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CASE NO.: Appeal (civil)  2645 of 2004

PETITIONER: New Moga Transport Company,Through its Proprietor Krishanlal Jhanwar

RESPONDENT: United India Insurance Co. Ltd. And Ors.

DATE OF JUDGMENT: 23/04/2004

BENCH: DORAISWAMY RAJU & ARIJIT PASAYAT.

JUDGMENT: J U D G M E N T

(Arising out of SLP(C) No. 11455/2003)

ARIJIT PASAYAT, J.

       Leave granted.

       In this appeal, the only question that is raised is  whether the High Court’s conclusion that the Civil Court at  Barnala had jurisdiction to try the suit filed by respondent  No.1-United India Insurance Co. Ltd. (hereinafter referred  to as ’Plaintiff No.1’) and Malwa Cotton Spinning Mills Ltd.  (hereinafter referred to as ’plaintiff No.2’) is correct or  not. While the trial Court held that the Barnala Court had  jurisdiction, the first Appellate Court held otherwise.  Accepting the revision filed under Section 115 of the Code  of Civil Procedure, 1908 (in short the ’CPC’) the High Court  by the impugned judgment held that the trial Court’s view  was correct.  

The dispute arose in the following background.  

       The plaintiff No.2 had purchased certain articles which  were booked in 29 bales. Material was booked with New Moga  Transport Co., the present appellant (defendant No.1) for  transportation to Barnala. The goods were loaded in truck  No. HYN 6973. The consignment reached Barnala at 9.30 a.m.  on 23.5.1993 near the factory of plaintiff No.2. On account  of a fire which took place allegedly due to electric short- circuiting there was destruction of whole of the materials.  Plaintiff No.2 claimed that he had suffered loss and lodged  a claim for a sum of Rs.5,10,000/- against the present  appellant i.e. defendant No.1. Since nothing was paid and  only a non-delivery of goods certificate was issued by the  appellant (defendant No.1), respondent No.1 (plaintiff No.1)  settled the claim for a sum of Rs.4,63,516/- on the basis of  the surveyor’s report and the amount was paid to plaintiff  No.2 and due receipt was obtained. Plaintiff No.2 on receipt  of the amount executed a letter of subrogation-cum-special  power of attorney, assigning, abandoning and transferring  all the rights in favour of plaintiff no.1 who claims the  compensation from defendant No.1. i.e. the present  appellant. In the suit a specific plea inter alia was taken  by the present appellant that the Court at Barnala had no  jurisdiction to deal with the suit. With reference to the  consignment note, it was submitted that the Court at Udaipur   alone had jurisdiction to deal with the matter. In the  consignment note it was indicated that the Court having

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jurisdiction was the one situated at Udaipur. As noted  above, the trial Court did not accept the plea that the  Court at Udaipur alone had jurisdiction. But in appeal, the  first Appellate Court upset the verdict of the trial Court.  By the impugned judgment the High Court restored the  judgment of the trial Court and held that the plaintiffs  were entitled to relief and Court at Barnala had  jurisdiction.  

       In support of the appeal, learned counsel for the  appellant (defendant No.1) submitted that the High Court has  clearly over-looked the fact that the parties by an  agreement have fixed a particular Court to be the Court that  has the jurisdiction to try the suit. Without any plausible  reason or basis the High court upset the decision of the  first Appellate Court.  

Undisputedly, in the consignment note it was stated as  follows:

"The Court at Head office city shall  only be the jurisdiction in respect of  all claims and matters arising under the  consignment at the goods entrusted for  transport".   

        Additionally, at the top of the consignment note the  jurisdiction has been specified to be with Udaipur Court.   With reference to the aforesaid indication in the  consignment note, learned counsel for the appellant stated  that there is clear exclusion of the Courts other than the  chosen one and, therefore, the suit could not have been  entertained at any other place. Unfortunately, the High  Court did not appreciate the factual position in its  proper perspective holding that the Court at Barnala would  have got jurisdiction in the ordinary course. Because of  the exclusion clause as embodied in the consignment note  and specific indication in the consignment note that the  Udaipur Court alone has jurisdiction the High Court was  not justified in its conclusion.  

