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Section 20 in The Indian Contract Act, 1872
Section 16 in The Indian Contract Act, 1872
Section 19 in The Indian Contract Act, 1872
Section 15 in The Indian Contract Act, 1872
Hakam Singh vs M/S. Gammon (India) Ltd on 8 January, 1971

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Bombay High Court
Pusaram S/O Dashrathlalji ... vs Ratilal S/O Valji Laddha And Anr. on 6 June, 2005
Equivalent citations: 2005 (6) BomCR 164, 2005 (4) MhLj 341
Author: B Dharmadhikari
Bench: B Dharmadhikari

JUDGMENT B.P. Dharmadhikari, J.

1. The appellant original plaintiff has challenged the order dated 16-12-2004 passed below Exh.15 by the Civil Judge, Senior Division, Darwha in Special Civil Suit No. 46/2004, by which said Court held that it has no jurisdiction to take cognizance of the suit and returned the plaint to appellant/plaintiff for its presentation to proper Court.

2. The present appellant has filed a suit for a specific performance of an agreement of sale dated 27-8-2001 by which the present respondents, who are owners of field survey No. 25, Gat No. 3 in sheet number 4(D) and admeasuring 436765 square feet or 40567 sq. mtr., commonly known as Walji Laddha Ginning Factory at Digras town. Total consideration agreed to is Rs. One crore sixty-five lakhs only (Rs. 1,65,00,0007-). The appellant/plaintiff states that from time to time he paid certain amounts to the respondents and, though he was ready and willing to get the sale deed executed, the respondents avoided and ultimately, memorandum of understanding was arrived at between parties on 10-10-2001 and in it was agreed that sale would be completed on or before 21-12-2001. As the respondents did not perform their part of contract, the appellant filed Special Civil Suit No. 16/2002 on 11-6-2002 before Civil Judge Senior Division, Pusad for a specific performance and for possession. After formation of Court at Darwha, this suit was transferred there and came to be registered as Spl. C.S. No. 46/2004. In that suit the present respondents filed application under Section 21 of Civil Procedure Code read with Section 28 of Indian Contract Act vide Exh.15. The respondents contended that in view of specific clause in the agreement between parties, the Court at a Mumbai alone had jurisdiction to take cognizance of the matter. The plaintiff relied upon Section 16 of Civil Procedure Code to justify filing of suit of at Darwha. However the Trial Court has given importance to that particular clause and has held that Court at Mumbai alone is competent to take cognizance of this suit. It has therefore returned the plaint to present appellant for its presentation to proper Court.

3. I have heard Advocate S. R. Deshpande for appellant/plaintiff and Advocate S. U. Nemade for respondents/defendants. Looking to the nature of controversy, parties requested the Court to decide the appeal itself finally and, accordingly, both the counsels have been heard. Rule was made returnable forthwith and heard finally by consent.

4. Advocate S. R. Deshpande contends that reliance by trial Court upon clause 15 of the Memorandum of Understanding between parties to hold that Court at Mumbai alone has jurisdiction, is erroneous inasmuch as it overlooks the provisions of Code of Civil Procedure. He contends that the Courts at Mumbai can never have jurisdiction over the subject matter. In support he places reliance upon the judgment reported at AIR 1941 Bombay 247 between New Mofussil Co. Ltd. v. Shankarlal Narayandas Mundade between New Moga Transport Co. v. United India Insurance Co. Ltd. He sums up by stating that parties by consent cannot confer jurisdiction upon the Court if it does not have it.

5. Advocate S. U. Nemade for respondents/original defendants contends that clause 15 of the Memorandum of Understanding between parties is very specific in this respect and in view of language thereof, the learned Trial Court is justified in holding that Court at Mumbai alone has jurisdiction in the matter. He places reliance upon Section 20 of Civil Procedure Code and also the judgment of Hon'ble Apex Court reported at AIR 2002 SC 2402 between Shriram City Union Finance Corporation Ltd. v. Rama Mishra. He argues that the view taken by learned trial Court is in accordance with law and as respondents are residing at Mumbai, on account of their old age, specific clause in respect of place of institution has been incorporated into agreement to avoid inconvenience of attending the Court at far of place where property is situated.

