Calcutta High Court
The Tata Iron And Steel Company Limited vs Himani Alloys Limited on 28 January, 2008
Equivalent citations: (2008)1CALLT278(HC)
Author: Sanjib Banerjee
Bench: Sanjib Banerjee
JUDGMENT Sanjib Banerjee, J.
1. This is an application for revocation of leave granted under Clause 12 of the Letters Patent. Three grounds have been urged: that no part of the plaintiffs cause of action arose within the jurisdiction of this Court; that the forum selection clauses in the plaintiffs invoices required the suit not to be instituted before this Court; and, as an alternative to the first ground, that the balance of convenience is against the continuation of the suit in this Court.
2. The suit is for price of goods sold and delivered. Paragraphs 4 and 7 of the plaint are the principal basis on which the territorial jurisdiction of this Court has been invoked. At paragraph 4 of the plant it is averred that purchase orders were placed by the defendant on the plaintiff at its office within jurisdiction where at the plaintiff accepted such orders. At paragraph 7 it is stated that part payments were made by the defendant to the plaintiff, and accepted by the plaintiff, at the plaintiffs office within jurisdiction. In addition, leave under Clause 12 has also been obtained on the basis of the averments in paragraph 15, which is a repetition of what has already been stated at paragraphs 4 and 7 of the plaint.
3. The defendant suggests that no part of the plaintiffs cause of action has arisen within the territorial jurisdiction of this Court. For such purpose, the defendant has denied that it placed purchase orders on the plaintiffs office within. The defendant submits that supplies were effected from factories of the plaintiff outside jurisdiction to the defendant outside jurisdiction and the averment at paragraph 4 of the plaint is too thin a thread for the suit to remain in this Court. Alternatively, it is submitted that even if a slender part of the plaintiffs cause of action arose within jurisdiction it would be inconvenient for the defendant to contest the claim at the trial, what with voluminous documents required to be hauled from far afield and necessary witnesses being put to hardship to travel to this Court.
4. The defendant relies on two invoices appended to its affidavit in reply. Such invoices raised by the plaintiff have two different forum selection clauses. The invoice of May 20, 1998 has the following line printed at the foot of it: "Subject to Delhi jurisdiction." Another invoice of March 4, 1999 has this to say: "Subject to Bombay jurisdiction". The defendant asserts that the plaintiff is bound by the forum selection clauses in its invoices and whether it is Delhi or Bombay that the plaintiff could have chosen as the forum, Calcutta is certainly not the forum in consonance with the fine print in the plaintiffs invoices.
5. To be fair to the defendant, it is the second and the third, albeit an alternative, grounds that have been more emphasized by the defendant. That is not to suggest that the defendant did not urge the first ground, but upon weighing that the first count of challenge would probably fall in the face of the averments in the plaint, the defendant has gone about trying to beat the plaintiff with the plaintiffs varying forum selection clauses.
6. The defendant has referred to a Judgment (Rite Approach Group Ltd. v. Rosoboronexport) to suggest that a forum selection clause may also be inferred. The Judgment reported at (Shriram City Union Finance Corporation Ltd. v. Rama Mishra) is placed to suggest that the word "only" need not appear in a forum selection clause for such clause to bind the parties thereto and the agreed forum to be identified. The Judgment reported at [Andhra Pradesh State Trading Corporation v. Auro Logistic Limited and Anr.] which follows the principle in the Shriram City case has been relied upon. The defendant seeks to stress that it may not be wise to search for specific words of exclusivity in a forum selection clause and that if the intention of the parties can be gauged with reasonable certainty, the Court would force the parties to keep to their bargain.
7. [Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd.) and [Man Roland Druckimachinen Ag v. Multicolour Offset Ltd. and Anr.) have been placed by the defendant to show that Courts have been more prone to accept a forum selection clause than to reject it despite such clauses not having specific words of exclusivity. (Sandeep Polymer Pvt. Ltd. v. Bajaj Auto Ltd. and Ors.) has been placed for the proposition that if a part of the suit could be carved out, the Court would do so for the forum selection clause to be enforced in respect of the part culled out even if the plaintiffs residual claim can be left to be proceeded with in the Court where the action was brought.
