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SPML Infra Ltd. v/s South Bihar Power Distribution Co. Ltd. & Others

    G.A. Nos. 424, 545 of 2015 & CS No. 37 of 2015

    Decided On, 08 April 2015

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE SOUMEN SEN

    For the Appearing Parties: P.C. Sen, Sr. Adv, Amitava Das, Jayanta Kr. Mitra, Gen, Pratap Chatterjee, Sr. Adv, Anirban Roy, Sourav Ghosh, Prithviraj Sinha, Arnab Basu Mullick, Advocates.



Judgment Text

The defendant has filed an application for revocation of the leave under Clause 12 of the Letters Patent.

The basis of the application appears to be the jurisdictional clause in the contract awarded to the plaintiff. The jurisdictional clause reads:-

'Jurisdiction of Court

All disputes/claims/counter-claims for and/or against the SBPDCL arising out of agreement contracts/order between the SBPDCL and the firms shall be subject to the exclusive jurisdiction of Civil Court, Patna and no other Court or Arbitrator.'

Mr. P.C. Sen, the learned Senior Counsel appearing with Mr. Amitabha Das, learned Counsel appearing on behalf of the applicant submits that the letter of award contains the aforesaid forum selection clause and in view thereof, this Court has no jurisdiction to try and determine the suit. It is submitted that on a meaningful reading of the plaint it would appear that the principal dispute is between the plaintiff and the defendant No.1. It is being alleged in the plaint that the defendant No.1 has invoked the bank guarantee is not a material fact which can be taken in the consideration for the purpose of deciding the jurisdiction of this Court.

It is submitted that the offer of the plaintiff was received at Patna and the work order was issued from Patna. The work relates to supply of materials and equipments for village electrification work in Gaya District of Bihar on turn key basis under Rajiv Gandhi Gramin Vidyutikaran Yojana.

The learned Senior Counsel has referred to South East Asia Shipping Co. Ltd. Vs. Nav Bharat Enterprises Pvt. Ltd. and Ors. reported at 1996 (3) SCC 443 for the proposition that merely because a bank guarantee was executed at Calcutta and transmitted from performance at Patna, it does not constitute a cause of action giving rights to the plaintiff to file the suit on the Original Side of this Court.

The judgment of the Supreme Court in The Iron and Steel Company Limited Vs. Tiwari Road Lines reported at 2007 (5) SCC 703 was cited for the self-same proposition.

Mr. Pratap Chatterjee, the learned Senior Counsel appearing on behalf of the plaintiff submits that this application for revocation of leave under Clause 12 of the Letters Patent is misconceived. In an application filed for revocation of leave, it is implicit that the applicant is accepting that a part of the cause of action has arisen outside the jurisdiction of this Court. A leave under Clause 12 of the Letters Patent can be revoked only if the applicant can demonstrate that serious injustice or prejudice would be caused to the applicant in the event the suit is tried at the place selected by the plaintiff. It is submitted that there is no prayer for rejection and return of the plaint.

It is argued that in order to invoke the jurisdiction of the Court at Patna it has to be shown that the Court at Patna has any nexus to the dispute. Mr. Chatterjee submits that it is well-settled that the parties by agreement cannot confer jurisdiction on a Court which the said Court otherwise does not possess in this regard. It is submitted that such jurisdiction clause is void and hit by Sections 23 and 28 of the Contract Act. In this regard he has referred to the decision of the Hon’ble Supreme Court in Interglobe Aviation Ltd. Vs. N. Satchidanand reported at 2011 (7) SCC 463.

It is submitted that in that plaint the plaintiff has claimed reliefs against the banks as well. The bank cannot be sued at Patna. No part of the cause of action against the bank would be said to have arisen at Patna. The invocation of the bank guarantee has taken place within the jurisdiction of this Court. It is submitted that each branch of the bank has a separate entity and the State Bank of India at Jawaharlal Nehru Road or the Camac Street branch cannot be sued at Patna. It is submitted that there is a distinction between the Corporation carrying on business within the meaning of Section 20 read with explanation to the said Section and the branches of the bank which are inextricable connected with the transaction. In this regard, he has referred to the decision of the Hon’ble Supreme Court in Hakam Singh Vs. Gammon (India) Ltd. reported at AIR 1971 SC 740, Vimal Chandra Grover Vs. Bank of India reported at 2000 (5) SCC 122 and a Full Bench judgment of this Court in Chainrup Sampatram Vs. Punjab & Sind Bank reported at 2009 (1) CHN 346.

