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Rajasthan High Court · body

2017 DIGILAW 679 (RAJ)

M/s HCL Infosystems Limited v. Compucom Software Limited

2017-03-03

MOHAMMAD RAFIQ

body2017
ORDER : 1. Applicant M/s HCL Infosystems Limited is a company registered under the Indian Companies Act, 1956. It has filed this application for appointment of independent and impartial person as an Arbitrator for settlement of its disputes with the non-applicant and payments to be released to the applicant. 2. Mr. R.K. Agarwal, learned senior counsel for applicant, argued that the applicant is a leading global technology and IT company and is inter alia engaged in the business of product engineering, custom and packages applications, IT infrastructure services, IT hardware, systems integration and distribution of information and communications technology (ICT) products across a wide range of focused industry verticals. The non-applicant is also a company registered under the provisions of the Companies Act, 1956 having its registered office at Jaipur. The Secondary Education Department, Government of Rajasthan, invited tenders to install computer labs to provide services under Integrated Scheme for Computer Education and Information Technology, in various schools identified in the tenders and the non-applicant was one of the successful bidders of the said tender. The non-applicant, in order to fulfill requirements of the said tenders, approached the applicant-company for supply of computer hardware, peripherals and software to run said computer systems and peripherals. The non-applicant placed a purchase order dated 09.06.2008 with the applicant subsequent to which, to govern the transaction of supply of computer hardware, peripherals and the software between the applicant-company and the non-applicant-company under the purchase order dated 09.06.2008, and subsequent purchase orders, and agreement dated 17.07.2008 was executed between them. Different purchase orders were placed by the non-applicant with the applicant. Clause 11 of the Agreement dated 17.07.2008 states about warrant conditions and penalty for failure of equipment. Clause (i) of the purchase order also provide the warrant of sixty days from date of installation/commissioning. 3. It is contended that as per the agreement, applicant-company was required to furnish bank guarantees equivalent to certain percentage of order value, for a period of four years and six months or sixty months against respective purchase orders. It furnished four bank guarantees, details of which are contained in para 14 of the application. 3. It is contended that as per the agreement, applicant-company was required to furnish bank guarantees equivalent to certain percentage of order value, for a period of four years and six months or sixty months against respective purchase orders. It furnished four bank guarantees, details of which are contained in para 14 of the application. A letter was sent by the non-applicant to the banker of the applicant dated 05.12.2012 stating that it has failed to invoke the bank guarantee of Rs.68,58,240/- on the basis of alleged failure of the applicant to comply with the terms and conditions of LD/SLA and repair of all hardware. The applicant-company also received a letter dated 05.12.2013, which was sent by non-applicant, under caption “Breach of terms and conditions of the Purchase Order dated 21.09.2010 (CALP-Iind Project)” and that it failed to submit OEM warranty cards of five years, which was in gross violation of terms and conditions of the purchase order. The letter therefore stated that why suitable action should not be taken against the applicant-company in a competent court of law including invocation of bank guarantee amounting to Rs.2,47,290/- and Rs.8,66,700/-. On receiving the said letter, applicant-company protested by email dated 12.12.2013 and also simultaneously offered to hold meetings of the officers of the non-applicant to amicably resolve the issues raised by them but to the utter shock and surprise, the applicant learnt from their bank that the non-applicant have invoked their remaining three bank guarantees without acceding to the request of the applicant-company. These bank guarantees were executed by the applicant as security for warranty of sixty months and service support on computer hardware, software and peripherals supplied by the applicant-company to the non-applicant. As per the warranty, the applicant-company was required to attend the complaints raised by the non-applicant and visit different sites to repair/replace parts of the computer hardware, software and peripherals, which the applicant actually did by visiting various sites of the schools by duly repairing/replacing the parts of the software. 