CHITAMBARA NADAR AND ANOTHER OF COLOMBO V. ELASTO LIMITED OF BENTOTA

034-SLLR-SLLR-1994-V2-CHITAMBARA-NADAR-AND-ANOTHER-OF-COLOMBO-V.-ELASTO-LIMITED-OF-BENTOTA.pdf


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The Surveyors' Institute of Sri Lanka v. The Surveyor-General
and Another (Kulatunga, J.)
325
CHITAMBARA NADARAND ANOTHER OF COLOMBO
v.
ELASTO LIMITED OF BENTOTA
SUPREME COURT.
G. P. S. OE SILVA, C.J.KULATUNGA, J. ANDRAMANATHAN, J.
S.C. NO. 5/90
A. NO. 1408/83
C. COLOMBO 82167/MOCTOBER 18.1993.
Jurisdiction – Preliminary issue of law – Civil Procedure Code sections 9(C), 45 -Payment on account stated on goods sold and delivered – Refusal to fulfil anobligation – Law applicable – Is it English Law or Roman Dutch Law?
In an action founded on an account stated there must be some antecedentliability or some previous transaction with reference to which an account is statedand in such case the plaintiff is suing upon a new contract upon a new cause ofaction which is independent of his liability to pay for goods sold and delivered.
To an action on an account stated the law applicable is the Roman Dutch Lawaccording to which the creditor must seek out the debtor in which event the
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[1994] 2 Sri LR.
District Court ot Colombo has no jurisdiction to hear the action, (or Bentota failsoutside the territorial limits of the District Court of Colombo.
An action on goods sold and delivered is based on English Law according towhich the debtor must seek out the creditor. Here an action based on goods soldand delivered would be prescribed.
The present action on accounts stated being governed by Roman Dutch Law, theDistrict Court of Colombo has no jurisdiction to hear the action.
The decision to try the issue of jurisdiction as a preliminary issue of law wascovered being based also on consent,
Cases referred to:
Sonnadara v. Weerasinghe 1 CLW 328.
KappoorSaibo v. Mudalihamy Bass 6 NLR 216, 218.
APPEAL from judgment of Court of Appeal.
D. R. P. Goonetilieke for substituted plaintiff-appellant.
R Wimalachandran with A. P. Nilas for defendant-respondent.
Cur. adv. vutt.
October 29, 1993.
P. 8. OE SILVA, CJ.,
The Plaintiff who carried on business in partnership at 2nd CrossStreet, Colombo 11. instituted this action in the District Court ofColombo, against Elasto Ltd., Bentota, for the recovery of a sum ofRs. 38,232.87. At the trial, both parties raised several issues. IssueNo. 8 which related to the jurisdiction of the Court read as follows:“Does this court have jurisdiction to hear and determine this action?”It is right to add that the defendant had in the answer expressly
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Chitambara Nadar and Another of Colombo
v. Elasto Limited ofBentota (G. P.S.de Siva, C.J.)
327
pleaded that the court has no jurisdiction to entertain the action.Counsel for the defendant invited the court to determine issue No. 8as a preliminary issue of law in terms of section 147 of the CivilProcedure Code. Counsel for the plaintiff did not object to this issuebeing determined as a preliminary issue of law. Parties filed theirwritten submissions. The District Court answered the issue in theaffirmative and fixed the case for trial on the remaining issues.
The defendant moved the Court of Appeal to revise the order ofthe District Court. Acting in revision, the Court of Appeal set aside theorder of the District Court and held that the District Court had nojurisdiction to hear and determine the action. The action wasaccordingly dismissed. The plaintiffs have now preferred this appealagainst the judgment of the Court of Appeal. At the outset,Mr. Goonetilake for the plaintiffs-appellants urged that issue No. 8involved a consideration of questions of fact and could not havebeen taken up as a preliminary issue of law. I do not agree. As rightlysubmitted by Mr. Niles for the defendant-respondent, at the trialCounsel for the plaintiffs agreed to argue the question of jurisdictionas a preliminary issue of law. In the written submissions filed onbehalf of the plaintiffs, no objection was taken on the ground that thisissue involved questions of fact. The objection cannot now be takenfor the first time in appeal.
Section 45 of the Civil Procedure Code states
.'“Every plaint shall contain a statement of facts setting out the^jurisdiction of the court to try and determine the claim in respect of.which the action is brought." The Court of Appeal in its judgment. stated that there is no plea in regard to jurisdiction. This is not. correct, for in paragraph 4 of the plaint it is specifically averred thatthe “cause of action hereinafter pleaded arose at Colombo within the: local limits of the jurisdiction of this court." According to the plaint
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therefore the jurisdiction of the court is founded on the plea that thecause of action arose within the local limits of the District Court ofColombo (Section 9 (c) of the Civil Procedure Code). Having regardto the definition of the term “cause of action” in section 5 of the Civil .Procedure Code it could be broadly be said that the cause of actionis the ‘refusal to fulfil an obligation." The true question that arises fordecision is whether it is a refusal to fulfil an obligation to pay moneydue for goods sold and delivered as contended for on behalf of theplaintiffs or whether it is a refusal to fulfil an obligation to pay moneydue on an account stated, as submitted on behalf of the defendant.