6. Clause No. 15 on which the respondents have placed reliance reads as under:-

"Clause 15: The parties hereto agree, record and confirm that this Memorandum is executed in Mumbai and earnest money is also paid in Mumbai and any disputes or differences between the parties hereto with regard to construction or interpretation of this Agreement and/or right of the parties hereto against each other shall be subject to jurisdiction of the Courts in the city of Mumbai only. The parties hereby further agree, record and confirm that except the Courts at Mumbai no other Courts will have jurisdiction."

(Emphasis supplied)

7. In view of this clause, the respondents contended that the Court at Mumbai alone is competent to try the suit for specific performance. The learned counsel for respondents has placed reliance upon AIR 2002 SC 2402 (supra) for this purpose. In this judgment the respondent obtained their bus on lease and its period expired on 14th August, 2000. The respondent defaulted in making payment of instalments and as per clause in the agreement, matter came to be referred to sole Arbitrator, and Advocate of Calcutta for deciding the issue. The respondent did not appear before Arbitrator and hence appellant and Finance Corporation made application under Section 9 of Arbitration Act, 1966 before City Civil Court at Calcutta for appointment of receiver for taking over the possession of suit vehicle. Accordingly receiver came to be appointed and he took over the possession of the bus. The respondent then filed a suit for injunction in Bhubaneshwar (Orissa State) and the appellant objected it to the jurisdiction and contended that Court at Calcutta alone would have jurisdiction. The Trial Court rejected this objection and the appellant filed appeal before District Judge, who allowed the appeal. The respondent then approached High Court in Revision which restored the order of trial Court and the appellant then approached Hon'ble Apex Court in the matter. The Hon'ble Apex Court took note of clause No. 34, which restricted the cognizance of suit or dispute by Calcutta Court and in paragraph 9 found that there is a difference between inherent lack of jurisdiction of any Court on account of statute and the other where parties to agreement bind themselves to have their dispute decided by any one of the Court having jurisdiction. The Apex Court then found that question was not whether the Courts at Orissa had jurisdiction to decide respondent's suit but whether the respondent could have invoked the jurisdiction of that Court in view of clause 34. It is open for the party for his convenience to fix the jurisdiction of any competent Court to have their dispute adjudicated by that Court alone. In other words if one or more Court has the jurisdiction to try any suit, it is open for the parties to choose any one of the two competent Courts to decide their disputes. It is in this background that the Hon. Apex Court has also relied upon its earlier judgment between Hakam Singh v. Gammon (India) Ltd. reported at . The Hon'ble Apex Court concluded that Court at Calcutta alone was competent to try the suit.

8. It is thus clear that the parties must have a choice in the matter of selection of Court for institution of suit. Thus, existence of more than one Court having jurisdiction under normal law to take cognizance of the grievance is condition precedent and thereafter alone, the parties can elect one of such Courts and restrict the institution of their grievance to it. The respondents, therefore, have to show that more than one Court possessed jurisdiction to take cognizance of suit as filed by present appellant. In this respect, opening part of clause No. 15 attempts to take care of that issue by mentioning that the Memorandum is executed in Mumbai and earnest money is paid in Mumbai. Whether, such mention by itself is conclusive and its relevance are the issues which need to be considered. However, perusal of impugned order in this background reveals that, in paragraph 4 thereof the learned Trial Court has recorded that the learned Advocate appearing for defendants before it stated that though the agreement took place at Digras and earnest money was also paid at Digras, still in view of clause 15 agreed between parties, Mumbai Court alone had jurisdiction. Thus, this argument defeats the attempt of defendants to show that the agreement in question was executed at Mumbai or amount was paid at Mumbai. It is thus clear that effort to contend that cause of action accrued at Mumbai has failed. In any case, it becomes a disputed question of fact which cannot be decided without parties leading evidence.

