The Chariman, The Institution of Engineers (India), Karnataka State Centre v. M. Nagaraj
2010-02-08
ASHOK B.HINCHIGERI
body2010
DigiLaw.ai
Judgment :- (This writ petition is filed under Article 226 and 227 of the Constitution of India praying to call for the records in O.S. No. 7420 of 2008 pending on the file of the learned XXIV Additional City Civil & Sessions Judge, Bangalore City; and etc.) As the question of facts and law involved in W.P.No. 26568/2009 and W.P.No.26569/2009 are the same, they are clubbed, heard together and are being disposed of by this common order. 2. The facts of the case in brief are that the Institution of Engineers (India), (hereinafter refereed to as ‘IEI’) is a body corporate incorporated by the Royal Charter in 1935. The IEI has several state and local centers. It has its headquarters at Kolkata. The respondent Nos. 1 to 4 in W.P.No.26569/2009 are all the members of IEI. They were the candidates in the election to the Council/Committee from different divisions. Alleging the electoral malpracties, they filed O.S. No. 7420/2008 and sought the declaratory relief that the election process is viod, that the constitution of the Committee is illegal etc. They further sought the relief of mandatory injunction directing the petitioner Nos. 2 and 3 to conduct fresh election. The Civil Court, by its order, dated 12.11.2008 directed the petitioners to maintain the status quo in respect of the election results. 3. When thus stood the state of affairs, the second petitioner issued the notification conveying 74th Annual General Meeting (hereinafter referred to as ‘A.G.M’) of the IEI for announcing the election results. Alleging that the status quo order granted in O.S.No.7420/2008 is being circumvented, Regulation 12(b) of IEI is being violated and directions of the first petitioner are being dishonoured, the respondents (in W.P. No.26569/2009) filed O.S.No.8039/2008. They sought the relief of permanent injunction restraining the petitioners from holding in A.G.M. of the IEI, Karnataka State Center till fresh notification for election is issued, etc. 4. The contesting defendants filed the I.A.No.2 for the return of the plaint for want of jurisdiction.
They sought the relief of permanent injunction restraining the petitioners from holding in A.G.M. of the IEI, Karnataka State Center till fresh notification for election is issued, etc. 4. The contesting defendants filed the I.A.No.2 for the return of the plaint for want of jurisdiction. The Trial Court, by its order, dated 2.2.2009 dismissed the said I.A. This was challenged by the petitioners and the Board of Scrutineers for Election (the defendant No.3) by filing W.P.No.7149/2009.This Court, by its order, dated 24.4.2009 set aside the Trial Court’s order on I.A. No.2 and directed the Trial Court to pass fresh orders after hearing both the parties on the points referred to in the said order of this Court. 5. Similar was the position in respect of O.S.No.8039/2008. The I.A. No.2 filed by the petitioner Nos.2 and 3 (defendant No.2 and 3) in O.S. No.8039/20008 was also dismissed by the Trial Court, by its order, dated 2.2.2009. The challenge to the said order in W.P.No.16288/2009 lead to its setting aside and for the remand of the matter to the Trail Court for fresh consideration vide this Court’s order, dated 22.6.2009. 6. Pursuant thereto, the Trial Court has passed identical orders in both the suits on 6.8.2009 dismissing the I.A. No.2 Aggrieved by the said orders, these two petitions are presented. 7. Sri V. Sudhish pai, the learned counsel appearing for M.N. Seshadri for the petitioners submits that the view taken by the Trial Court that it has the jurisdiction to entertain the suits is wholly erroneous. The Trial Court’s order suffers form non-application of mind. He further submits that it is not in keeping with the remand order passed by this Court in W.P.No. 7149/2009. 8. Sri Pai submits that when two or more competent Courts can entertain a suit, an agreement to confine jurisdiction to one such Court to try the dispute is valid. He submits that the IEI has its headquarters at Kolkata and that a part of the cause of action has arisen in Kolkata. As Bye-law No.124 of IEI’s Bye-laws specifies that only Kolkata Court has jurisdiction, the respondent –plaintiffs are not justified in raising the dispute before the Bangalore Civil Court.
