Gujarat High Court
Shreyas Construction vs An Infrastructure Limited on 12 September, 2025
NEUTRAL CITATION
C/FA/4368/2009 JUDGMENT DATED: 12/09/2025
undefined
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/FIRST APPEAL NO. 4368 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
=========================================
Approved for Reporting Yes No
==========================================
SHREYAS CONSTRUCTION
Versus
AN INFRASTRUCTURE LIMITED
==========================================
Appearance:
MR KG SUKHWANI(871) for the Appellant(s) No. 1
MR AI SURTI(875) for the Defendant(s) No. 1
RULE SERVED for the Defendant(s) No. 1
==========================================
CORAM:HONOURABLE MR. JUSTICE HEMANT M. PRACHCHHAK
Date : 12/09/2025
ORAL JUDGMENT
1. Present appeal is filed by the appellant - original plaintiff under Section 96 of the Civil Procedure Code, 1908 against the judgment and decree dated 12.01.2009 passed by the learned 3 rd Additional Senior Civil Judge, Ahmedabad (Rural) [hereinafter be referred to as "the trial Court"] in Special Civil Suit No. 176 of 1995 whereby the trial Court has dismissed the suit.
2. Brief facts of the present case, in nutshell, are as under:-
Page 1 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined 2.1 It is the case of the appellant that the appellant - plaintiff is a registered partnership firm carrying the business of engineers and contractors and the respondent - defendant is a Limited Company incorporated under the companies Act and the appellant invited the tender for the work of lowering, laying and jointing of A.C. pipes amounting to Rs. 10,78, 559/-, which came to be accepted by the respondent and the agreement was executed at Ahmedabad on 12.07.1989 between the parties. It is further averred that the Bank Guarantee was furnished towards the security deposit and the work was required to be completed within 167 days, but the work could be completed in 832 days due to the breach of the contract as the respondent failed to supply the necessary materials for the execution of the work and it has caused considerable delay. That the respondent has also committed breach of the contract by not making the payment regularly on account of the work done by the appellant and respondent failed to make the payment for the extra work executed by the appellant. The appellant has further averred that the work was completed in all respects and the final bill was submitted on 31.01.1992 and an amount of Rs 3,74,721.75 was required to be paid by the respondent. It is further averred that on repeated request, the said amount was not paid by the respondent till today and the appellant is entitled for further interest at the rate of 24% p.a on the principal amount due of Rs. 3,60,309.11 paise from 01.10.1992 till its realization. It is further averred that the main party Gujarat Water Supply and Sewerage Board (GWSSB) has already paid the final bill to the respondent and they have also refunded the amount of Security Deposit and granted necessary extension.
2.2 The appellant has further averred that Rs.3,60,609.11 paise
Page 2 of 27
Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025
NEUTRAL CITATION
C/FA/4368/2009 JUDGMENT DATED: 12/09/2025
undefined
towards principal amount was required to be paid to appellant on which the appellant has calculated the interest at the rate of 24% p.a. till 30.09.1992, thus an amount of Rs.3,74,721.75 paise was required to paid to the appellant and further interest at the rate of 24% p.a. from 01.10.1992 on Rs.3,60,609.11 paise and the appellant had also inured other expenditures. It is the case of the appellant that the work was required to be completed within 167 days, but on the lapse on the part of the respondent, the work could be completed in 832 days and due to the prolongation by 665 days the appellant has to incur the overhead establishment charges towards men, material, power etc. And, therefore, the appellant is entitled for Rs.4,40,000/-.
2.3 The appellant has filed the aforesaid suit seeking decree of Rs.8,98,221.75 paise with interest at the rate of 24% per annum from the due date till its realization.
2.4 The trial Court has, after considering the rival contentions of the parties, framed the following issues at Exhibit 54.
(1) Whether the plaintiff proves that it is a legally regd.
Partnership firm?
(2) Whether the plaintiff proves that the work could not be completed within stipulated time due to breach of the contract by the defendant?
(3) Whether this Court have jurisdiction to entertain the suit? (4) Whether the suit is bad for non-joinder of necessary party? (5) Whether the plaintiff proves that it's Rs.3,60,609.11 paise is outstanding dues from the defendant?
(6) Whether the plaintiff is entitled to recover Rs.30,000/- as an incentive from the deft.?
(7) Whether plaintiff is entitled to recover Rs.23,200/- as on
Page 3 of 27
Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025
NEUTRAL CITATION
C/FA/4368/2009 JUDGMENT DATED: 12/09/2025
undefined
account of extra rate from the deft.?
(8) Whether the plaintiff is entitled to recover Rs.28,800/- on
account of replacement of pipes from deft.?
(9) Whether the plff. Is entitled to recover Rs.4,40,000/- an
account of overhead establishment charges from the deft.? (10) Whether the plff is entitled to the interest at the rate of Rs.24 p.c. / p.a an outstanding dues?
(11) Whether the plff is entitled to the relief claimed?
(12) What order and decree?
