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2017 DIGILAW 901 (CAL)

J. K. ENGINEERING PVT LTD v. ANE INDUSTRIES PVT LTD

2017-11-22

SAHIDULLAH MUNSHI

body2017
JUDGMENT : 1. GA No.2998 of 2016 has been filed by the defendant complaining that this Court has no jurisdiction to entertain the suit and has also prayed for revocation of the leave granted under Clause 12 of the Letters Patent. In the application, the defendants have contended that the MoU dated 26th March, 2013 incorporates by reference the terms and conditions of the NIT of North Eastern Coalfield Ltd which is essentially the terms and conditions and/or instruction to a bidder of North Eastern Coalfield Ltd. A copy of the said NIT of North Eastern Coalfield Ltd has been annexed and marked as letter ‘B’. 2. The claim of the plaintiff as pleaded in the plaint arises out of the said MoU dated 26th March, 2013, which mentions a forum selection clause vesting exclusive jurisdiction with Guwahati High Court in the State of Assam. The contract has been performed in Assam. Part payment has been made in Assam. Therefore, the forum selection clause is operative and the plaintiff cannot maintain the suit in this Hon’ble High Court, in breach of the forum selection clause. It has been further contended that part of the alleged cause of action has arisen at Assam which will be evident from the plaint. In the said application, it has been further contended that as no part of cause of action has arisen within the jurisdiction of this Hon’ble Court, leave under clause 12 of the Letters Patent may be revoked. It is the further case made out by the defendant that paragraph 2 of the plaint refers to an oral agreement which, however, is to enter into further agreement and, therefore, cannot be the basis of the cause of action for the plaintiff in this suit. In any event, according to defendant, from the plaint it does not transpire that the plaintiff sues on this agreement. According to the defendant no part of the cause of action has arisen within the jurisdiction of the Calcutta High Court and the suit cannot be entertained. 3. Affidavit-in-opposition has been filed to the application filed by the defendants. The plaintiff has denied the case made out by the defendant and has contended that this Court is competent enough to try this suit. 3. Affidavit-in-opposition has been filed to the application filed by the defendants. The plaintiff has denied the case made out by the defendant and has contended that this Court is competent enough to try this suit. Cause of action has arisen partly within and partly outside the jurisdiction of this Court and, therefore, there is no wrong in selecting the jurisdiction of the Calcutta High court in filing the suit. 4. According to the plaintiff there could be no occasion for the defendant to argue that the plaint should be returned for filing it before the Guwahati High Court. According to the plaintiff, the application is not only mala fide but it suffers suppression of facts. 5. It is the specific case of the plaintiff that the so called forum selection clause contained in the NIT is exhaustive and takes within its fold only matters pertaining to disputes arising out the tender and the contract subsequently awarded on the basis thereof and cannot, therefore, be treated as being applicable to disputes between the plaintiff and the defendant under the MoU in question which are wholly independent and severable. 6. It is the further contention of the plaintiff that part of cause of action has arisen within the jurisdiction of this Court and the contention of the defendant that the MoU itself records that the same has been entered into at Chandigarh Road, Nawanshahr is contrary to the averments and pleadings contained in the plaint and, therefore, cannot be taken into account. 7. In support of such application, Mr.Jaydip Kar, learned senior advocate appearing for the defendant submits that since there was a forum selection clause in the agreement alleging breach whereof the suit arises, the plaintiff cannot ignore such clause in the agreement and the suit should not have been filed before this Court ignoring such clause. Accordingly, he submits that Order VII Rule 10 of the Code of Civil Procedure is attracted in this case. Order VII Rule 10 of the Code of Civil Procedure (hereinafter referred to as ‘the said Code’) says that subject to the provisions of Rule 10A, the plaint shall, at any stage of the suit, be returned and it should be presented to a Court in which the suit ought to have been instituted. Rule 10 is set out herein below : “10. Return of plaint. Rule 10 is set out herein below : “10. Return of plaint. – (1) [Subject to the provisions of rule 10A, the plaint shall] at any stage of the suit be returned to be presented to the Court in which the suit should have been instituted. [Explanation. – For the removal of doubts, it