M/S. Consolidated Ag... v. M/S. Gujarat Carbon ..., Madras High Court, Judgment, Law, casemine.com

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Case Number

O.S.A No. 225 of 2001

Advocates

Mr. T.K Seshadri, Advocate for Appellant.
R. Krishnaswamy, Senior Counsel for Respondents.

Judges

S. Jagadeesan
P.D Dinakaran, JJ.

Acts

Section 20 of the Code of Civil Procedure,

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Smart Summary

Factual and Procedural Background

This appeal is directed against the order dated 29.3.2001 made in Application No. 3713 of 1998 in C.S. No. 87 of 1998 which revoked the leave granted under Clause 12 of the Letters Patent to the plaintiff/appellant in Application No. 304 of 1998 (leave having been granted on 2.2.1998) to file C.S. No. 87 of 1998.

The plaintiff/appellant instituted C.S. No. 87 of 1998 seeking payment of Rs. 12,43,657.30 and a declaration that the plaintiff had no dues against the defendants, relying on a Consignment Stockist agreement dated 1.10.1985. The plaintiff alleged entitlement to sums for commission, discount, freight charges, etc., under that agreement. Because the first defendant's office was located outside the territorial jurisdiction of the Court (said to be Vadodara), the plaintiff obtained leave under Clause 12 of the Letters Patent to sue in this Court.

The first defendant/first respondent filed Application No. 3713 of 1998 to revoke the leave granted, alleging that the plaintiff had suppressed another agreement dated 1.4.1993 appointing the plaintiff as a stockist, and asserting that Clause 22 of the 1.4.1993 agreement (and Section 20 of the Code of Civil Procedure) vested jurisdiction in the Baroda/Vadodara courts. The plaintiff denied the existence of the 1.4.1993 agreement.

The learned Single Judge, noting a xerox copy of the 1.4.1993 agreement bearing the plaintiff's signature and Clause 22 providing jurisdiction at Baroda, held that the clause determined jurisdiction and revoked the earlier leave. The plaintiff appealed against that order.

Legal Issues Presented

Whether the plaintiff/appellant was entitled to seek leave of this Court under Clause 12 of the Letters Patent to file C.S. No. 87 of 1998 when the parties had agreements (dated 1.10.1985 and 1.4.1993) providing that disputes would be decided by courts at Vadodara/Baroda, Gujarat.
Whether a jurisdiction clause that specifies a forum without using express exclusionary words such as "only" or "alone" nevertheless ousts or excludes the jurisdiction of other competent courts.
Whether Section 20 of the Code of Civil Procedure or the grant of leave under Clause 12 of the Letters Patent could overcome or cure the jurisdictional stipulation in the agreements relied upon by the defendants.

Arguments of the Parties

Appellant's Arguments (Plaintiff)

Counsel for the plaintiff (Mr. T.K. Seshadri) relied on Nanak Chand v. T.T. Elec. Supply Co., AIR 1975 Mad 103, to contend that this Court's grant of leave under Clause 12 of the Letters Patent could cure any jurisdictional irregularity caused by the agreement(s).
Argued that where there are two or more competent courts, parties can agree to vest jurisdiction in one of them, but the objection based on irregular exercise of jurisdiction can be waived; the grant of leave under Clause 12 effects such waiver.
Relied on M/s. Sponge Iron India Ltd. v. A.S. Corpn. Ltd., AIR 1989 A.P. 206, to argue that an ouster or exclusion of jurisdiction must be expressly and unambiguously stated using words like "only" or "alone"; in absence of such words both courts have jurisdiction.
Relied on A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, 1989 (2) SCC 163, to contend that Clause 22 of the 1.4.1993 agreement only specifies one of two courts and does not specifically exclude the jurisdiction of this Court; hence both courts would have jurisdiction.

