The short question that arises for consideration in this appeal by special leave is, whether, in view of clause 18 of the consignment agency agreement (for short, ‘agreement’) dated 13.10.2002, ...
No Acts & Articles mentioned in this case
Page 1 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5086 OF 2013
(Arising out of SLP(C) No. 5595 of 2012)
M/s. Swastik Gases P. Ltd. … Appellant
Vs.
Indian Oil Corp. Ltd. … Respondent
JUDGMENT
R.M. LODHA, J.
Leave granted.
2. The short question that arises for consideration in this appeal by
special leave is, whether, in view of clause 18 of the consignment agency
agreement (for short, ‘agreement’) dated 13.10.2002, the Calcutta High Court
has exclusive jurisdiction in respect of the application made by the appellant
under Section 11 of the Arbitration and Conciliation Act, 1996 (for short, '1996
Act’).
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Page 2 3. The above question arises in this way. The IBP Company Limited,
which has now merged with the respondent-Indian Oil Corporation Limited,
hereinafter referred to as ‘the company’, was engaged in the business of storage,
distribution of petroleum products and also manufacturing and marketing of
various types of lubricating oils, grease, fluid and coolants. The company was
interested to promote and augment its sales of lubricants and other products and
was desirous of appointing consignment agents. The appellant, M/s. Swastik
Gases Private Limited, mainly deals in storage, distribution of petroleum products
including lubricating oils in Rajasthan and its registered office is situated at
Jaipur. An agreement was entered into between the appellant and the company
on 13.10.2002 whereby the appellant was appointed the company’s consignment
agent for marketing lubricants at Jaipur (Rajasthan). There is divergent stand of
the parties in respect of the place of signing the agreement. The company’s case
is that the agreement has been signed at Kolkata while the appellant’s stand is
that it was signed at Jaipur.
4. In or about November, 2003, disputes arose between the parties as
huge quantity of stock of lubricants could not be sold by the appellant. The
appellant requested the company to either liquidate the stock or take back the
stock and make payment thereof to the appellant. The parties met several times
but the disputes could not be resolved amicably.
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Page 3 5. On 16.07.2007, the appellant sent a notice to the company claiming
a sum of Rs.18,72,332/- under diverse heads with a request to the company to
make payment of the above amount failing which it was stated that the appellant
would pursue appropriate legal action against the company.
6. Thereafter, on 25.08.2008 another notice was sent by the appellant
to the company invoking arbitration clause wherein name of a retired Judge of
the High Court was proposed as the appellant’s arbitrator. The company was
requested to name their arbitrator within thirty days failing which it was stated
that the appellant would have no option but to proceed under Section 11 of the
1996 Act.
7. The company did not nominate its arbitrator within thirty days of
receipt of the notice dated 25.08.2008 which led to the appellant making an
application under Section 11 of the 1996 Act in the Rajasthan High Court for the
appointment of arbitrator in respect of the disputes arising out of the above
agreement.
8. The company contested the application made by the appellant, inter
alia, by raising a plea of lack of territorial jurisdiction of the Rajasthan High Court
in the matter. The plea of the company was that the agreement has been made
subject to jurisdiction of the courts at Kolkata and, therefore, Rajasthan High
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Page 4 Court lacks the territorial jurisdiction in dealing with the application under Section
11.
9. In the course of hearing before the designate Judge, two judgments
of this Court, one A.B.C. Laminart
1
and the other Rajasthan State Electricity
Board
2
were cited. The designated Judge applied A.B.C. Laminart
1
and held that
Rajasthan High Court did not have any territorial jurisdiction to entertain the
application under Section 11 and dismissed the same while giving liberty to the
appellant to file the arbitration application in the Calcutta High Court. It is from
this order that the present appeal by special leave has arisen.
10. We have heard Mr. Uday Gupta, learned counsel for the appellant
and Mr. Sidharth Luthra, learned Additional Solicitor General for the company.
Learned Additional Solicitor General and learned counsel for the appellant have
cited many decisions of this Court in support of their respective arguments.
Before we refer to these decisions, it is apposite that we refer to the two clauses
of the agreement which deal with arbitration and jurisdiction. Clause 17 of the
agreement is an arbitration clause which reads as under:
17.0. Arbitration
If any dispute or difference(s) of any kind whatsoever
shall arise between the parties hereto in connection with or
arising out of this Agreement, the parties hereto shall in good
1
A.B.C. Laminart Pvt. Ltd. and Another v. A.P. Agencies, Salem; (1989) 2 SCC 163
2
Rajasthan State Electricity Board v. Universal Petrol Chemicals Limited; (2009) 3 SCC 107
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Page 5 faith negotiate with a view to arriving at an amicable resolution
and settlement. In the event no settlement is reached within a
period of 30 days from the date of arising of the
dispute(s)/difference(s), such dispute(s)/difference(s) shall be
referred to 2 (two) Arbitrators, appointed one each by the parties
and the Arbitrators, so appointed shall be entitled to appoint a
third Arbitrator who shall act as a presiding Arbitrator and the
proceedings thereof shall be in accordance with the Arbitration
and Conciliation Act, 1996 or any statutory modification or re-
enactment thereof in force. The existence of any
dispute(s)/difference(s) or initiation/continuation of arbitration
proceedings shall not permit the parties to postpone or delay the
performance of or to abstain from performing their obligations
pursuant to this Agreement.
11. The jurisdiction clause 18 in the agreement is as follows:
18.0. Jurisdiction
The Agreement shall be subject to jurisdiction of the
courts at Kolkata.
