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2007 DIGILAW 3215 (MAD)

Aban Constructions (P) Ltd. v. ITD Cementation India Limited & Others

2007-10-03

A.P.SHAH, JYOTHIMANI

body2007
Judgment :- Honourable The Chief Justice These are appeals from the common judgment and order of the learned Single Judge, dated 4. 2006 in Application Nos.298, 896 and 1169 of 2006 vacating the prohibitory order, dated 21. 2006 and dismissing Application No.298 of 2006 filed under Section 9 of the Arbitration and Conciliation Act, 1996 on the preliminary question of jurisdiction. 2. One M/s. Kvaerner Construction International Limited (KCIL) was awarded a contract for the design, detailed engineering, procurement, fabrication, construction/installation and commissioning of the liquid chemical handling jetty at Dahej in Gujarat by the fourth respondent. The work was to be carried out by KCILs Indian subsidiary, namely, Trafalgar House Construction India Limited (THCIL) under the supervision of KCIL. THCIL sub-contracted a portion of the work, namely, mechanical, electrical, instrumentation and related works to the appellant M/s.Aban Constructions (P) Limited. .3. The appellant took up the work and completed the same within the contractual period. In the meanwhile, KCIL was taken over by Skanska International Limited and, accordingly, name of THCIL was changed as Skanska Cementation India Limited (SCIL). Subsequently, the third respondent acquired majority interest in SCIL and, consequently, the name of SCIL was changed to ITD Cementation India Limited. By the several transitory processes, THCIL, in due course, changed its name to the name of the first respondent herein. According to the appellant, the fourth respondent has been effecting payments to SCIL, but no corresponding payment was made to the appellant and a sum of Rs.3,71,54,965/- and a sum of USD 88,121/-is still due and payable by the first respondent. The appellant, therefore, invoked arbitration clause in the subcontract and pending such arbitration, Application No.298 of 2006 was filed by the appellant seeking a direction for prohibitory order. 4. The learned Single Judge, by order, dated 21. 2006 granted an interim prohibitory order and the same was extended from time to time. The first respondent filed two applications, viz., (1) A.No.896 of 2006 to vacate the interim order and (2) A.No.1169 of 2006 to dismiss Section 9 application for want of jurisdiction. The learned Single Judge, relying upon Clause 37 of the sub-contract, held that only Bombay Court has jurisdiction to try the dispute that has arisen between the parties by applying the doctrine of expressio unius est exclusio alterious and consequently vacated the interim order already granted and dismissed A.No.298 of 2006 for want of jurisdiction. The learned Single Judge, relying upon Clause 37 of the sub-contract, held that only Bombay Court has jurisdiction to try the dispute that has arisen between the parties by applying the doctrine of expressio unius est exclusio alterious and consequently vacated the interim order already granted and dismissed A.No.298 of 2006 for want of jurisdiction. 5. Mr.R.Murari, learned counsel appearing for the appellant strenuously contended that a Clause to the effect that the parties shall agree to submit to the jurisdiction of the High Court of Bombay would not amount to ousting the jurisdiction of all other courts. He submitted that the fact that the parties have agreed to submit to the jurisdiction of a court would not have the effect of excluding the jurisdiction of other courts. He submitted that the Supreme Court has time and again held that the intention to exclude a courts jurisdiction should be reflected in clear, unambiguous, explicit and specific terms. In the absence of clear, specific, unambiguous and explicit term, Clause 37 would not oust the jurisdiction of other courts. According to the learned counsel, the agreement was signed and the work was undertaken at Gujarat while the Registered Office of the first respondent was at Mumbai, and this coupled with the fact that certain payments were made to the appellant at Chennai would establish that not all constituents of the cause of action arose at Mumbai and, therefore, it was not the intention of the parties to vest exclusive jurisdiction in the Bombay High Court. .6. In reply, the learned counsel appearing for the first respondent submitted that the Registered Office of the first respondent is at Mumbai; the contract was signed in Gujarat; the entire work was carried out in Gujarat; the Chennai Office is only a liaison office having only two employees; the entire matter relating to the sub-contract took place in the first respondents Registered Office at Mumbai; the seat of arbitration is also in Mumbai and in such circumstances, it must be inferred that Clause 37 of the sub-contract was intended to submit all the disputes to the jurisdiction of the Bombay High Court only. He further submitted that the absence of the word only in Clause 37 does not mean that the parties should submit their disputes to other courts also. .7. He further submitted that the absence of the word only in Clause 37 does not mean that the parties should submit their disputes to other courts also. .7. To appreciate the arguments of both the learned counsel, it is necessary to extract Clause 37 of the sub-contract, which reads as follows:- .37. Proper Law and Jurisdiction :- The sub-contract shall be governed by and construed in all respects according to the law for the time being in force in India and the party shall agree to submit to the jurisdiction of the High Court of Bombay." 8. By a long series of decisions, it has been held that where two Courts or more have under the CPC jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in any one of such courts is not contrary to public policy and does not contravene Section 28 of the Indian Contract Act, 1872. Therefore, if on the facts of the given case more than one court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two Courts. But by an agreement parties cannot confer jurisdiction to a court which otherwise does not have jurisdiction to deal with a matter. (See Hakam Singh -vs-M/s.Gammon (India) Ltd. ( AIR 1971 SC 740 ) and M/s.Shriram City Union Finance Corporation Ltd. -vs-Rama Mishra ( AIR 2002 SC 2402 ). The same question was examined in considerable detail in A.B.C. Laminart (P) Ltd. -vs- A.P.Agencies (1989) 2 SCC 163 ) and it was held as under: (see SCC pp.175-76, paras 20 & 21):- When the court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause properly. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting factor for jurisdiction to the courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other courts. Where an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other courts. This would provide the connecting factor for jurisdiction to the courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other courts. Where an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other courts. 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." 9. In the aforesaid legal background, the facts of the case at hand have to be looked into. Clause 37 says that the parties shall agree to submit to the jurisdiction of the High Court of Bombay. There is no dispute that the contract was signed and the entire work was carried out in Gujarat. The first respondent is having its Registered Office at Mumbai and even the appellant is having its office at Mumbai. The seat of arbitration is in Mumbai and the Arbitrator is from Mumbai. It is also seen from the records that the negotiations for contract took place at Mumbai and the payments were also made at Mumbai. As was observed by the Supreme Court in Shrirams case (supra), referring to Hakam Singhs case (supra), a clause in the contract affecting jurisdiction of courts is not invalid. It is open to the parties to choose any of the two competent courts to decide the disputes. Once the parties bound themselves as such, it is not open for them to choose a different jurisdiction. 10. It is true that Clause 37 is not qualified by the words like "alone", "only" or "exclusively". It is open to the parties to choose any of the two competent courts to decide the disputes. Once the parties bound themselves as such, it is not open for them to choose a different jurisdiction. 10. It is true that Clause 37 is not qualified by the words like "alone", "only" or "exclusively". Therefore, what is to be seen is whether in the facts and circumstances of the present case, it can be held that the jurisdiction of all other courts except Mumbai Court is excluded. Having regard to the fact that both the parties are having their offices in Mumbai, the seat of arbitration is also in Mumbai and the payments were also made in Mumbai, there was a clear intention to confine the jurisdiction of the court in Mumbai to the exclusion of all other courts. The learned Single Judge was thus right in holding that this court lacks the jurisdiction to try the application under section 9 of the Arbitration and Conciliation Act, 1996. 11. In the result, the appeals are dismissed with costs. Consequently, all interim applications are closed.