8. The two celebrated decisions of this Court reported at (Karam Chand Thapar & Bros. (Coal Sales) v. Inder Mohan Kapoor) and (Bihar State Agro-Industries Development Corporation Ltd. v. Ram Chand Khosla and Anr.) have been pressed into service by the defendant to show that if the defendant can demonstrate that it would be inconvenient for the defendant to contest the suit at the trial, the Court may revoke the leave granted under Clause 12 of the Letters Patent even if the Court were satisfied that a part of the plaintiffs cause of action had arisen within the jurisdiction of this Court.
9. The plaintiff first refers to the conduct of the defendant. The defendant did not find this Court an inconvenient forum to start with. The defendant obtained an order of July 24, 2003 for extension of time to file its written statement. The defendant did not avail of the Court largesse, according to the plaintiff, and sprang up to challenge the authority of the Court to receive the action only upon an application for Judgment upon admission being served on it. The plaintiff urges that the laboured attempt by the defendant to establish its inconvenience, in such circumstances, should be discarded. The plaintiff asserts that it had a right to choose its forum, subject to the laws governing such choice, and the Court would be slow in accepting a belated plea of the nature brought by the defendant. Barhoo Mahto's case is relied upon to suggest that when a defendant had obtained a benefit from a Court, such defendant could not turn around and question the Court's authority to receive the action. In obtaining extension of time for filing written statement, the plaintiff argues, the defendant had obtained a benefit from Court.
10. As to the conflicting forum selection clauses, the plaintiff submits that on the ABC Laminart reasoning neither clause would pass muster. A Judgment reported at 2007(3) CLT 43 (Apeejay Oxford Bookstores Private Limited v. Hotel Leela Venture Limited) has been cited to suggest that for the plaintiff to be pinned to a particular forum, ahead of that before which the plaintiff had brought an action, the Court would first require the defendant to establish that the parties had agreed that it was only such other forum which could receive the action.
11. The plaintiff questions the quality of the grounds urged by the defendant to suggest that this Court would be an inconvenient forum. The Judgment reported at (Indian Mineral & Chemicals Co. and Ors. v. Deutsche Bank) is placed to submit that the inconvenience has to be on firmer counts than what this defendant demonstrates. This Judgment is also placed for the principle that in an application of such nature, the defendant has to succeed or fail upon the plaint averments being accepted.
12. A challenge as to territorial jurisdiction is not regarded as an issue of inherent lack of jurisdiction. No doubt, an action has to be brought before an authority entitled in law to receive it, but an objection of the nature urged in this application is ordinarily capable of being waived. On an application for dismissal of a suit or revocation of leave granted under Clause 12 simpliciter, three courses would be available to the Court: to dismiss the suit or revoke the leave under Clause 12; or, to postpone the adjudication till the trial; or, dismiss the application upon finding the Court to be competent to receive the suit. If the first course is chosen, the Court would necessarily have to conclude that the plaintiff had either not founded the action on a part of plaintiffs cause of action having arisen within jurisdiction or the plaintiff had invoked the territorial jurisdiction of the Court on irrelevant material not forming part of its cause of action. If it is the second option that the Court chooses on an application of this nature, then the Court would have found that the matter of territorial jurisdiction could not be assessed on affidavit evidence and leave the point to be thrashed out at the trial. In the third case scenario, the Court would have to find the defendant's challenge to be frivolous and totally unacceptable.
13. The plaintiff has alleged that the individual orders for supplies were received by it at its Calcutta Office within jurisdiction. The feeble denial notwithstanding, it is a matter that would require the purchase orders to be tendered in evidence and oral testimony to be received before the issue can be answered. The defendant is right when it objects to the plaintiffs reliance on certain documents appended to its affidavit-in-reply in its application for Judgment on admission, on the score that these were not made the basis in the plaint for invoking this Court's jurisdiction. But what the plaintiff really seeks to establish by relying on these documents is that a substantial part of its cause of action arose within jurisdiction and that the plaintiff has a case to carry to trial.
14. It is not necessary, given the facts in this case, to assess whether the principle that the averments in the plaint have always to be taken to be sacrosanct is an absolute proposition. The plaintiff here asserts that the individual orders were placed by the defendant at the plaintiffs Calcutta office and bases such averment for instituting the suit in this Court. It is neither an absurd allegation which is ex facie false nor can it be said that the placing of the orders by the defendant is no part of the plaintiffs cause of action in the suit. And yet, the defendant may still be able to establish that the orders were not placed at the plaintiffs Calcutta office. It is a matter on which evidence has to be led for a conclusive pronouncement to be made and not a point that can be decided at the threshold.
