Delhi High Court
Bush Foods Overseas Pvt Ltd vs Sentinel Capital Pte Ltd & Anr on 2 July, 2012
Author: A.K. Pathak
Bench: A.K. Pathak
*IN THE HIGH COURT OF DELHI AT NEW DELHI + I.A. No. 8084/2011 (u/O 7 R 10 & 11 r/w Sec. 151 CPC) and CS(OS) No. 1074/2011 Reserved on 1st May, 2012 Decided on 2nd July, 2012 BUSH FOODS OVERSEAS PVT LTD ..... Plaintiff Through: Mr. Rahul P. Dave, Mr. Bhaskar Tiwari, Mr. Sumit Chopra and Mr. Rohit Tripathy, Advs. Versus SENTINEL CAPITAL PTE LTD & ANR ..... Defendants Through: Mr. Rakesh Tiku, Sr. Adv. with Mr.N.S.Arora, Adv. Coram: HON'BLE MR. JUSTICE A.K. PATHAK A.K. PATHAK, J.
1. Defendant no. 1 has filed this application under Order 7 Rule 10 and 11 read with Section 151 of the Code of Civil Procedure, CS(OS) 1074-2011 Page 1 of 18 1908 ("CPC", for short) praying therein that plaint be rejected.
2. Plaintiff has filed the present suit seeking following reliefs:-
"a) Declare that no further fees or monies are due and payable from the plaintiff to defendant no. 1 on account of the Standard Chartered Bank deal entered into between the plaintiff and Standard Chartered Bank in March, 2011.
b) Pass a decree for declaration in favour of the plaintiff and against defendant no. 1, declaring that the mandate contained in the engagement letter dated 24th November, 2010 was never acted upon as the terms were not agreed by and between the plaintiff and defendant no. 1.
c) In the alternative, pass a decree for declaration in favour of the plaintiff and against defendant no. 1, declaring that the mandate contained in the engagement letter, if it forms a valid contract between the parties, CS(OS) 1074-2011 Page 2 of 18 came to an end after 4 months as of September 11, 2010 as per clause 2 and thereafter the mandate/contract became null and void for all purposes.
d) Pass a decree for declaration in favour of the plaintiff and against defendant no. 1, declaring the invoices bearing Nos. 333-2011 and 334-2011 both dated 8th April, 2011 for a sum of USD 375,000.00 and 1,250,000.00 respectively are not due or payable by the plaintiff to defendant no. 1.
e) Pass a decree of permanent injunction in favour of the plaintiff and against defendant no. 1, retraining defendant no. 1 its assigns, office bearers, employees, agents, successors or any other entity acting in the name and/or on its behalf from, in any manner, directly or indirectly holding themselves out to either Standard Chartered Bank or to any other person to be creditors of the plaintiffs on this CS(OS) 1074-2011 Page 3 of 18 account.
f) Pass a decree of permanent injunction in favour of the plaintiff and against defendant no. 1, restraining defendant no. 1 its assigns, office bearers, employees, agents, successors or any other entity acting in the name and/or on its behalf from initiating proceedings against the plaintiff in the courts at New York."
3. It is, thus, evident that no relief has been claimed against the defendant no. 2. Defendant No.2 appears to be a proforma party, inasmuch as, defendant no. 2 is not a signatory to the „Engagement Letter‟ dated 24th November, 2010, which is under challenge in this case.
4. As per the plaint, plaintiff is engaged in the business of export of basmati rice. Defendant no. 1 is a company incorporated in Singapore and carrying on its business in India as well from its office situated at 76, Hemkunt, Opposite Nehru Place, New Delhi - 110048. Plaintiff engaged defendant no. 2 as Financial Advisor to arrange funds. Plaintiff entered into an agreement with the CS(OS) 1074-2011 Page 4 of 18 defendant no. 2 on 30th April, 2010, for arranging funds from the investors. Defendant no. 2 introduced Shri Sukhdeep Singh Rana of defendant no. 1 to the plaintiff sometime in mid of 2010. A „Confidentiality Agreement‟ dated 2nd July, 2010 was existing between defendant no. 1 and defendant no. 2. In the month of September, 2010, Shri Sukhdeep Singh Rana introduced Shri Bobby Bhatia, CEO of defendant no. 1 to the plaintiff. Shri Bobby Bhatia was introduced as a private investor.
