Degremont Limited vs Kolkatta Municipal Corporation on 29 July, 2013

[Cites 10, Cited by 9]

Delhi High Court

Degremont Limited vs Kolkatta Municipal Corporation on 29 July, 2013

1. This application has been filed by the Defendant under Order VII, Rule 11 of the Civil Procedure Code, 1908 (CPC for short) for rejection of the plaintiff‟s suit for recovery of amount of Rs 88,80,107, on the grounds that this Court is not vested with the territorial jurisdiction to try this Suit.

CS(OS) 276/2012 Page 1 of 12

2. The Plaintiff is a company incorporated under the Companies Act, 1956 having its registered office at New Delhi and head office at Gurgaon, Haryana. The defendant is a body corporate constituted by the West Bengal Act, LIX 1980. Vide Memorandum of Agreement (MOA hereinafter) dated 22.08.2001, the defendant awarded a contract to the plaintiff to operate and maintain for an initial period of three years, a 20 MGD water treatment plant (Module 1 plant hereinafter) at Palta, West Bengal. The aforesaid contract provided the defendant with the option of extending the duration of the contract by thirty six months, and the same was extended till April 2006. Subsequently the defendant awarded the plaintiff another contract for operation of a second water treatment plant (Module 2 plant hereinafter) at Palta, West Bengal by issuing work orders. Except for the fee component, the terms stipulated in the contract dated 22.08.2001 were applicable to Module 2 plant as well.

3. Subsequent to the execution of the contract dated 22.08.2001, the Union of India imposed service tax on the services covered by the aforesaid contract with effect from 01.07.2003 vide Notification No. 7/2003 dated 20.06.2003. The plaintiff claims that since service tax is an indirect tax, and that, though the collection of the service tax is made from the service provider, the ultimate liability to pay the service tax is of the person availing the services. Hence, the defendant is liable to reimburse the plaintiff for all payments made by the plaintiff on account of service tax. The Union of India also imposed education cess on the services covered by the aforesaid contracts and the plaintiff claims that the defendant became liable to reimburse the aforesaid amount, in addition to the amount of service tax.

CS(OS) 276/2012 Page 2 of 12

4. The plaintiff claims that it raised invoices for Module 1 and Module 2 plants for the applicable fees as well as amount of service tax and education cess which remained unpaid by the defendant, while the plaintiff continued to make payment of the service tax and education cess at New Delhi between 31.03.2004 to 08.06.2007. The plaintiff claims that it demanded the payment towards reimbursement on account of service tax and education cess on various occasions and that the plaintiff also forwarded to the defendant the reply of the Joint Commissioner of service tax, Kolkata and the Joint Commissioner of service tax, New Delhi, confirming that service tax was leviable on the entire contract. Thereafter, the defendant confirmed to the plaintiff vide acknowledgement dated 31.12.2008, its liability to reimburse the plaintiff for service tax payments.

5. Having received no payment from the defendant despite service of a legal notice, the plaintiff filed the present suit for recovery of the amount paid by the plaintiff on account of service tax/education cess, and the earnest money deposited by the plaintiff - which was liable to be refunded on expiry of the contract dated 22.08.2001.

6. The submission of the applicant-defendant is that the "Jurisdiction Clause" in the MOA dated 22.08.2001 between the plaintiff and the defendant reads as "this agreement will be subject to jurisdiction of Calcutta Courts". The defendant submits that by virtue of the aforesaid clause, this court has no jurisdiction to try the present suit, as the parties have vested jurisdiction in Kolkata and, therefore, the plaint is liable to be rejected. The defendant-applicant submits that even otherwise, without prejudice to the above argument, as per Section 20 (c) of the CPC, part of cause of action CS(OS) 276/2012 Page 3 of 12 must arise in New Delhi for this court to have jurisdiction. The defendant submits that the MOA was executed in Kolkata, the performance of the contract by the plaintiff was to be carried out in West Bengal, and the defendant is situated in Kolkata. Therefore, no part of the cause of action has arisen with the jurisdiction of this court, and this court does not have the jurisdiction to entertain the suit.

7. On the other hand, the submission of the plaintiff-non applicant is that the jurisdiction clause in the MOA cannot oust the jurisdiction of this court, because the clause does not contain the phrases such as "alone", "only" or "exclusively" and therefore no inference can be drawn that the jurisdiction of courts, other than the courts at Kolkata has been ousted, or that the courts at Kolkata are vested with the exclusive jurisdiction. In support of this submission, reliance has been placed on R.S.D.V. Finance Co. Pvt. Ltd. v. Vallabh Glass Works Ltd., 1993 2 SCC 130. The plaintiff-non applicant submits that a clause ousting jurisdiction must be construed strictly. It is further submitted that the cause of action partly arose at New Delhi on account of the fact that Union of India imposed service tax and education cess from New Delhi, and that the plaintiff deposited the amounts of service tax and education cess in New Delhi.

8. The plaintiff further submits that the registered office of the plaintiff is at New Delhi; that the invoices addressed to the defendant were raised by the plaintiff from New Delhi, and; that the same were also payable at New Delhi. These facts, according to the plaintiff, constitute part of cause of action. It is also submitted that the defendant is deemed to have submitted to CS(OS) 276/2012 Page 4 of 12 the jurisdiction of this Court by moving I.A. No. 3617/2013, for recall of order dated 25.02.2013.