It is further argued that the law does not permit part rejection of the plaint. The learned Counsel in this regard has referred to the decision of the Hon’ble Supreme Court in Sopan Sukhdeo Sable & Ors. Vs. Assistant Charity Commissioner & Ors. reported at 2004 (3) SCC 137 and United Commercial Bank Vs. Sanatan Bastushilpa Pratisthan Pvt. Ltd. reported at AIR 1981 Cal 146.

To sum up his submission, the revocation of leave cannot be granted on the ground of jurisdiction clause inasmuch as no relief against the bank can be claimed at Patna. The suit as it is could not have been filed before any other Court or before Civil Judge at Patna.

The plaintiff has prayed for Clause 12 of the Letters Patent since a part of the cause of action has arisen within the jurisdiction of this Court. The foundational pleading for invocation of Clause 12 of the Letters Patent can be found in Paragraph 71 which reads:-

'71. The said Mobilization Advance Bank Guarantees had been issued by the Defendant nos.2 and 3 from their respective branch offices morefully mentioned in the Cause Title within the jurisdiction aforesaid. The Defendant no.1 has issued the letter dated 23rd January, 2015 by virtue of which the defendant no.1 is seeking to invoke the said bank guarantees, from outside the aforesaid jurisdiction of the plaintiff at its office morefully mentioned in the Cause Title within the jurisdiction aforesaid. Further the Letters of Award has been issued on the plaintiff and the same has been accepted by the plaintiff at its office 22, Camac Street, Kolkata 700 016 within the jurisdiction aforesaid. The fraud as stated above has been perpetrated by the Defendant no.1 from outside the aforesaid jurisdiction upon the plaintiff at its office within the aforesaid jurisdiction and has thus perpetrated both within and outside the aforesaid jurisdiction. The invocation has also been made by the defendant no.1 from outside the jurisdiction on the defendant no.3 at its branch office within the jurisdiction aforesaid.'

In the Plaint, it is admitted that the letters of award have been issued by the defendant No.1 from Patna and the fraud as stated in the Plaint has been perpetrated by the defendant No.1 from Patna upon the plaintiff at its office within the aforesaid jurisdiction. It is further stated that the invocation has been made by the defendant No.1 from outside the jurisdiction on the defendant No.3 at its office within the jurisdiction aforesaid.

There cannot be any quarrel with the proposition of law that the parties by agreement cannot confer jurisdiction on a Court which does not otherwise have the jurisdiction to try and determine the suit. Under the Code of Civil Procedure as well Clause 12 of the Letters Patent, save and except, disputes relating to immovable properties outside the jurisdiction of the Calcutta High Court, a Court would have jurisdiction to try a suit if the entirety of the cause of action arises within its jurisdiction irrespective of whether the defendant may dwell or carry on business or personally work for gain or if a part of the cause of action arises within the jurisdiction of this Court. The jurisdiction of the High Court to try and determine the suit is by virtue of Clause 12 of the Letters Patent. The circumstances under which a suit under Clause 12 of the Letters Patent would lie has been elaborately discussed in Chainrup Sampatram (supra) at Paragraph 24 which reads:-

