Calcutta High Court
Hi-Tech Systems And Services Limited vs Dilo Amaturen Und Anlagen Gmbh & Anr on 12 May, 2017
Author: Soumen Sen
Bench: Soumen Sen
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
BEFORE:
THE HON'BLE JUSTICE SOUMEN SEN
G.A. No.1201 of 2017
G.A. No.1318 of 2017
C.S. No.19 of 2017
Hi-Tech Systems and Services Limited
Vs.
DILO Amaturen Und Anlagen GMBH & Anr.
For the Plaintiff : Mr. Pratap Chatterjee, Sr. Adv.,
Mr. Surojit Nath Mitra, Sr. Adv.,
Mr. Anirban Roy, Adv.,
Mr. Sankarshan Sarkar,Adv.,
Ms. Micky Chowdhury, Adv.,
Mr. S.N. Pyne, Adv.,
Mr. Subhasis Pyne, Adv.,
For the Defendants : Mr. Abhrajit Mitra, Sr. Adv.,
Ms. Rajshree Kajaria, Adv.,
Mr. Satadeep Bhattacharya, Adv.,
Mr. Uttam Sharma, Adv.
Heard On : 20.03.2017, 22.03.2017, 03.04.2017,
10.04.2017, 11.04.2017, 12.04.2017,
25.04.2017, 27.04.2017, 02.05.2017.
Judgment On : 12th May, 2017
Soumen Sen, J.:- Both the applications are taken up together and
disposed of by this common judgment.
The defendants have filed an application being G.A. No.1201 of 2017
(hereinafter referred to as the "first petition") for rejection of plaint on the
ground of Forum Selection Clause and non-disclosure of cause of action
against the defendant No.2.
During the pendency of the said application, the plaintiff has filed an
application for amendment of the plaint being G.A. No.1318 of 2017
(hereinafter referred to as the "second petition").
Shorn of unnecessary details, the facts are summarized below.
The plaintiff filed a suit, inter alia, challenging the termination of two
agreements dated 12th July, 2011 and 18th October, 2012, that is,
maintenance contract and job to job contract respectively.
The plaintiff in the suit is claiming adjudication of its rights under the
said two agreements. The said suit was filed upon obtaining leave under
Clause 12 of the Letters Patent.
The first application for revocation of leave and dismissal of the suit of
two grounds, namely:-
(i) Forum Selection Clause and law governing the agreement.
(ii) the plaint does not disclose any cause of action.
It is undisputed fact that both the agreements contain Forum
Selection Clause that is Clause 10.2 in the agreement dated 12th July, 2011
which reads:-
"Clause 10.2.Court of jurisdiction is the court first instance competent
for the registered place of business of DILO. In case of litigation
regarding rights and obligations of this contract only German law is
applicable."
and Clause 12 in the agreement dated 18th October, 2012 which
reads:-
"Clause 12. Court of jurisdiction is the court first instance competent
for the registered place of business of DILO. In case of litigation about
rights and obligations of this contract only the German law is applied."
In the plaint, the defendant No.1 is described as a company
incorporated and registered under the relevant laws of Germany, having its
registered office at "36, D-87727, Babenhausen, Germany" outside the
aforesaid jurisdiction.
The said paragraph was affirmed and verified as true to knowledge.
The plaintiff alleged that the said two agreements are not terminable
in nature, in any event, the defendant No.1 cannot arbitrarily and
unilaterally terminate the said agreements.
In the plaint, it is alleged that on 13th January, 2017, the plaintiff has
found on the website of the defendant No.1 the name of the defendant No.2
indicated as strategic partners of the defendant No.1 instead of the plaintiff.
The defendant No.2 is well-aware that the plaintiff is the sole and exclusive
business partner of the defendant No.1 for the said territory. In spite
thereof, the defendant No.2 is interfering in the execution of the contract
between the plaintiff and the defendant No.1. It is alleged that the
defendant No.2 has prevented the plaintiff from performing its contract
dated 18th October, 2012 and 12th July, 2011 and such interference is
deliberate. The interference is direct and such interference by the defendant
No.2 has led to the illegal termination of the contract between the plaintiff
and the defendant No.1. The defendant No.2 has procured a breach of
contract.
In paragraph 38 of the plaint, the plaintiff has pleaded fraud by the
defendants on the plaintiff.
