Muldar (India) Private Ltd. v. Alembic Glass Industries
2008-05-29
K.RAMANNA
body2008
DigiLaw.ai
JUDGMENT K. Ramanna, J. The appellant / plaintiff has come before this Court challenging order dated 08-12-2003 passed by the XXVI Additional City Civil Judge, Mayo Hall Unit, Bangalore, in O. S. No. 15623/2000 returning the plaint in the said suit to the plaintiff, for presentation before the proper Court having jurisdiction over the subject matter of the suit. 2. For the sake of convenience the parties will be referred in their ranks assigned to them before the trial Court. 3. The brief facts of the case is that, the plaintiff is an industrial unit in Bangalore, manufacturing and supplying indentors, labels of decorative laminations called “Decals Transfers” for transferring such labels on to glass and ceramic wares at their manufacture by the respective manufacturers of such wares. The first defendant company is manufacturing and selling varieties of glassware globally with its subordinate offices located country-wide, including in Bangalore; that the defendants after negotiations with the plaintiff had placed the purchase order bearing No. AGI/NTK/835025 dated 14-10-1998 with the plaintiff for the purpose of manufacture and delivery of 4620 sheets of ‘Blue Bear Design Glass Decals’. The said agreement entered into between the parties is subject to terms and conditions of supply printed overleaf and the same among other conditions contains that ‘all disputes subject to Vadodara jurisdiction’. It is further admitted fact that the defendants cancelled the purchase order for supply of 1770 sheets of Decal Transfers’ after taking delivery of 2850 sheets of ‘Decal Transfers’ and a dispute has arisen between the parties in furtherance of the said agreement entered into between them. Therefore the plaintiff has filed a suit for declaration that, the recession of the agreement of sale made, by the defendant with the plaintiff, by cancelling the purchase order placed by the defendant on the plaintiff in respect of 1770 of ‘DECALS TRANSFERS’ by the defendants’ fax message dated 27-11-1998 is illegal and void, resulting in breach of contract committed by the defendants, and praying for the consequential relief by way of recovery of damages in the sum of Rs. 2,28,075/- along with interest and costs.
2,28,075/- along with interest and costs. On appearance before the trial Court the defendants filed common written statement denying the plaint averments and contended that in view of the above said clause in the agreement between the parties the Courts in Vadodara alone has jurisdiction to try the dispute between the parties and that the Court below is barred from trying the said suit. From the materials placed before it the Court below has framed in all 8 issues and among them issue No. 5 is a preliminary issue, framed with regard to the territorial jurisdiction of the Court below to try the said suit. After hearing both the parties and considering the documents placed before it the Court below passed order on the said preliminary issue, which is impugned herein, ordering to return the plaint in the said suit to the plaintiff appellant herein, for presenting the same before the proper Court. Hence, being aggrieved the plaintiff/appellant has come up with this appeal challenging the legality and correctness of the said order passed by the Court below. 4. Heard the arguments of the parties and perused the records. The points that arise for my consideration are, (a) Whether the contract entered into between the parties to the suit, to submit to the jurisdiction of the Court at Vadodara is illegal and void and (b) Whether the order of the Court below returning plaint to the plaintiff/appellant herein, holding that the subordinate office of the respondents company is not made as a party in the suit, is proper and correct? 5. Admittedly, the appellant company is carrying on its business in Bangalore and the respondents’ company is also having their subordinate office at Bangalore. The registered office of the respondents’ is at Vadodara, Gujarat. Further from the materials placed on record it is clear that the parties have entered into an agreement which contains a clause conferring jurisdiction with the Courts at Vadodara alone, in respect of any dispute that may arise in respect of the said agreement. Now the contention of the appellant is that the said agreement entered into between the parties is not concluded and that the jurisdiction of the Courts at Bangalore is not ousted; that any agreement entered into between the parties contrary to the legislative provisions is void, as such parties cannot submit themselves to the jurisdiction to the Courts at Vadodara.
