9911796707
TMI Blog2002 (7) TMI 784X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent to market and distribute the products, Isoflurane and Halothane, in the territories of India, Sri Lanka, Bangladesh and Nepal, for an initial period of 3 years at 23% margin of the price. The effective date under the agreement was the first day of the following month during which the respondent was granted the Product Licence. According to the Applicants, the effective date is 1-1-1998. For the purpose of deciding the question that arises in the present case, it will be useful to advert Article 15 of the said Distribution Agreement , which reads thus : Article 15-Governing Language and Law 15.1 : The governing language of this Agreement shall be English. This agreement shall in all respects, including the formation thereof and performance thereunder, be governed by and construed in accordance with the English law. 15.2 : All differences on the interpretation or performance of this agreement which will not be settled by amicable means, will be settled by the English Courts. 2. It is common ground that subsequently on November 30, 1998 the parties entered into another agreement known as Amendment 1 Mohit Project whereunder the Applicants agreed to supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not inclined to award specific performance of the Distribution Agreement dated 1st August, 1997, the Defendants be ordered and decreed to pay to the plaintiff as damages, the sum of U.S. $ 7,37,888/- together with further interest thereon at the rate of 18% per annum from the date of the filing of the suit till payment and/or realization as per statement annexed hereto and marked Exhibit DD; (f) Without prejudice and in the alternative to prayer (e) above, in the event of the Defendants not making payment in US $ as claimed hereinabove, the defendants be ordered and decreed to pay the amount and interest set out in prayer (e) in Indian Rupees at the rate of exchange prevailing on the date of the judgment; (g) That, in case this Hon'ble Court is not inclined to award specific performance of the Mohit Agreement dated 30th November, 1998, the Defendants be ordered and decreed to pay to the plaintiff, as damages, the sum of US $ 34,27,495/- together with further interest thereon at the rate of 18% per annum from the date of the filing of the suit till payment and/or realization, as per statement annexed hereto and marked Exhibit EE; (h) Without prejudice and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g with legal proceedings for recovery of US $ 176,013 + $ 818 + interest under the invoices of the defendant No. 3 for supply of Halothane by the defendants to the plaintiff; (q) For ad Interim reliefs in terms of prayer Clauses (m) to (o) (both inclusive) hereinabove; (r) For the costs of the suit; and (s) For such further and other reliefs as the nature and circumstances of the case may require. 3. This suit was filed on 22-1-2002 and on the same day the respondent filed application for interim injunction. The prayers in the said application read thus :-- a) The defendants be restrained by an order of injunction from committing breaches of the Distribution Agreement dated 1-8-1998 and MOHIT Agreement dated 30-11-1998 and from appointing any distributor in the territory of India. Sri Lanka, Bangladesh and Nepal and from filing or instituting any proceedings for recovery of US $ 176.013 + L 818 + interest under the invoice of defendant No. 2 for supply of Halothane by the defendants to the plaintiff. b) Such further and other orders be passed as this Hon'ble Court may feel proper and expedient to grant. 4. The applicants were served with the said appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;ble High Court of Judicature at Bombay, for the plaintiff and defendant No. 2 have their offices in Mumbai. It is, however, relevant to point out that although these pleas, have been taken in paras 9 and 13 in the application, but during the course of argument before this Court, the only contention pressed before this Court is that: (sic) have no jurisdiction to try and entertain the suit -- for the issues raised in the present suit could be tried and adjudicated by applying the English law and exclusively by the English Courts, having regard to the purport of Article 15 and Article 8 of the respective agreements. Be that as it may, it is further asserted that Isoflurane and Halothane Distribution Agreement in India amended by 'AMENDMENT 1 : MOHIT PROJECT was signed by the defendant No. 1 in England and by the defendant No. 2 and the plaintiff in Mumbai. Therefore, none of these agreements were signed at Palghar and the whole endeavour is outside Palghar. This application was resisted by the respondent-plaintiff by filing a written reply. 