Delhi High Court
Gujarat Insecticides Ltd. vs Jainsons Minerals And Anr. on 15 March, 2007
Equivalent citations: I(2008)BC45, 140(2007)DLT465, (2008)149PLR27
Author: A.K. Sikri
Bench: A.K. Sikri
JUDGMENT A.K. Sikri, J.
Page 1369
1. This suit filed by the plaintiff is for recovery of Rs. 20,92,086/- along with interest @ 24% p.a. w.e.f. 1.1.1999. The plaintiff is a company incorporated under the Indian Companies Act and is carrying on the business of manufacture and supply of insecticides and pesticides and agro Chemicals to its various customers. The plaintiff company also extends credit to its customers varying from 60 to 70 days, from the date of actual supply for making payments for the goods supplied. The defendant No. 1 is a partnership firm for which the defendant No. 2 is the managing partner. Other partners are not imp leaded as it is stated by the plaintiff that the plaintiff is not aware of any other partners of the defendant No. 1 firm.
2. It is the case of the plaintiff that sometime during the year 1989, the defendants approached the plaintiff for supply of certain pesticides since the plaintiff company is carrying on the business of manufacture and supply of insecticides, pesticides and agro-Chemicals. Thereafter from the year 1989 onwards the plaintiff began to supply the pesticides as requisitioned by the defendants and as a result of which a sum of Rs. 11,55,704/- became due and payable on behalf of the defendants to the plaintiff and towards the part payment of the aforesaid outstanding amount, the defendants issued two cheques of Rs. 5,08,728/- and Rs. 5,51,258/- dated 9.10.95 and 12.1.96 respectively. When the said cheques were presented for encashment, the same were dishonoured and returned unpaid to the plaintiff. Page 1370 The plaintiff in these circumstances issued notice dated 12.1.1996 regarding dishonour of cheques. Insofar as cheque dated 12.1.1996 is concerned, notice under Section 138 of the Negotiable Instrument Act was given and as in spite thereof defendants failed to make the payment the plaintiff filed complaint under Section 138 of the N.I. Act which is pending trial before the Metropolitan Magistrate, Delhi. However, complaint regarding dishonour of second cheque dated 9.10.95 was not filed and the plea of the plaintiff in this behalf is that defendants had assured to make the payment which was not honoured but in the meantime limitation for filing the complaint had expired. The plaintiff thereafter amended the suit and imp leaded Pioneer Organics (India) Ltd as defendant No. 3. Impleadment of defendant No. 3 is on the ground that the defendant No. 1 had been converted into a limited company in the name and style of defendant No. 3 which had taken over all the assets and liabilities of the defendant No. 1.
3. In the written statement filed on behalf of defendant No. 2 it is pleaded that the suit of the plaintiff is barred by limitation. Objection regarding territorial jurisdiction of this Court is also taken. On merits, the case set up is that that since the plaintiff used to insist upon handing over of post dated cheques immediately on dispatch of the materials, the partner of erstwhile defendant No. 1 concern had no other option but to provide blank cheques. Moreover, in the present case the said cheques (referred in the plaint) were apparently on the face of it misused for number of reasons. For example, all the cheques were presented when the Jainson Minerals was not existing. Secondly amount filled up in the cheques do not tally with the respective invoices amount. Thirdly, in the demand notice dated 18/11/1998, the plaintiff has categorically stated that it has issued a cheque bearing No. 107094 dated 12/01/1996 for Rs. 5,51,258/- where as while filing the above mentioned suit the plaintiff has claimed and stated that it has issued two cheques bearing No. 107082 dated 9.1.95 and 107094 which shows that there are number of cheques which are lying in the custody of the plaintiff. Further, it later on calculated the interest which is mentioned as Rs. 5,08,728/- i.e. interest from 8th Sept,1995 to 11th January,1996 calculated @ 24% p.a. which was never agreed nor there was any contract to this effect. It is also averred that there is nothing due and payable by the defendants. However, without prejudice, even for the sake of argument if one takes into consideration the alleged statement of account filed by the plaintiff, it only shows that as on 6.7.1995, liability of the defendant No. 1 was shown as Rs. 60,367/-. Hence in any case the present suit is not maintainable.
4. Following issues were framed in this case vide order dated 23.1.2006:
1. Whether this Court has territorial jurisdiction to entertain and decide the present suit, particularly in view of the exclusion clause printed at the invoices issued by the plaintiff?OPD.
