Calcutta High Court
Titagarh Wagons Limited vs Unicaf And Anr on 4 January, 2023
1
ODC-2
IA No: GA/02/2020
In CS/258/2019
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
COMMERCIAL DIVISION
TITAGARH WAGONS LIMITED
Vs.
UNICAF AND ANR.
BEFORE :
The Hon'ble JUSTICE KRISHNA RAO
Heard On : 17.11.2022, 25.11.2022 & 12.12.2022
Order On : 04.01.2023
Appearance:
Mr. Jishnu Saha, Sr. Adv.
Mr. Sayantan Bose, Adv.
Ms. Madhurima Das, Adv.
Ms. Ankita Chowdhury, Adv.
...for the plaintiff.
Mr. Krishna Raj Thaker, Adv.
Ms. Nandini Khaitan, Adv.
Mr. Srinjoy Bhattacharyya, Adv.
Mr. Joveria Sabbah, Adv.
...for the petitioner.
Mr. Saunak Mitra, Adv.
Ms. Shreya Singh, Adv.
...for the respondents.
2
ORDER
The defendant no.1 has filed the instant application being G.A. No. 2 of
2020 in C.S. No. 258 of 2019 praying for revocation of Leave granted to the
plaintiff under Clause 12 of the Letters Patent, 1865 and for return of plaint on
the ground that this Court has no jurisdiction to entertain the suit filed by the
plaintiff.
The plaintiff has filed the suit against the defendants praying for the
following reliefs:
"2. The plaintiff has filed the above suit seeking leave under Order II
Rule 2 of the Code of Civil Procedure, 1908, and, under Clause 12 of the
Letters Patent, 1865, and has claimed the following reliefs :
a) Decree against the defendant no. 1 for a sum of Euro 35,26,864
equivalent as on date to Rs. 27,92,21,822.28 as pleaded in
paragraph 25 above;
b) Decree for interest for a sum of Euro 11,63,865.12 equivalent to
Rs. 9,21,43,201.55 as pleaded in paragraph 26 above;
c) Decree against the defendant no. 1 for damages of Rs.
58,98,57,300/- as pleaded in paragraph 27 hereinabove;
d) Alternatively, an enquiry into the loss and damage suffered by
the plaintiff consequent on the breaches and defaults committed by
the defendant no. 1 and a decree against the said defendant for
such sum as may be found due and payable on such enquiry;"
On negotiation between the defendant no. 1 and defendant no. 2, on 21st
September, 2016, defendant no. 1 had issued a purchase order to the
defendant no. 2 for manufacture and supply of 100 flat wagons with metric
track bodies destined for container transportation on the Railway network of
SITARAIL, linking d' Ivoire with Burkina Faso in Africa. On receipt of the
purchase order, the defendant no. 2 had issued a back to back purchase order
dated 07.12.2016 to the plaintiff for manufacture and supply of 100 containers
carrying wagons at a total consideration of 43,920.80 Euro per wagon,
aggregating 43,92080 Euro, deliverable FOB, Kolkata by shipment after
inspection at the workplace of the plaintiff.
The purchase order dated 21.09.2016 issued by the defendant no. 1 was
amended by a document dated 22.06.2017 wherein the delivery schedule was
re-fixed and again on 23.10.2017 further amended by re-fixing the delivery
schedule which are as follows :
"a. First batch of 30 wagons to be delivered FOB Calcutta by
31.10.2017, the reception Ex Words whereof to be be before 23rd
October, 2017;
b. Second batch of 30 wagons to be delivered FOB Calcutta by
31.10.2017, the reception Ex Works to be before 21st November,
2017;
c. Third batch of 40 wagons to be manufactured before 30.12.2017
and to be received by the defendant no. 1 FOB Calcutta on a date to
be intimated to the defendant no. 2 60 days in advance and latest
by 22.06.2019.
Copies of the said amendments dated 22nd June, 2017 and 23rd
October, 2017 along with transaction thereof are annexed hereto
and marked "C" and "D" respectively."
