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Cites 9 docs - [View All]
Section 21 in The Indian Contract Act, 1872
Hoosen Kasam Dada (India) Ltd., By ... vs Motilal Padampat Sugar Mills Co. ... on 25 September, 1953
Achratlal Kesavlal Mehta And Co., ... vs Vijayam And Co., By Proprietor, G. ... on 27 January, 1925
Section 28 in The Indian Contract Act, 1872
Jhun Jhunwala Brothers vs N.K.M. Subbaramier on 29 November, 1966
Citedby 11 docs - [View All]
A.B.C. Laminart Pvt. Ltd. & Anr vs A.P. Agencies, Salem on 13 March, 1989
S.A.L. Limited., vs Shreenidhi Trading Company, on 4 February, 2011
Garware Marine Industries ... vs Integrated Finance Co. Ltd on 20 August, 2013
K.Duraisamy vs S.Velmurugan on 19 October, 2009
The Rajasthan Golden Transport ... vs The United India Fire And General ... on 5 October, 1979

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Madras High Court
Sath Nanak Chand Shandurain, ... vs The Tinnevelly Tuticorin ... on 18 January, 1974
Equivalent citations: (1974) 2 MLJ 431
Author: T R Rao

JUDGMENT T. Ramaprasada Rao, J.

1. The defendant in O.S. No. 21 of 1966 on the file of the Court of the Subordinate judge, Tuticorin, is the appellant. The plaintiff respondent filed the suit alleging that it paid in excess to the defendant in the course of certain supplies of R. S Joists for which orders were placed by the plaintiff with the defendant. It also included in the claim a sum of Rs. 210-70 towards demurrage charges which the plaintiff is said to have incurred due to the default on the part of the defendant, as also a sum of Rs. 410-41 towards bank charges which expense was also attributable to certain laches on the part of the defendant. It is common ground that under Exhibit A-29 dated, 17th June, 1963, the defendant supplied towards order No. 1716/GL/2 dated 14th December, 1961, placed by the plaintiff 265 pieces of R. S. Joists untested of a particular specification as detailed in the invoice and charged a sum of Rs. 31,861-17 as their price which included transporting and delivery charges. Again under Exhibit A-30 dated 29th June, 1963, 188 of such pieces were supplied by the defendant pursuant to the same order as above. In the invoices as above the defendant claimed that the joists were of a measurement of 5 inches X 3 inches whilst the plaintiff's case is that the joists were of a dimension of 125 X 75 m.m. Under Exhibits A-5 and A-7 the plaintiff made it clear that it has paid as claimed by the defendant in their invoices Exhibits A-29 and A-30 but that on later verification it was found that the R. S. Joists applied by the defendant was of the dimension 125 mm. x 75 m.m and not 5 inches X 3 inches as billed by the defendant. As the price of the materials sup lied has to be worked out on the weight and as a result of the misdescriation as to the dimension of the joists, the weight mechanically was put up higher resulting in excess charging of the price for the materials supplied. The plaintiff made this position clear by comparing the weight of the materials supplied with the railway weight as per the railway receipt and claimed under those exhibits a refund of the excess sums so paid. Incidentally it may be stated that there was another consignment which also suffered the same mistake and discrepancy and when a claim was made for refund of the excess price paid by mistake, the defendant, without any demur, refunded the same. As regards the two consignments which were the subject-matter of invoices Exhibits A-29 and A-30 towards which refunds of the excess price paid were claimed by the plaintiff under Exhibits A-5 and A-7 the defendant, in response to an express demand made for such a refund under Exhibit A-11 wrote to the plaintiff under Exhibit A-13 inter alia stating "We have given instructions to our Accounts Department to refund the amount". In spite of the circumstances as above the defendant would not refund the excess price paid. This resulted in the plaintiff issuing the suit notice Exhibit A-23 dated 4th September, 1964. It was confronted with a reply Exhibit A-24 dated 3rd October, 1964 whereunder the defendant repudiated liability to refund the amount claimed The plaintiff has therefore come to Court claiming a sum of Rs. 6,556-78 being the excess price paid towards the supplies covered by invoice Exhibit A-29 and sum of Rs. 4,912-18 towards such excess price covered by the invoice Exhibit A 30. The plaintiff also included in the plaint two other claims, one for Rs. 210-70 representing the demurrage charges incurred by it on account on the negligence of the defendant, and the other for Rs. 410-41 towards bank charges. In the written statement the defendant raised the contention that under the express terms of the contract the dispate in respect of the said contract shall be adjudicated by the Courts at Madras alone and that therefore, the Subordinate Judge, Tuticorin, before whom the suit was instituted, had no jurisdiction to try and adjudicate upon it. But without prejudice to the above contention as to jurisdiction, the defendant, on merits denied their liability to refund the alleged excess price paid, as also their liability towards demurrage and banking charges. The learned Subordinate Judge framed the following issues:

1. Whether the cause of action arose at Tuticorin and this Court has jurisdiction to entertain the suit?

2. Whether the entire cause of action arose within the local limits of the jurisdiction of the civil Courts in Madras and this Court has no jurisdiction to entertain the suit?

3. Whether the agreement alleged in para. 2 of the written statement is true and this Court's jurisdiction is excluded thereby?

4. Whether there was excess billing, for the supplies made by the defendant and the defendant is liable for the amounts claimed in that regard?

5. Whether the defendant is liable for demurrage and bank charges?

6. To what relief, if any, is plaintiff entitled?

After hearing the oral evidence and after considering in detail the documentary evidence filed on either side, the learned Subordinate Judge decreed the suit for a sum of Rs. 11,679-66 with proportionate costs disallowing the sum of Rs. 410-41 claimed by the plaintiff as bank charges. The defendant has come up to this Court in appeal after having participated fully in the trial in the lower Court.

2. Mr. T. Raghavan, learned Counsel for the appellant, was unable to impress upon us that the findings of the lower Court on merits ought to in any way be disturbed. As a matter of fact, under Exhibit A-I3 the defendant practically agreed to refund the suit amount and their prior conduct in refunding such excess paid in connection with an earlier supply also fortiles the case of the plaintiff that they did pay the price in excess of the price of the goods to which the defendant was lawfully entitled. As no person can unjustly enrich himself due to a mistake whether wanton or otherwise, made by him in the course, of dealings by him with another and as the weight of the Joists has been wrongly calculated in the invoices, we have no hesitation to hold that the plaintiff is entitled to the refund of the excess price of the goods sold and delivered to it by the defendant as found by the trial Court.

3. As regards the claim for demurrage which was allowed by the Court below, no serious argument had been addressed before us. The disallowance of bank charges is not the subject-matter of any cross appeal either. We are, therefore, sustaining the judgment of the Court below on merits.

4. But the more important question raised by Mr. T. Raghavan, learned Counsel for the appellant is that parties having contracted specifically to vest jurisdiction to decide dispute relating to the relative sales and purchases of goods in the course at Madras, the Court at Tuticorin had no jurisdiction to entertain the suit, and much less to decide on it. The relevant portion of the contract which is reflected in the conditions of sale agreed to between the parties reads thus:

All dealings are subject to Madras jurisdiction". On the basis of the text of such a special clause in the agreement of sale it was contended that there is an exclusion of jurisdiction of all Courts, including the Court at Tuticorin and as such the judgment appealed against is a nullity and is without jurisdiction. What was urged before us is that when the parties have so specifically agreed to have all matters decided in Madras, there is no option left to the plaintiff to choose the Court at Tuticorin though it might otherwise be a competent Court under the provisions of the Civil Procedure Code that being the place of performance of contract. Mr. M. R. Narayanaswami, on the other hand, contended that not only the Court at Tuticorin is a competent Court to entertain the lis but for the special clause as above, but when the defendant had submitted himself to the jurisdiction of that Court and went to trial on the merits he is prevented from raising the question of jurisdiction in this Court and set at nought the considered judgment rendered by the trial Court on merits.