       Learned counsel appearing for respondent No.1  (plaintiff No.1) submitted that the consignment note was not  clear and what was stated in the consignment note was "the  Court at Head Office city shall only be the jurisdiction in  respect of all claims and matters arising under the  consignment at the goods entrusted for transport". Though  the parties could by agreement restrict the jurisdiction to  a Court which along with other Courts had jurisdiction, yet  in view of the vague indication of the court relating to  jurisdiction the High Court has rightly interfered.  It was  submitted that basing on such technical pleas there has been  considerable delay in proceeding with the matter and the  trial Court and the High Court were justified in holding  that the court at Barnala had jurisdiction. A very technical  plea had been advanced by defendant No.1, (appellant herein)  to defeat the purpose of the suit. It is submitted that the  consignment note refers to the Head Office without  specifying as to where the head office was. In view of the  vague indication it cannot be said that the parties by  agreement excluded the jurisdiction of one of the Courts. It  is, therefore, not possible to know as to whether the Court  referred to in Clause 16 in the consignment note refers to  any particular Court having jurisdiction or was unconnected

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with the jurisdiction.

Similar question has been examined by this Court on  several occasions.  

       Section 20 of CPC reads as follows:

"Other suits to be instituted where  defendants reside or cause of action  arises.-Subject to the limitations  aforesaid, every suit shall be  instituted in a Court within the local  limits of whose jurisdiction -

(a)     the defendant, or each of the  defendants where there are  more than one, at the time of  the commencement of the suit,  actually and voluntarily  resides, or carries on  business, or personally works  for gain; or  

(b) any of the defendants, where        there are more than one, at  the time of the commencement  of the suit, actually and  voluntarily resides, or  carries on business, or  personally works for gain,  provided that in such case  either the leave of the Court  is given, or the defendants  who do not reside, or carry on  business, or personally work  for gain, as aforesaid,  acquiesce in such institution;  or  

(c)     the cause of action, wholly      or in  part, arises.

(Explanation) - A corporation shall be  deemed to carry on business at its sole  or principal office in (India) or, in  respect of any cause of action arising  at any place where it has also a  subordinate office, at such place."

       Normally, under clauses (a) to (c) plaintiff had a  choice of forum and cannot be compelled to go to the place  of residence or business of the defendant and can file a  suit at a place where the cause of action arises. If the  defendant desires to be protected from being dragged into a  litigation at some place merely because the cause of action  arises there it can save itself from such a situation by an  exclusion clause. The clear intendment of the Explanation,  however, is that where the Corporation has a subordinate  office in the place where the cause of action arises it  cannot be heard to say that it cannot be sued there because  it does not carry on business at that place. Clauses (a) and  (b) of Section 20 inter alia refer to a Court within local  limits of whose jurisdiction the defendant inter alia  "carries on business". Clause (c) on the other hand refers  to a Court within local limits of whose jurisdiction the

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cause of action wholly or in part arises.          On a plain reading of the Explanation to Section 20 CPC  it is clear that Explanation consists of two parts, (i)  before the word "or" appearing between the words "office  in India" and the word "in respect of" and the other  thereafter. The Explanation applies to a defendant which is  a Corporation which term would include even a company. The  first part of the Explanation applies only to such  Corporation which has its sole or principal office at a  particular place. In that event, the Court within whose  jurisdiction the sole or principal office of the company is  situate will also have jurisdiction inasmuch as even if the  defendant may not actually be carrying on business at that  place, it will be deemed to carry on business at that place  because of the fiction created by the Explanation. The  latter part of the Explanation takes care of a case where  the defendant does not have a sole office but has a  principal office at one place and has also a subordinate  office at another place. The expression "at such place"  appearing in the Explanation and the word "or" which is  disjunctive clearly suggest that if the case falls within  the latter part of the Explanation it is not the Court  within whose jurisdiction the principal office of the  defendant is situate but the Court within whose jurisdiction  it has a subordinate office which alone have the  jurisdiction "in respect of any cause of action arising at  any place where it has also a subordinate office".         Section 20 before the Amendment by CPC in 1976 had two  Explanations being Explanation I and II. By Amendment Act,   Explanation I was omitted and Explanation II was re-numbeed  as the present Explanation. Explanation which was omitted  reads as follows:    