Now the contention of the appellant is that the said agreement entered into between the parties is not concluded and that the jurisdiction of the Courts at Bangalore is not ousted; that any agreement entered into between the parties contrary to the legislative provisions is void, as such parties cannot submit themselves to the jurisdiction to the Courts at Vadodara. When in fact, the Courts at Vadodara is not at all having jurisdiction to try the suit, any agreement between the parties conferring jurisdiction with the said Court is void and is of no consequence. 6. Of course, the trial Court returned the plaint to the appellant / plaintiff, holding that the disputes between the parties in respect of the contract entered into between them has to be set right before the Courts at Vadodara alone. It is further held that, as the branch office of the defendant situate at Bangalore, is not made as a party in the suit, the Courts at vadodara alone has jurisdiction to try the suit and is not hit by Section 20 (c) CPC. However it is contended by the Counsel for the appellant that, there is no need to make the branch office of the respondents as a party in the suit and as per provisions of Rule 2 to Order 29 of CPC summons may be served on the Corporation at the registered office and only if there is no registered office then the notice should be taken at the place where the corporation carries on business. 7. In support of his case the learned Counsel for the appellant has relied on the decision reported in (1991) 4 SUPREME COURT CASES 270 in case of PATEL ROADWAYS LIMITED, BOMBAY -Vs- PRASAD TRADING COMPANY and PATEL ROADWAYS LIMITED, BOMBAY -Vs- TROPICAL AGRO SYSTEMS PVT.
7. In support of his case the learned Counsel for the appellant has relied on the decision reported in (1991) 4 SUPREME COURT CASES 270 in case of PATEL ROADWAYS LIMITED, BOMBAY -Vs- PRASAD TRADING COMPANY and PATEL ROADWAYS LIMITED, BOMBAY -Vs- TROPICAL AGRO SYSTEMS PVT. LTD AND ANOTHER wherein it is held thus : “Where defendant company / corporation has its principal office at one place and subordinate office at another place and cause of action arises at the place where the subordinate office is located, held, suit has to be filed only in the Court within whose jurisdiction the company/ corporation has its subordinate office and not in Court within whose jurisdiction it has its principal office - A clause to the contrary in the agreement would not be operative - where, however, the defendant company / corporation has only a principal office, then suit can be filed in Court within whose jurisdiction the principal office is located even if cause of action arises elsewhere. Choice of forum under, can be limited by incorporating exclusion clause under the agreement - but agreement cannot confer jurisdiction on a place it does not lie otherwise.” Further he also relied on a decision in case of NEW MOGH TRANSPORT COMPANY -Vs- UNITED INDIA CO., LTD. AND OTHERS reported in AIR 2004 SUPREME COURT 2154 wherein at paragraph No.10 it is held thus : “On a plain reading of the explanation to Section 20 CPC, it is clear that Explanation consists of two parts (1) before the word ‘or’ appearing between the words ‘office in India’ and the word in respect of and the other thereafter. The explanation applies to a defendant which is a corporation which term would include even a company. The first party of the explanation applies only to such Corporation which has its sole or principal office at a particular place. In that event, the Court within whose jurisdiction the sole or principal office of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be deemed to carry on business at that place because of the fiction created by the Explanation.
In that event, the Court within whose jurisdiction the sole or principal office of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be deemed to carry on business at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have sole office but has a principal office at one place and has also a subordinate office at another place. The expression ‘ at such place’ appearing in the Explanation and the word ‘or’ which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation. It is not the Court within whose jurisdiction the principal office of the defendant is situate but the Court within whose jurisdiction it has a subordinate office which alone have the jurisdiction in respect of any cause of action arising at any place where it has also a subordinate office.” 8. On the other hand the learned Counsel for the respondents has also relied on a decision reported in case of M/S HANIL ERA TEXTILES LTD., -Vs- M/S PUROMATIC FILTERS (P) LTD., reported in AIR 2004 SUPREME COURT 2432, wherein it is held thus: “Territorial jurisdiction of Court - determination of-part of cause of action accrued in both places viz., Delhi and Bombay - clause in agreement between parties, however, conferring jurisdiction in Courts in Bombay - Not opposed to public policy - Clause not qualified by words like ‘alone’ ‘only’ or ‘exclusively’ - but having regard to facts that purchase order was placed by the defendant at Bombay; the said order was accepted by the branch office of the plaintiff at Bombay; the advance payment was made by the defendant at Bombay; and as per the plaintiffs case the final payment was to be made at Bombay - It can be inferred that Courts in Bombay have jurisdiction to the exclusion of all other Courts - Court of Addl.
