Gujarat High Court Case Information System Print CRA/63/2001 7/ 10 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD CIVIL REVISION APPLICATION No. 63 of 2001 For Approval and Signature: HONOURABLE MS JUSTICE SONIA GOKANI ================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================= PARLE PRODUCTS LIMITED - Applicant(s) Versus JADAV F BOMBAYWALA - Opponent(s) ================================================= Appearance : MR DC DAVE for Applicant(s) : 1, MR BA SURTI for Opponent(s) : 1, ================================================= CORAM : HONOURABLE MS JUSTICE SONIA GOKANI Date : 21/02/2011 CAV JUDGMENT
1. This Civil Revision Application is preferred by the petitioner M/s.Parle Products Limited against the judgment and order dated 30.8.1999 passed by the learned Civil Judge in Special Civil Suit No. 39 of 1999 below Exh.9.
Original plaintiff Shri Jaydev F. Bombaywala (present respondent) filed the said Special Civil Suit on the allegation that the present petitioner has illegally and unilaterally terminated the agreement of wholesalership entered into by and between the parties and as a consequence of such termination of contract, the respondent hereto has allegedly suffered the damages. The present petitioner in the aforementioned suit has moved the application under Order VII Rule 10 of the Civil Procedure Code insisting that the Courts in Bombay only will have jurisdiction to entertain the dispute relating or arising out of wholesalership agreement dated 1.1.1976, the breach whereof is alleged. It is further insisted that the suit is filed on the basis of the said agreement entered into by and between the parties and the jurisdiction of the Courts other than that of the Bombay Court has been ousted as is permissible under the law.
D.C. Dave, learned counsel for the petitioner has vehemently submitted that there is an agreement in existence between the parties specifying ouster of the jurisdiction of all other Courts than the Courts specified in the agreement and therefore, the parties should be compelled by the Court to abide by such an agreement. He further submitted that when ouster clause is clear, unambiguous and specific, accepted notion of the contract must bind the parties and unless the absence of ad idem can be shown, other Courts should avoid exercising the jurisdiction. He further insisted that respondent is not likely to be prejudiced in any manner and non-implementation of the agreement will put a death knell to the objective of ouster. It is further argued by the learned counsel that the issue whether the jurisdiction is created or confined could be addressed by the Court without recording evidence and, therefore, it was outrightly erroneous on the part of the learned Judge not to give effect to the specific clause contained in the agreement. He insisted on the exercise of powers of revision under Section 115 of the Civil Procedure Code as according to him the failure to exercise the same would amount to miscarriage of justice. He has taken this Court to the clause 10 of the said agreement which runs as follows:-
10. Jurisdiction: All accounts will be made and settled in Bombay & Wholesaler shall make payment to the Company in Bombay. All legal proceedings in respect of any dispute or matter relating to or arising out of this agreement shall be taken only in the Courts having jurisdiction in Bombay."
Reliance is placed by counsel Mr.Dave on following judgments:-
Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem reported in AIR 1989 SC 1239.
2. Indian Oil Corporation Ltd. vs. M/s. Pragat Gas Service and anr. reported in 1993(1) G.L.H. 1004.
3. Cholamandalam Investments & Finance Co. Pvt. Ltd. vs. Radhika Synthetics and another reported in AIR 1996 SC 1098.
Angile Insulations vs. M/s. Davy Ashmore India Ltd reported in AIR 1995 SC 1766.
5. Balaji Coke Industry Private Limited vs. MAA Bhagwati Coke Gujarat Private Limited reported in (2009) 9 SCC 403.
3. Shri Kunal Shah learned advocate for the respondent argued that it was with mala fide intention that the contract has been terminated by the present petitioner and the loss of business on account of the said mala fide act on the part of the present petitioner resulted into damages. He has also submitted that there is no justification in exercising powers under Section 115 of the Civil Procedure Code as this Court is not to substitute its discretion in place of that of the trial Court.
4. Dwelling in the case laws at the outset;
1) In A.B.C. Laminart Pvt. Ltd. and another vs. A.P. Agencies, Salem (supra), ratio laid down is reproduced hereinafter:-
" Where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Sec.23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Mercantile Law and practice permit such an agreement."
