Khosla Machines Pvt. Ltd. vs Deepak Verma T/A B.M. Packaging
2009 Latest Caselaw 2996 Del

       IN THE HIGH COURT OF DELHI AT NEW DELHI

              CS(OS) 1806/2008 & IAs 10448, 15833/08, 2296/09

       KHOSLA MACHINES PVT. LTD.                ..... Plaintiff
                   Through Mr. Chander M. Lal with
                   Mr. Dushyant Mahant and
                   Ms. Kripa Pandit, Advocates.

              versus

       MR. DEEPAK VERMA T/A B.M. PACKAGING ..... Defendant
                    Through Mr. R.K. Kapoor with
                    Ms. Mansi Dhiman, Advocate.

       CORAM:
       HON'BLE DR. JUSTICE S. MURALIDHAR

       1. Whether reporters of the local newspapers
          be allowed to see the judgment?                            No
       2. To be referred to the Reporter or not?                     Yes
       3. Whether the judgment should be reported in the Digest? Yes
                            ORDER

04.08.2009

IA Nos. 15833/08 & 2296/09

1. These two applications are by the defendants. IA No. 15833 of 2008

filed by the defendant under Order XIV Rule 2(2) CPC seeks a direction

that the preliminary issue concerning the territorial jurisdiction of this

Court should be decided first. The ground urged in the application in IA

No. 2296 of 2009 under Order VII Rule 10 CPC is also similar. The

prayer here is that the plaint should be directed to be returned for

presentation in the proper court.

2. The facts leading to the filing of these applications are that the

aforementioned suit was filed by the plaintiff alleging infringement of the

plaintiff‟s copyrights in industrial drawings including but not restricted to

eight different brands of Auto Banding Machines. According to the

plaintiff the defendant joined it in the year 1992 as an employee and was

made part of the research and development team. During his employment

the defendant acquired complete knowledge regarding development,

designing, functioning and selling of the machines. It is claimed that the

defendant also had information of the trade secrets of the plaintiff.

3. According to the plaintiff, the defendant abruptly quit employment in

the year 2003. Subsequently the plaintiff learnt that during employment

the defendant was clandestinely involved in building machines similar to

the machines of the plaintiff. The defendant had timed his leaving in such

a manner that by the time he resigned, the machine infringing the design

of the plaintiff was ready.

4. The plaintiff claims that the defendant failed to sell his machines and

confessed to his guilt before the Managing Director of the plaintiff

company. He stated that he merely want to prove his ability by producing

the machine and it was never his intention to harm the interests of the

plaintiff company. He expressed his desire to continue in the employment

of the plaintiff company stating that he was under a huge financial burden

because of the development costs of the variant made by him.

5. The plaintiff has in para 16 of the plaint stated that the defendant

agreed to sign a „non-disclosure of confidentiality and a non-compete

Agreement‟. This agreement provided that the ownership, title and

interest and all other rights vesting in any confidential information

disclosed to the defendant which he might have develop in future would

singularly vest with the plaintiff company. By means of the said

agreement, the defendant agreed not to involve himself directly or

indirectly during his employment and for a further period of ten years

after his employment, in competition with the plaintiff or in the business

substantially similar to that of the plaintiff.

6. It is stated that the defendant was thereafter awarded a position in top

management of the plaintiff company which made him privy to all of

Plaintiffs‟ industrial designs etc. However, in June 2006 the defendant

again resigned from the plaintiff company. It is claimed that the plaintiff

recently came to know that the defendant had developed another machine

by copying the design scheme of the plaintiff and using reverse

engineering of the plaintiff‟s machines by misusing the confidential

information pertaining to the plaintiff. In paras 21 and 22, it is stated as

under:-

"21. The plaintiff was further shocked and taken aback when they learned that the Defendant has been approaching the Plaintiff‟s customers under the name of M/s B.M. Packaging and is offering the infringing machine to them at a much lower price. The Defendants can afford to undercut the Plaintiff because he has made no investments whatsoever in the research and development of his offending machine and has therefore no manufacturing costs to recover. The Defendants have simply copied the drawings of the Plaintiff and reverse engineered the Plaintiff‟s machines.

22. The Plaintiff‟s suspicions were further confirmed

when they became aware of the fact that Defendant has approached the Plaintiff‟s customer M/s Fena (P) Limited having its registered office at A-237, Okhla Industrial Area, Phase I, New Delhi-110030, India. The Defendant not only approached the said customer but has now also confirmed a purchase order for delivery of its machine. This clearly reiterates the Defendant‟s dishonest intentions."

7. In para 32 in claiming that this Court has territorial jurisdiction, the

plaintiff has averred as under:-

"32. As mentioned above the Defendant is offering for sale the offending goods in Delhi. The defendant has obtained a purchase order with M/s Fena (P) Ltd. having its registered office at A-237, Okhla Industrial Area, Phase-I, New Delhi. The Defendant further intends to sell and offer for sale its machine in Delhi, within the jurisdiction of this Hon‟ble Court. This Hon‟ble Court thus has the territorial jurisdiction to try and entertain the present suit."