is hereby declared that a Court of appeal or revision may direct, after setting aside the decree passed in a suit, the return of the plaint under this sub-rule.] (2) Procedure on returning plaint. – On returning a plaint, the Judge shall endorse thereon the date of its presentation and return, the name of the party presenting it, and a brief statement of the reasons for returning it.” 8. In order to attract the applicability of the provisions of Order VII Rule 10 Mr.Kar has referred to the agreement dated 26th March, 2013 executed by and between M/s. ANE Industries Private Limited and M/s. J.K. Engineering Private Limited respectively, being the defendant and the plaintiff. He submits that this agreement was executed at Chandigarh and even it reveals that the stamp paper on which the agreement was drawn was purchased in the State of Punjab. According to Mr.Kar, since the agreement was executed in Punjab and the suit has been filed complaining breach out of the said agreement by no stretch of imagination, suit can be filed in the High Court at Calcutta. 9. He also relies on the last clause in the agreement (MOU) wherein it has been incorporated “all other terms and conditions shall remain in the same as per the provisions of NIT of said tender of North Eastern Coalfields Limited which will remain in force back to back to party of second part”. According to Mr.Kar since the party of the second part relates to M/s. J.K. Enterprise Private Limited, the suit cannot be filed in this Court in view of the terms and conditions contained in the said NIT (Notice Inviting Tender). 10. According to Mr.Kar the said notice inviting tender (hereinafter referred to NIT) contains instructions to bidders and such instruction, inter alia, contains a clause being clause no. 32.0 on the question of legal jurisdiction. 10. According to Mr.Kar the said notice inviting tender (hereinafter referred to NIT) contains instructions to bidders and such instruction, inter alia, contains a clause being clause no. 32.0 on the question of legal jurisdiction. Clause 32.1 specifically mentions that the matter relating to any dispute or difference arising out of this tender and subsequent contract awarded based on the bid shall be subject to jurisdiction the Guwahati High Court only. It has been submitted by Mr. Kar that once the NIT contains such a clause for filing of legal proceeding before Guwahati High Court, the plaintiff cannot file the present lis in the Calcutta High Court taking leave of this Court under Clause 12 showing that part of cause of action arose outside the jurisdiction. 11. In the present case, it is undisputed that NIT as referred to hereinabove, are instructions to bidders. The defendant is a bidder and in his capacity as a successful bidder under the North Eastern Coalfields Coal India Ltd., has created the subject contract, (MOU) on 26th March, 2013 with M/s. J.K. Engineering Pvt. Ltd., the plaintiff herein. 12. Mr. Kar submits that in view of the incorporation of the clause of NIT the said sub-contract, that is, Memorandum of Understanding dated 26th March, 2013 and all other terms and conditions contained therein shall in its entirety be operative upon the plaintiff. In support of such submission Mr. Kar submits that by virtue of the incorporation of the terms at the end of the said sub-contract (MOU) the entire terms and conditions of NIT stood substantially incorporated into the subject contract made by the defendant in favour of the plaintiff and if that be so, the terms and conditions as contained in Clause 32.1 will squarely be applicable to the plaintiff with regard to filing any suit arising out of the MOU dated 26th March, 2013. In support of such submission Mr. Kar has relied on a decision in the case of Balaji Coke Industries Pvt. Ltd. reported in (2009) 9 SCC 403 , and relying on such decision Mr. In support of such submission Mr. Kar has relied on a decision in the case of Balaji Coke Industries Pvt. Ltd. reported in (2009) 9 SCC 403 , and relying on such decision Mr. Kar has pointed out before this Court that since the parties to the agreement had agreed to a particular forum they could no longer resile from the said position and claim that other Courts, where a part of the cause of action may have arisen would also have jurisdiction to entertain a suit or other proceeding. 13. Paragraphs 24, 25, 26 and 27 of the said judgment are relevant. In the said judgment following Hakam Sing reported in (1971) 1 SCC 286 and ABC Laminast reported in (1989) 2 SCC 166 it has been decided by the Hon’ble Supreme Court that the parties had knowingly and apparently agreed that the contract arising out of the high-seas sale agreement would be subject to Kolkata jurisdiction and even if the Courts in Gujarat also had the jurisdiction to entertain any action arising out of agreement, it ought to be held that the agreement to have the disputes decided in Kolkata by an Arbitrator in Kolkata, West Bengal, was valid and the respondent chooses to file its application under Section 9 of the Arbitration and Conciliation Act before some other Court at Gujarat in violation of such agreement and based on such finding the Hon’ble Apex Court directs return of the plaint from Gujarat to Calcutta. 