In the second application being G.A. No.1318 of 2017, the plaintiff has
proposed amendment of paragraphs 36, 38(d), 43, 44 and 51. The proposed
amendment was shown in red ink. The said paragraphs with the proposed
amendment indicated in bold letters read:-
"36. However, on 13th January, 2017, the plaintiff has found on the
website of the defendant No.1 the name of the defendant No.2 indicated
as strategic partners of the defendant No.1 instead of the plaintiff. The
plaintiff saw the name of the defendant no.2 on the website of
the defendant no.1, at its office at White House, 119. Park
Street, Kolkata - 700 016, within the aforesaid jurisdiction.
38(d). The defendants have perpetrated fraud on the plaintiff
both within and outside the aforesaid jurisdiction and
particularly at the office of the plaintiff where the termination
notice has been received.
43. The plaintiff is also entitled to a sum of Rs.57,69,333/- as
pleaded in paragraph herein above towards the cost of the demo tool
kit.
44. The plaintiff is also entitled to a sum of Rs.1,53,13,825/- towards
cost for development of as Industrial Shed for the storage, inspection,
dispatch clearance of the equipment of the Defendant no.1 in Indian
Subcontinent as pleaded hereinabove.
51. The defendants are invading and/or threatening to invade the
plaintiff's right to and enjoyment of the property and the invasion is
such compensation in money would not afford adequate relief.
Injunction is necessary to prevent a multiplicity of judicial proceeding."
Mr. Abhrajit Mitra, the learned Senior Counsel appearing on behalf of
the defendants submits that irrespective of a part of the cause of action
arising here, the appropriate Court in Germany within whose territorial
limits, the defendant No.1's registered place of business is situated would
jurisdiction to entertain the suit. In any event, the averments made in the
plaint would show that a part of the cause of action has arisen in Germany.
Mr. Mitra has referred to Paragraphs 18 and 53 of the original plaint. In so
far as the defendant No.2 is concerned, it is submitted that the reliefs
claimed against the defendant No.2 are only consequential to the reliefs
claimed against the defendant No.1. Only if the defendant No.1 could not
have terminated and/or has invalidly terminated the aforesaid two
agreements, the question of the defendant No.2 procuring breach of contract
would arise.
The plaint as originally filed, does not disclose as to which part of the
cause of action as against the defendant No.2 has arisen within the
jurisdiction. The defendant No.2 is admittedly carrying on its business from
Mumbai that is outside the jurisdiction of this Court. The plaint does not
show that any part of the alleged cause of action against the defendant No.2
has arisen or could have arisen within the jurisdiction of this Court. This is,
however, without prejudice to the fact that the plaintiff does not have or
cannot have any cause of action as against the defendant No.2.
On the aspect of Forum Selection Clause, it is submitted that it is trite
law that a Forum Selection Clause contained in an agreement is binding on
the parties to the agreement. It has been judicially held in several decisions
that when the parties with their eyes open had entered into an agreement
whereby they have agreed to settle their disputes in a manner as indicated
in the agreement, the forum mentioned in the agreement becomes the
natural forum to adjudicate such disputes. (Gujarat NRE Coke Ltd. &
Anr. Vs. Jindal Steel & Powers Limited & Ors. reported in 2016 (2) CLJ
442 (Cal), Paragraph.7)
While deciding which forum is the appropriate forum for adjudication
of disputes, the court will take into consideration the appropriate law which
would be governing such disputes. (Modi Entertainment Network & Anr.
vs. WSG Cricket PTE Ltd. reported in (2003) 4 SCC 341 Paragraph.19)
In the present case, the parties have agreed that the governing law for
the purpose of adjudication of disputes in terms of the agreements shall be
German Law.
When a contract is to be governed by the law of a particular country,
the courts of such country shall be more experienced in interpreting the
laws of such country and therefore, a more convenient forum for
adjudication of the disputes in accordance with such laws. (Rotomac
Electricals Pvt. Ltd. Vs. National Railway Equipment Company,
reported in (2011) 4 CHN 740 Paragraph 15). In the present case, law
governing the contract is German Law and, accordingly, Court in Germany
would be the proper forum.
