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Andhra Pradesh State Trading Corporation v. Auro Logistic Limited & Anr.
Structured Summary of the Court's Opinion
Factual and Procedural Background
The applicant/defendant moved for revocation of leave previously granted by this Court on 17-6-2005 in application No. 2380 of 2005 related to C.S. No. 544 of 2005. The underlying suit was filed by the plaintiff/respondent for recovery of Rs. 15,26,236/-, a declaration in respect of a shipment, and consequential permanent injunction. The plaint alleged that a Memorandum of Understanding (MOU) was entered into between the parties on 29-9-2003; that the plaintiff procured and sold iron ores (81 tonnes) to Fremery Resources Ltd. under a contract of sale and shipment at FOB Chennai Port; that a letter of credit was opened; and that documents were negotiated through the 1st defendant's bankers. At the initiation of proceedings this Court had granted leave on the causes of action as alleged in the plaint. The defendant sought revocation of that leave on the ground that Clause 8 of the MOU ousted the jurisdiction of this Court and required disputes to be litigated in the Civil Courts at Hyderabad.
Legal Issues Presented
- Whether the leave previously granted by this Court should be revoked on the ground that Clause 8 of the Memorandum of Understanding ousts the jurisdiction of the Madras Court by requiring disputes to be settled in the Civil Courts of Hyderabad.
- How Clause 8 of the MOU should be construed — whether the absence of explicit words such as "only", "alone" or "exclusively" prevents an inference that jurisdiction other than Hyderabad is excluded.
Arguments of the Parties
Applicant/Defendant's Arguments
- The MOU contains a clause (Clause 8) that specifies that disputes "shall be settled in the Civil Courts of Hyderabad jurisdiction where the contract ... were concluded".
- Because the parties agreed to Hyderabad jurisdiction, the Madras Court's jurisdiction is ousted and the leave previously granted must be revoked.
- Relied on the Apex Court decision reported as (2002) 9 SCC 613 : AIR 2002 SC 2402, Shriram City Union Finance Corporation Ltd. v. Rama Mishra, to support the contention that a clause stating where suits "shall be filed" can be construed as conferring exclusive jurisdiction on the specified forum.
Plaintiff/Respondent's Arguments
- A major part of the cause of action arose within the jurisdiction of the Madras Court, as pleaded in the plaint, and that would ordinarily suffice for leave to be granted.
- Although the MOU contains a clause regarding Hyderabad courts, the clause does not use explicit exclusivity words such as "exclusively", "alone" or "only", and therefore it does not amount to an ouster of jurisdiction.
- Relied on several authorities, including (1985) 2 SCC 54 : AIR 1985 SC 577 (Abdulla Bin Ali v. Galappa), (1989) 2 SCC 163 : AIR 1989 SC 1239 (A.B.C Laminart Pvt. Ltd. v. A.P Agencies, Salem), AIR 1992 Mad 332 (Neyveli Lignite Corporation v. Vinay Engineering) and 1998 (ii) CTC 492 (Premium Industries India Ltd. v. Quality Fabricators), to support the proposition that the absence of explicit words of exclusivity may preclude construing a forum-selection clause as ousting other courts' jurisdiction.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| (2002) 9 SCC 613 : AIR 2002 SC 2402 — Shriram City Union Finance Corporation Ltd. v. Rama Mishra | The opinion reproduced paragraph stating that an agreement providing that suits "shall be filed" in a particular court was interpreted by the Supreme Court to mean suits are to be filed "only" in that court (i.e., construed as conferring exclusive jurisdiction). | The Court relied on this decision to support the proposition that a clause specifying a forum may be construed as exclusive even where the word "only" is absent; it used this reasoning to infer that Clause 8 of the MOU pointed to Hyderabad as the exclusive forum. |
| (1989) 2 SCC 163 : AIR 1989 SC 1239 — A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem | The decision explains that when a clear, unambiguous ouster clause occurs the parties' agreement should be respected; further, that even without explicit words like "only" or "alone" the maxim expressio unius est exclusio alterius may apply in appropriate cases and an intention to exclude other jurisdictions can be inferred. | The Court relied on the reasoning in this case (paragraphs cited) to hold that exclusivity can be inferred and that Clause 8's specific mention of Hyderabad indicated an intention to exclude other jurisdictions. |
| (1985) 2 SCC 54 : AIR 1985 SC 577 — Abdulla Bin Ali v. Galappa | The opinion records that this authority was cited by the plaintiff to support the proposition that absence of explicit exclusive words may mean there is no ouster of other courts' jurisdiction. | The Court noted the citation but declined to accept the plaintiff's reliance on this line of authority as determinative; the Court preferred the interpretive approach taken in Shriram and A.B.C. Laminart in the present facts. |
| AIR 1992 Mad 332 — Neyveli Lignite Corporation v. Vinay Engineering | This case was cited by the plaintiff; the opinion does not set out a specific rule or paragraph from this decision. | The opinion records that the plaintiff relied on this decision, but it does not indicate that the Court applied any particular principle from it in reaching its decision. |
| 1998 (ii) CTC 492 — Premium Industries India Ltd. v. Quality Fabricators | This decision was cited by the plaintiff; the opinion does not state a specific rule or passage relied upon from this case. | The opinion notes the citation by the plaintiff; the Court did not adopt any specific principle from this authority in preference to the reasoning drawn from Shriram and A.B.C. Laminart. |
Court's Reasoning and Analysis
The Court examined Clause 8 of the Memorandum of Understanding, which provides that disputes "shall be settled in the Civil Courts of Hyderabad Jurisdiction where the contract in respect of these presents were concluded and where this agreement was signed/accepted by APSTC." The Court noted that both parties urged different interpretations of this clause.