12. The contention of the learned counsel for the appellant is that even
though clause 18 confers jurisdiction to entertain disputes inter se parties at
Kolkata, it does not specifically bar jurisdiction of courts at Jaipur where also part
of the cause of action has arisen. It is the submission of the learned counsel
that except execution of the agreement, which was done at Kolkata, though it
was signed at Jaipur, all other necessary bundle of facts forming ‘cause of action’
have arisen at Jaipur. This is for the reason that: (i) The regional office of the
respondent – company is situate at Jaipur; (ii) the agreement was signed at
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Page 6 Jaipur; (iii) the consignment agency functioned from Jaipur; (iv) all stock of
lubricants was delivered by the company to the appellant at Jaipur; (v) all sales
transactions took place at Jaipur; (vi) the godown, showroom and office of the
appellant were all situated in Jaipur; (vii) various meetings were held between the
parties at Jaipur; (viii) the company agreed to lift the stock and make payment in
lieu thereof at a meeting held at Jaipur and (ix) the disputes arose at Jaipur. The
learned counsel for the appellant would submit that since part of the cause of
action has arisen within the jurisdiction of the courts at Jaipur and clause 18
does not expressly oust the jurisdiction of other courts, Rajasthan High Court had
territorial jurisdiction to try and entertain the petition under Section 11 of the 1996
Act. He vehemently contended that clause 18 of the agreement cannot be
construed as an ouster clause because the words like, ‘alone’, ‘only’, ‘exclusive’
and ‘exclusive jurisdiction’ have not been used in the clause.
13. On the other hand, the learned Additional Solicitor General for the
company stoutly defended the view of the designate Judge that from clause 18 of
the agreement, it was apparent that the parties intended to exclude jurisdiction of
all courts other than the courts at Kolkata.
14. Hakam Singh
3
is one of the earlier cases of this Court wherein this
Court highlighted that where two Courts have territorial jurisdiction to try the
dispute between the parties and the parties have agreed that dispute should be
3
Hakam Singh v. M/s. Gammon (India) Ltd; (1971) 1 SCC 286
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Page 7 tried by only one of them, the court mentioned in the agreement shall have
jurisdiction. This principle has been followed in many subsequent decisions.
15. In Globe Transport
4
while dealing with the jurisdiction clause which
read “the Court in Jaipur City alone shall have jurisdiction in respect of all claims
and matters arising (sic) under the consignment or of the goods entrusted for
transportation”, this Court held that the jurisdiction clause in the agreement was
valid and effective and the courts at Jaipur only had jurisdiction and not the
courts at Allahabad which had jurisdiction over Naini where goods were to be
delivered and were in fact delivered. 16.In A.B.C. Laminart
1
, this Court
was concerned with clause 11 in the agreement which read, “any dispute arising
out of this sale shall be subject to Kaira jurisdiction”. The disputes having arisen
out of the contract between the parties, the respondents therein filed a suit for
recovery of amount against the appellants therein and also claimed damages in
the court of subordinate judge at Salem. The appellants, inter alia, raised the
preliminary objection that the subordinate judge at Salem had no jurisdiction to
entertain the suit as parties by express contract had agreed to confer exclusive
jurisdiction in regard to all disputes arising out of the contract on the civil court at
Kaira. When the matter reached this Court, one of the questions for consideration
was whether the court at Salem had jurisdiction to entertain or try the suit. While
dealing with this question, it was stated by this Court that the jurisdiction of the
4
Globe Transport Corporation v. Triveni Engineering Works and Another ; (1983) 4 SCC 707
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Page 8 court in the matter of contract would depend on the situs of the contract and the
cause of action arising through connecting factors. The Court referred to
Sections 23 and 28 of the Indian Contract Act, 1872 (for short, ‘Contract Act’) and
Section 20(c) of the Civil Procedure Code (for short ‘Code’) and also referred to
Hakam Singh
3
and in paragraph 21 (pgs. 175-176) of the Report held as under:
“……When the clause is clear, unambiguous and specific
accepted notions of contract would bind the parties and unless
the absence of ad idem can be shown, the other courts should
avoid exercising jurisdiction. As regards construction of the
ouster clause when words like ‘alone’, ‘only’, ‘exclusive’ and the
like have been used there may be no difficulty. Even without
such words in appropriate cases the maxim ‘expressio unius est
exclusio alterius’ — expression of one is the exclusion of
another — may be applied. What is an appropriate case shall
depend on the facts of the case. In such a case mention of one
thing may imply exclusion of another. When certain jurisdiction
is specified in a contract an intention to exclude all others from
its operation may in such cases be inferred. It has therefore to
be properly construed.”
Then, in paragraph 22(pg. 176) of the Report, this Court held as under:
“…..We have already 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. The bobbins of
metallic yarn were delivered at the address of the respondent at
Salem which, therefore, would provide the connecting factor for
court at Salem to have jurisdiction. If out of the two jurisdictions
one was excluded by clause 11 it would not absolutely oust the
jurisdiction of the court and, therefore, would not be void against
public policy and would not violate Sections 23 and 28 of the
Contract Act. The question then is whether it can be construed
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Page 9 to have excluded the jurisdiction of the court at Salem. In the
clause ‘any dispute arising out of this sale shall be subject to
Kaira jurisdiction’ ex facie we do not find exclusionary words like
‘exclusive’, ‘alone’, ‘only’ and the like. Can the maxim ‘expressio
unius est exclusio alterius’ be applied under the facts and
circumstances of the case? The order of confirmation is of no
assistance. The other general terms and conditions are also not
indicative of exclusion of other jurisdictions. 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 thereat was
expressly excluded……”
17. In R.S.D.V. Finance
5
the question that fell for consideration in the
appeal was, in light of the endorsement on the deposit receipt “subject to Anand
jurisdiction”, whether the Bombay High Court had jurisdiction to entertain the suit
filed by the appellant therein. Following A.B.C. Laminart
1
, this Court in paragraph
9 (pgs. 136-137) of the Report held as under :
“We may also consider the effect of the endorsement
‘Subject to Anand jurisdiction’ made on the deposit receipt
issued by the defendant. In the facts and circumstances of this
case it cannot be disputed that the cause of action had arisen at
Bombay as the amount of Rs 10,00,000 itself was paid through
a cheque of the bank at Bombay and the same was deposited in
the bank account of the defendant in the Bank of Baroda at
Nariman Point, Bombay. The five post-dated cheques were also
issued by the defendant being payable to the plaintiff at
Bombay. The endorsement ‘Subject to Anand jurisdiction’ has
5
R.S.D.V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd. ;(1993) 2 SCC 130
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Page 10 been made unilaterally by the defendant while issuing the
deposit receipt. The endorsement ‘Subject to Anand jurisdiction’
does not contain the ouster clause using the words like ‘alone’,
‘only’, ‘exclusive’ and the like. Thus the maxim ‘expressio unius
est exclusio alterius’ cannot be applied under the facts and
circumstances of the case and it cannot be held that merely
because the deposit receipt contained the endorsement ‘Subject
to Anand jurisdiction’ it excluded the jurisdiction of all other
courts who were otherwise competent to entertain the suit. The
view taken by us finds support from a decision of this Court in
A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem.”