4. Mr. R.K. Agarwal, learned senior counsel, argued that as evident from the purchase orders and agreement between the parties, it was agreed that the bank guarantees were to be kept as security deposit against the after sale warranty services to be provided by the applicant-company and since the applicant-company continuously provided such services, there was absolutely no justification for the non-applicant to invoke the bank guarantee. The non-applicant did not send any notice for any non-compliance of the warranty conditions by the applicant-company. The applicant-company has been repeatedly requesting the non-applicant to have meeting to discuss the issues raised by them in their letter dated 05.12.2012. Encashment of premature bank guarantee without providing notice to the applicant-company shows that the non-applicant had every intention to misappropriate valid legal security furnished to non-applicant. In order to resolve the dispute and differences between the parties, the applicant-company on 09.01.2014 sent a legal notice asking non-applicant to re-validate all four bank guarantees and amicably resolve the dispute within fifteen days. The non-applicant by letter dated 01.04.2014 replied to the legal notice stating that they were forced to encash the bank guarantee of Rs.68,58,240/- due to failure of the applicant to provide warranty cards against the equipment supplied to the non-applicant and the government has imposed heavy penalty on the non-applicant but the non-applicant did not provide any detail and nature of the penalties imposed on them. Learned counsel therefore submitted that clause 20 of the agreement dated 17.07.2008 provided for remedy of arbitration for settlement of disputes between the parties as per the provisions of the Arbitration and Conciliation Act, 1996. However, the non-applicant, by letter dated 06.05.2014 replied to the notice stating that there was no dispute between the parties. The non-applicant has thus failed to appoint the Arbitrator even after thirty days and thus have lost their right to make such appointment of Arbitrator and also failed to make payment of Rs.1,14,16,330/- along-with interest to the applicant. It is therefore prayed that this court may appoint an independent Arbitrator to resolve the dispute between the parties. 5. Learned senior counsel for applicant, in support of his arguments, has relied on judgments of the Supreme Court in State of Rajasthan and Others Vs. M/s. Swaika Properties and Another – AIR 1985 SC 1289 , Union of India Vs. Adani Exports Ltd. - (2002) 1 SCC 567 , A.B.C. Laminart (P) Ltd. Vs. A.P. Agencies – AIR 1989 SC 163, State of Goa Vs. Praveen Enterprises – AIR 2011 SC 3814 , Swastic Gases Pvt. Ltd. Vs. Indian Oil Corporation Ltd. - (2013) 9 SCC 32 , Purpse India Holding Ltd. Vs. Drilling and Offshore Pvt. Ltd. - 2016 (2) ARB.LR 153 (SC), and that of the Orissa High Court in National Aluminium Company Ltd. Vs. Praveen Enterprises – AIR 2011 SC 3814 , Swastic Gases Pvt. Ltd. Vs. Indian Oil Corporation Ltd. - (2013) 9 SCC 32 , Purpse India Holding Ltd. Vs. Drilling and Offshore Pvt. Ltd. - 2016 (2) ARB.LR 153 (SC), and that of the Orissa High Court in National Aluminium Company Ltd. Vs. The Doaba Industrial and Trading Co. (P) Ltd. - AIR 2008 Orissa 12, and that of this court in Narain Das Mukhija Vs. M/s. Seven Arts Pictures – 2015 (4) WLC (Rajasthan) 170. 6. Mr. Vivek Dangi, learned counsel for non-applicant, submitted that the application under Section 11 of the Act of 1996 is not maintainable as there is no valid arbitration agreement between the parties. The applicant relying on clause 10 of the Agreement dated 17.07.2008 describes the same as the arbitration clause and at the same time the applicant also relies on clause 20 of the invoice describing the same as arbitration clause but according to clause 19 of that very invoice, all disputes are subject to jurisdiction of courts at Delhi. The afore-mentioned two clauses are totally different. While clause 10 of the agreement dated 17.07.2008 refers to sorting out all disputes arising out of the said agreement by means of arbitration, but it provides that the process for appointment of the Arbitrator shall be decided by the parties on the basis of mutual acceptability, but clause 20 of the Invoices prescribe a specific process of reference to Sole Arbitrator and the power to appoint such Sole Arbitrator has been given exclusively to the Company Secretary of the applicant-company and the seat of such Arbitration is to be at New Delhi. The applicant thus has not been able to make up its clear mind as to under which of the clauses and under which jurisdiction it seeks to refer its alleged disputes to the arbitrator for adjudication under the provisions of the Act of 1996. 7. Objection of learned counsel for non-applicant is that this court does not have territorial jurisdiction to entertain this application filed under Section 11 of the Act of 1996 because clause 19 relied by the applicant provides that all disputes arising out of the ‘agreement’ shall be subject to the jurisdiction of Courts at Delhi. 