5. It is relevant to note that none of the parties adduced any evidence either in the shape of affidavit or for that matter oral e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts did not specifically mention the expression(s) only , exclusively , specific bar of the courts , alone , there would be no question of ouster of jurisdiction of the Indian Courts. For this purpose, the trial Court has mainly placed reliance on the decision of the Apex Court , A.B.C. Laminart Pvt. Ltd. v. A. P. Agencies, Salem. The trial Court has held that on reading the entire plaint as a whole, part of the cause of action did arise within its jurisdiction. Accordingly, the trial Court answered the issue of the jurisdiction of the Court against the applicants and held that the Indian Courts also have jurisdiction to adjudicate the issues arising out of the subject agreements by applying the Indian laws. 6. According to the applicants, the trial Court has acted in exercise of its jurisdiction illegally and with material irregularity in deciding the application against the applicants. Mr. Tulzapurkar, learned Counsel for the applicants submits that on plain language of Articles 15.1 and 8.1 of the respective agreements, it is amply clear that the parties have agreed that the subject agreements shall in all respects be governed and construed in accordance with the English L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pages 419 to 422, 424, 426 and 428) which pertains to the legal position in respect of jurisdiction clauses . Reliance has also been placed on para 633 of Halsbury's Laws of England (Fourth Edition) Vol. 8(1) pertaining to the jurisdiction derived from a choice of Court agreement . Reliance is also placed on the decision of 1992 Ch 196, Kruz v. Stella Musical Veranstaltungs G.M.B.H. (at pages 202 to 205). 7. Per contra, the learned Counsel for the respondent-plaintiff contends that the argument pressed before this Court that the parties have agreed to be governed by the English Laws and Articles 15.2 and 8.2 of the respective agreements be construed as per the English Laws, is being raised for the first time before this Court and should not be entertained. He further contends that reliance placed on the authorities referred to above by the Counsel for the applicants will be of no avail -- because the principle enunciated therein is applicable only relating to the parties residing in contracting States (European Countries) and will not govern the party such as the respondents, residing in India. He further contends that on close reading of the said authorities, it is not po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be said to be exclusive, especially when it is not in dispute that the said agreements have been signed by the plaintiff and defendant No. 2 in Mumbai. He further contends that assuming that the applicants were right in contending that the parties have agreed that the construction and interpretation or performance of the agreement shall be governed by and construed in accordance with the English Law, however, since the applicants have failed to prove the factum as to what is the settled legal position in England with regard to the construction of and interpretation of clause such as Articles 15.2 and 8.2 of the respective agreements, it will not be possible to hold that English courts have exclusive jurisdiction. He contends that the question of Foreign Laws is not only to be specifically pleaded but also proved as a question of fact and, if that is not done, the court cannot proceed to decide the same on the basis of some foreign decisions or authorities relied upon across the Bar during the course of arguments. Reliance is placed on paras 27 and 28 of the decision as well as paras 75.237 and 75.238 of Halsbury's Laws of India Vol. 10, to support this proposition. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in India and the Courts of Delhi to have exclusive jurisdiction in all matters arising under the contract. The Apex Court, while considering the matter in that perspective, in para 13 has adverted, inter alia, to Dicey and Morris in the conflict of laws, 11th Edition, Vol. II (Diecy), which refers to Rule 180. The Apex Court has reproduced the said Rule as well as the relevant portion of the opinion of Lord Herchell, L.C. in Hamlyn and Co. v. Tallsker Distillery (1891-4) All ER Rep 849 at 852. The Apex Court in para 14 has observed that the expressed Intention of the parties is generally decisive in determining the proper law of the contract . The only limitation on this rule is that the intention of the parties must be expressed bona fide and it should not be opposed to public policy. The apex Court in para 19 has observed that (at p. 1007 of AIR) : proper law is thus the law which the parties have expressly or impliedly chosen, or which is imputed to them by reason of its closest and most intimate connection with the contract. It must, however, be clarified that the expression proper law refers to the substantive principles of the domestic law of the chosen system and no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the action falls within its terms. The Apex Court then observed that: If there is no express choice of the proper law of the contract, the law of the country of the chosen court will usually, but not invariably, be proper law. It will be useful at this stage to advert to the observations made by the Apex Court in the paras 18 and 19 of the same decision. In para 18, the Apex Court has observed : It is accordingly unlikely that respondent I would be without any remedy. If the terms of Clause 3 of the bills of lading are faithfully observed In para 19, the Apex Court further observed that: The question of jurisdiction in the case ought not to be determined by the High Court on the basis of the provisions of Section 28 of the Indian Contract Act in the absence of a specific provision making it applicable to transactions in international trade. The abovesaid observations in this decision, to my mind, squarely deal with the contention raised on behalf of the respondent that if the subject agreement was to be construed in the manner contended by the applicants that would be opposed to public policy and contrary to the purport of Section 28 of the Indian Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e English Courts. 