8. The present suit has been filed for a decree of permanent injunction to

restrain the defendant from infringing the plaintiff‟s copyright and other

incidental reliefs.

9. In the written statement filed by the defendant, a preliminary objection

has been taken to the maintainability of the suit. It is pointed out that the

purchase order placed on record by the plaintiff pertains to the Surajpur

Unit in Uttar Pradesh (U.P.) of one Fena Pvt. Ltd. The said purchase

order states that delivery and billing is to be effected at Surajpur which

does not fall within the jurisdiction of the Delhi court. Fena Pvt. Ltd. is in

any event not even a party to the suit. Both defendants are at Mohali and

the plaintiff is in Chandigarh.

10. Pointing out to the two documents placed/referred by the plaintiff,

namely, the Non Compete Agreement as well as the Agreement to Sell,

both contain a clause which states that dispute, if any, between the

plaintiff and defendant will be subject to the exclusive jurisdiction of the

courts in Chandigarh. It is accordingly submitted that the present suit

ought to have been filed in Chandigarh. Moreover the plaintiff had

already filed a suit for recovery against the defendant before the court of

the Additional Civil Judge, Senior Division, Mohali on 31st January 2007.

11. Notwithstanding the above contentions, it is also pleaded by the

defendant that the agreement to sell dated and Non Compete Agreement

both dated 19th November 2003 lack proper attestation and execution not

having been signed by any witness. It is alleged that the case of the

plaintiff is based on forged and manipulated documents.

12. It is on the basis of the above preliminary objections raised in the

written statement that both the present applications have been filed by the

defendant.

13. The submissions of Mr. C.M. Lal, the learned counsel for the plaintiff

and Mr. R.K. Kapoor, the learned counsel for the defendant have been

heard.

14. Mr. C.M. Lal, the learned counsel for the plaintiff submits that the

suit is not based exclusively on the two documents, viz., the Non

Compete Agreement and the agreement to sell. He submits that while it is

not denied that both these documents contain a clause conferring

exclusive jurisdiction on the courts in Chandigarh, a violation of

copyright gives rise to an independent cause of action in common law

and therefore the present suit is maintainable in Delhi. He refers to the

judgment of the Supreme Court in A.B.C. Laminart Pvt. Ltd. v. A.P.

Agencies, Salem (1989) 2 SCC 163 and submits that the ouster clause

cannot be used as a means to defeat the ends of justice and that as long as

a part of the cause of action arose within the jurisdiction of the Court in

Delhi in terms of Section 20(c) of the CPC, the suit would be

maintainable. Relying upon the judgments of this Court in LG

Corporation v. Intermarket Electroplasters (P) Ltd. 2006 (32) PTC 429

(Del.); Pfizer Products, Inc. v. Rajesh Chopra 2006 (32) PTC 301(Del.)

and the Madras High Court in Base International Holdings N.V.

Hockenrode 6 v. Pallava Hotels Corporation Ltd. 1999 PTC (19) 252, it

is submitted that the purchase order for supply of equipment by the

defendant to Fena Pvt. Ltd. having its office in Delhi shows that the

jurisdiction of the courts in Delhi was attracted. It is submitted that

notwithstanding the fact that the machine was supplied from Mohali and

delivered at Surajpur as long as Fena Pvt. Ltd. has its registered office in

Delhi, the payment ought to have been made in Delhi and therefore this

Court has jurisdiction to try the suit. Reference is also made to the

decisions in Ajanta Enterprises v. Hoechst Pharmaceuticals Ltd. AIR

1987 Orissa 34 and Rajasthan Golden Transport Co. P. Ltd. v. United

India Fire & General Insurance Co. Ltd. AIR 1980 Gujarat 184.

15. Mr. Lal submitted that the defendant cannot be allowed to approbate

or reprobate. While doubting the genuineness of the two documents in

the written statement, the defendant cannot be permitted at the same time

to rely upon the clauses in those documents that confer exclusive

jurisdiction on the courts in Chandigarh. According to him, the plaintiff

cannot be estopped from invoking the jurisdiction of this Court, since the

parties were not ad idem about the genuineness of the aforementioned

documents. He relied upon the provisions of Section 115 of the Evidence

Act, 1872.

16. Mr. R.K. Kapoor, the learned counsel for the defendant on the other

hand points out that it is the plaintiff which itself has placed on record the

two documents and cannot now be heard to say that the ouster clause

contained in those documents should not apply. If the plaintiff has based

its case on the said documents, this Court cannot ignore those documents

to find jurisdiction when none exists. He further submits that since the

plaintiff has itself sued the defendant in Chandigarh for recovery of

monies it would not be open to the plaintiff to come to this Court for

another dispute involving the same parties when the plaintiff fully knew

that it is only the courts at Chandigarh which have the jurisdiction. He

points out that notwithstanding the defendant‟s averments made in the

written statement, the question of jurisdiction has to be decided with

reference to the averments in the plaint.