7. Objection of learned counsel for non-applicant is that this court does not have territorial jurisdiction to entertain this application filed under Section 11 of the Act of 1996 because clause 19 relied by the applicant provides that all disputes arising out of the ‘agreement’ shall be subject to the jurisdiction of Courts at Delhi. Alternatively, his submission is that provision contained in clause 20 do not even qualify for being a valid arbitration agreement in terms of Section 7 of the Act of 1996. Each of the purchase orders, namely, purchase orders dated 09.06.2008, 13.06.2009, 12.06.2010, 21.09.2010 and 22.09.2010 are self contained independent contracts and none of them contains an arbitration clause or agreement. None of the above said purchase orders except purchase order dated 09.06.2008, contains even a reference of agreement dated 17.07.2008, which under clause 10 provides for dispute settlement by appointment of Arbitrator. In fact, the purchase orders, afore mentioned, clearly stipulate that “until any separate agreement is signed this Purchase Order will also act as an agreement”, but no separate agreement was ever signed by the parties after execution of the purchase orders. In the circumstances, the purchase order itself has to be construed as self contained contract. This is another reason why each purchase order should be construed separate and independent contract. Since these purchase orders do not contain any arbitration clause, it must be held that there does not exist any arbitration clause. Each of the bank guarantees issued refer to specific purchase orders only and there is no reference of agreement dated 17.07.2008 therein. Value of the bank guarantee has been determined on the basis of each purchase order separately. Endeavour of the applicant to construe all the above stated purchase orders as part and parcel of one single transaction is wholly misconceived. Learned counsel for non-applicant, on merits of the case, denied the allegations contained in the application and stated that all these projects were executed by the non-applicant for Government of Rajasthan on Build, Own, Operate and Transfer basis, providing “onsite Comprehensive Warranty”, which was one of the main and crucial aspect for the success of the project. However, the applicant grossly failed to provide the required service warranty and consequently the non-applicant had to face huge financial losses. 8. Learned counsel for non-applicant, in support of his arguments, has relied on judgments in Jagdish Chander Vs. However, the applicant grossly failed to provide the required service warranty and consequently the non-applicant had to face huge financial losses. 8. Learned counsel for non-applicant, in support of his arguments, has relied on judgments in Jagdish Chander Vs. Ramesh Chander and Others – (2007) 5 SCC 719 , Govind Rubber Ltd. Vs. Louis Commodities Asia Private Ltd. - (2015) 13 SCC 477, M.R. Engineers & Contractors Pvt. Vs. Som Datt Builders Ltd. - (2009) 7 SCC 696 , Rajasthan State Electricity Board Vs. Universal Petrol Chemicals Limited – (2009) 3 SCC 107 , U Can Fly Ltd. Vs. AVA SPA Holidays (I) Pvt. Ltd. and Others – MANU/DE/3066/2016, Morgan Stanley Mutual Funds Vs. Kartick Das – (1994) 4 SCC 225 , Rajasthan SEB Vs. Universal Petro Chemical Ltd. - (2009) 3 SCC 107 , and that of this court dated 07.10.2016 in S.B. Arbitration Application No.111/2013 - M/s. Enertech Engineering Projects Vs. Rieter Automotive India Pvt. Ltd. and Another, and that of Kolkata High Court in Ashok Kumar Saboo (HUF) and Another Vs. Hindusthan Paper Corporation Limited and Others – 2007 (3) CHN 533 and of Bombay High Court in Indiabulls Financial Services Ltd. Vs. Loyal Motors Pvt. Ltd. - 2009 (111) BOMLR 3129. 9. Mr. Vivek Dangi, learned counsel for non-applicant submitted that judgment of this court in M/s. Enertech Engineering Projects Vs. Rieter Automotive India Pvt. Limited – S.B. Arbitration Application No.111/2013 decided on 07.10.2016, relied on by learned counsel for applicant, is distinguishable on facts because in that case there was only one principal agreement of the work order dated 13.07.2009 and subsequent work orders referred to core terms and conditions, as per the contract, thus implying that principal contract between the parties would continue to operate, whereas in the present case, each of the purchase orders were independent contract and that reference of agreement dated 17.08.2008 is one of the purchase orders dated 09.06.2008. It is argued that as per Section 7(5) of the Act of 1996, there should be separate and specific reference indicating mutual intention of the parties to incorporate the arbitration clause from another document into the contract. It is argued that as per Section 7(5) of the Act of 1996, there should be separate and specific reference indicating mutual intention of the parties to incorporate the arbitration clause from another document into the contract. Relying on judgment of the Supreme Court in M.R. Engineers and Contractors Private Limited, supra, learned counsel argued that reference to the document in the contract should be such that shows the intention to incorporate the arbitration clause contained in the document, into the subsequent contract. General reference to another contract would not have the effect of incorporating the arbitration clause from the referred document in the contract between the parties, held the Supreme Court. 