'24. There are three limbs to Clause 12 of the Letters Patent: the first limb covers suits for land or other immovable property, which is not germane for the present purpose; the second limb speaks of the place of accrual of the cause of action in the suit, requiring no previous leave if the cause of action arises wholly within jurisdiction but requiring previous leave if only a part – however infinitesimal or significant – of the cause of action arises within jurisdiction; and, the third is the situs of the defendant at the time of commencement of the suit. A suit for land (or other immovable property) stands on a different pedestal and it is unnecessary to go into that aspect of Clause 12 here. But in a suit which is not a suit for land (or other immovable property) the plaintiff has a choice of invoking the jurisdiction of this Court on either of the two remaining limbs of Clause 12. If there is a solitary defendant in a suit which is not a suit for land (or other immovable property), the plaintiff may unquestionably institute it on the Original Side of this Court if the entirety of the cause of action arises within the original jurisdiction of the Court and irrespective of where the defendant may dwell or carry on business or personally work for gain. If there is a solitary defendant in a suit which is not a suit for land (or other immovable property), the plaintiff may institute it on the original side of this Court if a part of the cause of action arises within the original jurisdiction of this Court irrespective of where the defendant may dwell or carry on business or personally work for gain, subject, however, to obtaining prior leave under Clause 12 to institute the suit. If there is a solitary defendant in a suit which is not a suit for land (or other immovable property), the plaintiff may institute it on the original side of this Court if the defendant, at the time of the commencement of the suit, dwells or carries on business or personally works for gain within the original jurisdiction of this Court, irrespective of where the cause of action may be arisen. The second and third limbs of Clause 12 that cover suits other than suits for land (or other immovable property) are, in a sense, mutually exclusive; in that the plaintiff has the choice of either founding territorial jurisdiction on situs of cause of action or on location of the defendant at the time of commencement of the suit. In a suit other than a suit for land (or other immovable property) where the plaintiff sues more than one defendant, either of the last two limbs of Clause 12 of the Letters Patent has to be satisfied in respect of each defendant in the suit for the action to be launched on the Original Side of this Court.'

In so far as the Courts not governed by Letters Patent, provisions of the Code of Civil Procedure would apply. Any agreement between the parties containing a Forum Selection Clause for adjudication of the dispute would certainly override Clause 12 of the Letters Patent. If it is found that the said forum is otherwise inextricable connected with the subject matter of the dispute, the said forum alone would have the jurisdiction to decide the dispute to the exclusion of others. On the basis of the averments made in the plaint, it cannot be said that no part of the cause of action has arisen at Patna. In fact, the award of contract, the letter of termination and invocation of bank guarantee all have taken place at Patna. The argument that the suit cannot be filed against the bank at Patna appears to be misconceived. The essential dispute is between the plaintiff and the defendant No.1. The furnishing of bank guarantee is not a material fact on which the cause of action in the suit is founded. Although, Mr. Chatterjee expressed serious reservation about the enunciation of law made in South East Asia (supra) but in a similar situation it was held by the Hon’ble Supreme Court that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained. The findings of the Hon’ble Supreme Court are stated below:-

'2. The only controversy is whether the Delhi High Court has jurisdiction to entertain the suit. It is an admitted position that the contract was executed in Bombay. It is also an admitted position that the performance of obligation and liabilities under the contract was required to be done in Bombay inasmuch as Cargo of livestock was to be transported in the ship from Kandla to Daman or Jeddah. It is also an admitted position that in furtherance of the execution of the contract at Bombay, the respondents had executed the bank guarantee at Delhi and had transmitted it to Bombay for performance of the contract. The question, therefore, is whether any part of the cause of action had arisen in Delhi. The learned Counsel for the respondents had relied upon a judgment of this Court in ABC Laminart Pvt. Ltd. and Anr. Vs. A.P. Agencies, Salem MANU/SC/0001/1989 : [1989] 2 SCR 1a to contend that since part of the cause of action had arisen in Delhi, the High Court on the original side has jurisdiction to entertain the suit. We are unable to accept the contention.

3. It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if transversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e, within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained.'

The said judgment was considered in The Iron and Steel Co. Ltd. (supra) in Paragraph 11 which reads:-