18. The question under consideration in Angile Insulations
6
was whether
the court of subordinate judge, Dhanbad possessed the jurisdiction to entertain
and hear the suit filed by the appellant for recovery of certain amounts due from
the first respondent. Clause 21 of the agreement therein read, “This work order is
issued subject to the jurisdiction of the High Court situated in Banglaore in the
State of Karnataka…..”. This Court relied upon A.B.C. Laminart
1
and held that
having regard to clause 21 of the work order which was legal and valid, the
parties had agreed to vest the jurisdiction of the court situated within the territorial
limit of High Court of Karnataka and, therefore, the court of subordinate judge,
Dhanbad in Bihar did not have jurisdiction to entertain the suit filed by the
appellant therein.
19. Likewise, in Shriram City
7
, the legal position stated in Hakam Singh
3
was reiterated. In that case, clause 34 of the lease agreement read “subject to
6
Angile Insulations v. Davy Ashmore India Ltd. and Another; (1995) 4 SCC 153
7
Shriram City Union Finance Corporation Limited v. Rama Mishra; (2002) 9 SCC 613
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Page 11 the provisions of clause 32 above it is expressly agreed by and between the
parties hereinabove that any suit, application and/or any other legal proceedings
with regard to any matter, claims, differences and for disputes arising out of this
agreement shall be filed and referred to the courts in Calcutta for the purpose of
jurisdiction”. This Court held that clause 34 left no room for doubt that the parties
had expressly agreed between themselves that any suit, application or any other
legal proceedings with regard to any matter, claim, differences and disputes
arising out of this claim shall only be filed in the courts in Calcutta. Whilst drawing
difference between inherent lack of jurisdiction of a court on account of some
statute and the other where parties through agreement bind themselves to have
their dispute decided by any one of the courts having jurisdiction, the Court said :
“9.……….It is open for a party for his convenience to fix the
jurisdiction of any competent court to have their dispute
adjudicated by that court alone. In other words, if one or more
courts have the jurisdiction to try any suit, it is open for the
parties to choose any one of the two competent courts to decide
their disputes. In case parties under their own agreement
expressly agree that their dispute shall be tried by only one of
them then the parties can only file the suit in that court alone to
which they have so agreed. In the present case, as we have
said, through clause 34 of the agreement, the parties have
bound themselves that in any matter arising between them
under the said contract, it is the courts in Calcutta alone which
will have jurisdiction. Once parties bound themselves as such it
is not open for them to choose a different jurisdiction as in the
present case by filing the suit at Bhubaneshwar. Such a suit
would be in violation of the said agreement.”
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Page 12 20. In Hanil Era Textiles
8
, this Court was concerned with the question of
jurisdiction of court of District Judge, Delhi. Condition 17 in the purchase order in
respect of jurisdiction read, “….. legal proceeding arising out of the order shall be
subject to the jurisdiction of the courts in Mumbai.” Following Hakam Singh
3
,
A.B.C. Laminart
1
and Angile Insulations
6
, it was held in paragraph 9 (pg. 676) of
the Report as under:
“Clause 17 says — any legal proceedings arising out of the
order shall be subject to the jurisdiction of the courts in Mumbai.
This clause is no doubt not qualified by the words like “alone”,
“only” or “exclusively”. Therefore, what is to be seen is whether
in the facts and circumstances of the present case, it can be
inferred that the jurisdiction of all other courts except courts in
Mumbai is excluded. Having regard to the fact that the order
was placed by the defendant at Bombay, the said order was
accepted by the branch office of the plaintiff at Bombay, the
advance payment was made by the defendant at Bombay, and
as per the plaintiff's case the final payment was to be made at
Bombay, there was a clear intention to confine the jurisdiction of
the courts in Bombay to the exclusion of all other courts. The
Court of Additional District Judge, Delhi had, therefore, no
territorial jurisdiction to try the suit.”
21. In New Moga Transport
9
, the question that fell for consideration
before this Court was whether the High Court’s conclusion that the civil court at
Barnala had jurisdiction to try the suit was correct or not? The clause in the
consignment note read, “the court at head office city shall only be the jurisdiction
8
Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd ; (2004) 4 SCC 671
9
New Moga Transport Co., through its Proprietor Krishanlal Jhanwar v. United India Insurance Co. Ltd. and
others; (2004) 4 SCC 677
Civil Appeal No.______of 2013
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Page 13 in respect of all claims and matters arising under the consignment at the goods
entrusted for transport.” Additionally, at the top of the consignment note, the
jurisdiction has been specified to be with Udaipur court. This Court considered
Section 20 of the Code and following Hakam Singh
3
and Shriram City
7
, in
paragraph 19 (pg. 683) of the Report held as under :
“19. The intention of the parties can be culled out from use of
the expressions “only”, “alone”, “exclusive” and the like with
reference to a particular court. But the intention to exclude a
court's jurisdiction should be reflected in clear, unambiguous,
explicit and specific terms. In such case only the accepted
notions of contract would bind the parties. The first appellate
court was justified in holding that it is only the court at Udaipur
which had jurisdiction to try the suit. The High Court did not
keep the relevant aspects in view while reversing the judgment
of the trial court. Accordingly, we set aside the judgment of the
High Court and restore that of the first appellate court. The court
at Barnala shall return the plaint to Plaintiff 1 (Respondent 1)
with appropriate endorsement under its seal which shall present
it within a period of four weeks from the date of such
endorsement of return before the proper court at Udaipur…..”