10. I have given my anxious consideration to rival submissions and perused the material on record. 11. Earliest purchase order, which the non-applicant issued to applicant, was dated 09.06.2008. Seventeen terms and conditions are there in that purchase order including condition no.11, which provides that all MAF/Undertakings submitted by applicant during the tender are binding on the applicant and will be part of that purchase order. After the first purchase order, the agreement dated 17.07.2008 was also then executed between the parties. clause 2 of the agreement provided that supplier has agreed with the customer to supply and installation of computer systems and peripherals and warranty thereon for computer education and information and communication technology project in 752 Government Senior Secondary Schools of Jodhpur and Ajmer Ranges of Rajasthan in the manner set forth in the terms and conditions of the purchase order dated 09.06.2008. But then, clause 4(i) thereof states that in consideration of the payment to be made by the customer for each school through LC at the rate set forth in the purchase order appended thereto, the supplier will supply and install all new genuine computer systems and peripherals and provide comprehensive onsite warranty (including parts & labor) thereon in schools set forth in effective way and thereof in the manner set forth in the conditions of the purchase order. clause 4 (iii) of the agreement provided that the mode of payment will be as per terms and conditions of the purchase order. clause 8 thereof is with regard to liquidated damage/penalty and termination due to non-fulfillment of contract and other. clause 4 (iii) of the agreement provided that the mode of payment will be as per terms and conditions of the purchase order. clause 8 thereof is with regard to liquidated damage/penalty and termination due to non-fulfillment of contract and other. If further provides that if this was levied on the non-applicant by the department due to delay in hardware supply by applicant, liquidated damages/penalty and termination shall be as per scope of the purchase order. This is thus evident that except for a specific reference to purchase order dated 09.06.2008 elsewhere, reference is made to purchase order in general, not in particular to a contract of any specific date. Even otherwise, what is provided in clause 2 is that the supplier has agreed with the customer to supply and installation of computer system and peripherals and warrant thereon for computer education and information & communication technology project in 752 Government Senior Secondary Schools of Jodhpur and Ajmer ranges of Rajasthan “in the manner set forth in the terms & conditions of the Purchase Order dated 09th June 2008”. All the clauses thus, if read conjointly, make it clear that reference in specific to purchase order dated 09.06.2008 is made merely for the purpose of terms and conditions set forth therein and not that the entire contract is confined to only one. Otherwise, there would be no purpose of mentioning “purchase order” in general in various subsequent paras of the contract, without giving any particular date. The agreement therefore primarily refers to the manner set forth in the terms and conditions of the purchase order, which shall be acted upon by the parties for supply or installation of computer system in peripherals and warranty thereon. 12. Clause 10 of the aforenoted Agreement clearly provides that any dispute arising out of the agreement and all questions relating to the interpretation of this agreement shall be decided by an arbitrator mutually acceptable to both parties. It is therefore erroneous to contend that clause 10 is not an arbitration agreement. 12. Clause 10 of the aforenoted Agreement clearly provides that any dispute arising out of the agreement and all questions relating to the interpretation of this agreement shall be decided by an arbitrator mutually acceptable to both parties. It is therefore erroneous to contend that clause 10 is not an arbitration agreement. Such an argument cannot be accepted merely because reference to arbitration clause under the Act of 1996 has not been given in clause 10, supra, and that the clause has been qualified in respect of appointment of Arbitrator by the words “mutually acceptable to both parties.” The clause does not cease to be arbitration clause in absence of arrival of mutual consensus because in that case it would be open to the parties to avail remedy of approaching the court under Section 11 of the Act of 1996. All the subsequent purchase orders shall have to be therefore