Calcutta High Court
Lafarge India (P) Ltd vs Madan Lal Agarwal & Anr on 17 March, 2011
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
GA No. 2600 of 2010
GA NO.2473 OF 2010
CS NO.117 OF 2010
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
LAFARGE INDIA (P) LTD.
VERSUS
MADAN LAL AGARWAL & ANR.
BEFORE:
The Hon'ble JUSTICE SANJIB BANERJEE
Date : 17th March, 2011 Appearance:
Mr. Abhrajit Mitra, Adv.
Mr. J. Chowdhury, Adv.
Mr. P. K. Srivastava, Adv.
Mr. Chayan Gupta, Adv.
Ms. P. Goswami, Adv.
..for the plaintiff Mr. P. K. Das, Sr. Adv.
Mr. Dhruba Ghosh, Adv.
Mr. Debasish De, Adv.
Mr. Raja Baliyal, Adv.
..for the defendant The Court :- GA No.2600 of 2010 is the defendants' application for recalling an ex parte decree dated July 7, 2010. The decree was made on an application for judgment on admission.
On GA No.2600 of 2010 being received, an order was passed on August 13, 2010 for the defendants to furnish security to have the decree 2 stayed. There was an order of injunction passed earlier in the suit on June 23, 2010 in respect of an immovable property. At the time of moving the application for recalling the ex parte decree, the defendants submitted on August 13, 2010 that a Berhampore property, in respect of which the order dated June 23, 2010 operated, was a freehold property of which the defendants were joint owners. It was also submitted that the property was not mortgaged but there were tenants in occupation thereof. The Court accepted as bona fide the offer made on behalf of the defendants for deposit of the title deeds relating to the Berhampore property with the Registrar, Original Side. The defendants say that the title deeds are still with the Registrar.
The defendants have filed an affidavit today to show that the Berhampore property is not otherwise charged or mortgaged in favour of any other person. The affidavit indicates that there are tenants at the Berhampore property. The defendants will detail, within a fortnight from date, the names of the persons who are in occupation of the Berhampore property and the defendants will not alienate or otherwise encumber the property in any manner or create any interest in respect thereof in favour of any person pending further orders in the suit. It is on such condition that decree of July 7, 2010 is recalled and GA No.1889 of 2010 on which the order dated July 7, 2010 was made is disposed of without any other 3 order. GA No. 2600 of 2010 stands disposed of with the security furnished being directed to continue.
GA No.2473 of 2010 is the defendants' application for rejection of the plaint on the ground that the claim is hopelessly barred by the laws of limitation. The defendants say that it would be evident from the plaint that the plaintiff's cause of action arose some time in the year 2006. The defendants refer to the plaintiff having filed a suit in the Alipore Court in the year 2006. The defendants say that the plaint relating to the Alipore suit was directed to be returned some time in January, 2010 but the plaintiff chose not to carry the same plaint to this Court but instituted a fresh suit with leave under Clause 12 of the Letters Patent.
Though the defendants do not harp on the technical point that since the Alipore Court had directed return of the plaint, it was such plaint that ought to have been filed in this Court; the more substantial point urged is that the time that the plaintiff spent in the Alipore Court should not be excluded for the purpose of reckoning the period of limitation relevant for the present claim.
At paragraph 20 of the plaint, the plaintiff has referred to the previous suit in the Alipore Court and the plaintiff has pleaded that it had pursued the action in the Alipore Court in good faith and it was only upon the return of the plaint (which the plaintiff's advocate obtained some time in April, 2010) that the suit could be filed in this Court. The good faith that 4 the plaintiff talks of does not, however, appear from paragraph 23 of the plaint where instead of the forum selection clause the arbitration clause contained in the agreement between the parties has been carelessly quoted. But more seriously, it has, therefore, to be assessed as to whether the plaintiff is entitled to the benefit of Section 14 of the Limitation Act, 1963.
It is not in dispute that on or about February 18, 2008 the defendants applied in the Alipore suit for return of the plaint relating thereto on the ground that there was a forum selection clause contained in the 41st clause of the agreement between the parties and such clause provided for the exclusive jurisdiction of Kolkata Courts to entertain any claim arising out of the agreement. The defendants say that once they had pointed out the forum selection clause within the period of limitation and the plaintiff chose to ignore the same and persisted with the action before the wrong forum, the plaintiff cannot subsequently be heard to say that the time it spent before the other Court was in good faith for the plaintiff to be entitled to the benefit under Section 14 of the Limitation Act.
Section 14(1) of the Act recognises that in computing the period of limitation for any suit, the time during which the plaintiff had been prosecuting with due diligence another civil proceeding shall be excluded where the other proceeding related to the same matter in issue and was prosecuted in good faith in a Court which was unable to entertain it 5 because of defect of jurisdiction or other cause of like nature. What the defendants insist on is that there are at least two conditions that have to be satisfied by the plaintiff to be able to take advantage of the extraordinary largesse available under Section 14 of the 1963 Act. The defendants contend that the subject-matter of the two actions has to be similar and the first action ought to have been instituted and proceeded with in good faith. The defendants show that the expression, "in good faith," is defined in Section 2(h) of the 1963 Act. Section 2(h) provides that nothing shall be deemed to be done in good faith if it is not done with due care and attention. In other words, negligent or careless acts of a plaintiff in carrying a claim to a palpably wrong forum would, according to the defendants, disentitle the plaintiff from subsequently claiming the exclusion of time under Section 14 of the 1963 Act.