14. It is also clear from the said decision that so long as the parties to a contract do not oust the jurisdiction of all the Courts, which would otherwise have the jurisdiction to decide the cause of action under the law, it cannot be said that the parties have be this contract ousted the jurisdiction of the Court. In this case it may be so that Guwahati High Court is the selected Court but jurisdiction of all other Courts have not been ousted. It may cause arises in Kolkata, it would have the natural jurisdiction and the same will stand ousted only by contract, which is absent here. Assuming there are two Courts available for a party, one is natural and the other is selected, in my view, option of the party suing must prevail upon unless jurisdiction of all other Courts including that of natural jurisdiction is ousted by contract. 15. Assuming there are two Courts available for a party, one is natural and the other is selected, in my view, option of the party suing must prevail upon unless jurisdiction of all other Courts including that of natural jurisdiction is ousted by contract. 15. According to Mr. Kar, it is different where the parties agreed to institute a proceeding before a particular High Court, but instead going there parties have filed the present suit before the Hon’ble High Court. Therefore, the decision is not applicable in the present case. 16. Mr. Kar has emphasized that the reference to the agreement and/or terms and conditions of the NIT will be applicable in between the parties in the MOU dated 26th March, 2013 and in this perspective he relies on a decision in the case of ‘Bhuwalka and Sons vs. Balajit Securities Ltd.’ reported in 2011(5) CHN (CAL) 516. This decision is distinguishable on facts and not applicable in this case. 17. On the issue of forum selection and doctrine of incorporation, Mr. Kar has also relied upon a judgment in the case of M. R. Engineers & Constructions Pvt. Ltd. VS Som Datt Builders Ltd. reported in 2009 (7) SCC, 696. He tried to give emphasis on the difference between reference to another document in a contract and incorporation of another document in a contract by reference. It has been submitted that in the present case by doctrine of reference, the entire documents in respect of which reference has been mentioned in the Memorandum of Understanding dated 26th March, 2013, it shall be deemed that the entire document has been referred to in the said MoU and the parties are bound by the terms and conditions of the NIT of which reference has been made in the MoU. Therefore, according to Mr. Kar in view of the forum selection clause, the suit cannot be held to be maintainable under the jurisdiction of Calcutta High Court and, therefore, it should have been before the Guwahati High Court. 18. Mr. Ratnanko Banerjee, learned senior advocate, submits that clause 32.1 as contained in Annexure B to the application which is an instruction to the bidders being part of Notice Inviting Tender (NIT) is only applicable in between the bidder (Defendant/petitioner and the North Eastern Coalfields Ltd). 18. Mr. Ratnanko Banerjee, learned senior advocate, submits that clause 32.1 as contained in Annexure B to the application which is an instruction to the bidders being part of Notice Inviting Tender (NIT) is only applicable in between the bidder (Defendant/petitioner and the North Eastern Coalfields Ltd). By stretch of imagination, scope and applicability of the said Notice Inviting Tender can be made applicable in case of the plaintiff who has taken special contract by virtue of the MoU dated 26th March, 2013. 19. Therefore, the terms and conditions in clause 32, which is according to Mr. Kar is a forum selection clause, cannot be made applicable to the plaintiff for filing a suit arising out of the said MoU dated 26th March, 2013. 20. Mr. Banerjee further submits that clause 32 of the said NIT will speak for itself that it cannot be binding upon a third party, who is not a bidder. The said clause says that the mater relating to any dispute or difference arising out of this tender and subsequent contract awarded based on the bid shall be subject to the jurisdiction of the Guwahati High Court only. According to Mr. Banerjee, the cause of action arises on the basis of the MoU and not on the basis of the tender in question so to say NIT. The subsequent contract awarded does not mean to say that it is based on the terms of the NIT and should have any application to the plaintiff in choosing the forum for filing this suit. Mr. Banerjee has further pointed out that this cannot be made applicable upon the plaintiff inasmuch as the plaintiff was not a party in the bid. Mr. Banerjee further submits that simply by incorporation of a clause in the MOU that all other terms and conditions shall remain in the same as per the provisions of the NIT of said tender of North Eastern Coalfields Ltd which will remain in force back to back to party of second part, is not sufficient to hold that clause 32.1 is applicable upon the plaintiff. 