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PETITIONER: CHOLAMANDALAM INVESTMENTS & FINANCE CO. PVT. LTD.

       Vs.

RESPONDENT: RADHIKA SYANTHETICS AND ANR.

DATE OF JUDGMENT:       16/01/1996

BENCH: AHMADI A.M. (CJ) BENCH: AHMADI A.M. (CJ) JEEVAN REDDY, B.P. (J)

CITATION:  1996 AIR 1098            1996 SCC  (2) 109  JT 1996 (1)   372        1996 SCALE  (1)324

ACT:

HEADNOTE:

JUDGMENT:                             WITH               TRANSFER PETITION NO.196 OF 1994 Radhika Synthetics and Anr. V. Cholamandalam Investments & Finance Co. Pvt. Ltd.                       J U D G M E N T AHMADI, CJI :      M/s. Cholamandlam  Investments &  Finance (P) Ltd. with its registered  office at  Madras filed  a suit  being  C.S. No.1161/91, in  the High Court of Madras against M/s Radhika Synthetics Ltd. seeking a decree for a sum of Rs.65,82,850/- with interest  amounting to Rs.62,75,778/- on the allegation that the  amount was  due under  a hire  purchase  agreement dated 26th  April, 1989  and a  Supplemental Agreement dated 1st June,  1989. The  plaintiff further contends that it had earlier filed  C.S. No.716/90 in the High Court of Madras in which an  Advocate Commissioner  was appointed  to seize the machinery that  were the subject matter of the agreement and that thereafter  on negotiation  between  the  parties,  two further supplemental  agreements, both  dated 19th  October, 1990,  were   executed  and  in  view  of  the  supplemental agreements, C.S.  No.716 of  1990 was withdrawn. The present suit before the Madras High Court was filed as the defendant M/s Radhika  Synthetics Ltd.,  failed to pay the instalments from November,  1990 onwards. As per the schedule annexed to the agreement  dated 26th April, 1989, the machinery were to be supplied  by  M/s  Primatex  Machinery  Private  Limited, Dombivli, Thane.  M/s Radhika Synthetics Limited had certain complaints about  the machinery supplied to them. About that M/s. Cholamandlam  Investments & Finance (P) Ltd. contend in the suit  that they  were only  the financiers  and were not concerned with  any defect  in the machinery supplied by M/s Primatex Machinery  Private Limited.  In para 12 of the suit in the  Madras High  Court, it  is stated  that the cause of action for  the suit arose partly at Madras where the monies

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are due  and payable under the original agreement as well as the supplemental agreements.      M/s. Cholamandlam  Investments & Finance (P) Ltd. filed some interim  applications presumably  under Order 38 Rule 5 of  the  Code  of  Civil  Procedure  for  attachment  before judgment. It  appears  from  the  record  that  M/s  Radhika Synthetics Limited  filed a counter affidavit in response to the application  under Order  38 Rule 5 of the Code of Civil Procedure. Copy  of the  counter affidavit is on record. The objections to  the application  under Order  38 Rule  5  all relate  to  the  plaintiff’s  responsibility  for  supplying defective machinery. No objection about the jurisdiction was taken therein.      Radhika Synthetics Limited filed suit No.692 of 1992 in the  High   Court  of   Bombay  against   M/s.  Cholamandlam Investments   &   Finance   (P)   Ltd.   for   recovery   of Rs.2,56,00,000/- with  interest holding them responsible for failure to  commence the  production unit for which the hire purchase agreement  between M/s  Radhika Synthetics  Limited and M/s.  Cholamandlam Investments  & Finance  (P) Ltd. were executed. Coming  to  jurisdiction  M/s  Radhika  Synthetics Limited  in   their  suit   allege  that  M/s.  Cholamandlam Investments &  Finance (P)  Ltd. had  agreed to  install the machinery at  the premises of M/s Radhika Synthetics Limited at Bombay,  that the defective machinery was supplied by the defendants at  Bombay, that  the agreement  was executed  at Bombay, that  the plaintiffs  suffered loss  and damages  at Bombay, and  that all  the material  part of cause of action has arisen at Bombay. M/s Radhika Synthetics further contend in their  suit that they have obtained leave under clause 12 of the Letters Patent from the High Court of Bombay.      The  Transfer   Petition  filed  by  M/s.  Cholamandlam Investments &  Finance (P)  Ltd. was opposed by M/s. Radhika Synthetics and  Anr. inter  alia on  the  ground  that  M/s. Cholamandlam Investments & Finance (P) Ltd. has an office in Bombay, that  the entire  documentation was  done at  Bombay that the  payments made  by M/s  Radhika Synthetics  Limited were made  at Bombay  and were received by M/s. Cholamandlam Investments &  Finance (P)  Ltd. at  Bombay, that the entire cause of  action arose at Bombay. In reply to this on behalf of the  M/s. Cholamandlam  Investments & Finance (P) Ltd. it was stated in the rejoinder that their office in Bombay is a small forwarding  office, that  the hire  purchase agreement was executed  at Madras,  that a  few instalments  were also paid at  Madras and  that as  per terms of the hire purchase agreement all  monies due  and payable  are to  be  paid  at Madras.      The copy  of the  hire purchase  agreement  dated  26th April, 1989  opens with  the words  "Memorandum of Agreement made at  Madras". Clause  20 of  the  agreement  deals  with jurisdiction which is as under:-      "20. Jurisdiction  : This  agreement has      been  accepted   and  executed   by  the      Company at MADRAS and it has been agreed      to between  the parties  hereto that all      the  covenants,   terms  and  conditions      hereof shall  be observed  and performed      at MADRAS  and  the  Hirer  specifically      agrees and  undertakes that  it  or  its      representatives   and    agents    shall      institute any arbitration or other legal      proceedings  only   in  MADRAS   Courts,      concerning this  agreement and the Hired      Articles hereunder. It is further agreed      between the  parties  hereto  that  only