11. The next question is : what is the English law as to the interpretation of clause such as Article 15.2 and R. 2 of the respective Agreements? No doubt the applicants have relied on several authorities to buttress their contention that the said clauses such as Article 15.2 and 8.2 will mean that the English Courts will have exclusive jurisdiction over the matter in issue. However, to my mind, the respondent has rightly contended that the English law is a foreign law so far as the Courts in India are concerned. The respondent rightly relies on the decision of the Apex Court in , in the case of Hari Shankar Jain v. Sonia Gandhi to support this proposition. The Apex Court in paras 27 and 28 of the said decision has noted that it is well settled that a foreign law ought to be pleaded like any other fact and must be proved by evidence of experts in that law being matters of evidence requiring proof as questions of fact, if a party wants to rely on the same. Reliance is also placed on the Halsbury's Laws of India, 10th Edition which reads thus :-- 75.237. Need for proof; Foreign law is a question of fact. It must be specifically pleaded by the party or par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al case. If such is the standard, of proof, it will not be possible to examine the matter any further. It necessarily follows that it will not be possible for this Court to decisively hold that the construction of clause such as Articles 15.2 and 8.2 of the respective agreements would mean that English Courts have exclusive jurisdiction to try and decide the dispute and that the jurisdiction of Indian Courts is ousted in absence of proof in that behalf. 13. Reverting to another contention of the respondent that the decisions relied by the applicants have no application to person residing in India, to my mind, it will not be necessary to go into that aspect of this stage, for the same can be answered only after parties have adduced, evidence to establish the question of foreign law. 14. The next contention raised on behalf of the respondent that the relief claimed in the subject application was not available under Section 9A of the Code of Civil Procedure and that the applicants have essentially made grievance of Forum of inconvenience and not of jurisdiction as the relief claimed in the application was for return of plaint and not for dismissal of the suit as such, to my ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the respective agreements would be void and hit by the provisions of Section 28 of the Indian Contract Act, 1872. This very contention was raised before the Apex Court in British India Steam Navigation Co. Ltd.'s case (supra) as can be seen from para 4 of the said decision and while dealing with the said contention, the Apex Court has clearly negatived the same by observing in para 19 that the question of jurisdiction ought not to be determined by the High Court on the basis of the provisions of Section 28 of the Indian Contract Act in the absence of a specific provision making it applicable to transactions in international trade. In this view of the matter the view taken by the Delhi High Court will be of no avail and in any case with utmost respect, not binding on this Court. Reliance was also placed on the decision reported in (1962) 64 Bom LR 113 in SE SE Oil v. Gorakhram Gokalchand's case to contend that the agreements could not have been entered into by the parties as the respondent was undoubtedly a company registered in India and was operating in India and therefore could not have agreed to avoid the applicability of the Indian Law to the contract signed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, it can be done only by construing the Articles 15.2 and 8.2 of the respective agreements by applying the English Law. For that it will be necessary to find out at least two relevant questions viz. : a) Whether the intention of the parties is expressed bona fide and is not opposed to public policy as per the proper law of the agreements ? b) Whether the purport and interpretation of Articles 15.2 and 8.2 of the respective agreements in accordance with the proper law of the agreements (i.e. the English law) is that the English Courts have exclusive jurisdiction over the subject-matter in this suit? 20. It is only on adduction of evidence on the above questions that the Court would be able to decisively answer as to whether the English Courts have exclusive jurisdiction. If the answer were to be in the affirmative, then obviously the Court at Palghar, which is otherwise a court of competent jurisdiction to try and decide the suit, albeit by applying the proper law of the agreements, will have no jurisdiction as it would mean that the jurisdiction of Indian Courts is ousted. In which case, the suit as filed by the respondent would not proceed. As no evidence has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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