1989 (3) TMI 370 - SC - Indian Laws

Whether Clause 11 of the agreement having provided that any dispute arising out of this sale shall be subject to Kaira jurisdiction formed part of. the agreement? Held that - Coming to clause 11 as already found that this clause was included in the general terms and conditions of sale and the order or confirmation No. 68/59 dated 2.10.1974 with the general terms and conditions was sent from Udyognagar, Mohmadabad, Gujarat to the respondent s address at 12 Suramangalam Road Salem, Tamilnadu. 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. As seen that making of the contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus Kaira court would even otherwise have had 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 there at was expressly excluded. We accordingly find no error or infirmity in the impugned judgment of the High Court. Appeal dismissed.

Summary

Issues Involved:
1. Whether Clause 11 formed part of the agreement.
2. Validity and effect of Clause 11.
3. Jurisdiction of the Court in the matter of the contract.

Issue-wise Detailed Analysis:

1. Whether Clause 11 formed part of the agreement:
The respondent argued that Clause 11 of the agreement, which stated, "Any dispute arising out of this sale shall be subject to Kaira jurisdiction," was merely one of the general terms and conditions and not an actual clause in the agreement. However, the court found that the parties had transacted business based on Clause 11, and thus, it was concluded that Clause 11 indeed formed part of the agreement. The respondent's submission denying the existence of Clause 11 was rejected.

2. Validity and effect of Clause 11:
The court examined whether Clause 11 was valid and its implications. It was noted that an agreement enforceable at law is a contract, and an agreement that ousts the jurisdiction of the court absolutely is contrary to public policy and hence void. However, parties can agree to a specific jurisdiction for resolving disputes. The court referred to Section 28 of the Indian Contract Act, 1872, which invalidates agreements that restrict legal proceedings to enforce rights under a contract, except for arbitration agreements and jurisdiction clauses agreed upon by the parties.

The court cited precedents, including Hakam Singh v. M/s. Gammon (India) Ltd., where it was held that an agreement conferring jurisdiction on one of several competent courts is not against public policy. The court concluded that Clause 11 would be valid if Kaira was a proper jurisdiction under the law.

3. Jurisdiction of the Court in the matter of the contract:
The court analyzed the jurisdiction based on the situs of the contract and the cause of action. It was noted that a cause of action includes all material facts necessary for the plaintiff to prove to obtain a decree. Under Section 20(c) of the Code of Civil Procedure, a suit can be instituted where the cause of action arises wholly or in part.

The court examined whether Kaira had a proper jurisdiction and whether other courts, such as Salem, also had jurisdiction. It was determined that the making of the contract at Udyognagar, Mohamadabad, Gujarat (within Kaira jurisdiction) and the delivery of goods at Salem provided connecting factors for both jurisdictions. The court found that Clause 11 did not explicitly exclude the jurisdiction of the court at Salem.

The court referred to various precedents, including S. Manuel Raj & Co. v. J. Manilal & Co. and Sri Rajendra Mills v. Haji Hassan, which supported the principle that parties can agree to a specific jurisdiction if multiple courts have concurrent jurisdiction. The court concluded that Clause 11 did not oust the jurisdiction of the court at Salem, as it did not contain exclusive terms like "exclusive," "alone," or "only."

Conclusion:
The appeal was dismissed, and the court found no error or infirmity in the impugned judgment of the High Court. The parties were left to bear their own costs.