Bush Foods Overseas Pvt Ltd vs Sentinel Capital Pte Ltd & Anr
2012 Latest Caselaw 3784 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+      I.A. No. 8084/2011 (u/O 7 R 10 & 11 r/w Sec. 151 CPC)
       and CS(OS) No. 1074/2011


                                         Reserved on 1st May, 2012

                                          Decided on 2nd July, 2012


       BUSH FOODS OVERSEAS PVT LTD                 ..... Plaintiff

                          Through:    Mr. Rahul P. Dave, Mr.
                                      Bhaskar Tiwari, Mr. Sumit
                                      Chopra and Mr. Rohit
                                      Tripathy, Advs.

                   Versus


       SENTINEL CAPITAL PTE LTD & ANR              ..... Defendants

                          Through:    Mr. Rakesh Tiku, Sr. Adv.
                                      with Mr.N.S.Arora, Adv.


Coram:
HON'BLE MR. JUSTICE A.K. PATHAK


A.K. PATHAK, J.

1. Defendant no. 1 has filed this application under Order 7 Rule

10 and 11 read with Section 151 of the Code of Civil Procedure,

1908 ("CPC", for short) praying therein that plaint be rejected.

2. Plaintiff has filed the present suit seeking following reliefs:-

"a) Declare that no further fees or monies

are due and payable from the plaintiff to

defendant no. 1 on account of the Standard

Chartered Bank deal entered into between the

plaintiff and Standard Chartered Bank in

March, 2011.

b) Pass a decree for declaration in favour

of the plaintiff and against defendant no. 1,

declaring that the mandate contained in the

engagement letter dated 24th November, 2010

was never acted upon as the terms were not

agreed by and between the plaintiff and

defendant no. 1.

c) In the alternative, pass a decree for

declaration in favour of the plaintiff and

against defendant no. 1, declaring that the

mandate contained in the engagement letter, if

it forms a valid contract between the parties,

came to an end after 4 months as of

September 11, 2010 as per clause 2 and

thereafter the mandate/contract became null

and void for all purposes.

d) Pass a decree for declaration in favour

of the plaintiff and against defendant no. 1,

declaring the invoices bearing Nos. 333-2011

and 334-2011 both dated 8th April, 2011 for a

sum of USD 375,000.00 and 1,250,000.00

respectively are not due or payable by the

plaintiff to defendant no. 1.

e) Pass a decree of permanent injunction

in favour of the plaintiff and against defendant

no. 1, retraining defendant no. 1 its assigns,

office bearers, employees, agents, successors

or any other entity acting in the name and/or

on its behalf from, in any manner, directly or

indirectly holding themselves out to either

Standard Chartered Bank or to any other

person to be creditors of the plaintiffs on this

account.

f) Pass a decree of permanent injunction

in favour of the plaintiff and against defendant

no. 1, restraining defendant no. 1 its assigns,

office bearers, employees, agents, successors

or any other entity acting in the name and/or

on its behalf from initiating proceedings

against the plaintiff in the courts at New

York."

3. It is, thus, evident that no relief has been claimed against the

defendant no. 2. Defendant No.2 appears to be a proforma party,

inasmuch as, defendant no. 2 is not a signatory to the „Engagement

Letter‟ dated 24th November, 2010, which is under challenge in this

case.

4. As per the plaint, plaintiff is engaged in the business of

export of basmati rice. Defendant no. 1 is a company incorporated

in Singapore and carrying on its business in India as well from its

office situated at 76, Hemkunt, Opposite Nehru Place, New Delhi -

110048. Plaintiff engaged defendant no. 2 as Financial Advisor to

arrange funds. Plaintiff entered into an agreement with the

defendant no. 2 on 30th April, 2010, for arranging funds from the

investors. Defendant no. 2 introduced Shri Sukhdeep Singh Rana

of defendant no. 1 to the plaintiff sometime in mid of 2010. A

„Confidentiality Agreement‟ dated 2nd July, 2010 was existing

between defendant no. 1 and defendant no. 2. In the month of

September, 2010, Shri Sukhdeep Singh Rana introduced Shri

Bobby Bhatia, CEO of defendant no. 1 to the plaintiff. Shri Bobby

Bhatia was introduced as a private investor.

