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Isha Distribution House Pvt. Ltd. v/s Aditya Birla Nuvo Limited

Company & Directors' Information:- ADITYA BIRLA NUVO LIMITED [Amalgamated] CIN = L17199GJ1956PLC001107

Company & Directors' Information:- BIRLA CORPORATION LIMITED [Active] CIN = L01132WB1919PLC003334

Company & Directors' Information:- ADITYA LIMITED [Active] CIN = U45400DL2012PLC231460

Company & Directors' Information:- ISHA DISTRIBUTION HOUSE PRIVATE LIMITED [Active] CIN = U51900WB1999PTC105419

Company & Directors' Information:- ISHA DISTRIBUTION HOUSE PRIVATE LIMITED [Strike Off] CIN = U51109BR1999PTC009083

Company & Directors' Information:- ADITYA AND COMPANY (INDIA) PRIVATE LIMITED [Active] CIN = U27107RJ2004PTC019073

    GA No. 2326 of 2016, APOT No. 274 of 2016 & CS No. 88 of 2016 (Original Side)

    Decided On, 13 February 2017

    At, High Court of Judicature at Calcutta


    For the Plaintiff: Pratap Chatterjee, Sr. Advocate, Mainak Bose, Amitabh Roy, Ankur Jain, Advocates. For the Respondent: R1, Anindya Kumar Mitra, Sr. Advocate, Sanjib Kumar, Dwaipayen Basu Mallick, Varun Sharma, Avishek Kisku, R2, Saunak Sengupta, Suvodeep Chakraborty, Advocates.

Judgment Text

Tapabrata Chakraborty J.

1. The instant appeal has been preferred against the judgment and order dated 25th July, 2016 passed by the learned Single Judge in CS 88 of 2016 by which the plaintiff’s application for interlocutory injunction being GA 884 of 2016 was dismissed and the first defendant’s application for revocation of leave granted under clause 12 of the Letters Patent being GA 2326 of 2016 was allowed.

2. The appellant entered into distributorship agreements for West Bengal and for Bihar and Jharkhand with the first respondent on 11th July, 2007 and on 21st May, 2008 respectively. Till 30th December, 2011 the first respondent used to collect blank cheques from the appellant and to fill them up at its own sweet will and to deposit the same without any prior notice to the appellant. Though the appellant never agreed to such terms but under coercion the appellant was compelled to accept such arrangement. To get out of such arrangement the appellant in the year 2011 entered into a channel finance facility agreement with ICICI bank, Gurusaday Branch at Kolkata on 30th December, 2011 and on the basis of the said agreement the first respondent was required to forward the invoice to the bank and only upon receipt of approval from the appellant, the bank used to make payment of such invoice directly to the first respondent. Such arrangement continued till the month of October, 2013 and as directed by the first respondent, the appellant had to enter into a fresh channel finance facility agreement on 18th October, 2013 with the second respondent being a group company of the first respondent. Thereafter in between April, 2014 and September, 2014 the appellant achieved an aggregate sale about of Rs.12,00,00,000/-. After September, 2014, the first respondent forcibly dumped stock to the extent of Rs.1,36,00,000/- and in the said month itself the sales dropped from Rs.3,85,00,000/- to Rs.50,00,000/- and the consequential deficit was recovered by the first respondent from the credit limit under the channel financing action in gross breach of the terms spelt out in the distributorship agreements. Thereafter threatening e-mails were sent to the appellant and on 29th May, 2015 the appellant was informed by the first respondent that a new distributor has been appointed for the State of West Bengal and the distributorships with the appellant have been terminated. Aggrieved thereby, the appellant preferred the suit, inter alia, praying for a declaration that the termination of the distributorship agreements for the States of West Bengal and Bihar is void, illegal and unlawful. In connection with the suit, the appellant preferred an application for interlocutory injunction.

3. In the backdrop of the above facts, Mr. Pratap Chatterjee, learned senior counsel appearing for the plaintiff/appellant submits that the distributorship agreements were concluded at Kolkata within the jurisdiction of this Court. All official communications and execution took place at the appellant’s previous registered office and present administrative office at 6, Russell Street, Kolkata, as would be explicit from the first respondent’s letters dated 13th January, 2016 and 14th January, 2016. From the agreements it would also be explicit that the witnesses have signed the said agreements at Kolkata and that they never travelled to Bangalore.

4. He further argues that the learned Single Judge has arrived at a finding that the issuance of the letter dated 9th October, 2015 from the Bangalore office constitutes a part of the cause of action but the same pertains to invocation of a bank guarantee which does not form a part of the appellant’s cause of action.

5. He further submits that inadvertently the advocate-on-record of the appellant did not forward to the appellant a copy of the affidavit-in-reply of the first respondent to the affidavit-in-opposition of the appellant filed in connection with the application for revocation of leave. The said affidavit was brought to the notice of the appellant only on 21st July, 2016. The documents annexed at pages 164 to 171 of the first respondent’s affidavit were all fabricated documents. The Value Added Tax (VAT) numbers as incorporated in the purchase orders are not the actual VAT numbers of the appellant and as such the said documents deserve no credence. To place such fact on record and to controvert the allegations made in affidavit filed by the first respondent, the appellant sought for leave to file an affidavit but such prayer was refused and such refusal constitutes violation of the principles of natural justice.

