Contractual forum selection clause upheld where parties chose Kolkata despite possible jurisdiction elsewhere.

A contractual forum selection clause choosing Kolkata as the place of arbitration and jurisdiction was treated as binding where more than one court could otherwise entertain the dispute. The Supreme Court applied the principle that parties may validly agree to submit disputes to one among several competent courts, and such a clause does not offend Section 28 of the Indian Contract Act, 1872 so long as it does not exclude all competent fora. Although part of the cause of action may have arisen in Gujarat, the parties' agreement and the high seas sale contract fixed Kolkata as the contractual forum, so proceedings in Bhavnagar were not maintainable.

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Issues: Whether the parties' agreement stipulating Kolkata as the place of arbitration and subjecting the contract to Kolkata jurisdiction precluded the respondent from maintaining a Section 9 application before the Bhavnagar Court on the basis that part of the cause of action arose there.

Analysis: The dispute turned on the effect of a contractual forum selection clause where more than one court could otherwise have jurisdiction. The Court applied the settled principle that parties may validly choose one among several competent courts as the forum for disputes, and such agreement is not hit by Section 28 of the Indian Contract Act, 1872 so long as it does not oust the jurisdiction of all competent courts. On the facts, the agreement and the high seas sale contract both indicated Kolkata as the contractual forum and the place of arbitration, while the respondent's invocation of Bhavnagar jurisdiction was contrary to that bargain. The Court held that even if courts in Gujarat may otherwise have had jurisdiction on account of part of the cause of action, the parties had validly agreed to have their disputes decided in Kolkata.

Conclusion: The Bhavnagar proceedings were not maintainable in the face of the agreed Kolkata jurisdiction, and the transfer petition was allowed.

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