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2013 DIGILAW 486 (HP)

Kilitch Drugs (India) Ltd. v. Gupta Electricals

2013-05-29

DHARAM CHAND CHAUDHARY

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JUDGMENT Dharam Chand Chaudhary, Judge (Oral) The challenge herein is to the order dated 01.09.201 1 passed by learned District Judge, Sirmour at Nahan in Civil Suit No. 2-CS/1 of 2009/08 answering thereby preliminary issue in respect of territorial jurisdiction, against the defendants and posting the suit for trial. 2. On 26.10.2005, the parties to the lis entered into an agreement Annexure P-5 qua installation of 33 KV Sub-Station and allied equipment at Phase-I in the premises of defendant No. 1-company at Nihalgarh, Tehsil Paonta Sahib, District Sirmour. As per condition No. 8 of the agreement, time was the ‘essence’ of contract and the work was required to be completed within three months from its commencement. The petitioners (hereinafter referred to as the ‘plaintiffs’) delayed the performance of contract on their part, therefore, on account of that the work could not be executed within the stipulated period, leading to the stopping of the work by the defendants. On account of that the plaintiffs allegedly suffered huge financial losses hence the suit for recovery of Rs. 11,99,175.47/- together with interest @ 18% per annum and also on account of its machinery and other equipments having been retained by the defendants in its premises,. 3.In the written statement, besides contesting the suit on merits and also filing the counter-claim for the recovery of a sum of Rs. 13,49,069.90/- together with interest @ 12% per annum, the defendants have questioned the maintainability of the suit on account of territorial jurisdiction in preliminary issues, which read as follows: “1. That this Ld. Court has not no territorial jurisdiction to entertain and try the present suit, because as per clause no. 16 of the Agreement Dt. 26/10/2005, entered into between the parties to the suit, it has been specifically agreed by the parties to the agreement, on the basis of which the present suit has been filed, that in case of any question or dispute arising out of or in any way connected with this agreement, the same shall be heard ad decided only by the Courts at Mumbai, who alone shall have the jurisdiction to entertain and try the suit and as such the suit filed by the plaintiff is liable to be dismissed.” 4.This has led to settlement of the following issues: 1.Whether this Court has territorial jurisdiction to try this Suit ? 2.What is the effect of the filing of the counter claim by the defendants regarding the territorial jurisdiction of this Court ? ...OPP 3.Relief. 5.The issues, so framed, being legal in nature were taken as preliminary and decided by the impugned order Annexure P-6, after hearing the parties on both sides and also taking into consideration the relevant provisions of law. The trial Court while answering both issues in favour of the plaintiffs has held as under : “ The aforesaid provision of Section 20 of the CPC, hence, depicts that, it, is not necessary, that, all the defendants, if more, than one, are required to be, at the time of commencement of the suit, actually and voluntarily residing, or carrying on business, within the territorial jurisdiction of this Court. Compliance, is, begotten even, if, one of the defendants does so reside or voluntarily works for gain within the territorial limits of the jurisdiction of this Court, as, one of the defendant, in, the instant suit so does, as, apparent on a reading of the same and address of the defendant in the memo of parties and its disclosing that one of the defendants also resides and, is, as such carrying on business within the territorial limits of the jurisdiction of this Court. The other prescription under the provision of Section 20 CPC envisages, that, a Court whose local limits of whose jurisdiction the cause of action has arisen, enjoys the jurisdiction to try the lis. In the above regard, it is found, that since, a unit was set up at Paonta Sahib, by the defendants, as such, obviously, for want of payment of money to the plaintiff by the defendants qua material supplied at Paonta Sahib cause, of, action has arisen within the jurisdiction of this Court “ 6.The trial Court has, therefore, concluded that the cause of action to the plaintiffs has arisen only within its territorial jurisdiction and there cannot be any ouster of jurisdiction pursuant to the agreement Annexure P-5, as the same amounts to restrict/extinguish the right of the plaintiffs to initiate the legal proceedings against the defendants before the trial Court. Such agreement to the extent of exclusion of the jurisdiction of the trial court being hit by the provisions contained under Section 28 read with Section 23 of the Indian Contract Act, 1872, is void. Such agreement to the extent of exclusion of the jurisdiction of the trial court being hit by the provisions contained under Section 28 read with Section 23 of the Indian Contract Act, 1872, is void. 7.The legality and validity of the impugned award has been questioned on the grounds inter-alia that the parties have mutually agreed for resolution of the dispute, if any, between them arising, pursuant to agreement Annexure P-5 by a Court of law having jurisdiction over the matter in Mumbai. Therefore, the findings that the Court below has the territorial jurisdiction to try and entertain the suit are both against law and the facts of the case. The Court below has failed to appreciate the terms of the agreement qua jurisdiction of the competent Court at Mumbai alone to try and adjudicate the controversy under the agreement and thereby ousting the jurisdiction of the other Courts. Therefore, it is the Courts at Mumbai alone which had the jurisdiction to try the lis. Since the plaintiffs and the defendants had selected the Courts in Mumbai, having exclusive jurisdiction to try and entertain the dispute, arising out of the agreement, such ouster was neither opposed to public policy nor hit by the provisions of Section 28-F of the Contract Act. Such ouster clause in the agreement has not been construed in its right perspective. 