In support of such contention, the defendants have first referred to a judgment reported at AIR 2004 Ker 91 where a Division Bench of that Court considered an appeal from an order rejecting an application under Order XXXIII Rule 2 of the Code for leave to sue as an indigent person. The Court noticed that the original claim had been instituted in a wrong forum after issuance of a pre-suit notice of demand. The Court observed that at every stage, the defendant in that case had reminded the plaintiff of the forum selection clause contained in the agreement between the parties. The Court held that the plaintiff having gone to the wrong 6 Court despite the defendants' reminders would not entitle the plaintiff to seek the benefit under Section 14 of the 1963 Act upon the plaintiff's original action being arrested by the defendants citing the forum selection clause before that forum.
The defendants next place a judgment reported at AIR 2005 Kant 264. The Court considered the applicability of Section 14 of the 1963 Act in the context of an application for setting aside an award under Section 34 of the Arbitration and Conciliation Act, 1996. The Court found that the award-debtor had sought to challenge the award before a Court of Civil Judge (Sr. Div.). Though there was a forum selection clause contained in the agreement to which the arbitration clause applied, the ultimate decision of the Court rested on its view that no person could have, in good faith, attempted to prosecute an application under Section 34 of the 1996 Act before a Civil Judge (Sr. Div.) since Section 2(e) of the 1996 Act ordained that no Court inferior to a principal Civil Court in the district would be competent to receive an application under that Act.
The defendants rely on a judgment reported at AIR 1958 SC 767 for the expanded view of the expression, "in good faith," that is found therein. In the opinion of the Supreme Court, it is for the plaintiff and the plaintiff alone to discharge the burden of establishing that the plaintiff had acted in good faith and had approached a wrong forum. If the plaintiff, according to the Supreme Court, does not discharge such burden, the 7 defendant is not called upon to demonstrate that the plaintiff had not acted in good faith.
The final judgment that the defendants have cited is reported at AIR 1972 SC 730. In such case, the plaintiff had resisted attempts by the defendants to have others impleaded in the suit despite the defendants' contention that the claim was incompetent because of non-joinder of parties. Upon the dismissal of such suit, the plaintiff sought to launch a fresh suit beyond the period of limitation by seeking to claim exclusion of time under Section 14 of the Limitation Act. Clearly, the facts obtaining in that case would not make that decision relevant in the present context.
There is no doubt that the plaintiff here resisted these defendants' application under Order VII Rule 10 of the Code which was made within a period of two years of the suit having been instituted in Alipore; and ultimately failed. Yet, nothing that the defendants have been able to show now would render as utterly absurd the plaintiff's contention at paragraph 20 of the plaint that it had prosecuted the Alipore suit in good faith.
It was not, unlike the Karnataka case where the plaintiff had carried the claim to a forum which was obviously incompetent to receive it, as if the plaintiff here had lodged its claim before a forum that altogether lacked jurisdiction. A forum selection clause does not , by itself, operate as an ouster of jurisdiction. A forum selection clause is effective only if the 8 forum is identifiable and a part of the cause of action relating to the claim is shown to have arisen within the jurisdiction of the forum that is specified in the forum selection clause; and, a party thereto enforces it. Again, it cannot be said that the mere existence of a forum selection clause would denude the authority of courts other than the specified court to receive an action if such other courts are otherwise competent. A party to an agreement has the choice of whether or not to enforce the forum selection clause that may be contained therein and an application for dismissal of an action carried to a forum other than the agreed forum is, in effect, for specific performance of the forum selection clause. There is no law that forces a party to a forum selection clause to enforce such clause.
At the end of the day, it has to be assessed on facts upon evidence being received in support of the statements made in paragraph 20 of the plaint as to whether the plaintiff had prosecuted the Alipore suit with diligence or in good faith. For the moment, the statements contained in the plaint have to be accepted as true and as correct and it is on this thin thread that the suit now hangs.
An objection as to limitation is not always capable of being adjudicated conclusively on an application in the nature of demurer. If the plaint, on the face of it, does not indicate that the claim has been lodged within the period of limitation, the defendant may apply for the suit to be 9 dismissed. If, however, the plaint contains averments which would allow the Court to receive the action by accepting the statements to be correct, unless the defendant demonstrates that such statements are ex facie false or absurd, the defendant may be made to wait for the trial to discredit the averments and succeed on limitation.
The adjudication of the likely issue as to limitation is postponed till the trial. GA No. 2473 of 2010 is disposed of by preserving the defendants' objection on such count and permitting them to carry the same in the written statement that may be filed within six weeks from date.
There will no order as to costs in either case.
Since the plaintiff's original application for judgment on admission stands disposed of but the order thereon recalled, it will be open to the plaintiff to apply for judgment on admission if the plaintiff is otherwise so entitled.
Urgent certified photocopies of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.
(SANJIB BANERJEE, J.) bp./kc.
A.R(C.R)