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2012 (1) Supreme 753
SUPREME COURT OF INDIA
Altamas Kabir and Cyriac Joseph, JJ
A.V.M. Sales Corporation — Petitioner
versus
M/S. Anuradha Chemicals Pvt. Ltd. — Respondent
Special Leave Petition (C) No.10184 of 2008
Decided on : 17-01-2012
(b) Civil Procedure Code, 1908 ¯ Section 20 ¯ Cause of action ¯ Cause of action comprises a bundle of facts which are relevant for the determination of the lis between the parties. (Para 18)
(c) Civil Procedure Code, 1908 ¯ Section 20 ¯ Agreement between parties excluding jurisdiction of Court ¯ Where two Courts have jurisdiction consequent upon the cause of action or a part thereof arising therein, if the parties agree in clear and unambiguous terms to exclude the jurisdiction of the other, the said decision could not offend the provisions of Section 23 of the Contract Act. In such a case, the suit would lie in the Court to be agreed upon by the parties. (Para 12)
(d) Indian Contract Act, 1872, Section 23 ¯ Where two Courts have jurisdiction consequent upon the cause of action or a part thereof arising therein, if the parties agree in clear and unambiguous terms to exclude the jurisdiction of the other, the said decision could not offend the provisions of Section 23 of the Contract Act. (Para 12)
(e) Indian Contract Act, 1872 ¯ Section 28 ¯ Section 28 of the Act, clearly spells out that any agreement in restraint of legal proceedings is void ¯ If any mutual agreement is intended to restrict or extinguish the right of a party from enforcing his/her right under or in respect of a contract, by the usual legal proceedings in the ordinary Tribunals, such an agreement would to that extent be void. In other words, parties cannot contract against a statute. (Para 9 and 10)
Facts of the Case
Parties entered into agreement at Calcutta whereunder the respondent agreed to supply its products, exclusively in West Bengal, Bihar, Orissa and Assam. The agreement contained a clause “Any dispute arising of this agreement will be subject to Calcutta jurisdiction only”. As differences arise, petitioner filed suit against the respondent at Calcutta, while the respondent filed suit at Vijayawada ¯ In suit filed by the respondent at Vijaywada, the petitioner challenged the jurisdiction of Vijayawada Court to entertain the suit in view of the exclusion clause by which all actions arising of the agreement were to be subject to Calcutta jurisdiction only ¯ Principal Senior Civil Judge Vijayawada rejected the petitioner’s objection relating to jurisdiction and decree the respondent’s suit. In appeal, the Andhra Pradesh High Court upheld the Judgment of the Principal Senior Civil Judge Vijayawada. Hence this special leave petition before the Supreme Court. Held both the Courts within the jurisdiction of Calcutta and Vijayawada had jurisdiction under Section 20 of the Code of Civil Procedure to try the Suit, as part of the cause of action of the Suit had arisen within the jurisdiction of both the said Courts.
Findings
In view of the exclusion clause in the agreement entered into between the parties, the Courts at Vijayawada had no jurisdiction to try respondent’s suit ¯ Decree passed by the Principal Senior Civil Judge Vijayawada and the impugned judgment of the High Court set aside, trial Court at Vijayawada directed to return the plaint for presentation before the appropriate Court at Calcutta ¯ Special leave petition allowed.
JUDGMENT
Altamas Kabir, J.
1. On 23rd December, 1988, the parties to the Special Leave Petition entered into an Agreement at Calcutta for supply of chemicals manufactured by the Respondent to the Petitioner. In continuation of the aforesaid Agreement, the parties arrived at a Mutual Understanding on 15th May, 1989, whereby the Respondent would adjust the advance lying with it and would exclusively supply to the Petitioner its two products, namely, Sodium Chromate and Sodium Dichromate in West Bengal, Bihar, Orissa and Assam. The Understanding between the parties included other terms and conditions as well. The terms of the Understanding entered into between the parties were reduced into writing in an agreement and the same was executed at Calcutta on 5th August, 1989, reiterating the terms of the Understanding and containing an additional clause indicating that “Any dispute arising out of this agreement will be subject to Calcutta jurisdiction only.” [Emphasis supplied].
2. Since certain differences arose between the parties relating to the supply of goods in question, the Petitioner herein filed Original Suit No.588 of 1991 in the Calcutta High Court on 27th August, 1991, for recovery of its alleged dues from the Respondent, after giving due adjustment of the amount of the Invoices raised by the Respondent and filed its claim only for the balance amount, along with penalties etc. Upon receiving summons of the suit filed by the Petitioner, the Respondent on 12th September, 1991, filed a separate suit against the Petitioner at Vijayawada for recovery of a sum of 3,86,453.05, treating the Purchase Order dated 12th February, 1990, to be independent of the Agreement and also sought recovery of supplies made under the Invoices raised by the Respondent upon the Petitioner.
3. The Petitioner duly contested the Suit filed by the Respondent by filing Written Statement, along with relevant documents, in support of its case. Out of the several issues raised by the Petitioner, one was the issue relating to the jurisdiction of the Vijayawada Court to entertain the Suit on account of the exclusion clause by which all actions arising out of the Agreement and the Memorandum of Understanding were to be subject to the Calcutta jurisdiction only. The other issue of importance was with regard to adjustment, inasmuch as, the Purchase Order dated 12th February, 1990, was treated as independent of the Understanding and Agreement arrived at between the parties. Rejecting the objection relating to jurisdiction, the Principal Senior Civil Judge, Vijayawada, by his judgment and decree dated 5th March, 1999, decreed the Respondent’s Suit (Original Suit No.519 of 1991) with costs for a sum of 3,86,453.05, together with interest at the rate of 12% per annum, from the date of the Suit till realisation of the principal amount of 2,98,267.50. The Petitioner filed First Appeal No.1352 of 1999 before the Andhra Pradesh High Court against the aforesaid judgment and decree dated 5th March, 1999. By judgment and order dated 18th January, 2007, the learned Single Judge of the High Court dismissed the Appeal filed by the Petitioner. It is against the aforesaid judgment of the learned Single Judge of the Andhra Pradesh High Court in the First Appeal preferred by the Petitioner that the present Special Leave Petition has been filed.
4. Apart from the other grounds taken with regard to factual aspect of the matter, grounds have also been taken regarding the exclusive jurisdiction of the Courts at Calcutta agreed to by the parties in the Agreement and whether the same was not binding upon the parties. A further ground has also been taken as to whether in breach of the Agreement, the Respondent was entitled to invoke the jurisdiction of a Court at Vijayawada, whose jurisdiction stood ousted by the Agreement entered into between the parties.
5. On the strength of the pleadings of the parties, five issues were framed by the Trial Court, of which the first issue was whet
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