22. The question for consideration in Shree Subhlaxmi Fabrics
10
, was
whether city civil court at Calcutta had territorial jurisdiction to deal with the
dispute though condition 6 of the contract provided that the dispute under the
contract would be decided by the court of Bombay and no other courts. This
Court referred to Hakam Singh
3
, A.B.C. Laminart
1
and Angile Insulations
6
and
then in paragraph 18 (pg. 713) and paragraph 20 (pg. 714) of the Report held as
under :
10
Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia and Others; (2005) 10 SCC 704
Civil Appeal No.______of 2013
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Page 14 “18. In the case on hand the clause in the indent is very clear
viz. “court of Bombay and no other court”. The trial court on
consideration of material on record held that the court at
Calcutta had no jurisdiction to try the suit.”
xxx xxx xxx
“20. In our opinion the approach of the High Court is not
correct. The plea of the jurisdiction goes to the very root of the
matter. The trial court having held that it had no territorial
jurisdiction to try the suit, the High Court should have gone
deeper into the matter and until a clear finding was recorded
that the court had territorial jurisdiction to try the suit, no
injunction could have been granted in favour of the plaintiff by
making rather a general remark that the plaintiff has an arguable
case that he did not consciously agree to the exclusion of the
jurisdiction of the court.”
23. In Harshad Chiman Lal Modi
11
, the clause of the plot buyer
agreement read, “Delhi High Court or courts subordinate to it, alone shall have
jurisdiction in all matters arising out of, touching and/or concerning this
transaction.” This Court held that the suit related to specific performance of the
contract and possession of immovable property and the only competent court to
try such suit was the court where the property was situate and no other court.
Since the property was not situated in Delhi, the Delhi Court had no jurisdiction
though the agreement provided for jurisdiction of the court at Delhi. This Court
found that the agreement conferring jurisdiction on a court not having jurisdiction
was not legal, valid and enforceable.
11
Harshad Chiman Lal Modi v. DLF Universal Ltd. and Another; (2005) 7 SCC 791
Civil Appeal No.______of 2013
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Page 15 24. In Rajasthan State Electricity Board
2
, two clauses under
consideration were clause 30 of the general conditions of the contract and clause
7 of the bank guarantee. Clause 30 of the general conditions of the contract
stipulated, “the contract shall for all purposes be construed according to the laws
of India and subject to jurisdiction only at Jaipur in Rajasthan courts only……”
and clause 7 of the bank guarantee read, “all disputes arising in the said bank
guarantee between the Bank and the Board or between the supplier or the Board
pertaining to this guarantee shall be subject to the courts only at Jaipur in
Rajasthan”. In light of the above clauses, the question under consideration
before this Court was whether Calcutta High Court where an application under
Section 20 of the Arbitration Act, 1940 was made had territorial jurisdiction to
entertain the petition or not. Following Hakam Singh
3
, A.B.C. Laminart
1
and Hanil
Era Textiles
8
, this Court in paragraphs 27 and 28 (pgs. 114-115) of the Report
held as under:
“27. The aforesaid legal proposition settled by this Court in
respect of territorial jurisdiction and applicability of Section 20 of
the Code to the Arbitration Act is clear, unambiguous and
explicit. The said position is binding on both the parties who
were contesting the present proceeding. Both the parties with
their open eyes entered into the aforesaid purchase order and
agreements thereon which categorically provide that all disputes
arising between the parties out of the agreements would be
adjudicated upon and decided through the process of arbitration
and that no court other than the court at Jaipur shall have
jurisdiction to entertain or try the same. In both the agreements
in Clause 30 of the general conditions of the contract it was
specifically mentioned that the contract shall for all purposes be
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Page 16 construed according to the laws of India and subject to
jurisdiction only at Jaipur in Rajasthan courts only and in
addition in one of the purchase order the expression used was
that the court at Jaipur only would have jurisdiction to entertain
or try the same.
28. In the light of the aforesaid facts of the present case, the
ratio of all the aforesaid decisions which are referred to
hereinbefore would squarely govern and apply to the present
case also. There is indeed an ouster clause used in the
aforesaid stipulations stating that the courts at Jaipur alone
would have jurisdiction to try and decide the said proceedings
which could be initiated for adjudication and deciding the
disputes arising between the parties with or in relation to the
aforesaid agreements through the process of arbitration. In
other words, even though otherwise the courts at Calcutta would
have territorial jurisdiction to try and decide such disputes, but in
view of the ouster clause it is only the courts at Jaipur which
would have jurisdiction to entertain such proceeding.”
Then, in paragraph 35 (pg. 116) of the Report, the Court held as under:
“35. The parties have clearly stipulated and agreed that no other
court, but only the court at Jaipur will have jurisdiction to try and
decide the proceedings arising out of the said agreements, and
therefore, it is the civil court at Jaipur which would alone have
jurisdiction to try and decide such issue and that is the court
which is competent to entertain such proceedings. The said
court being competent to entertain such proceedings, the said
court at Jaipur alone would have jurisdiction over the arbitration
proceedings and all subsequent applications arising out of the
reference. The arbitration proceedings have to be made at
Jaipur Court and in no other court.”
25. In Balaji Coke
12
the question was, notwithstanding the mutual
agreement to make the high-seas sale agreement subject to Kolkata jurisdiction,
12
Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat Private Limited ; (2009) 9 SCC 403
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Page 17 whether it would be open to the respondent-company to contend that since a part
of cause of action purportedly arose within the jurisdiction of Bhavnagar (Gujarat)
Court, the application filed under Section 9 of the 1996 Act before the Principal
Civil Judge (Senior Division), Bhavnagar (Gujarat) could still be maintainable.