21. Mere reference of the terms and conditions contained in the NIT is not itself incorporation of the agreement and it cannot be said to be agreement between the plaintiff and the defendant. 21. Mere reference of the terms and conditions contained in the NIT is not itself incorporation of the agreement and it cannot be said to be agreement between the plaintiff and the defendant. Therefore, the stipulation mentioned in the terms and conditions of NIT is not applicable to the plaintiff, if at all, it is applicable in between the North Eastern Coalfields Ltd and the defendants. 22. Mr. Banerjee, however, submits that the decision relied on by Mr. Kar in the case of MR Engineers (supra) squarely supports his case where the Hon’ble Apex Court has held in paragraph 33 that “in the absence of a clear or specific indication that the main contract in entirety including the arbitration agreement was intended to be made applicable to the sub contract between the parties, and has the wording of the sub contract discloses only an intention to incorporate by reference the terms of the main contract relating to the execution of the work as contrasted from the dispute resolution, we are of the view that the arbitration clause in the main contract did not form part of the sub contract between the parties”. The above finding of the Hon’ble Apex Court is sufficient to support the contention made by the plaintiff that doctrine of incorporation as argued by Mr. Kar has no manner of application in the present case and simply while giving reference of the terms and conditions of the NIT is not sufficient to hold that the entire terms and conditions are binding between the plaintiff and the defendant being parties in the MOU dated 26th March, 2013, irrespective of its place of execution. In addition Mr. Kar has further submitted that although Mr. Kar tried to argue that in view of clause 32.1 of the NIT the suit ought to have been filed before the Guwahati High Court, incidentally the Guwahati High Court has no Original Side Jurisdiction and, therefore, the suit cannot be filed before Guwahati High Court. In the midst of his submission Mr. Banerjee relies on a decision in the case of SHRACHI DEVELOPERS PRIVATE LIMITED Versus BIDYULATA MOHAPATRA & ORS. In the midst of his submission Mr. Banerjee relies on a decision in the case of SHRACHI DEVELOPERS PRIVATE LIMITED Versus BIDYULATA MOHAPATRA & ORS. decided by Hon’ble Justice Sanjib Banerjee on 8th April, 2010 which also dealt with the jurisdictional issue in an identical fact based on an agreement between the parties containing clause “All matters arising I connection with the agreement shall be settled by the Courts within the jurisdiction of the Bhubaneswar High Court of Orissa”. In that decision His Lordship held that there is no High Court in this country by the name of Bhubaneswar High Court. However, His Lordship held that “To start with there is no High Court in this country by the name of Bhubaneswar High Court. Even if one were to ignore such minor matter and consider the clause to imply the Orissa High Court at Cuttack it would still not be forum selection clause conferring exclusivity on any specific Court as is ordinarily required for a forum selection clause to be effective. The Orissa High Court has no original jurisdiction and as such the forum selection clause could not have provided that only the Orissa High Court would have exclusive authority to entertain petitions arising out of the agreement….” Here we have this identical situation where although according to Mr. Kar suit ought to have been filed before Guwahati High Court but Guwahati High Court has got no original jurisdiction and so it is impracticable to file a suit in that Court. Those apart Mr. Banerjee has relied on a decision in the case of AFRICA EXPRESS LINE LIMITED (“AEL”) –and- (1) SOCOFI S.A. (“Socofi”) reported in [2009] EWHC 3223 (Comm). Referring to the said decision Mr. Banerjee has pointed out that contracts which include words of incorporation must be construed in their commercial context which may cast light on whether an arbitration or jurisdiction clause is to be treated as incorporated by general words of incorporation. He submits that merely pointing out that other terms and conditions will be applicable is not enough to hold that by way of doctrine of incorporation the entire terms and conditions have been incorporated