" Where the clause under which it was claimed that there was ouster of jurisdiction of Courts only stated that any dispute arising out of sale would be subject to jurisdiction of Court within whose jurisdiction order was placed but there were no exclusive words like 'exclusive', 'alone', 'only' and the like, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. "
"18. In Hakam Singh v. M/s. Gammon (India) Ltd., (1971) 3 SCR 314: (AIR 1971 SC 740) the appellant agreed to do certain construction work for the respondent who had its principal place of business at Bombay on the terms of conditions of a written tender. Clause 12 of the tender provided for arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into by the parties at Bombay, and the Court in Bombay alone shall have jurisdiction to adjudicate upon. On dispute arising between the parties the appellant submitted a petition to the Court at Varanasi for an order under Section 20 of the Arbitration Act, 1940 that the agreement be filed and an order of reference be made to an arbitrator or arbitrators appointed by the Court. The respondent contended that in view of the Clause 13 of the arbitration agreement only the Courts at Bombay had jurisdiction. The Trial Court also held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the Courts possess. The High Court in revision held that the Courts at Bombay had jurisdiction under the general law and hence could entertain the petition and that in view of Clause 13 of the arbitration agreement the petition could not be entertained at Varanasi and directed the petition to be returned for presentation to the proper Court. On appeal therefrom one of the questions that fell for consideration of this Court was whether the Courts at Bombay alone had jurisdiction over the dispute. It was held that the Code of Civil Procedure in its entirety applied to proceedings under the Arbitration Act by virtue of Section 41 of that Act. The jurisdiction of the Court under the Arbitration Act to entertain a proceeding for filing an award was accordingly governed by the provisions of the Code of Civil Procedure. By the terms of Section 20(a) of the Code of Civil Procedure read with explanation II thereto the respondent company which had its principal place of business at Bombay was liable to be sued at Bombay. It was held that it was not open to the parties to agreement to confer by their agreement jurisdiction on a Court which it did not possess under the Code. But where two Courts or more have under the Code of Civil Procedure jurisdiction to try suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts was not contrary to public policy and such an agreement did not contravene Section 28 of the Contract Act. Though this case arose out of an arbitration agreement there is no reason why the same rule should not apply to other agreements in so far as jurisdiction is concerned. Without referring to this decision a Division Bench of the Madras High Court in Nanak Chand v. T.T. Electric Supply Co., AIR 1975 Mad 103 observed that competency of a Court to try an action goes to the root of the matter and when such competency is not found, it has no jurisdiction at all to try the case. But objection based on jurisdiction is a matter which parties could waive and it is in this sense if such jurisdiction is exercised by Courts it does not go to the core of it so as to make the resultant judgment a nullity. Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Ss. 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Mercantile Law and practice permit such agreements.
22. Coming to Clause 11 we already found that this clause was included in the general terms and conditions of sale and the order of confirmation No.68/59 dated 2-10-1974 with the general terms and conditions was sent from Udyognagar, Mohmadabad, Gujarat to the respondent's address at 12 Suramangalam Road Salem,Tamil Nadu. The statement made in the Special Leave Petition that Udyognagar, Mohamadabad, Gujarat of Kaira has not been controverted. We have already seen that making of the contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus Kaira court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the Court and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause ' any dispute arising out of this sales shall be subject to Kaira jurisdiction' ex facie we do not find exclusive words like 'exclusive.'alone', 'only' and the like. Can the maxim ' expressio unius est exclusio alterius' be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded. We accordingly find no error or infirmity in the impugned judgment of the High Court."
2) In the case of Indian Oil Corporation Ltd. vs. M/s. Pragat Gas Service and anr.(supra), it is held as under:-
According to the Supreme Court in the decision in AIR 1989 SC 1239 when a clause in a contract is clear, unambiguous or specific and the words like 'alone', 'only', 'exclusive', etc. are used, it would bind the parties unless the absence of ad idem is shown. Even in absence of such words, looking to the surrounding circumstances, the Court may hold the agreement to be binding to the parties"
Shelat, however, submitted that in all those cases, the proceedings were initiated either by a third party or by the person who felt aggrieved by such agreement and was of the opinion that gross injustice was meted out to him and the contention was taken by the other side that the Court had no jurisdiction to entertain the suit in view of the agreement of the parties. In the light of the facts and circumstances, in those cases, this Court held that notwithstanding an agreement, the Court may grant relief in favour of the plaintiff. According to Mr. Shelat, in the instant case, it does not lie in the mouth of the appellant Corporation to ignore Clause 36 and to invoke jurisdiction of Baroda Court. He submitted that the defendants were doing business at Baroda. It was the plaintiff- Corporation whose Head Office is at Bombay entered into an agreement with the defendants and they were compelled to sign such agreement, if they were interested in dealership/ distributorship. He further submitted that the clause was specific and unambiguous and explicitly clear. In such cases, the Courts have taken a view that if the agreement is not hit by the provisions of Section 28 of the Contract Act, only that Court would decide the matter which has been agreed to by the parties to the contract. A number of decisions have been cited before me. However, I intend to refer only two decisions of the Hon'ble Supreme Court in the case of Globe Transport Corporation v. Triveni Engg. Works, reported in 1984 GLH 63 (SC) and A. B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem reported in AIR 1989 SC 1239. Again, it is pertinent to note that in both the cases, the matters reached to the Supreme Court only at preliminary stage. In the former case, the Hon'ble Supreme Court observed that if the parties by agreement opted for jurisdiction of a particular Court excluding other Courts and if that Court had jurisdiction, such an agreement would be legal and valid and must be given effect to. in the latter case, the Hon'ble Supreme Court had made the position much more clear. Referring to a number of cases, the Supreme Court observed in para 21 as under:
From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction.