2.5 The respondent has filed its written statement at Exhibit 52
contending that the respondent is a registered Limited Company and ordinarily carries on its business at Village Hamirgarh, District Bhilwara, State of Rajasthan. The proper forum for the institution of suit against the company is one within whose local limits the registered office of the company is situated, that the plaintiff has chosen a wrong territorial forum and the suit on this count is liable to be dismissed.
2.6 The trial Court, after considering the submissions of both sides and oral as well as documentary evidence, has dismissed the suit.
3. Being aggrieved and dissatisfied with the judgment and decree passed by the trial Court, the appellant has preferred the present appeal.
4. Heard Mr. Paras Sukhwani, learned counsel for the appellant and Mr.A. I. Surti, learned counsel for the respondent at length. Perused the material available on record.
5. Mr.Sukhwani, learned counsel for the appellant has submitted the same facts which are narrated in the memo of appeal and has Page 4 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined submitted that there was delay in supplying CI pipes which caused extra expenditure, which fact was evident from the document at Exhibit 84. He has submitted that the trial Court has not considered the documentary as well as oral evidence i.e. Exhibit 64, 73, 131 and 142 and also not considered the fact that there was enough evidence to establish the execution of the agreement at Ahmedabad. He has submitted that the Court below has jurisdiction to entertain the suit and the cause of action had not arisen within the jurisdiction of Rajasthan Court. He has submitted that the trial Court wrongly came to the conclusion that the appellant has not produced any documentary evidence to show that the defective or broken pipes were supplied by the respondent and the appellant incurred expenses for broken material. He has submitted that the contract agreement was executed at Ahmedabad, the part payment was made by the respondent from the Ahmedabad Office and the contract was performed within the territorial jurisdiction of the Court. It is submitted by learned counsel that no cause of action or part of cause of action has arisen within limits of the Courts below situated at Bilwara; that merely because the registered office of the respondent is situated at Bilwara, the Court at Bilwara will have no jurisdiction. It is submitted by the learned counsel that since no cause of action has arisen within the limits of the Court at Rajasthan, Clause 3 of the contract agreement is void as per the provisions of Section 28 of the Contract Act.
5.1 Mr.Sukhwani, learned counsel has submitted that agreement was executed at Ahmedabad and the work was executed within limits of Ahmedabad (Rural) and hence, the Court at Ahmedabad (Rural) has jurisdiction to hear and decide the suit filed by the appellant. He has Page 5 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined submitted that the respondent had filed an application at Exhibit 66 with regard to hearing of issue No.3 as preliminary issue which came to be rejected against which Special Civil Application No. 19535 of 2005 came to be filed which was also dismissed. He has submitted that the work was completed for which the respondent had received payment from principal employer and number of reminders were given for outstanding due. He has submitted that by letter dated 20.03.1990, the respondent informed that as a special incentive for timely completion of work, an amount of Rs.30,000/- will be paid, however, the same had not paid and the work was delayed due to the respondent. He has submitted that the extra work was done as per direction of the respondent for which bill was also submitted on 05.03.1991 and though extra work was done and bill was submitted, the respondent had not made payment. He has submitted that though the appellant had written a letter dated 22.09.1992 to the Chairman with regard to payment of final bill along with the statement of account, but the final bill has not been paid to the appellant. He has further submitted that in spite of several reminders, the respondent has not made payment and since the payment was not made, the appellant had filed the suit for recovery of the decreetal amount. He has submitted that the agreement which was under challenged in the suit, was executed at Ahmedabad and, therefore, in view of the settled principle of law, the Court at Ahmedabad has jurisdiction to try the suit, however, the trial Court has failed to considered the said fact in its true and proper spirit. He has submitted that by consent of the parties can not confer the jurisdiction on a particular Court if the same Court has jurisdiction to try the suit. He has submitted that the respondent used the printed letterhead at Exhibit 72 wherein the address of the Rajasthan office was mentioned and only on that basis Page 6 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined the trial Court drew inference that the agreement was executed at Hamirgarh, Rajasthan. He has submitted that the work was done in Gujarat and the respondent also having its branch office at Ahmedabad and the agreement in dispute is executed at Ahmedabad only and hence the trial Court has jurisdiction to try the suit, however, the trial Court has overlooked the said aspect. He has submitted that on one hand, the trial Court has concluded that the Court has jurisdiction, however, the Court dwelled into other issues and given reasons and in respect of the issue if once the Court has come to the conclusion that the Court has no jurisdiction then the Court ought to have returned the plaint for filing the suit before the appropriate Court instead of the Court has considered the suit and dismissed the same on the ground of having no jurisdiction.
5.2 Mr.Sukhwani, learned counsel has relied upon the decision of the Hon'ble Supreme Court in the case of A.B.C. Laminat Pvt. Ltd Vs. A. P. Agencies, AIR 1989 SC 1239 wherein the Hon'ble Supreme Court has held and observed in paras - 11 and 15 as under:-
"11. The jurisdiction of the Court in matter of a contract will depend on the sites of the contract and the cause of action arising through connecting factors. A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a Judgement of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate Judgement must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff.