He submits that the IEI has its headquarters at Kolkata and that a part of the cause of action has arisen in Kolkata. As Bye-law No.124 of IEI’s Bye-laws specifies that only Kolkata Court has jurisdiction, the respondent –plaintiffs are not justified in raising the dispute before the Bangalore Civil Court. The said Bye-law reads as follows: “Only an appropriate Court in Kolkata shall have jurisdiction to adjudicate and any dispute between the Institution and a member of any class involving interpretation or operation of the Bye-Laws, Regulations of the Institution and the decisions of the Council.” 9. As the dispute raised by the plaintiff -respondents would come with the scope and ambit of Bye-law No.124, the jurisdiction to adjudicate such a matter would be vested in and confined to the Court in Kolkata. 10. The learned counsel submits that any individual who becomes member of IEI undertakes to be governed by the Bye-laws and Regulations of the IEI. In this regard, he also reads out the relevant paragraph of the undertaking contained in the application for the membership of the IEI. It read as follows: “2. I do hereby undertake that in the event of my election as Fellow, I will be governed by the Bye- Laws and the Regulations of the Institution as they now are or as they may hereafter be legally altered and that I will accept as final and binding the decision of the council in all matters dealt with by them in accordance with the provisions of the Charter, Bye-Laws and Regulations, and Will forthwith cease to describe myself as a Fellow or to designate myself as belonging to the Institution in any other form, on receipt of a notice from the Secretary and Director General that acting under the powers conferred upon them by the Bye-Laws and Regulations the Council have declared me to be no longer as a Fellow of the Institution. I further undertake that I will promote the objects of the institution, as far as may be in my power, provided that whenever I shall signify in writing to the Secretary and Director General that I am desirous of withdrawing form the Institution, I shall after the payment of any arrears which may be due by me at that period be free from this obligation. 3.
3. I have noted that the decision of the Council of the Institution shall be final in granting the Membership and the District Courts at Alipore, 24 Parganas (South) shall have the exclusive jurisdiction in setting the dispute, if any, arising out of this Membership.” 11. Sri Pai finds fault with the Trial Court’s very framing of the point as follows: “Whether this Court has jurisdiction to entertain this suit.” The learned Counsel contends that the Trial Court ought to have framed the point as to “whether the Court at Kolkata has the jurisdiction and whether by the agreement of parties (as per Bye-law No.124), the jurisdiction of the all other Courts is validity excluded.” 12. The learned counsel cites the judgment of the Hon’ble Supreme Court in the case of Hakam Singh V. M/s. Gammon (India) Ltd. Reported in AIR 1971 SC 740 , wherein it is held that parties cannot by agreement confer jurisdiction on Court not possessed by it under the CPC, but agreement that one of the Courts having such jurisdiction alone shall try dispute is not contrary to public policy and does not contravene Section 28 of the Contract Act. The learned counsel also brings to my notice the judgment of the Hon’ble Supreme Court in the case of A.B.C. Laminart PVt. Ltd & Another V. A.P. Agencies, Salem reported in AIR 1989 SC 1239 , wherein it is held that if more than one Court have jurisdiction, the contract vesting the jurisdiction in only one of them is not against public . He has also relied upon the judgment of the Hon’ble Supreme Court in the case of M/s. Shriram city Union finance Corporation Ltd. V. Rama Mishra reported in AIR 2002 SC 2402 , wherein in the parties agreement to choose any one of the two competent Courts to decide their disputes is upheld. In case parties under their own agreement expressly agree that the dispute shall be tried by one of them, then the party can only file a suit in the Court alone. 13. He contends the Trial Court’s order Virtually renders Bye-law No.124 illusory and futile. The Trial Court’s impugned order is unsupportable and unsustainable. When there is an ouste/exclusion clause, the excluded Court should avoid exercising jurisdiction. If a party files a suit in any place other than the agreed place, the same cannot be entertained. 14.