'11. Learned Counsel for the appellant has also submitted that City Civil Court, Hyderabad had no jurisdiction to entertain the application moved by the respondent as no part of cause of action had accrued there. In this connection, he has referred to Clause (b) of Sub-section (12) of Section 11 and Clause (e) of Sub-section (1) of Section 2 of the Act which will govern the question of jurisdiction as to Chief Justice of which High Court has to be approached for moving an application under Section 11 of the Act. Learned Counsel has submitted that the tenders were floated at Kolkata, the respondent submitted the tender at Kolkata, the agreement was executed at Kolkata and, therefore, the Court at Hyderabad had no jurisdiction to entertain the application. Learned Counsel has also submitted that the view taken by the High Court that as the bank guarantee was furnished at Hyderabad and was encashed at Hyderabad, 'the court at Hyderabad has jurisdiction is erroneous in law inasmuch as the agreement did not contain any clause regarding the place from where the bank guarantee had to be furnished. Learned Counsel has submitted that there was only a requirement for furnishing the bank guarantee and that it could be furnished from anywhere in India and since in the present case the bank guarantee was furnished by the respondent from a bank at Hyderabad it was encashed there and, therefore, the said fact was wholly irrelevant for deciding the plea of jurisdiction. He has also relied upon a decision of this Court in South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. MANU/SC/1124/1996: [1996] 3 SCR 405, in support of his contention that the submission of the bank guarantee from Hyderabad or the encashment thereof does not constitute even a part of cause of action to confer jurisdiction on the Court at Hyderabad. Though we find substance in the contention raised by the learned Counsel for the appellant but in view of our finding recorded on the main point, we do not consider it necessary to express any final opinion on the second contention.'

Mr. Chatterjee has placed reliance on Inter Globe Aviation (supra) to submit that such jurisdictional clause is void. In my respectful reading of the judgment, it does not appear that the Hon’ble Supreme Court has laid down that such a forum selection clause giving a particular court jurisdiction to try and determine the suit is void. The issue was whether the Permanent Lok Adalat at Hyderabad did not have territorial jurisdiction to receive the complaint and decide the complaint. The Indigo Conditions of Carriage, containing the standard terms which govern the contract between the parties provide as follows; 'All disputes shall be subject to the jurisdiction of the courts of Delhi only.' The appellant contends that the ticket related to the travel from Delhi to Hyderabad, the complaint was in regard to delay at Delhi and, therfore, the cause of action arose at Delhi and that as the contract provided the courts at Delhi only will have jurisdiction, the jurisdiction of other courts were ousted. The ‘exclusive jurisdiction clause’ is a standard clause that is made applicable to all contracts of carriage with the appellant, relating to passengers, baggage or cargo anywhere in the country, irrespective of whether any part of the cause of action arose at Delhi or not. The said ouster clause was held to be invalid since irrespective of the place of cause of action, only courts at Delhi would have given the exclusive jurisdiction. It was held that a clause ousting jurisdiction of a court, which otherwise would have jurisdiction will have to be construed strictly. The Hon’ble Supreme Court was considering a clause which provides that all disputes shall be subject to the jurisdiction of the courts at Delhi only. In the said case, the respondent did not approach a 'court'. The claim was filed by the respondent before a Permanent Lok Adalat constituted under Chapter VI-A of the Legal Services Authorities Act, 1987. Section 22C of the said Act provides that any party to a dispute may, before the dispute is brought before any court, make an application to the Permanent Lok Adalat for settlement of the dispute. The said clause was held to be invalid as the clause provides that irrespective of the place of cause of action only Courts at Delhi would have jurisdiction.

In the instant case, there cannot be any doubt that a part of the cause of action has arisen at Patna and the Court at Patna would have jurisdiction to decide the dispute. The plaintiff cannot avoid its dispute being tried at Patna.

The law with regard to the ouster of jurisdiction is well-settled. In ABC Laminart (P) Ltd. Vs. A.P. Agencies reported at 1989 (2) SCC 163 the Hon’ble Supreme Court held that where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as being against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. It was further held that even when words like ‘alone’, ‘only’, ‘exclusive’ and the like have been used in the contract if the Court is of the view that the parties intended to have their dispute resolved by a particular court or forum, the Court shall refer the dispute to have particular court and may refuse to exercise its jurisdiction to decide the dispute. This view has been recently followed and clarified in Swastik Gases (P) Ltd. Vs. Indian Oil Corpn. Ltd. reported at 2013 (9) SCC 32. The parties with their eyes wide open had agreed to submit their dispute to a Court which otherwise would have jurisdiction to decide the lis between the parties.

