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Bombay High CourtIndian Cases

Premchand Sales Through Its Partners … vs Shree Precoated Steels Ltd. on 26 September 2001

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Bombay High Court
Premchand Sales Through Its Partners … vs Shree Precoated Steels Ltd. on 26 September, 2001
Equivalent citations: 2002(1)BOMCR112, 2002 A I H C 699, 2002 BOM LR 1 134, (2001) 4 ALLMR 597 (BOM), (2002) 2 ICC 9, (2002) 1 BOM CR 112
Author: A.M. Khanwilkar
Bench: A.M. Khanwilkar
JUDGMENT

A.M. Khanwilkar, J.

1. This appeal takes exception to the Order passed by the Civil Judge, S.D., Pune dated July 2, 1998 in Special Civil Suit No. 573 of 1998. By this order the trial Court has returned the plaint to the appellants-plaintiffs for presentation to the proper Court.

2. Briefly stated, the parties hereto viz. the appellants and the respondents have entered into an agreement of distributorship some time in March 21, 1993 in respect of products of respondents i.e. Precoated Steels/Steel Strips manufactured by the Company in the State of Maharashtra except Greater Bombay and Thane. Under the said agreement, the appellants were undoubtedly appointed as Distributors. It is also relevant to point out that at the relevant time the registered office of the respondent company was at Bombay. It is in that context, Clause 11 of the said agreement provided for that only the competent courts at Bombay will have jurisdiction in respect of any dispute or differences arising out of or touching this arrangement. It is not necessary to extensively refer to all the facts mentioned in the plaint. Suffice it to point out that the said agreement was only for a period of one year. It is also not in dispute that respondents subsequently entered into another agreement on June 22, 1994 appointing the appellants as Distributors on same terms and conditions, which agreement was also to last for a period of one year. It is relevant to point out that even when the second agreement was executed between the parties in 1994, Clause 11 relating to the jurisdiction of competent Court at Bombay was retained-inasmuch as when this agreement was executed the respondents at the relevant time had their office at Bombay. While the said agreement was in force, the respondents shifted their office to Pune and the parties thereafter continued to transact their usual business within the jurisdiction of Pune Court. In due course of time the agreement executed in the year 1994 also expired by efflux of time in the year 1995. The specific case made out in the plaint is that, in spite of expiry of the second agreement, parties arrived at oral understanding and continued to transact their usual business on the same terms and conditions. It is further asserted in the plaint that the parties had in fact prepared a draft agreement, but the same was not finally executed. However, the respondents unilaterally terminated the agreement of Distributorship by communication dated March 20, 1998. After the said communication the appellants immediately rushed to the Civil Court at Pune by filing Special Civil Suit No. 573 of 1998 on 4-4-1998.

3. In other words, on perusal of the plaint as a whole the position that emerges is that when the first as well as the second agreement was executed between the parties, the respondents had its office at Bombay. Moreover, during the tenure of the second agreement the respondents shifted their office at Pune and the parties continued to transact their usual business in Pune. Admittedly, the second agreement expired in June 1994, but still the parties continued to transact usual business in Pune on same terms and conditions-albeit on the basis of oral agreement. On this premise the appellants filed the subject suit in the Civil Court at Pune contending that the entire cause of action has arisen at Pune and both the parties are also within the jurisdiction of Pune Court. Along with the said suit appellants also took out application for interim injunction being Exh. 5. In response to the said interim application the respondents filed reply taking specific plea that Pune Court has no jurisdiction, for the only competent Court to try and decide the dispute between the parties would be at Bombay in view of Clause 11 of the agreement. Besides raising this objection in reply to Exh. 5 the respondents filed separate application under section 9A of the Code of Civil Procedure for framing preliminary issue as to the jurisdiction of Pune Court to try and decide the suit. From the averments in this application it would appear that case made out by the respondents is purely on the basis of Clause 11 of the agreement which provides that “only the competent courts at Bombay will have jurisdiction in respect of any dispute or differences arising out of or touching this arrangement”. According to the respondents the parties have agreed to confer jurisdiction upon the Civil Courts at Bombay and therefore the suit filed before Pune Court was not maintainable. This application further asserts that the agreements dated 29-6-1993 and 22-6-1994 have been executed in Mumbai and at the relevant time dealing of respondent Company was done from Mumbai only. The trial Court proceeded to decide this preliminary issue regarding jurisdiction of the Court at Pune by the impugned order. The trial Court has mainly held that Clause 11 of the agreement was binding on the parties and therefore the jurisdiction to try and decide the dispute between the parties was only with the competent Court at Bombay. Accordingly, the trial Court returned the plaint to the appellants for presentation to the proper Court. It is this Order which is subject matter of challenge in the present appeal.