6. On behalf of the appellant it has also been argued that the integral part of the cause of action relates to the second respondent, namely, Aditya Birla Finance Limited inasmuch as on the basis of the representations made by the first respondent, the channel financing arrangement was entered into with the second respondent and all the payments involved in the said distributorship agreements were made by the appellant through the second respondent having its office at Industry House, Camac Street, Kolkata. The forum selection clause between the appellant and the first respondent does not and cannot affect the appellant’s cause of action and the relief as sought for against the second respondent.

7. Records reveal that in the interlocutory application orders have been passed appointing a special officer to make an inventory of the goods and/or stocks lying with the plaintiff at its warehouse at Patna, Bihar. Subsequent thereto, the first respondent preferred an application for revocation of the leave granted under clause 12 of the Letters Patent.

8. Drawing the attention of this Court to the averments made in the plaint, Mr. Mitra, learned senior counsel appearing for the first respondent submits that the appellant has approached the Court suppressing the fact that in both the said distributorship agreements there were forum selection clauses. In the cause title of the plaint the appellant has recorded its office address as 6, Russell Street, Kolkata – 700071 though in the distributorship agreements the address has been stated to be at 5, Kustia Road, Keola Bhawan, Kolkata-700039. The said agreements were executed on stamp papers purchased in Bangalore and that it was the Bangalore office of the first respondent which did business with the appellant.

9. He further submits that a detailed reply was issued by the appellant through one of its directors to the notice of the termination of the distributorship agreements and such reply of 14th October, 2014 was also addressed to the first respondent at its Bangalore address and also to four officials of the first respondent at the same Bangalore address.

10. He further submits that the argument made on behalf of the appellant to the effect that the documents annexed to the reply are fabricated documents is not acceptable inasmuch as there is no pleading to such effect in the plaint and in the interlocutory application.

11. He further submits that the location of garment division of the first respondent is at Bangalore. The payment obligations under the distributorship agreements were to be performed at Bangalore and the cheques made over by the appellant were deposited for encashment of the drawee bank at Bangalore. The termination notice was issued by the first respondent from its Bangalore office and the reply to the same was also sent to the appellant by the Bangalore office. Thus, no part of the cause of action, as alleged in the plaint, had arisen within the jurisdiction of this Court and as such the learned Single Judge has rightly revoked the leave granted to the appellant under clause 12 of the Letters Patent.

12. Heard the learned advocates appearing for the respective parties and considered the materials on record as well as the affidavit and the annexures as sought to be brought on record by the appellant before the learned Single Judge.

13. It is now also well settled that a Court of appeal should not ordinarily interfere with the discretion exercised by the Courts below and that the appellate power is exercised not when a possible view has been taken by the Court of first instance but when the order is clearly wrong. The difference is real though fine.

14. No explanation is forthcoming as to why the appellant has omitted to aver in the plaint as regards the existence of clauses regarding forum selection in the concerned distributorship agreements. The appellant consciously had signed the distributorship agreements and had agreed to the clauses towards forum selection. Once a party has agreed to submit to the exclusive jurisdiction of a Court which is otherwise competent to try and determine the suit, the natural forum should be that Court only and jurisdiction of all other Courts by implication are excluded.

15. There is also no averment in the plaint as regards any inconvenience to be faced by the appellant for pursuing a litigation in the Courts of Bangalore least to say of any insurmountable inconvenience. In the said sequence of facts the balance of convenience takes a back seat and accordingly there cannot be any doubt that all the disputes between the parties pertaining to the said agreements are to be tried at Bangalore. In view of the forum selection clause, the Courts excluded by a valid agreement of the parties become incompetent to entertain the suit.

16. There is no dispute as regards the proposition that this Court derives power from the Letters Patent to do substantial justice and that by virtue whereof the situs of any office of a defendant company within the jurisdiction of this Court will empower this Court to entertain a suit against such defendant company notwithstanding the cause of action in such suit having no nexus with the relevant office within its jurisdiction. However, such discretion can only be exercised within a permissible limit. Inherent jurisdiction of the Court to make order ex debito justitiae cannot be exercised on the rudiments of skirmishes and bald allegations.

17. The argument advanced on behalf of the appellant to the effect that the first respondent has placed reliance on fabricated documents is not acceptable, prima facie, inasmuch as erroneous incorporation of VAT numbers in a document cannot render the same to be a fabricated one. There is also no pleading in the plaint and in the interlocutory application to the effect that documents have been manufactured by the first respondent prior to termination of the distributorship agreements.

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> 18. It has been averred in the plaint that all the payments involved in the distributorship agreements were made by the appellant through the second respondent having its office at Industry House, Camac Street, Kolkata. The relationship between the appellant and the second respondent is inextricably attached with the terms of the said agreements and as such it cannot be contended on behalf of the appellant that the forum selection clause in the said agreements cannot affect the appellant’s cause of action against the second respondent. 19. A perusal of the judgment impugned reveals that the learned Single Judge has minutely dealt with all the grounds as averred in the plaint and in the interlocutory application and as argued on behalf of the appellant and upon applying the proposition of law to the facts of the case has arrived at specific findings which do not suffer from any infirmity warranting interference of this Court. 20. Accordingly, the appeal is dismissed. In view of such dismissal of the appeal, the application for stay has become infructuous and the same is also dismissed. There shall, however, be no order as to costs.