As to the case of procurement of breach of contract made out against
the defendant No.2, it is submitted that apart from it being consequential to,
and dependent upon what relief is granted against the defendant no.1, that
the defendant no.2 is not a necessary or proper party. The alleged cause of
action against the defendant no.2 has no connection and/or relation to the
alleged cause of action of the plaintiff against the defendant no.1. The
defendant no.2 has been impleaded in the present suit with the objective of
avoiding the said forum selection clause. This is not permissible. (Gujarat
NRE Coke Ltd. vs. Jindal Steel & Power Ltd. reported in 2015 SCC
Online Cal 7519, Paragraphs 31 to 35)
It is now settled position of law that for a forum selection clause to be
enforced, the words like "alone", "only", "exclusive" need not be used and it
is not the decisive factor, as long as it appears from the language of the
agreement that the parties had intended to exclude the jurisdiction of other
courts. (Swastik Gases Pvt. Ltd. vs. Indian Oil Corporation Ltd.
reported in (2013) 9 SCC 32 Paragraph 32 and Skipper Limited vs.
Sewerage & Infrastructure Development Corporation Ltd. reported in
2016 SCC online Cal 4911).
In the instant case, the forum selection clause excludes the
jurisdiction of all other courts but for the forum as mentioned therein.
A non-exclusive forum selection clause in favour of a foreign court
shall also be honoured by the courts as it shall be presumed that the parties
have considered their convenience and all other relevant factors before
submitting to a non-exclusive jurisdiction of a court of their choice and such
court cannot be treated as an alternative forum. [Modi Entertainment
Network & Anr vs. WSG Cricket PTE Ltd. reported in (2003) 4 SCC 341
Paragraph 24(5)]
It is submitted that no case has been made out in the plaint as to the
vagueness and/or uncertainty of the said forum selection. This is another
ground for dismissal of the suit. (Isha Distribution House Pvt. Ltd. vs.
Aditya Birla Nuvo Ltd. reported in 2016 SCC online Cal 4208). The
Hon'ble Division Bench in appeal from Isha Distribution being APOT
No.274 of 2016 (supra) has affirmed this view at paragraph 14 of the
Judgment delivered on February 13, 2017.
The principal challenge in the suit is termination of two separate
agreements dated 12th July, 2011 and 18th October, 2012 by way of a letter
dated 25th November, 2016. All the other reliefs claimed are consequential.
The claim for termination of the agreement is not tenable inasmuch as both
the agreements are per se determinable and clauses to the effect has been
incorporated in each of these agreements. In view of such termination
clause in both the agreements which permits termination by a notice period
of three months for both the parties inasmuch as the said termination
clause clearly stipulates that due to the termination of the contractual
relationship no claim for compensation could be raised except that gross
negligence can be proved against one of the parties, the plaint is liable to be
rejected as the plaintiff could not have any cause of action against the
defendants.
In respect of the second application for amendment of the plaint, it is
submitted that in the midst of hearing of the defendants' application for
revocation of Clause 12 of the Letters Patent, the plaintiff with the sole
objection of making out a cause of action against the defendant No.2 arising
within the jurisdiction of this Court has filed an application for amendment
of the plaint. Such application cannot be entertained when the issue as the
territorial jurisdiction of the High Court to entertain the present suit has
been raised and the same is yet to be decided. The learned Senior Counsel
has relied upon a Division Bench judgement of this Court in Manthan
Brand Band Services Pvt. Ltd. Vs. C.K.T. Communications Pvt. Ltd.
reported at AIR 2005 Cal 317 Paragraph 21 and an earlier Division
Bench judgment of this Court in the case of Mst. Zohra Khatoon Vs.
Janab Mohammad Jane Alam & Ors. reported at AIR 1978 Cal 133.
Per contra, Mr. Pratap Chatterjee, the learned Senior Counsel
appearing on behalf of the plaintiff submits that on a true and meaningful
reading of the plaint, it would show that the suit is maintainable in this
Court and the plaint discloses cause of action against the defendants. There
is no requirement in law that in the plaint, the plaintiff is required to
specially make an averment about the Forum Selection Clause. The plaintiff
is only required to state material facts. The Code of Civil Procedure does not
require that in the plaint, the plaintiff would have to specifically aver of the
existence of an agreement which contains a Forum Selection Clause. In any
event, the agreement forms part of the plaint. Mr. Chatterjee, in this regard,
has relied upon a decision of the Hon'ble Supreme Court in Mayar (H.K.)
