PNC-Jain Construction Co. (JV) v. IRCON International Limited through Managing Director
2016-10-07
MOHAMMAD RAFIQ
body2016
DigiLaw.ai
ORDER : 1. This application under Section 11 of the Arbitration and Conciliation Act, 1996(for short 'the Act of 1996') has been filed by the applicant M/s. PNC-Jain Construction Company inter alia praying for appointment of an independent arbitrator for adjudication of its disputes and differences with the respondents in respect of Agreement No. IRCON/3014/RRVUNL.RS/Tender/P-way (JHL to Plant) related to “Earthwork in Formation and Permanent Way work from proposed Jhalawar Railway Station to Kalisindh Thermal Power Plant in connection with railway siding work consisting of Earthwork in formation, supply of blanketing material, ballast and P.Way material, P.Way linking, commissioning and associated work. 2. Facts of the case are that the non-applicants awarded tender of aforesaid work to the applicant vide letter of acceptance dated 25.02.2011 for a sum of Rs.28,25,53,210/-. Agreement was executed between the parties on 25.04.2011 under the hands of Non-applicant No. 3 and authorized signatory of the applicant at Jhalawar. As agreed, entire work was required to be completed within eleven(11) months from the date of acceptance letter and thus, date of completion of work was 24.01.2012. The applicant claims to have deputed its representative on 02.03.2011 to take over the work site but the Engineer-in-charge of the non-applicants could not make the work site available. The applicant then sent reminders dated 07.03.2011, 20.04.2011 and 06.06.2011 to the non-applicants. The Engineer-in-charge of the non-applicants vide letter dated 07.06.2011 informed the applicant that as advised at several occasions and also as confirmed by DM/Jhalawar during last progress meeting, the entire site along the alignment lying in government and private land is available for construction work except the forest area. The applicant, however, still insisted that work site was not handed over and brought this to the notice of the non-applicant No. 3 vide letters dated 10.06.2011 and 11.06.2011. The applicant out of its own volition surveyed the entire site and communicated to the non-applicant No. 3 vide letter dated 23.09.2011 that at few places work can be commenced. Thereafter correspondences were exchanged between the applicant and the non-applicants to record progress of acquisition of work sites by the District Administration. In this regard, the applicant wrote letters dated 21.11.2011, 13.01.2012, 10.09.2012 and 18.01.2013 and non-applicants wrote letters dated 09.01.2012, 20.01.2012, 28.06.2012, 28.08.2012 and 12.09.2012. 3. Mr.
Thereafter correspondences were exchanged between the applicant and the non-applicants to record progress of acquisition of work sites by the District Administration. In this regard, the applicant wrote letters dated 21.11.2011, 13.01.2012, 10.09.2012 and 18.01.2013 and non-applicants wrote letters dated 09.01.2012, 20.01.2012, 28.06.2012, 28.08.2012 and 12.09.2012. 3. Mr. R.P. Singh, learned Senior Counsel appearing on behalf of the applicant argued that progress of the work suffered due to reasons which have been detailed in extenso in Point No. (C) (i) to C(vii) of the present application. In view of those reasons, considerable delay occurred which was attributable to the non-applicants in not being able to provide work sites, earth and etc. on time, which resulted in huge delay in completion of contract work. As a consequence thereof, the applicant suffered huge losses on account of price escalation in terms of men and material cost, increased overheads, decrease of profit, illegal withholding of amount against executed items. The applicant vide letter dated 24.02.2013 submitted to the non-applicants an interim statement of claims(claims arising till 31.01.2013 only) in which it claimed heavy direct losses owing solely to the delay on the part of the non-applicants. As per the agreement, an attempt for mutual settlement was made. The non-applicants constituted a Committee of General Manager (Finance)-HQ IRCON, General Manager-II Jaipur and General Manager-I Jaipur, which, however, after holding few meetings reported failure under joint signatures vide letter dated 23.09.2013. The Committee opined regarding one of the interim claims for “earthwork in cutting for IRCON's earth for use in filling for embankment in alignment” that such a claim should be put forth after mutually exploring possibilities under the contractual provisions. This claim itself was for a sum of Rs.1,83,36,031.44/-. It is argued that the applicant approached Joint General Manager, IRCON International, Jhalawar for settlement of this one claim vide its letter dated 14.10.2013. The applicant received letter dated 28.10.2013 inviting them for a meeting on 01.11.2013 to mutually settle this one claim. However, Joint General Manager, IRCON International, Jhalawar expressed his inability to release any payment on account of claim of “Earthwork in cutting for IRCON's earth for use in filling for embankment in alignment”. Left with no other option, the applicant served notice dated 11.11.2013 on the non-applicant No. 1 in terms of arbitration clause (Clause 72.2 of the contract agreement) requesting for initiation of arbitration proceedings as per the agreed terms.
