Bombay High Court
M/S. Polycab Wires Pvt. Ltd vs M/S. Eta Engineering Pvt. Ltd on 19 November, 2014
Author: Roshan Dalvi
Bench: Roshan Dalvi
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
LEAVE PETITION NO. 234 OF 2014
IN
SUMMARY SUIT (L) NO. 736 OF 2014
M/s. Polycab Wires Pvt. Ltd. ... Petitioner
Vs.
M/s Eta Engineering Pvt. Ltd. ... Respondent
Mr. Chandanani i/b. Mr. Heeralal Chaturvedi, Advocate for the Petitioner
CORAM : MRS. ROSHAN DALVI, J.
Date of Reserving the Judgmentig : 29 th
October, 2014
Date of Pronouncing the Judgment : 19 th
November, 2014
J U D G M E N T
1. Leave under clause 12 of the Letters Patent applied by the plaintiff has been refused in this suit under the order dated 1 st September, 2014. The plaintiff however is unduly keen to sue in this Court alone. Counsel on behalf of the plaintiff drew the Court's attention to a judgment of the Supreme Court in the case of A.B.C.Laminart Pvt. Ltd and another Vs. A.P. Agencies, Salem AIR 1989 SC 1239 stating that this judgment was shown to the Division Bench of this Court in another matter of the same plaintiff where leave under Clause 12 granted came to be revoked by this Court and the Division Bench of this Court set aside that order. The order of the Division Bench does not show the Supreme Court's judgment being considered. However it is argued that it was shown to the Division Bench, but has not been mentioned in its order.
2. Be that as it may, since it is a question of law to be adjudicated, the Supreme Court judgment has been considered to see whether under this judgment leave can be granted to the plaintiff to sue in this Court.
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3. It may be mentioned that if a given Court is the only Court having territorial jurisdiction the suit has to be filed in that Court alone. A Court where the cause of action has arisen either wholly or where the defendant resides and carries on business would have territorial jurisdiction. If the cause of action arises in such Court only partly the Court must grant leave. Consequently cause of action must arise at least in part for the Court to grant leave to sue in its jurisdiction.
4. In para 12 of the judgment the meaning of the cause of action is given. It means every fact necessary for the plaintiff to prove to obtain a judgment or relief against the defendant and it must be some act done by the defendant such that in its absence no cause of action would possibly accrue. It is, therefore, all the facts necessary for the plaintiff to prove to obtain a decree and if not proved to give the defendant the right to judgment (i.e. the dismissal of the suit).
5. In the case of A.B.C.Laminart (Supra) the suit was filed for recovery of advances paid for delivery of goods and for damages. The suit was filed in Salem, Tamilnadu. The plaintiff was to be supplied the goods by the defendant who manufactured the goods. The goods were manufactured in Kaira, Gujarat and were to be sent to the plaintiff at Salem. The parties entered into an agreement under which the defendant would supply the goods and the plaintiff paid advances for the goods. The plaintiff had paid advances.
The defendant was to supply the goods. Hence the supply would be affected from Kaira and the goods would have to reach Salem. For the supply to be affected the defendant would raise invoices. The plaintiff would pay certain advances. The making of the contract was held to be in Kaira. (This observation is in the penultimate para of the judgment). The agreement ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 3 LPETN.234/2014-SSL.736/2014-Judgment provided that the dispute would be subject to Kaira jurisdiction. The plaintiff sued for refund of the advances remaining in the hands of the defendant and damages. The Court was to determine the territorial jurisdiction, the suit having been filed in Salem though the contract showed that it was subject to Kaira jurisdiction.
6. The plaintiff in this suit is a manufacturer and supplier of the suit goods. The plaintiff's manufacturing unit is at Daman, UT. The defendant placed purchase orders upon the plaintiff under which the plaintiff supplied the goods. The purchase orders are addressed to the plaintiff's branch office at Daman. They are stated to have been accepted at Mahim, Mumbai. The goods were to be supplied at New Delhi International Airport. The plaintiff has sued for recovery of the price of the goods supplied.
7. The defendants raised purchase orders from New Delhi upon the plaintiff in Daman. The delivery was to be affected in New Delhi. The purchase orders do not show the Court's jurisdiction. Upon the goods being supplied the plaintiff raised invoices. The plaintiff's own invoices show that the contract is subject to Daman jurisdiction. Hence the goods would be sent from the plaintiff's manufacturing unit at Daman to be supplied to New Delhi.