8.Having gone through the record and also the case law cited by learned counsel appearing on behalf of the petitioners/defendants, it would not be improper to conclude that learned trial Judge has neither committed any illegality nor any irregularity in deciding the issue of territorial jurisdiction, as raised by the petitioners/defendants against them and in favour of the plaintiffs, for the reason that ouster of jurisdiction on the basis of a clause to that effect in an agreement can only be in those cases where two or more Courts have the territorial jurisdiction to entertain and try the suit. In a case where the dispute arises within the territorial jurisdiction of one Court, it is that Court alone which shall have the jurisdiction to entertain and try the suit, irrespective of the fact that one of the defendants resides outside its territorial jurisdiction, as provided under Section 20 of the Code of Civil Procedure, which reads as follow: 20. In a case where the dispute arises within the territorial jurisdiction of one Court, it is that Court alone which shall have the jurisdiction to entertain and try the suit, irrespective of the fact that one of the defendants resides outside its territorial jurisdiction, as provided under Section 20 of the Code of Civil Procedure, which reads as follow: 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. 9.In the case in hand, the unit of the defendant- company is located at Nihalgarh, Paonta Sahib, District Sirmour, Himachal Pradesh. The work of installation of 33 KY Sub-Station and allied equipment was also to be executed in the premises of defendant No.1 at Nihalgarh, Paonta Sahib, District Sirmour, Himachal Pradesh. Cause of action also arose wholly at Nihalgarh, Paonta Sahib, District Sirmour. Merely that the head office of the defendant-company (defendant No.2) is at Mumbai and in the agreement, there is a clause qua the adjudication of the dispute arising out of the agreement at Mumbai, is not sufficient to exclude the jurisdiction of the learned trial court to entertain and try the suit by any stretch of imagination. Merely that the head office of the defendant-company (defendant No.2) is at Mumbai and in the agreement, there is a clause qua the adjudication of the dispute arising out of the agreement at Mumbai, is not sufficient to exclude the jurisdiction of the learned trial court to entertain and try the suit by any stretch of imagination. Clause No. 16 in the agreement, reads as follows: “This Agreement and Contract shall be deemed to have been made in Mumbai and any questions or dispute arising out of or in any way connected with this Agreement and Contract shall be deemed to have arisen in Mumbai, and only court of laws in Mumbai shall have the jurisdiction to deal with it.” 10.As discussed hereinabove, there cannot be any ouster of jurisdiction of the trial Court, pursuant to the clause ibid, being in contravention of Section 28 read with Section 23 of the Contract Act, for the reason that it is only the trial Court which has the jurisdiction to entertain and try the suit and the present is not a case where more than one Court have the jurisdiction to try the suit. The question of jurisdiction is covered by the provisions of Section 20 of the Code of Civil Procedure. In this case, the plaintiffs are not entitled to invoke the jurisdiction of the court elsewhere, and legally the suit is maintainable before the trial Court alone. The ouster of jurisdiction in terms of Clause 16 of the agreement, reproduced supra, is not legally sustainable for the reason that there cannot be any contract, contrary to the statutory provisions. True it is that the exclusion of jurisdiction is available, however, only in appropriate cases. For example, where two or more competent Courts have jurisdiction to entertain suit, consequent upon a part of the cause of action having arisen within the jurisdiction of one of the said Courts, the parties by way of an agreement can opt for the jurisdiction of either of such Court. For example, where two or more competent Courts have jurisdiction to entertain suit, consequent upon a part of the cause of action having arisen within the jurisdiction of one of the said Courts, the parties by way of an agreement can opt for the jurisdiction of either of such Court. This, however, is not the position in the present case before this Court, for the reason that here the cause of action has wholly arisen within the territorial jurisdiction of the learned trial Court, as the work of installation of 33 KY Sub-Station was to be executed at Nihalgarh, Paonta Sahib in District Sirmour, Himachal Pradesh and as the defendant had stopped execution of the work on account of delay allegedly occurred in the execution of the work, due to the reasons attributable to the defendants, however, as per version of the defendant-Contractor, on account of failure of the defendants to hand over the drawings etc., and also to perform their part of the contract, therefore, the Court below alone has the jurisdiction to entertain and try the suit. The law laid down by the Apex Court in (2012) 2, Supreme Court Cases, 315 titled A.V.M. Sales Corporation and Anuradha Chemicals Private Limited, cited by learned counsel for the defendant, however, is hardly of any help to its case and rather supports the view of the matter, hereinabove taken by this Court. The ratio of the judgments of the Supreme Court in AIR 2004 Supreme Court Cases, 2154 titled New Moga Transport Company versus United India Insurance Co. Ltd. and 2009(4) Recent Civil Reports (Civil) 554 titled Balaji Coke Industry Pvt. Ltd. versus M/s Maa Bhagwati Coke (Guj.) Pvt. Ltd. is also to the similar effect, as it has been held in all these judgments that jurisdiction of a Court can only be ousted if two or more Courts have the jurisdiction and by way of mutual agreement the parties had agreed to opt for the jurisdiction of a particular Court. Such, however, is not the position in the case in hand. 11.The above discussion leads to the only conclusion that the Court of learned District Judge, Sirmour alone has the jurisdiction to entertain and try the suit. Such, however, is not the position in the case in hand. 11.The above discussion leads to the only conclusion that the Court of learned District Judge, Sirmour alone has the jurisdiction to entertain and try the suit. Clause 16 of the agreement Annexure P-5 being against the provisions contained under Section 20 of the Code of Civil Procedure is void being against the statutory provisions and against the public policy and as such hit by Section 28 read with Section 23 of the Contract Act, hence on the basis thereof the jurisdiction of the trial Court to entertain and try the suit cannot be excluded. The Court below has, therefore, not committed any illegality and irregularity while answering both the issues in favour of the plaintiffs and against the defendant. I thus find no merit in this petition and the same as such deserves dismissal. 12.For all the reasons discussed hereinabove, this petition fails and the same is accordingly dismissed. Pending miscellaneous application(s), if any, also stand disposed of.