Orissa High Court
Indian Rare Earths Ltd. And Ors. vs Unique Builders Ltd. on 9 April, 1986
Equivalent citations: AIR1987ORI30, AIR 1987 ORISSA 30, (1986) 62 CUT LT 43 (1987) 1 ARBI L.R. 87, (1987) 1 ARBI L.R. 87
ORDER P.C. Misra, J.
1. This revision is directed against the order dated 5-1-85 passed in Misc. Case No. 117 of 1983 (Arbitration) by the Subordinate Judge (I), Cuttack, The aforesaid Miscellaneous case was filed for appointment of an Arbitrator to adjudicate disputes between the parties. The learned Court below after hearing the parties ordered for appointment of an Arbitrator overruling the objection raised by the present petitioner on the ground that only the Courts of Maharashtra shall have the jurisdiction to determine the matter in- issue and the jurisdiction of all other Courts having been ousted by an agreement between the parties.
2. The present opp. party was entrusted with the work "Structural Steel and Cladding Work in Bulk Ware Houses" as per the agreement between the petitioner and the opp. party. The work order issued by the present petitioners was received by the contractor (present opp. party) in their office at Cuttack. During the execution of the work certain disputes arose between the parties which was brought to the notice of the present petitioners, by letters dated 7-6-82 and 11-8-82. There being no response to the said letters the present opp. party requested for appointment of an arbitrator by letters dated 20-11-82 and 19-2-83, but the same also produced no effect. Hence, this application was filed before the Subordinate Judge, Cuttack under Ss. 5, 8 and 11 of the Arbitration Act.
3. The present petitioners who were opp. parties in the aforesaid misc. ease in the Court below contested the application mainly on the ground that it was stipulated in the agreement executed between the parties that all disputes arising out of or in any way connected with the agreement shall be deemed to have arisen in Bombay and only the Courts of Maharashtra shall have jurisdiction to determine the same. It was, therefore, contended that the jurisdiction of all other Courts have been expressly barred by the terms of the said agreement for which the Subordinate Judge at Cuttack had no jurisdiction to entertain the application in question. It was further stated that none of the present petitioners reside or carry on business within the jurisdiction of the Subordinate Judge, Cuttack for which there was lack of jurisdiction on the part of the said Court. In this connection, it was also stated that the registered office of the present petitioners-company being located at Bombay and the work in question being within the district of Ganjam, the Courts at Bombay, Berhampur or Chhatrapur were competent to entertain the petitioner and not the Subordinate Judge, Cuttack. An objection was taken that the present petition for appointment of an arbitrator was not maintainable as the Consulting Engineer, i.e. M.N. Deatur & Co. Pvt. Limited had not been approached which according to the terms of the agreement a pre-condition before approaching the arbitrator.
4. The learned Subordinate Judge after hearing the parties came to the conclusion that the said Court (Subordinate Judge, Cuttack) had jurisdiction to entertain the present case and the stipulation in the agreement to the effect that the Court of Maharashtra alone shall have the jurisdiction in the matter is oppressive, unfair and inequitable. It was also held in the impugned order that in the facts and circumstances of this case, an application for appointment of an arbitrator was competent as the disputes were brought to the notice of the Consulting Engineer who took no action as was required of him. On these findings, the learned Court below ordered that an arbitrator be appointed for adjudication of the disputes between the parties and directed the parties for submitting panel of names from out of which one was to be selected and appointed as the arbitrator. In this revision the aforesaid order of the Subordinate Judge, Cuttack has been challenged on the very same grounds which were taken against the application in the Court below.
5. The finding of the Subordinate Judge that the disputes were previously brought to the notice of the Consulting Engineer and that no action was taken by him, in my view, is unassailable for the reasons discussed in the impugned order. Nothing further has been placed in this Court for taking a view that the aforesaid precondition was not satisfied. The only other question which requires determination in this case is as to whether the Subordinate Judge, Cuttack is one of the Courts having jurisdiction to entertain the application under Section 8 of the Arbitration Act and, if so, whether its jurisdiction has been ousted by agreement of the parties. In the event it is held that the jurisdiction of the Subordinate Judge, Cuttack has been so ousted, whether the said Court can still exercise his jurisdiction on the ground that the ouster clause is inequitable and oppressive.
6. The present opp. party had alleged in para 9 of his petition in the Court below that the agreement between the parties was signed by him at Cuttack and he had received payments with regard to the contract in question at Cuttack for which, according to him, the cause of action for the case arose also within the territorial jurisdiction of the Courts at Cuttack. In the written statement filed by the present petitioners in the Court below it was denied that any part of the cause of action arose within the jurisdiction of the Courts at Cuttack. In order to establish that the appropriate Court at Cuttack has jurisdiction to entertain the application, a copy of the work order issued by the present petitioners has been filed to indicate that the same was addressed to the present opp. parties at Cuttack with a request to return one copy of the same duly signed by him in token of his receipt and acceptance. In another communication dated 7th May, 1979 the original unsigned agreement in respect of the work in question was sent to the present opp.
party to his Cuttack address with a request to affix his signature on all pages and return the same within 10 days of the receipt thereof.
An offer undoubtedly is a part of cause of action as soon as the same is received by the other party to the contract. Admittedly the present opp. party having received the unsigned agreement had executed the same in token of his acceptance. By acceptance of the offer the contract became complete and concluded so far as the proposer is concerned.