Ltd. & Ors. Vs. Owners & Parties, Vessel M.V. Fortune Express & Ors.
reported at (2006) 3 SCC 100, Paragraphs 3, 6, 9, 19, 31, 32 and
submits that for the purpose of cause of action, it is not necessary for the
plaintiffs to plead the ouster of the jurisdiction of the Calcutta Court. In
fact, it is for the defendants to plead and prove the ouster of the jurisdiction
of the Calcutta Court and conferment of the jurisdiction in the German
Court alone. It is submitted that the exclusion clause in the instant case
refers to the jurisdiction of the Court of the first instance where the
defendant No.1 has its registered place of business. Unless and until, it is
established that the defendant No.1 is having its registered place of business
at Germany merely because the said clause records that the rights and
obligations of the contract would be governed by the German law, ipso facto,
does not exclude the jurisdiction of this Court and makes a Court in
Germany as the Court alone to decide the dispute. Simply because in the
Cause Title of the Plaint, the plaintiff has described the defendant No.1 as
the company incorporated and registered under laws of Germany would not,
per se, establish the fact that the registered place of business of the
defendant No.1 was at Germany to exclude the jurisdiction of the High Court
at Calcutta which admittedly had the jurisdiction to try the suit. In order to
arrive at a finding as to which the principal business the parties would be
required to place the relevant material before the Court. The Court cannot
arrive at a finding on a particular place being the principal place of business
at the preliminary stage of hearing of the suit. When the Court has to
decide the question of jurisdiction pursuant to an ouster clause, it is
necessary to construe the exclusion clause properly. The clause has to be
clear, unambiguous and specific.
The learned Senior Counsel relying upon a decision of the Hon'ble
Supreme Court in A.B.C. Laminart Pvt. Ltd. & Anr. Vs. A.P. Agencies,
Salem reported at 1989 (2) SCC 163 Paragraphs 20, 21, 22 submits that
since the aforementioned clauses are unclear, ambiguous and does not
explicitly exclude the jurisdiction of this Court, the application for demurrer
must fail. The reference to German Law in the Forum Selection Clause,
according to the learned Senior Counsel, is a question of fact which is
required to be pleaded and proved by the party whose rights flow from such
foreign law. It is submitted that the Hon'ble Supreme Court in Transport
Corporation of India Limited VS. Ganesh Polytex Limited. reported at
(2015) 3 SCC 571 in Paragraph 31 has clearly laid down the law in this
regard. It has been held in the said decision that foreign law is a question of
fact which is required to be pleaded and proved by the party whose rights
flow from such foreign law.
In respect of the application for amendment of the plaint, it is
submitted that the power of the Court to allow amendment of pleadings
should not be in any way restricted or controlled by the provisions contained
in Order 7 Rule 11 of the Code of Civil Procedure. The Court is not
precluded from considering an application for amendment of the plaint even
if an application for rejection of the plaint is pending on the ground that the
original plaint does not disclose a cause of action. The Court may prevent
the operation of Order 7 Rule 11 of the Code of Civil Procedure and may
save the plaint being rejected by exercising its power under Order 6 Rule 17
by allowing the plaint to be amended. The strength of the argument is
based on a Division Bench judgement of the Bombay High Court in
Gaganmal Ramchand Vs. The Hongkong & Shanghai Banking
Corporation reported at AIR 1950 Bombay 345 (Paragraphs 3 and 4).
The learned Senior Counsel has also relied upon a Division Bench judgment
of our Court in Nishit Chandra Ghosh Vs. Bidhu Bhusan Ghosh & Ors.
reported at 1983 (II) CHN 380 (Paragraphs 4 and 5) and distinguished
Mst. Zohra Khatoon (supra) and Ratan Chand Khanna Vs. Mahendra
Kumar reported at AIR 1979 Cal 55 by submitting that in the instant case,
there is no inherent lack of jurisdiction to entertain the suit as the ground
for revocation of leave is based on the Forum Selection Clause. The decision
of a learned Single Judge of our Court in M/s. Bharat Overseas Pvt. Ltd. &
Anr. Vs. Suchittra Properties (Pvt.) Ltd. & Ors. reported at 2016 SCC
Online Cal 4379 has been relied upon for the self-same proposition for the
purpose of completeness.