15. The plaintiffs argument that the application should not be entertained on the basis of the Barhoo Mahto reasoning is unacceptable, though it will be a relevant consideration for assessing the merits of the defendant's plea. In the Barhoo Mahto case, the defendant had, consented to an order and thereby sought a benefit from Court. A step as the one taken in defence by the defendant in this case would not be with the intention of obtaining any benefit. It tells on the seriousness of the grounds urged to arrest the action, it would not bar the defendant from altogether questioning the jurisdiction of the Court.
16. The challenge as to the defendant's inconvenience needs next be assessed. As dominus litus, the plaintiff has a choice of forum and an infinitesimal part of the plaintiffs cause of action having arisen within jurisdiction would give the plaintiff the toehold to invoke jurisdiction. Convenience is a relative concept. It is also to be seen whether the forum approached is an altogether unnatural forum. For a plaintiff to be thrown out from its chosen forum, a defendant has to demonstrate overwhelming inconvenience. A defendant would make out a case of overwhelming inconvenience if it were alarmed at first notice of the suit. This defendant did not find it so inconvenient at the beginning, but realized its inconvenience upon being served the plaintiffs application for Judgment on admission. That is not to suggest that a belated plea of inconvenience or a plea of inconvenience made after obtaining extension of time to file written statement, in every case, would have to be turned down. But it substantially detracts from the claim of inconvenience and such a defendant would, by its conduct, have raised the bar for it to cross.
17. It is not in dispute that the law permits a plaint to be returned or for a plaintiff to be required to choose a forum that would be less inconvenient to the defendant. The question is whether this defendant makes out such a case, particularly in its timing of the present application. The sparse allegations in the application merely pay lip service to the ground of inconvenience, not unlike any other defendant who would find it inconvenient when reminded that it had admitted the plaintiffs claim or a substantial part of it. What the defendant has cited as inconvenience is a far cry from the overwhelming case that it had to make out, it is closer to the unconvincing end of the spectrum. The plea of inconvenience lacks seriousness and merit.
18. The body of law that either side has put on display on the enforceability of a forum selection clause, may be overlooked on a more fundamental score. There are two conflicting forum selection clauses. Even if such clauses had express words of exclusivity, the defendant's case would not have gone much further. For in such case, either clause would have been found to be exclusive with no consensus between the parties as to which would apply. This would rob the point of all of its sheen. The defendant's argument is that the plaintiff could choose either but the plaintiff could not have chosen a forum other than the two mentioned in the conflicting clauses in its several invoices. Such argument cannot be accepted.
19. A forum selection clause acts as an ouster upon conferment of authority to a chosen forum. The ouster is merely a consequence. The ouster is not the cause but only the effect. The cause is the identification of a forum that the parties had agreed to go to. If the identification is not possible, then there is no cause and, consequently, no effect. Loosely speaking, the ouster of a Court by a forum selection clause is by specific performance of the parties' bargain. Vagueness or conflict as to the import of a clause is anathema to specific performance.
20. This defendant does not suggest that it is the Delhi clause which is the one to be enforced or that it is the Bombay clause which is the one that binds the parties. All that this defendant says is for it to be relieved of Calcutta for the conflict between the Delhi and Bombay clauses to be resolved later. It is only the ouster that the defendant stresses on. This is not an argument that can be countenanced.
21. There is another aspect that the defendant has completely overlooked and has failed to address on. A forum selection clause is enforceable provided the designated forum would otherwise have authority to receive the action. The defendant has made no attempt to establish that either any Court in Delhi or any Court in Bombay would have jurisdiction to entertain the plaintiffs claim. This obviates the need for assessing whether either clause confers exclusivity, even if one were to disregard that two conflicting clauses of such nature would ipso facto preclude exclusivity.
22. Since it is on such basis that the defendant's assertion of the rival forum selection clauses is found to be flawed, there is no necessity, despite the temptation, for tucking into the rich feast of authorities that the parties have brought to the table. Exclusivity, or the lack of it, the defendant stands beaten by the conflicting sticks that it has brought to drive the plaintiff away from its chosen forum.
23. The application, G.A. 3386 of 2003, is dismissed but with liberty to the defendant to take the first ground, that no part of the plaintiffs cause of action arose within jurisdiction, to the trial that it must endure despite its feigned inconvenience. There will be no order as to costs.
Urgent photostat certified copy of the order may be supplied to the parties applying for it upon compliance with all requisite formalities.