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T. Motandas & Co. v. L. Hakumat Rai
Factual and Procedural Background
The plaintiffs instituted a suit for recovery of Rs. 225/-, comprising Rs. 200/- advanced for the purchase of ten boxes of beer from Messrs T. Motandas & Co., a firm with a head office at Bombay and a sub-office at Jodhpur, and Rs. 25/- based on a Credit Note No. 47 dated 31-12-1950. The plaintiffs alleged breach of contract by the defendants for failing to supply the goods in time and claimed the amount advanced. The defendants denied breach, asserted they had supplied the goods, denied issuing the credit note, and contended that the Jammu Courts lacked jurisdiction to try the suit as per the contract terms. The trial Court of Munsiff, 2nd class, Jammu, raised a preliminary issue on jurisdiction and held that the suit was triable by the Jammu Court. The defendants filed this revision application challenging that order.
Legal Issues Presented
- Whether the Courts at Jammu have jurisdiction to try the suit given the contractual clause selecting Bombay Courts for dispute resolution.
- Whether the parties can validly agree to exclude jurisdiction of one competent court in favour of another.
- Whether the claim relating to Rs. 25/- based on the Credit Note falls under the jurisdiction clause favoring Bombay Courts or is triable by Jammu Courts.
Arguments of the Parties
Petitioner's Arguments
- The plaintiffs placed the order with the firm at Bombay and signed the order form containing a clause agreeing to conditions printed on the reverse.
- Condition No. 5 on the reverse of the order form (Ex. P. 3) specifies that all disputes are to be settled in the Bombay Courts.
- The trial Court erred in holding that the Jammu Court had jurisdiction despite this clear contractual provision.
Respondent's Arguments
- The order was placed with the Jodhpur branch of the Bombay firm, not the head office at Bombay.
- Therefore, the Bombay Courts had no jurisdiction and the parties could not confer jurisdiction on Bombay Courts by special agreement.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Musaji Lukmanji v. Durga Das, AIR 1948 Lah 57 (FB) | Validity and enforceability of an agreement selecting one competent court out of two for dispute resolution under a contract, not void under Section 28. | The Court relied on this precedent to hold that parties can validly select a forum out of two competent courts, thus enforcing the Bombay Courts’ jurisdiction clause and excluding Jammu Courts for the Rs. 200/- claim. |
Court's Reasoning and Analysis
The Court examined the order form (Ex. P. 3) signed by the plaintiffs, which contained a clear clause that disputes arising out of the contract would be settled by the Bombay Courts. The Court rejected the respondent's argument that the order was placed with the Jodhpur branch rather than the Bombay head office, noting the plaintiffs' own averments treating both as one concern and that the order was placed with the Bombay head office. The Court recognized that both Jammu and Bombay Courts were competent to try the suit but emphasized the parties' contractual agreement selecting Bombay Courts as the exclusive forum for disputes concerning the Rs. 200/- contract. The Court applied the principle from Musaji Lukmanji v. Durga Das to uphold the validity of the forum selection clause. However, regarding the Rs. 25/- claim based on the Credit Note, no such forum selection agreement existed, and the Court accepted that the Jammu Court had jurisdiction over that part of the suit. Consequently, the Court partially allowed the defendants’ revision application, excluding the Jammu Court’s jurisdiction over the Rs. 200/- claim but affirming it for the Rs. 25/- claim.
Holding and Implications
The Court partly allowed the defendants’ revision application:
- The suit concerning Rs. 200/- arising from the contract evidenced by Ex. P. 3 is not triable by the Munsiff, Second Class, Jammu Court but falls within the jurisdiction of the Bombay Courts as per the contractual forum selection clause.
- The suit concerning Rs. 25/- based on the Credit Note is triable by the Jammu Court.
The parties were directed to bear their own costs in the revision application. No new precedent was established beyond the application of existing principles on forum selection clauses and jurisdiction.