Left with no other option, the applicant served notice dated 11.11.2013 on the non-applicant No. 1 in terms of arbitration clause (Clause 72.2 of the contract agreement) requesting for initiation of arbitration proceedings as per the agreed terms. Same notice was sent by speed post which was delivered in the office of non-applicant no.1 on 13.11.2013. As per requirement of arbitration clause, the applicant submitted its claims which had arisen as on 30.09.2013. Despite lapse of more than one month, Managing Director of the Non-applicant No. 1 did not communicate to the applicant as to whether he/she shall himself/herself act as the sole arbitrator or appoint someone else to act as the sole arbitrator or constitute an arbitral tribunal. The applicant had executed contract work beyond aforesaid period of 31.01.2013 and disputes regarding payment have continued under these very items of the submitted claim statement. 4. Learned Senior Counsel argued that notwithstanding Clause 72.7 of the contract agreement, according to which jurisdiction of courts for dispute resolution shall be at New Delhi, this Court would have jurisdiction because parties to a contract can select one of the many places where part of cause of action arose to confer exclusive jurisdiction for resolution of disputes arising out of the contract, but each such place should satisfy the requirement of jurisdiction that part of cause of action arose there. It is argued that parties cannot confer jurisdiction by agreement to a place which otherwise would not have jurisdiction. Reliance in this connection has been placed upon judgment of the Supreme Court in Interglobe Aviation Limited Vs. N. Satchidanand, (2011) 7 SCC 463 , wherein it was held that any clause which ousts the jurisdiction of all courts having jurisdiction and confers jurisdiction on a court not otherwise having jurisdiction, would be invalid. Reliance is also placed upon judgment of the Supreme Court in A.B.C. Laminart Pvt. Ltd. & Another Vs. A.P. Agencies, Salem, (1989) 2 SCC 163 . Learned Senior Counsel has relied upon the judgment of the Supreme Court in Swastik Gases Private Limited Vs. Indian Oil Corporation Limited, (2013) 9 SCC 32 wherein it was held that the rules applicable to territorial jurisdiction provided in Section 20 of the CPC are extendable to applications filed under Section 11 of the Act of 1996.
Learned Senior Counsel has relied upon the judgment of the Supreme Court in Swastik Gases Private Limited Vs. Indian Oil Corporation Limited, (2013) 9 SCC 32 wherein it was held that the rules applicable to territorial jurisdiction provided in Section 20 of the CPC are extendable to applications filed under Section 11 of the Act of 1996. Section 20 CPC explains jurisdiction of the courts which includes cases pertaining to a corporation (like IRCON International Ltd., respondent herein). Reliance in this connection has also been placed on judgment of the Supreme Court in Hakam Singh Vs. M/s. Gammon (India) Ltd. (1971) 3 SCR 314 wherein it was held that “Corporation” referred to in Section 20 meant not only a statutory corporation, but also a company registered under the Indian Companies Act. It is argued that explanation to Section 20 CPC clarifies that a corporation shall be deemed to carry on its business at “its sole or principal office” in respect of any cause of action arising at a place where the corporation does not have a subordinate office. However, this legal friction would not apply to cases where cause of action arises at a place where the corporation has a subordinate office. For such cases, the place of subordinate office shall be considered to be the place where the corporation carries on its business. 5. Learned Senior Counsel relied on judgment of the Supreme Court in Patel Roadways Limited, Bombay Vs. Prasad Trading Company, (1991) 4 SCC 270 and argued that explanation to Section 20 CPC is in two parts. First part 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 even if the defendant may not be actually carrying on business at that place. Later part of 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.