Respondent's Arguments (First Defendant)

Counsel for the first defendant (Mr. R. Krishnaswamy) relied on averments in paragraphs 11 and 12 of the plaint (that the second defendant was assigned the book of debts without informing the plaintiff) to contend that there was no cause of action against the first defendant and that the suit as framed was frivolous as against it.
Contended that Clause 22 of the 1.4.1993 agreement (providing jurisdiction at Baroda) and Clause (xvi) of the 1.10.1985 agreement (providing jurisdiction at Vadodara) determine jurisdiction and that Section 20 CPC requires suit to be instituted where the defendant carries on business (i.e., principal office).
Relied on Angile Insulations v. Davy Ashmore India Ltd., 1995 (4) SCC 153, to submit that parties have the right to determine jurisdiction and where jurisdiction is unambiguously determined by agreement the parties cannot resile from that explicit term.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Nanak Chand v. T.T. Elec. Supply Co., AIR 1975 Mad 103	Held that irregular exercise of jurisdiction can be waived; leave under Letters Patent may cure jurisdictional irregularity.	The plaintiff relied on this case to argue that the leave granted under Clause 12 cured jurisdictional defect. The Court noted the principle but declined to accept it as decisive where parties have unambiguously agreed upon a particular forum.
M/s. Sponge Iron India Ltd. v. A.S. Corpn. Ltd., AIR 1989 A.P. 206	Suggested that ouster or exclusion of jurisdiction should be expressly and unambiguously provided in the agreement (using words like "only" or "alone"); absence of such words indicates concurrent jurisdiction.	The appellant relied on this authority to contend that absence of exclusionary words meant the Court's jurisdiction was not ousted. The Court, however, did not adopt this view as absolute and held that a clear consensus to confine jurisdiction can be effective even without the word "only".
A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, 1989 (2) SCC 163	Held that parties do not oust jurisdiction of all courts unless clearly intended; but where clause is clear, unambiguous and specific, accepted contract notions bind parties and other courts should avoid exercising jurisdiction; an intention to exclude others may be inferred.	The Court relied on this decision to emphasize that a clear, unambiguous clause can justify inference of exclusive jurisdiction even without the precise words "only" or "alone", and used this ratio to reject the appellant's contention.
Angile Insulations v. Davy Ashmore India Ltd., 1995 (4) SCC 153	Affirms that parties have the right to determine the jurisdiction of the court to try disputes and that an unambiguous agreement vesting jurisdiction in a particular court is valid and binding.	The Court applied this principle to conclude that where the parties had clearly and unambiguously agreed that disputes would be tried at Vadodara/Baroda, that agreement is valid and the Court should respect it; it supported the Single Judge's revocation of leave.

Court's Reasoning and Analysis

The Court began by extracting and comparing the jurisdiction clauses in the two agreements relied upon by the plaintiff:

Clause (xvi) of the 1.10.1985 agreement: "In the event of any dispute in respect of this agreement our decision will be final and binding and jurisdiction will be at Vadodara/Gujarat."
Clause (22) of the 1.4.1993 agreement: "In the event of any dispute in respect of this agreement our decision will be final and binding and jurisdiction will be at Baroda, Gujarat."

The Court noted the settled principle that jurisdictional issues turn on the facts and circumstances of each case and acknowledged the general proposition that, where part of the cause of action arises within the jurisdiction of more than one competent court, parties may agree to vest jurisdiction in one of those courts.

The Court reviewed the authorities cited by the parties. It observed that Nanak Chand recognized waiver of irregular exercise of jurisdiction but declined to treat that principle as overriding where the parties had unambiguously agreed on a particular forum. The Court considered M/s. Sponge Iron and the contention that exclusion must be expressed by specific words ("only", "alone"), but refused to accept that formula as absolute.

The Court relied heavily on the reasoning in A.B.C. Laminart to hold that although omission of exclusionary words may often indicate no intention to exclude other courts, where the clause is clear, unambiguous and specific, contract principles will bind the parties and an intention to exclude other courts may be inferred. The Court also applied the principle from Angile Insulations that agreements vesting jurisdiction in one court are valid when unambiguous.

Applying these principles to the present clauses, the Court found that the parties had "unambiguously, clearly and explicitly arrived at a consensus" that any dispute under the respective agreements would be tried before the specified courts (Vadodara or Baroda). Given that finding, the Court held that the learned Single Judge correctly revoked the leave previously granted and that the plaintiff could not rely on Section 20 CPC or Clause 12 of the Letters Patent to litigate in this Court.