9. The jurisdiction clause in the MOA in no uncertain terms states "this agreement will be subject to jurisdiction of Calcutta Courts". No doubt, the words "only", "exclusively" and "alone" have not been used in the aforesaid jurisdiction clause; however, the same does not destroy the exclusiveness of the jurisdiction of the Kolkata Courts. In A.B.C. Laminart Pvt. Ltd. and Anr. v.A.P. Agencies, Salem, 1989 2 SCC 163, the Court observed as follows -

"21. 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 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' - 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 others from its operation may in such cases be inferred. It has therefore to be properly construed." (emphasis supplied)

10. The aforesaid decision makes it clear that even in the absence of the words "only", "exclusively" etc, the intention of the parties to vest, or oust the jurisdiction of a particular court must be examined as it could be a CS(OS) 276/2012 Page 5 of 12 case of - expression of one is the exclusion of another. In Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd., 2004 4 SCC 671, following the decision in A.B.C. Laminart (supra), the Court observed -

"9. Clause 17 says - any legal proceedings arising out of the order shall be subject to the jurisdiction of the Courts in Mumbai. This clause is no doubt not qualified by the words like "alone", "only" or "exclusively". Therefore, what is to be seen is whether in the facts and circumstances of the present case, it can be inferred that the jurisdiction of all other Courts except Courts in Mumbai is excluded. Having regard to the fact that the order was placed by the defendant at Bombay, the said order was accepted by the branch office of the plaintiff at Bombay, the advance payment was made by the defendant at Bombay, and as per the plaintiffs' case the final payment was to be made at Bombay, there was a clear intention to confine the jurisdiction of the Courts in Bombay to the exclusion of all other Courts. The Court of Additional District Judge, Delhi had, therefore, no territorial jurisdiction to try the suit." (emphasis supplied)

11. In the present case, the defendant is situated in Kolkata and was constituted by the West Bengal Act, LIX 1980. The functions of the defendant corporation are confined within State of West Bengal. It is not the plaintiff‟s case that the defendant operates from, or has various branches or subordinate offices all over the country through which it is operating. It has no operations in Delhi. Though the Plaintiff may have deposited the cheques in Delhi - which were received by it in Kolkata, that would not vest jurisdiction in the Courts at Delhi. If this submission were to be accepted, a party may deposit the cheque received by it at its place of choice anywhere in the country, and create jurisdiction in the Court having jurisdiction over such place. Similarly, because the Plaintiff CS(OS) 276/2012 Page 6 of 12 may have issued its invoices from New Delhi, this Court would not have jurisdiction. The Defendant is not concerned, and has no control over such unilateral acts of the Plaintiff who may choose to issue invoices from any of its several offices. None of these facts are a part of the bundle of essential facts, which constitute cause of action. What is of relevance is - where the invoices were sent to the Defendant, and where they were expressly or impliedly repudiated/rejected. It is the rejection of the invoices raised by the plaintiff (from where ever they may have been raised) which gives rise to cause of action.

12. The plaintiff‟s averment that the invoices were payable at Delhi is not supported from the material on record. No doubt, in A.B.C. Laminart (supra), the court observed that part of cause of action arises where money is expressly or impliedly payable, however, a perusal of the MOA shows that there is not a whisper of which place the money is payable at. The payment would be released by the Defendant from its office in Kolkata. It has not been pleaded by the Plaintiff that the Defendant was obliged to, or has, in fact, released or made payment from its office in Delhi.

13. As far as an implied inference regarding where the money is payable is concerned, all correspondence between the plaintiff and the defendant was issued from the plaintiff‟s head office in Gurgaon. The communication of the acceptance of the contract was also made vide a letter sent by the defendant from Kolkata to the plaintiff‟s head office in Gurgaon. It is settled law, that as regards acceptance of a contract via letters, the place of formation of a contract is the place where the acceptance was dispatched which, in this case, is Kolkata. All work CS(OS) 276/2012 Page 7 of 12 orders issued by the defendant from Kolkata to the plaintiff were also communicated to the head office in Gurgaon. There is no reason to accept that, merely because invoices were raised from New Delhi, they became payable at New Delhi, especially since no express term in respect of the same has been provided for in the MOA.

14. The decision in R.S.D.V. Finance Co. Pvt. Ltd. (supra) relied upon by counsel for plaintiff does not advance the case of the plaintiff. In the aforesaid case, though the court observed that the clause did not contain the words "only", "exclusively" etc, the same was not the primary grounds for rejecting the claim of exclusive jurisdiction. The court disregarded the clause "Subject to Anand jurisdiction" because the same was in the form of an endorsement made unilaterally by the defendant while issuing the deposit receipt. The present is not a case where the jurisdiction clause was unilaterally imposed by one party. The execution of the MOA implies that both parties were aware of its contents, including the jurisdiction clause. Since the Defendant is located in Kolkata, the MOA was executed at Kolkata, and the Contract had to be performed in Kolkata, the parties were clearly aware that Kolkata Courts would have jurisdiction. There was no uncertainty in that regard.