Later part of 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, is disjunctive, which clearly suggests that if the case 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, alone shall have jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office”. Learned Senior Counsel argued that in the present case, the contract has been executed and performed at Jhalawar, Rajasthan. There is nothing to link New Delhi with the contract except that the respondent-corporation has its principal/registered office there. But respondent-non-applicants subordinate offices are situated both at Jhalawar and Jaipur. At Jhalawar, non-applicant’s subordinate office is situated at KTPS Jhalawar Railway Siding Project, Plot No. 31, Roop Nagar, Opposite Reliance Petrol Pump, Jhalawar where a Joint General Manager operates as Project Head. At Jaipur, the non-applicants have their subordinate office at IRCON International Ltd., B-2/524, Vaishali Nagar, Jaipur where General Manager-I/JP and General Manager-II/JP operate. Notices of this application were served on the non-applicants on the above given addresses. 6. It is submitted that in the affidavit sworn by one Shri Vinit Kumar on behalf of the respondents, he claimed to be Joint General Manager, IRCON International Ltd., Jhalawar and presently at Jaipur. This confirms that the respondents have a subordinate office at Jhalawar. The non-applicants also have a subordinate office in Jaipur as they themselves constituted a committee of General Manager(Finance), HQ, IRCON’, General Manager-II, Jaipur’ and General Manager-I, Jaipur to attempt a mutual settlement. The Committee so constituted held meetings at non-applicants’ office at Jaipur. It is argued that while respondents seek to draw support from the principles of law laid down in Swastik Gases(supra), it is distinguishable on the facts. In that case, the parties to the contract had conferred exclusive jurisdiction to the Courts Kolkata, whereas an application under Section 11 of the Act of 1996 was filed before this Court which was dismissed for want of territorial jurisdiction.
In that case, the parties to the contract had conferred exclusive jurisdiction to the Courts Kolkata, whereas an application under Section 11 of the Act of 1996 was filed before this Court which was dismissed for want of territorial jurisdiction. The Supreme Court did not find any error of law in that order, as the applicant therein did not dispute that part of cause of action had arisen in Kolkata. In the present case, however, no part of cause of action has arisen at New Delhi. Conferment of exclusive jurisdiction to the courts at New Delhi by way of an agreement is thus against the settled principles of law. It is, therefore, argued that this Court would have jurisdiction to entertain present application. 7. Learned Senior Counsel further relied upon the judgment of the Supreme Court in Ace Pipeline Contracts (P) Ltd. Vs. Bharat Petroleum Corpn. Ltd., (2007) 5 SCC 304 , wherein the Supreme Court relying on Datar Switchgears Ltd. Vs. Tata Finance Ltd. & Another, (2000) 8 SCC 151 held that if one party demands the opposite party to appoint an arbitrator and the opposite party does not make an appointment within 30 days of the demand, the right to appointment does not get automatically forfeited after expiry of 30 days. If the opposite party makes an appointment even after 30 days of the demand, but before the first party has moved the court under Section 11, that would be sufficient. It is argued that the applicant served notice for initiation of arbitration dated 11.11.2013 upon the non-applicants on 13.11.2013 through registered speed post and then filed present application on 14.12.2013 whereas the letter issued by the non-applicants dated 27.12.2013 was received by the applicant only on 02.01.2014, much after filing of the present application. Learned Senior Counsel cited provisions of Section 12(5) of the Arbitration and Conciliation (Amendment) Act, 2015(for short ‘the Act of 2015’) to argue that an employee of the party cannot be an arbitrator. The panel of the employees suggested by the non-applicants vide letter dated 27.12.2013 was, therefore, against the mandate of law. It is, therefore, prayed that present application be allowed and an independent arbitrator be appointed by this Court for adjudication of disputes and differences between the parties. 8. Mr.