In reply, Mr. Mitra submitted that the plaintiff has not pleaded that
the defendant No.1 is carrying on business at any place other than Germany
or that the defendant No.1's registered place of business is something
different from that of its registered office 36, D-87727, Babenhausen,
Germany.
In Mayar (H.K) Ltd. (supra), the Forum Selection Clause referred to
"principal place of business" of the carrier. What is that principal place of
business of the company is not necessarily the registered office and is a
question of fact. However, a company has only one registered office or
registered place of business which is recognized in Mayar (H.K) (supra) at
paragraph 32 and also in a single bench judgment of this court in India
Glycols Ltd. & Anr. Vs. Commissioner of Income Tax & Ors. reported at
(2005) 274 ITR 137. In Mayar H.K. (supra) the governing law was also not
specified and it was to be the law of the principal place of business. In this
case it is expressly stated that "only the German law" is applicable.
The learned Senior Counsel has placed reliance on placetum e of
Paragraph 6 at page 111 of Mayar H.K. (supra) which reads:-
"If the parties have chosen a particular forum and a particular set of
laws in the world to govern them, then they are, in the large majority of
ordinary cases, to be held to their bargain and not to be allowed to
depart therefrom only because one party finds it convenient and,
therefore, chooses to do so."
However, this is an observation of the Division Bench and not of the
Apex Court. Accordingly, the defendants have prayed for dismissal of both
the applications.
The entire basis of the rejection of the plaint proceeds on the Forum
Selection Clause. If the Forum Selection Clause is construed to mean that
the registered place of business of the defendant No.1 is in Germany then
irrespective of part disclosure of cause of action within jurisdiction, the
plaint has to go and a fresh action may be required to be initiated before the
Court at first instance where the registered place of business of DILO is
situated. There cannot be any doubt that a part of the cause of action has
also arisen at Germany. The issue is whether the registered place of
business is the same as that of registered office of DILO. If the registered
place of business and the registered office is one and the same thing then
the plaint has to go irrespective of the fact that the defendant No.2 has been
impleaded and it is being alleged that he has procured a breach of contract.
As it can be easily made out from the plaint and the proposed amendment
that the defendant No.2 has been roped in to create a jurisdiction for this
Court. The proposed amendment is for the same purpose. The several
judgments cited by the parties with regard to the enquiry to be made by the
Court in an application for rejection of the plaint and revocation of leave
under Clause 12 of the Letters Patent on the ground of Forum Selection
Clause shows that when the ouster clause is clear, unambiguous and
specific, the parties cannot resile from it or wriggle out of it. This, of
course, is with the rider that either of the Court should have otherwise the
jurisdiction to entertain the suit. It is well settled that for a breach of
contract a suit can be filed either at the place where the contract was
concluded or performed on breach has occurred. The place of suing must
have some nexus with the dispute. When the parties with their eyes wide
open have consciously entered into an agreement whereby they have agreed
to settle their disputes in a manner as indicated in the agreement, the
Forum mentioned in the agreement becomes a natural Forum to adjudicate
the disputes.
The law with regard to the ouster of jurisdiction is well-settled. In
ABC Laminart (P) Ltd. Vs. A.P. Agencies reported at 1989 (2) SCC 163 the
Hon'ble Supreme Court held that 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 being against public policy. If on the other hand the jurisdiction
they agreed to submit to would not otherwise be proper jurisdiction to
decide disputes arising out of the contract it must be declared void being
against public policy. It was further held that even when words like 'alone',
'only', 'exclusive' and the like have been used in the contract if the Court is
of the view that the parties intended to have their dispute resolved by a
particular court or forum, the Court shall refer the dispute to have
particular court and may refuse to exercise its jurisdiction to decide the
dispute. This view has been recently followed and clarified in Swastik
Gases (P) Ltd. Vs. Indian Oil Corpn. Ltd. reported at 2013 (9) SCC 32.
In Swastik Gases (supra), the Hon'ble Supreme Court has considered
both A.B.C. Laminart (supra) and InterGlobe Aviation Limited v. N.
