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Beacon Pharmaceutical Vs. Duni Chand Khosla and Sons - Court Judgment

LegalCrystal Citation
SubjectContract
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Revn. No. 397 of 1972
Judge
Reported inAIR1973P& H160
ActsIndian Contract Act, 1872 - Sections 29; Code of Civil Procedure (CPC), 1908 - Sections 20
AppellantBeacon Pharmaceutical
RespondentDuni Chand Khosla and Sons
Appellant Advocate M.N. Bhatkal and; P.C. Khungar, Advs.
Respondent Advocate G.C. Mittal, Adv.
Excerpt:
.....was terminated by them with effect from january 1, 1970, by a letter dated december 31, 1969. it was further alleged that according to the terms of the agreement between the parties, the petitioner-defendant firm was receiving direct orders from the consumers of the sole agency territory of the plaintiff-respondent and was supplying the product directly against the same. it is well known that the town of greater bombay has now scores of civil courts exercising jurisdiction within their respective territorial limits. i do not think that it is one of the essentials of a restrictive covenant like clause 12 to specify the particular and the only court which would have territorial jurisdiction for the purpose of filing of the suit. indeed it would be impossible for the..........disputes arising out of the agreement were subject to the jurisdiction of the courts within the state of maharashtra. on the above said pleadings the trial court framed the following issue:--'whether this court has jurisdiction to proceed with the trial of this case?'3. evidence was led by the parties and the court took the view that acceptance of the proposal conveyed through letters exhibits p-5 and p-6 by the plaintiff-respondent firm had taken place at jullundur and it was thereafter that these were duly despatched by post to bombay for delivery to the defendant-petitioners. adverting to clause 12 of exhibits p-5 and p-6, the trial court, however, took the view that this clause giving jurisdiction to the courts of maharashtra for the settlement of disputes under the contract was.....
Judgment:
ORDER

1. The only issue that arises for determination in this civil revision is whether by virtue of the subsisting contract between the parties, the jurisdiction of the Civil Courts at Jullundur has been lawfully excluded. The petitioner-firm styled as Beacon Pharmaceuticals carries on business at 135/136 Andheri Kurla Road, Bombay-69. The said firm appointed Messrs Duni Chand Khosla & Sons, the respondent-firm as their sole selling agents for their products on the terms and conditions contained specifically in the agreement Exhibit P-5 dated March 1, 1966 for a period of three years. On expiry of the abovesaid period a further agreement dated April 30, 1969 was agreed upon which renewed the earlier contract for a period of three years on the old terms and conditions vide Exhibit P-6. Disputes having arisen over the accounts, partnership-firm of Messrs Duni Chand Khosla and sons brought a suit for rendition of accounts in the Court of Shri Amjad Ali Khan. Sub-Judge 1st class, Jullundur. It was averred on their behalf that they had performed their part of the agreement between the two firms diligently and to the best of their ability, but to their utter surprise and astonishment the sole distributorship granted to them by the petitioner-defendants was terminated by them with effect from January 1, 1970, by a letter dated December 31, 1969. It was further alleged that according to the terms of the agreement between the parties, the petitioner-defendant firm was receiving direct orders from the consumers of the sole agency territory of the plaintiff-respondent and was supplying the product directly against the same. It was alleged regarding these transactions that the defendant-petitioner were bound to render the accounts to the plaintiff-respondent from March 1, 1966 from which date no accounts had been rendered by them.

2. In the written statement filed on behalf of the defendant-petitioner, it was expressly pleaded that the Court at Jullundur had no territorial jurisdiction because vide clause 12 of the agreement, the same had been excluded and all disputes arising out of the agreement were subject to the jurisdiction of the Courts within the state of Maharashtra. On the above said pleadings the trial court framed the following issue:--

'Whether this Court has jurisdiction to proceed with the trial of this case?'