The panel of the employees suggested by the non-applicants vide letter dated 27.12.2013 was, therefore, against the mandate of law. It is, therefore, prayed that present application be allowed and an independent arbitrator be appointed by this Court for adjudication of disputes and differences between the parties. 8. Mr. Shailesh Prakash Sharma, learned counsel appearing on behalf of the non-applicants opposed the application and argued that the applicant has not properly understood the relevant clause 72.7 wherein jurisdiction was with courts at New Delhi and this fact has not been brought to the notice of this Court which clearly shows concealment and suppression of the facts on the part of the applicant. Learned counsel in this connection relied upon judgment of the Supreme Court in Swastik Gases(supra) and argued that even without use of words ‘alone’ only, exclusive or exclusive jurisdiction etc., if parties have agreed to have jurisdiction at a place other than the place where signing of agreement etc. had taken, the jurisdiction was conferred upon that place. Therein, the company was situated at Jaipur as consignment agent and agreement was entered between the company and IOC at Jaipur. In that case, only the courts at Kolkata had jurisdiction to entertain the disputes between the parties. Judgment of the Supreme Court in Hakam Singh(supra) and A.B.C. Laminart(Supra), which has also been relied by the applicant herein, was considered and distinguished by the Supreme Court in the case of Swastik Gases(supra) in para 11, 13, 22 and 34. It is argued that provisions of CPC, more particularly Section 20, are also not attracted in the present matter because as per decision in Swastik Gases(supra), jurisdiction lies to the place in terms of agreement and conditions agreed upon by the parties, i.e. New Delhi. The applicant was aware of the fact that they were signing an agreement with jurisdiction of any dispute to be decided at New Delhi and once he agreed, the right was already waived and applicant was estopped from filing application before this Court. 9. Learned counsel, in support of this argument, has also relied upon judgments of the Supreme Court in Shree Subhlaxmi Fabrics (P) Ltd. Vs. Chand Mal Baradia & Others, (2005) 10 SCC 704 ; A.V.M. Sales Corporation Vs. Anuradha Chemicals Private Limited, (2012) 2 SCC 315 ; Balaji Coke Industry Private Limited Vs.
9. Learned counsel, in support of this argument, has also relied upon judgments of the Supreme Court in Shree Subhlaxmi Fabrics (P) Ltd. Vs. Chand Mal Baradia & Others, (2005) 10 SCC 704 ; A.V.M. Sales Corporation Vs. Anuradha Chemicals Private Limited, (2012) 2 SCC 315 ; Balaji Coke Industry Private Limited Vs. Maa Bhagwati Coke Gujarat Private Limited (2009) 9 SCC 403 ; Interglobe Aviation Limited(supra). It is, therefore, argued that contention of the applicant regarding contract being executed at Jaipur and performed at Jhalawar and further more urging that no cause of action being arose at New Delhi is wholly baseless and cannot be accepted. It is to be noted that parties agreed to confer jurisdiction over New Delhi in case where a dispute arises between the parties, this Court will have no jurisdiction to entertain an application under Section 11 of the Act of 1996. Judgment of the Supreme Court in Ace Pipeline Contracts (P) Ltd.(supra), on which reliance has been placed by the applicant, is distinguishable on facts of the present case. Non-applicants’ right does not stand forfeited as the limitation period cannot be attracted insofar as application filed before this Court is concerned. 10. Learned counsel for the non-applicants argued that the applicant has filed present application under Section 11 of the Act of 1996 seeking appointment of an arbitrator without waiting for expiry of 60 days as required under Clause 62 of the General Conditions of Contract which is evident from the fact that demand for appointment of arbitrator was made by the applicant vide letter dated 11.11.2013 which was received on 13.11.2013 and consequently, on 27.12.2013, the non-applicants replied the applicant which clearly shows that non-applicants replied within 44 days from the date of receipt of notice regarding appointment of arbitrator whereas the upper time limit is 60 days as per Clause 62 of the General Conditions of Contract. Recently, the Supreme Court in Union of India & Another Vs. Premco-DKSPL (JV) & Ors.(Civil Appeal No. 6179/2016 decided on 25.07.2016), clarified the aforesaid issue while distinguishing its earlier view taken in Datar Switchgears(supra), judgment relied by the applicant and held that after the date of demand of notice the contractor has to wait for 60 days for receipt of a panel of more than three names. Thereafter the contractor had to suggest two names for appointment of his nominee arbitrator within 30 days.
