2002 (7) TMI 784 - HC - Companies Law

Summary

Issues Involved:
1. Jurisdiction of the Indian Court.
2. Applicability of English Law.
3. Interpretation of Jurisdiction Clauses in Agreements.
4. Public Policy and Section 28 of the Indian Contract Act.
5. Pleading and Proof of Foreign Law.
6. Forum Non Conveniens.
7. Submission to Jurisdiction.

Detailed Analysis:

1. Jurisdiction of the Indian Court:
The primary issue in this case is whether the Indian courts have jurisdiction to entertain the suit filed by the respondent. The applicants argued that the jurisdiction is ousted by Articles 15.2 and 8.2 of the respective agreements, which state that all differences on the interpretation or performance of the agreements will be settled by the English Courts. The trial court, however, held that the Indian courts also have jurisdiction because the respondent's plant is situated within its jurisdiction, and part of the cause of action arose within its jurisdiction. The High Court found that the trial court did not examine the matter correctly and remitted the case for fresh adjudication, emphasizing the need to interpret the jurisdiction clauses as per English law.

2. Applicability of English Law:
The agreements in question explicitly state that they shall be governed by and construed in accordance with English law. The High Court noted that the parties have expressly intended their contracts to be governed by English law, making it the "proper law" of the agreements. This means that the substantive principles of English domestic law should apply, not its conflict of laws rules. The court highlighted that the intention of the parties must be bona fide and not opposed to public policy.

3. Interpretation of Jurisdiction Clauses in Agreements:
The High Court emphasized that the interpretation of Articles 15.2 and 8.2, which pertain to the jurisdiction of the English Courts, must be done according to English law. The applicants argued that these clauses mean that the English Courts have exclusive jurisdiction. However, the High Court noted that the applicants failed to provide evidence of the settled legal position in England regarding such clauses, which is necessary to conclusively determine whether the English Courts have exclusive jurisdiction.

4. Public Policy and Section 28 of the Indian Contract Act:
The respondent argued that excluding the jurisdiction of Indian courts and laws would be against public policy and Section 28 of the Indian Contract Act, which invalidates agreements that restrict legal proceedings. The High Court referred to the Supreme Court's decision in British India Steam Navigation Co. Ltd., which held that such jurisdiction clauses in international trade agreements are not necessarily void under Section 28, provided they are not opposed to public policy.

5. Pleading and Proof of Foreign Law:
The High Court pointed out that foreign law must be specifically pleaded and proved as a fact by expert evidence. The applicants did not provide such evidence, making it impossible for the court to determine the interpretation of the jurisdiction clauses under English law. The court cited the Supreme Court's decision in Hari Shankar Jain v. Sonia Gandhi, which emphasizes the need for proof of foreign law.

6. Forum Non Conveniens:
The respondent contended that the application filed by the applicants was essentially about forum non conveniens rather than jurisdiction, as it sought the return of the plaint instead of dismissal of the suit. The High Court dismissed this argument, stating that the core issue raised by the applicants was the jurisdiction of the Indian courts.

7. Submission to Jurisdiction:
The respondent argued that the applicants had submitted to the jurisdiction of the trial court by appearing and filing a reply. The High Court rejected this contention, noting that the applicants had consistently challenged the jurisdiction and filed the application under Section 9A of the Code of Civil Procedure without prejudice to their jurisdictional challenge.

Conclusion:
The High Court set aside the trial court's order and remitted the case for fresh adjudication. The trial court was directed to allow the parties to adduce necessary evidence to determine whether the English Courts have exclusive jurisdiction. The High Court emphasized that the trial court should decide the matter expeditiously and in accordance with law, considering the observations made in the judgment.