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2015 DIGILAW 49 (JK)

Sanjay Diesels, Proprietorship v. Mir Engineer & Builders

2015-02-25

HASNAIN MASSODI

body2015
JUDGMENT : Hasnain Massodi, J.:- 1. Mir Engineers and Builders, Samandar Bagh SP College Road, Srinagar-respondent in Civil revision on hand and petitioner in Civil Transfer Application being CTA No. 61/2011 (hereinafter Mir Engineers) vide No. MEB/DGS/GREAVES/248-07 dated 5th August 2007 placed supply Order with M/s. Sanjay Diesel Kashmiri Gate, Delhi-petitioner in the Civil revision and respondent in Civil Transfer Application ('Sanjay Diesels', for short) for supply of 546 KVA DG Sets at the rate of 1.63 lac per set and 15 KVA 27 DG sets of at the rate of Rs. 2.79 lacs. The DG Sets were to be supplied by Mir Engineers to Chief Engineer, Headquarters, 15 Corps and the supplier i.e. M/s. Sanjay Diesel was duly informed in this regard. The transaction ran into rough weather after the supply order was partly acted upon. If Mir Engineers are to be believed, Sanjay Diesel did not provide service back up and few gensets, had mechanical defect and could not operate. Non-availability of service back up and mechanical defect in a few supplied gensets, are said to have exposed Mir Engineers to immense loss and mental agony. 2. Be that as it may, Mir Engineers on 18th April 2008 filed a suit in the Court of Principal District Judge, Srinagar for recovery of Rs. 36 lacs from Mir Engineers with costs and interest at reasonable rate till the amount was realised. Mir Engineers admitted that an amount of Rs. 29 lacs was payable by the firm to Sanjay Diesels. It was further pleaded that as an amount of Rs. 69 lacs was recoverable from the Sanjay Diesels on the grounds set out in Para 33 of the plaint, the amount of Rs. 29 lacs when deducted from Rs. 65 lacs, recoverable from Sanjay Diesels, an amount of Rs. 36 lacs remained to be payable by the firm. 3. The suit was resisted by the Sanjay Diesels inter alia on the ground that the Court at Srinagar lacked jurisdiction to entertain and proceed with the suit. It was pleaded that as per the invoices whereby the goods were supplied "all disputes" were "subject to Kathua jurisdiction only" and Principal District Judge, Kathua alone could entertain and try the suit. The suit was resisted by the Sanjay Diesels inter alia on the ground that the Court at Srinagar lacked jurisdiction to entertain and proceed with the suit. It was pleaded that as per the invoices whereby the goods were supplied "all disputes" were "subject to Kathua jurisdiction only" and Principal District Judge, Kathua alone could entertain and try the suit. It was next pleaded that as the order was placed and delivered at Kathua, DG Sets tested by the Mir Engineers at Kathua, and payment received at Kathua, the Court at Kathua alone had jurisdiction to try the suit. 4. Learned Trial Judge on 7th November 2009 upon perusal of the pleadings framed as many as 15 issues for adjudication. Two of the issues, being Issue No. 1 and 3 noticed below, were treated as preliminary issues. i) Whether, there is any cause of action in favour of the plaintiff to the present suit and ii) Whether this court has got jurisdiction to entertain and try the suit. 5. The Trial Court vide Order dated 11th July 2012, decided both the issues in favour of Mir Engineers and against the Sanjay Diesels. The suit was held to be maintainable and Court at Srinagar to have jurisdiction to try the suit. 6. The Trial Court order dated 11th July 2012 is questioned in the Civil revision petition on hand on the grounds set out in the petition. The Order is said to be self-contradictory and depicting mis-conception of law on the part of trial Court. The preliminary issues according, to petitioner have been decided on extraneous consideration, not relevant to the question of jurisdiction in commercial transaction where parties by agreement oust jurisdiction of one of the Courts, otherwise having jurisdiction and restrict jurisdiction to one of such Courts. The trial Court is said to have erred while holding the suit to be maintainable inasmuch as there was sufficient material before the trial Court to conclude that Sanjay Diesels was not under a contractual obligation to provide service back up and that Mir Engineers had received entire amount on account of supply of 54 Gensets from Chief Engineer Headquarters, 15 Corps. 7. 7. Sanjay Diesels during pendency of the suit of Mir Engineers pending in the Court of Principal District Judge, Srinagar filed Civil suit in the Court of Principal District Judge, Kathua for specific performance of the contract dated 5th August 2007 and directing Mir Engineers to take delivery of five 15 KVA DG Sets. Sanjay Diesels in alternative asked for a decree for recovery of Rs. 84 lacs from the defendants. Mir Engineers -defendant in the suit, filed a Civil Transfer Application being CTA 61/2011 on 16th November 2010 before this Court and proceedings in the suit before Principal District Judge, Kathua (09 Civil Suit) were stayed. Record of the Civil Suit (09) was summoned and is available along with record of Civil Suit (03). Controversy in Civil revision 35/2012 and Civil Transfer application 61/2011 is intertwined and both the petitions therefore may well be taken up together. 