The Court considered the parties' authorities. It observed that in the Shriram decision the Supreme Court construed language that did not explicitly use the word "only" but nonetheless interpreted "shall be filed" as meaning "only to be filed" in the specified forum. The Court reproduced the relevant paragraphs from Shriram to show that the Supreme Court had given an exclusive meaning to comparable language.
The Court also examined A.B.C. Laminart, where the Supreme Court explained that when an ouster clause is clear and unambiguous it binds the parties, and that even without explicit words of exclusivity the maxim expressio unius est exclusio alterius may apply in appropriate cases — that is, mentioning one jurisdiction may imply exclusion of others depending on facts and context.
Applying these principles to Clause 8, the Court concluded that the clause's specific designation of Hyderabad as the forum manifested an intention to exclude other jurisdictions. The Court rejected the plaintiff's argument that the lack of words like "only", "alone" or "exclusively" prevented construing the clause as exclusive. Instead, the Court held that, on the facts and in light of the cited authorities, exclusivity could be inferred and therefore the leave previously granted by this Court had to be revoked.
The Court's analysis proceeded in the following steps:
- Established that part of the cause of action arose in Madras and acknowledged the usual rule that a fractional cause of action within a forum suffices to grant leave.
- Identified Clause 8 of the MOU and reproduced it for close textual analysis.
- Turned to binding authority (Shriram) which had construed comparable language as conferring exclusive jurisdiction, even without the word "only".
- Considered A.B.C. Laminart, which permits inference of exclusivity from the contract wording in appropriate cases and affirms that clear ouster clauses bind parties.
- Concluded that Clause 8, by specifically referring to Hyderabad, evidenced an intention to exclude other courts' jurisdiction and therefore operated to oust Madras jurisdiction for the disputes covered.
- On that basis, the Court held that the leave previously granted should be revoked and proceeded to effectuate the consequences (revocation, vacating injunction, dismissal of the listed application).
Holding and Implications
Holding: The Court's final decision was to revoke the leave previously granted. In the terms used in the judgment, the Court held as follows:
- The leave previously granted by this Court is revoked.
- Application No. 4830 of 2005 is allowed.
- The interim injunction previously granted by this Court is vacated.
- O.A. No. 641 of 2005 is dismissed.
Implications: The direct effects on the parties are that the suit will not proceed before this Court (Madras) because Clause 8 was construed to direct disputes to the Civil Courts at Hyderabad and the interim relief granted by this Court has been vacated. The opinion does not announce or claim to establish a new legal rule beyond applying existing Supreme Court authorities; the decision applies those precedents to the facts of this case to determine that the forum-selection clause in the MOU operated to exclude Madras jurisdiction.
1. Seeking revocation of the leave granted by this Court on 17-6-2005 in application No. 2380 of 2005 in C.S No. 544 of 2005, this application has been brought forth by the applicant/defendant.