5. On or about 11th September, 2010, a meeting took place

between Shri Bobby Bhatia and Shri Vikaran Awasthy at

Singapore, wherein Shri Bobby Bhatia represented that he could

arrange finances for the plaintiff. At that stage, defendant no. 1

was aware of prior engagement of defendant no. 2 by the plaintiff.

Pursuant to this meeting held on 11th September, 2010, an

„Engagement Letter‟ was entered into between the plaintiff and

defendant no. 1. Shri Bobby Bhatia of defendant no. 1 arranged

meetings with the representatives of Standard Chartered Bank,

Singapore, besides some other banks/financers. In the meanwhile,

defendant no. 2 had also initiated negotiations with the Standard

Chartered Bank Private Equity (India) Ltd. In the meeting between

Shri Vikaran Awasthy of the plaintiff and Shri Bobby Bhatia of

defendant no. 1 held at Singapore, Shri Bobby Bhatia expressed his

concern that defendant no. 2 might try to take over the mezzanine

finance deal, thus, requested to make it clear to defendant no. 2 that

he was involved in the deal with Standard Chartered Bank which

Shri Vikaran Awasthy did, making it clear to defendant no.2 that

the mezzanine potential deal was worked out by Shri Bobby

Bhatia. In the meanwhile, defendant no. 2 continued to pursue its

efforts to arrange finance by way of private equity participation and

working capital for the plaintiff and eventually succeeded in

concluding the deal with Standard Chartered Bank Private Equity

(India) Ltd. on 21st March, 2011, without any involvement of

defendant no. 1 whatsoever. On coming to know this fact,

defendant no. 1 issued two invoices, that is, (a) Invoice dated 8th

April, 2011 bearing No. 333-2011 in the amount of USD 1,250,000

representing 5% commission of private equity deal of USD

25,000,000 and (b) Invoice dated 8th April, 2011 bearing reference

334-2011 in the amount of USD 375,000 representing 1.5%

commission on working capital limits of USD 25,000,000 (sic) to

the plaintiff and these invoices were raised, in terms of the

„Engagement Letter‟ dated 24th November, 2010. Under the

„Engagement Letter‟, defendant no. 1 was not entitled to raise the

invoices, inasmuch as finance was arranged by defendant no. 2.

The „Engagement Letter‟ dated 24th November, 2010 specifically

provided that mandate was valid for a period of four months,

thereafter mandate was to be treated as null and void. The mandate

was, otherwise, restricted to the particular transaction, that is,

mezzanine finance from Standard Chartered Bank, Singapore,

which did not materialize.

6. Thereafter, defendant no. 1 served a notice upon Sh. Vikaran

Awasthy of the plaintiff through an American law firm, namely, K

& L Gates, Dallas whereby called upon the plaintiff to pay US

Dollar 16,25,000.00 and also threatened to initiate legal

proceedings in New York, USA in case amount was not paid.

Hence, the present suit.

7. Before venturing into the merits of the case, it would be

appropriate to discuss the principles governing the applications

under Order 7 Rule 10 and 11 CPC. There is no gainsaying that

provision of Order 7 Rule 10 and 11 CPC can be invoked at any

stage of the proceedings after filing of the suit. Only averments

made in the plaint and the documents filed therewith have to be

looked into. Defence of the defendant has not to be considered.

Plaint has to be read as a whole together with the documents filed

by the plaintiff. In Sri Kishan Vs. Shri Ram Kishan and Ors.159

(2009) DLT 470, a Single Judge of this Court observed thus,

"Order 7 Rule 11 of the Civil Procedure Code contemplates that

where the suit appears from the averments made in the plaint to be

barred by any law, then the plaint can be rejected. The legal

position is that to decide whether a plaint is liable to be rejected

under Order 7 Rule 11, averments in the plaint have to be read

without looking at the defence and thereupon it has to be seen

whether on the averments made in the plaint under Order 7 Rule 11

of the Code of Civil Procedure gets attracted.