2. Whether the plaint has been signed, verified and suit instituted by a duly authorized person? OPP.
3. Whether the suit is bad for misjoinder of parties, as alleged in the written statement? OPP.
Page 1371
4. Whether the present suit is barred by limitation? OPP.
5. Whether the plaintiff is entitled to a decree for the prayed amount? OPP.
6. Whether the plaintiff is entitled to interest? If so, at what rate and for what period? OPP.
7. What is the effect of dishonouring of the cheques alleged to have been issued by the defendants in favor of the plaintiff in discharge of their claims? OPP.
8. Relief.
5. Issue No. 1 was treated as preliminary issue and both the counsel have advanced their arguments on this issue. Learned Counsel for the plaintiff submits that this Court had the territorial jurisdiction to decide the suit as the defendants had approached the plaintiff company for supply of the aforesaid goods in question. The plaintiff has also been supplying the goods as requisitioned and the goods were supplied to the defendants from its depots at New Delhi, Parwanoo etc. It is also stated that though the defendants are based at New Delhi, they requested the plaintiff to supply the said goods to them at Fatehabad, Haryana. In the instant matter the plaintiff has its office at New Delhi. The defendants work for gain at New Delhi. The defendants approached the plaintiff company for supply of certain goods at New Delhi. The plaintiff supplied certain goods from New Delhi. The payments were received from the defendants at New Delhi. The cheques on account of part payment on behalf of the defendants were got issued at New Delhi. The cheques issued on behalf of the defendants were presented for encashment at New Delhi, whereupon the said cheques got dishonoured and the proceedings under Section 138 of the N.I. Act were initiated and are pending before the Court of Metropolitan Magistrate at New Delhi. It is thus claimed that substantial cause of action has arisen at Delhi, though part of cause of action has arisen at various cities as well i.e. Parwanoo and Fatehabad. It is not disputed that the invoice raised by the plaintiff incorporates the clause "subject to Bharuch jurisdiction" but it is the case of the plaintiff that no cause of action has arisen at Bharuch nor the defendants have been able to show how Court at Bharuch will have exclusive jurisdiction. It is thus argued that once the Bharuch Court lacks inherent jurisdiction, even the parties cannot confer jurisdiction upon the said Court by their consent and in support of this proposition, reliance is placed on the following judgments:
1. Hakam Singh v. Gammon (India) Ltd. .
2. A.B.C. Laminart Pvt. Ltd. and Anr. v. A.P. Agencies .
3. Angile Insulations v. Davy Ashmore India Ltd. and Anr. .
Page 1372
4. New Moga Transport Co. v. United India Insurance Co. Ltd. .
6. It is also argued that the invoices placed by the plaintiff on record are denied by the defendants and, therefore, defendants cannot place reliance on the clause relating to jurisdiction.
7. On behalf of the defendants, it was submitted that the plaintiff and the defendant purposefully with their open eyes choose the place of settling the dispute (if any) is subject to Bharuch jurisdiction where the goods, i.e. Quinalphos (Tech), Fenvalerate (Tech), Cypermathrin (Tech), were manufactured and the registered office and work of the plaintiff is at Bharuch. It was argued that as per settled position in law, even if a small part of cause of action arose at a place that Court would have the jurisdiction, as held in the case of Angile Insulations v. Davy Ashmore India Ltd, & Anr.(supra). It was also submitted that the Supreme Court while dealing with Section 20 Explanation to Clause A of CPC has held in the case of Patel Roadways Ltd. v. Prasad Trading Company that the location of the subordinate office, within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. Learned Counsel stated that this has been upheld in the case of New Moga Transport Co. v. United India Insurance Co. Ltd. (Supra). The defendants further state that the contract is valid and the parties are to be relegated to Bharuch Court as both the parties agreed to submit to the jurisdiction of the said Court, where the goods were manufactured and the registered office and work of the plaintiff company is also located. Hakam Singh v. M/s.Gammon (India) Ltd. (supra) was cited for the proposition that if there is an agreement conferring the jurisdiction of one of the Court where a part of the cause of action has arisen, then it is not against the public policy and the suit has to be filed in that Court alone. The performance of the contract is a part of cause of action. In the documents filed by the plaintiff, it is clearly said that the goods were dispatched from the depot of the plaintiff i.e. Parwanoo which were originally manufactured in Bharuch and delivered to the defendant's office at Fatehabad. It was further submitted that in the present case, admittedly the contract was not executed within the jurisdiction of this Court and performed at a place which is outside the jurisdiction of this Court. As regards construction of the ouster 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'-one is the exclusion of another- may be applied. The same proposition has been upheld in A. B. C. Laminart Pvt. Ltd. & Anr. v. A.P. Agencies (supra) and the same contentions have also been upheld in the case of New Moga Transport Co. v. United India Insurance Co. Ltd. (Supra) as Page 1373 well as in the case of Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. . In a similarly placed case Gujarat High Court in the matter of S. Manuel Raj & Co. v. J. Manilal & Co. reported in AIR 1963 Gujarat 148 held that where there was a clause `subject to Madras jurisdiction', the jurisdiction of all other Courts to be excluded.
