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  • Section 20(c) of the CPC
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Citation Codes
Equivalent Citations
citation codes
Case Number
Attorney(S)
Judges
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  • Section 20(c) of the CPC
Smart Summary

Factual and Procedural Background

The plaintiff (Opposite Party No. 1) filed a suit claiming damages for loss of certain goods against two defendants: defendant No. 1, the supplier of the goods, and defendant No. 2, the Union of India representing two Railways involved in the carriage of the goods. There was a contract between the plaintiff and defendant No. 1 specifying that all suits arising out of the contract were to be instituted in the Court at Salem. The plaintiff initially instituted the suit at the Howrah Court, which the learned trial Judge found improper and directed the plaint to be returned for presentation to the Salem Court. The lower appellate Court reversed this decision, holding that since defendant No. 2 was not a party to the contract, the restriction to Salem Court did not bind it, and thus the suit could be maintained at Howrah. The present Rule challenges the appellate Court’s order.

Legal Issues Presented

  1. Whether a contractual forum selection clause restricting suit institution to the Salem Court binds all parties, including a non-contracting party (defendant No. 2) involved in the suit.
  2. Whether the plaint instituted at Howrah Court should be returned for presentation to the Salem Court in light of the contract between plaintiff and defendant No. 1.
  3. The legality and correctness of the lower appellate Court’s reversal of the trial Judge’s order directing return of the plaint.

Arguments of the Parties

Appellant's Arguments

  • The plaintiff had validly waived the right to institute the suit anywhere except at the Salem Court by virtue of the contract with defendant No. 1.
  • Both the Howrah and Salem Courts had territorial jurisdiction, but the contractual choice of forum limited the plaintiff’s option to Salem alone.
  • It was not open to the plaintiff to institute the suit at Howrah, nor was it just to allow the suit to proceed there against defendant No. 2, who would also be properly sued at Salem.

Respondent's Arguments

  • The lower appellate Court held that defendant No. 2, not being a party to the contract, was not bound by the forum selection clause.
  • This reasoning justified maintaining the suit at Howrah Court despite the contractual provision between plaintiff and defendant No. 1.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The Court recognized that both the Salem and Howrah Courts had concurrent territorial jurisdiction under Section 20(c) of the Civil Procedure Code, as the cause of action arose partly in both places. However, the plaintiff and defendant No. 1 had entered into a contract expressly limiting the venue for suits arising out of their contract to the Salem Court. The Court held that this contractual forum selection clause effectively waived the plaintiff’s right to sue elsewhere, including the Howrah Court. Although defendant No. 2 was not a party to the contract, the plaintiff’s waiver of forum choice precluded it from instituting the suit at Howrah against any party. The Court found the lower appellate Court’s reversal of the trial Judge’s order to be illegal and materially irregular, as it failed to give effect to the contractual limitation on forum choice. Accordingly, the Court restored the trial Judge’s order directing the plaint to be returned for presentation to the Salem Court.

Holding and Implications

The Rule is made absolute. The impugned order of the learned District Judge (lower appellate Court) is set aside, and the order of the learned Subordinate Judge (trial Judge) directing the plaint to be returned for presentation to the Salem Court is restored.

The direct effect of this decision is that the suit must be instituted only in the Salem Court as per the contractual forum selection clause. No new precedent was established beyond enforcing the contractual waiver of alternative forums in cases of concurrent jurisdiction.

    Sri Rajendra Mills Ltd. v. Messrs H.V.M Hazi Hasan Dada And Another Opposite Parties.

    P.N Mookerjee, A.C.J:— This Rule was obtained against an order of the lower appellate Court, holding that the institution or the instant suit at the Howrah Court was proper and the learned trial Judge was in error in directing return of the plaint for its presentation to the Court at Salem.

    2. The suit is one wherein the plaintiff-Opposite Party No. 1 claims damages for loss of certain goods against the two defendants—defendant No. 1, the party who supplied the goods and defendant No. 2, the Union of India, representing the two Railways over which the goods in question were carried — there being ultimately mis-delivery in the instant case. There is a contract between the plaintiff and defendant No. 1, under which the parties agreed that all suits, arising on or out of the contract, would be instituted in the Court at Salem. It is true that the instant suit could have been instituted either at Salem or at Howrah under Section 20(c) of the CPC as the cause of action, admittedly, arose in part in both the places.

    3. It was, therefore, a case, where two Courts had concurrent jurisdiction and, in such a case, it was open to the parties to make a choice, restricting the Court, in which the suit under or upon the contract could be instituted. In other words, both the Courts having territorial jurisdiction, the parties by their agreement, waived their right to institute any action, as aforesaid, except at Salem.

    4. The learned trial Judge took the view that, in view of the said contract, the plaintiff could not be allowed to bring the suit at Howrah and, accordingly, the Salem Court could be the only proper Court for entertaining the suit and the plaint should be returned for proper presentation to that Court. The learned Judge in the Court of appeal below has held that, although there was a contract, as aforesaid, between the plaintiff and defendant No. 1, defendant No. 2, not being a party to the same, was not bound by the said contract, and, therefore, the same should not be enforced so as to enable the Court to direct return of the plaint for presentation to the Court at Salem. It appears, however, as we have already stated, that the instant suit could have been instituted either at Howrah or at Salem and the plaintiff, by reason of the above contract, had validly waived its right to institute the suit except at Salem. In such circumstances, it is not open to the plaintiff to object to the order for return of the plaint for presentation to the Court at Salem. It is not also open to defendant No. 2 to object to the same course as the choice of forum in case of alternative forums, lies with the plaintiff and the plaintiff having debarred or precluded itself from going to any other Court except the Court at Salem, which would be a proper Court as against defendant No. 2 also, it would not be just to allow the plaintiff, at the instance or any other party or under cover of its objection, to institute the suit except in the Court at Salem. We would, therefore, hold that, in reversing the decision of the learned trial Judge, the lower appellate Court has acted illegally and with material irregularity in the exercise of its jurisdiction and its decision should be reversed and that of the learned trial Judge restored.

    5. We, accordingly, make this Rule absolute, set aside the impugned order of the learned District Judge and restore that of the learned Subordinate Judge.

    6. There will be no order for costs in this Rule.

    7. Let the records go down as quickly as possible.

    Amiya Kumar Mookerjee, J.:— I agree.

    8. Rule made absolute.

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    Comments

    Sri Rajendra Mills Ltd. v. Messrs H.V.M Hazi Hasan Dada And Another Opposite Parties.
    (Jul 7, 1969)