5. A marked distinction exists between cases in which Courts lack jurisdiction to try the cases and where jurisdiction is irregularly exercised by Courts. In the former case the Court ought not to have entered upon trial of the suit; in the latter it could have avoided trial, but necessarily not. Competency of a Court to try an action goes to the root of the matter and when such competence 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. Equally well settled is the proposition that where there are two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen within the jurisdiction of each of these Courts, parties to the concerned transaction can contract to vest jurisdiction in one of such Courts to try disputes which might arise as between themselves. If such a contract is clear, unambiguous, not vague and explicit, it is not hit by Section 28 of the Contract Act. This should not be understood as parties contracting against statute. But this is one of many series of contracts available in mercantile practice and forged in the name of commercial expediency.

6. However, invariably, the whole question resolves itself into one of fact. If the parties at the inception applied their mind and chose one of the competent Courts as the Court in which disputes have to be adjudicated and decided upon, and if such a consensus is demonstrable in a given case, Courts ought not to be astute to find a different contract between the parties. I shall presently refer to the decided cases which touch upon the instant subject-matter;

7. In Achmatlal Kesavlal Mehta and Co. v. Vijayam and Co. (1925) 49 M.L.J. 189 : 22 L.W. 70 : A.I.R. 1925 Mad. 1145 : 90 I.C. 1019 Madhavan Nair, J., had to consider a clause which read that "In all legal disputes arising out of the contract, Ahmedabad will be understood as the place where the cause of action arose." The verb used is 'will' which has therefore to be interpreted literally. The learned Judge therefore held:

Where there are two Courts both of which would normally have jurisdiction to try a suit, an agreement between the parties that the suit should be filed in one of those Courts alone and not in the other does not contravene the provisions of the Contract Act ....I do not think that the term is void, because it means that all suits in respect of the contracts should be brought at Ahmedabad only and not at Madras, I do not think it is void, because the Ahmedabad Court is also a Court which would normally have jurisdiction to entertain those suits....

In Hoosen Kasam Dada (India), Limited v. Motilal Padampat Sugar Mills Co. Limited , Rajamannar, C.J., presiding over the Division Bench, approved of the above principle and held that a stipulation that all disputes in respect of the contract shall be settled by arbitration, failing which, shall be settled in the Court of seller's jurisdiction where this contract shall be deemed to have been entered into, cannot be said to be opposed public policy. This is also authority for the proposition that if there is a voluntary agreement to oust the jurisdiction of all other compentent Courts excepting one, then it is a perfectly legal and an enforceable contact.

8. Reference was also made to two decisions rendered by Ramachandra Iyer, J., as he then was, sitting singly and presiding over a Division Bench as well. In Patel Brothers v. Vadilal Kashidas Limited the exhibit with which the learned Judge was concerned was a printed bill in which there was a printed clause at the top which contained the words 'subject to Bombay jurisdiction". It was found there that beyond filing the said contract, no other evidence was let in, in the case to prove that such a stimulation was entered into voluntarily and that the parties applied their minds at the time when they forged such a contract. The learned Judge, therefore, distinguished Hoosen Kasam Dada (India) Limited v. Motilal Padampat Sugar Mills Co. Limited (1954)1 M.L.J. 434 : 67 L.W. 36 : I.L.R. (1954) Mad. 855 and relied upon the decision of Balakrishna Iyer,J., in Hemchandra, Sahu v. Messrs. Sirdarlal Keraimall and Co. C.R.P.No. l010 of l953 and held _ that such a contract containing a printed clause as above cannot be interpreted to mean that the jurisdiction of all other Courts is excluded. The learned Judge was of the view that such a clause cannot also amount to a contract between the parties agreeing to have Bombay as the venue for settling disputes. Apparently this case was decided on its own merits and on the singular fact that there was no evidence to show that the parties voluntarily agreed to the exclusion of competent Courts than the Courts at Bombay.