read in continuation with the agreement dated 09.06.2008. In fact, clause 20 of the Invoices relied on by the non-applicant itself states that all disputes, differences and questions whatsoever, which shall arise between the parties hereto or afterwards, touching any clause or matter herein contained, shall be referred to Sole Arbitrator to be appointed by the Company Secretary of the applicant. The agreement as well as number of purchase orders and the correspondence that were exchanged between the parties, thus leaves no manner of doubt that there was indeed an agreement between the applicant and non-applicant herein to refer their disputes to the Arbitrator mutually acceptable to both the parties or appointed by the Company Secretary of the applicant. However, there can thus be no gainsaying the fact that there exists an arbitration clause in the contract between the parties in terms of Section 7 of the Act of 1996. And despite request of the applicant, if the Company Secretary has failed to refer the dispute to arbitration, he has by virtue of Section 11(6) of the Act is now precluded from making such reference by appointing an arbitrator. 13. In the judgment of the Supreme Court in Jagdish Chander, supra, relied by learned counsel for non-applicant, it has been held that the intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. 13. In the judgment of the Supreme Court in Jagdish Chander, supra, relied by learned counsel for non-applicant, it has been held that the intention of the parties to enter into an arbitration agreement shall have to be gathered from the terms of the agreement. If the terms of the agreement clearly indicate an intention on the part of the parties to the agreement to refer their disputes to a private tribunal for adjudication and a willingness to be bound by the decision of such tribunal on such disputes, it is arbitration agreement. The Supreme Court further held that while there is no specific form of an arbitration agreement, the words used should disclose a determination and an obligation to go to arbitration and not merely contemplate the possibility of going for arbitration. Therein, it is further held that the main attribute of an arbitration agreement, namely, consensus ad idem to refer the disputes to arbitration was missing. And, it was in that context that their Lordships held that mere use of the word “arbitration” or “arbitrator” in a clause will not make it an arbitration agreement, if it requires or contemplates a further or fresh consent of the parties for reference to arbitration. In the present case, it cannot be said that the parties were not in consensus ad idem to refer the disputes to arbitration or that relevant arbitration clause, be it clause 10 of the agreement or clause 20 of the invoices or the terms and conditions contained in different purchase orders, requiring any further or fresh consent of the parties or reference to arbitration. The relied judgment of the Supreme Court is thus distinguishable. 14. In Govind Rubber Ltd., supra, the Supreme Court held that signing of agreement is not mandatory. An agreement, even if not signed by parties can be spelt out from correspondence exchanged between the parties. However, it is the duty of court to construe correspondence with a view to arrive at the conclusion whether there was any meeting of minds between the parties which could create a binding contract between them. This could be established from the exchange of letter, telex, telegraph or other means of communication. 15. However, it is the duty of court to construe correspondence with a view to arrive at the conclusion whether there was any meeting of minds between the parties which could create a binding contract between them. This could be established from the exchange of letter, telex, telegraph or other means of communication. 15. The argument of learned counsel for non-applicant that since general reference of any contract will not be sufficient to incorporate the arbitration clause from the referred contract under consideration would not, in my view, be available in the present case. The agreement dated 17.07.2008 may have made reference to purchase order dated 09.06.2008 in one of the clause thereof but such reference is not made precisely for incorporation of arbitration clause from that purchase orders into the agreement aforesaid only in respect of that purchase order but only in stipulates that manner set froth in the terms and conditions wholly provides for adoption and applicability of manner set forth in the terms and conditions of the purchase order. The term ‘purchase order’ in general, has found mention in many subsequent clauses without reference to any particular date. Therefore, it cannot be deduced from this that the agreement in making a reference to one particular purchase order with date intended to confine the arbitration clause of the agreement to that purchase order alone, in terms of Section 7(5) of the Act of 1996. In fact, there was no such requirement as the agreement itself contained a separate arbitration clause being clause 10. The clause 20 of the Invoices again is a reiteration of the intention of the parties to arbitration agreement between the parties. 