13. He contends the Trial Court’s order Virtually renders Bye-law No.124 illusory and futile. The Trial Court’s impugned order is unsupportable and unsustainable. When there is an ouste/exclusion clause, the excluded Court should avoid exercising jurisdiction. If a party files a suit in any place other than the agreed place, the same cannot be entertained. 14. The learned counsel submits that the IEI is a body corporate with its headquarters at Kolkata and that in case of incorporate body, its residence is the place where its registered office/headquarters is located and it is there that normally cases are to be filed against it. IEI, whose place of residence is kolkata, where its headquarters is situated, merely has a branch at Bangalore. He relied on the judgment of the Hon’ble Supreme Court in case of Morgan Stanley Mutual Fund v. Kartick Das reported in (1994) 4 SCC 225 . The relevant portion of the said judgment is as follows: “42. As far as India is concerned, the residence of the company is where the registered office is located. Normally, cases should be filed only where the registered office of the company is situate.” 15. The learned counsel has relied upon the following judgments for contending that the place of residence of incorporated body is where its office is situated and Courts there would have jurisdiction: 1. New Moga Transport Co. V. United India Insurance Co. Ltd. Reported in AIR 2004 SC 2154 . 2. M/s. Patel Roadways Ltd., Bombay V. M/s. Prasad Trading Company reported in AIR 1992 SCC 1514. 3. Bloom Dekor Limited v. Subhash Himatial Desai and others reported in (1994) 6 SCC 322 . 16. While advancing his submission that a part of cause of action for the suit arose in kolkata, he submits that election to the IEI Council/Committee were notified in Kolkata. 17. The learned counsel takes serious exception to the expression used by the Trial Court that the defendants have taken a “U’’ turn. 18. According to the learned counsel, if a defendant corporation desires to be protected from being dragged into litigation at some place merely because a cause of action arose there, it can save itself from such a situation by an exclusion clause. To buttress this submission, he cited the judgment of the Hon’ble Supreme Court in the case of New Moga Transport Company(supra).
To buttress this submission, he cited the judgment of the Hon’ble Supreme Court in the case of New Moga Transport Company(supra). The Hon’ble Supreme Court has this to stay in para 14 of its reported judgment: “14. 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 such Courts is not contrary to public policy and in no way contravenes Section 28 of the Indian Contract Act, 1872. 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. 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 v. M/s. Gammon (India) Ltd., ( AIR 1971 SC 740 ) and M/s. Shriram City Union Finance Corporation Ltd. V. Rama Mishra ( AIR 2002 SC 2402 )”. 19. The learned counsel has relied on the judgment of the Apex Court in the case of M/s. Patel Roadways Ltd., Bombay (supra), for canvassing the point that neither a party can notify jurisdiction nor a Court can exercise the jurisdiction where its jurisdiction is excluded by the parties. 20. Per contra, Sri Ajoy Kumar Patil, the learned counsel for the respondents submits that it is only a statute, which confers to takes away the jurisdiction of the Courts and Tribunals. By agreement or consent the parties can neither confer nor divest the jurisdiction. At the most, if the two Courts have jurisdiction, parties can be specify one Court, which can be approached by them for resolving their disputes. Unless the Court’s jurisdiction is expressly or impliedly barred they have the jurisdiction to try all suits of civil nature. In this regard, he brings to my notice the provisions contained in Section 9 of the CPC. “9. Courts to try all civil suits unless barred: The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.” 21. Nextly, Sri Patil brings to my notice the provisions contained in Section 20 of CPC, which read as follows: “20.
Courts to try all civil suits unless barred: The Courts shall (subject to the provisions herein contained) have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred.” 21. Nextly, Sri Patil brings to my notice the provisions contained in Section 20 of CPC, which read as follows: “20. Other Suits to be instituted where defendants reside or cause of 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 commencements of the suit, actually and voluntarily resides, or carries on business, or personally work for gain, provided that in such case either the leave of the Court is givens 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.” 22. He also relies on the decision in the case of New Moga Transport Company (supra) relied upon by the petitioners; side. Sri Patil relied upon the said decision for contending that when no cause of action whatsoever, has arisen within the territorial jurisdiction of kolkata, the parties by agreement cannot confer jurisdiction on Kolkata Court. He has also relied upon the decision in the case of A.B.C. Laminart Pvt. Ltd (supra ) in support of the proposition that the parties can submit to the jurisdiction of a Court, only if it has otherwise the jurisdiction to try dispute. 23. He submits that Bye-law No.124 only relates to the interpretation of the Bye-law or Regulations of IEI; it does not in any way affect the jurisdiction of the City Civil Court, Bangalore to entertain the above suit. 24.
