IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION ORDINARY ORIGINAL CIVIL JURISDICTION SUMMONS FOR JUDGMENT NO.264 OF 2008 SUMMONS FOR JUDGMENT NO.264 OF 2008 SUMMONS FOR JUDGMENT NO.264 OF 2008 IN IN IN SUMMARY SUIT NO.3454 OF 2006 SUMMARY SUIT NO.3454 OF 2006 SUMMARY SUIT NO.3454 OF 2006 A/W. A/W. A/W. SUMMONS FOR JUDGMENT NO.265 OF 2008 SUMMONS FOR JUDGMENT NO.265 OF 2008 SUMMONS FOR JUDGMENT NO.265 OF 2008 IN IN IN SUMMARY SUIT NO.1835 OF 2004 SUMMARY SUIT NO.1835 OF 2004 SUMMARY SUIT NO.1835 OF 2004 A/W. A/W. A/W. SUMMONS FOR JUDGMENT NO.38 OF 2009 SUMMONS FOR JUDGMENT NO.38 OF 2009 SUMMONS FOR JUDGMENT NO.38 OF 2009 IN IN IN SUMMARY SUIT NO.3454 OF 2006 SUMMARY SUIT NO.3454 OF 2006 SUMMARY SUIT NO.3454 OF 2006 Bajaj Auto Ltd. ..Plaintiffs versus Madhya Pradesh State Electricity Board & Others ..Defendants Mr.P.K.Samdhani, Sr. Counsel with B. Saraf i/b. M/s. Dhru & Co. for the plaintiffs Mr. Sanjay Udeshi for the defendant No.1. Mr. H.N.Thakaore with Pranav Sampat and Jyoti Ghag i/b. Thakaore Jariwala & Associates for the defendant Nos.2 and 4 Mr. Nishant Shashidharan i/b. K.J.Nansi for the defendant No.2 in S.J.265 of 2008 & Defendant NO.5 in SJ 264 of 2008 & SJ 38 of 2009. Mr.P.G.Lad for State of Madhya Pradesh In S.J.38 of 2009. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. CORAM : R.Y.GANOO, J. DATED : 4th March, 2009. DATED : 4th March, 2009. DATED : 4th March, 2009. P.C. 1. These three Summons for Judgment can be -2- disposed of by common order as the point involved therein is common. Parties to the suit are common in both the suits. The present defendant No.1 and defendant No.2 are the bodies which have come into existence after splitting of the Original Madhya Pradesh Electricity Board. Defendant No.3 is the State of Madhya Pradesh and defendant No.4 is the State of Chattisgarh. Defendant No.4 was brought into existence on account of division of original State of Madhya Pradesh into State of Madhya Pradesh and State of Chattisgarh. The Original Madhya Pradesh Electricity Board intended to float the issue of bonds and receive the funds from the members of the public and certain organisations. For that issue defendant No.5 were appointed as agents and they had their office at Bombay. Defendant No.6 is State Bank of India who can be called a Debenture Trustee and defendant No.7 were the lead managers for the said bonds issue. 2. The defendant No.5, in their capacity as agent of issue pursuaded the plaintiffs to invest substantial amount in the said issue and it is an admitted fact that plaintiffs invested a sum of Rs. 10 Crores in the said issue. -3- 3. The terms of the issue are found at page 38 and 33% of the principal amount was to be redeemed on the completion of 5th year, 33% further amount was to be redeemed on completion of 6th year and balance 34 % amount was to be reedemed on completion of 7th year. The interest at the rate of 15% was payable at half yearly rest. The plaintiffs invested the amount with an expectation that the terms of the issue would be complied with and pursuant to the issue letter of allotment came to be issued in favour of the plaintiffs and the said letter of allotment was to remain valid and operational till the actual bonds are issued for the monies paid to the board as per the terms of allotment. It is an admitted position that as of today bonds are not issued and as a result of that plaintiffs are in possession of the letter of allotment. 4. The plaintiffs have approached this Court for recovery of the first instalment ofthe amount which was to be redeemed at the end of the 5th year and for that plaintiffs have filed suit No.1835 of 2004. The second instalment of redemption was due on 1.12.2004 and the third instalment for redemption was due on 1.12.2005 and for these two -4- redemptions Suit No.2454 of 2006 has been filed. It is the case of the plaintiffs that they have not received interest due and therefore Suit No.1835 of 2004 takes care of that part of the interest which would fall within the period of limitation. Suit No.3454 of 2006 takes care of the interest which falls within the period of limitation i.e. interest period commencing from 1.1.2004 upto 30.6.2004. 5. The plaintiffs have taken out Summons for Judgment and parties herein have filed affidavit in reply to the summons for judgment State of Madhya Pradesh has not filed affidavit in reply in Summons for Judgment No.38 of 2009 in Suit NO.2454 of 2006. It appears that in the Suit NO.1835 of 2004 also affidavit in reply is not filed by State of Madhya Pradesh. 