Page 7 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined
15. In the matter of a contract there may arise causes of action of various kinds. In a suit for damages for breach of contract the cause of action consists of the making of the contract, and of its breach, so that the suit may be filed either at the place where the contract was made or at the place where it should have been performed and the breach occurred. The making of the contract is part of the cause of action. A suit on a contract, therefore, can be filed at the place where it was made. The determination of the place where the contract was made is part of the law of contract. But making of an offer on a particular place does not form cause of action in a suit for damages for breach of contract. Ordinarily, acceptance of an offer and its intimation result in a contract and hence a suit can be filed in a court within whose jurisdiction the acceptance was communicated. The performance of a contract is part of cause of action and a suit in respect of the breach can always be filed at the place where the contract should have (been) performed or its performance completed. If the contract is to be performed at the place where it is made, the suit on the contract is to be filed there and nowhere else. In suits for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to the invalid, such part of cause of the action disappears. The above are some of the connecting factors."
5.3 Mr.Sukhwani, learned counsel also relied upon the decision of this Court in the case of Indian Oil Corporation Ltd Vs. M/s.Pragat Gas Services, 1993 (1) GLH 1004 wherein this Court has held and observed in paras 13 and 14 as under:-
"13. Looking to the above observations and particularly the italicised portion, it becomes clear that according to the Supreme Court, when a clause in a contract is clear, unambiguous or specific and the words like 'alone', 'only', 'exclusive', etc. are used, it would bind the parties unless the absence of ad idem is shown. Even in absence of ad idem is shown. Even in absence of such words, looking to the surrounding circumstances, the Court may hold the agreement to be binding to the parties. In that case, the agreement entered into between the parties contained a clause 'any dispute arising out of this sale shall be subject to Kaira Jurisdiction'. The Supreme Court observed that though ex facie , there was no exclusionary words like 'exclusive', 'alone', 'only' and the like, the intention of the parties was to confer jurisdiction to Kaira Court alone. In these circumstances, jurisdiction of Salem Court was Page 8 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined excluded.
14. In view of these decisions of the Hon'ble Supreme Court, in my opinion, the submission of Mr. Shelat appears to be well-founded and deserves to be accepted. In the instant case, the plaintiff has obtained an agreement from the defendants. Clause 36 thereof is clear, unambiguous and specific. As per that clause, the Corporation was bound to approach Civil Court at Bombay for taking an action against the defendants. If in light of such provisions, a contention was taken by the defendants that the suit filed by the plaintiff- Corporation in Baroda Court was not maintainable and the contention was upheld by the Court, it cannot be said that the order passed by the Trial Court is contrary to law or requires any interferences. I am also of opinion that for the purpose of deciding this preliminary issue, the Court will have to take into account the necessary facts and circumstances though for a limited purpose of deciding the preliminary issue on question of law regarding the jurisdiction of the Court. In the instant case, upholding the preliminary objection of the defendants, the Court has passed the impugned order. Looking to the judgments of the Hon ble Supreme Court and particularly in A. B. C. Laminarts Pvt. Ltd. (supra), it becomes clear that the impugned order passed by the Trial Court directing the Corporation to file suit in an appropriate Court at Bombay is according to law and does not require any interference. In the result, I do not find any substance in any of the contentions raised by the learned Counsel for the appellant and the appeal requires to be dismissed. The appeal is accordingly dismissed, however, in the facts and circumstances, with no order as to costs."
5.4 Mr.Sukhwani, learned counsel has further relied upon the decision of the Hon'ble Supreme Court in the case of Hakam Singh Vs. M/s.Gammon (India), AIR 1971 SC 740 wherein the Hon'ble Supreme Court has held and observed in para - 3 as under:-
"3. Section 41 of the Arbitration Act, 1940 provides in so far as it is relevant:
"Subject to the provisions of this Act and of Rules made thereunder:
(a) the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings before the court, and to all appeals under this Act".
The Code of Civil Procedure in its entirety applies to proceedings Page 9 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By Cl. 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the respondents have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement 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 Courts is not contrary to public policy. Such an agreement does not contravene sec. 28 of the Contract Act."
5.5 Mr.Sukhwani, learned counsel has submitted that considering aforesaid facts and circumstances of the case and the decisions, the appeal deserves to be allowed and the impugned judgment and decree deserves to be quashed and set aside.
6. Mr.Surti, learned counsel for the respondent has submitted that from the issues framed by the trial Court, it transpires that the burden to prove the case had rested upon the appellant. He has submitted that the reasoning assigned by the trial Court, while passing the judgment and decree, are in consonance with the evidence which has come on record. He has submitted that the trial Court has not committed any error of law and facts in passing the impugned judgment and decree and no interference is required to be called for. He has referred to the cross-examination of the appellant and submitted that in the cross-examination, the appellant has stated that as per the contract, the work was required to be completed within 167 days and the same was not completed within the stipulated period as the respondent has failed to supply the necessary materials in time.