The Court further noted that other submissions on merits were irrelevant to the jurisdictional question and therefore did not influence its conclusion.

Holding and Implications

Holding:

APPEAL DISMISSED.

The Court upheld the order of the Single Judge dated 29.3.2001 (Application No. 3713 of 1998), which revoked the leave granted on 2.2.1998 in Application No. 304 of 1998 permitting the plaintiff to file C.S. No. 87 of 1998 in this Court.

Implications:

Direct effect on the parties: The plaintiff/appellant is not permitted to proceed with the suit in this Court under the leave previously granted; the jurisdiction clauses in the agreements (Vadodara/Baroda) govern the forum for disputes under those agreements.
Procedural outcome: The appeal fails and is dismissed; there is no order as to costs; connected C.M.P. No. 1660 of 2001 is also dismissed.
Broader legal implication: The Court applied existing authorities (including A.B.C. Laminart and Angile Insulations) to hold that an unambiguous jurisdiction clause can be effective to confine forum even without express exclusionary words. The opinion does not state that it sets a new legal precedent beyond applying and reconciling existing authorities.

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M/S. Consolidated Agencies A Partnership Firm Rep. By Its Partner A.L Lakshmanan v. M/S. Gujarat Carbon & Industries Ltd., Office Town R.C Dutt Road, Baroda-390 005 And Another S

P.D Dinakaran, J.

1. The appeal is directed against the order dated 29.3.2001 made in Application No. 3713 of 1998 in C.S No. 87 of 1998 revoking the leave granted under Clause 12 of the Letters Patent to the plaintiff/appellant herein in Application No. 304 of 1998 on 2.2.1998 to file the suit in C.S No. 87 of 1998.

2. For the purpose of convenience, the parties are arrayed as per their rank in the suit.

3.1 The plaintiff/appellant herein filed C.S No. 87 of 1998 to direct the defendants/respondents herein to pay a sum of Rs. 12,43,657.30 and for a declaration that the plaintiff has no dues payable as against the defendants, based on the Consignment Stockist agreement dated 1.10.1985

3.2 According to the plaintiff, they are entitled for the suit amount towards commission, discount, freight charges, etc., based on the consignment stockist agreement dated 1.10.1985, entered into between the plaintiff and the first defendant in the suit. Even though the said agreement was said to have been forwarded from the office of the first defendant from Vadodara, the plaintiff accepted it only at Madras. Since the office of the first defendant is located outside the jurisdiction of this Court, the plaintiff preferred the above application No. 304 of 1998, invoking Clause 12 of the Letters Patent and obtained leave of this Court by order dated 2.2.1998 to sue the defendants in C.S No. 87 of 1998.

4.1 The first defendant/first respondent herein therefore filed Application No. 3713 of 1998 to revoke the leave granted on 2.2.1998 in Application No. 304 of 1998 to file the above suit, alleging that, apart from the alleged agreement dated 1.10.1985, the plaintiff/appellant herein was appointed as a stockist by the first defendant/first respondent herein, by another agreement dated 1.4.1993, which is suppressed by the plaintiff/appellant herein. The first defendant/first respondent herein, however, denied any liability to the plaintiff/appellant herein setting out the details of the transactions between them.

4.2 Inter alia, the first defendant/first respondent herein, referring to Clause 22 of the agreement dated 1.4.1993 that any dispute between the parties to the said agreement would be subject to the jurisdiction of Baroda, Gujarat, contended that this Court has no competent jurisdiction to try the above suit.

4.3 That apart, the first defendant/first respondent herein contended that even as per Section 20 of the Code of Civil Procedure, the plaintiff/appellant herein shall institute a suit only in a Court within whose local limits, the first defendant/first respondent herein actually and voluntarily resides and carries on business, i.e, where its principal office is located, and hence preferred Application No. 3713 of 1998 to revoke the leave granted on 2.2.1998 in Application No. 304 of 1998.