9. Even so P. H. Sanghvi v. Asher Textiles Limited (1961) 2 M.L.J. 337 : 74 L.W. 333 was decided on its merits. That was a case where the clause in the contract stipulated that all proceedings in respect of it shall be taken in a Court of original jurisdiction in Tirupur and it so happened that only a District Munsif's Court existed at that place with limited pecuniary jurisdiction of the said Court which will be outside the purview of the clause. Such a clause, Ramachandra Iyer, J., as he then was, speaking for the Bench said, cannot be interpreted to mean any Court having original jurisdiction over Tirupur, such as the Sub-Court at Coimbatore. He continued and said that the general rule of construction of a written contract is that its language should be understood in its ordinary and natural meaning even though such a construction may not carry out the purpose, which the parties may be supposed to have intended. He concluded by saying that it will not, however, be open to the parties, by an agreement, to vest jurisdiction in a Court which it did not possess and deprive the only Court of the jurisdicion which it has(sic)

10. Ramanujam, J., no doubt, followed the ratio in Patel Brothers v. Vadilal Kashidas Limited ( in a decision of his reported in Melur G. Venkatappa and sons, Shimoga, Mysore v. T. V. R Ramalingam Pillai and sons (1973) 32 S.T.C 274. There also the learned Judge who spoke for the Bench was considering a printed clause on the reverse of an invoice which was to the effect that all claims and disputes arising out of the transaction arc subject to the jurisdiction of the Court at Shimoga. Apparently the learned Judge was of the view that there was no further evidence to show that the parties were made aware at all of the existence of that clause in the invoice. It is in that context that the learned Judge preferred the decision of Ramachandra Iyer, J., as he then was, in Patel Brothers v. Vadilal Kashidas Limited (1954) 1 M. L. J. 434 : 67 L.W. 36 : I.L.R. (1954) Mad. 855 and accepted the distinction drawn by him to the ratio in H. K. Dada (Indian Limited v. Motilal Padampat Sugar Mills Co. (1954) 1 M. L. J. 434 : 67 L.W. 36 : I.L.R. (1954) Mad. 855

11. But Alagiriswami, J., in Jhun Jhunwala Brothers v. N.K.M. Subbaramier had occasion to interpret a contract containing the clause. "This order is subject to confirmation by the works at Barang, South Eastern Railway, and shall be considered as having been made at Barang and subject to the jurisdiction of Cuttack Courts only, placing strong reliance upon the words 'only' and invoking the principle in Achratlal Kesavalal Mehta and Co. v. Vijayam and Co. (1925) 49 M. L.J. 189 : 90 I.C. 1019 : 22 L.W. 70 : A.I.R. 1925 Mad. 1145 and Hoosen Kasam Dada (India, Limited v. Motilal Padampat Sugar Mills Co. Limited (1954) 1 M.L.J. 434 : 67 L.W. 36; I.L.R. (1954) Mad. 855 the learned Judge held:

It will be noticed that in the present case the ouster of jurisdiction is specifically made a term of the contract and the contract also says that the contract shall be subject to the jurisdiction of Cuttack Courts only and upheld the principle that it is only the Cuttack Courts that will have jurisdiction to entertain the suit even though part of the cause of action had arisen within their jurisdiction.

12. In the instant case the term of the contract, as already stated, was "all dealings are subject to Madras jurisdiction. " Even assuming that there was consensus ad item between the parties as to the place where causes have to be brought, since it forms part of the contract itself it is for consideration as to how the specific terms can be workedont and enforced. The plaintiff is in the State of Madras. The defendant also is in the State of Madras No particular or specific forum is agreed upon. The terms as to ouster of jurisdiction in the present case is vague and note unambiguous. (The word "Madras" in the popular sense may geographically mean the original civil Courts in the State of Madras. This may be obvious in cases where the defendant contracts with a party outside the State of Madras. If a particular dealing is not inter-State but intra-State, as in this case, it is difficult to hold that there has been such a deliberate attempt on the part of the parties when the contract was entered into so as to exclude the jurisdiction of all the civil Courts in the State of Madras excepting that in the Madras City. The patent, ambiguity in the terms of the contract considered in the light of the situs of trade of the parties in this case, prompts us to hold that it cannot be said that there has been an ouster of jurisdiction of the Court at Tuticorin and that there has been a demonstrable consensus between the parties to vest jurisdiction only in Courts in the City of Madras. Even assuming that Mr. Raghavan's contention is well-founded that the parties agreed by choice to invoke the jurisdiction of the Madras City Courts only, the argument of Mr. M.R. Narayanaswami is that such a technical plea as to ouster of jurisdiction ought not to be entertained at the appelate stage when the defendant did not express and such an duty whiest the case was tried by the trial Court at Tuticorin.