8. I have gone through the pleadings as also record available on the file. I have heard learned counsel for the parties at length. 9. It is well settled law that the parties to transaction, where more than one courts have jurisdiction to try the civil suit arising out of the transaction, may exclude jurisdiction of one of such courts and restrict jurisdiction to one of the courts, otherwise competent in terms of Section 20 Code of Civil Procedure to try the suit. The law on the subject is free from ambiguity and reference to case law is not required. Having said so, let us proceed to examine the controversy raised in the petitions on hand. 10. Mir Engineer approached Sanjay Diesels, through an e-mail message dated July 24 2007 at 4:15 pm requesting for details of DG Sets (Engines and alternators) that company would be in a position to supply to it. Information was sought, as Mir Engineers expected to bag a contract for supply of fifty four 6 KVA and 27 15 KVA DG Sets from Chief Engineer, HQ 15 Corps. Sanjay Diesels through return e-mail dated 24th July 2007 at 5:20 pm conveyed desired details to Mir Engineers and Builders. In the meantime; Chief Engineer, HQ 15 Corps placed supply order for aforesaid DG Sets with Mir Engineer. Sanjay Diesels through return e-mail dated 24th July 2007 at 5:20 pm conveyed desired details to Mir Engineers and Builders. In the meantime; Chief Engineer, HQ 15 Corps placed supply order for aforesaid DG Sets with Mir Engineer. The details of DG Sets to be supplied by Mir Engineers to Chief Engineer, HQ 15 Corps, were conveyed by Mir Engineers to Sanjay Diesels on August 4 2007 at 12:35 pm. Sanjay Diesels on receipt of information through return e-mail on the same date at 1:14 pm asked Mir Engineers to formally place supply order, with an advance amount. Mir Engineers was further asked to give technical details of the equipment, in the supply order. 11. Mir Engineers finally placed the order with Sanjay Diesels for supply of aforementioned DG Sets on August 4, 2007 at 3:39 pm. This was followed by e-mail communication dated August 4, 2007 at 4:36 pm from Sanjay Diesels to Mir Engineers, whereby some additional information/clarification was sought. The purchase order was also send through courier to Sanjay Diesels, at 1580 Church Road, Kashmiri Gate, Delhi. Sanjay Diesels informed Mir Engineers that the supplies would be made from its factory at Kathua, Jammu and Kashmir. It vide e-mail communication dated 7th August 2007 at 6:01 pm asked the company to deposit the advance in current Account No. 380, Govindsar Bank Kathua. Mir Engineers vide communication No. MEB/SD/216-17 dated 18-09-2007 sent the price of DG Sets i.e. Rs. 73,35000/- through Cheque No. 19456018 to Sanjay Diesels, Delhi. This was followed by delivery of 49 DG sets by Sanjay Diesels 41-A Industrial Extension Area Kathua J&K State to Mir Engineers at Kathua between 27th September 2007 to 26th October 2007, against receipt with seal of Mir Engineers affixed on the reverse of all the invoices. It is after part supplies were made that disputes arose as regards the performance of DG Sets supplied and after sale, service between the parties. 12. The above brief survey of the facts and events is made to find out the place where contract was concluded and the court having jurisdiction to deal with dispute arising out of transaction in question, between the parties. From the above overview of material facts, it is evident that contract was concluded at Delhi i.e. principal place of business of Sanjay Diesels, where the supply order were placed through e-mail and accepted by supplier. From the above overview of material facts, it is evident that contract was concluded at Delhi i.e. principal place of business of Sanjay Diesels, where the supply order were placed through e-mail and accepted by supplier. The price of the goods was paid through Cheque at Delhi and realised at Kathua. The cheque though drawn on a bank at Srinagar was send to Sanjay Diesels at Delhi and the advance deposited in the account of Sanjay Diesels at Kathua. Goods were agreed to be supplied at Kathua, and were actually handed over and tested at Kathua. It is therefore, the Courts at Kathua or Srinagar i.e. registered Office of Mir Engineers that has jurisdiction to try the suit arising out of the contract. 