23. He submits that Bye-law No.124 only relates to the interpretation of the Bye-law or Regulations of IEI; it does not in any way affect the jurisdiction of the City Civil Court, Bangalore to entertain the above suit. 24. He submits that the election process starting with the appointment of the Board of Crutineer’s (‘B.O.S.’ for short) and the notification issued by B.O.S. to elect the members have all taken place in the city of Banglaore. Annexure – H and J were issued from Banglore. Annexure-K containing the tentative calendar of events is issued by B.O.S., Bangalroe. Large Scale irregularities and rigging of votes had taken place in Bangalore. The issuance of the electoral ballots by post, receipts of the postal ballots, counting of votes, etc. have taken place in Bangalore. 25. The learned counsel submits that the expression ‘at such place’ appearing in the explanation of section 20 read with the word ‘or’ which is disjunctive, clearly suggests that if the case falls within the later part of the explanation, it is not the Court within whose jurisdiction the principal office of the defendant is situated but the Court within whose jurisdiction it has a Subordinate office which alone has the jurisdiction in respect of any cause of action arising at any place where it has a sub-ordinate office. 26. The Trial Court raised the point whether it has jurisdiction to entertain the suit. It answered this point in the affirmative. It has reasoned and observed that the object of Section 20 of the CPC is only to ensure that the defendant is not put to any expenses an inconvenience in traveling a long distance to defend himself in a case. 27. The considered judicial view emerging from the catena of judgments cited by both the sides is that it is not open to the parties by an agreement to confer jurisdiction on a Court, which it does not possess under the Code of Civil Procedure but whether two Courts or more have under the CPC, the jurisdiction 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 and such an agreement does not contravene Section 28 of the Contract Act. 28.
28. IEI is a juristic person and therefore the explanation embodied in Section 20 applies to the case on hand. As held by the Apex Court in the case of Patel Roadways (supra), the linking together of the place where the cause of action arises with the place where a subordinate office is located clearly shows that the intention of the legislature was that in case of a corporation, for the purpose of clause (a) of section 20 of C.P.C., the location of the subordinate office within the local limits of which a cause of action arises, is to be the relevant place for the filing of a suit and not the principal place of business. 29. The Madras High Court, in the case of M/s. Arputam Cine Release V. M/s. Raja Theatre reported in AIR 2006 Mad 344 , held that where part of cause of action had arisen at place K and no cause of action took place at C, the Court at place K has got jurisdiction to deal with the matter, even though the contract conferred jurisdiction on the court at C. 30. The entire bundle of facts pleaded need not constitute a cause of action; what is necessary to be proved before the plaintiff can obtain a decree is the material fact. Cause of action means any material fact which the plaintiff has to prove for succeeding in the suit. Facts which the plaintiff may allege incidentally would not necessarily constitute a part of the cause of action. In taking this view , I am fortified by the Madhya Pradesh High court judgment in the case of Shah Ganpat Pasu and Co., V. Gulzarilal Bhaiyalal and Another Reported in AIR 1958 MP 409 . Cause of action means the action for which the defendant is answerable to the Court. It gives a right to the plaintiff to seek the relief against the defendant. As held by the Full Bench of Allahabad High Court in the Case of Ram Awalamb and Others V. Jata Shankar and Others reported in AIR 1969 ALL 526 , the cause of action may be defined as the fact or facts entitling a party to seek a decree in a Court of law. 31. It is not in dispute that the calendar of events was announced at Bangalore; election was held in Bangalroe; counting took place in Bangalore.