This question arose in light of clause 11 of the agreement which contained an
arbitration clause and read as under :
“In case of any dispute or difference arising between the parties
hereto or any claim or thing herein contained or the construction
thereof or as to any matter in any way connected with or arising
out of these presents or the operation thereof or the rights,
duties or liabilities of either party thereof, then and in every such
case the matter, differences or disputes shall be referred to an
arbitrator in Kolkata, West Bengal, India in accordance with and
subject to the provisions of the Arbitration and Conciliation Act,
1996, or any other enactment or statutory modifications thereof
for the time being in force. The place of arbitration shall be
Kolkata.”
26. This Court held in para 30 (pg. 409) of the Report, that the parties
had knowingly and voluntarily agreed that the contract arising out of the high-
seas sale agreement would be subject to Kolkata jurisdiction and even if the
courts in Gujarat also had the jurisdiction to entertain any action arising out of
the agreement, it has to be held that the agreement to have the disputes decided
in Kolkata by an arbitrator in Kolkata was valid and respondent had wrongly
chosen to file its application under Section 9 of the 1996 Act before the
Bhavnagar court (Gujarat).
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Page 18 27. The question in Interglobe Aviation
13
, inter alia, was whether the
Permanent Lok Adalat at Hyderabad had territorial jurisdiction to deal with the
matter. The standard terms which governed the contract between the parties
provided, “all disputes shall be subject to the jurisdiction of the courts of Delhi
only”. The contention on behalf of the appellant before this Court was that the
ticket related to travel from Delhi to Hyderabad. The complaint was in regard to
delay at Delhi and, therefore, the cause of action arose at Delhi and that as
contract provided that the courts at Delhi only will have jurisdiction, the
jurisdiction of other courts was ousted. This Court in paragraph 22 (pgs. 476-477)
of the Report held as under :
“22. As per the principle laid down in A.B.C. Laminart [(1989) 2
SCC 163], any clause which ousts the jurisdiction of all courts
having jurisdiction and conferring jurisdiction on a court not
otherwise having jurisdiction would be invalid. It is now well
settled that the parties cannot by agreement confer jurisdiction
on a court which does not have jurisdiction; and that only where
two or more courts have the jurisdiction to try a suit or
proceeding, an agreement that the disputes shall be tried in one
of such courts is not contrary to public policy. The ouster of
jurisdiction of some courts is permissible so long as the court on
which exclusive jurisdiction is conferred, had jurisdiction. If the
clause had been made to apply only where a part of cause of
action accrued in Delhi, it would have been valid. But as the
clause provides that irrespective of the place of cause of action,
only courts at Delhi would have jurisdiction, the said clause is
invalid in law, having regard to the principle laid down in A.B.C.
Laminart [(1989) 2 SCC 163]. The fact that in this case, the
place of embarkation happened to be Delhi, would not validate a
clause, which is invalid.”
13
Interglobe Aviation Limited v. N. Satchidanand; (2011) 7 SCC 463
Civil Appeal No.______of 2013
Page 18 of 36
(Arising out of SLP(C) No.5595/2012)
18
Page 19 28. In a comparatively recent decision in A.V.M. Sales
14
, the terms of the
agreement contained the clause, “any dispute arising out of this agreement will
be subject to Calcutta jurisdiction only”. The respondent before this Court had
filed a suit at Vijayawada for recovery of dues from the petitioner while the
petitioner had filed a suit for recovery of its alleged dues from the respondent in
Calcutta High Court. One of the questions under consideration before this Court
was whether the court at Vijayawada had no jurisdiction to entertain the suit on
account of exclusion clause in the agreement. Having regard to the facts
obtaining in the case, this Court first held that both the courts within the
jurisdiction of Calcutta and Vijayawada had jurisdiction to try the suit. Then it was
held that in view of the exclusion clause in the agreement, the jurisdiction of
courts at Vijayawada would stand ousted.
29. Section 11(12)(b) of the 1996 Act provides that where the matters
referred to in sub-sections (4), (5), (6), (7), (8) and (10) arise in an arbitration
other than the international commercial arbitration, the reference to ‘Chief
Justice’ in those sub-sections shall be construed as a reference to the Chief
Justice of the High Court within whose local limits the Principal Civil Court
referred to in Section 2(1)(e) is situate, and where the High Court itself is the
court referred to in clause (e) of sub-section (1) of Section 2, to the Chief Justice
of that High Court. Clause (e) of sub-section (1) of Section 2 defines ‘Court’
14
A.V.M. Sales Corporation v. Anuradha Chemicals Private Limited ; (2012) 2 SCC 315
Civil Appeal No.______of 2013
Page 19 of 36
(Arising out of SLP(C) No.5595/2012)
19
Page 20 which means the principal Civil Court of original jurisdiction in a district, and
includes the High Court in exercise of its ordinary civil jurisdiction, having
jurisdiction to decide the questions forming the subject matter of the arbitration if
the same had been the subject matter of a suit, but does not include any civil
court of a grade inferior to such principal Civil Court, or any Court of Small
Causes.
30. When it comes to the question of territorial jurisdiction relating to
the application under Section 11, besides the above legislative provisions,
Section 20 of the Code is relevant. Section 20 of the Code states that
subject to the limitations provided in Sections 15 to 19, every suit shall be
instituted in a Court within the local limits of whose jurisdiction (a) the defendant,
or each of the defendants where there are more than one, at the time of
commencement of the suit, actually and voluntarily resides, or carries on
business, or personally works for gain; or (b) any of the defendants, where there
are more than one, at the time of the commencement of the suit, actually and
voluntarily resides, or carries on business, or personally works for gain, provided
that in such case either the leave of the court is given, or the defendants who do
not reside, or carry on business, or personally work for gain, as aforesaid,
acquiesce in such institution; or (c) the cause of action, wholly or in part arises.
