Citation: 1989 AIR 1239
Case Type: Civil Appeal
Case No: 2682/1982
Appellants: A.B.C. Laminart Pvt. Ltd. & Anr
Respondents: P. Agencies, Salem
Decided On: 13-03-1989
Statues Referred: Indian Contract Act, 1872
Case Referred:
- Lee v. Showmen’s Guild
- S. Manuel Raj & Co. v. J. Manilal & Co
Bench: Saikia, K.N. (J) Oza, G.L. (J)
Facts:
The appellant is a manufacturer and supplier of metallic yarn and the respondent is the registered partnership firm dealing I metallic yarn and other allied products.
On 2-10-1974 both the appellant and the respondent entered into contract whereunder the appellant was required to supply 5000 bobbins of Rupalon Metallic Yarn to the respondent @ 35 per bobbin.
The respondent filed a suit for the recovery of 2,40,000 towards damages. The appellant contended that the Subordinate Judge at Salem had no jurisdiction to entertain the suit as by express contract, parties had agreed to confer exclusive jurisdiction for all disputes arising out of the contract only to the civil Court at Kaira.
Hence the issue was transferred to the proper Court. but the respondent appealed to the High Court upon the impugned judgement, and the appeal was allowed. And the suit was directed to be disposed of on merit. And thereafter the appeal was filed to the Supreme Court.
Issue:
Whether clause 11 of the agreement was a part of the agreement or not.
Whether Clause 11 in itself is valid or not.
Obiter dicta:
Any contract which tends to jeopardize the public poly is void pro tanto.
No contract can oust the ordinary courts from jurisdiction. But of course question of law and fact can be left upon the competent jurisdiction to decide upon.
“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”.
Ratio decedendi:
The Court refused to accept that the terms and condition printed overleaf had clause 11 in it. Clause 11 formed the part of agreement and the parties were bound by it.
Since Clause 11 was a part of agreement, therefore the Court held it to be valid. Since any agreement enforceable by law is a contract.
Arbitration clause is a statutory mode of settlement and the parties are free to choose the jurisdiction upon which jurisdiction the dispute shall be subjected.
Section 28 of the Indian Contract Act, 1872 provides that every agreement which restricts the rights of any person to fight his case by due process of law, is always void to that extent.
The jurisdiction of the Court is decided by the situs of the contract and the cause of action arising out of connecting factors.
Section 28 of CrPc states that every suit shall be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part arises.
In suit for damages for breach of contract, the suit shall be filed at places where either the contract was made or at the place where it should have been performed or breach happened.
Similarly in suits for agency the cause of action arises where the contract was made or place where the action was made. Hence if the jurisdiction of the Court is not ousted the contract and its term shall always prevail.
The Court agreed to the contention that the suit in the said case could be filed at Salem or at Howrah because the cause of action arose in pat both the place. And hence it was a case where two courts had the jurisdiction to adjudicate.
When ouster clause is clear, unambiguous and specified, where parties are bound, then the other Courts are devoid of jurisdiction.
The Court held that making of Contract was a part of the cause of action and a suit on a contract could legitimately be filed at Kaira.
The situs of contract within Kaira was ensured while connecting factor with Kaira jurisdiction. Other jurisdiction was not excluded.
Judgment:
The Apex Court’s bench comprising of Saikia, K.N. (J) Oza, G.L. (J), held the following:
Clause 11 formed a part of the contract and therefore was and therefore not void.
Since the clause 11 was held valid the jurisdiction of the Court at Salem had proper jurisdiction to entrain the said case.
Accordingly the impugned order of High Court is free from error or infirmity.
Resultantly the appeal failed and no cost was ordered. Appeal was dismissed.
Conclusion:
The Jurisdiction of the Court is the farthest limit upto which the Court of law can exercise it authority over suits, cases, proceedings, appeal. The reason for the same lies in the fact that the Court should adjudicate upon such matters with which it has some connection. Without jurisdiction any sensitive cases no matter how grave it is shall not be entitled to adjudication.
Kaushal Agarwal.