2. It is a suit filed by the plaintiff/respondent for recovery of a sum of Rs. 15,26,236/- along with declaration in respect of a shipment and for consequential permanent injunction. The plaint proceeds on the footing that the causes of action for the suit arise within the jurisdiction of this Court where the Memorandum of Understanding was entered into between the plaintiff and the defendant on 29-9-2003; that the plaintiff and the defendant acted in terms of the memorandum of understanding; that 81 tones of iron ores were procured by the plaintiff from the 2nd defendant; that the plaintiff has entered into contract with Fremery for export of iron ore fines in pursuance of the agreement; that a letter of credit was opened by Fremery with Standard Bank, London; that iron ores were sold and delivered at FOB Chennai Port to Fremery Resources Limited; that shipment was loaded from the Port of Madras; and that all the documents as contemplated under the letter of credit were submitted and negotiated at the instance of the 1st defendant through the 1st defendants bankers and all others.
3. The Court at the time of initiation of the proceedings granted leave on the said causes of action as alleged in the plaint.
4. On appearance, the defendant has brought forth this instant application, seeding revocation of the leave granted by this Court. What are all contended by the learned counsel for the applicant/defendant seeking revocation of the leave is that in the instant case, the causes of action though showing to have arisen in the city of Madras on the basis of which the suit has been brought forth, there is an agreement between the parties, as could be seen from the Memorandum of Understanding, wherein they have specifically spelt that any disputes between the parties should be settled by invoking the jurisdiction of the Civil Court at Hyderabad where the contract in respect of the parties were concluded and where the Memorandum of Understanding was also entered into between the parties. Hence, once they have agreed so, there is no question of filing the case before the Court of Madras. In the instant case, there is ouster of jurisdiction and hence, leave already granted has got to be revoked. In support of his contention learned counsel for the defendant relied on the decision of the Apex Court reported in (2002) 9 SCC 613 : (AIR 2002 SC 2402), (Shriram City Union Finance Corporation Ltd. v. Rama Mishra.).
5. Contrary to the above contention, learned Senior Counsel for the plaintiff/respondent would submit that major part of the cause of action arises within the jurisdiction of this Court as set out in the plaint. Learned Senior Counsel would further submit that it is true that there was a Memorandum of Understanding entered into between the parties as stated by the defendant's side; but, a reading of the said Clause would reveal that there is no ouster of jurisdiction. So long as there is no ouster of jurisdiction by using the words ‘exclusively’, ‘alone’, and ‘only’, this Court has got jurisdiction and thus, it has been rightly done by this Court by granting leave and hence, there is no reason of legal ground to revoke the leave originally granted by this Court. In support of his contention, learned Senior Counsel relied on the decisions reported in (1985) 2 SCC 54 : AIR 1985 SC 577, (Abdulla Bin Ali v. Galappa); (1989) 2 SCC 163 : AIR 1989 SC 1239, (A.B.C Laminart Pvt. Ltd. v. A.P Agencies, Salem); AIR 1992 Mad 332, (Neyveli Lignite Corporation v. Vinay Engineering); 1998 (ii) CTC 492, (Premium Industries India Ltd. v. Quality Fabricators).
6. After careful consideration of the rival submissions made, this Court is of the considered opinion that the leave already granted by this Court has got to be necessarily revoked. It is not in dispute that part of cause of action as set out in the plaint has taken place in the city of Madras. It is needless to say that ordinarily even if a fractional cause of action arose within the jurisdiction of the Court, it would be suffice to grant leave and take the suit to be entertained by the Court. In the instant case, the impediment is felt by introduction of a Clause in the memorandum of understanding entered into between the parties. It is apt and appropriate to reproduce Clause 8 of the Memorandum of Understanding which reads as follows:
“All disputes or differences whatsoever arising between the parties out of or relating to the construction, meaning and operation or effect of this contract or the breach thereof shall be preferably be solved in amicable manner between the parties otherwise the matter shall be settled in the Civil Courts of Hyderabad Jurisdiction where the contract in respect of these presents were concluded and where this agreement was signed/accepted by APSTC.”
7. A reading of the said Clause would reveal that when a dispute arises between the parties, it shall be settled in the Civil Court of Hyderabad jurisdiction. At this juncture, both the sides made an attempt to interpret the said Clause in one way or the other. For interpreting the said Clause, both the learned counsel, in support of their contentions, relied on the decisions referred to above respectively. It is true that the words ‘only’, ‘exclusively’ and ‘alone’ are not employed there. At this juncture, it has become necessary to point out the decision of the Apex Court reported in (2002) 9 SCC 613 : (AIR 2002 SC 2402), (Shriram City Union Finance Corporation Ltd. v. Rama Mishra.). In that case also there was a clause as to the question of jurisdiction as found in paragraph 7 of the decision which reads as follows:
“Subject to the provisions of Clause 32 above, it is expressly agreed by and between the parties herein above that any suit, application and/or any other legal proceedings with regard to any matter, claims, differences and for disputes arising out of this agreement shall be filed and referred to the Courts in Calcutta for the purpose of jurisdiction.”