Satchidanand reported at (2011) 7 SCC 463 in Paragraphs 13, 14. The
said Paragraphs are reproduced below:-
"13. In A.B.C. Laminart, this Court was concerned with Clause 11 in
the agreement which read, "any dispute arising out of this sale
shall be subject to Kaira jurisdiction". The disputes having arisen
out of the contract between the parties, the respondents therein
filed a suit for recovery of amount against the appellants therein and also claimed damages in the Court of the Subordinate Judge at Salem. The appellants, inter alia, raised the preliminary objection that the Subordinate Judge at Salem had no jurisdiction to entertain the suit as parties by express contract had agreed to confer exclusive jurisdiction in regard to all disputes arising out of the contract on the Civil Court at Kaira. When the matter reached this Court, one of the questions for consideration was whether the Court at Salem had jurisdiction to entertain or the jurisdiction of the court in the matter of contract would depend on the situs of the contract and the cause of action arising through connecting factors. The Court referred to Sections 23 and 28 of the Contract Act, 1872 (for short "the Contract Act") and Section 20(c) of the Civil Procedure Code (for short "the Code") and also referred to Hakam Singh and in para 21 of the Report held as under:
"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. 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."
14. Then, in para 22 of the Report, this Court held as under:
"22......We have already seen that making of contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus, Kaira Court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the court and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause 'any dispute arising out of this sale shall be subject to Kaira jurisdiction' ex facie we do not find exclusionary words like 'exclusive', 'alone', 'only' and the like. Can the maxim expressio unius est exclusio alterius be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that 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. That being the position it could not be said that the jurisdiction of the Court at Salem which court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded."
Although strictly there is no requirement to plead ouster clause in the plaint as Order 6 Rule 2 of the Code of Civil Procedure does not mandatorily require such pleading to be made, however the plaintiff approaching the Court is expected to state the full facts in order to enable the Court to exercise the discretion in favour of the plaintiff as leave under Clause 12 of the Letters Patent is discretionary. The law of pleadings under Order 6 Rule 2 of the Code of Civil Procedure has been elaborately discussed in Mayar H.K. (supra) where in Paragraph 19 it has been clearly stated that for the purpose of cause of action it is not necessary for the plaintiff to plead the ouster jurisdiction of the Calcutta Court. In fact, it was for the defendants to plead and prove the ouster jurisdiction of the Calcutta Court and conferment of the jurisdiction of the Singapore Court alone. The Apex Court was considering Clause 3 of the Bill of Lading which is the jurisdiction clause. The said Clause reads:-
Bill of Lading "Clause 3. Jurisdiction. - Any dispute arising under the Bill of Lading shall be decided in the country where the carrier has his principal place of business and the law of such country shall apply except as provided elsewhere herein."
It is clear from the aforesaid jurisdiction clause that for the purpose of jurisdiction, it shall be the Court in the country where the carrier has its principal place of business and the law of such country shall apply except as provided elsewhere. However, the Hon'ble Division Bench, inter alia, held that the plaintiffs have suppressed the jurisdiction clause and, accordingly, the Court should decline the plaintiff to proceed any further on the improper plaint improperly proceeded by the plaintiff. The Division Bench assumed that the defendants had their principal place of business at Singapore. This view was overturned by the Apex Court. In paragraphs 19, 31 and 32 of the aforesaid decision, the issue with regard to the principal place of business was discussed and it reads:-
"19. The allegations in the plaint are to the effect that the parties have entered into a contract on 7.1.2000 to carry on board the vessel M.V. Fortune Express under the six split bills of lading 642 logs from the port of Sarawak, Malaysia for discharge at the port of Calcutta, India. As per stowage plan, 578 logs were lying on the deck of the vessel. At the time of the discharge of the cargo lying on the deck of the vessel, it was found that 456 logs out of 578 logs were missing and had been short- landed. The plaintiffs claimed a decree for the proportionate value of 456 logs, port and other charges, custom duty and proportionate insurance payment. As per the plaintiffs' allegation, the logs, which were to be carried on the vessel owned by the defendants, had not been delivered at the port of destination. Thus, all the material facts on the basis of which the plaintiffs claimed the decree are alleged in the plaint. As the logs were not delivered at the port at Calcutta, the port of destination, the part of cause of action arose within the jurisdiction of the Calcutta Court and, thus, the suit filed by the plaintiffs at Calcutta was maintainable although it may be pleaded by the defendants in their written statement that the Calcutta High Court has no jurisdiction on account of Clause 3 of BOL. For the purpose of the cause of action, it was not necessary for the plaintiffs to plead the ouster of the jurisdiction of the Calcutta Court. In fact, it was for the defendants to plead and prove the ouster of the jurisdiction of the Calcutta Court and conferment of the jurisdiction in the Singapore Court alone. On a bare reading of Clause 3 of BOL, it is clear that any dispute arising under the BOL shall be decided in the country where the carrier has its principal place of business and the law of such country shall apply except as provided elsewhere in the BOL. Therefore, the exclusion clause refers to the jurisdiction of a court where the carrier has its principal place of business. Unless and until it is established that the defendant-carrier has its principal place of business at Singapore, the exclusion clause has no application. Simply because in the cause title of the plaint, the plaintiffs have described defendant No.2 Trustrade Enterprises PTE Ltd. to be carrying on business at Singapore, would not ipso facto establish the fact that the principal place of business of defendant No.2 (respondent herein) is/was at Singapore to exclude the jurisdiction of the Calcutta Court which admittedly has the jurisdiction to try the suit. Therefore, absence of reference of Clause 3 of BOL in the pleadings cannot be said to be suppression of the material fact as the question of jurisdiction would be required to be adjudicated and decided on the basis of the material placed on record at the trial.