The purchase order dated 07.12.2016 issued by the defendant no. 2 to
the plaintiff was also amended firstly on 06.02.2017 and subsequently on
17.11.2017 by extending the delivery schedule originally fixed in the purchase
order dated 07.12.2016.
As per the purchase order, the plaintiff had completed the manufacture
of wagons and duly notified to the defendant no. 2. The defendant no. 2
engaged one Bureau Veritas an internationally reputed inspecting agency for
inspection of the wagons and accordingly the wagons were inspected at Hind
Motor, District - Hooghly, West Bengal and on inspection, it was certified that
the same has been manufactured in terms of the specification contained in the
purchase order dated 07.12.2016. The plaintiff had raised invoices against the
defendant no. 2 after adjusting the advance of Euro 8784.16 received by the
plaintiff from the defendant no. 2. During the course of preparation of
transportation of the wagons to the port, the defendant no. 2 intimated the
plaintiff that the defendant no. 1 intends further checks to be carried out on
the wagons. As there was no such provision for further checking and
accordingly the plaintiff has objected the same but the defendant no. 2 had
suggested the plaintiff to allow further checks by the defendant no. 1 to avoid
unnecessary delay or controversy with regard to quality of the wagons. All of a
sudden on 18.01.2018, the defendant no. 1 had informed the defendant no. 2
with regard to some defects in the wagons and also informed that the
defendant no. 1 unable to accept the delivery of the same and had terminated
the delivery procedure including chartering and loading of vessel. As the
defendant had refused to take any further steps to either nominate or charter
any vessel or to accept the delivery of the wagons manufactured by the
plaintiff, the plaintiff unable to recover the balance 80 % of the value of wagons
being a sum of Euro 35,26,864 and accordingly the plaintiff had filed the
instant suit.
Mr. Jishnu Saha, Learned Senior Advocate representing the plaintiff
submits that the defendant no. 2 was a wholly owned subsidiary of the plaintiff
and in the month of August, 2016, the defendant no. 2 commenced negotiation
on behalf of the plaintiff with the defendant no. 1 for manufacture and supply
of 100 flat wagons with metric track bodies.
Mr. Saha further submits that the defendant no. 1 had the knowledge
that the defendant no. 2 was not capable to undertake the manufacture of
wagons and the defendant no. 2 is wholly owned subsidiary of the plaintiff and
was acting as agent of the plaintiff accordingly had placed the purchase order
to the defendant no. 2 and the defendant no. 2 had placed the same to the
plaintiff.
Mr. Saha further submits that in the purchase order, it is categorically
mentioned that the defendant no. 2 would supply 100 numbers of wagons at
FOB, Kolkata at a fixed price of Euro 49,910 per wagon. He further submits
that as per the condition 75 % of payment will be paid on receipt of wagons
FOB, Kolkata upon presentation of invoice. He further submits that the
plaintiff would transport the wagons from its factory at Kolkata to the Port,
FOB Kolkata at the expense and risk of the defendant no. 2.
Mr. Saha submits that it is clear from Clauses 19 and 20 of the contract
entered between the defendant no. 1 and defendant no. 2 that the "Court of
Paris Commerce" in view of the "parties election of domicile" as both the parties
having their offices at Paris but the said clause is not applicable to the plaintiff
as the plaintiff is neither the domicile of Paris nor is having any office at Paris.
Mr. Saha submits that the factory of the plaintiff situated at Hind Motor,
Hooghly and the office of the plaintiff is situated at Park Street, Kolkata and as
such this Court has got jurisdiction to entertain the suit filed by the plaintiff.
Mr. Krishna Raj Thaker representing the defendant no. 1 submits that
the suit filed by the plaintiff is not maintainable as in the purchase order there
is a clause of forum selection wherein it is mentioned that the Court of PARIS
Commerce is having the jurisdiction to entertain the suit and not by this
Hon'ble Court. Mr. Thaker had referred Article 19.3 of the Agreement entered
between the defendant no. 1 and the defendant no. 2 wherein the forum
selection is mentioned.
Mr. Thaker submits that the defendant no. 1 and defendant no. 2 have
entered into a contract wherein a specific forum selection is provided and the
plaintiff seeking to enforce the contract but the plaintiff is bound by the
provisions thereof.
