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2012 DIGILAW 246 (CHH)

Ratnesh Dev Sharman v. Cipla Limited

2012-09-24

N.K.AGARWAL

body2012
ORDER 1. Instant appeal is directed against the order dated 15.12.2010 passed by District Judge, Ambikapur, Surguja in Civil Suit No. 3-B/2009. 2. Facts necessary for disposal of this appeal are as under:- (i) The appellant/plaintiff was employed by the respondent- Cipla Limited as Marketing Executive. (ii) The respondent used to pay salary to the plaintiff at Mumbai. Admittedly, service agreement was entered by the parties at Mumbai and Clause 20 of the agreement provide as follows: "Any dispute arising out of and/or related to appellant's employment with the Company shall be subject to Mumbai Jurisdiction only". (iii) Disputes having arisen out of the service contract the appellant filed a Civil Suit No.3-B/2009 against the respondent in the court of District Judge, Ambikapur, Sarguja for the recovery of a sum of Rs.59,687/- and for mandatory injunction. (iv) The respondent took a preliminary objection that the District Judge, Ambikapur, Sarguja has 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 Mumbai. 3. The trial Court, having found that it had no jurisdiction to entertain the suit in view of Clause 20 of the Service Contract, returned the plaint for presentation in the proper court. Hence, this appeal. 4. Shri A. N. Bhakta, learned counsel appearing for the appellant while not disputing the fact that part of cause of action also arose at Mumbai would submit: Clause 20 of the service contract is hit by Sections 23 and 28 of the Indian Contract Act and is void and, therefore, the trial Court has committed an error of law in holding that it had no jurisdiction to entertain the suit and in returning the plaint for presentation in the proper court. 5. Per contra, Shri Sunil Tripathi, learned counsel appearing for the respondent by placing his reliance upon the judgment of Supreme Court in case of A.V.M. Sales Corporation Vs. Anuradha Chemicals Private Limited (2012) 2 SCC 315 would submit: both the courts i.e. Court at Ambikapur, Sarguja and Court at Mumbai have jurisdiction to entertain the present suit as the part of cause of action arose at both the places. Anuradha Chemicals Private Limited (2012) 2 SCC 315 would submit: both the courts i.e. Court at Ambikapur, Sarguja and Court at Mumbai have jurisdiction to entertain the present suit as the part of cause of action arose at both the places. Parties to the contract had agreed to vest jurisdiction in one such court to try the dispute i.e. Court at Mumbai and, therefore, the Clause 20 of the service contract vesting jurisdiction in the court at Mumbai is not hit by Section 28 read with Section 23 of the Contract Act and the trial Court has not committed any error of law in returning the plaint for its presentation to the proper court. 6. I have heard learned counsel appearing for the parties and perused order impugned. 7. Indisputably, under the law, the Court at Mumbai has also jurisdiction to decide the present dispute as part of cause of action has also arisen within the jurisdiction of the Mumbai Court. 8. Section 28 of the Act, which has a direct bearing on the facts of this case, clearly spells out that any agreement in restraint of legal proceedings is void. For the sake of reference, the same is extracted hereinbelow: "28. Agreement in restraint of legal proceedings void. -- Every agreement,-- (a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, or (b) which extinguishes the rights of any party thereto, or discharges any party thereto from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent. Exception 1. Saving of contract to refer to arbitration dispute that may arise. This section shall not render illegal a contract, by which two or more persons agree that any dispute which may arise between them in respect of any subject or class of subjects shall be referred to arbitration, and that only the amount awarded is such arbitration shall be recoverable in respect of the dispute so referred. Exception 2. Saving of contract to refer questions that have already arisen. Exception 2. Saving of contract to refer questions that have already arisen. Nor shall this section render illegal any contract in writing, by which two or more persons agree to refer to arbitration any question between them which has already arisen, or affect any provision of any law in force for the time being as to references to arbitration." 9. Basically, what Section 28 read with Section 23 does, is to make it very clear that if any mutual agreement is intended to restrict or extinguish the right of a party from enforcing his/her right under or in respect of a contract, by the usual legal proceedings in the ordinary tribunals, such an agreement would to that extent be void. In other words, parties cannot contract against a statute. 10. However, such a result would ensue if it is shown that the jurisdiction to which the parties had agreed to submit had nothing to do with the contract. If, on the other hand, it is found that the jurisdiction agreed would also be a proper jurisdiction in the matter of the contract, it could not be said that it ousted the jurisdiction of the court. (Please See A.V.M. Sales Corporation Vs. Anuradha Chemicals Private Limited, { (2012) 2 SCC 315 }) 11. The Supreme Court in case of A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies Salem (1989) 2 SCC 163 has observed in paragraph - 18 as under: ".......... Thus it is now a settled principle that where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in on one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Sections 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the statute." 12. A similar view has been taken by the Supreme Court in case of Angile Insulations Vs. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Sections 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the statute." 12. A similar view has been taken by the Supreme Court in case of Angile Insulations Vs. Davy Ashmore India Ltd. (1995) 4 SCC 153 wherein the Hon'ble Judges while referring to the decision of this Court in case of A.B.C. Laminart Pvt. Ltd. and another (supra), inter alia held that where two courts have the jurisdiction consequent upon the cause of action or a pat thereof arising therein, if the parties agree in clear and unambiguous terms to exclude the jurisdiction of the other, the said decision could not offend the provisions of Section 23 of the Contract Act. In such a case, the suit would lie in the court to be agreed upon by the parties. 13. Therefore, where part of cause of action arose at both Mumbai and Ambikapur Court, mutual agreement to exclude the jurisdiction of the Ambikapur Court to entertain the suit was not opposed to public policy and was valid and therefore, the trial Court has not committed any error of law in returning the plaint for its proper presentation. 14. In the result, the; appeal fails and is hereby dismissed. No order as to costs. Appeal Dismissed.