5. On or about 11th September, 2010, a meeting took place between Shri Bobby Bhatia and Shri Vikaran Awasthy at Singapore, wherein Shri Bobby Bhatia represented that he could arrange finances for the plaintiff. At that stage, defendant no. 1 was aware of prior engagement of defendant no. 2 by the plaintiff. Pursuant to this meeting held on 11th September, 2010, an „Engagement Letter‟ was entered into between the plaintiff and defendant no. 1. Shri Bobby Bhatia of defendant no. 1 arranged meetings with the representatives of Standard Chartered Bank, Singapore, besides some other banks/financers. In the meanwhile, defendant no. 2 had also initiated negotiations with the Standard Chartered Bank Private Equity (India) Ltd. In the meeting between CS(OS) 1074-2011 Page 5 of 18 Shri Vikaran Awasthy of the plaintiff and Shri Bobby Bhatia of defendant no. 1 held at Singapore, Shri Bobby Bhatia expressed his concern that defendant no. 2 might try to take over the mezzanine finance deal, thus, requested to make it clear to defendant no. 2 that he was involved in the deal with Standard Chartered Bank which Shri Vikaran Awasthy did, making it clear to defendant no.2 that the mezzanine potential deal was worked out by Shri Bobby Bhatia. In the meanwhile, defendant no. 2 continued to pursue its efforts to arrange finance by way of private equity participation and working capital for the plaintiff and eventually succeeded in concluding the deal with Standard Chartered Bank Private Equity (India) Ltd. on 21st March, 2011, without any involvement of defendant no. 1 whatsoever. On coming to know this fact, defendant no. 1 issued two invoices, that is, (a) Invoice dated 8th April, 2011 bearing No. 333-2011 in the amount of USD 1,250,000 representing 5% commission of private equity deal of USD 25,000,000 and (b) Invoice dated 8th April, 2011 bearing reference 334-2011 in the amount of USD 375,000 representing 1.5% commission on working capital limits of USD 25,000,000 (sic) to the plaintiff and these invoices were raised, in terms of the CS(OS) 1074-2011 Page 6 of 18 „Engagement Letter‟ dated 24th November, 2010. Under the „Engagement Letter‟, defendant no. 1 was not entitled to raise the invoices, inasmuch as finance was arranged by defendant no. 2. The „Engagement Letter‟ dated 24th November, 2010 specifically provided that mandate was valid for a period of four months, thereafter mandate was to be treated as null and void. The mandate was, otherwise, restricted to the particular transaction, that is, mezzanine finance from Standard Chartered Bank, Singapore, which did not materialize.
6. Thereafter, defendant no. 1 served a notice upon Sh. Vikaran Awasthy of the plaintiff through an American law firm, namely, K & L Gates, Dallas whereby called upon the plaintiff to pay US Dollar 16,25,000.00 and also threatened to initiate legal proceedings in New York, USA in case amount was not paid. Hence, the present suit.
7. Before venturing into the merits of the case, it would be appropriate to discuss the principles governing the applications under Order 7 Rule 10 and 11 CPC. There is no gainsaying that provision of Order 7 Rule 10 and 11 CPC can be invoked at any stage of the proceedings after filing of the suit. Only averments CS(OS) 1074-2011 Page 7 of 18 made in the plaint and the documents filed therewith have to be looked into. Defence of the defendant has not to be considered. Plaint has to be read as a whole together with the documents filed by the plaintiff. In Sri Kishan Vs. Shri Ram Kishan and Ors.159 (2009) DLT 470, a Single Judge of this Court observed thus, "Order 7 Rule 11 of the Civil Procedure Code contemplates that where the suit appears from the averments made in the plaint to be barred by any law, then the plaint can be rejected. The legal position is that to decide whether a plaint is liable to be rejected under Order 7 Rule 11, averments in the plaint have to be read without looking at the defence and thereupon it has to be seen whether on the averments made in the plaint under Order 7 Rule 11 of the Code of Civil Procedure gets attracted.
