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 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.
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
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’).
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.
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 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.
Laminart1 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
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 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 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. Laminart1, 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 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 Singh3 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 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. Laminart1, 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 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. Laminart1 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 Singh3 was reiterated. In that case, clause 34 of the lease
agreement read “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”. 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.”
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 Singh3 , A.B.C. Laminart1 and Angile
Insulations6 , 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 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 Singh3 and Shriram
City7, 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 Singh3, A.B.C. Laminart1 and
Angile Insulations6 and then in paragraph 18 (pg. 713) and paragraph 20
(pg. 714) of the Report held as under :
“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.
24. In Rajasthan State Electricity Board2, 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 Singh3, A.B.C. Laminart1 and Hanil Era
Textiles8 , 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 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, 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).
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.”
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’ 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 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 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 Singh3, A.B.C. Laminart1, R.S.D.V. Finance5, Angile Insulations6,
Shriram City7, Hanil Era Textiles8 and Balaji Coke12.
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.
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.
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:
-
“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 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 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)
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 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 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 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 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.
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.
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 “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.
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
-----------------------
[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
[3] Hakam Singh v. M/s. Gammon (India) Ltd; (1971) 1 SCC 286
[4] Globe Transport Corporation v. Triveni Engineering Works and
Another ; (1983) 4 SCC 707
[5] R.S.D.V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd.
;(1993) 2 SCC 130
[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
[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
[10] Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia and Others;
(2005) 10 SCC 704
[11] Harshad Chiman Lal Modi v. DLF Universal Ltd. and Another; (2005) 7
SCC 791
[12] Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat
Private Limited ; (2009) 9 SCC 403
[13] Interglobe Aviation Limited v. N. Satchidanand; (2011) 7 SCC 463
[14] A.V.M. Sales Corporation v. Anuradha Chemicals Private Limited ;
(2012) 2 SCC 315
-----------------------
35
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 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.
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
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’).
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.
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 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.
Laminart1 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
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 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 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. Laminart1, 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 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 Singh3 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 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. Laminart1, 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 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. Laminart1 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 Singh3 was reiterated. In that case, clause 34 of the lease
agreement read “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”. 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.”
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 Singh3 , A.B.C. Laminart1 and Angile
Insulations6 , 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 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 Singh3 and Shriram
City7, 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 Singh3, A.B.C. Laminart1 and
Angile Insulations6 and then in paragraph 18 (pg. 713) and paragraph 20
(pg. 714) of the Report held as under :
“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.
24. In Rajasthan State Electricity Board2, 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 Singh3, A.B.C. Laminart1 and Hanil Era
Textiles8 , 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 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, 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).
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.”
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’ 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 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 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 Singh3, A.B.C. Laminart1, R.S.D.V. Finance5, Angile Insulations6,
Shriram City7, Hanil Era Textiles8 and Balaji Coke12.
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.
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.
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:
-
“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 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 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)
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 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 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 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 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.
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.
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 “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.
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
-----------------------
[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
[3] Hakam Singh v. M/s. Gammon (India) Ltd; (1971) 1 SCC 286
[4] Globe Transport Corporation v. Triveni Engineering Works and
Another ; (1983) 4 SCC 707
[5] R.S.D.V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd.
;(1993) 2 SCC 130
[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
[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
[10] Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia and Others;
(2005) 10 SCC 704
[11] Harshad Chiman Lal Modi v. DLF Universal Ltd. and Another; (2005) 7
SCC 791
[12] Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat
Private Limited ; (2009) 9 SCC 403
[13] Interglobe Aviation Limited v. N. Satchidanand; (2011) 7 SCC 463
[14] A.V.M. Sales Corporation v. Anuradha Chemicals Private Limited ;
(2012) 2 SCC 315
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