Thereafter the contractor had to suggest two names for appointment of his nominee arbitrator within 30 days. It is argued that cause of action for sending a notice of 30 days or any reasonable period can arise only after 60 days which in the present case is complied by the non-applicant vide letter dated 27.12.2013. The applicant has not waited for a period of 60 days and subsequently not suggested two names within 30 days and has rather prematurely filed this application. Learned counsel argued that view taken in Datar Switchgears(supra) regarding the terms of forfeiture of right to appoint arbitrators on failure in not appointing within 30 days has been held erroneous in the aforesaid judgment and, therefore, the present application is liable to be dismissed. 11. I have given my anxious consideration to rival submissions and perused the material on record. 12. The Supreme Court in Ace Pipeline Contracts (P) Ltd. (supra) held that on failure of appointing authority in appointing an arbitrator as per the appointment procedure within 30 days from the receipt of request from the other party to do so, the appointing authority under the arbitration agreement does not automatically forfeit right to make appointment in such a case. Limitation period of 30 days is only provided under Sections 11(4) and (5) and cannot be invoked under Section 11(6). This position was further clarified by the Supreme Court in Datar Switchgears Ltd.(supra) wherein it was held that if party having responsibility of appointing arbitrator does not do so within 30 days of demand being made by the other party, the right to make the appointment is not automatically forfeited. The appointment can still be made, but only before the other party moves the court under Section 11. Once the other party moves the court the right to make the appointment ceases to exist. 13. Adverting now to the question of territorial jurisdiction, the Supreme Court in Swastik Gases Private Limited(supra) was dealing with a case where the appellant approached the Supreme Court against the order of this Court passed under Section 11(8) of the Act of 1996 whereby its application for appointment of the arbitrator under Section 11 of the Act of 1996 was rejected for lack of territorial jurisdiction. Clause 18 of the consignment agency agreement in that case provided that the agreement shall be subject to jurisdiction of the courts at Kolkata.
Clause 18 of the consignment agency agreement in that case provided that the agreement shall be subject to jurisdiction of the courts at Kolkata. Even though the agreement did not use the words “alone”, “only”, “exclusive” or “exclusive jurisdiction”, the Supreme Court held that this would not be decisive and would not make any material difference in deciding the jurisdiction of a court because intention of the parties by having Clause 18 in the agreement is clear that the Courts at Kolkata shall have jurisdiction which means that the Courts at Kolkata alone shall have the jurisdiction and the parties have thereby excluded jurisdiction of this Court. But then what is observed by the Supreme Court in Para 32 of the report is that where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner, held the Supreme Court. This observation of the Supreme Court has to be understood in the light of observation made in para 31 of the report wherein the Supreme Court began with observing that “the appellant does not dispute that part of cause of action has arisen in Kolkata.” However, case of the appellant was that part of cause of action also arose in Jaipur and, therefore, the Chief Justice of the Rajasthan high court or the designate Judge had jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11 of the Act of 1996. The ratio of the judgment would therefore be that if the jurisdiction vests in courts at multiple places and if the parties had agreed in the agreement to the terms that courts only at one particular place shall have jurisdiction and if such courts otherwise have territorial jurisdiction to deal with the matter, an inference has to be drawn that parties intended to exclude all other courts. Para 31 and 32 of the judgment reads as under: 31.