8. It may be noted here that plaintiff has filed this suit on 3rd

May, 2011, that is, after the service of legal notice on the plaintiff

by defendant no. 1 through its Attorney. It appears that present suit

has been filed by the plaintiff apprehending legal action in U.S.

Courts by defendant no. 1, in terms of the „Engagement Letter‟

dated 24th November, 2010. The relevant Clause reads as under:-

"16. Governing Law

16.1 This Agreement is governed by New York law. The parties submit to the non-

exclusive jurisdiction of the New York courts. You irrevocably appoint Bush Foods Overseas Pvt. Ltd. 2301 Trafalgar Square, Hillsborough, NJ, 08844 USA as agent for service of process."

9. Indeed, defendant no. 1 has filed appropriate legal

proceedings against the plaintiff in the Supreme Court of the State

of County, New York near about the filing of present suit and the

same is pending adjudication.

10. Case of the defendant no. 1 is that in view of the fact that the

parties had agreed that contract shall be governed by New York

law, inasmuch as, they shall submit to the non-exclusive

jurisdiction of the New York courts, the present suit is not

maintainable. This Court has no jurisdiction to entertain and try

the present suit and parties have to be relegated to the New York

courts. Reliance has been placed on Modi Entertainment Network

& Anr. vs. W.S.G. Cricket Pvt. Ltd. (2003) 4 SCC 341, Piramal

Healthcare Limited (Formerly known as Nicholas Piramal India

Ltd.) vs. DiaSorin S.P.A. 172(2010) DLT 131, Gupta Pigments and

Chemicals Pvt. Ltd. vs. Natpar Lines (S) Pvt. Ltd. and Anr. and a

judgment dated 4th May, 2011 of Calcutta High Court passed in CS

No. 10 of 2011 titled Rotomac Electricals Private Limited vs.

National Railway Equipment Company

11. Per contra, case of the plaintiff is that a „non exclusive

jurisdiction‟ clause does not oust the jurisdiction of Courts at

Delhi. Plaintiff had not agreed for exclusive jurisdiction of New

York courts. Merely because, parties had agreed that they shall be

governed by the New York law was also not determinative for the

ouster of jurisdiction of this Court. „Cause of action‟ and „choice

of law‟ are two different and distinct aspects. Stipulation

pertaining to „choice of law‟ in a contract did not oust the

jurisdiction of Indian Court, within whose territorial jurisdiction

the „cause of action‟ had, wholly or in part, arisen. Reliance has

been placed on Laxman Prasad vs. Prodigy Electronics Ltd. and

Another (2008) 1 SCC 618, Essel Sports Pvt. Ltd. vs. Board of

Control for Cricket in India & Ors. (2011) 178 DLT 465 (DB) and

Donohue vs. Armco Inc. & Ors. (2002) 1 All ER to contend that

anti suit injunction can be granted inspite of such a non-exclusive

jurisdiction clause. It is contended that „cause of action‟ involved

in this suit as also the suit filed by defendant no. 1 in New York on

19th May, 2011 is materially the same, inasmuch as, similar

evidence has to be led which will result in multiplication of

evidence. That apart, there is possibility of conflicting verdicts, in

case both the suits are continued concurrently. It is further

contended that the defendant no. 2 is a necessary and proper party

since Shri Sukhdeep Singh Rana of defendant no. 1 was introduced

to plaintiff by the defendant no. 2, inasmuch as, there exists a

„Confidentiality Agreement‟ between the defendant nos. 1 and 2. It

is further contended that in Donohue‟s case (supra) court had

injuncted the parties even when there was "exclusive jurisdiction"

clause in the Agreement.