The explanation appended to Section 20 clarifies that a corporation shall be
deemed to carry on business at its sole or principal office in India or, in respect of
Civil Appeal No.______of 2013
Page 20 of 36
(Arising out of SLP(C) No.5595/2012)
20
Page 21 any cause of action arising at any place where it has also a subordinate office, at
such place.
31. In the instant case, the appellant does not dispute that part of cause
of action has arisen in Kolkata. What appellant says is that part of cause of action
has also arisen in Jaipur and, therefore, Chief Justice of the Rajasthan High
Court or the designate Judge has jurisdiction to consider the application made by
the appellant for the appointment of an arbitrator under Section 11. Having
regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section
20(c) of the Code, there remains no doubt that the Chief Justice or the designate
Judge of the Rajasthan High Court has jurisdiction in the matter. The question is,
whether parties by virtue of clause 18 of the agreement have agreed to exclude
the jurisdiction of the courts at Jaipur or, in other words, whether in view of
clause 18 of the agreement, the jurisdiction of Chief Justice of the Rajasthan
High Court has been excluded. For answer to the above question, we have to
see the effect of the jurisdiction clause in the agreement which provides that the
agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that
whilst providing for jurisdiction clause in the agreement the words like ‘alone’,
‘only’, ‘exclusive’ or ‘exclusive jurisdiction’ have not been used but this, in our
view, is not decisive and does not make any material difference. The intention of
the parties - by having clause 18 in the agreement – is clear and unambiguous
Civil Appeal No.______of 2013
Page 21 of 36
(Arising out of SLP(C) No.5595/2012)
21
Page 22 that the courts at Kolkata shall have jurisdiction which means that the courts at
Kolkata alone shall have jurisdiction. It is so because for construction of
jurisdiction clause, like clause 18 in the agreement, the maxim expressio unius
est exclusio alterius comes into play as there is nothing to indicate to the
contrary. This legal maxim means that expression of one is the exclusion of
another. By making a provision that the agreement is subject to the jurisdiction of
the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other
courts. Where the contract specifies the jurisdiction of the courts at a particular
place and such courts have jurisdiction to deal with the matter, we think that an
inference may be drawn that parties intended to exclude all other courts. A
clause like this is not hit by Section 23 of the Contract Act at all. Such clause is
neither forbidden by law nor it is against the public policy. It does not offend
Section 28 of the Contract Act in any manner.
32. The above view finds support from the decisions of this Court in
Hakam Singh
3
,
A.B.C. Laminart
1
, R.S.D.V. Finance
5
, Angile Insulations
6
, Shriram
City
7
, Hanil Era Textiles
8
and Balaji Coke
12
.
33. In view of the above, we answer the question in the affirmative and
hold that the impugned order does not suffer from any error of law.
Civil Appeal No.______of 2013
Page 22 of 36
(Arising out of SLP(C) No.5595/2012)
22
Page 23 34. Civil appeal is, accordingly, dismissed with no order as to costs. The
appellant shall be at liberty to pursue its remedy under Section 11 of the 1996
Act in the Calcutta High Court.
……………………….J.
(R.M. Lodha)
……………………… .J.
(Kurian Joseph)
NEW DELHI
JULY 03, 2013.
Civil Appeal No.______of 2013
Page 23 of 36
(Arising out of SLP(C) No.5595/2012)
23
Page 24 REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 5086 OF 2013
(Arising out of SLP (CIVIL) NO. 5595 OF 2012)
M/s Swastik Gases P. Ltd. ... Appellant
Versus
Indian Oil Corporation Ltd. ... Respondent
J U D G M E N T
Madan B. Lokur, J.
1. Leave granted.
2.While I agree with the conclusion arrived at by my learned
Brother Justice Lodha, this judgment has been penned down to
raise the question – is it really necessary for this Court to
repeatedly affirm the legal position ad nauseam? I believe the
law on the subject is well settled and it is to nobody’s advantage
if the same law is affirmed many times over.
3.The clause in the agreement that is sought to be interpreted
reads as follows:
Civil Appeal No.______of 2013
Page 24 of 36
(Arising out of SLP(C) No.5595/2012)
24
Page 25 -
“The agreement shall be subject to jurisdiction of the Courts
at Kolkata.”
4.In my opinion, the very existence of the exclusion of
jurisdiction clause in the agreement would be rendered
meaningless were it not given its natural and plain meaning. The
use of words like “only”, “exclusively”, “alone” and so on are not
necessary to convey the intention of the parties in an exclusion of
jurisdiction clause of an agreement. Therefore, I agree with the
conclusion that jurisdiction in the subject matter of the
proceedings vested, by agreement, only in the Courts in Kolkata.
5.The facts of the case have been detailed by my learned
Brother and it is not necessary to repeat them.
6.Reference has been made to several decisions rendered by
this Court and I propose to briefly advert to them.
One set of decisions:
7.There is really no difficulty in interpreting the exclusion
clause in the first set of decisions. The clause in these decisions
generally uses the word “alone” and, therefore, it is quite obvious
Civil Appeal No.______of 2013
Page 25 of 36
(Arising out of SLP(C) No.5595/2012)
25
Page 26 that the parties have, by agreement, excluded the jurisdiction of
courts -
other than those mentioned in the agreement. These decisions,
along with the relevant clause, are as follows:
1.Hakam Singh v. Gammon (India) Ltd., (1971) 1
SCC 286:
“Notwithstanding the place where the work under this
contract is to be executed, it is mutually understood
and agreed by and between the parties hereto that this
Contract shall be deemed to have been entered into by
the parties concerned in the city of Bombay and the
court of law in the city of Bombay alone shall have
jurisdiction to adjudicate thereon.” (emphasis given)
It was held that only the courts in Bombay and not Varanasi had
jurisdiction over the subject matter of dispute.