Mr. Thaker further submits that the defendant no. 1 is a company
incorporated under the appropriate law of Republic of France and having its
registered office at 31-32, Quai de Dion Bouton, 92800 Puteaux, France
outside the jurisdiction of this Court and the defendant no. 1 does not have
any office or establishment in India or at Kolkata.
Mr. Thaker further submits that the plaintiff has not claimed any relief
against the defendant no. 2 and as such the cause of action pleaded in the
plaint is totally false, baseless and with the ulterior motive to harass the
defendant no. 1.
Mr. Thaker further submits that there is no pleading in the plaint to
justify for grant of leave under clause 12 of the Letters Patent and no part of
cause of action at all arose within the jurisdiction this Court. He further
submits that the plaintiff is bound by the forum selection clause which
specifically stipulates adjudication of disputes by Commercial Court at PARIS.
Heard the Learned Counsel for the respective parties and considered the
documents available on record.
The sole question in the instant application whether the plaintiff is
having any cause of action against the defendants within the jurisdiction of
this Court.
To decide the said issue some of the Articles of the contracts entered
between the defendant no.1 and defendant no.2 are to be looked into.
Article 19 of the contract reads as follows :
"19.1. This contract is subject to French Law.
19.2. The parties shall attempt to settle any disagreement arising from this
contract amicably. Any conciliation must be recorded in a settlement
signed by the parties.
19.3. If no amiable can be reached between the parties, a definitive ruling
on the disagreement shall be given by judicial means before the
Commercial Court of Paris."
Article 20: JURISDICTION
"For the fulfillment of this contract and subsequent documents, the
parties choose the following address for service.
The Manufacturer seller at its head office designated above.
The purchaser at its head office designated above."
At paragraph 30 of the plaint, the plaintiff has describe the cause of
action which reads as follows :
"30. The plaintiff's cause of action in the suit has arisen, inter alia, as its
erstwhile registered office at 113, Park Street, Kolkata within the
jurisdiction of this Hon'ble Court and at its works at Hind Motor, Hooghly
as also at the address of the defendant No. 1 in France, outside the
aforesaid jurisdiction. As such, the plaintiff is entitled to seek and seeks
leave under Clause 12 of the Letters Patent to institute this suit in this
Hon'ble Court. in as much as no mechanism for pre-institution mediation
and settlement is available in this Hon'ble Court - Chapter III A of the
Commercial Courts Act has no application to the present suit."
The contract was entered between the defendant no. 1 and defendant no.
2 after discussion on 21st September, 2016 at Berlin wherein the defendant no.
2 had agreed to supply 100 nos of Wagons to the defendant no. 1.
In the contract, the defendant no.1 and defendant no. 2 have agreed that
the manufacture and sale of the wagons will be at FOB Kolkata and the
defendant no. 2 agreed that the same will be manufactured at Titagarh CARS
AFR located at Calcutta, India.
The specific case of the plaintiff is that the defendant no. 1 was well
aware of the fact that the defendant no. 2 was wholly owned subsidiary of the
plaintiff and was acting as an agent of the plaintiff.
In the contract entered between the defendant no.1 and defendant no. 2,
nothing is mentioned that the defendant no. 2 being the agent of the plaintiff
entering into the contract with the defendant no. 1. It is also not mentioned
that the wagons will be manufactured by the plaintiff on behalf of the
defendant no. 2. In the contract it is simply mentioned that the manufacture
and sale will be conducted at FOB Kolkata. In Clause 2.2 of the contract is
mentioned that:
"2.2. The cars will be manufactured in our factories Titagarh CARS
AFR LOCATED at Calcutta, India."
In the said clause also it is not mentioned that the plaintiff will
manufacture the said Wagons at its factory at Titagarh, Kolkata.
On entering into contract between the defendant no. 1 and defendant no.