3. Evidence was led by the parties and the Court took the view that acceptance of the proposal conveyed through letters Exhibits P-5 and P-6 by the plaintiff-respondent firm had taken place at Jullundur and it was thereafter that these were duly despatched by post to Bombay for delivery to the defendant-petitioners. Adverting to clause 12 of Exhibits P-5 and P-6, the trial Court, however, took the view that this clause giving jurisdiction to the Courts of Maharashtra for the settlement of disputes under the contract was too vague and was unenforceable on that score. It, therefore, held the same to be invalid and consequently took the view that in spite of its existence, the Jurisdiction of the Court at Jullundur was not excluded. The preliminary issue was decided in favour of the plaintiff-respondent and against the defendant-petitioner and consequently the present revision is at the instance of defendant-petitioner.

4. Mr. Bhatkal in support of the revision places primary reliance on sub-clause(a) of Section 20 of the Code of Civil Procedure. Counsel contends that in view of the admitted fact that the firm of the defendant-petitioner carries on business within the State of Maharashtra and its partners were residents within the jurisdiction of that state, it is evident that the present suit could lie in the relevant Civil Court within that State. On these premises, the forceful submission on behalf of the defendant-petitioner was that even assuming for a moment that the contract between the parties was accepted at Jullundur, nevertheless a suit under the contract could lie both at Jullundur and within the State of Maharashtra where the defendant-petitioner's firm carries on business and are residents therein respectively. It is argued that if territorial jurisdiction lies at two places, it is always open to the parties to exclude one or the other and to bind themselves that they are to resort to either of the two jurisdictions only.

5. There is patent merit in the argument raised on behalf of the defendant-petitioner. The trial Court found on evidence that the agreements Exhibits P-5 and P-6 were accepted at Jullundur. Assuming this finding to be correct for the sake of argument, it is nevertheless manifest that the plaintiff-respondent in the present case could sue the defendant-petitioner both at Jullundur as also in the Court having the relevant territorial jurisdiction within the State of Maharashtra. Indeed the matter is wholly simplified because Mr. G. C. Mittal on behalf of the respondents fairly concedes that his clients on the present facts could certainly sue either within the State of Punjab or in the Court having jurisdiction within the State of Maharashtra. Mr. Mital, however, contended that it was for his clients to elect as to where they would sue. I am afraid that contention appears to be unsustainable. For this aspect one has to advert to the relevant documents Exhibits P-5 and P-6. A perusal of the same would show that the parties willingly and with their eyes open have agreed that the Courts having jurisdiction in all matters arising out of the contract, would be those within the State of Maharashtra. Clause 12 of the agreements Exhibits P-5 and P-6, which is in identical terms, is as follows:--

'Any disputes arising out of this agreement will be subject to the jurisdiction of the State of Maharashtra.'

In construing the above said clause, it has to be kept in mind that Exhibits P-5 and P-6 are not formal legal deeds formally drafted by a lawyer or a solicitor. They are letters being exchanged between the parties. Its context in Exhibits P-5 and P-6, therefore, leaves no manner of doubt that the intention of the parties was to exclude the jurisdiction of the Civil Courts of other states except that of Maharashtra where the firm of the defendant-petitioner carries on business. It is also evident that Messrs Beacon Pharmaceuticals had themselves written Exhibits P-5 and P-6 and asked the firm of Messrs. Duni Chand Khosla and Sons to accept the same. The firm of the defendant-petitioner is the principal whilst the plaintiff-respondent's firm was appointed as their sole selling agents. There was merit in the contention of Mr. Bhatkal that since the defendant-petitioners firm carried on business in Maharashtra, whilst appointing the sole selling agents, it wished to avoid the multiplicity of jurisdictions and it was, therefore, that the restrictive covenant in clause 12 was in corporated by which, of the two jurisdictions that might arise within the country, Civil Courts in the State of Maharasthra alone were chose as the forum of litigation, if necessary. It is not in dispute that such a covenant is neither invalid nor illegal as being opposed to public policy. It is settled law that where two courts have jurisdiction to try the suit, then it is open to the parties to fairly agree to the dispute between them being tried in one of them. That, in the present case, resort could be made to either of the two Courts is not now in dispute and is indeed patent from the language of the stature in Section 20, Civil Procedure Code, itself and more specifically by illustration (a) to the said section. Exhibits P-5 and P-6, therefore did not more than bind the parties that the jurisdiction for the litigation would vest in only one of those within the territorial limits of the State of Maharashtra.

