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IN THE HIGH COURT OF KARNATAKA
S.R. Krishna Kumar, J.
Vittal Cashew Industries – Appellant
Versus
Tropical Industries International Pvt. Ltd – Respondent
Writ Petition No. 9481 of 2022 (GM-CPC)
Decided On : 27-06-2023
JURISDICTION - TERRITORIAL JURISDICTION IN CIVIL PROCEDURE - Order 37 CPC, Sections 20-22, Section 151 CPC, Order 7 Rule 11 CPC - The court analyzed the exclusive jurisdiction clause in the Settlement Agreement between the parties, determining that the commercial court in Mangaluru lacked territorial jurisdiction to hear the case. The court emphasized the importance of the agreed-upon jurisdiction in New Delhi, supported by the cause of action arising from communications originating there. The court's decision to return the plaint for re-presentation in New Delhi was influenced by these legal provisions.
Fact of the Case:
The plaintiffs filed a summary suit against the defendants for recovery of a sum of Rs.15,29,886.64 under Order 37 CPC. The defendants sought leave to defend, but the commercial court granted summary judgment in favor of the plaintiffs. The defendants challenged this order, arguing that the commercial court lacked territorial jurisdiction based on a Settlement Agreement that conferred exclusive jurisdiction to the courts in New Delhi.
Finding of the Court:
The court found that the Settlement Agreement clearly stipulated that any disputes should be adjudicated in New Delhi, and that the commercial court in Mangaluru did not have the jurisdiction to entertain the suit. The court noted that the cause of action arose from communications and actions that took place in New Delhi, reinforcing the jurisdictional agreement.
Issues: Whether the commercial court at Mangaluru had territorial jurisdiction to entertain the suit given the exclusive jurisdiction clause in the Settlement Agreement.
Ratio Decidendi: The court held that the exclusive jurisdiction clause in the Settlement Agreement was binding and that the cause of action arose in New Delhi, thus confirming that the commercial court in Mangaluru lacked jurisdiction to hear the case.
Final Decision: The petition was allowed, the order of the commercial court was set aside, and the plaint was directed to be returned to the plaintiffs for re-presentation in the appropriate court in New Delhi.
JUDGMENT
1. The present petition arises out of Com.O.S.No.506 / 2021 pending on the file of IV Addl.District Judge and Commercial Court, D.K., Mangalore (for short ' the commercial court').
2. The material on record discloses that the respondents - plaintiffs instituted the aforesaid suit against the petitionersdefendants for recovery of a sum of Rs.15, 29, 886.64 and for other reliefs. The said suit was filed by the plaintiffs as a summary suit by invoking the provisions contained in Order 37 CPC. The petitioners who are arrayed as defendants entered appearance in the suit, pursuant to which, plaintiffs filed an application I.A.1 under Order 37 Rule 3(4) CPC seeking passing of summary judgment in their favour against the defendants. The petitioners - defendants filed their objections / counter affidavit and also sought for leave to defend. By the impugned order, the commercial court refused to grant leave to defend in favour of the petitioners and allowed I.A.No.1 and directed passing of summary judgment in favour of the plaintiffs. Aggrieved by the impugned order, petitioners are before this Court by way of the present petition.
3. In the first instance, by order dtd. 19/7/2022, this Court dismissed the present petition and confirmed the order of the commercial court. Aggrieved by the same, petitioners approached the Apex Court in Civil Appeal No.5277/2022 (arising out of SLP (civil) No.13822/2022). By final order dtd. 12/8/2022, the Apex Court set aside the aforesaid order dtd. 19/7/2022 passed by this Court and remitted the matter back to this Court for consideration of the issue of jurisdiction. In this context, it is relevant to state that on 30/5/2022 itself i.e., prior to the aforesaid order dtd. 19/7/2022 being passed by this Court, the petitioners - defendants had filed an application I.A.No.4 seeking return of the plaint on the ground that the commercial court did not have territorial jurisdiction to entertain or adjudicate upon the suit and that both parties had agreed that the Courts at Delhi alone would have exclusive territorial jurisdiction to decide the suit. The said application I.A.No.4 filed by the petitioners is still pending consideration before the commercial court.
4. Heard learned Senior counsel appearing for the petitioners and learned counsel for the respondents and perused the material on record.
5. In addition to reiterating the various contentions urged in the petition and referring to the material on record, learned Senior counsel for the petitioners submits that having regard to clause 7.2 of the Settlement Agreement dtd. 29/4/2019 entered into between the parties whereby they had agreed to confer exclusive territorial jurisdiction upon the courts at New Delhi alone, the commercial court at Mangaluru, did not have territorial jurisdiction to decide the suit and as such, the issue regarding jurisdiction is to be answered in favour of the petitioners. In support of his contentions, learned Senior counsel placed reliance upon the following judgments:-
(ii) IDBI Trusteeship v. Hub Town Ltd., - 2017 (1) SCC 568;
(iii) Shriram City Union Finance Corporation Ltd., vs. Rama Mishra - (2002) 9 SCC 613;
(iv) Abhimanya vs. Sri. Ram Investment Limited, Gulbarga - (2006) SCC Online Kar 530;
(v) Indus Mobile Distribution Private Limited Versus Datawind Innovations Private Limited and Others, - (2017) 7 SCC 678.
(vi) Swastik Gases Pvt. Ltd. vs Indian Oil Corporation Ltd. - (2013) 9 SCC 32.
(vii) B.E. Simoese Von Staraburg Niedenthal & Anr. V. Chhattisgarh Investment Ltd. - (2015) 12 SCC 225.
(viii) Sundaram Finance Limited and Ors V. T. Thankam - 2015 (14) SCC 444.
(ix) Dr. Jagmittar Sain Bhagar v. Dir. Health Services, Haryana and Anr. - 2013 AIR SCW 4387.
(x) Omega Finvest LLP v. Direct News Private Limited - 2022 SCC Online Del 3418 : (2022) 295 DLT 645;
(xi) Hakam Singh v. M/s. Gammon (India) Ltd., - (1971) 1 SCC 286;
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