Page 10 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined
He has submitted that the appellant has admitted in the cross- examination that an additional agreement at Exhibit 73 was executed in the context of Exhibit 64 and it bears his signature and the signature of the officer of respondent's company and the terms and conditions of the agreement are binding to him. He has submitted that from the evidence on record, the appellant had miserably failed to prove that the delay in completion of the work had attributed due to delay / negligence / inaction on the part of the respondent. He has submitted that the appellant has not adduced any evidence to show that the work was not completed because the respondent has not supplied the goods in time or the goods supplied to the appellant were defective or broken or that the appellant has replaced or incurred the expenses for the same as alleged. He has submitted that the appellant has filed the suit on the basis of the agreement at Exhibit 64 and at the time of filing the suit, the same has not produced, not only that the said document produced by the appellant after notice of production given by the respondent on 17.12.2003. He has submitted that the respondent had preferred an application at Exhibit 66 to decide the issue regarding jurisdiction as a preliminary issue as the parties to the agreement had by virtue of Clause 3 of the agreement at Exhibit 64 had specifically opted by the jurisdiction of the Court at Rajasthan alone in the event of disputes arising between them. He has submitted that trial Court at the relevant time rejected the application inter alia stating that the issue of jurisdiction is a mixed question of fact and law and ordered the same to be decided along with other issues. He has submitted that being aggrieved by the order passed below Exhibit 66, the respondent had preferred Special Civil Application No. 19535 of 2005, which was not entertained by this Court and the same came to be rejected. He has submitted that the Page 11 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined agreement dated 12.07.1989 was executed between the parties based upon the letter dated 07.07.1989 produced at Exhibit 72 and by virtue of the said letter, the respondent had called upon the appellant to attend the office of the respondent with requisite stamp papers for preparing and signing the contract agreement. Mr.Surti, learned counsel has submitted that the appellant during his cross- examination had admitted that the letter at Exhibit 72 does not bear the address of Ahmedabad Office and the agreement at Exhibit 64 was executed in the context of letter at Exhibit 72 and the said agreement bears his signature as a partner of the appellant. He has submitted that the appellant has admitted in his cross-examination that he had read the agreement at Exhibit 64 and thereafter he had signed the same and as the terms and conditions of the agreement were agreeable to him, he had signed the agreement. He has submitted that the respondent had led oral evidence by examining witness namely Shri Shambhulal Hiralal Pareek at Exhibit 142. He has submitted that this witness has categorically stated in his examination-in-chief in para 3 and 4 as under:-
3. The defendant No.1 is a Limited Company registered under the provisions of Companies Act, 1956 having its registered office and workshop at Village - Hamirgarh, District - Bhilwara in the State of Rajasthan. Hence, proper forum for the institution of suit against the company is one within whose local limits the registered office of the defendant company is situated. The plaintiff has chosen a wrong territorial forum and the suit on this count is returnable to the plaintiff / liable to be dismissed.
4. The plaintiff has produced an agreement dated 12 th July 1989 being Exh - 64 which was produced on production notice given by the defendant. The parties have specifically agreed to the selection of the forum as Rajasthan courts having jurisdiction over the matter for resolution of the dispute between them as per clause No.3 of the said agreement, which is reproduced here -
Clause 3: That in the event disputes arising between the parties the Page 12 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined Courts of Rajasthan alone shall have the jurisdiction to try the suit.
The plaintiff is bound by the agreement and cannot be allowed to select the forum of his own choice. Therefore, the suit is not maintainable before the Hon'ble Court in view of issue No.3 at Exh -
54."
6.1 Mr.Surti, learned counsel has submitted that the trial Court has rightly considered the decisions relied upon by the respective parties and passed the impugned judgment and decree, which does not warrant any interference by this Court. With regard to the non-joinder of necessary party, Mr.Surti, learned counsel has submitted that the Gujarat Water Supply and Sewerage Board was the principal agency who awarded the contract of supplying laying, joining and commissioning of the pressure pipes to the respondent - company, as also the work was required to be completed as per condition No.6 of the agreement at Exhibit 73. He has submitted that the appellant ought to have joined the Gujarat Water Supply and Sewerage Board as co-respondent being necessary party and hence the appeal is liable to be dismissed. He has submitted that the appellant's witness in his cross-examination before the Court below had admitted that the final bill has not been certified and the project engineer has to certify the measurement of whatever work done by him. According to Mr.Surti, learned counsel, in absence of any cogent documentary evidence in consonance with the terms and conditions of the contract coupled with the admissions of the appellant's witness during the course of cross-examination reflecting their non-adherence / non-compliance of the terms and conditions of the contract. He has submitted that the witness of the appellant has deposed that he did not know the fact that if the material supplied by the respondent found inferior quality then he has to make a note of it on G.R. and inform the company and this witness has admitted that he has not produced any documentary Page 13 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined evidence to show that the pipes supplied by the respondent were of inferior quality and, therefore, the same had busted. So far as the claim of incentive of Rs.30,000/- is concerned, he has submitted that the appellant had relied on the letter dated 20.03.1990 at Exhibit 81 and with regard to the same, the trial Court has observed that the appellant to claim such incentive was duty bound and liable to complete the work allotted by 25.04.1990 and further that delay of each day beyond 25.04.1990 would reduce the amount by Rs.3,500/- per day of delay. So far as the claim of Rs.23,200/- on account of extra rate is concerned, he has submitted that the trial Court has rightly taken the note of condition No.08 of the agreement at Exhibit 73 and observed that the appellant failed to establish it's claim. He has submitted that the appellant has failed to prove on what basis such interest was claimed, not only this, but the appellant has miserably failed to prove that it is entitled to recover any dues from the respondent - company and, therefore, the trial Court has observed that the appellant failed to establish the outstanding dues from the respondent and, therefore, the appellant is not entitled for any interest as claimed by it. Mr.Surti, learned counsel has submitted that the appellant has failed to establish the fact that the work was completed as per the terms and conditions of the agreement, in fact, the work was not completed in the given time. He has submitted that the appellant has failed to establish the fact that the respondent had committed any breach of agreement and the appellant is not entitled for Rs.1500/- towards the notice charges, as the same is based on false and fabricated facts.
