At, High Court of Karnataka
By, THE HONOURABLE MR. JUSTICE K. SREEDHAR RAO & THE HONOURABLE MR. JUSTICE L. NARAYANA SWAMY
For the Appellant: D.S. Joshi & H.D. Joshi, Advocates. For the Respondents: R1 & R2, Are Served, R3, is Dispensed With.
(This M.F.A. is filed U/sec. 32(9) of the state financial corporations Act against the order dated 3.9.03 passed in MISC. No.844/1999 on the file of the VI Addl. City Civil Judge, Bangalore, CCCH.11, returning the petition to the petitioner for presenting the same before the court having jurisdiction over the industrial concern.)
K. Sreedhar Rao, J.
The 1st respondent borrowed loan from the appellant. Respondents 2 and 3 are the guarantors. The respondents defaulted in repayment of the loan. The appellant filed a petition under Section 31 (aa) of the State Financial Corporation Act (for short, the Act). The respondents filed objections that the District Court, Bangalore has no territorial jurisdiction and that too proceedings have to be launched in whose local jurisdiction the industrial concern carries on business, wholly or substantially, in view of the provisions contained in sec. 31 of the Act.
2. In the instant case, the learned district judge has found that the contract between the appellant and the respondents 2 and 3 to invest jurisdiction in the Court at Bangalore is void since it is contrary to the provisions of Sec. 31 of the Act and that appellate is not carrying on any business in Bangalore.
3. The provisions of Section 46-B of the Act reads thus:
?Effect of Act on other laws:
The provisions of this Act and of any rules or orders made thereunder shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in the memorandum or articles of association of an industrial concern or in any other instrument having effect by virtue of any law other than this Act, but save as aforesaid, the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being applicable to an industrial concern.?
4. In the instant case, it is admitted that respondents 2 and 3 have executed a contract of guarantee at Bangalore wherein there is a stipulation to invest exclusive jurisdiction to the courts at Bangalore in the case of a dispute between the parties. The provisions of Section 46-B of the Act makes it clear that ?the provisions are not in derogation of any other law but in addition to any other law, the provisions of the act have to be applied?. The contract of guarantee is entered at Bangalore. Therefore, a part of the cause of action arises at Bangalore. Hence, it is within the valid realm of contract between the parties to choose the court at Bangalore to have the exclusive jurisdiction. Such a contract cannot be assailed as illeg
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al and contrary to the provisions of Section 31 of the Act. 5. The view taken by the learned district judge is bad in law and the same is set aside. The matter is remanded to the learned district judge for fresh disposal in accordance with law. The appeal is accordingly disposed of.