4. The question that arises for consideration of this Court is whether the suit as filed before the Pune Court was maintainable in law?

5. The trial Court, in my view, has completely glossed over the crucial facts while adjudicating the point in issue. Admittedly, the second agreement executed between the parties in June 1994 was to expire after a period of one year. It is not in dispute that after expiry of the said agreement, no written agreement was executed between the parties. It is also not in dispute that before the second agreement expired in June 1995, the respondents had already shifted their office at Pune and transacted usual business with the appellants from its Pune Office, albeit pursuant to oral agreement even after June 1995 till termination of the agreement. In other words, the oral agreement purported to be in June 1995 is unquestionably entered at Pune. Accordingly, the admitted position that emerges from the record is that, both the parties, at the relevant time-when the suit is instituted before the Pune Court, were within the jurisdiction of that Court. Moreover, all transactions between the parties after June 1995 pursuant to the oral agreement were also within the jurisdiction of Pune Court. In that sense, the entire cause of action arose within the jurisdiction of Pune Court.

6. Assuming that by oral agreement parties agreed to adopt all terms and conditions of the previous agreements which would include Clause 11 of the earlier agreements relating the jurisdiction of Bombay Court, however, as rightly submitted by Mr. Shah for the appellants, the parties by agreement cannot invest jurisdiction in a Court which otherwise will have no jurisdiction and such an attempt would be obviously against the public policy. In support of this submission reliance has been placed on the decision of the Apex Court Globe Transport Corporation v. Triveni Engineering Works and another. In that case the appellant was carrying on transport business in Jaipur. The consignor entrusted goods to the appellant at Baroda for carriage to Naini, Allahabad. The goods were damaged in transit due to an accident. The condition in the consignment note did specifically provide that the Court in Jaipur alone shall have jurisdiction in respect of all claims and matters arising under the consignment. The Apex Court however negatived the said plea and held that it is not competent to the parties by agreement to invest a Court with jurisdiction which it does not otherwise possess but if there are more than one forums where a suit can be filed, it is open to the parties by agreement to select a particular forum and exclude the other forums in regard to claims which one party may have against the other under a contract.

7. Having regard to this settled legal position, I am disposed of to take the view that the trial Court has completely glossed over the crucial facts germane for deciding the issue of jurisdiction and has therefore committed manifest error in concluding that the Pune Court shall have no jurisdiction. In the circumstances, the impugned Order is set aside and the plaint is restored to the file of the Civil Judge, Senior Division, Pune for being decided in accordance with law.

8. As a consequence of restoration of the suit, the application for interim injunction (Exh. 5) preferred by the appellants during the pendency of the suit is also restored and the trial Court may examine the same on merits in accordance with law.

9. The Counsel for the respondents has orally pointed out that the respondent-company has gone under BIFR. However, I am not expressing any opinion on this aspect of the matter and it will be open for the trial Court to examine the same before the Court proceeds to decide issues that would arise for its consideration.

10. This appeal therefore succeeds. The impugned order is set aside and the plaint as well as application (Exh. 5) are restored to the file of the trial Court to be tried and decided in accordance with law. No order as to costs.

Parties to act on the copy of this order duly authenticated by Sheristedar of the Court.