12. It is not in dispute that "Engagement Letter", executed

between the plaintiff and defendant no. 1 contains a specific clause

to the effect that the parties will be governed by New York law,

inasmuch as, parties agreed to the non-exclusive jurisdiction of the

New York courts. Plaintiff has even appointed Bush Foods

Overseas Pvt. Ltd. 2301 Trafalgar Square, Hillsborough, NJ, 08844

USA as agent for service of process. Supreme Court in Modi

Entertainment‟s case (supra) held that in regard to jurisdiction of

courts under the CPC over a subject-matter one or more courts may

have jurisdiction to deal with it having regard to the location of

immovable property, place of residence of work of a defendant or

place where cause of action has arisen. Where only one court has

jurisdiction, it is said to have exclusive jurisdiction; where more

courts than one have jurisdiction over a subject-matter, they are

called courts of available or natural jurisdiction. The growing

global commercial activities gave rise to the practice of the parties

to a contract agreeing beforehand to approach for resolution of

their disputes thereunder, to either any of the available courts of

natural jurisdiction and thereby create an exclusive or non-

exclusive jurisdiction in one of the available forums or to have the

disputes resolved by a foreign court of their choice as a neutral

forum according to the law applicable to that court. It is a well-

settled principle that by agreement the parties cannot confer

jurisdiction, where none exists on a court to which CPC applies,

but this principle does not apply when the parties agree to submit

to the exclusive or non-exclusive jurisdiction of a foreign court;

indeed in such cases the English courts do permit invoking their

jurisdiction. Thus, it is clear that the parties to a contract may

agree to have their disputes resolved by a foreign court termed as a

"neutral court" or "court of choice" creating exclusive or non-

exclusive jurisdiction in it. In Piramal‟s case (supra), a Single

Judge of this Court by following Modi Entertainment‟s case has

taken a similar view and has observed that the Supreme Court has

placed its imprimatur, in consonance with global practice in the

field to jurisdictional clause whereby, parties agree to "exclusive"

or "non-exclusive" jurisdiction of one of the available courts of

natural jurisdiction or to the exclusive or non-exclusive jurisdiction

of a foreign court of their choice; being a neutral forum for

resolution of their disputes, according to law applicable to that

court. The fact that this principle is an exception to the principle

that parties by agreement cannot confer jurisdiction on a court

where none exists is made clear by observations made in paragraph

11 of the Modi Entertainment‟s case (supra).

13. In Gupta Pigments‟ case (supra) a Single Judge of this Court

has taken similar view. In the said case agreement between the

parties provided that the laws of Singapore will apply and the

courts at Singapore will have jurisdiction. Trial Court dismissed

the suit of the plaintiff in view of the said clause by holding that

Delhi Courts would not have jurisdiction to try the subject-matter.

In Appeal, it was held that Courts of Delhi would not have

jurisdiction to try the subject-matter in view of the clause appearing

in the agreement envisaging that the laws of Singapore will apply

and courts of Singapore have jurisdiction. Similar is the view

taken by the Division Bench of Calcutta High Court in Rotomac

Electricals‟ case (supra).

14. The legal proposition which emerges from the above is that

by an Agreement parties cannot confer jurisdiction where none

exists on a court to which CPC applies, but this principle does not

apply when the parties agree to submit to the exclusive or non-

exclusive jurisdiction of a foreign court. Parties to a contract may

agree to have their disputes entertained by a foreign court termed

as "neutral court" or "court of choice" creating exclusive or non-

exclusive jurisdiction in it. In view of this, reliance placed by the

counsel for plaintiff on A.B.C. Laminart Pvt. Ltd. & Anr. vs. A.P.

Agencies, Salem, (1989) 2 SCC 163, is misplaced. View taken by

the Supreme Court in Laxman Prasad‟s case (supra) is in the

context of different facts and the same is of no help to the plaintiff.

Similarly, Essel Sports‟ case (supra) is also of no help, being in the

context of different facts, inasmuch as, the question involved in the

said case was about the grant or non-grant of „anti suit injunction‟

and the principles in this regard have been discussed.

15. In view of the facts of this case and existence of Clause 16 in

the „Engagement Letter‟ dated 24th November, 2010, which was

entered into between the plaintiff and defendant no. 1, I am of the

opinion that parties have to be relegated to the New York court,

which is a „neutral forum‟ and is a „court of choice‟, as agreed

between the parties, inasmuch as defendant has already initiated

appropriate proceedings therein, after issuing the notice.