Para 31 and 32 of the judgment reads as under: 31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded? 32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties-by having Clause 18 in the agreement-is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts.
Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.” 14. In the present case it has not been shown or even contended on behalf of the respondents that part of cause of action has arisen at New Delhi. Admittedly, in the present case, contract agreement between the parties was signed at Jaipur and entire work was to be executed at Jhalawar in the State of Rajasthan. It is not the case of the non-applicants that part of cause of action had arisen in New Delhi. Mere fact that their headquarter is situated at New Delhi would not therefore confer jurisdiction on courts at New Delhi. 15. The Supreme Court in A.B.C. Laminart Pvt. Ltd.(supra) while dealing with the meaning of “cause of action” in the context of Section 20(c) CPC held that in a suit for damages for breach of contract, cause of action arises at a place of making of the contract and a suit on a contract can therefore be filed at the place where it was made. So long as the parties to a contract do not oust the jurisdiction of all the courts which would otherwise have jurisdiction to decide the cause of action under the law, it cannot be said that the parties have by their contract ousted the jurisdiction of the court. 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 there within, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves, the agreement would be valid. It was held that the jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors.
It was held that the jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors. As to what would be the meaning of “cause of action” their Lordships had following observations to make in para 12 of the judgment: “12. A cause of action means every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has not relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.” 16. In Interglobe Aviation Limited(supra), the respondent approached Pernament Lok Adalat at Hyderabad as part of cause of action arose at Hyderabad. The relevant clause in that matter provided that all disputes shall be subject to jurisdiction of courts at Delhi. The Supreme Court relying on the judgment of A.B.C. Laminart Pvt. Ltd. (supra), in para 22 of the judgment concluded as under: “22. As per the principle laid down in A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163 , any clause which ousts the jurisdiction of all courts having jurisdiction and conferring jurisdiction on a court not otherwise having jurisdiction would be invalid.
As per the principle laid down in A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163 , any clause which ousts the jurisdiction of all courts having jurisdiction and conferring jurisdiction on a court not otherwise having jurisdiction would be invalid. It is now well settled that the parties cannot by agreement confer jurisdiction on a court which does not have jurisdiction; and that only where two or more courts have the jurisdiction to try a suit or proceeding, an agreement that the disputes shall be tried in one of such courts is not contrary to public policy. The ouster of jurisdiction of some courts is permissible so long as the court on which exclusive jurisdiction is conferred, had jurisdiction. If the clause had been made to apply only where a part of cause of action accrued in Delhi, it would have been valid. But as the clause provides that irrespective of the place of cause of action, only courts at Delhi would have jurisdiction, the said clause is invalid in law, having regard to the principle laid down in A.B.C. Laminart (P) Ltd. v. A.P. Agencies, (1989) 2 SCC 163 . The fact that in this case, the place of embarkation happened to be Delhi, would not validate a clause, which is invalid.” 17. The Supreme Court in Hakam Singh(supra) in the context of Section 20 C.P.C. held that it is not open to the parties by agreement to confer by their agreement jurisdiction on a court which it does not possess under the Code of Civil Procedure. But where two courts or more have under the Code of Civil Procedure 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. Such an agreement does not contravene Section 28 of the Contract Act. 18. The Supreme Court in Shree Subhlaxmi Fabrics(P) Ltd. (supra) held that plea of jurisdiction goes to very root of the matter and has to be determined first before any relief can be granted. Conferral of jurisdiction by agreement on court not having jurisdiction otherwise, held, impermissible. 19.