5. However, the plaintiff/appellant herein denied the dispute and the existence of agreement dated 1.4.1993

6. The learned Single Judge, upon the above rival contentions, by order dated 29.3.2001, taking note of the fact that the xerox copy of the agreement dated 1.4.1993 contains the signature of the plaintiff/appellant herein and considering Clause 22 of the agreement dated 1.4.1993, held that there is no ambiguity in the said clause 22 of the agreement, which determines the jurisdiction of the Court to decide the dispute between the parties to the said agreement, even though there is no phrase which confers “exclusive” or “only” jurisdiction at Baroda Court, and therefore, revoked the leave granted on 2.2.1998 in Application No. 304 of 1998. Hence, the above appeal.

7.1 Mr. T.K Seshadri, learned counsel for the plaintiff/appellant herein, placing reliance on the decision of a Division Bench of this Court in Nanak Chand v. T.T Elec. Supply Co., AIR 1975 Mad 103, contended that it cannot be said that this Court lacks jurisdiction to try the case; that the leave granted by this Court by order dated 2.2.1998 in Application No. 304 of 1998, exercising the power under Clause 12 of the Letters Patent, curifies the jurisdictional irregularity said to have been caused either by Clause 16 of the agreement dated 1.10.1985 or by Clause 22 of the agreement dated 1.4.1993; where there are two or more competent Courts which can entertain a suit, the parties to the concerned transaction can contract to vest jurisdiction in one of such Courts to try the dispute; in spite of any agreement in the clause to that effect, in as much as the objection based on such irregular exercise of jurisdiction is a matter in which the parties can waive; and in any event, the restriction as to the jurisdiction agreed between the parties can be waived by grant of leave by this Court, exercising the powers conferred under Clause 12 of the Letters Patent.

7.2 Placing reliance on the decision in M/s. Sponge Iron India Ltd., v. A.S Corpn. Ltd., Bangalore, AIR 1989 A.P 206, the learned counsel for the plaintiff/appellant herein contends that ouster or exclusion of jurisdiction of Court having concurrent jurisdiction, should be expressly, unambiguously and specifically available in the agreement itself, by exercising the words “only” or “alone”; in the absence of any such expressed exclusion or ouster, the courts at both places have jurisdiction to try the dispute arising between the parties, as otherwise, it is to be presumed that there is no consensus or meeting of minds of the parties to the contract with regard to such ouster or exclusion of jurisdiction of the Court having concurrent jurisdiction.

7.3 Relying on the decision of the Apex Court in A.B.C Laminart Pvt. Ltd., v. A.P Agencies, 1989 (2) SCC 163, Mr. T.K Seshadri, learned counsel for the plaintiff/appellant herein, contended that Clause 22 of the agreement dated 1.4.1993 entered into between the plaintiff and the first defendant only specifies one of the two courts having jurisdiction, without specifically excluding the jurisdiction of the other Court, and therefore contends that both the Courts have jurisdiction.

8.1 Per contra, Mr. R. Krishnaswamy, learned senior counsel for the first defendant/first respondent herein invited our attention to the averments in paragraphs 11 and 12 of the plaint, wherein the plaintiff had stated that the second defendant was assigned the book of debts of the first defendant without informing the plaintiff and took over the alleged liability of the first defendant; as there is no cause of action except the above plea alleged against the first defendant, it is contended that the suit as framed against the first defendant/first respondent herein in without any cause of action and the same is frivolous.

8.2 In any event, Mr. R. Krishnaswamy, learned senior counsel for the first defendant/first respondent, placing reliance on the decision in Angile Insulations v. Davy Ashmore India Ltd., 1995 (4) SCC 153, contends that parties to the contract have the right to determine the jurisdiction of the Court to try the dispute between them, and once the jurisdiction is thus determined unambiguously, they are not entitled to go back from such explicit term with respect to the jurisdiction of the Courts.

9. With due consideration to the above rival contentions, we are obliged to decide whether the plaintiff is entitled to seek leave of this Court invoking Clause 12 of the Letters Patent to file the above C.S No. 87 of 1998, based on either of the agreements dated 1.10.1985 or 1.4.1993, which provides that any such dispute between the parties to the said agreement shall be decided only by the Court within the jurisdiction of Vadodara, Gujarat or Baroda, Gujarat, respectively.

10.1 In this regard, we are obliged to extract Clause (xvi) of the agreement dated 1.10.1985 as well as Clause 22 of the agreement dated 1.4.1993:

Clause (xvi) of the agreement dated 1.10.1985:

“In the event of any dispute in respect of this agreement our decision will be final and binding and jurisdiction will be at Vadodara/Gujarat.”