16. If the matter is looked from a different angles, then also it

can be safely concluded that this court has no territorial

jurisdiction. From the documents placed on record, it is clear that

defendant no. 1 has its registered office at Singapore. On the

correspondences exchanged as also invoices Singapore address has

been mentioned. Even in the „Engagement Letter‟ Delhi address

has not been mentioned. Sections 591 to 602, as contained in part

II of the Companies Act, 1956 (for short hereinafter referred to as

"said Act"), deals with the companies incorporated outside India

and establishing a place of business in India. Part II specifies the

compliances to be made by a foreign company while establishing

its business in India as also prescribes penalties, on failure to make

compliance. It is not a case of the plaintiff that defendant no. 1 is

registered under Sections 591/592 of the said Act with the

Registrar of Companies. In order to allege that defendant no. 1 has

its office at 76, Hemkunt, Opposite Nehru Place, New Delhi -

110048, plaintiff has placed reliance on the visiting card of Shri

Sukhdeep Singh Rana, which is not sufficient to suggest that the

defendant no. 1 is having its subordinate office in India and is

carrying on its business in India from the said office. Even if, it is

presumed that Shri Sukhdeep Singh Rana is residing at the

aforesaid address and is one of the Directors of defendant no. 1 that

by itself would not be sufficient to indicate that defendant no. 1 has

its subordinate office at that place, within the meaning of Section

20(a) of the CPC.

17. As regards „cause of action‟, plaint fails to disclose any such

„cause of action‟ having been taken place in Delhi pursuant to the

"Engagement Letter" entered into between the parties. In para 5 of

the plaint, it is alleged that in the month of September, 2010 Shri

Sukhdeep Singh Rana introduced Shri Bobby Bhatia, the CEO of

defendant no. 1, to the plaintiff and thereafter a meeting took place

between Shri Bobby Bhatia and Shri Vikaran Awasthy of the

plaintiff in Singapore on or about 11th September, 2010. This

indicates that even the meeting took place in Singapore. In para 8

of the plaint, it is further averred that on 8 th December, 2010 Shri

Bobby Bhatia of defendant no. 1 arranged meetings with the

representatives of the Standard Chartered Bank, Singapore and that

was to be strictly related to working capital facility only and

funding for mezzanine finance. It appears that Shri Bobby Bhatia

arranged meetings between the representatives of Standard

Chartered Bank, Singapore and the plaintiff‟s representative and

that by itself will not give any „cause of action‟ in Delhi, more

particularly when the plaintiff, in the plaint, has alleged that no

deal was struck with the Standard Chartered Bank, Singapore. By

impleading defendant no. 2 as proforma party, plaintiff cannot be

permitted to vest jurisdiction in Delhi Courts, in respect of

transactions between the plaintiff and defendant no. 1, in terms of

the „Engagement Letter‟ to which defendant no. 2 is not a

signatory. As regards Agreement, same came to be concluded

through emails. Offer made by the defendant no. 1, as contained in

the Agreement was accepted by the defendant no. 1, by signing the

same at New Delhi. But at the same time, this document was sent

to defendant no. 1 through email and was received by the defendant

nos. 1 at Singapore. Thus, concluded contract came into existence

at Singapore. It is not the case that both the parties were present

together at the same time or at the same place, that is, Delhi and

executed the Agreement giving rise to „cause of action‟ or for that

matter „part cause of action‟ at Delhi. Contract came to be

concluded through exchange of documents through email, thus, the

place of contract would be where the acceptance of offers was

received by the Offeror, that is, defendant no. 1. In this case,

acceptance was received by defendant no. 1 in Singapore. Thus,

place of contact would be Singapore.

18. Be that as it may, in view of the Clause 16 of the Agreement,

in my view, this suit could not have been filed in Delhi and is not

maintainable. Thus, the application is allowed and plaint is

rejected. All other pending interim applications are disposed of as

infructuous.

A.K. PATHAK, J.

July 02, 2012 rb