6. I have heard counsels on both the sides. The fact that certain monies as per the redemption claim has not been repaid cannot be disputed by the defendants. The fact that interest as was due has not been paid also cannot be disputed by the defendants. -5- 7. On account of splitting of the Original State of Mahdya Pradesh into two states there was consequential division of erstwhile Madhya Pradesh State Electricity Board into two boards i.e. defendant Nos.1 and 2. Before the Court certain points were placed so as to say that the monies under the issue were received by Madhya Pradesh Electricity Board which was then functioning and the arrangement between the defendant No.1 and defendant No.2 as regards liability in respect of the issue is yet not finalised though before the Honourable Supreme Court an interim arrangement is arrived at whereby defendant No.1 and defendant No.2 are to share the burden to the extend of 10% only. i.e. defendant No.2 is answerable, (if at all) only to the extent of 10%. Counsel for the defendant No.1 who had taken a lead in arguing the matter had contended that stamp duty is not paid on the allotment letter and therefore the document on the basis of which the suit is filed is not properly stamped. It must be mentioned that the letter of allotment came to be issued and was to remain in operation till the bonds are issued. The bonds have yet not been issued. If the letter of allotment does not bear the appropriate stamp it cannot lie in the mouth of the defendant No.1 to -6- say that the letter of allotment is not properly stamped. To that extent the argument advanced by the counsel for the defendant No.1 is required to be rejected. 8. It is seen that looking to the way in which the defendants were managing the affairs as regards the payment of interest from time to time, as also the fact of redemption, plaintiffs thought of getting out of the issue and wanted to have principal amount returned to them. This request was not acceped to by defendant No.1 and other concerned authorities. It is required to be mentioned that in the entire issue there was no stipulation by which recession from the issue was permissible. If this is so, the request for recession made by the plaintiffs could not have been acted upon and therefore the defendants now can not take the advantage of such a letter of recession and say that the plaintiffs are not entitled to the principal amount which was to be redeemed or the interest which was to be paid from time to time. 9. Argument was advanced to contend that the plaintiffs are claiming interest on interest. This -7- argument is based on the contention that when certain amount of interest is not paid from time to time, demand of interest on this component which is interest component is illegal. This argument just can’t be accepted. If the amount of interest is not paid when due it will have to be termed as Principal and then if plaintiffs expect interest on such amount then that is not illegal. To that extent the argument advanced is rejected. 10. The main point which is now required to be decided is concerning the jurisdiction of this Court to entertain the suit. The plaintiffs moved this Court for leave under clause 12 of the letters patent and Leave to institute this suit has been granted and that is how the suit has reached the stage of Summons for Judgment. It is true that till today no application for revocation of such leave has been made. Despite this factual aspect defendants have raised contention of jursidiction. Learned Counsel for the defendant No.1 had taken me through the relevant averments of the plaint which are at paragraph 10 and according to the learned Counsel for the defendant No.1 this Court has no jurisdiction. It was contended that even though defendant No.5, defendant No.6 and defendant No.7 -8- have their addresses at Bombay, that has no nexus with the terms of the bond issue. It was also contended that merely because an application is tendered at Bombay at the office of defendant No.5 cannot confer jurisdiction on this Court. It was also contended that even if the cheque is issued by the plaintiffs from their Bombay Account that will not give jurisdiction to this Court. Counsel for the defendants therefore contended that no part of cause of action has arisen at Bombay, particularly when the issue was of All India level, and any person from any part of the country could make an application. On the basis of these submission it was sought to be contended that this Court has no jurisdiction. 11. Counsel for the plaintiffs opposed submissions and contended that the averments in paragraph 10 clearly go to show that this Court has jurisdiction. It was also contended that when leave under Clause 12 is granted, this Court cannot go into the question of jurisdiction and decide the Summons for Judgment. It was also contended that the defendant No.5 were the agents of the plaintiffs, the offer was made to the plaintiffs in Bombay, Cheque from Bombay Account was issued and -9- notice of demand by which monies were demanded after they were not paid also indicated that the payment should be made in Bombay. In the substance, every effort was made by the counsel for the plaintiffs to show that a part of cause of action has arisen in Bombay and therefore this Court has jurisdiction to try and entertain this suit. Learned Counsel for the plaintiffs had relied upon the judgements in the case of Smt. Smt. Smt. Brindarani Debi vs. Co-operative Assurance Co. Brindarani Debi vs. Co-operative Assurance Co. Brindarani Debi vs. Co-operative Assurance Co. Ltd. reported in A.I.R. (31) 1994 Calcutta 1 Ltd. reported in A.I.R. (31) 1994 Calcutta 1 Ltd. reported in A.I.R. (31) 1994 Calcutta 1 and in the case of Firm Kanhaiyalal vs. Dinesh Chandra the case of Firm Kanhaiyalal vs. Dinesh Chandra the case of Firm Kanhaiyalal vs. Dinesh Chandra reported in AIR 1959 Mahdya Pradesh 234 reported in AIR 1959 Mahdya Pradesh 234 reported in AIR 1959 Mahdya Pradesh 234 to contend that this Court has jurisdiction on the ground that a part of cause of action has arisen in Bombay. 