Skip to content


Biswanath Chowdhury Vs. U.P. Forest Corporation - Court Judgment

LegalCrystal Citation
SubjectContract;Civil
CourtKolkata High Court
Decided On
Case NumberSuit No. 512 of 1985
Judge
Reported inAIR1986Cal334
ActsCode of Civil Procedure (CPC) , 1908 - Section 20; ;Contract Act, 1872 - Section 28
AppellantBiswanath Chowdhury
RespondentU.P. Forest Corporation
DispositionApplication allowed
Cases ReferredPeriwal Packing Industries Pvt. Ltd. v. Fertiliser and Chemicals Travancore Ltd.
Excerpt:
- .....confer jurisdiction on a court which it has not; but if two courts have jurisdiction to decide a suit parties by their agreement prefer one court against the other. such an agreement is not unlawful and in case of such agreement parties should be held to the terms of such agreement.7. in the case of hakam singh v. gammon (india) ltd., : [1971]3scr314 by clause 13 of the agreement it was expressly stipulated between the parties that the contract should be deemed to have been entered into by the parties concerned in the city of bombay. regarding the clauses the supreme court has observed that it is not open to the parties by agreement to confer jurisdiction on a court which it does not possess under the code; but, where two courts, or more, have, under the code of civil procedure,.....
Judgment:
ORDER

R.N. Pyne, J.

1. The respondent in this application as plaintiff has filed the above suit with leave under Clause 12 of the Letters Patent, inter alia, for a decree for Rs. 5,58,314.00. The respondent's case is that under a contract made between the parties by its offer dated 9th March 1983 for supply of hessian bags and accepted by the petitioner by its letter of acceptance, dated 22nd March 1983, the respondent supplied hessian bags to the petitioner. According to the respondent, the letter of acceptance and the order were sent by the petitioner from its office at Mahanagar, Lucknow outside the aforesaid jurisdiction and the same were received by the respondent at his office at 68, Cotton Street, Calcutta, within the aforesaid jurisdiction. It is further stated by the respondent'that the said hessian bags were inspected by the petitioner's representative at the respondent's office within the jurisdiction of this Hon'ble Court. The respondent duly delivered the entire contractual quantity of hessian bags to the petitioner at various places in the State of U. P. outside the jurisdiction of this Hon'ble Court and the petitioner paid 90% value of the said goods aggregating to Rs. 31,27,411/-. The respondent has filed the above suit for recovery of the balance of the price of the said goods.

2. The petitioner's case is that the goods supplied by the respondent were not of contract quality and specification and as a result whereof the petitioner has suffered loss and damage for a sum of Rs. 7,43,058.35. The petitioner has also denied that it has office at Calcutta within the original side Jurisdiction of this Court or that goods were inspected at Calcutta within the said jurisdiction.

3. Clause 4 of the letter of acceptance contains, inter alia, the following terms : --

'Any dispute arising out of this contract will be settled in a Court of law at Lucknow.'

4. The petitioner has made the instant application, inter alia, for revocation of the leave under Clause 12 of the Letters Patent and the plaint filed in the suit be rejected as also permanent stay of the suit.

5. Two points were urged at the hearing of this application. Firstly whether in view of Clause 4 of the agreement mentioned above the respondent should have filed a suit in a Courtof law at Lucknow and the above suit should be stayed and leave under Clause 12 of the letters patent should be revoked; secondly whether the balance of convenience is in favour of the suit being tried at Calcutta or not.

6. The law on the first point is well settled by various decisions of the Supreme Court and of this Hon'ble Court. It is well settled that parties by consent, cannot confer jurisdiction on a Court which it has not; but if two Courts have jurisdiction to decide a suit parties by their agreement prefer one Court against the other. Such an agreement is not unlawful and in case of such agreement parties should be held to the terms of such agreement.

7. In the case of Hakam Singh v. Gammon (India) Ltd., : [1971]3SCR314 by clause 13 of the agreement it was expressly stipulated between the parties that the contract should be deemed to have been entered into by the parties concerned in the City of Bombay. Regarding the clauses the Supreme Court has observed that it is not open to the parties by agreement to confer jurisdiction on a Court which it does not possess under the Code; but, where two Courts, or more, have, under the Code of Civil Procedure, jurisdiction to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such Court is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act. The Supreme Court dismissed the appeal against the order of the High Court directing that the petition be returned for presentation to the proper Court.

