2007 (12) TMI 533 - SC - Indian Laws

Summary

Issues Involved:
1. Jurisdiction of Delhi High Court.
2. Applicability of Hong Kong Law.
3. Cause of Action and Territorial Jurisdiction.
4. Imposition of Costs.

Summary:

1. Jurisdiction of Delhi High Court:
The appellant contended that the agreement between the parties stipulated that disputes would be governed by the laws of Hong Kong, thereby excluding the jurisdiction of Indian courts. The High Court dismissed this contention, holding that the agreement did not oust the jurisdiction of the Delhi Court. The Supreme Court upheld this view, stating that the clause regarding the applicability of Hong Kong law did not imply exclusive jurisdiction of Hong Kong courts. The Delhi High Court had jurisdiction as part of the cause of action arose within its territorial limits.

2. Applicability of Hong Kong Law:
Clause 18 of the agreement stated that the terms and conditions would be interpreted according to the laws of Hong Kong Special Administrative Region. The Supreme Court clarified that this clause pertains to the interpretation of the agreement and does not affect the territorial jurisdiction of the court. The court emphasized that 'cause of action' and 'applicability of law' are distinct concepts and should not be conflated.

3. Cause of Action and Territorial Jurisdiction:
The Supreme Court explained that 'cause of action' means every fact necessary for the plaintiff to prove to obtain a decree. Sections 16 to 20 of the Code of Civil Procedure deal with territorial jurisdiction. Section 20(c) allows a suit to be instituted where the cause of action arises, wholly or partly. The plaintiff-Company alleged that the defendant breached the agreement during a Trade Fair in Delhi, thus part of the cause of action arose in Delhi. Therefore, the Delhi High Court had jurisdiction to entertain the suit.

4. Imposition of Costs:
The High Court imposed costs of Rs. 4,000 on the defendant for filing an application to delay the proceedings. The Supreme Court found no reason to interfere with this discretionary decision, noting that the defendant's actions appeared to be intended to delay the suit.

Conclusion:
The Supreme Court dismissed the appeal, affirming the Delhi High Court's jurisdiction and the imposition of costs. The Court clarified that the applicability of Hong Kong law does not exclude the jurisdiction of Indian courts where part of the cause of action arises within India.