9. At this juncture, relevant provisions of Civil Procedure Code need to be first looked into. Section 20 reads as under :-

"Other suits to be instituted where defendants reside or cause of action arises--

Subject to the limitations aforesaid, every suit shall be instituted in the Court within the local limits of whose jurisdiction-----------(the portion is not relevant for present discussion and hence, not reproduced).

10. The underlined portion at the beginning above therefore speaks of suits about which there is no arrangement made in Civil Procedure Code earlier. This fact becomes apparent in view of subsequent underlined portion which again states that the provision being made in Section 20 is subject to the arrangement made earlier in Civil Procedure Code. Thus, entire Section 20 and its scheme is either subordinate to and is governed by the earlier sections in relation to "Place of Suing" which begins with Section 15. In other words, scheme made by legislature in Section 20 is for suits which are not regulated by Section 15 to 19. When these sections are perused, Section 16 is the section which assumes importance. Section 15 states that every suit is to be instituted in the Court of lowest grade competent to try it. Section 16 states that suit is to be instituted where subject matter is situated. Section 17 then considers the contingency in which such subject matter/immovable property is situated within jurisdiction of different Courts and section 18 makes a provision for place of institution of suit where situation of subject matter/immovable property within jurisdiction of any particular Court is not clear and there is confusion between jurisdiction of two or more Courts in this respect. Section 19 regulates the suits filed for compensation for wrong done to the person or to the movable property and as such, Section 19 is not relevant for present purposes. However, Section 20 is subordinate to all these arrangements.

11. Sections 16, 17 and 18 read together emphasize the fact that suit in relation to immovable property must be filed in the Court within whose jurisdiction it is situated. In this respect reference can be made to the judgment of Special Bench of Calcutta High Court reported at between Maharaja Probirendra Mohun Tagore v. State of Bihar and Anr.. In this case plaintiff filed suit for declaration of his right, title and interest in the settled estate created under a deed of family settlement. He joined State of West Bengal and also State of Bihar as party defendants. The suit was filed at Calcutta and none of the lands were located in West Bengal. The Special Bench considers clause 12 of Letters Patent, Calcutta and also Section 20 of Civil Procedure Code. Clause 12 of letters patent divided suits into two categories (I) suits for land and (II) suits which are not suits for land. The suits for land could be tried by Calcutta High Court in exercise of its ordinary original civil jurisdiction if the land was situated only with the local limits thereof. If part of the land was outside such jurisdiction, suit could still be tried by it if plaintiff had first obtained leave of Court for the purpose. The Bench in paragraph 16 observes that the suit which was not suit for land but is suit for administration of an estate consisting of lands in Calcutta, Patna and other places could be instituted before it with the previous leave, if defendant resided at the time of commencement of suit or the cause of action wholly or in part accrued within the limits of its original jurisdiction. However, these determining factors were held to be totally irrelevant if the suit was suit for land where the only criterion was geographical situation of land. If the land was wholly situated within limits of original jurisdiction, this suit could be tried on the original side without the leave of the Court. The Special Bench also considers the meaning to be given to words "suit for land". However it is not necessary now to look into said controversy. The Special Bench found that suit instituted before Calcutta Court was without jurisdiction.

12. The words "suit for land" appear to have posed some problems about its scope. However, when one looks at Section 16 of Civil Procedure Code, it does not permit any such debate. Section 16 reads as under :-

"16. The suits to be instituted where subject-matter situated - Subject to pecuniary or other limitations prescribed by any law, suits;

(a)      for recovery of immovable property with or without rent or profits;

(b)     for the partition of immovable property;

(c)     for foreclosure, sale or redemption in the case of a mortgage of or charge upon immovable property;

(d)     for the determination of any other right to or interest in immovable property;

(e)     for compensation for a wrong to immovable property.