Explanation 1.- Where a person has a  permanent dwelling at one place and also  temporary residence at another place, he  shall be deemed to reside at both places  in respect of any cause of action  arising at the place where he has such  temporary residence."

       This Explanation dealt with the case of place of  residence of the defendant and provided with regard to a  person having a permanent dwelling at one place and also  temporary at another place that such person shall be deemed  to reside at both places in respect of any cause of action  arising at the place where he has such temporary residence.   The language used in Explanation II on the other hand which  is the present Explanation was entirely different.  Had the  intention been that if a corporation had its principal  office at one place and a subordinate office at another  place and the cause of action arose at the place where it  had its subordinate office it shall be deemed to be carrying  on business at both places the language used in Explanation   II would have been identical to that of Explanation I which  was dealing with a case of a person having a permanent  dwelling at one place and also temporary residence at  another place.   

The above position was noted in Patel Roadways Ltd.,  Bombay v. Prasad Trading Company (1991 (4) SCC 270).  

       By a long series of decisions it has been held that  where two Courts or more have under the CPC jurisdiction to  try a suit or proceeding an agreement between the parties

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that the dispute between them shall be tried in any one of  such Courts is not contrary to public policy and in no way  contravenes Section 28 of the Indian Contract Act, 1872.  Therefore, if on the facts of a given case more than one  Court has jurisdiction, parties by their consent may limit  the jurisdiction to one of the two Courts. But by an  agreement parties cannot confer jurisdiction to a Court  which otherwise does not have jurisdiction to deal with a  matter. (See Hakam Singh v. M/s. Gammon (India) Ltd. (AIR  1971 SC 740} and M/s. Shriram City Union Finance Corporation  Ltd. v. Rama Mishra (AIR 2002 SC 2402).

       In the aforesaid factual background, the facts of the  case at hand have to be looked into.                   Had it only been indicated in the consignment note the  Court at Head Office city had jurisdiction then in the  absence of a precise indication of the place what would have  the consequence, we are not presently concerned, more  particularly, when the consignment note itself had indicated  that Court at Udaipur alone had jurisdiction.  

       As was observed by this Court in Shriram’s case (supra)  referring to Hakam Singh’s case (supra) an agreement  affecting jurisdiction of Courts is not invalid. It is open  to the parties to choose any one of the two competent Courts  to decide the disputes. Once the parties bound themselves as  such it is not open for them to choose a different  jurisdiction.  

       Above being the factual and legal position, the  inevitable conclusion is that the High Curt was not  justified in upsetting the order of First Appellate Court.  It is not a case where the chosen Court did not have  jurisdiction. The only question, therefore, related to  exclusion of the other Courts.  

       The intention of the parties can be culled out from use  of the expressions "only", "alone", "exclusive" and the  like with reference to a particular Court.  But the  intention to exclude a Court’s jurisdiction should be  reflected in clear, unambiguous, explicit and specific  terms.  In such case only the accepted notions of contract  would bind the parties. The first Appellate Court was  justified in holding that it is only the Court at Udaipur  which had jurisdiction to try the suit. The High Court did  not keep the relevant aspects in view while reversing the  judgment of the trial Court. Accordingly, we set aside the  judgment of the High Court and restore that of the first  Appellate Court. The Court at Barnala shall return the  plaint to the plaintiff No.1 (respondent No.1) with  appropriate endorsement under its seal which shall present  it within a period of four weeks from the date of such  endorsement of return before the proper Court at Udaipur. If  it is so done, the question of limitation shall not be  raised and the suit shall be decided on its own merits in  accordance with law. The appeal is allowed. No costs.