District Judge, Delhi had therefore, no territorial jurisdiction to try the suit.” Further he also relied on a decision reported in case of M/S ANGILE INSULATIONS - Vs- M/S DAVY ASHMORE INDIA LTD., AND ANOTHER reported in AIR 1995 SUPREME COURT 1766, wherein it is held thus : “Jurisdiction of Court - Ousting of, by agreement between parties - Two or more competent Courts to entertain a suit - parties to contract agreeing to vest jurisdiction in one such Court - contract clear and unambiguous - it is not hit by S.23 or S.28 of Contract Act.” Further the Counsel for the respondent had also relied on following decisions in support of his case, reported in * AIR 1971 SC 740 HAKAM SINGH Vs. M/S. GAMMON (INDIA) LTD., * 1983 (4) SCC 707 GLOBE TRANSPORT CORPORATION Vs.TRIVENI ENGINEERING WORKS AND ANOTHER * 1963 (1) MYSORE LAW JOURNAL 194 M/S NAGANUR BASAPPA & SONS. BANGALORE CITY Vs. V. KRISHNA SETTY * 1963 (2) MYSORE LAW JOURNAL 513 NEW INDIA ASSURANCE CO., LTD & ANOTHER Vs. T.K. NANJUNDA SETTY & SONS & ANOTHER * AIR 1962 ANDHRA PRADESH 452 MESSRS. LIBRA MINING WORKS, Vs.MESSRS. BALDOTA BROTHERS, IMPORTERS AND EXPORTERS AND OTHERS. 9. Before considering the law laid down in the above decisions referred and relied on by the Counsel for both the parties, it is just and necessary to look into the provisions of Section 20 of code of civil procedure, which reads as under. Section 20 : OTHER SUITS TO BE INSTITUTED WHERE THE DEFENDANTS RESIDE OF CAUSE OR ACTION ARISES. Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction (a) the defendant or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution or (c) the cause of action, wholly or in part, arises.
EXPLANATION : A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. 10. From the plain reading of the above provision of the Code and also from the law laid down in the above referred decisions, the law in this regard is very settled that “Where two or more Courts have jurisdiction under the CPC, to try a suit or proceeding, an agreement between the parties to the effect that the dispute between them shall be tried in any one of such Courts alone is not contrary to public policy and in no way contravenes Section 28 of the Indian Contract Act. Therefore, if on the facts of a given case, more than one Court has jurisdiction, parties by their consent may limit the jurisdiction to one of the two Courts. However by an agreement parties cannot confer jurisdiction to a Court which otherwise does not have jurisdiction to deal with the matter.” 11. In the instant case admittedly, the appellant company is carrying on its business in Bangalore and the respondents’, company is also having a subordinate office at White Field, Bangalore-66. The registered office of the respondent, is at Vadodara, Gujarat. Further the appellant company at the time of entering into an agreement with the respondent company has agreed to submit itself to the jurisdiction of Courts at Vadodara and it is agreed between them in respect of the saida agreemet. However on crop up of some dispute between them that only the Courts at Vadodara shall have jurisdiction to try the disputes that may arise between them the appellant company has filed a suit before the City Civil Court at Bangalore, seeking some relief. The cause of action for the suit arise at Bangalore, when the respondent failed to take delivery of readied goods from the appellant and failed to make the payment.
The cause of action for the suit arise at Bangalore, when the respondent failed to take delivery of readied goods from the appellant and failed to make the payment. According to respondents, in view of specific clause in the agreement any dispute between the appellant and respondents in respect of the said agreement has to be set right before the Courts at Vadodara alone and only the Courts at Vadodara are having jurisdiction to try the same, on the other hand the contention of the appellant is that said agreement is void and the jurisdiction of the Courts at Bangalore is not ousted. 12. In view of the above facts and the contentions of the parties and also in view of the settled position of law discussed above, the question that arise for consideration in this appeal is that, whether the clause in the agreement between the appellant company and respondents company conferring jurisdiction with the Courts at Vadodora is void or not. In this regard before going to decide the same, it is necessary to bear in mind that the respondents’ company is covered under Section 20 of CPC. The word ‘corporation’ referred in Section 20 of CPC meant also a ‘company’ registered under the Indian Companies Act and thus the provisions of the above Section is applicable to the respondents. 13. Further in view of the Explanation to Section 20 CPC it is clear that ordinarily a suit against a corporation shall be filed at its sole or principal office in India, irrespective of fact whether the cause of action to sue arise there or not, the 2nd part of the said explanation further makes it clear that, where the cause of action for the plaintiff to sue arise at a place where the defendant company is having a subordinate office, the suit shall be filed only at that place and no suit shall be filed at the place where the defendant company is having its principal/registered office. Thus in the instant case when the respondents are having their branch office at Bangalore, wherein the cause of action for the appellant to sue has arisen, suit shall be filed before the Courts at Bangalore and the Courts at Vadodara will not be having any jurisdiction to try the said suit.
