Maharashtra State Road ... vs Larsen And Toubro Ltd., Ecc ...
2004 Latest Caselaw 201 Bom

JUDGMENT

V.M. Kanade, J.

1. Petitioner is challenging the Order passed by the Second Extra Joint District Judge Pune in Misc. Civil Application No. 702 of 2001 dated 10/7/2002 whereby the application made by the Petitioner raising a preliminary issue regarding the maintainability of the Misc. Civil Application in the Pune Court was rejected.

2. Brief facts are as under:-

3. Petitioner is a Government Company within the meaning of Section 617 of the Companies Act, 1996 by virtue of its share capital being held solely and exclusively by the State Government. Petitioner - Company has been established with the sole objective of executing road development projects in the State of Maharashtra. Respondent No. 1 is a Public Limited Company with whom the petitioner had entered into a contract for constructing a segment of the Mumbai-Pune Expressway being Segment 'C' from Kusgaon to Ozarde. Petitioner and respondent No. 1 entered into a written contract on 27/1/1998. Clause 5(1)(b) of the said contract which is relevant for the purposes of deciding the present application is reproduced hereinbelow:-

"The contract shall be governed by and construed in accordance with the governing law of India and also the laws in force in the State of Maharashtra and no suit or other proceeding relating to the contract shall be filed or taken by the contractor in any court of law except in the High Court of Mumbai which shall have exclusive jurisdiction to hear and determine all actions and proceedings in connection with and arising out of the contract and the contractor shall submit to the jurisdiction of the aforesaid for a court of law for the purpose of any such action and proceedings."

4. It is an admitted position that certain disputes had arisen in respect of certain claims made by respondent No. 1 on the petitioner and the disputes were referred to the sole Arbitrator Shri S.P. Upasani as per the terms of the contract. The sole Arbitrator made an Award on 16/6/2001 rejecting the claims of respondent No. 1. This Award was challenged by respondent No. 1 in the District Court at Pune by filing Misc. Civil Application No. 702 of 2001 under Section 34 read with Sections 18 and 28 of the Arbitration and Conciliation Act, 1996 for setting aside the Award.

5. The petitioner filed an application in the said Misc. Application and raised a preliminary issue regarding the maintainability of the Misc. Civil Application in the District Court at Pune in view of the ouster of jurisdiction of the other Courts as per Clause 5(1)(b) and, therefore, the petitioner prayed that the preliminary issue be framed regarding the maintainability of the Misc. Application in the Pune Court. A reply was filed by the respondent No. 1 to the said application and the District Court framed a preliminary issue as regards the jurisdiction of the Civil Court, Pune. The District Court tried the said preliminary issue and by its Order dated 10/7/2002 held that the Pune Court had jurisdiction to entertain the Application. Thus the objections raised by the petitioner were rejected. Petitioner has therefore preferred this Civil Revision Application challenging the Order passed by the Trial Court.

6. It was submitted by the learned Counsel appearing on behalf of the petitioner that the District Judge had erred in holding that the District Court had jurisdiction to entertain the application by taking a hyper technical view that the nomenclature of the Bombay High Court is "High Court of Judicature at Bombay" and not "High Court of Mumbai" as stated in Clause 5(1)(b) of the Contract. He submitted that the District Judge ought to have appreciated that as per Clause 5(1)(b) of the Contract, the High Court at Mumbai alone had a jurisdiction to entertain the application. It was further submitted that if Clause 5(1)(b) was read as a whole, there was no manner of doubt that the jurisdiction of the other Courts was expressly ousted. He relied upon the Judgment of the Apex Court in the case of A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem and submitted that in deciding the preliminary issue the Apex court has laid down that two Courts situated at two different places have jurisdiction and if the parties by an agreement subjected themselves to the jurisdiction of one Court then such a clause was not hit by the provisions of Sections 25 and 28 of the Contract Act, and, therefore, the jurisdiction of the other Courts was ousted as a result of such clause in the agreement. He submitted that the Trial Court has not taken into consideration the ratio of the judgment of the Apex Court.

7. The learned Counsel appearing on behalf of the respondent No. 1 submitted that the wording of Clause 5(1)(b) was ambiguous and vague. He submitted that from the perusal of the said clause, it was clear that restriction regarding the alleged ouster of jurisdiction was only in respect of the contractor and not the petitioner. He further submitted that the said clause also did not specify as to what would happen if the High Court did not have a pecuniary jurisdiction to decide the claim which was below Rs. 50,000/-. It was, therefore, submitted that the said clause was ambiguous and vague. He relied upon the Judgment of the Apex Court in the case of Patel Roadways Limited v. Prasad Trading Company . he also relied upon the Judgment of the Madras High Court in the case of Naziruddeen v. P.A. Annamalai and in the case of Sponge Iron India Ltd. v. A.S. Corporation Ltd. Bangalore in support of his submissions. He submitted that from the ratio of the aforesaid judgments it was clear that the jurisdiction of the Civil Court would be taken away only by express provision or by necessary implication and ousting of jurisdiction of Civil Court should not and ought not to be lightly inferred from the ambiguous provision.