Such an agreement does not contravene Section 28 of the Contract Act. 18. The Supreme Court in Shree Subhlaxmi Fabrics(P) Ltd. (supra) held that plea of jurisdiction goes to very root of the matter and has to be determined first before any relief can be granted. Conferral of jurisdiction by agreement on court not having jurisdiction otherwise, held, impermissible. 19. In Balaji Coke Industry Private Limited(supra), the Supreme Court held that where two or more competent courts have jurisdiction to entertain a suit, parties to contract can agree to vest jurisdiction in one such court to try the dispute and such agreement is valid. In A.V.M. Sales Corporation(supra), the appellant at Calcutta was having business with respondent at Vijaywada(in Andhra Pradesh) for supply of goods from Vijayawada to Calcutta. The agreement provided that disputes between the parties subject to Calcutta jurisdiction. Court at Vijayawada allowed suit by respondent for recovery of certain amounts from appellant on ground that it had territorial jurisdiction to entertain said suit. Judgment of the Court was upheld by Andhra Pradesh High Court. The Supreme Court held that cause of action arose within jurisdiction of courts of both Vijayawada and Calcutta. However, as parties had agreed to submit to jurisdiction of courts at Calcutta only, jurisdiction of courts at Vijayawada, had been ousted by virtue of exclusion clause in agreement. 20. In Rajasthan State Electricity Board Vs. Universal Petrol Chemicals Limited, (2009) 3 SCC 107 , the appellant was having operations at Jaipur and respondent company was having its registered office at Calcutta. Agreement stipulated that disputes between the parties shall be subject to exclusive jurisdiction of Jaipur courts. Respondent filed proceedings before Calcutta Court. Division Bench of Calcutta High Court held that it has jurisdiction. It was in this context that the Supreme Court held that there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therein, if parties to the contract agree to vest jurisdiction in one such court to try the dispute, such agreement is valid and binding. 21. The Supreme Court in Patel Roadways Limited, Bombay (supra) while interpreting Section 20(a) to (c) C.P.C. held that choice of forum can be limited by incorporating exclusion clause under the agreement, but agreement cannot confer jurisdiction on a place where it does not lie otherwise.
21. The Supreme Court in Patel Roadways Limited, Bombay (supra) while interpreting Section 20(a) to (c) C.P.C. held that choice of forum can be limited by incorporating exclusion clause under the agreement, but agreement cannot confer jurisdiction on a place where it does not lie otherwise. Interpreting explanation to Section 20(a) C.P.C., the Supreme Court further held that where defendant company/corporation has its principal office at one place and subordinate office at another place and cause of action arises at the place where the subordinate office is located, the suit has to be filed only in the court within whose jurisdiction the company/corporation has its subordinate office and not in court within whose jurisdiction it has its principal office. A clause to the contrary in the agreement would not be operative. However, where the defendant company/corporation has only a principal office, then suit can be filed in court within whose jurisdiction the principal office is located even if cause of action arises elsewhere. Ratio of this judgment would squarely apply to the present case. 22. In view of above, it must be held that notwithstanding exclusionary clause in the contract agreement providing that jurisdiction of courts for dispute resolution shall be at New Delhi, since no part of cause of action has arisen within territorial jurisdiction of New Delhi, this Court would have jurisdiction to entertain the present application. 23. In view of above discussion, the application is accordingly allowed. Hon'ble Mr. Justice N.L. Tibrewal, Plot No. 1, Scheme No. 8, (Near Mahadeo Nagar) Gandhi Path, Queens Road, Jaipur- 302021, Mobile-9414056192 is hereby appointed as an independent sole arbitrator to resolve the disputes between the parties. Payment of the cost of arbitration proceedings and the arbitration fees shall be made as per the Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time. 24. A copy of this order be sent to Hon'ble Mr. Justice N.L. Tibrewal, Plot No. 1, Scheme No. 8, (Near Mahadeo Nagar) Gandhi Path, Queens Road, Jaipur-302021, Mobile-9414056192.