If it is the former, the English law would be applicable and the DistrictCourt of Colombo would have jurisdiction, for under the English lawthe debtor must seek out the creditor. If it is the latter, the RomanDutch Law would apply and the principle is that the creditor mustseek out the debtor. In that event, the District Court of Colombo hasno jurisdiction to hear the action, for Bentota falls outside territoriallimits of the District Court of Colombo.
The question whether the action is one for goods sold anddelivered or whether it is an action on an account stated may bedetermined on a consideration of the averments in the amendedplaint.
The relevant averments read as follows:
“(4) The defendant from time to time purchased from the plaintiffsand the plaintiffs sold and delivered to the defendant tannedleather, industrial chemicals and foot wear accessories and thecause of action hereinafter pleaded arose at Colombo within thelocal limits of the jurisdiction of this court to recover all sumsdue to the plaintiffs on the said goods sold and delivered to thedefendant.
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Chitambara Nadar and Another of Colombo
v. Elasto Limited of Benlola (G. P. S. de Silva, C.J.)
329
The plaintiffs opened an account in the plaintiffs books for thedefendant and debited the defendant with the value of thegoods sold to the defendant and credited the defendant for allpayments made from time to time by the defendant for suchpurchases.
The defendant also opened an account in the defendant'sbooks for the plaintiffs and credited the plaintiffs with the valueof the goods sold by the plaintiffs to the defendant and debitedthe plaintiffs with ah payments made by the defendant for same.
The defendant on or about the 31st March, 1977 adjusted thesaid accounts between the plaintiffs and the defendant and asum of Rs. 790.24 was found due to the plaintiffs which sum theplaintiffs and the defendant confirmed to be correct.
After the 31st March. 1977 the plaintiffs continued to sell tannedleather, industrial chemicals and foot wear accessories to thedefendant and the value of the goods sold to the defendant andthe payments made by the defendant from time to time wereentered in the books of the plaintiffs and the defendant asstated in paragraphs 5 and 6 of the plaint.
The plaintiffs after the 31st March, 1977 from time to timeplaced bills for payment and the defendant from time to timemade various payments as shown in the statement of accounts
| marked “A" and filed herewith.
, The plaintiffs went through the accounts in their books on or
about the 25th April 1978 and found that a sum of Rs. 38,232.87, was due from the defendant to the plaintiffs for the said goodssold and delivered to the defendant.
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(199412 Sri L.R.
The defendant failed and neglected to pay and settle the saidsum of Rs. 38,232.87 found to be due to the plaintiffs andadjusting the accounts between the plaintiffs and the defendanton or about the 25th April 1978."
On a scrutiny of the averments in paragraphs 5 and 6, and inparticular the averments in paragraphs 7, 9 and 11, it seems to methat the action is founded on an account stated. Paragraph 7specifically speaks of an adjustment of accounts between theparties and that it was agreed that a sum of Rs. 790.24 was due tothe plaintiffs, as on 31st March, 1977. Similarly in paragraph 11 it isexpressly pleaded that there was an adjustment of accounts betweenthe plaintiffs and the defendant on or about 25th April, 1978.
Moreover, in the account particulars filed along with the plaint it isSignificant that there is no reference to the facts (the quantity, theprice) relating to the goods sold and delivered. On the other hand,under date 23.2.77 there is a reference to a loan of Rs. 15,000/-given by the plaintiffs to the defendant. The account particularscommence with an opening balance of 14,455.50 as at 31st March1976. If the action was for goods sold and delivered this claim wouldhave been prescribed. What is more, out of the 6 issues raised onbehalf of the plaintiffs, 5 issues were based on an account stated.This clearly shows the true nature of the plaintiffs’ claim.
Where the action is founded on an account stated there must besome antecedent liability or some previous transaction with referenceto which an account is stated (Sonnadara v. Weerasinghe1"). In theinstant case the antecedent liability is for goods sold and delivered.But the action itself is based on the amount due to the plaintiffs fromthe defendant after the accounts maintained by each other areexamined, adjusted, and a balance struck. As stated by Moncreiff J.,
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Chitambara Nadar and Another of Colombo
v. Elasto Limited of Bentota (G. P. S. de Silva, C.J.)
331
in Kappoor Saibo v. Mudalihami Baas™, "if this claim(i.e. a claim for goods sold and delivered) is brought on a validaccount stated, the plaintiff is not suing for goods sold and delivered,nor in a sense possibly upon any acknowledgment of liability for, orpromise to pay for goods sold and delivered, nor upon a continuingcontract. He is suing upon a new contract, upon a new cause ofaction which is independent of his liability to pay for goods sold anddelivered." (The emphasis is mine). I
I accordingly hold that the cause of action pleaded in the plaint isfounded on an account stated and not for goods sold and delivered.The: Court of Appeal rightly held that the District Court of Colombohad; no jurisdiction to hear and determine the action. In the result, theappeal fails and is dismissed with costs.
KUtATUNGA J., -1 agree.
RAMANATHAN J., -1 agree.
Appeal dismissed.