2.Globe Transport Corpn. v. Triveni Engg. Works,
(1983) 4 SCC 707:
“The Court in Jaipur City alone shall have jurisdiction in
respect of all claims and matters arising (sic) under the
consignment or of the goods entrusted for
transportation.” (emphasis given)
It was held that only the courts in Jaipur and not Allahabad had
jurisdiction over the subject matter of dispute.
3.Angile Insulations v. Davy Ashmore India Ltd.,
(1995) 4 SCC 153:
“This work order is issued subject to the jurisdiction of
the High Court situated in Bangalore in the State of
Karnataka. Any legal proceeding will, therefore, fall
Civil Appeal No.______of 2013
Page 26 of 36
(Arising out of SLP(C) No.5595/2012)
26
Page 27 within the jurisdiction of the above court only.”
(emphasis given)
-
It was held that only the courts in Karnataka and not Dhanbad
had jurisdiction over the subject matter of dispute.
4.New Moga Transport Co. v. United India
Insurance Co. Ltd., (2004) 4 SCC 677 :
“The court at head office city [Udaipur] shall only be
the jurisdiction in respect of all claims and matters
arising under the consignment at the goods entrusted
for transport.” (emphasis given)
It was held that only the courts in Udaipur and not Barnala had
jurisdiction over the subject matter of dispute.
5.Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal
Baradia, (2005) 10 SCC 704 :
“Dispute under this contract shall be decided by the
court of Bombay and no other courts.” (emphasis
given)
It was held that only the courts in Bombay and not Calcutta had
jurisdiction over the subject matter of dispute.
6.Rajasthan State Electricity Board v. Universal
Petrol Chemicals Limited, (2009) 3 SCC 107 :
“The contract shall for all purposes be construed
according to the laws of India and subject to jurisdiction
only at Jaipur in Rajasthan courts only.” (emphasis
given)
Civil Appeal No.______of 2013
Page 27 of 36
(Arising out of SLP(C) No.5595/2012)
27
Page 28 It was held that only the courts in Jaipur and not Calcutta had
jurisdiction over the subject matter of dispute.
7.A.V.M. Sales Corporation v. Anuradha Chemicals
Private Limited, (2012) 2 SCC 315 :
-
“Any dispute arising out of this agreement will be
subject to Calcutta jurisdiction only.” (emphasis given)
It was held that only the courts in Calcutta and not
Vijaywada had jurisdiction over the subject matter of dispute.
8.The exclusion clause in the above cases is explicit and
presents no difficulty in understanding or appreciation.
Another set of decisions:
9. In the second set of decisions, the exclusion clause is not
specific or explicit in as much as words like “only”, “alone” or
“exclusively” and so on have not been used. This has apparently
presented some difficulty in appreciation.
10.In A.B.C. Laminart v. A.P. Agencies, (1989) 2 SCC 163
the relevant clause read as follows:
“Any dispute arising out of this sale shall be subject to Kaira
jurisdiction.”
11.Despite the aforesaid clause, proceedings were initiated by
the respondent in Salem (Tamil Nadu). The appellant challenged
Civil Appeal No.______of 2013
Page 28 of 36
(Arising out of SLP(C) No.5595/2012)
28
Page 29 the jurisdiction of the Court at Salem to entertain the proceedings
since the parties had agreed that all disputes shall be subject to
the jurisdiction of the Courts in Kaira (Gujarat). The Trial Court
upheld the objection but that was set aside in appeal by the
Madras High -
Court which held that the Courts in Salem had the jurisdiction to
entertain the proceedings.
12.The Civil Appeal filed by the appellant challenging the
decision of the Madras High Court was dismissed by this Court
thereby affirming the jurisdiction of the Court in Salem
notwithstanding the exclusion clause.
13.While doing so, this Court held that when a certain
jurisdiction is specified in a contract, an intention to exclude all
others from its operation may be inferred; the exclusion clause
has to be properly construed and the maxim “expressio unius est
exclusio alterius” (expression of one is the exclusion of another)
may be applied.
14.Looking then to the facts and circumstances of the case, this
Court held that the jurisdiction of Courts other than in Kaira were
Civil Appeal No.______of 2013
Page 29 of 36
(Arising out of SLP(C) No.5595/2012)
29
Page 30 not clearly, unambiguously and explicitly excluded and therefore,
the Court at Salem had jurisdiction to entertain the proceedings.
15.In R.S.D.V. Finance Co. (P) Ltd. v. Shree Vallabh Glass
Works Ltd., (1993) 2 SCC 130 , the exclusion clause read as
follows :
-
“Subject to Anand jurisdiction.”
16.Proceedings were initiated by the appellant in the Ordinary
Original Civil Jurisdiction of the Bombay High Court. The
respondent questioned the jurisdiction of the Bombay High Court
in view of the exclusion clause. The learned Single Judge held
that the Bombay High Court had jurisdiction to entertain the
proceedings. However, the Division Bench of the High Court took
the view that the Bombay High Court had no jurisdiction in the
matter and accordingly dismissed the proceedings.
17.In appeal, this Court noted in paragraph 9 of the Report that
the endorsement “Subject to Anand jurisdiction” had been made
unilaterally by the respondent. Accordingly, there was no
agreement between the parties to exclude the jurisdiction of the
Civil Appeal No.______of 2013
Page 30 of 36
(Arising out of SLP(C) No.5595/2012)
30
Page 31 Bombay High Court. Clearly, this decision turned on its own
special facts.
18.In Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd.,
(2004) 4 SCC 671 the exclusion clause read as follows:
“Any legal proceeding arising out of the order shall be
subject to the jurisdiction of the courts in Mumbai.”
19.On a dispute having arisen, proceedings were instituted by
the respondent in the Courts in Delhi. This was objected to by the
-
appellant but neither the Additional District Judge, Delhi nor the
Delhi High Court accepted the contention of the appellant that the
Courts in Delhi had no territorial jurisdiction in the matter.
