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The Khandesh Lakshmivilas Mills Co. Vs. Vinayak Atmaram Karpurkar - Court Judgment

LegalCrystal Citation
SubjectContract
CourtMumbai
Decided On
Case Number Appeal from Order No. 3 of 1934
Judge
Reported inAIR1935Bom198; (1935)37BOMLR157
AppellantThe Khandesh Lakshmivilas Mills Co.
RespondentVinayak Atmaram Karpurkar
DispositionAppeal dismissed
Excerpt:
.....valid.;the defendant, who resided in bombay, agreed to advance money to plaintiff who carried on business at jalgaon. the parties agreed between themselves that all disputes arising between them should be decided by a court in bombay. notwithstanding this, the plaintiff filed a suit in the jalgaon court to recover damages from the defendant for breach of the contract to lend money. the defendant having objected to the jurisdiction of the jalgaon court to entertain the suit :-;that the suit could be entertained only by a court in bombay, inasmuch ;as there was nothing in the agreement between the parties to contravene the provisions of section 28 of the indian contract act, 1872, as it merely selected one out of two competent tribunals for the disposal of disputes between the parties..........the trial judge upheld the objection of the defendant that in view of the agreement between the parties the suit could only be tried in bombay. the question in this appeal is whether that finding is right, and in my opinion it is.3. the learned advocate who appears for the appellant-plaintiff has admitted that he cannot call in aid the provisions of section 28 of the indian contract act. that section provides that every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, is void to that extent. but here obviously there is no absolute restriction. both the jalgaon court and the courts in bombay would ordinarily be competent to entertain the suit. all that.....
Judgment:

Broomfield, J.

1. The principal question in this appeal is whether the parties to a contract, one of whom resides at Jalgaon and the other in Bombay, may validly agree that litigation arising out of the contract should be tried in Bombay and not in Jalgaon, it being admitted that apart from the agreement such litigation might be tried in either place. The plaintiff is a company owning oil mills in Jalgaon. The defendant is a resident of Bombay. He agreed to supply funds to the company for the purpose of carrying on their business in groundnuts which were to be purchased and milled in the plaintiff's mill at Jalgaon. He failed to supply the money, and in consequence the company brought a suit to recover Rs. 7,500 damages, that being what, it is alleged, the company would have earned in the business if the defendant had supplied the funds. There was a formal written agreement between the parties, one clause of which provides ;-

If any dispute arises in respect of the aforesaid business between us under this agreement, the same shall be referred to the Bombay High Court or in such Courts in the Town and Island of Bombay, as shall have jurisdiction in the matter.

2. In spite of this clause the plaintiff company filed their suit for damages in the Subordinate Court of Jalgaon. The trial Judge upheld the objection of the defendant that in view of the agreement between the parties the suit could only be tried in Bombay. The question in this appeal is whether that finding is right, and in my opinion it is.

3. The learned advocate who appears for the appellant-plaintiff has admitted that he cannot call in aid the provisions of Section 28 of the Indian Contract Act. That section provides that every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, is void to that extent. But here obviously there is no absolute restriction. Both the Jalgaon Court and the Courts in Bombay would ordinarily be competent to entertain the suit. All that has happened is that the parties have agreed to select one of two competent tribunals for the disposal of their disputes. Mr. Pradhan contends that parties cannot by agreement make such a change in the law. But if the case does not come within the mischief of Section 28-and it clearly does not-then, as far as I am aware, it is not contrary to any law. Moreover, agreements of the same kind have been held valid (see A, Milton & Co. v. Ojha Automobile Engineering Co. I.L.R.(1930) Cal. 1280 following Achratlal Kesavlal Mehta & Co. v. Vijayam & Co. : AIR1925Mad1145 .

4. A further point taken was that, as the trial Judge has mentioned in his judgment, the plaintiff made an application for joining another defendant who is an agriculturist residing at Dhulia. If that application had been granted, so the learned Subordinate Judge says, the suit would have had to go to the Court at Dhulia under Section 11 of the Dekkhan Agriculturists' Relief Act. Mr. Pradhan uses this as an argument for holding that the Courts in Bombay cannot have jurisdiction. I think, however, there is no substance in this point. So far no additional party has been joined, but if he were to be joined, it would not apparently have the effect which the learned Judge supposed. Two persons on behalf of the company entered into the agreement with the defendant. The suit is brought by the company. The person sought to be added as a co-defendant is one of the persons who executed the agreement on the company's behalf. No relief is or could be sought against him. He would be a purely formal party. But apart from that, Section 11 of the Dekkhan Agriculturists' Relief Act, to which the learned Judge refers, does not appear to have any application. That provides that every suit of the description mentioned in Section 3, Clause (w), shall be instituted and tried in a Court within the local limits of whose jurisdiction the defendant resides. But this being a suit for damages is not a suit under Section 3, Clause (w), but one under Section 3, Clause (x).

5. There is one other small point as to the construction of the agreement. It was urged in the trial Court-and Mr. Pradhan has repeated the argument- that the disputes contemplated by the clause in the agreement, which I have quoted, must mean disputes arising in the course of the business, not one like the present, which has arisen before, the business was actually started at all.

6. I do not think there is any force in this argument. Reading the agreement as a whole, 'the aforesaid business' clearly means the projected business or trade in groundnuts and the present must be regarded as a dispute which has arisen in respect of that business. Moreover, it is expressly provided in clause 14 of the agreement that the business should be deemed to have begun on the date of the agreement. In my opinion the appeal fails and must be dismissed with costs.


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