31. From the aforesaid, it is apparent that the Court has found that the Calcutta Court has jurisdiction to try the proceedings except when the forum selection clause excludes the jurisdiction of the Court. The Court has also found that the law of Singapore is not known. The case of the defendant carrier/owner of the ship, of exclusion of the Calcutta Court, is solely based on the exclusion clause which conferred jurisdiction on the Court where the defendant has the principal place of business, which according to us has to be determined only after sufficient material is placed before the Court. In Advanced Law Lexicon, 3rd Edition 2005, by P.Ramanatha Aiyar, at page 3717, `principal place of business' is defined as under:
"where the governing power of the corporation is exercised, where those meet in council who have a right to control its affairs and prescribe what policy of the corporation shall be pursued, and not where the labour is performed in executing the requirements of the corporation in transacting its business.
The place of a corporation's chief executive offices, which is typically viewed as the "nerve center".
.. the place designated as the principal place of business of the corporation in its certificate of incorporation."
32. From this, it appears that the principal place of business would be where the governing power of the corporation is exercised or the place of a corporation's Chief Executive Offices, which is typically viewed as the nerve center or the place designated as the principal place of business of the corporation in its incorporation under the various statutes. Therefore, to arrive at a finding as to which is the principal place of business, the parties would be required to place the relevant material before the Court. The Court cannot arrive at a finding of a particular place being the principal place of business at the preliminary stage of the hearing of the suit. The defendants have not placed any material before the Court that the Singapore Court is another available forum which is clearly or distinctly more appropriate than the Indian Courts. The Court has not taken into consideration that the action commenced by the plaintiff-appellants in Calcutta Court founded on the facts which are most real and substantially connected in terms of convenience or expense, availability of the witnesses and the law governing the relevant transaction in the Indian Court. There is no averment in the application filed by the defendants that continuance of the action in Calcutta High Court would work injustice to them because it is oppressive or vexatious to them or would be an abuse of the process of the Court. There was no material before the Court how the trial at Singapore would be more convenient to the parties vis-a-vis the trial of the suit at Calcutta and that justice could be done between the parties at substantially less inconvenience and expense. Nor it has been shown that stay would not deprive the plaintiffs of legitimate personal or juridical advantage available to them. In the facts of the case, we are not satisfied that there is other forum having jurisdiction, in which the case may be tried more suitably for the interest of all the parties and for ends of justice." (emphasis supplied) In Black's Law Dictionary, 1990 Edition Principal Office was treated as synonymous to principal place of business. It is defined as under:
"Principal Office. The principal office of a corporation is its headquarters, or the place where the chief or principal affairs and business of the corporation are transacted. Usually it is the office where the company's books are kept, where its meetings of stockholders are held, and where the directors, trustees, or managers assemble to discuss and transact the important general business of the company; but no one of these circumstances is a controlling test. Synonymous with 'principal place of business', being the place where the principal affairs of a corporation are transacted."
The company from the date of incorporation mentioned in the certificate of incorporation becomes a legal person separate from the corporations.