16. Before adverting to the objection of the non-applicant about territorial jurisdiction of this court, a brief survey of the relevant case law on the subject would not be out of place. 17. The Supreme Court in Swastik Gases Private Limited Vs. Indian Oil Corporation Limited – (2013) 9 SCC 32 , 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. Indian Oil Corporation Limited – (2013) 9 SCC 32 , 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. 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. However, 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. 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. 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. 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.” 18. 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 therewithin, 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. 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. 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.” 19. In Interglobe Aviation Limited Vs. N. Satchidanand – (2011) 7 SCC 463 , 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.” 20. The Supreme Court in Hakam Singh Vs. M/s. Gammon (India) Ltd. - (1971) 3 SCR 314 , 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. 21. In Balaji Coke Industry Private Limited Vs. Maa Bhagwati Coke Gujarat Private Limited – (2009) 9 SCC 403 , 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 Vs. Maa Bhagwati Coke Gujarat Private Limited – (2009) 9 SCC 403 , 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 Vs. Anuradha Chemicals Private Limited – (2012) 2 SCC 315 , 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. In Rajasthan State Electricity Board, (supra), 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. 22. The Supreme Court in Patel Roadways Limited, Bombay Vs. Prasad Trading Company – (1991) 4 SCC 270 , 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. 22. The Supreme Court in Patel Roadways Limited, Bombay Vs. Prasad Trading Company – (1991) 4 SCC 270 , 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. 23. The argument of the learned counsel for non-applicant is that this court would have no territorial jurisdiction, as clause 20 of the Invoices has made all the disputes arising out of the contract between the parties subject to jurisdiction of the courts at Delhi. But on facts it is evident that agreement between the parties was executed at Jaipur, all the purchase orders placed by the non-applicant have originated from Jaipur at the instance of the non-applicant and supplies were also made/received at Jaipur. The purchase order dated 09.06.2008 and 21.09.2010 were addressed to the Regional Head of the applicant at Jaipur. The purchase orders dated 13.06.2009 and 12.06.2010 were addressed to office of the applicant at Sardarpet Pondicherry/Rudrapur Uttarnchal and NOIDA (Uttar Pradesh), respectively. None of the purchase orders was thus placed with any office of the applicant at Delhi. Merely because registered office of the non-applicant is located at Delhi and its Directors are stationed at Delhi and bank guarantees have been invoked by issuance of letter on banks at Delhi, would not give rise to any part of cause of action at Delhi. In fact, the letters invoking bank guarantees, have been issued by the non-applicant from Jaipur. Merely because registered office of the non-applicant is located at Delhi and its Directors are stationed at Delhi and bank guarantees have been invoked by issuance of letter on banks at Delhi, would not give rise to any part of cause of action at Delhi. In fact, the letters invoking bank guarantees, have been issued by the non-applicant from Jaipur. In these facts, part of cause of action can not be held to have arisen in Delhi so as to justify conferment of exclusive jurisdiction on the courts at Delhi in the condition of Invoices. 24. In view of the above, it must be held that despite exclusionary clauses 19 and 20 contained in the Invoices providing jurisdiction of courts for the disputes at Delhi, since no part of cause of action has arisen within the territory of New Delhi, this court would be competent to entertain present application. 25. In the result, the application is accordingly allowed. Hon'ble Mr. Justice Sunil Kumar Garg, former Judge of the Rajasthan High Court, R/o 851, Ahinsa Path, Behind Ram Mandir, Mahaveer Nagar, Tonk Road, Jaipur – 18 (Cell No.9829027732) 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 Fourth Schedule of the Arbitration and Conciliation (Amendment) Act, 2015 and Manual of Procedure for Alternative Dispute Resolution, 2009 of this Court, as amended from time to time. 26. A copy of this order be sent to Hon'ble Mr. Justice Sunil Kumar Garg, for information and needful.