(f)      for the recovery of movable property actually under distrait or attachment,

shall be instituted in the Court within local limits of whose jurisdiction the property is situated;-----(remaining part not reproduced)

13. Language of Section 16 is very wide and all cases, in which prayer for declaration of any right or interest in immovable property is made or its sale is asked for, must be filed in the Court which has territorial jurisdiction over such immovable property. It definitely covers suit for specific performance and such suit is required to be filed in the Court within local limits of whose jurisdiction the properties situate. Here admittedly, the property is not situated within jurisdiction of Mumbai Court and it is in jurisdiction of Court of Civil Judge, Senior Division, Darwha. Thus, it is apparent that only trial Court and not in the Court at Mumbai possessed the jurisdiction to take cognizance of suit filed by present appellant. The Court at Mumbai did not have such jurisdiction under Civil Procedure Code. In the (supra), the Hon'ble Apex Court has held that choice of forum is available only when two or more Courts have jurisdiction under the Civil Procedure Code and the agreement restricts place of suing to any one of them. This position also emerges from the judgment of Hon'ble Apex Court cited by respondents. Here also the Hon'ble Apex Court has relied upon its earlier judgment reported at (supra). This Court has also considered said issue in 1998(4) L.J. 359 in C.R.A. 816 of 1990 between City And Industrial Development Corporation of Maharashtra v. R.M. Mohite and Company and Ors.. After placing reliance upon case between Hakam Singh v. Gammon (India) Ltd., (supra) in paragraph 5, 6 and 7 it is observed :-

"5. Undisputedly, the claim for damages is on account of non-performance of the contract work and the work site is situated within the territorial jurisdiction of the Raigad Court. It is also not disputed that the contract papers were signed at Kalamboli. There is no dispute that no part of cause of action in the instant case has arisen within the territorial jurisdiction of Bombay Courts. Applying the test laid down by the Apex Court in the matter of Hakam Singh v. Gammon (India) Ltd. , it cannot be said that the parties can be allowed by an agreement to confer jurisdiction on a Court which it does not possess under the Code. It would have been a different case if a part of cause of action had arisen within the limits of Bombay and part within the limits of Raigad District, in which case parties by an agreement could have agreed to refer the dispute to anyone of the Courts of their choice. However, that is not the case in the instant matter and the undisputed fact is that the entire cause of action has arisen within the territorial limits of the Raigad Court. Being so, the respondent cannot avail any benefit from Clause 5 so as to challenge the jurisdiction of Raigad Court to entertain their present suit.

6. The finding arrived at by the trial Court that only the Bombay Courts will have jurisdiction to entertain the dispute is neither borne out from the records nor can stand the test of law, considering the well established principle of law that the parties cannot be an agreement confer jurisdiction on a Court, in fact Section 20 of the Civil Procedure Code clearly provides that any such suit shall be instituted within the local limits of whose jurisdiction the cause of action wholly or in part arisen. This is clear from clause (c) of Section 20 of Civil Procedure Code which is the relevant provision for decision in the matter considering the facts of the case. Indeed, in such circumstances, the Apex Court has clearly observed in Hakam Singh (supra) case as under :

"It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code. But where two Courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy. "

7. In view of the well settled principle of law relating to the jurisdiction of the Court and considering the decision of the Apex Court in Hakam Singh (Supra), the impugned order cannot be sustained and is liable to be set aside. It is apparently clear that the trial Court has failed to exercise its jurisdiction properly while upholding the objection raised by the respondents in the instant case and to the extent has acted with material irregularly in holding that the Raigad Court has no jurisdiction solely on the basis of Clause 5 of the agreement between the parties, thereby wholly ignoring the relevant provisions of law."

14. It is, thus clear, that the Court at Mumbai could not and did not possess jurisdiction to take cognizance of suit for specific performance filed by present appellant in Court within whose territorial limits immovable property forming subject-matter thereof was situated. Clause 15 of the memorandum between parties is therefore redundant because it cannot confer jurisdiction upon Mumbai Court. Section 20, Civil Procedure Code has no relevance in the facts and circumstances of the case.

15. In this view of the matter, the Appeal against Order is allowed. The impugned order dated 16-12-2004 below Exh.15 is set aside and said Exh.15 is dismissed. Plaint is restored back to the file of learned trial Court with a direction to dispose of the suit as expeditiously as possible.

Rule is made absolute in above terms. No order as to costs.