Thus in the instant case when the respondents are having their branch office at Bangalore, wherein the cause of action for the appellant to sue has arisen, suit shall be filed before the Courts at Bangalore and the Courts at Vadodara will not be having any jurisdiction to try the said suit. As per Section 20 CPC only in the absence of respondents having their subordinate office at Bangalore, where the cause of action for the plaintiff to sue the defendants company has arisen a suit shall be filed at Vadodara where the respondent is having their registered office. Thus it is only the Courts at Bangalore which alone have jurisdiction to try the dispute between the parties and there is no other Court, including the Courts at vadodara, at any point of time had jurisdiction to try the dispute between the parties, for which the cause of action had arisen at Bangalore. 14. Further the appellant and respondents by agreement cannot confer jurisdiction on a Court which it does not possess, as such any agreement entered into between the parties conferring jurisdiction with the Courts at Vadodara is void and the same is against the public policy. Only when two Courts are having jurisdiction to try a suit, the parties may by agreement restrict themselves to sue the other only at one place excluding the other Court. But in the instant case by an agreement between the appellant and respondents, the parties are conferring jurisdiction on the Courts at Vadodara, which the said Court does not possess, as such, the said clause in the agreement conferring jurisdiction with the said Court is void and the same is a nullity. Therefore, the appellant has every right to file a suit before the Courts at Bangalore, where the cause of action for the appellant to sue respondents has arisen. 15. Thus viewed from any angle the clause in the agreement entered into by the appellant with the respondent conferring jurisdiction with the Courts at Vadodara is void, against the statute and law. It is only the Courts at Bangalore which have jurisdiction to try the dispute between the parties and thus the suit filed by the appellant at City Civil Court at Bangalore is proper and correct, and the Court below is having jurisdiction to try the same.
It is only the Courts at Bangalore which have jurisdiction to try the dispute between the parties and thus the suit filed by the appellant at City Civil Court at Bangalore is proper and correct, and the Court below is having jurisdiction to try the same. In view of respondents having their subordinate office at Bangalore they can very well be represented through their subordinate office and no question of hardship or inconvenience to respondents will arise. 16. Further the Court below erred in returning the plaint to the appellant/plaintiff, holding that the subordinate office of the respondent company is not made as a party in the suit. In this regard it is necessary to look into the Provision of Order 29 Rule 2 CPC which reads as follows : ORDER XXIX : ‘SUITS BY OR AGAINST CORPORATIONS’ Rule 2 : Service on corporation; Subject to any statutory provision regulating service of process, where the suit is against a corporation, the summons may be served (a) on the Secretary, or on any director, or other principal officer of the corporation, or (b) by leaving it or sending it by post addressed to the corporation at the registered office, or if there is no registered office then at the place where the corporation carried on business. 17. From the above it is clear that, in a suit against a corporation / company the service of summons is to be effected on the Secretary, or on any director, or other principal officer of the corporation. It is sufficient, if these persons are made as party to the suit. The claim of the appellant arises against that company. The respondents company included, both its registered office and subordinate office, therefore it is sufficient if the responsible officers of the said company are made as a party in the suit and it will not be proper for the respondents to contend that the subordinate office of the respondents ought to have been made as a party in the suit, it appears the said technical objection was raised by the respondents only to defeat the purpose of the suit. Only because the subordinate office of the respondents company is not a party to the suit the same will not create a new jurisdiction with the Courts at Vadodara, nor it oust the jurisdiction of the Courts at Bangalore.
Only because the subordinate office of the respondents company is not a party to the suit the same will not create a new jurisdiction with the Courts at Vadodara, nor it oust the jurisdiction of the Courts at Bangalore. The appellant has sent notice to all the necessary persons to whom the notice has to be sent as per order 29 Rule 2 CPC, the appellant has further made them as a party in the suit, thus failure of the appellant to make the subordinate office of the respondents company as a party in the suit is of no consequence, however it is very well open for the respondents to contest the suit through their subordinate office. 18. Thus in view of the above discussions and the reasoning it is clear that the order of the Court below returning the plaint in the said suit to the appellant / plaintiff is wholly incorrect, illegal and cannot be sustained. Viewed from any angle the order of the Court below is liable to be set aside. 19. Therefore this appeal is allowed. The order under challenge dated 08-12-2003 passed by the XXVI Additional City Civil Judge, Mayo Hall Unit, Bangalore, in O.S. No. 15623/2000 is hereby set aside. The matter is remanded to the Court below to dispose of the same on merits. In view of the fact that the suit is of the year 2000, the Court below is directed to dispose of the same as expeditiously as possible within six months from the date of receipt of a copy of this order. Both the parties are directed to co-operate with the Court below to dispose of the suit expeditiously.