31. It is not in dispute that the calendar of events was announced at Bangalore; election was held in Bangalroe; counting took place in Bangalore. None of the documents produced by the petitioner-defendants reveal that the cause of action arose in Kolkota. The election notices at Annexures-H and J, both dated 30.06.2008 are issued in Bangalroe,, Annexures-L and M contain the guidelines for election. Even assuming that Annexure-L and M are issued from and in Kolkata, they do not constitute the cause of action for filing the suits. No part of cause of action, much less the whole of cause of action, arose within the jurisdiction of Kolkata Court. 32. That apart, the cause of action has to be judged mainly from the allegations in the plaint and not from the defence set up by the defendants. The cause of action is independent of the defence taken by the defendants. In the case of Prem Kumar Peters v. ADDL. District and Session Judge, Kanpur and others reported in AIR 1994 ALL 158 , it is held that cause of action is to be ascertained from the facts stated in the plaint. The existence of registered office of a company within the territorial jurisdiction of Kolkata Court coupled with the agreement to submit only to the Kolkata Court does no ipso facto give a cause of action to the respondent-plaintiffs. What has given them the cause of action are the electoral malpractices and the consequent acts alleged to have taken place in Bangalore. In this context, it is worthwhile to refer to the Delhi High Court’s decision in the case of Jaspal Singh Sahni V. K.I.F.C.S.A.K. reported inn (1998) 71 Delhi Law Times 740, wherein it is held that under the Explanation to Section 20, a Corporation is deemed to carry on business at its sole are principal office in India, or in respect of a cause of action arising at any place where it has also a subordinate office at such place. A Corporation cannot be sued at a place where it has subordinate office except in a respect of a cause of action arising at such subordinate office. Conversely, if no part cause of action accrues at the place of the branch office, the mere fact of the Corporation having a branch office will not give the Court of that place jurisdiction to entertain a suit. 33.
Conversely, if no part cause of action accrues at the place of the branch office, the mere fact of the Corporation having a branch office will not give the Court of that place jurisdiction to entertain a suit. 33. It is also profitable to refer to para 16 of Lahore High Court Judgment in the case of Bhola Nath Aggarwal and Another V. The empire of India Life Assurance Company Limited, reported in AIR 1948 Lahore 56, wherein it is held as follows: “16. It is, therefore, clear that the Corporation can be said to carry on business at the head office or at the place where it has a branch in respect of a cause of action which arises, wholly or in part, at the place where the branch office is situated. It no part of the cause of action arises at the place of the branch office, the corporation cannot be said to transact business at that place. This is the only possible interpretation of Expl.2, and not a single case cited before me has taken the contrary view, therefore, the Courts at Lahore can only have jurisdiction if it can be shown that the cause of action, wholly or in part, arose within the jurisdiction of the Lahore Courts, otherwise the suit must be instituted at Bombay where the head office is situated or at some place where cause of action, wholly or in part arose.” 34. It is also profitable to refer to the Orissa High Court Judgment in the case of Tarachand Boid V. Shikam Chand Bhora reported in AIR 1995 Ori 199 , wherein it is held that the agreement between the parties does not oust the jurisdiction of the Court. It ,may operate as an estoppel against the parties, but it cannot deprive the Court of its power to do justice. The Court would ordinarily have regard to the choice of the parties but where however, the court whose jurisdiction has been ousted is satisfied that the stipulation would operate harshly, is oppressive in character, inequitable or unfair, for the ends of justice it can relieve the party of the bargain. The ouster clause can be ignored. 35.
The Court would ordinarily have regard to the choice of the parties but where however, the court whose jurisdiction has been ousted is satisfied that the stipulation would operate harshly, is oppressive in character, inequitable or unfair, for the ends of justice it can relieve the party of the bargain. The ouster clause can be ignored. 35. The Division Bench of this Court in the case of M/s. Bombay Goods Carriers (P) Ltd., V. M/s. Shah Multhanmul Hastimal and sons reported in AIR 1974 Kar 1 , has held that parties can not confer jurisdiction on Court by agreement when a such Court is incompetent to entertain the suit. An ouster of jurisdiction cannot divest jurisdiction of Courts where part of cause of action arose and invest in the Court where no cause of action arose. 36. For all the aforesaid, reasons, this Court finds it hard to give acceptability to the submissions of the petitioners that the respondent-plaintiffs have to go to Kolkata Court, if they want to sue the petitioners. The insistence of the petitioners for being sued only in Kolkata is not tenable at all. These writ petitions are dismissed with no order as to costs.