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    MADRAS  Courts   shall  have   exclusive      jurisdiction to  try any  arbitration or      legal proceedings or any suit in respect      of any  matter, claim or dispute arising      out of  or in  any way  relating to this      agreement  in   respect  of   the  Hired      Articles." It is settled law that where two courts have jurisdiction to adjudicate upon  any dispute,  the parties by a contract can submit  to   the  jurisdiction   of  one   and  exclude  the jurisdiction of the other. In that view, it appears that the parties are  bound to submit to the jurisdiction of the High Court of Madras.      The supplemental  agreements dated  19.10.1990 may have been signed  on behalf of the M/s Radhika Synthetics Limited at Bombay  as appears from their letter dated 18.4.1991, but they  purport   to  have  been  made  at  Madras.  Both  the supplemental agreements  have a  clause that  all terms  and conditions covered  by the  original hire purchase agreement will continue to be in force.      Apparently, at  best both  the High Court of Madras and the High  Court of  Bombay can  be said to have jurisdiction over the subject-matter of the dispute although by virtue of clause 20  of the  agreement the  parties submitted  to  the jurisdiction of  Madras and  are bound  by that  clause. The supplemental agreements  have  not  totally  superseded  the original agreement  and therefore  the question whether they were executed  at Bombay  or Madras  as they  purport to  be loses significance.  So far  as the  High Court of Bombay is concerned, the  leave granted under clause 12 of the Letters Patent cannot  exclude the jurisdiction of the High Court of Madras, particularly,  in view  of the agreement between the parties. Besides  the suit  at Madras  was first in point of time and  in that  suit also,  in  the  counter,  the  first respondent raised  the contention  that  they  had  suffered damage to the tune of Rs.2.16 crores. The suit at Bombay was filed almost  six months after the institution of the Madras suit and  that is why it is described as a counterblast. The issues arising  in both the suits are likely to be common in many respects.  Two courses  are open  (i) to  transfer  the Bombay suit  to Madras to be tried along with the latter; or (ii) to stay the Bombay suit under Section 10 of the Code of Civil Procedure  till the  disposal of  the Madras  suit. In order that  all the  issues are  finally thrashed out by and between the  parties and the litigation is not unnecessarily and unduly  protracted, the  first course of action commends us. Article 139A(2) empowers this Court to transfer any case pending before  any High  Court to  any other High Court. We are satisfied that this is a fit case to exercise that power and transfer  the Suit No.6920 of 1992 pending in the Bombay High Court  to the  High Court  of Madras  to be tried along with C.S.No.1161  of 1991.  Transfer Petition No.870 of 1993 shall stand  allowed accordingly  with no  order as to costs while Transfer  Petition No.196 of 1994 shall stand rejected with no order as to costs.