Between Delhi and Daman the parties agreed to confer jurisdiction upon the Courts in Daman.
8. It would have to be seen where the various causes of action arose since the cause of action is a bundle of rights that will enable the plaintiff to obtain judgment, of course, upon proof of the facts. The relevant facts are that the plaintiff would manufacture the goods in Daman; the plaintiff has its factory in Daman. The defendant would receive the goods in New Delhi. The ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 4 LPETN.234/2014-SSL.736/2014-Judgment plaintiff's registered office is in Mumbai. The defendant's registered office is in Chennai (The plaintiff carries on business in Mumbai; and defendant carries on business in Chennai). These 4 Courts, would be the Courts where the part of the cause of action would arise. The Court at Daman would have jurisdiction because the goods are manufactured and sent from Daman. The Court at New Delhi would have jurisdiction because the goods sent under the contract would be received in New Delhi. The Court in Mumbai would have jurisdiction because the price would be payable to the plaintiff in Mumbai at its registered office. The Court in Chennai would have jurisdiction because the defendant's registered office is in Chennai and hence the defendant carries on business in Chennai.
9. Out of these 4 Courts, any of which would have territorial jurisdiction to try the suit, the parties chose the Daman Courts. The plaintiff itself under its own invoices conferred jurisdiction upon Daman Court. The defendant accepted that jurisdiction by accepting the goods sent under the plaintiff's invoices. Hence the parties agreed not to confer jurisdiction upon the Courts in New Delhi, Mumbai or Chennai.
10. It has been held in the case of Garware Marine Industries Vs. Integrated Company Ltd that conferment of one jurisdiction is the exclusion of another.
11. The fact that parties can confer jurisdiction upon one Court is settled as a matter of Commercial Law and practice. The conferment of the jurisdiction must be upon one of the Court's having jurisdiction and not upon a Court not having jurisdiction at all. In the case of A.B.C.Laminart (supra) the exclusivity of the conferment of the jurisdiction is considered. It is held that an ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 5 LPETN.234/2014-SSL.736/2014-Judgment agreement to oust absolutely the jurisdiction of the Court will be unlawful and void as being against public policy and being in restraint of trade under Sections 23 and 28 of the Indian Contract Act. This will only be if the parties agree to submit to jurisdiction which has nothing to do with the contract. It is held in para 6 of the judgment that if there is no such exclusion ousting the jurisdiction, the agreement to confer jurisdiction is not void as being against public policy and would not fall within the mischief of Sections 23 and 28 of the Indian Contract Act.
12. It is held in para 16 of the judgment thus:
"16. So long as the parties to a contract do not oust the jurisdiction of all the Courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said, that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law, their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy".
13. If the contract is not void and if the parties can confer jurisdiction upon one of the many Courts which would have territorial jurisdiction, it would be a term of the contract which would be binding upon the parties like any other term of the contract. A term which is valid in law is an enforceable term. Such an enforceable contract cannot be varied or modified by the Court. The Court has to give effect to the contract between the parties.
14. The judgment further refers to the case of Sri Rajendra Mills Vs. ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 6 LPETN.234/2014-SSL.736/2014-Judgment Haji Hasan AIR 1970 Cal 342. It is important to see that judgment. In that case the Courts at Salem and Howrah would have had territorial jurisdiction as the cause of action arose in part in both those places. The parties agreed to confer jurisdiction upon Court in Salem. The suit was filed in the Court at Howrah. The plaint was ordered to be returned for presenting to the Court at Salem. It was held that the plaintiff was debarred and precluded from going to any Court other than at Salem as the plaintiff had made a choice restricting the Court in which the suit could be instituted. In other words the plaintiff had "waived their right to institute any action except at Salem". It was further held that it would not be just to allow the plaintiff to sue "except in the Court at Salem".
15. In this case the cause of action arose in Daman, New Delhi, Mumbai and Chennai in part. The parties agreed to confer jurisdiction upon Daman. The plaintiff can file the suit in no Court other than Daman. The conferment of jurisdiction does not oust the jurisdiction of any Court; it only confers jurisdiction upon one of the Courts which has territorial jurisdiction. It excludes the jurisdiction of all other Courts. That contract is not void being against public policy. That contract would have to be upheld as in the case of Sri Rajendra Mills (supra).
