Ranbaxy Fine Chemicals Ltd. vs National Enterprises
2005 Latest Caselaw 1653 Del

JUDGMENT

A.K. Sikri, J.

Page 2380

1. The plaintiff has filed the instant suit for recovery of Rs. 26,72,179.84 ps. against the defendant. The suit is founded on the averments that the defendant was appointed as a stockist of the plaintiff company for the purpose of selling laboratory Chemicals in Bhilai Nagar, Chattisgarh, manufactured by the plaintiff company. An agreement to this effect was executed between Page 2381 the plaintiff and the defendant on 27th May 1998 and subsequently the said agreement was renewed on 22nd September 1999. The plaintiff company supplied the Chemicals to the defendant from its godown situated at Bhiwandi, Maharashtra during the period June 1999 to July 1999 under separate invoices. The total value of these supplies was 27,05,129.63 pc. On account of the various supplies made by the plaintiff and part payments made by the defendant, an amount of Rs. 19,07,371.84 pc. remained as balance. As this amount was not paid inspite of repeated requests and notice, suit for recovery is filed after adding interest @ 21% per annum and thereby making a total of Rs. 26,72,179.84 pc.

2. The defendant has filed present application under Order VII Rule 11 of the Code of Civil Procedure for rejection of the plaint on the ground that this Court has no territorial jurisdiction to entertain the present suit. The case put by the defendant is that as per the averments made in the plaint itself, it is not shown that any cause of action or part of cause of action arose within the territorial jurisdiction of this Court and the jurisdiction of this Court is invoked only because of clause 17 of the agreement dated 27th May 1998 which stipulates that the Courts at Delhi alone shall have the jurisdiction. The submission of the defendant is that when this Court lacks inherent jurisdiction, it cannot be clothed because of the aforesaid clause as even the consent of the parties cannot confer the jurisdiction on a Court which otherwise does not have the jurisdiction. From the averments made in the plaint learned counsel further submitted that nowhere it is mentioned that even a part of cause of action has arisen within the territorial jurisdiction of this Court.

3. After hearing the counsel for the parties I am of the view that there is force in the aforesaid submission of the learned counsel for the defendant and prayer made in this application deserves to be allowed.

4. At the outset, it may be noted that the plaintiff has its registered office in district Sirmour, Himachal Pradesh and head office at 25, Nehrul Place, New Delhi. The defendant is a sole proprietorship firm of Mr. Bhushan Kumar Malhotra. It has its office in Chattisgarh. Indubitably, the defendant resides and works for gain in Chattisgarh. The two addresses of the defendant shown in the cause title mention his addresses at Chattisgarh only. Therefore, in so far as residence/place of work of the defendant is concerned, it is not within the jurisdiction of this Court. The only other aspect which needs examination is as to whether cause of action or part of cause of action arose within the territorial jurisdiction of this Court to enable this Court to entertain this suit under Section 20 of the Code of Civil Procedure. For this, let me first point out the averments made in the plaint.

5. In para 3 of the plaint it is stated that the defendant had approached the plaintiff company with a proposal to become stockist to sell laboratory Chemicals. These Chemicals are manufactured by the plaintiff company in Maharashtra. Although plaint mentions about the execution of the agreement, it is conspicuously silent about the place where agreement was signed. As per the averments made in para 4, the supplies were to be made by the plaintiff to the defendant from its godown sitauted at Bhiwandi, Page 2382 Maharashtra. These supplies were made from Bhiwandi to Bhilai Nagar, Chattisgarh. Thus, there is no averment about cause of action or part thereof in Delhi. In para 16 wherein averments relating to jurisdiction are made reads as under:-

"That the agreement for supply of goods to the defendant on credit basis was executed between the parties contains a clause whereby it has specifically been agreed between the parties that the courts in Delhi alone shall have jurisdiction in case of any dispute. Further on the back of the invoices of the Plaintiff Company through which goods are sold, it is clearly printed/mentioned that the disputes between the parties shall be within the jurisdiction Delhi Courts. Therefore, this Hon'ble Court has territorial jurisdiction to try and entertain this suit."

Even in this para no attempt is made to plead that cause of action/part of cause of action had arisen in Delhi. Only reason for filing the suit in Delhi, as per this para, is that parties specifically agreed that Courts in Delhi alone shall have the jurisdiction in case of any dispute and it is so printed on the back of the invoices as well. Thus, in the entire plaint there is no other averments except reliance on clause 17 of the agreement and insertion in the invoice.

6. A perusal of agreement would also show that place where the agreement is signed has not been mentioned. Invoices for supply are prepared at Bhiwandi, from where the supplies were made and sent to the defendant at Bhilai Nagar, Chattisgarh.