8. In the case of Continental Drug Company Limited v. Chemoids and Industries Limited, : AIR1955Cal161 an agreement relied upon by the plaintiff as the foundation of their claim contained a clause which is as follows :

'Any dispute arising between the parties, settlement of same legally or otherwise will be decided in Bombay.'

It has been observed by a Division Bench of this Court that it is a well settled proposition of law that litigants cannot, by private agreement confer jurisdiction upon a Court which it does not possess nor can they divest a Court of the jurisdiction which it possesses under the law. Where, however, there are two Courts which are equally competent to try the suit, an agreement between the parties that the suit should be instituted in one of those two courtscannot be said to be absolute restriction on the right of taking legal proceedings in the ordinary law but a partial restriction on such right. Such an agreement does not contravene the provisions of Section 28 if chosen Court has jurisdiction to try the suit under the ordinary law. It was further observed that where a suit is not filed in the Court agreed to by party, the proper method of enforcing the agreement is to return the plaint for presentation to the proper Court.

9. In the case of Tobu Enterprises Pvt Ltd. v. Cameo Industries Ltd., : AIR1984Cal24 the agreement contained a clause that in the event of any dispute arising out of the contract the matter will be given to arbitrator appointed by both the parties failing which the jurisdiction of Delhi Court will apply. In the above case the Divisjon Bench has observed that it is not disputed that apart from the arbitration clause both this Court (subject to the leave under clause 12 of the Letters Patent) and the Delhi High Court have jurisdiction in the matter. So the parties have agreed that their forum will be Delhi High Court and there is no illegality in such agreement that Delhi High Court has jurisdiction to entertain the award in this matter to which reference may relate. The Division Bench relied on the following observation in the case of Michael Golodetz v. Serajuddin : [1964]1SCR19 .

'.....The Court ordinarily requires the partiesto resort for resolving disputes arising under a contract to the Tribunal contemplated by them at the time of the contract. That is not because the Court regards itself bound to abdicate its jurisdiction in respect of disputes within its cognizance; it merely seeks to promote the sanctity of contracts x x x x x.'

The Division Bench further observed as follows : --

'Now, the granting of leave under clause 12 of the Letters Patent is discretionary with the High Court and, when the parties have agreed to restrict their forum to the Delhi High Court, the learned Judge, in our opinion, should not have granted leave under Clause 12 of the Letters Patent enabling the respondent to file the application under section 20 of the Arbitration Act. It does not appear that there is any special reason or circumstance justifying the grant of leave under clause 12 of the Letters Patent. Further, the arbitration agreement as contained in clause 4 appears to be vague.'

The Division Bench in the facts and circumstances of the above case observed that the impugned order of the learned Judge granting leave under Clause 12 of the Letters Patent should be set aside.

10. In the case of Ganpatrai Agarwal v. Fertiliser Corporation of India, : AIR1984Cal35 a clause in the contract between the parties provided that the contract was 'subject to jurisdiction of the Dhanbad Court'. On a dispute between the parties having arisen an application under Arbitration Act was filed in the Calcutta Court. Construing the clause Mrs. Pratibha Bonnerjea, J. held that, when the parties entered into a forum selection agreement with their consent and as a result whereof the parties have to face botherations and expenses these are no grounds for releasing them from their contract. In such a case excluded Court cannot consider the balance of convenience or make a new approach to relieve the parties from their bargain. The contract cannot be avoided only because it contains stringent terms and the Court has no jurisdiction to ignore such contract unless such contracts are found to be voidable or void under the law.

The learned Judge further observed as follows : --

'When two or more Courts have jurisdiction in a matter and a proceeding has been started in one of such Courts if there is no ouster clause, then certainly the Court which has been moved, has the discretion to consider the balance of convenience if that point is agitated by any party to the proceeding and to release or retain the matter accordingly. But when a clear unambiguous ouster clause is there, the legal position would be entirely different. In suuuch a case, the ouster clause may not be binding on the excluded Court or may not affect its jurisdiction, but the effect of the excluded Court exercising its jurisdiction in the matter would be to absolve the parties from their solemn agreement which is otherwise binding on them. Now a Court ordinarily will not allow parties to get out of their lawful bargain.'

