Mukesh Engineers Pvt. Ltd. v. M/s. Pratibha Aparna JV
2013-07-29
BELA M.TRIVEDI
body2013
DigiLaw.ai
JUDGMENT 1. - The present appeal has been filed by the appellant under Section 37 of the Arbitration & Conciliation Act, 1996 (hereinafter referred to as "the said Act") challenging the order dated 25.08.2012 passed by the Additional District Judge No.1, Jaipur Metropolitan, City Jaipur (hereinafter referred to as "the court below") in Arbitration Application No.25/2012, whereby the court below has returned the application of the appellant-applicant filed under Section 9 of the said Act, for presentation before the competent court having jurisdiction. 2. In the instant case, it appears that the appellant had filed an application under Section 9 of the said Act seeking various interim measures in respect of the agreement dated 30.5.11 before the court below for the period till the arbitrator was appointed to resolve the dispute between the parties. In the said application, the respondents had filed an application under Section 27 of the CPC read with Section 2(e) of the said Act, contending interalia that as per the terms of the contract, the parties had agreed to resolve the dispute subject to Mumbai jurisdiction only and therefore the court below had no jurisdiction to entertain the application filed by the applicant. The court below allowed the said application of the respondents and returned the application of the appellant for presentation before the court of competent jurisdiction as per the impugned order. 3. It has been submitted by the learned counsel Mr. S.C. Goyal for the appellant that the court below had misinterpreted the provisions contained in the CPC as well as the terms of the agreement for holding that it had no jurisdiction and the court at Mumbai only had the jurisdiction. Placing heavy reliance on the decision of the Apex Court in case of Patel Roadways Limited, Bombay v. Prasad Trading Company (1991) 4 SCC 270 , Mr. Goyal the learned counsel for the appellant submitted that the present case would fall within the later part of the explanation to Section 20 of the CPC, which pertains to the Court within whose jurisdiction the subordinate office of the respondents was situated and where the cause of action had arisen. According to him, no cause of action had arisen within the jurisdiction of Mumbai Court and the cause of action had arisen only within the jurisdiction of Jaipur court, where the subordinate office of the respondents was situated.
According to him, no cause of action had arisen within the jurisdiction of Mumbai Court and the cause of action had arisen only within the jurisdiction of Jaipur court, where the subordinate office of the respondents was situated. He also submitted that the entire work was to be executed at Jaipur, the bills were to be submitted by the appellant to the site office of the respondents at Jaipur and the appellant also had to receive the payment from the respondents at Jaipur, and therefore the cause of action had arisen within the jurisdiction of the Jaipur court only. According to him, the parties by agreement could not have conferred the jurisdiction on the Court at Mumbai, where no cause of action had arisen. 4. However, the learned senior counsel Mr. Ashok Mehta for the respondents submitted that apart from the fact that the parties had agreed to submit to the jurisdiction of Mumbai only, the head office of the respondents was situated at Mumbai and the part cause of action had also arisen at Mumbai, inasmuch as all the invoices were to be submitted at the head office at Mumbai and payments were also to be released from the Mumbai Office. He also submitted that there was no subordinate office at Jaipur and only temporary site office was opened at Jaipur, where work was to be executed by the appellant. The learned senior counsel has Mr. Mehta has relied upon the decision of Apex Court in case of A.V.M. Sales Corporation v. Anuradha Chemicals Private Limited (2012) 2 SCC 315 to submit that cause of action comprises a bundle of facts which are relevant for the determination of lis between the parties. He also submitted that the agreement to limit jurisdiction at one place only, out of the other courts otherwise having jurisdiction, would be valid. He has also relied upon the decisions of the Apex Court in case of Shree Subhlaxmi Fabrics (P) Ltd v. Chand Mal Baradia & Ors. (2005) 10 SCC 704 and in case of Mr. Angile Insulations v. M/s. Davy Ashmore India Ltd. & Anr. JT 1995(5) S.C. 179 , to buttress his submissions. 5. In the instant case it appears that the appellant as well as the respondent No.1 are the Companies incorporated under the Companies Act.
(2005) 10 SCC 704 and in case of Mr. Angile Insulations v. M/s. Davy Ashmore India Ltd. & Anr. JT 1995(5) S.C. 179 , to buttress his submissions. 5. In the instant case it appears that the appellant as well as the respondent No.1 are the Companies incorporated under the Companies Act. The appellant-company has its registered office at New Delhi and is engaged in the business of civil construction, whereas the respondent No.1 has its head office at Mumbai and is engaged in the construction work for metro rail projects. It further appears that the respondent No.1 had entrusted construction work of depot-cum-workshop at Mansarovar on east-west corridor for Stage-I of Jaipur Metro and thereafter had placed various work orders upon the appellant from time to time. Out of the various work orders, the work order dated 30.5.11 to be governed by the agreement was issued for the construction of boundary wall at Metro Depot at Mansarovar, Jaipur, as per the terms and conditions mentioned in the said agreement. Subsequently some disputes had arisen between the parties as regards the payments to be made to the appellant. According to the appellant though the work was successfully carried out by it, the respondent No.1 was not making the payments as per the terms of the contract. The appellant, therefore, moved an application under Section 9 of the said Act seeking various interim measures as prayed for therein. The respondent No.1 having filed its appearance raised the objection as regards the jurisdiction of the court, by submitting an application under Section 27 read with Section 2(e) of the said Act. The court below after hearing the learned counsels for the parties returned the application of the appellant filed under Section 9 of the said Act for presentation before the court of competent jurisdiction, vide the impugned order dated 25.10.12. The said order is under challenge before this court by way of the present appeal. 6. Since both the parties have relied upon the provisions contained in Section 20 of CPC, it would be beneficial to reproduce the same, which reads as under:- "20.