8. I have heard the learned Counsel appearing on behalf of the appellant and respondent No. 1 at length. In my view, after perusing the said Clause 5(1)(b), it is apparent that the said clause has not been very happily worded. Normally, whenever both parties decide to confer jurisdiction in respect of a particular Court which otherwise would also have a jurisdiction in the facts and circumstances of the case to decide the dispute, it is made expressly clear in explicit and unambiguous terms that the said Court alone would have jurisdiction or that the jurisdiction would be confined to the Court in that particularly City. In the present case, on the one hand it is stated that the contract shall be governed by and construed in accordance with the governing law of India and also the laws in force in the State of Maharashtra and, on the other hand, the said clause further states that no suit or other proceedings relating to the contract shall be filed or taken by the contractor in any court of law except in the High Court of Mumbai which shall have exclusive jurisdiction to hear and determine all actions and proceedings in connection with and arising out of the contract and the contractor shall submit to the jurisdiction of the said court. Thus the clause put a restriction on the contractor that the High Court of Mumbai shall alone have jurisdiction to decide a dispute. There is no such restriction on the petitioner - company. Further, the said clause does not contemplate a situation where the High Court of Judicature at Mumbai is not in a position to entertain any dispute in view of the provisions of the Civil Procedure Code or any other law. It is quite well settled that the parties cannot confer jurisdiction on the Court which otherwise does not have jurisdiction to decide a dispute according to the provisions of Civil Procedure Code or any other law which is applicable to the facts of the case. Thus, in my view, the said Clause 5(1)(b) is ambiguous and vague and, therefore, under these circumstances, I am of the view that the Pune Court has the jurisdiction to decide the dispute. In the case of A.B.C. Laminart Pvt. Ltd. v. A.P.A. Agencies Salem, the Apex Court in para 18 has observed as under:-

"18. .....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 therewithin, 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 Sections 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute, Mercantile Law and practice permit such agreements."

However, in para 21 of the said Judgment the Apex Court has observed as under:-

"21. .....When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction. ....."

From the aforesaid observations, it is clear that the jurisdiction of the Court would not be ousted unless the clause is clear and unambiguous. In the present case, in my view, since the wording of the clause is ambiguous, it cannot be said that the jurisdiction of the Pune Court is completely ousted. The Madras High Court in its Judgment in the case of Naziruddeen v. P.A. Annamalai has also observed that the jurisdiction of the Civil Court can be taken away only by express provision and that the ousting of the jurisdiction of the Civil Court should not and ought not be lightly inferred from an ambiguous provision. The Madras High Court in the above case in para 3 has observed as under:-

"3. It is well established that the jurisdiction of a civil court can be taken way only by an express provision or by necessary implication and the ousting of jurisdiction of a civil court should not and ought not to be lightly inferred from an ambiguous provision. ....."

The Andhra Pradesh High Court in its Judgment in the case of Sponge Iron India Ltd. v. A.S. Corporation Ltd., Bangalore has also held that in order to decide the jurisdiction of the Civil Court the language must be clear and specific. In para 8 of the said Judgment the Andhra Pradesh High Court observed as under:-

"8. On the reverse of Ex.A-1 the purchase order, some terms and conditions are printed. Condition No. 11 is as follows:-

"This order in all respects shall be subject to the jurisdiction of the Bangalore Courts."

.....This condition in Ex.A-1 in the absence of the words "only" or "alone" does not have the effect of ousting any other Court of its jurisdiction which it otherwise had. In matters like this, which relates to the ouster of the jurisdiction the language must be clear and specific. It is one thing to say 'subject to the jurisdiction of the Bangalore Courts' and it is entirely another thing to say that 'subject to the jurisdiction of the Bangalore Courts only". In the former, the ouster of jurisdiction of any other Court cannot be implied, whereas in the latter, the intention is clear that the choice is limited to one Court."

9. Once it is held that the said clause is ambiguous act vague the, in that event, the plaintiff would also have right to file a suit where the cause of action has arisen. In the present case both, the plaintiff and respondent No. 1 have their Offices in Pune and it is not disputed that otherwise Pune Court will have a jurisdiction. The ratio laid down by the Apex Court in the case of Patel Roadways Ltd. v. Prasad Trading Company, would be clearly applicable to the facts of the present case.

10. In the result, the Order passed by the Trial Court is confirmed. It is no doubt true that the Trial Court has in para 5 of its Order has observed that the name of the Bombay High Court according to the Letters Patent is "High Court of Judicature at Bombay" and that there is no "High Court of Mumbai". The observations of the Trial Court obviously regarding the nomenclature of the Bombay High Court is hyper technical and incorrect. However, the Trial Court in para 7 has observed that the said condition in the agreement is vague and uncertain. Thus, there is no merit in the Civil Revision Application. Civil Revision Application is therefore rejected.

C.C. expedited.