2, the defendant no. 2 had issued back to back purchased order to the plaintiff
on 7th December, 2016 for manufacture and supply of 100 containers carrying
wagons but none of the correspondences between the plaintiff and the
defendant no. 2 was served to the defendant no. 1. In one of the
correspondence between the plaintiff and the defendant no. 2 it is mentioned
that "All invoices will be made in the name of TITAGARH WAGONS AFR and
addressed to 140 RUE DU PARADIS 59500 DOUAI".
Mr. Saha had relied upon the Sections 218, 226, 230 and 231 of the
Indian Contract Act :-
"218. Agent's duty to pay sums received for principal.- Subject
to such deductions, the agent is bound to pay to his principal all sums
received on his account.
226. Enforcement and consequences of agent's contracts.-
Contracts entered into through an agent, and obligations arising from acts
done by an agent, may be enforced in the same manner, and will have the
same legal consequences, as if the contracts had been entered into and the
acts done by the principal in person.
230. Agent cannot personally enforce, nor be bound by
contracts on behalf of principal.- In the absence of any contract to that
effect, an agent cannot personally enforce contract entered into by him on
behalf of his principal, nor is he personally bound by them.
Presumption of contract to contrary.- Such a contract shall be
presumed to exist in the following cases-
(1) Where the contract is made by an agent for the sale of purchase
of goods for a merchant resident abroad;
(b) Where the agent does not disclose the name of his principal;
(3) Where the principal, though disclosed, cannot be sued.
231. Right of parties to a contract made by agent not
disclosed.--If an agent makes a contract with a person who neither
knows, nor has reason to suspect, that he is an agent, his principal may
require the performance of the contract; but the other contracting party
has, as against the principal, the same rights as he would have had as
against the agent if the agent had been principal.
If the principal discloses himself before the contract is completed, the
other contracting party may refuse to fulfil the contract, if he can show
that, if he had known who was the principal in the contract, or if he had
known that the agent was not a principal, he would not have entered into
the contract."
Mr. Saha submits that defendant no. 2 acted as agent of the plaintiff in
the transactions on the basis of back to back contract and thus the plaintiff is
entitle to enforce its claims against the defendant no. 1 for back of such
contract in view of the above provisions of the Contract Act.
In the instant case the defendant no. 1 who had entered into an
agreement with the defendant no. 2, there is no such condition that, the
plaintiff is the agent of the defendant no. 2 and the plaintiff will manufacture
and supply the goods to the defendant no. 1. There is no documents or any
correspondence between the plaintiff and the defendant no. 1 or in between the
defendant No. 1 and defendant no. 2 that the plaintiff is the agent of the
defendant no. 2 and the plaintiff will manufacture and supply the wagons thus
the provisions referred by Mr. Saha is not applicable in the instant case.
Mr. Saha referred the judgment reported in (2003) SCC Online Cal 140
(Bellevue Clinic & Anr. -vs- State of West Bengal & Ors.) wherein the
Coordinate Bench of this Court held that :
"16. In the present case, the documents placed before this Court
establish that this particular instrument has come from a foreign territory
to the premises of the petitioner No. 1 at Kolkata by virtue of the order
placed by the petitioner No. 1 with the respondent No. 6. Therefore, the
requisition of the petitioner No. 1 has brought the machine to Kolkata from
a foreign country. At this juncture, we must not confuse this transaction
with one where the respondent No. 6, itself has imported the machine and
the petitioner No. 1 has subsequently purchased the same from the
respondent No. 6 as if it has purchased the instrument from the shop of a
dealer. In the latter type of a transaction, petitioner No. 1 has the option of
choosing this particular machine or any other one amongst those decorated
in the show-room of the respondent No. 6. But in the present case, the
foreign manufacturer has earmarked this particular machine for delivery to
the premises of the petitioner No. 1 as would be reflected from the bill of
lading itself."