12. I have considered the rival contentions on the question of jurisdiction. I have considered the judgements which have been cited. At the outset it will have to be noted that the issue which was floated by then Madhya Pradesh State Electricity Board was all India issue. If that is so, it is quite natural that any person residing in any corner of the Country of India could make an application. It will be ofcourse obvious that in order to see that maximum amount is collected under -10- the issue, the board must have appointed various agents who will have offices at various places in India, including Bombay. The agent has a choice to operate in the territory allotted to him collect the business and ultimately sent the monies to his principal. In the present case the defendant No.5 is said to have acted as an agent for the Madhya Pradesh Electricity Board, and in my view the place where the office of such an agent is situated, is hardly material to decide the question of jurisdiction. Plaintiffs were fully aware of the fact that defendant No.5 has acted as middleman for the issue and he has no specific role to play except receiving the application from the plaintiffs and arrange to see that it is delivered to the concerned authority who is responsible for receiving the funds. Similarly, merely because a cheque from Bombay Bank account of plaintiffs is issued, cannot confer jurisdiction on the Bombay Court. It was equally possible to issue a cheque from a bank situate beyond Bombay. Merely because plaintiffs issued cheque from their account at Bombay, will not confer jurisdiction on this Court. The defendant no. 6 are debenture trustees. Their role in the matter is not relevant to give jurisdiction to Court at Bombay. In fact, they -11- have no active role to be played in the matter of payment of interest redeemtion amount to plaintiffs. The defendant No.7 are the Lead manager and they equally have no role to play in the matter so far as the cause of action is concerned i.e. non payment of monies by the defendant Nos.1 to 4 to the plaintiffs. 13. The argument advanced by the Counsel for the plaintiffs that offer is made by the plaintiffs in Bombay can hardly be accepted because the offer was on all India basis and plaintiffs happen to invest money in the issue through their Bombay account. If one peruses the application form, which is annexed to the plaint, it clearly goes to show that the address to plaintiffs mentioned in the said application form is of Village Akurdi, District Pune. This will mean that the defendant would look to the plaintiffs as Body Corporate running their affairs from Akurdi, District Pune. The argument advanced by the Counsel for the plaitniffs that the address of Akurdi was given for communication only can’t be accepted. If the application mentioned address of the applicant at Akurdi, certainly the plaintiffs cannot say so that they are from Bombay for the purpose of this issue. -12- 14. The judgments which are cited by the Counsel for the plaintiffs will not be applicable to the facts of this issue for the reasons stated aforesaid The application form submitted with defendant No.5 at Bombay. In my view, in the peculiar facts and circumstances, the argument advanced by the Counsel for the plaintiffs that this Court cannot go into the question of jurisdiction particularly when defendants have not objected to the grant of leave or have not filed an appliation for revocation of the leave cannot be accpeted. If at the stage of consideration of summons for judgmen if defendant No.1 is able to satisfy this Court that this Court has no jurisdiction, certainly this Court can answer the said question and an order can be passed accordingly. It was also contended that the State of Madhya Pradesh has not filed any affidavit in reply and therefore the questin of jurisdiction cannot be considered so far as the State of Madhya Pradesh is concerned. I am not inclined to accept this argument becuse merely because State of Madhya Pradesh has not filed any affidavit in reply raising the contention that this Court has no jurisdiction, that by itself is not proper to say -13- that the State of Madhya Pradesh has submitted to the jurisdiction of this Court. If the Court, after consdiering all the points come to the conclusion that this Court has no jurisdiction, certainly benefit of that can be passed on to the State of Madhya Pradesh even in the absence of affidavit in reply. The aforesaid discussion will go to show that this Court has no jurisdiction to try and entertain this suit and to that extent defendants have been able to make out a case. In view of this observation, defendnats will be entitled to uncondition leave to defend the suit. Hence, the order :- ORDER ORDER ORDER . Unconditional leave to defend the suit is granted. Defendant to file written statement on 4.5.2009. . Suit set down for filing written statement on 4.5.2009. . All the three summons for judment stand disposed of in above terms with no order as to costs. -14- (R.Y.Ganoo, J.) (R.Y.Ganoo, J.) (R.Y.Ganoo, J.)