13. Each of the invoices whereby goods (DG Sets) were delivered to Mir Engineers, at its bottom restricted jurisdiction as regards disputes arising out of the contract to Court at Kathua. The condition is written at the foot of each invoice in bold and capital letters. It reads: "ALL DISPUTES SUBJECT TO KATHUA JURISDICTION ONLY". The invoices, in token of receipt of the goods and acceptance of condition laid down, carry seal and signature of Mir Engineers, affixed on their reverse. Mir Engineers, therefore, agreed to have disputes arising out of the contract adjudicated upon at Kathua. Let us now see, how the trial court has dealt with the matter and what persuaded it to decide the preliminary issues in favour of the respondent against the petitioners. 14. A closer look at the trial court order would reveal that while dealing with the jurisdictional question raised by the petitioner, the trial court made a complete departure from factors that it was required to consider while dealing with the issues raised before it. It on the other hand, dilated on extraneous and irrelevant considerations. To illustrate, the trial court considered the balance of convenience between the parties, inconvenience to which Mir Engineers and Builders may be exposed, in the event, it is made to file a suit at Kathua. It on the other hand, dilated on extraneous and irrelevant considerations. To illustrate, the trial court considered the balance of convenience between the parties, inconvenience to which Mir Engineers and Builders may be exposed, in the event, it is made to file a suit at Kathua. Learned trial Judge, recorded agreement, with the case set up by Sanjay Diesel that goods were delivered at Kathua and that as per the conditions laid down and agreed upon by the parties, the Court at Kathua had jurisdiction to try the suit, but rushed to the conclusion that such a condition would be too harsh for the Mir Engineers and to witnesses they may have to produce to substantiate their claim. It would be appropriate to extract following excerpts from the trial court Order dated 11.7.2012 to point out that the Order is self-contradictory and conclusion drawn are not based on discussion and observation made in the body of the Order. 15. The trial Court while dealing with the matter observed: "Though delivery of goods has taken place at Kathua and as per invoice there is a condition on the bottom of the invoices that all disputes subject to Kathua jurisdiction only, but this condition has to be read in the whole context of the background in which the supplies have been made by the Manufacturer defendants to the supplier, the plaintiff to the user units at Srinagar. The user units are at Srinagar and other service back up has to be provided at Srinagar. The complaints allegedly have occurred at Srinagar and the witnesses pertaining to the cause of action and breach alleged has occurred from Srinagar and it is surrounding districts". It proceeded to hold: "Though the plaintiffs interpretation of the condition incorporated at the bottom of the invoice generally would bind the parties the jurisdiction of Kathua courts only but it will be harsh condition to be imposed on the plaintiff that they shall institute the proceedings in the courts at Kathua when the affected parties along with their witnesses etc. hailing from Valley or operating in the city of Srinagar or surrounding cities shall be called to the headquarters at Kathua for resolving the controversy which shall be too harsh a condition for the plaintiff/witnesses to be observed. hailing from Valley or operating in the city of Srinagar or surrounding cities shall be called to the headquarters at Kathua for resolving the controversy which shall be too harsh a condition for the plaintiff/witnesses to be observed. This condition incorporated in the invoices does not deprive the other courts at Srinagar or surrounding areas from adjudicating upon the matter in controversy between the parties". 16. The trial court opining that it is profitable and desirable to adhere to the conditions incorporated in invoices observed: "Though it is profitable and desirable that the condition incorporated in the invoices of the defendants showing that it will be in their interest if they have to bring any action with regard to the goods supplied that shall be brought at Kathua only but that does not mean that no other court shall have power to exercise their discretion in resolving the controversy outside the jurisdiction of Kathua courts if business conditions operates harshly on one of the parties". It next shifted its attention to the question to balance of convenience between the parties and held: "If the balance of convenience lies in the institution of action at a place where the part of cause of action has arisen then the clause contracting out the jurisdiction of such court cannot operate upon the courts whose jurisdiction is agreed to be ousted. Moreover, even then still it is to be seen as to whether the parties especially whose position is not equal with that party whose contract forms are printed or whether that party had sufficient notice of this clause at the time of making the contract or as otherwise the condition is unilaterally imposed on the plaintiff." 