In Swastik Gases (supra), the Hon’ble Supreme Court has considered both A.B.C. Laminart (supra) and Inter Globe Aviation (supra) in Paragraphs 13, 14 and 26. The said Paragraphs are reproduced below:-

'13. In A.B.C. Laminart, this Court was concerned with Clause 11 in the agreement which read, 'any dispute arising out of this sale shall be subject to Kaira jurisdiction'. The disputes having arisen out of the contract between the parties, the respondents therein filed a suit for recovery of amount against the appellants therein and also claimed damages in the Court of the Subordinate Judge at Salem. The appellants, inter alia, raised the preliminary objection that the Subordinate Judge at Salem had no jurisdiction to entertain the suit as parties by express contract had agreed to confer exclusive jurisdiction in regard to all disputes arising out of the contract on the Civil Court at Kaira. When the matter reached this Court, one of the questions for consideration was whether the Court at Salem had jurisdiction to entertain or the jurisdiction of the court in the matter of contract would depend on the situs of the contract and the cause of action arising through connecting factors. The Court referred to Sections 23 and 28 of the Contract Act, 1872 (for short 'the Contract Act') and Section 20(c) of the Civil Procedure Code (for short 'the Code') and also referred to Hakam Singh and in para 21 of the Report held as under:

'21. …..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.'

14. Then, in para 22 of the Report, this Court held as under:

'22……We have already seen that making of contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus, Kaira Court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the court and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause ‘any dispute arising out of this sale shall be subject to Kaira jurisdiction’ ex facie we do not find exclusionary words like ‘exclusive’, ‘alone’, ‘only’ and the like. Can the maxim expressio unius est exclusio alterius be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded.'

26. The question in Inter Globe Aviation, inter alia, was whether the Permanent Lok Adalat at Hyderabad had territorial jurisdiction to deal with the matter. The standard terms which governed the contract between the parties provided, 'all disputes shall be subject to the jurisdiction of the courts of Delhi only'. The contention on behalf of the appellant before this Court was that the ticket related to travel from Delhi to Hyderabad. The complaint was in regard to delay at Delhi and, therefore, the cause of action arose at Delhi and that as the contract provided that the courts at Delhi only will have the jurisdiction, the jurisdiction of other courts was ousted. This Court in para 22 of the Report held as under:

'22.As per the principle laid down in A.B.C. Laminart, any clause which ousts the jurisdiction of all courts having jurisdiction and conferring jurisdiction on a court not otherwise having jurisdiction wou

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ld be invalid. It is now well settled that the parties cannot by agreement confer jurisdiction on a court which does not have jurisdiction; and that only where two or more courts have the jurisdiction to try a suit or proceeding, an agreement that the disputes shall be tried in one of such courts is not contrary to public policy. The ouster of jurisdiction of some courts is permissible so long as the court on which exclusive jurisdiction is conferred, had jurisdiction. If the clause had been made to apply only where a part of cause of action accrued in Delhi, it would have been valid. But as the clause provides that irrespective of the place of cause of action, only courts at Delhi would have jurisdiction, the said clause is invalid in law, having regard to the principle laid down in A.B.C. Laminart. The fact that in this case, the place of embarkation happened to be Delhi, would not validate a clause, which is invalid.' In the instant case, the plaintiff does not dispute that no part of the cause of action has arisen at Patna. In fact, the plaintiff cannot dispute the same. If a part of the cause of action has arisen at Patna even without the exclusivity clause, the jurisdictions of other Courts are ousted. This Court would be required to give due importance to such ouster clause and refuse exercising discretion in favour of the plaintiff. In fact, in Swastik Gases (supra) Justice Lokur in His Lordship’s concurring judgment held that absence of words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' is neither decisive nor does it make any material difference in deciding the jurisdiction the jurisdiction of a Court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In view thereof, the leave granted under Clause 12 of the Letters Patent is revoked. The Plaint filed in the suit is returned to the plaintiff in order to enable the plaintiff to institute the suit before the appropriate Court at Patna upon furnishing an authenticated copy of the Plaint in the Department concerned. However, the interim order passed on 3rd February, 2015 shall continue for a period of four weeks or until any order that may be passed by the appropriate Court at Patna after presentation of the Plaint whichever is earlier. It is made clear that the extension of the interim order shall not be treated as an expression of opinion on the merits of the injunction application. Moreover, the defendant in the suit has not filed any affidavit dealing with the merits of the injunction application. G.A. No.545 of 2015 is allowed. G.A.No.424 of 2015 is dismissed. In view of the aforesaid the suit shall not be shown as pending. However, there shall be no order as to costs.
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