7. In the application filed by the defendant specific averment is made in para 2 thereof to the effect that "admittedly no cause of action or any part thereof has ever arisen within the local limits of jurisdiction of this Court..." and that "it is categorically submitted that not an iota of transaction ever took place between the parties to the above suit in Delhi." In reply to this application, the aforesaid averments are not specifically disputed except bald averment that "it is denied that no cause of action or any part thereof took place within the local limits of jurisdiction of this Hon'ble Court". In support of this submission plaintiff has again relied upon clause 17 of the agreement by alleging that said para in unambiguous and clear terms gives jurisdiction to Delhi courts alone to entertain the dispute and reliance is placed on the judgment of this Court in the case of Delhi Bottling Co. Ltd. v. Times Guaranty Financials Ltd., 2002 III AD (Delhi) 1037. Therefore, the position which is discernible from the aforesaid discussion is:-

(a) As per the averments made in the plaint itself, the defendant resides and works for gain in Chattisgarh; the defendant was made stockist of the plaintiff for sale of plaintiff's goods in Bhilai Nagar, Chattisgarh; goods were supplied by the plaintiff from its godown situated at Bhiwandi, Maharashtra to the defendant at Chattisgarh.

(b) It is nowhere alleged that any cause of action/part of cause of action arose in Delhi and obviously, no mention as to how it arose in Delhi.

(c) Jurisdiction of Delhi court is sought only on the basis of para 17 of the agreement and stipulation contained in the invoices.

Page 2383

Mere statement in clause 17 of the agreement that Delhi courts alone will have jurisdiction would not confer jurisdiction on this court if the court otherwise lacks inherent jurisdiction. Even parties by their agreement cannot confer jurisdiction on a Court which otherwise does not possess the jurisdiction under the Code of Civil Procedure. This law stands settled by the Apex Court in series of judgments. Reference can be made to the judgment of the Supreme Court in Hakam Singh v. Gammon (India) Ltd., wherein the Court held as under:-

"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 Court is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act."

8. If this Court has no jurisdiction and the Courts at Bhilai Nagar, Chattisgarh and Bhiwandi, Maharashtra have jurisdiction, the agreement in question which ouster the jurisdiction of those Courts and confer jurisdiction on this Court, will be unlawful and void. The principle of law reiterated is found in the following observations of the Supreme Court in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem, :-

"10. Under Section 23 of the Contract Act the consideration or object of an agreement is lawful, unless it is opposed to public policy. Every agreement of which the object or consideration is unlawful is void. Hence there can be no doubt that an agreement to oust absolutely the jurisdiction of the Court will be unlawful and void being against the public policy. Ex dolo malo non oritus actio. If therefore it is found in this case that Clause 11 has absolutely ousted the jurisdiction of the Court it would be against public policy. However, such will be the result only if it can be shown that the jurisdiction to which the parties have agreed to submit had nothing to do with the contract. If on the other hand it is found that the jurisdiction agreed would also be a proper jurisdiction in the matter of the contract it could not be said that it ousted the jurisdiction of the Court."

9. The judgment of this Court in Delhi Bottling Co. Ltd. (Supra), as cited by the plaintiff, would not come to its aid. That is a judgment on the proposition that if two courts have the jurisdiction to entertain a suit, parties by agreement exclude the jurisdiction of one Court and agree that other Court only will have the exclusive jurisdiction. Thus, whereas by agreement exclusion of jurisdiction of one Court and limiting it to another Court, which has otherwise the jurisdiction, is permissible, what is not permissible is conferring jurisdiction on a Court which otherwise does not possess the jurisdiction. Plaintiff has not even made an averment nor has been able to state as to how this Court would have the jurisdiction.

Page 2384

10. At this stage, I may point out that when this application came up for hearing on 24th July 2004, the Court pointed out that agreement referred to did not state as to whether it was executed and allowed the parties to file respective affidavits about the place of execution of the agreement. The plaintiff has filed the affidavit stating that agreement was executed in Delhi whereas the defendant has made an averment in his affidavit that discussions and deliberations took place with the Mumbai office of the plaintiff and also with an officer of the plaintiff at Bhiwandi, Maharashtra and ultimately agreement of stockistship was tied at Mumbai office of the plaintiff company and signed by Sh. R.K. Srivastava, the then Regional Sales Manager at Mumbai office.

11. Notwithstanding this contradictory stand, no steps are taken by the plaintiff seeking amendment of the plaint and pleading that the agreement was signed at Delhi. That apart, clause 17 of the agreement on which reliance is placed, would itself militate against this averment in the affidavit of the plaintiff.

"17. Notwithstanding the place of execution of this Agreement, the Courts at Delhi alone shall have jurisdiction in the matter and/or disputes arising out of this Agreement."

12. It starts with the words "Notwithstanding the place of execution of this Agreement, the Courts at Delhi alone shall have jurisdiction ...". The plaintiff was conscious of the fact that the agreement was not signed in Delhi and, therefore, this non obstante clause was added. This clause itself give a clear indication that though agreement is not signed in Delhi, still the parties (rather the plaintiff) wanted Courts at Delhi to have the jurisdiction. Unfortunately for the plaintiff, the law does not permit so.

13. The upshot of the aforesaid discussion would be to hold that this court lacks territorial jurisdiction to entertain the present suit. The prayer made in this application is accordingly allowed.

CS(OS) No. 1847/2001

Consequently, the plaint is returned to the plaintiff for filing in the appropriate Court having territorial jurisdiction in the matter.