6.2 In support of his submissions, Mr.Surti, learned counsel has relied upon the following decisions:-
Page 14 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined (1) Indian Oil Corporation Limited Vs. Pragat Gas Service, Baroda, 1993 (1) GLR 82;
(2) Rakesh Kumar Verma; HDFC Bank Vs. HDFC Bank Ltd; Deepti Bhatia, 2025 LawSuit (SC) 484;
(3) Precitech Enclosures Systems Pvt Ltd Vs. Rudrapur Precision Industries and another, 2025 LawSuit (Del) 745; (4) R P Inforsystems Private Limited Vs. Redington (India) Limited, 2023 LawSuit (Cal) 1651;
6.3 Mr.Surti, learned counsel has submitted that the appeal being meritless deserves to be dismissed and the impugned judgment and decree deserves to be confirmed.
7. I considered the submission canvassed by learned counsel for the respective parties and facts of the case and the record and proceedings. I have perused the impugned judgment and decree and the documentary evidence available on record. It appears that the issues involved in the present appeal for determination are that whether the judgment and decree passed by the trial Court is erroneous, illegal and unjust; whether the trial Court has committed any error in passing the judgment and decree while dismissing the suit.
8. It is to be looked into the fact that the trial Court has dismissed the suit on account of jurisdiction, for which, let first discuss the facts of the case that the suit filed by the partnership firm seeking recovery of Rs.8,98,221.75 paise towards the damages. As the appellant firm was successful bidder for the work of lowering, laying and joining of A.C. pipes for Sabarmati Section II (Bholad to Dholera), District:
Ahmedabad amount to Rs.10,78,559/-, the offer was accepted and the Page 15 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined respondent entered into agreement with the appellant at Ahmedabad on 12.07.1989. The signature put on behalf of respondent by one of the signatory is officiated at Ahmedabad. As the work was to be completed within 167 days as per Clause 25 of the agreement, but instead of 167 days, the appellant took 832 days to complete the work and, therefore, there was a breach of contract on the part of the respondent, who failed to supply the necessary materials in time. In view of the said fact, the suit came to be filed, however, the trial Court in deciding issue No.3 i.e. whether this Court has jurisdiction to entertain the suit, where the trial Court has specifically referred to the oral evidence of Poonambhai D. Patel and the same was described on the ground that on letterhead at Exhibit 72, the address of Ahmedabad office was mentioned and only address of Hamirgarh was mentioned. Thus agreement at Exhibit 64 bearing the signature of the appellant and the respondent and after considering the said aspect, the trial Court has come to the conclusion that the Court at Ahmedabad has no jurisdiction and further the trial Court in paras 13 to 21 has discussed such evidence and facts at length and ultimately the suit was dismissed the suit for want of jurisdiction. If once the Court has come to the such conclusion and after considering the averments made in the plaint and written statement along with the oral as well as documentary evidence, the Court has come to the conclusion that the Court has no jurisdiction then the Court ought not to have consider other issues framed therein. Thus, in view of settled principles laid down by the catena of decisions, the trial Court has committed and error in ignoring the other material evidence and the oral evidence produced by the appellant. The trial Court has also committed serious error of facts and law in interpreting the evidence and discussion made in aforesaid paragraphs. On perusal of the Page 16 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined discussion made by the trial Court in the impugned judgment and decree, it appears that if once the Court having no jurisdiction then the trial Court ought not to have discussed other issue that the plaintiff proves that the plaintiff is entitled for damages or not. In my view, the said aspect is completely illegal, unjust and erroneous and hence, the impugned judgment and decree deserves to be quashed and set aside. It is pertinent to note herein that while determining issues no.5, 6, 7 and 8, the trial Court held that this Court has no jurisdiction to dwell into the issues relating to the claim made by the appellant under different head as mentioned in para - 9 of the plaint, which reads thus:-
Claim No. Amount Description
1. 3,74,721.75 On account of final bill
2. 30,000.00 On account of incentives
3. 23,200.00 On account of extra rate
4. 28,800.00 On account of replacement charges
5. 4,40,000.00 On account of Overhead establishment charges
6. 1,00,000.00 Notice Fees Charges Total 8,98,221.75 Interest @ 24% from the due date till its realization.
