An agreement to select one of two competent Courts for the disposal of disputes is not void under Section 28, Contract Act, and is binding between the parties.

( 1 ) THIS Rule has been obtained by the defendants against an order made by the Subordinate Judge, 7th Court, 24-Parganas, in Title Suit No. 83 of 1953, by which the learned Subordinate Judge has decided the question as to whether he was competent to try the suit. The plaintiffs-opposite parties instituted the suit for a declaration that under an agreement dated 23-12-1950, the plaintiffs were the sole distributors of the defendants and also for a decree for accounts against the defendants and for recovery of certain sums of money as commission and damages. The agreement which was relied upon by the plaintiffs as the foundation of their claim contains a clause which runs as follows: "any dispute arising between the parties, settlement of same legally or otherwise, will be decided in Bombay. " the defendants raised a preliminary point to the effect that under the aforesaid clause of the agreement, it was only the Bombay Court which would be competent to try the suit. The learned Subordinate Judge has held in substance that the agreement in question amounts to an arbitration clause and as there was no proper application under Section 34, Arbitration Act, by the defendants he was not prepared to give effect to that clause and therefore overruled the plea raised by the defendants. Against this decision the defendants have obtained the present Rule.

( 2 ) MR. Mukherjea, appearing in support of the Rule, has placed before us decisions of different High Courts of India in which the effect of an agreement like this has been considered and Mr. Ghose, appearing on behalf of the opposite parties, has also invited our attention to certain other decisions which according to him support his view. It is a well settled proposition of law that litigants cannot, by private agreement, confer jurisdiction upon a Court which it does not possess nor can they divest a Court of jurisdiction which it possesses under the ordinary law. In the case before us, it is conceded that both the Bombay Court and the Alipore Court have concurrent jurisdiction to try the suit. The question is whether the agreement by which the Bombay Court was chosen as the forum for the disposal of all disputes between the parties can be said to be void under Section 28, Contract Act. That section runs as follows:"every agreement by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract by the usual legal proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights is void to that extent. "there are two exceptions to this section which save agreements for reference to arbitration. On a plain reading of this section, it seems to us that it applies to a case where the parties are wholly precluded from pursuing their legal remedies in the ordinary tribunals because in that case it can be said that there is an absolute restriction upon the parties from enforcing their rights in the ordinary tribunals. If, however, there are two Courts which are equally competent to try the suit, an agreement between the parties that the suit should be instituted in one of those two Courts cannot, in our opinion, be said to be an absolute restriction on the right of taking legal proceedings in the ordinary tribunals but a partial restriction on such right. It has been established by a long line of judicial decisions that such an agreement does not contravene the provisions of Section 28, Contract Act, if the chosen Court has 'jurisdiction to try the suit under the' ordinary law. Vide in this connection the decisions of the Madras. High Court in the case of --'achratlal Kesavlal Mehta and Co. v. Vijayam and Co. ', AIR 1925 Mad 1145 (A), which was followed by the same High Court in the case of -- 'raghavayya v. Vasudevayya Chetty', AIR 1944 Mad 47 (B ). The same view was also taken by the Bombay High Court in the case of -- 'tilakram Chaudhuri v. Kodumal Jethanand', AIR 1928 Bom 175 (C ).