Clause (22) of the agreement dated 1.4.1993:

“In the event of any dispute in respect of this agreement our decision will be final and binding and jurisdiction will be at Baroda, Gujarat.”

Therefore, whether the plaintiff relies either on agreement dated 1.10.1985 or 1.4.1993, both the agreements provide that, in the event of any dispute in respect of the said agreements, the same shall be decided by the Courts having jurisdiction either at Vadodara or Baroda, Gujarat.

10.2 It is well settled in law that the issue regarding jurisdiction of the Courts has to be decided upon the facts and circumstances of each case. Equally, it is well settled that where there are two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen within the jurisdiction of each of these Courts, parties to the concerned transaction can contract to vest jurisdiction in one of the Courts to try disputes which may arise as between themselves. Therefore, even though the irregular exercise of jurisdiction is a matter in which the parties can waive as held in Nanak Chand Case, AIR 1975 Mad 103, in our considered opinion, if the parties to the contract agree with a consensus on a particular term of the agreement that the dispute shall be decided only by a particular Court having jurisdiction, the ouster or exclusion of the other Courts cannot be lightly disregarded merely because of the absence of the words “only” or “alone” in the said clause. We are therefore unable to subscribe ourselves to the view that the parties to the agreement can waive the irregular exercise of the jurisdiction as held in Nanak Chand Case, AIR 1975 Mad 103, or with the view expressed in M/s. Sponge Iron India Ltd. case, AIR 1989 A.P 206, that the ouster of the jurisdiction of other Courts cannot be implied in the absence of the words “only” or “alone” in the clause of the agreement between the parties which deals with the jurisdiction of this Court.

10.3 It is true the Apex Court in A.B.C Laminart Pvt. Ltd. Case, 1989 (2) SCC 163, held that 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, and that if under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them, it cannot be said that there is total ouster of jurisdiction. However, the Apex Court in A.B.C Laminart Pvt. Ltd. case, 1989 (2) SCC 163, itself, after discussing the issue in detail has laid down that when the clause is clear, unambiguous and specific, accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction, and that when certain jurisdiction is specified in a contract, an intention to exclude all others from its operation may in such cases be inferred. Applying the said ratio laid down in A.B.C Laminart Pvt. Ltd. case, 1989 (2) SCC 163, we are unable to agree with the contention of the plaintiff/appellant herein that merely because the clause relating to the jurisdiction of the Courts to decide the dispute arising under either of the contract dated 1.10.1985 or 1.4.1993 does not contain the exclusionary words like “exclusive”, “alone”, “only” and the like, the jurisdiction of this Court is not excluded or ousted. Our construction in this regard is supported by the decision of the Apex Court in Angile Insulations Case, 1995 (4) SCC 153, as relied upon by the learned counsel for the first defendant/first respondent herein, wherein, the Apex Court, after referring the A.B.C Laminart Pvt. Ltd. case, 1989 (2) SCC 163, held that, 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 therewith, 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.

10.4 In the instant case, even if the petitioner relies upon either of the agreements dated 1.10.1985 or 1.4.1993, it is beyond doubt that parties to the said agreements have unambiguously, clearly and explicitly arrived at a consensus that any dispute under the respective agreements shall be tried only before the Court having a definite jurisdiction mentioned in the said agreements, namely at Vadodara or Baroda, respectively.

10.5 If that be so, finding that the other submissions on merits have no relevance to the issue raised for our consideration, we are satisfied that the learned Single Judge, rightly, by order dated 29.3.2001 in Application No. 3713 of 1998, revoked the leave granted on 2.2.1998 in Application No. 304 of 1998 to file the above suit, and in which event, the plaintiff/appellant herein shall not have recourse either under Section 20 of the Code of Civil Procedure or under Clause 12 of the Letters Patent.

Hence, appeal fails and therefore dismissed. However, there is no order as to costs. Consequently, connected C.M.P No. 1660 of 2001 is also dismissed.

M/S. Consolidated Ag... v. M/S. Gujarat Carbon ...