in the Memorandum in between the plaintiff and the defendant. The parties have made their submissions at length. He submits that merely pointing out that other terms and conditions will be applicable is not enough to hold that by way of doctrine of incorporation the entire terms and conditions have been incorporated in the Memorandum in between the plaintiff and the defendant. The parties have made their submissions at length. After considering the submissions it transpires that the Memorandum of Understanding dated 26.3.2013 in between the plaintiff and the defendant is a sub-contract given by the defendant as a bidder while being a bidder the defendant is bound by the terms and conditions contained in the notice inviting tender issued by North Eastern Coalfield. Merely because the defendant has created a sub-contract with the plaintiff it cannot be said that clause 32.1 which is according to the defendant is a forum selection clause would be binding upon the plaintiff in filing a suit. That apart I am of the view that the wording made in clause 32.1 are also different to hold that the contract if any awarded by the bidder has to be placed on the bid. The Memorandum of Understanding cannot be said to be awarded on the basis of the bid given to the defendant nor the terms and conditions of the NIT could be made applicable in respect of the plaintiff. 23. That apart clause 32.1 of NIT clearly specifies “matter relating to any dispute or difference arising out of this tender” which means the terms and conditions contained in NIT which is part of annexure B to the application. The said clause has also mentioned that “subsequent contract awarded based on the bid shall be subject to the jurisdiction of Guwahati High Court”. The rights and obligations between the parties here flow from the Memorandum of Understanding not from the terms and conditions contained in the NIT. It a party is made to be bound by the whole of the terms of the NIT he would be put on notice about the whole of such terms. Simply by referring the terms of NIT without due incorporation thereof it cannot be presumed that plaintiff had knowledge of whole of the terms of NIT. It a party is made to be bound by the whole of the terms of the NIT he would be put on notice about the whole of such terms. Simply by referring the terms of NIT without due incorporation thereof it cannot be presumed that plaintiff had knowledge of whole of the terms of NIT. Therefore, simply by giving a reference to the NIT in the Memorandum of Understanding without letting the plaintiff aware the entire terms and conditions which were binding upon the bidder, the bidder while executing a sub-contract cannot impose those terms and conditions upon the plaintiff and they can not permitted to take advantage of clause 32.1 of the NIT to show that forum has been agreed to be Guwahati High Court to the exclusion of Calcutta High Court. 24. Plaintiff has filed a suit purely on the basis of rights and obligations created under the Memorandum of Understanding dated 26th March, 2013 and in pusurance whereof the plaintiff has filed this suit contending that there has been breach of the terms in the said MOU. In paragraphs 2,3, 5, 6 and 10 the plaintiff has demonstrated the cause for filing this suit. On an analysis of the averments made in these paragraphs it does not raise any doubt in the mind of this Court that part cause of action has not arisen within the jurisdiction of this Court, whether or not the averments made in those paragraphs are correct is yet to be decided in trial. Those are all triable issues. Court must give emphasis at this stage upon the averment made in the pleadings and it is for the determination of the issue whether a plaint should be rejected under provisions of Order 7 Rule 10 of the Code of Civil Procedure, Court is not required to traverse through documents other than the plaint at this stage. From the plain reading of the plaint it is sufficient that the plaintiff has been able to show the exact part cause of action within the jurisdiction of Calcutta High Court and, therefore, there is no reason to reject and/or to return the plaint as prayed for by the defendant. Accordingly, the application is dismissed. 25. It is submitted by the learned Counsel for the plaintiff that an application for attachment is pending but is not listed. Let that application to be listed. Accordingly, the application is dismissed. 25. It is submitted by the learned Counsel for the plaintiff that an application for attachment is pending but is not listed. Let that application to be listed. The defendants are also given opportunity to file written statement to the suit as well as affidavit-in-opposition to the application concerned within three weeks; affidavit-in-reply, if there be any thereto, within two weeks thereafter. Let this matter appear four weeks after ensuing Christmas Vacation.