As regards construction of the quarter clause when words like "alone", "only", "exclusive" and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim expressio unius est exclusio alterius -
expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all other from its operation may in such cases be inferred. It has, therefore, to be properly construed." (Emphasis supplied.) Looking to the above observations and particularly the italicised portion, it becomes clear that according to the Supreme Court, when a clause in a contract is clear, unambiguous or specific and the words like 'alone', 'only', 'exclusive', etc. are used, it would bind the parties unless the absence of ad idem is shown. Even in absence of such words, looking to the surrounding circumstances, the Court may hold the agreement to be binding to the parties. In that case, the agreement entered into between the parties contained a clause ' any dispute arising out of this sale shall be subject to Kaira Jurisdiction'. The Supreme Court observed that though ex facie, there was no exclusionary words like 'exclusive', 'alone', 'only' and the like, the intention of the parties was to confer jurisdiction to Kaira Court alone. In these circumstances, jurisdiction of Salem Court was excluded"
3) In the case of Cholamandalam Investments & Finance Co. Pvt. Ltd. vs. Radhika Synthetics (supra), it is held as under:-
"6. It is settled law that where two Courts have jurisdiction to adjudicate upon any dispute, the parties by a contract can submit on the jurisdiction of one and exclude the jurisdiction of the other. In that view, it appears that the parties are bound to submit to the jurisdiction of the High Court of Madras."
4) In the case of M/s. Angile Insulations vs. M/s. Davy Ashmore India Ltd (supra), it was held as under:-
this Court laid that where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therwith, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves, the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague, it is not hit by Ss.23 and 28 of the Contract Act. This cannot be under stood as parties contracting against the statute. Mercantile law and practice permit such agreements."
5) In the case of Balaji Coke Industry Private Limited vs. MAA Bhagwati Coke Gujarat Private Limited (supra), the case of A. B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem (Supra) is reiterated.
5. Thus the ratio laid down in all the aforementioned judgments, it is explicitly made clear that the parties cannot create or confer the jurisdiction if there is none but can certainly confine the same, provided there is a clear, unambiguous and specific ouster clause in the agreement entered into by and between the parties. And, unless the absence of ad idem can be shown, other Courts can be precluded from exercising the jurisdiction.
6. The short question in the said premise therefore before this Court in this revision is as to whether the issue of jurisdiction is so clear that there would arise a need to interfere with the order in Special Civil Suit below Exh.9.
7. The Special Civil Suit preferred by the present respondent arises out of the agreement of wholesalership, which allegedly has been terminated by the petitioner illegally and unilaterally. The tenor of plaint if is looked at, all the averments made therein are emerging from the said alleged breach of contract. The respondent (original plaintiff ) has insisted in the reply filed in the Special Suit as to how Court at Bharuch also has jurisdiction and the only defence that has been taken is of unilateral covenant or the standard form of contract where his signature is obtained allegedly under the influence of obtaining wholesalership. Undoubtedly, the Court at Bharuch may also have jurisdiction, considering other facts pleaded in the plaint on the jurisdiction of the Court, in the instant case, clause 10 of the said agreement, reproduced hereinabove, clinches the issue which restricts the jurisdiction as the parties have agreed to ouster the jurisdiction of all other Courts than that of Courts in Bombay, suffixing the same with the word" only" and has ruled in A. B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem (supra). With this exclusive word jurisdiction of other Courts appears to be clearly, unambiguously and explicitly excluded and, therefore, this is a fit case for interfering in the revision setting aside the order of trial Court below Exh.9.
8. Consequently, the plaint should be returned to the respondent (original plaintiff) for presenting it before the appropriate Court within a stipulated period as provided under the law. Petition is disposed of. No order as to costs. Rule is made absolute to the above extent.
Sonia Gokani, J. ) Learned advocate Mr. Kunal Shah, at this stage, has requested the Court that the point of limitation may not come in the way of original plaintiff to which the other side has ensured not to raise any objection and even otherwise as the Special Civil Suit was stayed by virtue of the order of the High Court, the original plaintiff is entitled to the legal remedy as provided under the law and, therefore, there may not require any other specific order on that aspect.
( Ms. Sonia Gokani, J. ) sudhir Top