8. I have considered the submissions of both the parties. The first question to be determined is the effect of the clause in the invoices i.e. on the facts of this case, whether it can be said that Bharuch Court has the exclusive jurisdiction in the matter?
9. The suit is filed by the plaintiff on the basis of invoices allegedly raised which are filed along with the plaint by the plaintiff. In these invoices it is specifically mentioned that the transaction is "subject to Bharuch Jurisdiction". Even if the defendants have denied the invoices, plaintiff can succeed in the suit if the plaintiff proves that goods were supplied through these invoices. Therefore, insofar as plaintiff is concerned it cannot shy away from the clause relating to jurisdiction mentioned in the invoices and cannot say that merely because defendants have denied these invoices, the plaintiff is also not bound by the same. As the case of the plaintiff is founded on these invoices on which the plaintiff places reliance, the plaintiff is bound by the terms and conditions contained therein. Thus, Insofar as issue of jurisdiction is concerned, same will have to be decided with the aforesaid clause in mind.
10. It is trite law that when more than one Court has the jurisdiction, parties may, by agreement, confer exclusive jurisdiction on one Court to the exclusion of all other Courts. At the same time, if a particular court has no jurisdiction and it lacks inherent jurisdiction, the parties cannot confer jurisdiction upon the said Court by their consent. Therefore, what is to be seen is as to whether part of cause of action arose within the jurisdiction of Bharuch Court. If answer to this question is in the affirmative, then Bharuch Court will have exclusive jurisdiction. On the other hand if Bharuch Court lacks inherent jurisdiction, such a clause contained in the invoices would not be of any help to the defendants and the same would be void.
11. In the case of Angile Insulations v. Davy Ashmore India Ltd. (supra) the Supreme Court stated the law in the following manner:
4. Normally, the plea of jurisdiction of the Court is to be considered in accordance with Sections 16 to 20 of CPC. Section 20 provides that subject to some limitations, every suit shall be instituted in a Court within the local limits of whose jurisdiction - (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carried on business, or personally Page 1374 works for gain; or any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides or carried on business or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally works for gain.
5. So, normally that Court also would have jurisdiction where the cause of action, wholly or in part, arises, but it will be subject to the terms of the contract between the parties. In this case, Clause (21) reads thus: This work order is issued subject to the jurisdiction of the High Court situated in Bangalore in the State of Karnataka. Any legal proceeding will, therefore, fall within the jurisdiction of the above Court only. A reading of this clause would clearly indicate that the work order issued by the appellant will be subject to the jurisdiction of the High Court situated in Bangalore in the State of Karnataka. Any legal proceeding will, therefore, be instituted in a Court of competent jurisdiction within the jurisdiction of High Court of Bangalore only. The controversy has been considered by this Court in A.B.C Laminart Pvt. Ltd. and Anr. v. A.P. Agencies, Salem . Considering the entire case law on the topic, this Court held that the citizen has the right to have his legal position determined by the ordinary Tribunal except, of course, subject to contract (a) when there is an arbitration clause which is valid and binding under the law, and (b) when parties to a contract agree as to the jurisdiction to which dispute in respect of the contract shall be subject. This is clear from Section 28 of the Contract Act. But an agreement to oust absolutely the jurisdiction of the Court will be unlawful and void being against the public policy under Section 23 of the Contract Act. We do not find any such in validity of Clause (21) of the Contract pleaded in this case. On the other hand, 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 therewith, 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 Sections 23 and 28 of the Contract Act. This cannot be understood as parties contacting against the statute. Mercantile law and practice permit such agreements.
12. It could not be denied by the plaintiff that plaintiff has its registered office and manufacturing unit at Bharuch. The defendants have categorically stated that goods which were dispatched by the plaintiff from its depot at Parwanoo were originally manufactured at Bharuch and delivered to the defendants' office at Fatehabad. On the invoice where words 'subject to Bharuch jurisdiction' are written, it shows that the registered office and the works of the plaintiff are at Plot No. 805/806,GIDC Industrial Estate,, Ankleshwar, Dist. Bharuch (Gujarat). Therefore, the goods supplied to the defendants were manufactured at Bharuch.