Mr. Thaker relied upon the judgment reported in (2013) 9 SCC 32
(Swastik Gases Private Limited -vs- Indian Oil Corporation Ltd.) wherein the
Hon'ble Supreme Court held that :
"31. In the instant case, the appellant does not dispute that part of cause
of action has arisen in Kolkata. What appellant says is that part of cause of
action has also arisen in Jaipur and, therefore, the Chief Justice of the
Rajasthan High Court or the designate Judge has jurisdiction to consider the
application made by the appellant for the appointment of an arbitrator under
Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act
read with Section 20(c) of the Code, there remains no doubt that the Chief
Justice or the designate Judge of the Rajasthan High Court has jurisdiction in
the matter. The question is, whether parties by virtue of Clause 18 of the
agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in
other words, whether in view of Clause 18 of the agreement, the jurisdiction
of the Chief Justice of the Rajasthan High Court has been excluded?
32. For answer to the above question, we have to see the effect of the
jurisdiction clause in the agreement which provides that the agreement shall
be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst
providing for jurisdiction clause in the agreement the words like "alone",
"only", "exclusive" or "exclusive jurisdiction" have not been used but this, in
our view, is not decisive and does not make any material difference. The
intention of the parties--by having Clause 18 in the agreement--is clear and
unambiguous that the courts at Kolkata shall have jurisdiction which means
that the courts at Kolkata alone shall have jurisdiction. It is so because for
construction of jurisdiction clause, like Clause 18 in the agreement, the
maxim expression unius est exclusion alterius comes into play as there is
nothing to indicate to the contrary. This legal maxim means that expression of
one is the exclusion of another. By making a provision that the agreement is
subject to the jurisdiction of the courts at Kolkata, the parties have impliedly
excluded the jurisdiction of other courts. Where the contract specifies the
jurisdiction of the courts at a particular place and such courts have
jurisdiction to deal with the matter, we think that an inference may be drawn
that parties intended to exclude all other courts. A clause like this is not hit by
Section 23 of the Contract Act at all. Such clause is neither forbidden by law
nor it is against the public policy. It does not offend Section 28 of the Contract
Act in any manner.
34. In view of the above, we answer the question in the affirmative and
hold that the impugned order [Swastik Gases (P) Ltd. v. Indian Oil Corpn.
Ltd., Civil Arbitration Application No. 49 of 2008, order dated 13-10-2011
(Raj)] does not suffer from any error of law. The civil appeal is, accordingly,
dismissed with no order as to costs. The appellant shall be at liberty to
pursue its remedy under Section 11 of the 1996 Act in the Calcutta High
Court."
In the present case, contract was entered between the defendant no.1
and defendant no. 2. In the contract it is specifically mentioned that the
contract is for manufacture and sale of 100 flat cars had bogies metric route
(Wagons) and the same will be manufactured at Titagarh CARS AFR, located at
Calcutta, India. Inspite of the facts, the defendant no. 2 had agreed that "the
contract is subject to French Law and if no amicable settlement can be reached
between the parties, a definitive ruling on the disagreement shall be given by
judicial means before the Commercial Court of Paris".
As per the prayer in the plaint, the plaintiff has prayed for decree against
the defendant no.1 and as per pleadings in the plaint there is no averments
how the cause of action arose within the jurisdiction of this Court against the
defendant no.1. In paragraph 30 of the plaint, the plaintiff has shown the
cause of action as the registered office of the plaintiff is situated at 113, Park
Street, Kolkata, but there is no justification how the cause of action can be
treated to be arose at Park Street, Kolkata. Due to defaults committed by the
defendant no. 2, the defendant no. 1 had terminated the contract of the
defendant no. 2 and defendant no. 2 had initiated a proceeding against the
defendant no. 1 before the Commercial Court at Paris against the said
termination. It is also admitted by the plaintiff that the defendant no. 2 is
under liquidation at France.
In view of the above, this Court finds that as per the case made out by
the plaintiff, the defendant no. 1 and defendant no. 2 are the companies
incorporated in terms of the appropriate laws of France and the defendant no.
2 while executing contract had agreed for forum selection clause and no cause
of action arose within the jurisdiction of this Court.
Accordingly, leave granted by this Court to the plaintiff under Clause 12
of the Letters Patent, 1865 is revoked consequently the plaint filed by the
plaintiff in connection with CS No. 258 of 2019 along with all documents are
returned to the plaintiff.
G.A. 2 of 2020 is allowed.
(KRISHNA RAO, J.)
p.d/