8. It may be noted here that plaintiff has filed this suit on 3rd May, 2011, that is, after the service of legal notice on the plaintiff by defendant no. 1 through its Attorney. It appears that present suit has been filed by the plaintiff apprehending legal action in U.S. Courts by defendant no. 1, in terms of the „Engagement Letter‟ dated 24th November, 2010. The relevant Clause reads as under:-
"16. Governing Law CS(OS) 1074-2011 Page 8 of 18 16.1 This Agreement is governed by New York law. The parties submit to the non-
exclusive jurisdiction of the New York courts. You irrevocably appoint Bush Foods Overseas Pvt. Ltd. 2301 Trafalgar Square, Hillsborough, NJ, 08844 USA as agent for service of process."
9. Indeed, defendant no. 1 has filed appropriate legal proceedings against the plaintiff in the Supreme Court of the State of County, New York near about the filing of present suit and the same is pending adjudication.
10. Case of the defendant no. 1 is that in view of the fact that the parties had agreed that contract shall be governed by New York law, inasmuch as, they shall submit to the non-exclusive jurisdiction of the New York courts, the present suit is not maintainable. This Court has no jurisdiction to entertain and try the present suit and parties have to be relegated to the New York courts. Reliance has been placed on Modi Entertainment Network & Anr. vs. W.S.G. Cricket Pvt. Ltd. (2003) 4 SCC 341, Piramal Healthcare Limited (Formerly known as Nicholas Piramal India Ltd.) vs. DiaSorin S.P.A. 172(2010) DLT 131, Gupta Pigments and Chemicals Pvt. Ltd. vs. Natpar Lines (S) Pvt. Ltd. and Anr. and a CS(OS) 1074-2011 Page 9 of 18 judgment dated 4th May, 2011 of Calcutta High Court passed in CS No. 10 of 2011 titled Rotomac Electricals Private Limited vs. National Railway Equipment Company
11. Per contra, case of the plaintiff is that a „non exclusive jurisdiction‟ clause does not oust the jurisdiction of Courts at Delhi. Plaintiff had not agreed for exclusive jurisdiction of New York courts. Merely because, parties had agreed that they shall be governed by the New York law was also not determinative for the ouster of jurisdiction of this Court. „Cause of action‟ and „choice of law‟ are two different and distinct aspects. Stipulation pertaining to „choice of law‟ in a contract did not oust the jurisdiction of Indian Court, within whose territorial jurisdiction the „cause of action‟ had, wholly or in part, arisen. Reliance has been placed on Laxman Prasad vs. Prodigy Electronics Ltd. and Another (2008) 1 SCC 618, Essel Sports Pvt. Ltd. vs. Board of Control for Cricket in India & Ors. (2011) 178 DLT 465 (DB) and Donohue vs. Armco Inc. & Ors. (2002) 1 All ER to contend that anti suit injunction can be granted inspite of such a non-exclusive jurisdiction clause. It is contended that „cause of action‟ involved in this suit as also the suit filed by defendant no. 1 in New York on CS(OS) 1074-2011 Page 10 of 18 19th May, 2011 is materially the same, inasmuch as, similar evidence has to be led which will result in multiplication of evidence. That apart, there is possibility of conflicting verdicts, in case both the suits are continued concurrently. It is further contended that the defendant no. 2 is a necessary and proper party since Shri Sukhdeep Singh Rana of defendant no. 1 was introduced to plaintiff by the defendant no. 2, inasmuch as, there exists a „Confidentiality Agreement‟ between the defendant nos. 1 and 2. It is further contended that in Donohue‟s case (supra) court had injuncted the parties even when there was "exclusive jurisdiction"
clause in the Agreement.