16. It was, therefore, specifically held in para 18 of the judgment referring to the Supreme Court case of Hakam Singh Vs. M/s. Gammon (India) Ltd., (1971) 3 SCR 314 (AIR 1971 SC 740) that when there are two or more competent Courts and the parties agree to vest jurisdiction in one such Court, the contract is valid and permitted by Mercantile Law and practice. Consequently such contracts must be upheld.
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17. It is held in para 20 of the judgment that the ouster clause must be construed properly. If the contract stipulates that it is deemed to be made at the particular place it would not take away the jurisdiction of other Courts and the other Courts would also have territorial jurisdiction.
18. Our case is not one such. In our case there is no agreement except as reflected from the invoices of the plaintiff. The contract is shown to be made at Daman. The plaintiff's invoice specifically confers jurisdiction upon Courts in Daman and makes it subject to Daman jurisdiction.
19. What is important is that in paragraph 21 of the judgment the Court has held thus:
"21. 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".
20. Since the clause conferring jurisdiction such as any other clause would bind the parties and must be enforced by the Court, all Courts other than the court to which jurisdiction is conferred must avoid exercising the jurisdiction. This avoidance can only be by not granting leave to the plaintiff to sue even if a part of the cause of action has arisen in Mumbai in view of the conferment of the jurisdiction upon the Court in Daman.
21. Hence it is held in para 21 of the judgment that if the words "alone", "only" "exclusive" there will be no difficulty. Yet the maxim "expression of one is the exclusion of another" may be applied Hence it is further observed thus:
"When certain jurisdiction is specified in a contract, an intention to ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 8 LPETN.234/2014-SSL.736/2014-Judgment exclude all others from its operation may in such cases be inferred".
22. In that case though the contract was subject to Kaira jurisdiction and the suit was filed in Salem it was observed that Kaira Court would even otherwise have jurisdiction, as the goods were manufactured in Kaira and delivered in Salem (and hence the contract was made at Kaira as the marking of the contract is a part of the cause of action). Out of the 2 jurisdictions one was excluded. It did not absolutely oust the jurisdiction of that Court. The contract was not void against public policy. It was however observed that the general terms and conditions of the contract are not indicative of exclusion of other jurisdictions though the contract was subject to Kaira jurisdiction. Hence under the facts and circumstances of that case it was observed:
"......while connecting factor with Kaira jurisdiction was ensured, by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded".
Therefore, it was held that the jurisdiction of the Court of Salem, which otherwise had jurisdiction under the law as a place of delivery of goods was not expressly excluded and the suit could be filed there.
23. We have seen the analysis of the law of jurisdiction in the aforesaid judgment from paras 1 to 21 and the discretion used by the Supreme Court in allowing the suit to be filed at the place impliedly excluded by the contracting parties in para 22 of the judgment. (Refer: the expression "Under the facts and circumstances of the case we hold that ......" in para 22). It would, therefore, be material to see why the discretion was exercised and how it must be exercised by all Courts.
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24. In the case of A B C Laminart (Supra) Salem was the place of delivery of the goods and hence a place where that part of the cause of action arose. In our case Daman is the place of manufacture and supply of the goods. It would otherwise be the place where the price would also be payable, unless, of course, the price is paid in Mumbai where the registered office of the plaintiff is, since the debtor must seek his creditor. The place where the plaintiff carries on business is otherwise, under Clause 12 of the Letters of Patent not a place where the Court's territorial jurisdiction is conferred, unlike the place where the defendant carries on business.
25. Why should the Court exercise its discussion ( like the Supreme Court in the case of Laminart) to allow the plaintiff to sue in Mumbai though the jurisdiction of Mumbai Court is validly excluded in the contract. In paragraph 11 of the plaint and in paragraph 4 of the petition for leave of this Court the plaintiff has stated 4 other facts without particulars and production of substantive documents and which cannot be seen to be true or relevant.
The plaintiff would claim that leave has to be granted to it upon those facts. It is, therefore, necessary to see those additional facts which purportedly give a cause of action to the plaintiff to sue in Mumbai. The 4 facts are :
(a) All meetings (presumably between the parties) were held at Mumbai office of the defendant (In Goregaon(East), Mumbai) or at the registered office of the plaintiff (in Mahim, Mumbai).