15. Merely because the plaintiff has its registered office in New Delhi does not give this court jurisdiction to entertain the present suit, as the location of the plaintiff per se does not vest jurisdiction in a Court.

16. The next argument of the plaintiff that payments on account of service tax and education cess were deposited by the plaintiff with the Union of India in New Delhi is also not sufficient to constitute cause of CS(OS) 276/2012 Page 8 of 12 action. The aforesaid payments are on account of a statutory liability and cannot be the sole basis of conferring jurisdiction on this Court. The Supreme Court in Union of India v. Adani Exports Limited , (2002) 1 SCC 567, while considering the issue of territorial jurisdiction of the High Court to entertain a writ petition under Article 226 of the Constitution of India, relied upon its earlier decision in ONGC v. Utpal Kumar Basu , (1994) 4 SCC 711, and while referring to it, held that "...It is clear from the above judgment that each and every fact pleaded by the Respondents in their application does not ipso facto lead to the conclusion that those facts give rise to a cause of action within the court's territorial jurisdiction unless those facts pleaded are such which have a nexus or relevance with the lis that is involved in the case. Facts which have no bearing with the lis or the dispute involved in the case, do not give rise to a cause of action so as to confer territorial jurisdiction on the court concerned."

17. The place where the plaintiff made payments on account of service tax and education cess is not the subject matter of the suit, and only happens to be incidental to the claim of the plaintiff. It is not shown that these payments could have been deposited only at Delhi. What is of relevance is that factum of deposit, not the place of deposit. Therefore these are not facts sufficient to clothe this court with jurisdiction. In Rattan Singh Associates (P) Ltd. v. Gill Power Generation Company (P) Ltd., 2009(93) DRJ431, a single bench of this court examined various decisions of the Supreme Court and observed that "It also requires to be borne in mind that a trivial or insignificant part of the cause of action CS(OS) 276/2012 Page 9 of 12 arising at a particular place or where it may have incidentally arisen, would not be sufficient to confer territorial jurisdiction on the court. It is the court within whose jurisdiction, the cause of action has substantially or predominantly arisen which would have territorial jurisdiction to adjudicate upon the lis." (emphasis supplied)

18. In Rattan Singh (supra), the court also observed that deduction or deposit of Tax Deducted at Source (TDS) in New Delhi would not constitute cause of action. In this case, the petitioner had invoked the jurisdiction of this Court under the Arbitration & Conciliation Act, 1996 seeking appointment of an arbitrator. The defendant therein raised a preliminary objection as to the territorial jurisdiction of this Court to entertain the application. I find it relevant to extract a few paragraphs of the aforesaid judgment which, in my view, have a direct bearing on this case -

"12. I find that all communications which have been claimed by the petitioner to have been sent to the respondent are addressed to its managing directors or have been sent to its address at G.T. Road, Batala, in the State of Punjab. The legal notices relied upon by the petitioner were also sent to the same address in Punjab. The communication dated 24th September, 2005 which has been sent by the petitioner to the respondent notifying it about the extension of bank guarantee and seeking issuance of a cheque, has been sent to the same address at Punjab. The meeting dated 20th May, 2005 wherein the memorandum of understanding was recorded, which is relied upon by the petitioner, was held not at Delhi but at Chandigarh. It is so mentioned thereon. There is no dispute that the contracted work was to be executed at Punjab. The petitioner has not disputed these factual assertions.

CS(OS) 276/2012 Page 10 of 12

13. The learned Counsel for the petitioner has placed reliance on a certificate of tax deposit at source ('TDS' for brevity) purportedly issued by the respondent. According to the petitioner, this TDS certificate is for the period from 1st April, 2003 to 31st March, 2004 and reflects deposit of the tax at Delhi. The respondent has explained that for one year, the tax was deposited at Delhi but the same would not impact the jurisdiction of this court."

19. In South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. and Ors., 1996 3 SCC 443, the Supreme Court observed -

"It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e., within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained." (emphasis supplied)

20. In the present case too, the MOA was executed at Kolkata and the performance of the contract was to be carried out in West Bengal. Merely because invoices were raised from New Delhi or payments were made by CS(OS) 276/2012 Page 11 of 12 the plaintiff on account of service tax/education cess at New Delhi, are not sufficient to clothe this court with jurisdiction. Even otherwise, owing to the „jurisdiction clause‟ in the MOA, I am of the opinion that the intention of the parties was to confine the jurisdiction to Kolkata only, as already discussed hereinabove.

21. Consequently, I am of the opinion that this Court has no territorial jurisdiction to entertain the present suit. Application is allowed.

CS(OS) No.276/2012

Since this Court lacks the territorial jurisdiction to entertain the suit, the plaint is directed to be returned under Order 7 Rule 10(1) CPC, to be presented to the Court in which the suit should have been instituted. The Registry is directed to make the necessary endorsements in terms of Order 7 Rule 10(2) CPC.

VIPIN SANGHI, J JULY 29, 2013 CS(OS) 276/2012 Page 12 of 12

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