20.In appeal, this Court referred to A.B.C. Laminart and after
considering the facts and circumstances of the case inferred that
the jurisdiction of all other Courts except the Courts in Mumbai
was excluded. This inference was drawn from the fact that the
purchase order was placed by the appellant at Mumbai and was
accepted by the respondent at Mumbai. The advance payment
was made by the respondent at Mumbai and as per the case of
Civil Appeal No.______of 2013
Page 31 of 36
(Arising out of SLP(C) No.5595/2012)
31
Page 32 the respondent itself the final payment was to be made at
Mumbai.
21.In Balaji Coke Industry Private Limited v. Maa
Bhagwati Coke Gujarat Private Limited, (2009) 9 SCC 403,
the exclusion clause read as follows:
“In case of any dispute or difference arising between the
parties hereto or any claim or thing herein contained or the
construction thereof or as to any matter in any way
connected with or arising out of these presents or the
operation thereof or the rights, duties or liabilities of either
party thereof, then and in every such case the matter,
differences or disputes shall be referred to an arbitrator in
Kolkata, West Bengal, India in accordance with and subject
to the provisions of the Arbitration and Conciliation Act,
1996, or any other enactment or statutory modifications
thereof for the time being in force. The place of arbitration
shall be Kolkata.”
22.Notwithstanding the aforesaid clause, proceedings were
instituted by the respondent against the appellant in Bhavnagar
(Gujarat). The petitioner in this Court then moved a Transfer
Petition under Article 139-A(2) of the Constitution of India for
transfer of the proceedings to Kolkata. While allowing the
Transfer Petition, this Court drew an inference, as postulated in
A.B.C. Laminart that the intention of the parties was to exclude
the jurisdiction of Courts other than those in Kolkata.
Civil Appeal No.______of 2013
Page 32 of 36
(Arising out of SLP(C) No.5595/2012)
32
Page 33 23.Finally, in Shriram City Union Finance Corporation Ltd.
v. Rama Mishra, (2002) 9 SCC 613 , the exclusion clause read
as follows:
“Subject to the provisions of clause 32 above it is expressly
agreed by and between the parties hereinabove that any
suit, application and/or any other legal proceedings with
regard to any matter, claims, differences and for disputes
arising out of this agreement shall be filed and referred to
the courts in Calcutta for the purpose of jurisdiction.”
24.Proceedings were initiated by the respondent in
Bhubaneswar (Odisha). An objection was taken by the appellant
that the Court in Bhubaneswar had no jurisdiction to entertain the
proceedings. However, the objection was not accepted by the
Trial Judge, Bhubaneswar. In appeal, the District Judge accepted
the contention -
of the appellant that only the Courts in Kolkata had jurisdiction in
the matter. In a Civil Revision Petition filed before the Orissa High
Court by the respondent, the order passed by the Trial Court was
affirmed with the result that it was held that notwithstanding the
exclusion clause, the Civil Judge, Bhubaneswar (Odisha) had
jurisdiction to entertain the proceedings.
Civil Appeal No.______of 2013
Page 33 of 36
(Arising out of SLP(C) No.5595/2012)
33
Page 34 25.In the Civil Appeal filed by the appellant in this Court, it was
held that the exclusion clause left no room for doubt that the
parties expressly agreed that legal proceedings shall be instituted
only in the Courts in Kolkata. It was also held that the parties had
agreed that the Courts in Kolkata “alone” would have jurisdiction
in the matter and therefore, the Civil Court, Bhubaneswar ought
not to have entertained the proceedings. A reading of the
exclusion clause shows that it does not use the word “alone” but
it was read into the clause by this Court as an inference drawn on
the facts of the case, in line with the decision rendered in A.B.C.
Laminart and the relief declined in A.B.C. Laminart was
granted in this case.
26.It will be seen from the above decisions that except in
A.B.C. Laminart where this Court declined to exclude the
jurisdiction of the Courts in Salem, in all other similar cases an
inference was -
drawn (explicitly or implicitly) that the parties intended the
implementation of the exclusion clause as it reads
notwithstanding the absence of the words “only”, “alone” or
Civil Appeal No.______of 2013
Page 34 of 36
(Arising out of SLP(C) No.5595/2012)
34
Page 35 “exclusively” and the like. The reason for this is quite obvious.
The parties would not have included the ouster clause in their
agreement were it not to carry any meaning at all. The very fact
that the ouster clause is included in the agreement between the
parties conveys their clear intention to exclude the jurisdiction of
Courts other than those mentioned in the concerned clause.
Conversely, if the parties had intended that all Courts where the
cause of action or a part thereof had arisen would continue to
have jurisdiction over the dispute, the exclusion clause would not
have found a place in the agreement between the parties.
27.It is not necessary to refer to the decisions rendered by this
Court in Harshad Chimanlal Modi v. DLF Universal Limited,
(2005) 7 SCC 791 and InterGlobe Aviation Limited v. N.
Satchidanand, (2011) 7 SCC 463 since they deal with an issue
that does not at all arise in this case. In this context it may only
be mentioned that the appellant in the present case did not
dispute -
that a part of the cause of action arose in Kolkata, as observed by
my learned Brother Justice Lodha.
Civil Appeal No.______of 2013
Page 35 of 36
(Arising out of SLP(C) No.5595/2012)
35
Page 36 Conclusion:
28.For the reasons mentioned above, I agree with my learned
Brother that in the jurisdiction clause of an agreement, the
absence of words like “alone”, “only”, “exclusive” or “exclusive
jurisdiction” is neither decisive nor does it make any material
difference in deciding the jurisdiction of a court. The very
existence of a jurisdiction clause in an agreement makes the
intention of the parties to an agreement quite clear and it is not
advisable to read such a clause in the agreement like a statute. In
the present case, only the Courts in Kolkata had jurisdiction to
entertain the disputes between the parties.
29.The Civil Appeal is dismissed, as proposed, leaving the
appellant to pursue its remedy in Kolkata.
.………………………J.
New Delhi (Madan B.
Lokur)
July 3, 2013
Civil Appeal No.______of 2013
Page 36 of 36
(Arising out of SLP(C) No.5595/2012)
36
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