6. Adverting to the reasoning of the trial Court, the basic error in which it seems to have fallen, in my view, is that it held in terms that clause 12 of the contract between the parties and void and unenforceable on the ground of vagueness. This contention does not appear to me to hold water. Such clauses confining the jurisdiction for the litigation within one or the other states or lesser territorial areas, are common incidents of commercial contracts. Indeed clause 12 is one of usual incidents of numerous commercial contracts where parties are living or carrying on business at considerable distances from each other. The clause above said expressly laid down that all disputes arising out of the contracts Exhibits P-5 and P-6 would be subject to the jurisdiction of the Courts within the State of Maharashtra. There does not appear to be any vagueness about the same. Indeed Mr. G. C. Mital on behalf of the plaintiff-respondent, had to concede that though such a clause was a common place incident of commercial contracts, he could cite no authority either of this Court or of any other Court where such a provision in the contract has been struck down on the ground of vagueness nor could learned counsel on principle given any cogent argument to sustain the view of the trial Court that clause 12 was not enforceable on the ground of vagueness.

7. Assuming entirely for the sake of argument (though I have held to the contrary above) that clause 12 had an element of uncertainty about it, nevertheless in the context in which the contract has been arrived at, it is patent that this clause was obviously capable of being made certain. The trial Court expressly referred to Section 29 of the Contract Act. It seems, however, to have oblivious of the provision therein, which lays down that an agreement is void only if it is not capable of being made certain. In the present case, the place where the defendant-petitioner firm carrying on business is a fixed one and address thereof is specifically mentioned prominently on the letter-heads of Exhibits P-5 and P-6. Equally so the firm has partners and wherever they are residing personally working for gain is a matter which is specific and capable of ascertainment. Consequently the Civil Court having territorial jurisdiction is easily capable of determination. The view of the trial Court, that clause 12 sought to vest the jurisdiction of the courts for disputes between the parties in each one of the Courts of the State of Maharashtra, seems to me to be wholly unsupportable.

8. Indeed the trial Court took the view that considering the address of the defendant-petitioner firm, the jurisdiction in the civil disputes would be within the Courts at Bombay, It observed as follows:--

'Had the parties agreed that only Court at Bombay would have jurisdiction to try the suit arising out of the contract between them, the matter might have been different but as Clause 12 of the agreement Exhibits P-5 and P-6 says that disputes would be subject to the jurisdiction of the State of Maharashtra, it could not be enforced.'

The above said argument again suffers from a patent fallacy. It is well known that the town of greater Bombay has now scores of Civil Courts exercising jurisdiction within their respective territorial limits. Merely saying that jurisdiction would be in the Bombay Courts would in no way make clause 12 either exceptionally certain or clothe it with validity. There would be no magic in the use of the word Bombay alone. The specific court having jurisdiction would be where either the firm carries on business or its partners reside to work for gain etc. I do not think that it is one of the essentials of a restrictive covenant like Clause 12 to specify the particular and the only Court which would have territorial jurisdiction for the purpose of filing of the suit. Indeed it would be impossible for the parties to foresee and specify the same in agreements of the nature of Exhibits P-5 and P-6. I had invited learned counsel for the plaintiff-respondent to cite any authority to sustain the view that a covenant like Clause 12 must specify the town or the Court necessarily to which jurisdiction is confined. Mr. Mittal was unable either to cite authority or to support the view on principle.

9. In fairness to Mr. Bhatkal, I would notice another contention raised by him in which he placed reliance on sub clause (c) of Section 20 of the Code of Civil Procedure. It was argued that the letters Exhibits P-5 and P-6 having been despatched and sent from Bombay, therefore, the cause of action in part did arise within that jurisdiction. Learned counsel had also assailed the finding of the fact of the trial Court and argued that the acceptance of the offer Exhibits P-5 and P-6 was also within Bombay and hence in fact the dispute was within the State of Maharashtra. In view of the fact that I have taken a view favourable to the defendant-petitioner in regard to first contention it is unnecessary to advert to these.

10. In view of the foregoing discussion, the revision petition is allowed and the finding of the trial court on the preliminary issue No. 1 is reversed. There will be no order as to costs.

11. Revision allowed.


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