***** 'In my opinion, if the excluded court finds that there is a valid ouster clause in the agreement but the Court has been moved in breach of it, the excluded Court should not exercise itsjurisdiction. If the excluded court exercises jurisdiction by making a new approach it would be an encouragement to the parties to commit breach of contract and a Court should not be a party to it. In my opinion, when parties enter into a forum selection agreement with free consent and as a result thereof, the parties have to face botheration and expenses, these are no grounds for releasing them from their contract. In such a case the excluded Court cannot consider the balance of convenience or make a new approach to relieve the parties from their bargain.'

11. In the case of Shah Prabhudas Gulabchand v. Eurasian Equipments & Chemicals Ltd., : AIR1977Cal449 the contract contained a clause to the following effect :--

'This contract is subject to Bombay jurisdiction.'

12. It was observed by a Division Bench of this Court that the place of suing in respect of enforcement of any claim under the contract was restricted to Bombay Court. The mere fact that the bank was impleaded as a party to the suit and the plaintiff had transaction with its branch at Calcutta would not entitle the plaintiff to file the suit at Calcutta. The question of balance of convenience of the defendant bank in the facts and circumstances of the case lost a great deal of its importance.

13. Strong reliance was placed on behalf of the respondent on the case of Periwal Packing Industries Pvt. Ltd. v. Fertiliser and Chemicals Travancore Ltd., : AIR1982Cal350 . In that case the contract contained the following clause :--

'Any litigation arising on account of the said contract would be taken up in a Court of law at Kerala.'

14. In this case Dipak Kumar Sen, J. has held that the clause does not indicate that only the Courts of law in Kerala would have exclusive jurisdiction or that any other Court will not have jurisdiction to entertain such litigation or that the parties would not be entitled to resort to any other Court.

15. In my view, when the parties select a forum where the litigation should be instituted, it is not necessary for the parties to agree that only that particular Court will have jurisdiction. If the two Courts have jurisdiction and theparties choose by their agreement one of them that is sufficient. The observation of Dipak Kumar Sen, J., it appears, is contrary to the principles laid down by the Division Bench in the cases mentioned hereinbefore. Hence I am unable to follow the above decision.

16. It has been argued on behalf of the respondent that in the instant case, letter of acceptance was sent from outside Calcutta to the plaintiff at Calcutta within the jurisdiction of this Hon'ble Court. It has been further stated that inspection of the goods took place in Calcutta, It is also stated that 90% of the bills was paid at Calcutta within the jurisdiction of this Court. It is stated that the respondents carried on business within Calcutta and the petitioner has also an office at Calcutta. Therefore, the balance of convenience is in favour of instituting a suit in this Court. The aforesaid facts are all disputed and denied by the petitioner. The petitioner has denied that any part of the cause of action has arisen within the jurisdiction of this Court. The petitioner has further denied that it has an office at No. 23A, Netaji Subhas Road or that any payment was made at Calcutta within the jurisdiction of this Court. It is stated that goods were supplied outside the jurisdiction of this Court and the defendant has its office at Lucknow. It is further denied that all the documents and records relating to the supply of the goods are maintained in Calcutta as alleged by the respondent.

17. In view of the above disputed position it cannot be said that the balance of convenience is in favour of this Court to try the suit. In any event, when the parties have entered into a forum selection agreement the contention to the effect that if the suit is filed in the chosen forum that will be inconvenient for the plaintiff cannot be accepted. In such a case and in particular in view of the above disputed questions of fact the respondent should not, in my view, be allowed to get out of the agreement. In the facts and circumstances of this case the alleged hardship or inconvenience of the respondent is not sufficient consideration to allow the respondent to file a suit in breach of the terms of the agreement As the parties have agreed to a forum selection agreement they must be held to their bargain. Further, in view of the decision of the Division Bench in the case of Tobu Enterprises Pvt. Ltd. v.Camco Industries Ltd. : AIR1984Cal24 (supra) as the respondent has filed the above suit with leave under Clause 12 of the Letters Patent in this Court in breach of their agreement such leave should be revoked.

18. For all the reasons mentioned above this application succeeds. Hence, leave granted under Clause 12 of the Letters Patent is revoked. The suit is stayed. After keeping a loco copy, the plaint shall be returned to the plaintiff for presenting the same in the proper Court. The respondent will pay the cost of this application to the petitioner.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //