TaxTMI 
TaxTMI 
TaxTMI 
1989 (3) TMI 370
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....of Rupalon Metallic Yarn to the respondent at the rate of Rs.35 per bobbin as stipulated in different clauses of the agreement. Clause 11 of the agreement provided as follows: "Any dispute arising out of this sale shall be subject to Kaira jurisdiction." Disputes having arisen out of the contract the respondent filed a suit, being original suit No. 302 of 1975, against the appellants in the Court of Subordinate Judge at Salem for the recovery of a sum of Rs. 1,63,240 claiming to be the balance of the advance remaining in the hands of the appellants and also a sum of Rs.2.40,000 towards damages. The appellants took a number of defences and also took a 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. The Trial Court, inter alia, framed issue No. 2 as follows : "Issue No. 2. Has the court no jurisdiction to entertain or try this suit?" The learned Court treating it as a preliminary issue in its judgment dated 18.4.1978 found that it had no jurisdiction to entertain the suit....
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....ly prescribes certain limiting principles within which parties are free to make their own contracts. An agreement enforceable at law is a contract. An agreement which purports to oust the jurisdiction of the Court absolutely is contrary to public policy and hence void. Each of the citizens has the right to have his legal position determined by the ordinary Tribunal except, of course, in a contract (a) when there is an arbitration clause which is valid and binding under the law, and (b) when parties to a contract agree as to the jurisdiction to which disputes in respect of the contract shah be subject. "It has long be en established", say Cheshire and Fifoot, "that a contract which purports to destroy the right of one or both of the parties to submit questions of law to the courts is contrary to public policy and is void protanto". However, arbitration is a statutory mode of settlement; and as a matter of commercial law and practice parties to a contract may agree as to the jurisdiction to which all or any disputes on or arising out of the contract shall be subject. Section 28 of the Indian Contract Act, 1872 provides that every agreement by which any party thereto is restricted ....
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....facts of this case as to whether Kaira would be proper jurisdiction in the matter of this contract. It would also be relevant to examine if so me other courts than that of Kaira would also have had jurisdiction in the absence of Clause 11 and whether that would amount to ouster of jurisdiction of those courts and would thereby affect the validity of the clause. The jurisdiction of the Court in matter of a contract will depend on the situs of the contract and the cause of action arising through connecting factors. A cause of action means every fact, which, if traverse d, 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 fight to relief against the defendant. It must include some act done by t he defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the fight sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to e....
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.... for agency actions the cause of action arises at the place where the contract of agency was made or the place where actions are to be rendered and payment is to be made by the agent. Part of cause of action arises where money is expressly or impliedly payable under a contract. In cases of repudiation of a contract, the place where repudiation is received is the place where the suit would lie. If a contract is pleaded as part of the cause of action giving jurisdiction to the Court where the suit is filed and that contract is found to be invalid, such part of cause of the action disappears The above are some of the connecting factors. So long as the parties to a contract do not oust the jurisdiction of all the Courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Courts. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the d....
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.... to object to the order for return of the plaint for presentation to the Court at Salem as the choice of forum in case of alternative forums lies with the plaintiff and the plaintiff having debarred or precluded itself from going to any other Court except at Salem which would be a proper Court as against the defendants it would not be just to allow the plaintiff at the instance of any other party or under cover of its objection to institute the suit except in-the Court at Salem. In Hakam Singh v. M/s. Gammon (India) Ltd., [1971] 3 S.C.R. 3 14 where the appellant agreed to do certain construction work for the respondent who had its principal place of business at Bombay on the terms and conditions of a written tender. Clause 12 of the tender provided for arbitration in case of dispute. Clause 13 provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into by the parties at Bombay, and the Court in Bombay alone shall have jurisdiction to adjudicate upon. On dispute arising between the parties the appellant submitted a petition to the Court at Varanasi for an order under section 20 of the Arbitrati....
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....all to try the case. But objection based on jurisdiction is a matter which parties could waive and it is in this sense if such jurisdiction is exercised by Courts it does not go to the core of it so as to make the resultant judgment a nullity. Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent up on a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by sections 23 and 28 of the Contract Act. This can not be understood as parties contracting against the Statute. Mercantile Law and Practice permit such agreements. In Nazirrudin v. V.A. Annamalai & Ors., [1978] 2 M.L. J. 254 where the question was whether Rule 35 of U.P. State Lottery Rules, 1969 confined the jurisdiction only to Lucknow. The Rule said: "35. Legal jurisdiction in all matters concerning the State lottery shall be Lucknow." The sole question for consideration therefore was whether the above Rul....
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....inted by us", it was held that it merely fixed the situs of the contract at Calcutta and it did not mean to confer an exclusive jurisdiction on the Court at Calcutta, and when a part of the cause of action had arisen at Salem, the Court there had also jurisdiction to entertain the suit under section 20(c) of the Code of Civil Procedure. From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. 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 speci....