82 AIR 1940 Cal 443;See, also Mehar Baksh vs Harichand, AIR 1935 Lah 623; Firm Sheik Mohammad Ismail
Maula Bakh vs. Mian Abdul Majid Khan, AIR 1937 Lah 259 ; Nanulal vs. Firm Shibba Mal Nand Kishore, AIR
1939 Lah 18
There are three different approaches that can be culled out of the whole lot of the Judgments. They
are:

1. The common law doctrine of debtor shall seek for the creditors cannot be applied and the
plaintiff cannot file a suit at the place of his residence unless there is an agreement regarding
the place of payment. In few judgments which were discussed above, it was held that the
agreement can be inferred from the facts and circumstances in a given case by applying the
common law principle and in a few cases it was said that such inference cannot be drawn
without specification in the agreement. Those who support this view argue that the courts
cannot override statutory prescriptions made in CPC.

2. Second dominant opinion is that the common law principle is applicable in India to all kind
of transactions and therefore in all cases it shall be presumed that it is the duty of the debtor
to find the creditor (if he is within the country) and pay the debt and if he fails to do so the
creditor can sue him at the place where he is entitled to receive the payment. Neither
specific agreement nor inference from the circumstances is needed.

3. Third opinion in this regard is that such a principle can be applied in India to the
transactions other than those under negotiable instruments. Those who hold this opinion rely
on certain technical formalities to be complied under the provisions of the N I Act for
payments due under negotiable instruments under the.

Conclusion

A careful analysis shows that though the application of the common law principle was
favoured in the beginning of the British regime, during the course of time the British Indian
courts have shown reluctance to apply the common law principle. Similarly during post
independence period also there are judgments for and against the application of this principle.
Recent judgments are gain in favour of the application of this principle. The reasons offered by
the judges who refused to apply this principle are mainly technical. If technical objections are
ignored the common law principle which was recognised as “reasonable and it is in conformity
with justice and equity”83 shall be favoured. The following observation of the High court of
Gujarat, in Sita Ram Singhania vs. State of Gujarat 84 while dealing with a case under section
138 of N I Act and considering the background of changing socio, economical and financial
scenario of our country, is relevant.

83 AIR 1956 Bom 111


84 (2005)2GLR1298: MANU/GJ/0412/2004
Ultimately, the common law rule when has been found reasonable, and the same is in
conformity with the justice and equity, then it would be highly unjustified to ask the company to go
to the place to institute the proceedings which is not its ordinary place of business or the place from
where he might have agreed to sell the raw material…

Law Commission of India way back in the year 1992 after considering a few of the
judgments mentioned above made the following recommendation.

In our view, the position should be clarified and the place where the creditor
resides should also to be treated as the place where the payment is to be made
unless the agreement expressly provides to the contrary. We would recommend that
an explanation may be added to section 20 in suitable terms to achieve the objective.
This is the view of the majority of the High Courts and represents in large number of
cases, the intention of parties85.

Apart from such technical objections, in Firm Hiralal Giridhari Lal86 the court said that
since India is a vast country the debtor cannot be forced to seek for the creditor. This is true in view
of the fast increasing the mobility rate of the people. But the creditor who parted with money also
faces the same difficulty. In any developing country if trade and commerce need to flourish it is
necessary to enact laws which create a legal environment in which the creditors feel secured. In the
current scenario the courts may find it difficult to apply this common law doctrine in the absence of
any specific legal provision. If the statutory provisions are the only hurdles for application of the
common law principle they need to be amended. Further, To facilitate the creditor, to sue his debtor
at the place of his (creditor’s) residence section 20 of the CPC and section 49 of the Contract Act
are required to be amended. In the mean while the Supreme Court also can take an opportunity to
clarify that the common law principle is applicable in India.

_______

85 144 report of Law Commission of India on Conflicting Judicial Decisions Pertaining to the Code of Civil
Procedure, 1908, at P.7
86 AIR 1960 P&H450

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