12. It is not in dispute that "Engagement Letter", executed between the plaintiff and defendant no. 1 contains a specific clause to the effect that the parties will be governed by New York law, inasmuch as, parties agreed to the non-exclusive jurisdiction of the New York courts. Plaintiff has even appointed Bush Foods Overseas Pvt. Ltd. 2301 Trafalgar Square, Hillsborough, NJ, 08844 USA as agent for service of process. Supreme Court in Modi Entertainment‟s case (supra) held that in regard to jurisdiction of courts under the CPC over a subject-matter one or more courts may CS(OS) 1074-2011 Page 11 of 18 have jurisdiction to deal with it having regard to the location of immovable property, place of residence of work of a defendant or place where cause of action has arisen. Where only one court has jurisdiction, it is said to have exclusive jurisdiction; where more courts than one have jurisdiction over a subject-matter, they are called courts of available or natural jurisdiction. The growing global commercial activities gave rise to the practice of the parties to a contract agreeing beforehand to approach for resolution of their disputes thereunder, to either any of the available courts of natural jurisdiction and thereby create an exclusive or non- exclusive jurisdiction in one of the available forums or to have the disputes resolved by a foreign court of their choice as a neutral forum according to the law applicable to that court. It is a well- settled principle that by agreement the parties cannot confer jurisdiction, where none exists on a court to which CPC applies, but this principle does not apply when the parties agree to submit to the exclusive or non-exclusive jurisdiction of a foreign court; indeed in such cases the English courts do permit invoking their jurisdiction. Thus, it is clear that the parties to a contract may agree to have their disputes resolved by a foreign court termed as a CS(OS) 1074-2011 Page 12 of 18 "neutral court" or "court of choice" creating exclusive or non- exclusive jurisdiction in it. In Piramal‟s case (supra), a Single Judge of this Court by following Modi Entertainment‟s case has taken a similar view and has observed that the Supreme Court has placed its imprimatur, in consonance with global practice in the field to jurisdictional clause whereby, parties agree to "exclusive" or "non-exclusive" jurisdiction of one of the available courts of natural jurisdiction or to the exclusive or non-exclusive jurisdiction of a foreign court of their choice; being a neutral forum for resolution of their disputes, according to law applicable to that court. The fact that this principle is an exception to the principle that parties by agreement cannot confer jurisdiction on a court where none exists is made clear by observations made in paragraph 11 of the Modi Entertainment‟s case (supra).
13. In Gupta Pigments‟ case (supra) a Single Judge of this Court has taken similar view. In the said case agreement between the parties provided that the laws of Singapore will apply and the courts at Singapore will have jurisdiction. Trial Court dismissed the suit of the plaintiff in view of the said clause by holding that Delhi Courts would not have jurisdiction to try the subject-matter. CS(OS) 1074-2011 Page 13 of 18 In Appeal, it was held that Courts of Delhi would not have jurisdiction to try the subject-matter in view of the clause appearing in the agreement envisaging that the laws of Singapore will apply and courts of Singapore have jurisdiction. Similar is the view taken by the Division Bench of Calcutta High Court in Rotomac Electricals‟ case (supra).
14. The legal proposition which emerges from the above is that by an Agreement parties cannot confer jurisdiction where none exists on a court to which CPC applies, but this principle does not apply when the parties agree to submit to the exclusive or non- exclusive jurisdiction of a foreign court. Parties to a contract may agree to have their disputes entertained by a foreign court termed as "neutral court" or "court of choice" creating exclusive or non- exclusive jurisdiction in it. In view of this, reliance placed by the counsel for plaintiff on A.B.C. Laminart Pvt. Ltd. & Anr. vs. A.P. Agencies, Salem, (1989) 2 SCC 163, is misplaced. View taken by the Supreme Court in Laxman Prasad‟s case (supra) is in the context of different facts and the same is of no help to the plaintiff. Similarly, Essel Sports‟ case (supra) is also of no help, being in the context of different facts, inasmuch as, the question involved in the CS(OS) 1074-2011 Page 14 of 18 said case was about the grant or non-grant of „anti suit injunction‟ and the principles in this regard have been discussed.
15. In view of the facts of this case and existence of Clause 16 in the „Engagement Letter‟ dated 24th November, 2010, which was entered into between the plaintiff and defendant no. 1, I am of the opinion that parties have to be relegated to the New York court, which is a „neutral forum‟ and is a „court of choice‟, as agreed between the parties, inasmuch as defendant has already initiated appropriate proceedings therein, after issuing the notice.