The registered place of business necessarily means the place where registered office of the company is situated. The registered office, however, may not be the corporate office of the company. The Forum Selection Clause could have been held to be uncertain if it had described the jurisdiction of the Court at a place where the corporate office of the defendant No.1 is situated or its principal place of business without specifying where the corporate office or the principal place of business of the company is situated. It is an admitted fact that the defendant No.1 is incorporated and registered under the relevant laws of Germany and having its registered office at Germany. There cannot be any doubt that the expression "registered place of business" is the registered office of the company.
A company is required to have a registered office which is capable of receiving and acknowledging communications and notices as may be addressed to it. In fact, the communications between the plaintiff and the defendant No.1 would show that the defendant No.1 has made all its communications from its registered office at Germany. A company may acquire a foreign residence so as to be capable of being sued in a foreign country but the company remains domiciled and is capable of being sued in the country of incorporation. (Egyptian Delta Land & Investment Co. v. Todd, (1929) AC 1) Interestingly, the plaintiff in the Cause Title as well as in paragraph 2 of the plaint described the defendant as a company incorporated and registered under the relevant laws of Germany having its registered office at 36, D-87727, Babenhausen, Germany. The jurisdiction clause does not show that the jurisdiction of the Court would be at the principal place of business of the defendant. If the word "principal" is read into the said jurisdiction clause in place of "registered" then what the defendant No.1 has contended could have been acceptable. There cannot be any doubt that the registered place of business may not be the principal place of business. When such a doubt is raised, it calls for a decision at the trial of the suit. In view of the undisputed fact that the plaintiff has accepted that the defendant No.1 is having its registered office at Germany, in my view, that should be treated as the registered place of business and there cannot be any confusion on this point at all. The phrase "place of business" is preceded by the word "Registered" instead of "principal". There is no vagueness and ambiguity.
When there is an express jurisdiction clause between the parties, it is all the more necessary to find out the reason and motive behind impleading the defendant with whom the plaintiff does not have any separate contract. It is necessary to find out if the defendant No.2 has been impleaded in order to wriggle out of the jurisdiction clause in the agreement.
In the instant case, it cannot be said that the Court at Germany does not have the jurisdiction. The defendant No.1 is having its registered place of business at Germany. The two several notices of termination were also issued from Germany. In so far as the defendant No.2 is concerned, there cannot be any doubt on a reading of the plaint that the defendant No.2 has been roped in for the purpose of creating a jurisdiction. The principal and essential claim is against the defendant No.1. The defendant No.2 is having a similar contract with the defendant No.1. The application for revocation and/or rejection and/or return of the plaint has been filed by both the defendants.
The primary object of the suit is to seek a relief against the defendant No.1. According to the plaintiff, the defendant No.2 has procured a breach of contract entered into between the plaintiff and the defendant No.1. The unamended plaint would show that even if averments made in the plaint are taken to be true and correct, no part of the cause of action against the defendant No.2 has arisen within the jurisdiction of this Court. However, the proposed amendment tries to mend it in order to create a jurisdiction for this Court. If the plaintiff succeeds in establishing that the notice of termination is illegal and/or bad, then the plaintiff would be entitled to restoration of the original contractual relation and consequential reliefs like damages. It may not be necessary at this stage to express any opinion with regard to the termination clause in the agreement as the court is rejecting the plaint on the basis of Forum Selection Clause. The relief against the defendant No.2 is consequential. The purpose of impleading the defendant no.2 is to be judged after taking into consideration the primary and dominant object of the suit in juxtaposition to any other incidental or ancillary facts not forming integral part of the cause of action. This enquiry is essential in order to find out if a party has been impleaded in the suit in order to avoid the agreed forum. The defendant no.2 does not say that he would be inconvenienced in the event a trial takes place at the registered place of business of the defendant no.1 at Germany. The same suit could have been filed at Germany seeking the self-same reliefs against the defendants.
Under such circumstances, the application being G.A. No.1201 of 2017 stands allowed. There shall be an order in terms of prayers (a) & (d) of the notice of motion. G.A. No.1318 of 2017 stands dismissed, however, not on merits. C.S. No.19 of 2017 stands disposed of.
The order shall not prevent the plaintiff to initiate litigation at the registered place of business of the plaintiff at Germany.
However, there shall be no order as to costs.
Urgent Photostat certified copy of this judgment, if applied for, be given to the parties on usual undertaking.
(Soumen Sen, J.)