8. Paragraph 8 of the said decision reads as follows:
“Clause 34 leaves no room for doubt that the parties expressly agreed between themselves that any suit, application or any other legal proceedings with regard to any matter, claim, differences and dispute arising out of this claim shall only be filed in the Courts in Calcutta.”
9. From the above Clause 34, it is very well evident that it does not contain the word “only” but their Lordships of the Supreme Court have interpreted that ‘shall be filed’ would mean ‘only to be filed’.
10. Learned counsel for the plaintiff took this Court to the decision of the Apex Court reported in (1989) 2 SCC 163 : AIR 1989 SC 1239, (A.B.C Laminart Pvt. Ltd. v. A.P Agencies, Salem) and relied on paragraph 22 of the said decision which reads as follows:
“Coming to Clause 11 we already found that this clause was included in the general terms and conditions of sale and the order of confirmation No. 68/59, dated 2-10-1974 with the general terms and conditions was sent from Udyognagar, Mohamadabad, Gujarat to the respondent's address at 12 Suramangalam Road, Salem, Tamil Nadu. The statement made in the Special Leave Petition that Udyognagar, Mohamadabad, Gujarat is within the jurisdiction of the Civil Court of Kaira has not been controverted. We have already seen that making of the contract was a part of the cause of action and a suit on the contract therefore, could be filed at the place where it was made. Thus, Kaira Court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11, it would not absolutely oust the jurisdiction of the Court and therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the cause ‘any dispute arising out of this sale shall be subject to Kaira jurisdiction’ ex facie we do not find exclusive words like ‘exclusive’, alone, ‘only’ and the like. Can the maxim ‘expressio unius est exclusio alterious’ be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdiction. Under the facts and circumstances of the case, we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded. We accordingly find no error or infirmity in the impugned judgment of the High Court.”
11. Learned counsel would submit that the words ‘alone’, ‘exclusive’ and ‘only’ and the like have not been employed and so long as, it is not employed, no question of ouster jurisdiction would arise. Likewise, in the instant case, nowhere the word ‘only’ is employed and it would be suffice to conclude that there is no ouster of jurisdiction.
12. The Court is unable to agree with the contention put forth by the learned counsel for the plaintiff for the reason that their Lordships in the earlier paragraph viz., Paragraph 21 of the decision reported in (1989) 2 SCC 163 : AIR 1989 SC 1239, (A.B.C Laminart Pvt. Ltd. v. A.P Agencies, Salem) have held as follows:
“From the foregoing decision it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. 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. As regards construction of the ouster clause when words like ‘alone’, ‘only’, exclusively and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim expressio unius est exclusio alterious — expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed.”
13. From this, it would be very clear that their Lordships have clearly expressed as regards construction of the ouster clause, when words like, ‘alone’ ‘only, ‘exclusively’ and the like have been used there may be no difficulty. Even without such words, the maxim ‘expressio unius est exclusio alterious’ — expression of one is the exclusion to another, may be applied in appropriate cases. What is an appropriate case shall depend on the facts of the case. In such case, mention of one thing may imply exclusion of another. When certain jurisdiction is specified in the contract, an intention to exclude all others from its operation may in such cases be inferred.
14. In the instant case, it remains to be stated that they have specifically agreed in the Memorandum of Understanding that all these matters must be settled before the Civil Court of Hyderabad. Thus, by the mentioning of certain jurisdiction specifically in the contract entered between the parties, an intention to exclude all others have got to be taken. It leaves no room for any doubt to this decision. What is now relied on by the plaintiff as could be seen above, is that the words like ‘alone’, ‘only’ and ‘exclusively’ and the like have not been used, but in view of the above decision the said contention cannot be countenanced.
15. Under such circumstances, the Court is of the opinion that the contention put forth by the learned counsel for the defendant has got to be agreed. Therefore, the leave granted by this Court has got to be revoked. Accordingly, the same is revoked. Application No. 4830 of 2005 is allowed. The interim injunction granted by this Court is vacated, and O.A No. 641 of 2005 is dismissed.
16. Application allowed.
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