17. Agreeing that Mir Engineers representative signed the invoices at the time of delivery of goods, the court down played his presence and his signing the invoices and observed: "No doubt the plaintiffs representative is shown to have signed the invoice at the time of delivery of goods but the signatures are on the back of the invoice raising question regarding sufficiency of notice at the time of making contract. Though the trade practices demand that it is obligatory upon the parties to stick to the terms of the contract and restrict the bringing of action to the jurisdiction as per the contracting clause but taking in view the effect of in-equality of bargaining power which is generally involved in standard form of contracts where one of the parties is in a dominant position the balance of convenience ground and that of the witnesses and the effected persons or user units complainants, the economic duress or influence is needed to be taken care of the interest of justice does not demand the strict enforcement of the clause literally". 18. The above reproduced excerpts from the trial Court Judgment would reveal that the trial court mis-directed itself and failed to appreciate rival contentions in right perspective. The court in the process landed in a gross error and returned finding on the issues having regard to the consideration not at all relevant to the controversy. 19. It is well settled that the parties to contract may by agreement restrict jurisdiction as regards the dispute arising out of contract to one of the Courts otherwise having jurisdiction to deal with such matters. In such a case, the parties would be bound by the agreement and subject themselves to the jurisdiction of the Court that they agreed to have jurisdiction over the disputes arising out of the contract. There is plethora of cases law on the subject. Though, learned counsel for the parties have referred to a large number of reported case to buttress their arguments, reference may be made to 2004(2) Civil Court Cases 548 (SC), 2005 (2) Civil Court cases 227 (SC) and 2013 (1) Civil Court Cases 533 (Delhi). It has been held that the jurisdiction may be ousted even where the ouster clause does not use expressions like "alone", "only" and "exclusive" provided the clause is clear and unambiguous. 20. In the present case, the ouster clause excluding jurisdiction of the Courts other than the Court at Kathua, is clear and unambiguous. It uses the word "only" to further signify the intention of the parties that the Court at Kathua was to have exclusive jurisdiction to deal with any and all disputes arising out of the contract. 20. In the present case, the ouster clause excluding jurisdiction of the Courts other than the Court at Kathua, is clear and unambiguous. It uses the word "only" to further signify the intention of the parties that the Court at Kathua was to have exclusive jurisdiction to deal with any and all disputes arising out of the contract. Such an intention is gatherable from surrounding circumstances of the case like delivery and acceptance of goods, testing of goods, payment of advance etc. 21. Against the above backdrop, learned trial Judge erred while deciding the issue in favour of the respondent and against the petitioner and holding that the Court at Srinagar had jurisdiction to try the suit. Viewed thus, the Civil revision is to succeed and trial Court order dated 11th July 2012 to be set aside. 22. The Civil Transfer application (CTA No. 61/2011) whereby Civil suit filed by Sanjay Diesels against the Mir Engineers is sought to be withdrawn from the files of Principal District Judge, Kathua and transferred to Court of Principal District Judge, Srinagar is based on the assertion that the Court at Kathua does not have exclusive jurisdiction to deal with the disputes arising out of the contract. As it has been held that the parties agreed on ouster of jurisdiction of the court(s) otherwise having jurisdiction to try the suit arising out of the contract except the Court at Kathua, the Civil Transfer application, therefore, is also to fail. Both the civil suits against the backdrop of the above discussion are to be transferred to the Court of Principal District Judge, Kathua, for disposal under law. 23. For the reasons discussed, Civil Revision assailing the order of learned Additional District Judge, Srinagar dated 11th July 2012 is allowed and the civil transfer application is dismissed. The Principal District Judge, Court Kathua is held to have exclusive jurisdiction to deal with the dispute arising out of the contract entered into by the parties for the supply 54 DG Sets of 6 KVA at the rate of 1.63 lac per set and 27 DG Sets of 15 KVA at the rate of Rs. 2.79 lacs. Resultantly both the Civil Suits are transferred to Kathua. 24. Record be send down. The court at Kathua shall issue notice to the parties and thereafter dispose of the Civil suit in accordance with law.