9. So the trial Court has acceded its the jurisdiction which is vested with it. If once the Court comes to the conclusion that the Court has no jurisdiction to try the suit, in simple way, the Court has to return the plaint for the purpose of filing the proceedings before the appropriate Court having jurisdiction instead of that the Court has framed the issue which is referred hereinabove and recorded the findings. Thus, in my view the trial Court has committed serious error in considering the said fact and passing the impugned judgment and decree. It is also required to be looked into the fact that so far as the oral evidence of both the sides as well as documentary evidence, which are discussed by the trial Court are concerned, the trial Court Page 17 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined ought to have stayed there by applying the ratio laid down by this Court in the case of Pragat Gas Agency (supra). The trial Court, while considering the cross-examination on behalf of the appellant, has failed to appreciate the fact that the contractual work was executed by and between the appellant and the respondent in 1992. It was specific evidence come on record that the company has changed its name after 1992 i.e. after completion of the work. The letter at Exhibit 58/4, which refers that the letter written by Shree Pipes Limited wherein the address of the respondent shown as Hamirgadh. It was mentioned in the said letter that there was no mentioned with regard to the address at Ahmedabad. In view of the deposition which is required to be considered as a whole and not in isolation in one or two sentences, I am of the view that the trial Court has completely ignored the said facts and under the guise of the same, the trial Court has passed the judgment and decree. Though the trial Court, on one hand, has come to the conclusion that the Ahmedabad Court has no jurisdiction and on the other hand, the Court has dealt with the issues which were framed for determination of the suit.
10. In the case of A.B.C. Laminat Pvt. Ltd (supra), the Hon'ble Supreme Court has held and observed in para - 7, 16 and 18 as under:-
"7. The first question to be decided, therefore, is whether Clause
11 as aforesaid formed part of the agreement. Mr. Javali submits that Ext. B-1 is an order of confirmation No. 68/59 dated 2.10.1974 from the Sales Excusive for the first appellant to the respondent acknowledging the receipt of their order and registering the same subject to the terms and conditions 'overleaf. The general terms and conditions printed overleaf included the aforesaid Clause 11. We are unable to agree. Admittedly the parties have transacted the business on inter alia basis of Clause 11. There is, therefore, no Page 18 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined escape from the conclusion that Clause 11 formed part of the agreement and the parties would be bound by it so long as they would be bound by the contract itself. It is not open to the respondent to deny existence of Clause 11. The submission of Mr. Javali has, therefore, to be rejected.
16. So long as the parties to a contract do not oust the jurisdiction of all the Courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said, that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the position in the instant case?
18. In Hakam Singh V/s. M/s. Gammon (India) Ltd., (1971) 3 SCR 314 the appellant agreed to do certain construction work for the respondent who had its principal place of business at Bombay on the terms and conditions of a written tender. Clause 12 of the tender provided for arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into by the parties at Bombay, and the Court in Bombay alone shall have jurisdiction to adjudicate upon. On dispute arising between the patties the appellant submitted a petition to the Court at Varanasi for an order under Section 20 of the Arbitration Act, 1940 that the agreement be filed and an order of reference be made to an arbitrator or arbitrators appointed by the Court. The respondent contended that in view of the Clause 13 of the arbitration agreement only the Courts at Bombay had jurisdiction. The Trial Court also held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the Courts at Bombay which they did not. otherwise possess. The High Court in revision held that the Courts at Bombay had jurisdiction under the general law and hence could entertain the petition and that in view of Clause 13 of the arbitration agreement the petition could not be entertained at Varanasi and directed the petition to be returned for presentation to the proper Court. On appeal therefrom one of the questions that fell for consideration of Page 19 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined 'this Court was whether the Courts at Bombay alone had jurisdiction over the dispute. It was held that the Code of Civil Procedure in its entirety. applied to' proceedings under the Arbitration Act by virtue of Section 41 of that Act. The jurisdiction of the Court under the Arbitration Act to entertain a proceeding for filing an award was accordingly governed by the provisions of the Code of Civil Procedure. By the terms of Section 20(a) of the Code of Civil Procedure read with explanation 11 thereto the respondent company which had its principal place of business at Bombay was liable to be sued at Bombay. It was held that it Was not open to the parties to agreement to confer by their agreement jurisdiction on a Court which it did not possess under the Code. But where two Courts or more have under the Code of Civil Procedure jurisdiction to try suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts was not contrary to public policy and such an agreement did not contravene Section 28 of the Contract Act. Though this case arose out of an arbitration agreement there is no reason why the same rule should not apply to other agreements in so far as jurisdiction is concerned. Without referring to this decision a Division Bench of the Madras High Court in Nanak Chand V/s. T. T. Electric Supply Co., AIR 1975 Mad 103 observed that competency of a Court to try an action goes to the root of the matter and when such competency is not found, it has no jurisdiction at all to try the case. But objection based on jurisdiction is a matter which parties could waive and it is in this sense if such jurisdiction is exercised by Courts it does not go to the core of it so as to make the resultant Judgement a nullity. Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Ss. 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Mercantile Law and practice permit such agreements.