Page 1375
13. However, I am afraid that simply because the goods are manufactured at Bharuch, it cannot be said that part of cause of action arose at Bharuch. In so far as the defendant is concerned, goods were supplied from Parwanoo to the defendant at Fatehabad. Therefore, there is inherent lack of jurisdiction so far as Bharuch is concerned. Next question is: whether any cause of action or part of cause of action accrued in Delhi?
14. It seems that in the present case no cause of action had arisen within the territorial jurisdiction of this Court either. In para relating to the territorial jurisdiction the plaintiff has averred in the petition as under:
13. That the defendants office is situated in Delhi. They reside and work for gain at Delhi. The aforesaid cheques, towards the part payment were handed over by the defendant to the plaintiff at Delhi. The plaintiff is entitled to an amount of Rs. 20,92,086/- (Rupees Twenty Lakhs Ninety Two Thousand and Eighty Six only) along with the interest and costs from the defendants. Hence, this Hon'ble Court has got the pecuniary and territorial jurisdiction to entertain this suit.
15. The reasons given for conferring the jurisdiction in Delhi are (a) defendants reside and work for gain at Delhi (b) the cheques towards the part payment were handed over by the defendants to the plaintiff at Delhi. It is, however, not disputed that the goods were supplied by the plaintiff from its Parwanoo depot to the defendants at its Fatehabad (Haryana) Office. The contract is thus performed outside Delhi. Merely because the defendants have its principal office at Delhi would not confer the jurisdiction if the defendants also have its subordinate office at other place and cause of action has also arisen at that place and in that case suit will be filed only in the Court within whose jurisdiction the company/corporation has its subordinate office and not in the Court within whose jurisdiction it has principal office. This is so held by the Supreme Court in the case of Patel Roadways Ltd. v. Prasad Trading Company . In the process Section 20 of the CPC was interpreted in the following manner:
9. Clauses (a) and (b) of Section 20 inter alia refer to a court within the local limits of whose jurisdiction the defendant inter alia "carries on business". Clause (c) on the other hand refers to a court within the local limits of whose jurisdiction the cause of action wholly or in part arises. It has not been urged before us on behalf of the appellant that the cause of action wholly or in part arose in Bombay. Consequently Clause (c) is not attracted to the facts of these cases. What has been urged with the aid of the Explanation to Section 20 of the Code is that since the appellant has its principal office in Bombay it shall be deemed to carry on business at Bombay and consequently the courts at Bombay will also have jurisdiction. On a plain reading of the Explanation to Section 20 of the Code we find an apparent fallacy in the aforesaid argument. The Explanation is in two parts, one before the word "or" occurring between the words "office in India" and the words "in respect Page 1376 of" and the other thereafter. The Explanation applies to a defendant which is a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will "be deemed to carry on business" at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The words "at such place" occurring at the end of the Explanation and the word "or" referred to above which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the Court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office.
16. The following observations in the case of New Moga Transport Co. v. United India Insurance Co. Ltd. (supra) needs specific mention:
11. Section 20, before the amendment of CPC in 1976, had two Explanations being Explanations I and II. By the Amendment Act, Explanation I was omitted and Explanation II was renumbered as the present Explanation. Explanation which was omitted reads as follows:
Explanation I.-Where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence.
12. This Explanation dealt with the case of place of residence of the defendant and provided with regard to a person having a permanent dwelling at one place and also temporary at another place, that such person shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence. The language used in Explanation II, on the other hand, which is the present Explanation, was entirely different. Had the intention been that if a corporation had its principal office at one place and a subordinate office at another place and the cause of action arose at the place where it had its subordinate office it shall be deemed to be carrying on business at both places, the language used in Explanation II would have been identical to that of Explanation I which was dealing with a case of a person having a permanent dwelling at one place and also temporary residence at another place.
17. Merely because cheques given to the plaintiff are deposited by the plaintiff in Delhi would not be of an indicator that part of action has arisen in Delhi. Though learned Counsel for the plaintiff made oral submission to the effect that the order was placed in Delhi and part of the goods were also supplied Page 1377 from this depot at New Delhi. However, there is no such averment made in the plaint and as far as jurisdiction is concerned the only grounds taken are that office of the defendants is situated in Delhi where they reside and work for gain and cheques towards the part payment were handed over by the defendant to the plaintiff at Delhi. Thus this oral submission is not supported by any pleadings. I am, therefore, of the view that this Court has no territorial jurisdiction. Issue No. 1 is accordingly, decided in favor of the defendants and against the plaintiff and plaint is returned herewith to be presented at a Court of Competent jurisdiction.
The plaint is accordingly rejected.