13. We are of the view that the contention of Mr. M.R. Narayanaswami is well-founded. Section 21 of the Civil Procedure Code runs as follows:

No objection as to the place of suing shall be allowed by any appellate or revisional Court unless such objection was taken in the Court of first instances at the earliest possible opportunity and in all cases where issues are settled at or before such settlement, and unless there has been a consequent failure of justice.

It speaks of a rule of prodence as well as a rule of guidance. (The first Part of Section 21 is its prudential content whilst the later part of it sets out the guidelines on which the appellate or revisional Court should act. If by an act of omission or commission the defendant in a particular cause having raised the plea as to jurisdiction and particularly an objection as to the place of suing participates in the trial Court, does not even ask for trial of the issue on such jurisdiction as a preliminary issue, and being aware of the framing of such an issue dose not press for it in a manner known to aw but allows the trial to go on in the usual course on all the issues, he is bound by his own conduct. He should be deemed in such circumstances to have waived his objection as to jurisdiction. He cannot risk a full trial with bald chance of success on merits. Having so risked and having had the benefit of a full trial, it is unreasonable to hold that he is prejudiced at the end of the trial if he finds his cause unsuccessful before the trial Court. A litigant is expected ordinarily to be aware of his legal rights as Ignorantia juris is neminem excusat. Such knowledge and awareness includes his right to press for a decision on his objection as to place of suing which is obviously a contractual right and seek for a trial of the cause by the agreed competent Court. He should be alert as to press for such a decision at the appropriate time before the forum in which, according to him, the lis has been wrongly instituted and thus avoid prejudice on all sides to all parties. If he does not, he cannot at the appellate stage approbate and reprobate and attempt to re-open a rather closed issue and avoid the assailing of the general verdict on merits. It is this essential feature in such a subject-matter that is brought o t in the second part of Section 21, Civil Procedure Code, which lays down as a requirement in law that unless there has been a consequent failure of justice, a litigant should not be encouraged to raise objection as to the place of suing at the appellate or revisional stage, since such objection, though taken in the Court of first instance, was not pressed to its normal end. In fact, the guidelines in Section 21 make it imperative that such an objection has to be raised at the earliest possible opportunity and in all cases where issues are settled at or before such settlement. A hesitant attempt, no doubt, was made in the Court below as issues 1, 2 and 3 have been so expressly framed. In suite of this the plaintiff was not diligent to pursue the issues in the appropriate manner and in a manner known to law, but suffered ultimately a judgment against him. In these circumstances it cannot be said that there has been a consequent failure of justice within the meaning of the last paranthetical clause in Section 21, Civi. Procedure Code.

14. In Kiran Singh v. Chaman Paswan the Supreme Court laid down the salient principle thus:

The policy underlying Section 11 of the Suits Valuation Act, as a so of Sections 21 and 99 of the Civil Procedure Code is that when a case has been tried by a Court on the merits and judgment rendered, it should not be lable to be reversed purely on technical grounds unless a fail re of justice has resulted. The policy of the legislature has been to treat objections as to jurisdiction, both territorial and pecuniary, as technical and not open to consideration by an appelate Court, unless there has been prejudice on the merits.

The Supreme Court, this, has characterised an objection as to territorial jurisdiction as technical and if no concrete roof is available as to the resultant prejudice caused to the complaining litigant he ought not to be encouraged to reiterate the same plea and raise objection as to territorial jurisdiction in the appelate stage.

15. In Jagan Mohan Rao v. Swarun (1972) 2 M.L.J. 77:85 L.W. 484 Ramanujam J., after referring to the decision of the Supreme Court as above, observed that in such cases the appelant has in; alowed the ower Court to proceed to decide on the merits of the case and taken a chance of having a decision in his favour from the lower Court, is prevented from raising the question of jurisdiction at the appelate stage.

16. Having regard to the express conduct of the appellant and as on merits he was unable to challenge the findings of the Court below and as in our view the appellant has not been prejudiced in the least by the trial of the case by the Subordinate Judge. Tuticorin, we are unable to accent and allow the technical objection as to territoria jurisdiction at this stage. The appeal, therefore, fails and is dismissed with costs.