The acceptance of an offer being a constituent of the bundle of facts which constitute the cause of action it is bound to be concluded that the appropriate Court at Cuttack within whose teritorial jurisdiction the contract was executed by one of the parties in token of his acceptance, would be one of the Courts competent to entertain the action. This is because, by virtue of Section 41 of the Arbitration Act, the Civil P.C. in its entirety applies to the proceedings under the Arbitration Act.
7. It is unnecessary to refer to numerous decisions on the subject that where two or more Courts have jurisdiction under the Civil P.C. to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such Courts, is not contrary to public policy nor does it contravene Section 28 of the Contract Act. Thus the choice of the forum made by the parties by an agreement shall ordinarily be respected. This, however, does not mean that the Courts other than the one chosen by the parties would have no jurisdiction to entertain the suit or the proceeding. This is because the parties cannot by agreement confer jurisdiction not inherently possessed by it just as the parties could not by such agreement take away the jurisdiction of the Court which is otherwise vested in it. The necessary corollaries which follow from the aforesaid proposition is that a Court which is possessed of the jurisdiction by operation of any law to try a suit or proceeding cannot be divested merely because the parties have by agreement chosen a different forum. It has been held in large number of cases that while the parties can lawfully enter into an agreement restricting the institution of a suit or proceeding to a particular Court having jurisdiction and ordinarily the Courts who respect the agreement, the said stipulation can be ignored by the excluded Court which otherwise possesses jurisdiction, it is considered to be oppressive, unjust or unfair having regard to the facts and circumstances of the case. In this connection the decision. reported in AIR 1975 Guj 72, Snehalkumar Sarabhai v. Economic Transport Organisation relied by this Court in a case reported in AIR 1984 Ori 182, (Pattnaik Industries Pvt. Ltd. v. Kalinga Iron Works) may be referred to. From the large number of decisions cited at the Bar the acceptable principle seems to be that though the parties are bound by the terms of the contract choosing one of the Courts having jurisdiction to be the proper forum but the Court whose jurisdiction has been ousted by the terms of the agreement can still exercise jurisdiction, in the event the said Court after taking into consideration the entire facts and circumstances of the case is of the opinion that the said stipulation is unfair, unjust, inequitable or oppressive ignoring the said stipulations and relieve the parties from the operation thereof.
8. The present petitioners in their written statement filed in the Court below stated that the registered office of the Indian Rare Earths Ltd. which is a company registered under the Companies Act, 1956 is located at Bombay and the execution of the work being in the district of Ganjam (in Ofissa), the Courts competent to entertain this proceeding are the Courts at Berhampur/Chhatrapur and also at Bombay in the State of Maharashtra, but in view of the stipulations in the agreement to the effect that all disputes arising within or in any way connected with the agreement shall be deemed to have arisen at Bombay, only the Courts in Maharashtra shall have the jurisdiction to determine the disputes. This stipulation in the agreement as has been discussed above is neither contrary to public policy nor does it contravene Section 28 of the Contract Act. It would, therefore, be legitimate to conclude that even though the jurisdiction of the Court at Cuttack could not be taken away by agreement between the parties, the choice of the forum made by the parties as per the contract should ordinarily be respected to.
9. I have already discussed the principle of law which permits the Court to take into consideration the facts and the surrounding circumstances and to refuse to enforce the choice of forum as made by the parties. The learned Court below in the impugned order held the aforesaid stipulation to be oppressive, unfair and inequitable mainly on two grounds, namely : (1) that the relevant clause of the agreement between the parties does not specifically mention the Court to whose jurisdiction the parties were to submit, but it merely stated that the Courts in Maharashtra shall have the jurisdiction to determine the same; and (2) that the work site being in the district of Ganjam it is unreasonable to require 'the parties to run to Bombay to seek redress of their grievances. In my opinion the stipulation in the agreement that the Courts at Maharashtra without specifying the particular Court in which the proceeding shall be initiated is not vague nor unworkable. In the event the said clause is given effect to, it is the appropriate Court having jurisdiction in the State of Maharashtra who would be competent to entertain the proceeding. It is the parties to find out which Court in the State of Maharashtra would be the appropriate Court for their purpose depending upon the nature of the relief to be claimed and other restrictions relating to the institution of the action. The other ground that the work site is in the district of Ganjam and it would be unfair, oppressive and inequitable to require the parties to run to Bombay for the purpose, is equally untenable. The parties were conscious at the time of execution of the agreement and had voluntarily agreed that the Courts at Maharashtra alone would have jurisdiction in the matter. It was not the case of the present opp. party that he was not aware of the aforesaid stipulation in the agreement at the time of its execution or that the agreement was not enforceable on the ground of fraud, misrepresentation of the facts, etc.
10. It appears to me that all the circumstances relevant for the purpose of considering as to whether the parties should be relieved of the choice of forum as stipulated in the agreement had not been placed before the Subordinate Judge. The petition filed by the opp. party in the Court below did not contain any averment justifying to ignore the aforesaid stipulation in the agreement. No evidence appears to have been adduced by any of the parties in that behalf. Consequently, the question has not been appropriately approached or considered by the learned Court below. Ends of justice would be better served if the parties are given further opportunity to place all the relevant facts and circumstances on this question on the basis of which the Court would be in a position to reach at a conclusion either way.
11. In the result, I would allow this revision, set aside the impugned order and remand the case with a direction that the learned Court below shall consider the matter afresh after giving the parties full opportunity by adducing evidence both oral and documentary to establish the facts and circumstances relevant to the issue namely whether the stipulation as to the choice of forum in the agreement was unfair, oppressive or inequitable. There would be no order as to costs of this revision.