17. Having considered the submissions of the counsel for the parties, it

appears to this Court that the defendant will succeed in these

applications. The question of jurisdiction has to be decided on the facts

and circumstances of every case. In A.B.C. Laminart Pvt. Ltd. v. A.P.

Agencies, Salem, the Supreme Court in para 21 explained the position

concerning the ouster clause as under (SCC @ p.175-76):

"From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. 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. As regards construction of the ouster clause when words like 'alone', 'only, 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius' - expression of one is the exclusion of another - may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed."

18. In the instant case, the agreement to sell as well as the Non Compete

Agreement both dated 19th November 2003 contain an identical clause

which reads as under:-

"That both the parties irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the courts in Chandigarh."

19. What is significant is that an undertaking was given by the defendant

not to design or develop a similar prototype/machine as was "an essential

and fundamental condition of this agreement" and formed the basis of the

present suit. Mr. Lal tried to impress upon the court that even irrespective

of such an agreement to sell containing a negative covenant, the plaintiff

would still be able to sue the defendant for violation of copyright. In a

given case such a contention could be accepted. However, in the present

case, the plaintiff has itself placed these documents on record and has

come to the court claiming violation of the agreements by the defendant.

The plaintiff cannot be heard to say that the court should now ignore the

said two documents in determining whether the court has jurisdiction to

try the suit.

20. The next contention of Mr. Lal is that a part of the cause of action

arose within the jurisdiction of this court and therefore in terms of

Section 20(c) CPC this Court has jurisdiction to entertain the suit. It

requires to be noticed that the only averment in this regard is that the

defendant has received a purchase order from Fena Pvt. Ltd., which has

its office in Delhi. It is not in dispute that the allegedly offending

machine made in Mohali to be delivered at Surajpur (UP). Mr. Lal states

that this Court should not go by the place from where the machine is

dispatched or even the place where it is delivered, it should only go by

the address of the company which purchased the machine from the

defendant.

21. There are two difficulties in the way of the plaintiff. The first is that

by accepting the above plea of the plaintiff, this Court would be turning a

blind eye to the two documents which have been included by the plaintiff

in the list of documents being relied upon by it. Both these documents

contain clauses, which have been inserted obviously at the instance of the

plaintiff itself, conferring on the exclusive jurisdiction on the courts in

Chandigarh. In light of the law explained by the Supreme Court in A.B.C.

Laminart Pvt. Ltd. v. A.P. Agencies, Salem, the wording of the ouster

clause is unambiguous particularly when it uses words like "exclusive".

In those circumstances, no option is left to the court to still assert its

jurisdiction. Once an ouster clause is clear that it is only the court in

Chandigarh that will have the jurisdiction, it is not possible to ignore

such a clause and still say that since a part of the cause of action has

arisen within the territorial jurisdiction of this court, this suit should be

entertained. This is what distinguishes the judgments of this Court in LG

Corporation v. Intermarket Electroplasters (P) Ltd., Pfizer Products,

Inc. v. Rajesh Chopra and of the Madras High Court in Base

International Holdings N.V. Hockenrode 6 v. Pallava Hotels

Corporation Ltd. in their application to the present case. Those cases

seem to find jurisdiction on the basis that either a sale or a threatened sale

was to take place within the jurisdiction of this Court. None of those

decisions were rendered in cases where there was an ouster clause which

conferred exclusive jurisdiction on some other court.

22. As regards the plea of estoppel, this Court is unable to appreciate how

the plaintiff can seek to take advantage of the defendant‟s averments in

its written statement. The submission of Mr. Lal was that unless the

defendant admitted the genuineness of the two documents which

contained the ouster clause, the ouster clause cannot be used to estop the

plaintiff from approaching the court. In the first place, this Court does not

have to look into the written statement to see whether the suit is

maintainable. At this stage this Court has to determine whether on the

basis of the averments in the plaint, this Court has jurisdiction or not. The

plaint has to be examined along with the documents for that purpose. It is

incumbent on the plaintiff to satisfy the court that it has jurisdiction to

entertain the suit. In the considered view of this Court, the question of

estoppel does not arise. It is the plaintiff that maintains that its case on

the basis of the two documents which are part of its reliance. As long as

these documents remain on the record, it is not possible for this Court to

ignore them. Therefore, it is not possible to accept the plea of the plaintiff

that this Court has territorial jurisdiction to entertain the suit.

23. In view of the above determination, it is not necessary to examine in

great detail whether the purchase order which envisages a delivery from

Mohali or delivery at Surajpur can attract the jurisdiction of this court,

only for the reason the company purchasing the equipment has an office

in Delhi.

24. This Court accordingly finds that the defendant has been able to make

out a case for a direction that the plaint should be returned to be

presented before the proper court.

25. IA No. 15833 of 2008 under Order XIV Rule 2(2) CPC is

accordingly allowed and other IA 2296 of 09 is disposed of.

CS(OS) No. 1806/2008 & IA 10448/2008

26. In view of the above order, the plaint is directed to be returned for

presentation in the court in which it is supposed to be instituted.

27. This application does not survive and is disposed of as such.

S. MURALIDHAR, J.

AUGUST 04, 2009 ak