The meetings between the parties prior to the execution of the contract or filing of the suit do not confer jurisdiction upon any Court. Hence the place of holding meetings is inconsequential.
(b) The purchase order was signed, accepted, executed and
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received at Mumbai.
The purchase orders are issued by the defendant showing the registered office of the defendant in Chennai along with only telephone numbers of branches in various cities. In any event the purchase orders became inconsequential in view of the plaintiff's own invoices issued consequent upon the plaintiff having complied with the purchase orders and delivered the goods. The invoices, as aforesaid confer jurisdiction upon Daman Court and exclude jurisdiction of Mumbai Court.
(c) The whole transaction, management and administration was organized and held at Mumbai.
There are no particulars of the management and administration or the organization of the transaction except that the pay orders of the defendant executed in Chennai were received by the plaintiff in Mumbai and the plaintiff issued its tax invoice making the contract subject to Daman jurisdiction where the goods were admittedly manufactured and from where the goods were admittedly supplied to Delhi. Hence the management etc. become inconsequential.
(d) The defendants have local business office at Goregaon Mumbai for doing day-to-day business transactions which is shown in the cause title.
The local branch office of a limited company is immaterial for conferring jurisdiction upon any Court. A registered company is deemed to carry on business only at its registered office address.
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26. Even taking into account the various averments in para 11 of the plaint the cause of action is, either not shown to have arisen in Mumbai by virtue of any of those averments without particulars or it is wholly irrelevant so as not to be the relevant factors of determining the cause of action in a suit.
27. What is a cause of action is defined and explained in paragraph 12 of the judgment in the case of ABC Laminart (supra) itself thus:
"12. A cause of action means 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 relief against the defendant. It must include some act done by the defendant since in the absence of such an act cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defense which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff".
28. The above facts are not necessary for the plaintiff to prove to obtain a judgment. The plaintiff is not required to prove where meetings with the defendants were held, where the defendants signed and executed the contract other than its registered office, where the management and administration was organized or to show where was the defendant's local office, if any.
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29. The plaintiff must show where the contract was made. Hence the plaintiff must show where the purchase order was signed, if it was not signed at the registered office of the defendants shown in the purchase order, where the goods were manufactured, from where the goods were to be supplied, the place where the goods were to be supplied and where the price was payable. Only the last important factor has been mentioned in para 11 of the plaint and para 4 of the above petition.
30. Hence though the price was payable in Mumbai, the plaintiff had its registered office in Mumbai, the plaintiff also claims to have a branch office in Mumbai and the plaintiff claims to have maintained, administered and organized the transaction in Mumbai the plaintiff itself made the transaction subject to Daman jurisdiction where the plaintiff is shown to be having its factory. The Court need not exercise its discretion to allow the plaintiff to sue at a place not appointed by the plaintiff itself and which must be taken to be excluded by the plaintiff itself.
31. The importance of Mumbai as the place of the territorial jurisdiction of the Court must be considered. It is indeed the place where the price would be payable. But the grant of leave to sue in Mumbai would be to disregard the contract between the parties altogether making the contract "subject to Daman jurisdiction". Who made this contract? The plaintiff itself under its own invoice. Though the defendant is the proposer of the contract, having placed the orders, the plaintiff is the acceptor having supplied the goods as per the defendant's orders under its invoices. The plaintiff itself made the contract subject to Daman jurisdiction. The defendant accepted that term of the contract by accepting the goods sent under the plaintiff's invoices specifying that term. The plaintiff itself has sought to breach or modify that ::: Downloaded on - 25/11/2014 23:46:47 ::: mnm 13 LPETN.234/2014-SSL.736/2014-Judgment term. Can the Court allow it to do so? The judgment in the case of A B C Laminart (supra) forbids the Court from doing so. In paragraph 21 of the judgment the Court has held thus:
"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".
32. For the aforesaid reasons, there is no case made out for using the discretion of the Court because the party specifying the term cannot be allowed to ignore it and the court must "avoid exercising jurisdiction".
33. Hence seeing all the aforesaid facts from all angles and after fully dissecting the judgment that the plaintiff has produced before this court after leave was refused by this Court it is seen that, unfortunately, leave cannot be granted by this Court in law and hence the petition earlier dismissed is again dismissed.
(ROSHAN DALVI, J.) ::: Downloaded on - 25/11/2014 23:46:47 :::