The said order is under challenge before this court by way of the present appeal. 6. Since both the parties have relied upon the provisions contained in Section 20 of CPC, it would be beneficial to reproduce the same, which reads as under:- "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 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 arises at any place where it has also a subordinate office, at such place." 7. It would be also beneficial to reproduce the relevant Clauses of the agreement in question, for ready reference and in order to appreciate the contentions raised by the learned counsels for the parties. Article 4 pertains to the Schedule of invoices and payments which reads as under:- "ARTICLE 4-SCHEDULE OF INVOICES AND PAYMENT. 4.1 Invoicing: Invoices shall be issued in original to the respective Site in English only, bearing the following references: i. Complete Name of the Project ii. Sub-Contract Reference No. iii. Second Party's Complete name, address. iv. Invoice No. v. Date of issue of invoice vi. PAN No./Service Tax No./TIN No. as applicable. vii. A detail work carried out, duly certified by the Site Engineer.
Sub-Contract Reference No. iii. Second Party's Complete name, address. iv. Invoice No. v. Date of issue of invoice vi. PAN No./Service Tax No./TIN No. as applicable. vii. A detail work carried out, duly certified by the Site Engineer. 4.2 All the invoices duly signed and certified by the Site should be submitted to the authorised representative of the First Party at the Head Office of Pratibha Group, Universal Majestic, 13th & 14th Floor, Off Eastern Express Highway, P.L. Lokhande Marg, Ghatkopar, Mankhurd Link Road, Opp RBK International School, Govandi, Mumbai, Maharashtra 400 088, India. 4.3 Method of payment. All the payments will be released through A/c Payee Cheque to the Second Party account. 4.4 The quantities given in the BOQ/Price Schedule are tentative only. However payment shall be released on the actual quantity executed and duly certified by the Site Engineer of PIL. 4.5 Income Tax at source (TDS) from all payments due to you under this contract shall be deducted in accordance with the prevailing Income Tax Act from time to time." 8. Article 9.1 as regards the jurisdiction reads as under:- "9.1 This contract shall be governed by and take effect in accordance with the Indian Laws and all disputes shall be subject to Mumbai Jurisdiction only." 9. At this juncture, the interpretation made by the Apex Court of the Explanation to Section 20 in case of Patel Roadways Ltd., Bombay v. Prasad Trading Company (supra) heavily relied upon by the learned counsel Mr. Goyal for the appellant, is required to be reproduced. Para 9 of the said decision reads as under:- "Clauses(a) and (b) of Section 20 inter alia refer to a court within the local limits of whose jurisdiction the defendant inter alia "carries on business". Clause (c) on the other hand refers to a court within the local limits of whose jurisdiction the cause of action wholly or in part arises. It has not been urged before us on behalf of the appellant that the cause of action wholly or in part arose in Bombay. Consequently clause (c) is not attracted to the facts of these cases. What has been urged with the aid of the Explanation to Section 20 of the Code is that since the appellant has its principal office in Bombay it shall be deemed to carry on business at Bombay and consequently the courts at Bombay will also have jurisdiction.
Consequently clause (c) is not attracted to the facts of these cases. What has been urged with the aid of the Explanation to Section 20 of the Code is that since the appellant has its principal office in Bombay it shall be deemed to carry on business at Bombay and consequently the courts at Bombay will also have jurisdiction. On a plain reading of the Explanation to Section 20 of the Code we find an apparent fallacy in the aforesaid argument. The Explanation is in two parts, one before the word "or" occurring between the words "office in India" and the words "in respect of" and the other thereafter. The Explanation applies to a defendant which is a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually 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 a sole office but has a principal office at one place and has also a subordinate office at another place. The words "at such place" occurring at the end of the Explanation and the word "or" referred to above which is disjunctive clearly suggest that if the ease 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 shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office". 10.