Wazir, C.J:— This is defendant's revision application and arises out of a suit instituted by plaintiffs for the recovery of Rs. 225/-; Rs. 200/- as the amount advanced for the purchase of beer and Rs. 25/- on the basis of a Credit Note No. 47 dated 31-12-1950. The plaintiff's case was that they placed anorder with Messrs T. Motandas & Co., a firm having head office at Bombay and Sub-office at Jodhpur, for supply of ten boxes of beer. The order was placed with the firm at Bombay and Rs. 200/- were advanced to the firm. The defendants did not supply the goods in time and there was a breach of the contract on their part and hence the plaintiffs filed a suit for the recovery of the amount advanced. It was further alleged that Rs. 25/- were due from the defendants in connection with some previous transaction and a Credit Note was issued for the same by the defendants in favour of the plaintiffs. The defendants resisted the suit on the ground that there was no breach of the contract on their part. They had supplied the goods and they-were entitled to recover the balance price from the plaintiffs. The defendants denied having issued any credit note in favour of the plaintiffs. Lastly it was pleaded by the defendants that the Courts at Jammu had no jurisdiction to try the suit according to the terms of the contract entered into between the parties. The trial Court of Munsiff, 2nd class, Jammu raised a preliminary issue whether the suit was triable by the Jammu Courts or not. After considering the evidence led by the parties it came to the conclusion that the suit was triable by the Jammu Court. Against this order the defendants have filed this revision application.
2. On behalf of the petitioner it is argued that the plaintiffs placed an order with the firm at Bombay and signed the order form in which there is a clause “we agree to the conditions printed on reverse”. Condition No. 5 at the back of this document Ex. P. 3 is “all disputes to be settled in Bombay Courts.” It is argued that the parties had agreed that all disputes arising out of the contract will be settled by Courts in Bombay and not by Courts in Jammu. The trial Court was, therefore, wrong in holding that Jammu Court had jurisdiction to try the suit.
3. We have perused the document Ex. P. 3. There is a clear provision that the disputes arising out of the contract will be settled by Courts in Bombay and the plaintiffs having signed the order form agreed to abide by the terms which appear on the reverse of the document Ex. P. 3. The counsel for the respondent has argued that the order was placed with the Jodhpur branch of the Bombay firm and not with the head office at Bombay and, therefore, Bombay Courts had no jurisdiction to try the suit and the parties could not confer jurisdiction on Bombay Courts to try the suit by their special agreement. This contention appears to be without force.
4. From the averments in the plaint it appears that the plaintiffs placed an order with the head office at Bombay and they treated the Bombay head office and the Jodhpur branch as one and the same concern. In the statement made by the plaintiff in the trial Court he had mentioned that the order was placed with Messrs T. Motandass & Co at their head office at Bombay. In view of the averment made in the plaint and the statement of the plaintiff it is clear that Bombay Courts had jurisdiction to try the suit. The suit was triable either by Jammu Court or by a Bombay Court.
5. Now the question for consideration is whether the parties could by their agreement select a forum for filing a suit concerning any dispute which arose out of the contract. In — ‘Musaji Lukmanji v. Durga Das’, AIR 1948 Lah 57 (FB) (A) it has been held that an agreement between the parties to a contract to the effect that the suit concerning disputes arising between them on the basis of that contract should be instituted in one only out of two competent courts having territorial jurisdiction over the subject matter is valid and enforceable and is not void under S. 28. This is a clear authority for the proposition that the parties can select a forum out of two competent forums for filing a suit in respect of a dispute arising out of a contract. In this case the plaintiffs have agreed, according to the terms of Ex. P. 3, that the Bombay Courts will have jurisdiction to try a suit concerning any dispute which arose out of the contract, and the jurisdiction of Jammu Courts to try such a suit is excluded.
6. As regards the claim of the plaintiffs in respect of Rs. 25/- on the basis of the Credit Note there is no agreement between the parties that the suit in respect of this item will be triable by the Bombay Courts. The counsel for the applicants has frankly conceded that the Jammu Court has jurisdiction to try the suit for Rs. 25/-.
7. This application of the defendants applicants is accepted to this extent that the suit in respect of Rs. 200/- arising out of the contract evidenced by Ex. P. 3 is not triable by Munsiff, Second Class, Jammu whereas the suit in regard to Rs. 25/- based on the Credit Note is triable by that Court.
8. In the circumstances of the case the parties are left to bear their own costs in this Court.
D.S.P
9. Application partly allowed.
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