11. It is required to be looked into the fact that since the appellant carried out the work at Ahmedabad and in view of the said decision of the Apex Court, the Civil Court has jurisdiction to try the suit and thus, I am of the opinion that the view taken by the trial Court is not just and proper and hence, the judgment and decree deserves to be Page 20 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined quashed and set aside.
12. It appears from the cross-examination of Punambhai D. Patel at Exhibit 69 that he is a partner in Shreyas Construction Company and he had dealt with Shri Pipes Limited and thereafter changed name to Infrastructure. He has admitted that he did not know the reason why they changed name and this name was changed around the year 1992 and the name was changed after the completion of his contract. He did not know whether he was called with a stamp paper or not. He has admitted that it is true that the letter does not have an address of Ahmedabad. His signature is on the contract as a partner on behalf of Shreyas Construction and this contract bears the signatures of the officers of Shri Pipes Limited. He was informed about the terms and conditions of the contract therefore, he made his signature. An additional contract was executed at Mark 58/5. This contract bears his signature and the signatures of the officers of Shri Pipes Limited. That the contract at Mark-58/5 is now assigned Exhibit 73. According to this contract, if he has to do any additional work, it was to be done as per the written instructions of Shri Pipes Limited. It is true that if he performed work, his ...illegible... were to be certified. According to this contract, he had to complete the work within 167 days and the same was not completed within 167 days. He has stated that it was not completed because he did not receive the materials. He will have to see whether any documentary evidence has been produced to the effect that he did not supply the materials. He did not know whether there is any condition regarding interest in both contracts and has not produced any documentary evidence showing the additional Page 21 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined name. He has not produced any evidence to prove that the work he did was certified. The witness has voluntarily stated that he had certified the bills but he did not certify the final bill. Regarding this, the bills were in the possession of the applicant, therefore, he cannot register them. The witness has stated that the payment for the bill has not been received. It is not true that the bill was not certified because he did not complete the work. It is true that after 167 days, no bill has been received. It is not true that he has not received payment because he did not act according to the contract. The witness voluntarily stated that he did not know whether any documentary evidence has been presented regarding not receiving the materials. He has stated that according to this letter at Mark 58/7, he had to complete the line testing by 25.04.1990 and if he had done the work as per this, he was supposed to receive the bill. It is true that he did not complete the work before 25.04.1990.
12.1 This witness has further cross-examined wherein he has stated that it is true that the bill which was decided for digging work and taking out the soil and transportation the same and has been received from the time of transportation. It is true that in the said contract, if damage was caused while transporting the pipes, it was his responsibility. The witness voluntarily states that as the pipe was not as per...illegible.. was broken and no evidence is produced in this regard that I had informed the company about it. It is true that as per the Clause-14 of the Contract..illegible... he was responsible for the custody. It is not true that it was his responsibility if any Page 22 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined damage was caused to the material which the company sent to the site. He did not know that if the company...illegible..received goods..illegible... the contractor... illegible.. make note thereon and inform the company. He did not know that I have adduced any evidence pertaining to giving a bank guarantee. The owner of with whom he entered into .... illegible... supply and... illegible.. Board. He....illegible.. has been not joined as party. He has been a contractor since year 1957 and pipe is included in business and hence, he would not know whether the pipe is old or crack is open or broken. It is true that he has not mentioned in his plaint as to when he completed his work. It is not true that he has not carried out the work according to the relief sought in his plaint. It is true that I have not produced receipt of Rs.1500/- towards notice cost in payer clause No.6. It is not true that he has filed false suit.
13. It appears from the cross-examination of Shambhulal Hiralal, Senior Account Officer in A Infrastructure Ltd that he has been performing duty as a Senior Accountant Officer in the respondent company Ltd since 06.12.1994. He has deposed that he had joined the Company as Assistant Accountant in 06.12.1994 and thereafter, he been performing duty as Senior Accountant Officer from year 2007. He has deposed that It is not true that he did not have personal knowledge of the suit. It is true that the agreement was executed between the plaintiff and the defendant. It is not true that the plaintiff did not send the... illegible.... that was to be given on time. ...Illegible... had to be sent to the plaintiff as per the Schedule-A within time limit..
Page 23 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined
Question: When did the defendant made the final bill payment to the plaintiff?
Answer: We have not accepted the final bill.