10. In view of the above, the questions that fall for consideration before this court are - as to whether Clause 9.1 contained in agreement in question restricting the jurisdiction to Mumbai only was valid and binding to the parties or not; as to whether any cause of action wholly or in part had arisen in Mumbai where the head office of the respondent No.1 was situated; and as to whether the respondent No.1 had its subordinate office at Jaipur or not, so as to attract the later part of the Explanation to Section 20 of CPC. 11. So far as the Clause No. 9.1 in the agreement restricting the jurisdiction at Mumbai is concerned, it is well settled principle of law that the parties by agreement cannot confer jurisdiction on the court which did not possess under the law, however whether the two courts or more have the jurisdiction under the Code to try the suit or a proceeding, an agreement between the parties that the disputes between them shall be tried in one of such courts would not be contrary to public policy and would not contravene Section 23 of the Contract Act. The beneficial reference of the decisions of the Apex Court in this regard be made in cases of A.B.C. Laminart Pvt. Ltd. & Anr. v. A.P. Agencies, Salem (1989) 2 SCC 163 , in case of Shree Shublaxmi Fabrics (P) Ltd. v. Chand Mal Baradia & Ors. (2005) 10 SCC 704 , in case of Rajasthan State Electricity Board, v. Universal Petrol Chemicals Ltd. (2009) 3 SCC, 107 and in case of A.V.M. Sales Corporation v. Anuradha Chemicals Pvt. Ltd. (2012) 2 SCC 315 . It has also been held by the Apex Court in case of Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. (2004) 4 SCC 671 that - "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.
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." 12. In the instant, case by incorporation Clause 9.1 in the agreement, it clearly transpires that the parties had intended to oust the jurisdiction of other courts except Mumbai. Of course, as per the submission of the learned counsel Mr. Goyal for the appellant, no cause of action partly or wholly had arisen in Mumbai as the execution of the work was to be carried out at Jaipur and the payments were also to be made by the respondents at Jaipur and, therefore, only the court at Jaipur, where the cause of action had arisen and where the subordinate office of the respondent No.1 was situated, had the jurisdiction, in view of the Explanation to Section 20 as interpreted by the Apex Court in case of Patel Roadways Ltd. (supra). The said submission of Mr. Goyal cannot be accepted inasmuch as, from Article 4 of the agreement in question it clearly transpires that the invoices were to be issued in original to the respective site and all the invoices were to be duly signed and certified by the site were to be submitted to the authorised representative of the first party i.e. respondent No.1 herein at the Head Office at Mumbai and that the payments were to be realised through account payee cheques to the second party i.e. the appellant. Thus, since the invoices had to be submitted at the Head Office of the respondent No.1 at Mumbai and since the dispute raised by the appellant is with regard to the nonpayment of the invoices, the part of cause of action could be said to have arisen within the jurisdiction of Mumbai. Further, as such there is nothing on record to suggest that the respondent No.1 had any subordinate office at Jaipur. As rightly pointed out by the learned senior counsel Mr.
Further, as such there is nothing on record to suggest that the respondent No.1 had any subordinate office at Jaipur. As rightly pointed out by the learned senior counsel Mr. Mehta for the respondent No.1, it was only the site office at Jaipur, where the work was to be executed, that was opened by the respondent No.1, which could not be said to be a subordinate office as contemplated in the Explanation to Section 20. The court finds substance in the submission of learned counsel Mr. Mehta that such site offices would be opened temporarily and would keep on changing the place with the change of work place. It is pertinent to note that even in the cause-title of the appeal, the appellant has mentioned the address of the respondent No.1 as "work place Metro Depot, Jaipur Metro Project, Mansarovar, Jaipur, Head Office, Mumbai. Thus, there being no subordinate office of the respondent No.1 at Jaipur and since part of cause of action had arisen within the jurisdiction of Mumbai, it could not be said that the parties had conferred jurisdiction to the courts at Mumbai to the exclusion of other courts, though the courts at Mumbai did not have the jurisdiction. 13. The decision relied upon by the learned counsel Mr. Goyal for the appellant in case of Patel Road (supra) could not have the application to the facts of the present case, inasmuch as in the said case, admittedly no cause of action had arisen wholly or in part in Bombay where the parties had agreed to submit to the jurisdiction, to the exclusion of other courts. Further, in the said case admittedly the appellant of the said case had the subordinate office at the place Periakulam, where the respondent of the said case had filed the suit and, therefore, the question had arisen as to whether in view of the relevant clause in the contract between the parties, the courts at Bombay alone had the jurisdiction, and the jurisdiction of the courts at Madras where the suit was instituted, was barred.
On such facts the Apex Court while interpreting Section 20 as also the Explanation to the said section had held that the said case fell within the later part of Explanation and that it was not the court within whose jurisdiction the principal office of the defendant-appellant was situate but he court within whose jurisdiction it had a subordinate office, that alone shall have the jurisdiction. 14. As stated herein above, the part of cause of action having arisen within Mumbai and the respondent No.1 having no subordinate office at Jaipur, both the courts at Mumbai as well as Jaipur had the jurisdiction, however, in view of specific, clear and unambiguous agreement between the parties as contained in Clause 9.1, only the courts at Mumbai would have the jurisdiction to entertain the disputes between the parties. The learned counsel Mr. Goyal for the appellant has failed to point out any illegality or infirmity in the impugned order passed by the court below. 15. In view of the above, the appeal being devoid of merits deserves to be dismissed and is accordingly dismissed.Appeal dismissed. *******