16. If the matter is looked from a different angles, then also it can be safely concluded that this court has no territorial jurisdiction. From the documents placed on record, it is clear that defendant no. 1 has its registered office at Singapore. On the correspondences exchanged as also invoices Singapore address has been mentioned. Even in the „Engagement Letter‟ Delhi address has not been mentioned. Sections 591 to 602, as contained in part II of the Companies Act, 1956 (for short hereinafter referred to as "said Act"), deals with the companies incorporated outside India and establishing a place of business in India. Part II specifies the CS(OS) 1074-2011 Page 15 of 18 compliances to be made by a foreign company while establishing its business in India as also prescribes penalties, on failure to make compliance. It is not a case of the plaintiff that defendant no. 1 is registered under Sections 591/592 of the said Act with the Registrar of Companies. In order to allege that defendant no. 1 has its office at 76, Hemkunt, Opposite Nehru Place, New Delhi - 110048, plaintiff has placed reliance on the visiting card of Shri Sukhdeep Singh Rana, which is not sufficient to suggest that the defendant no. 1 is having its subordinate office in India and is carrying on its business in India from the said office. Even if, it is presumed that Shri Sukhdeep Singh Rana is residing at the aforesaid address and is one of the Directors of defendant no. 1 that by itself would not be sufficient to indicate that defendant no. 1 has its subordinate office at that place, within the meaning of Section 20(a) of the CPC.
17. As regards „cause of action‟, plaint fails to disclose any such „cause of action‟ having been taken place in Delhi pursuant to the "Engagement Letter" entered into between the parties. In para 5 of the plaint, it is alleged that in the month of September, 2010 Shri Sukhdeep Singh Rana introduced Shri Bobby Bhatia, the CEO of CS(OS) 1074-2011 Page 16 of 18 defendant no. 1, to the plaintiff and thereafter a meeting took place between Shri Bobby Bhatia and Shri Vikaran Awasthy of the plaintiff in Singapore on or about 11th September, 2010. This indicates that even the meeting took place in Singapore. In para 8 of the plaint, it is further averred that on 8 th December, 2010 Shri Bobby Bhatia of defendant no. 1 arranged meetings with the representatives of the Standard Chartered Bank, Singapore and that was to be strictly related to working capital facility only and funding for mezzanine finance. It appears that Shri Bobby Bhatia arranged meetings between the representatives of Standard Chartered Bank, Singapore and the plaintiff‟s representative and that by itself will not give any „cause of action‟ in Delhi, more particularly when the plaintiff, in the plaint, has alleged that no deal was struck with the Standard Chartered Bank, Singapore. By impleading defendant no. 2 as proforma party, plaintiff cannot be permitted to vest jurisdiction in Delhi Courts, in respect of transactions between the plaintiff and defendant no. 1, in terms of the „Engagement Letter‟ to which defendant no. 2 is not a signatory. As regards Agreement, same came to be concluded through emails. Offer made by the defendant no. 1, as contained in CS(OS) 1074-2011 Page 17 of 18 the Agreement was accepted by the defendant no. 1, by signing the same at New Delhi. But at the same time, this document was sent to defendant no. 1 through email and was received by the defendant nos. 1 at Singapore. Thus, concluded contract came into existence at Singapore. It is not the case that both the parties were present together at the same time or at the same place, that is, Delhi and executed the Agreement giving rise to „cause of action‟ or for that matter „part cause of action‟ at Delhi. Contract came to be concluded through exchange of documents through email, thus, the place of contract would be where the acceptance of offers was received by the Offeror, that is, defendant no. 1. In this case, acceptance was received by defendant no. 1 in Singapore. Thus, place of contact would be Singapore.
18. Be that as it may, in view of the Clause 16 of the Agreement, in my view, this suit could not have been filed in Delhi and is not maintainable. Thus, the application is allowed and plaint is rejected. All other pending interim applications are disposed of as infructuous.
A.K. PATHAK, J.
July 02, 2012 rb CS(OS) 1074-2011 Page 18 of 18