13.1 He has stated with regard to the final bill sent on 31.01.1999 by the plaintiff that no such final bill exists in our record. The plaintiff has demanded payment..illegible... for the work performed under the suit from the defendant.I can state after seeing the record that whether the defendant got the work done at the cost and ...illegible.. of the plaintiff or not. It is true that the plaintiff has carried out extra work and has demanded its money time to time. It is not true that the plaintiff is entitled to demand...illegible..as per the contract. It is not true that when and where we demanded, the defendant has not raised any objection at that time. It is not true that the suit...illegible.. documents... illegible have been dirty. It is not true that the defendant...illegible... has submitted final bill and deposit to the board. He did not know the fact that extension of the Gujarat Water Supply and ...illegible.. Board is approved. It is not true that an order to return the deposit was passed. It is not true that the company of the defendant is situated in Ahmedabad. We have not filed any suit against the Gujarat Water Supply and Board. ..Illegible... work has not been completed. It is not true that the plaintiff has completed the work satisfactorily. He has deposed that on looking at bill that it has been not accepted with the final bill and it did not bear his signature also.
14. So far as the issue relating to the jurisdiction is concerned, it is a law and it is required to be considered first as preliminary issue and Page 24 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined on preliminary issue if the Court is not satisfied then the Court avoid dwell into other issues. In the case of Sathyanath and another Vs. Sarojamani, (2022) 7 SCC 644 = AIR 2022 SC 2242, the Hon'ble Supreme Court, while dealing with the provision of Order XIV Rule 2 of the Civil Procedure Code, has observed in para - 5 Order XIV Rule 2 before amendment by the Act No. 104 of 1976 reads thus:
"R.2. Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on the issues of law only, it shall try those issues first, and for that purpose may, if it thinks fit, postpone the settlement of the issues of fact until after the issues of law have been determined."
14.1 Thereafter, after amendment in the provision of Order XIV Rule 2, after the substitution of Rule 2 by the Act No. 104 of 1976, effective from 1.4.1977, reads thus:
"2. Court to pronounce judgment on all issues.-- (1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of sub-rule (2), pronounce judgment on all issues.
(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to --
(a) the jurisdiction of the Court, or (b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may Page 25 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined deal with the suit in accordance with the decision on that issue."
14.2 Therefore, the Hon'ble Supreme Court, in the said decision, has referred the provision in para - 8 and after considering the various decisions delivered by the Hon'ble Supreme Court and the High Court ultimately the Court has observed in paras - 30 and 31 as under:-
30. A perusal of the said judgment would show that only issue Nos. 5 and 6 were decided relating to res judicata and limitation as preliminary issues by judgment dated 3.2.2006. This Court set aside the finding on the preliminary issue by judgment dated 23.9.2021 i.e., almost more than 15 years later when the matter was remanded back to the trial court. The absence of the decision on all issues have necessitated the matter to be remanded back, defeating the object of expeditious disposal of lis between the parties. The conclusion in Para 62(i) is that the plea of res judicata in appropriate cases may be determined as preliminary issue when it is neither a disputed question of fact nor a mixed question of law and fact. Such finding is what this Court held in Ramesh B. Desai.
31. We find that the order of the High Court to direct the learned trial court to frame preliminary issue on the issue of res judicata is not desirable to ensure speedy disposal of the lis between parties.
Order XIV Rule 2 of the Code had salutary object in mind that mandates the Court to pronounce judgments on all issues subject to the provisions of sub-Rule (2). However, in case where the issues of both law and fact arise in the same suit and the Court is of the opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that suit first, if it relates to jurisdiction of the Court or a bar to the suit created by any law for the time being in force. It is only in those circumstances that the findings on other issues can be deferred. It is not disputed that res judicata is a mixed question of law and fact depending upon the pleadings of the parties, the parties to the suit etc. It is not a plea in law alone or which bars the jurisdiction of the Court or is a statutory bar under clause (b) of sub-Rule (2)."
14.3 In the said decision, the Hon'ble Supreme Court has also observed in para - 33 as under:-
"33. Keeping in view the object of substitution of sub-Rule (2) to avoid the possibility of remanding back the matter after the decision on the preliminary issues, it is mandated for the trial court under Page 26 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025 NEUTRAL CITATION C/FA/4368/2009 JUDGMENT DATED: 12/09/2025 undefined Order XIV Rule 2 and Order XX Rule 5, and for the first appellate court in terms of Order XLI Rules 24 and 25 to record findings on all the issues."
15. Considering the aforesaid facts and circumstances of the case and the submissions canvassed by both the sides and the decision in the case of Sathyanath (supra), this Court is of the opinion that the trial Court has committed an error of facts and law in passing the impugned judgment and decree and, therefore, interference is required to be called for and hence, the present appeal deserves to be allowed and the impugned judgment and decree deserves to be quashed and set aside.
16. In the result, the appeal is allowed. The impugned judgment and decree dated 12.01.2009 passed by the learned 3 rd Additional Senior Civil Judge, Ahmedabad (Rural) in Special Civil Suit No. 176 of 1995 is hereby quashed and set aside. Registry is directed to transmit back the record and proceedings of the case to the concerned trial Court forthwith. There shall be no order as to costs.
Pending civil application/s, if any, shall stand disposed of accordingly.
(HEMANT M. PRACHCHHAK,J) V.R. PANCHAL Page 27 of 27 Uploaded by V.R. PANCHAL(HC00171) on Mon Sep 15 2025 Downloaded on : Mon Sep 15 23:11:17 IST 2025