Bajaj Electricals Limited vs Rana Sugars Limited
2012 Latest Caselaw 6737 Del

       *       IN THE HIGH COURT OF DELHI AT NEW DELHI

%                                      Date of Decision: 26.11.2012

+      CS(OS) 1259/2009
       BAJAJ ELECTRICALS LIMITED                                      ..... Plaintiff
                            Through:   Mr. Anil K. Kher, Sr. Adv. with Mr. Rishi
                                       Manchanda and Mr. Ankur Bansal,
                                       Advocates
                   versus
       RANA SUGARS LIMITED                                           ..... Defendant
                            Through:   Mr. Nikhil Rohatgi, Advocate
CORAM:
HON'BLE MR. JUSTICE V.K.JAIN

                            JUDGMENT

V.K.JAIN, J. (ORAL)

IA No.13207/2010 (under Order 37 rule 3(5) CPC by defendant for leave to defend)

1. This is a suit filed under Order XXXVII Code of Civil Procedure for

recovery of Rs.60,24,345/-. The case of the plaintiff is that the defendant placed an

order with it for supply of certain equipment and appliances and paid 10% advance

to it at New Delhi. The plaintiff claimed to have supplied material worth

Rs.45,29,582.30 to the defendant between 8.2.2007 to 30.4.2007 vide 17 invoices

mentioned in para 5 of the plaint. The defendant issued C-Form for the material

purchased by it, but has not paid the amount of the invoices. The plaintiff has

accordingly claimed the principal sum of Rs.45,29,582.30 along with interest on

that amount at the rate of 18% per annum, coming to Rs.14,94,762.70, thereby

making a total sum of Rs.60,24,345/-.

2. In this application for leave to contest, the defendant has taken a preliminary

objection that this Court lacks territorial jurisdiction to try the present suit since

Clause 13 of the Purchase Order clearly stipulated that any dispute between the

parties would be subject to jurisdiction of Chandigarh Court alone. On merits, it

has been alleged that the Purchase Order clearly stipulated that the GA and

Foundation Drawings would be sent within three days from the issuance of the

Purchase Order, but the plaintiff defaulted in performance of the aforesaid

condition. It is further alleged that the equipment delivered by the plaintiff were not

up to the quality and the goods were delivered much after the period of two weeks

prescribed in the Purchase Order.

3. In M/s Mechalec Engineers and Manufactures v. M/s Basic Equipment

Corporation (1977) 1 SCR 1060, the Supreme Court set out the following

principles:-

(a) If the Defendant satisfies the Court that he has a good

defence to the claim on its merits the plaintiff is not entitled to

leave to sign judgment and the defendant is entitled to

unconditional leave to defend.

(b) If the defendant raises a triable issue indicating that he has a

fair or bona fide or reasonable defence although not a positively

good defence the plaintiff is not entitled to sign judgment and

the Defendant is entitled to unconditional leave to defend.

(c) If the defendant discloses such facts as may be deemed

sufficient to entitle him to defend, that is to say, although the

affidavit does not positively and immediately make it clear that

he has a defence, yet, shows such a state of facts as leads to the

inference that at the trial of the action he may be able to

establish a defence to the plaintiff's claim the Plaintiff is not

entitled to judgment and the Defendant is entitled to leave to

defend but in such a case the Court may in its discretion impose

conditions as to the time or mode of trial but not as to payment

into Court or furnishing security.

(d) If the defendant has no defence or the defence set up is

illusory or sham or practically moonshine then ordinarily the

Plaintiff is entitled to leave to sign judgment and the Defendant

is not entitled to leave to defend

(e) If the defendant has no defence or the defence is illusory or

sham or practically moonshine then although ordinarily the

Plaintiff is entitled to leave to sign judgment, the Court may

protect the Plaintiff by only allowing the defence to proceed if

the amount claimed is paid into Court or otherwise secured and

give leave to the Defendant on such condition, and thereby

show mercy to the Defendant by enabling him to try to prove a

defence.

4. The plaintiff itself has placed on record five Purchase Orders issued to it by

the defendant, three of 8.1.2007, one vide 21.1.2007 and one of 23.3.2007. Vide

Clause 13 of the Purchase Orders dated 8.1.2007, it was stipulated by the defendant

that they would try to settle all possible disputes in a friendly way, but the disputes

which cannot be settled amicably, shall be subject to Chandigarh Jurisdiction only.

The plaintiff having supplied goods to the defendant pursuant to the aforesaid

purchase order, the term with respect to the jurisdiction of the Court by which the

disputes between the parties could be decided is deemed to have been accepted by

it. Therefore, any unresolved disputes between the parties were made subject to

jurisdiction of the Chandigarh Court alone.

5. It is contended by the learned counsel for the plaintiff that since no cause of

action arose in the jurisdiction of the Court at Chandigarh, the parties by agreement

could not have conferred territorial jurisdiction on the said Court. There is no

quarrel with the preposition of law that the parties cannot, by agreement, confer

jurisdiction upon the Court which otherwise lacks jurisdiction to try the suit.

However, in the present case, it would be difficult to say that the Court at

Chandigarh had no jurisdiction to try the present suit. Admittedly, the registered

office of the defendant company is at Chandigarh. The address of Chandigarh has

been given in the plaint itself. Section 20 of the Code of Civil Procedure, to the

extent it is relevant, provides that Subject to the limitations contained in Section 15

to 19, every suit shall be instituted in Court within the local limits of whose

jurisdiction the defendant, at the time of commencement of the suit actually and

voluntarily carries on business. The Explanation to Section 20 provides that a

corporation shall be deemed to carry on business at its sole or principal office

in India or, in respect of any cause of action arising at any place where it has also a

subordinate office, at such place. Since the defendant company is having its

principal office at Chandigarh, it would be difficult to dispute that it was carrying

on business at Chandigarh at the time this suit was instituted. Therefore, prima

facie, Chandigarh Court also had jurisdiction to try the present suit and hence the

parties by agreement could have restricted the territorial jurisdiction, to the Court at

Chandigarh alone.

6. Since prima facie, it appears to be that Delhi Court has no territorial

jurisdiction to try the present suit that by itself would be a sufficient ground to

grant leave to contest the suit to the defendant. Accordingly, the defendant is

granted unconditional leave to defend the suit.

Written statement be filed within four weeks. Replication thereto can be filed

two weeks thereafter.

The application stands disposed of.

IA No.8828/2009 (under Order XXXVIII Rule 5 CPC)

The learned counsel for the defendant seeks a short adjournment to take

instructions on this application from the defendant company with respect to transfer

or sale of the Chandigarh property, in terms of order dated 24.11.2009, during

pendency of the suit.

Hence, renotify on 01.02.2013.

CS(OS) 1259/2009

Written statement be filed four weeks. Replication thereto can be filed two

weeks thereafter.

List before the Joint Registrar on 8.1.2013 for admission/denial of

documents.

The matter be listed before the Court on 1.2.2013 for framing of issues.

V.K. JAIN, J

NOVEMBER 26, 2012 Rd/BG