1991 (8) TMI 332 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of Courts in Contractual Disputes
2. Interpretation of Section 20 of the Code of Civil Procedure
3. Validity of Jurisdiction Clauses in Contracts

Summary:

Jurisdiction of Courts in Contractual Disputes:
The primary issue in these appeals was whether the courts at Bombay had exclusive jurisdiction to decide disputes arising from the contracts between the parties, as stipulated in the contractual clauses, thereby ousting the jurisdiction of the courts at Madras where the suits were instituted.

Interpretation of Section 20 of the Code of Civil Procedure:
The appellant argued that, apart from the courts within whose territorial jurisdiction the goods were delivered for transport, the courts at Bombay also had jurisdiction due to the principal office being located there, as per the Explanation to Section 20 of the Code of Civil Procedure. The court, however, found this argument flawed. The Explanation to Section 20 is in two parts: the first part applies to corporations with a sole or principal office, and the second part applies to corporations with both a principal and subordinate office. The court clarified that if the cause of action arises at a place where the corporation has a subordinate office, only the courts at that place have jurisdiction, not the courts at the location of the principal office.

Validity of Jurisdiction Clauses in Contracts:
The court referred to precedents such as Hakam Singh v. M/s. Gammon (India) Ltd. and Globe Transport Corporation v. Triveni Engineering Works, which held that parties could agree to confer jurisdiction on one of the courts that already had jurisdiction under the Code. However, in the present cases, since the cause of action did not arise in Bombay and the appellant had subordinate offices at the places where the goods were delivered, the courts at Bombay did not have jurisdiction. Consequently, the jurisdiction clause in the contracts conferring exclusive jurisdiction on the courts at Bombay was invalid.

Conclusion:
The appeals were dismissed, affirming that the courts at Madras had jurisdiction to entertain the suits, and the jurisdiction clause in the contracts was not enforceable. The parties were ordered to bear their own costs.