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2020 Supreme(Del) 885
IN THE HIGH COURT OF DELHI AT NEW DELHI
Rajiv Shakdher, J.
Beoworld Pvt Ltd. - Appellant
Versus
Bang & Olufsen Expansion - Respondent
Interlocutory Application No. 4174 of 2020; Civil Suit (Comm) No. 122 of 2020
Decided On : 24-08-2020
Tanmaya Mehta, Advocate, Gunjan Tejwani, Advocate, Gaurav Gupta, Advocate, Nikhil Kohli, Advocate, Nandita Rao, Advocate, Jivesh Chandrayan, Advocate
Headnote:(A) Code of Civil Procedure, 1908 - Order VII Rule 10 - Interlocutory application concerning jurisdiction - The dispute centers around the scope of Clause 18 of the Master Dealer Agreement dated 19.03.2014, determining which court has jurisdiction for disputes. The defendant argues for exclusive jurisdiction in Denmark, while the plaintiff claims concurrent jurisdiction in India based on Section 20 of CPC. A complicating factor is a Prolongation Agreement that continued rights under the original MDA as negotiations for a new agreement occurred. The court found Clause 18.2 to indicate that the plaintiff must approach Danish courts while Clause 18.3 allows the defendant to sue in either jurisdiction. The court concluded that the plaintiff's claims of inconvenience regarding jurisdiction were not compelling since they had willingly entered into the agreement without objection for five years. (Paras 11.3, 14.3, 15.3)
| Table of Content |
|---|
| 1. introduction of the application filed (Para 1 , 2 , 3) |
| 2. facts of the case and background (Para 4) |
| 3. non-compliance with court orders (Para 5) |
| 4. arguments from both parties (Para 8 , 9) |
| 5. court's analysis of jurisdiction clause (Para 10 , 11 , 12 , 13 , 14) |
| 6. court's reasoning and final observations (Para 15) |
| 7. final conclusion and order (Para 16 , 17 , 18 , 19) |
JUDGMENT
Rajiv Shakdher, J. - This is an application filed by the defendant under the provisions of Order VII Rule 10 of the Code of Civil Procedure, 1908 [in short "CPC"].
2. For the ease of narration, the plaintiff and the defendant will be collectively referred to as parties unless the context requires otherwise.
3. The captioned application is pivoted on a singular clause i.e. Clause 18 of the Master Dealer Agreement dated 19.03.2014 [in short "MDA"].
3.1 Based on this clause [in particular, Clauses 18.1 and 18.2], the defendant asserts that the disputes raised in the instant suit can be presented by the plaintiff only before the Court where the defendant is located i.e. The Danish Court.
3.2 The plaintiff disputes this contention. The plaintiff claims that this Court has concurrent jurisdiction. In this behalf, provisions of Section 20 of the CPC are relied upon by the plaintiff. In other words, in sum, the plaintiff claims that Clause 18.2 of the MDA does not vest exclusive jurisdiction on the Courts in Denmark. This argument is sought to be buttressed by referring to Clauses 18.3 and 18.4 of the MDA.
3.3 Therefore, the core issue which requires adjudication in the present application is the scope and effect of Clause 18 of the MDA.
Prefatory facts: -
4. Before I proceed further, it would be relevant to note the broad contours of the case so that the issue at hand is seen in the correct perspective.
4.1 On 19.03.2014, the plaintiff and the defendant executed the MDA. Under the MDA, the plaintiff was appointed as an exclusive dealer vis- -vis the subject territory i.e. India qua products manufactured by the defendant. The initial period of engagement was 5 years.
4.2 The MDA contained a renewal clause i.e. Clause 12.2. The defendant, instead of renewing the MDA for a further period of 5 years, six (6) months before its expiration, on 20.12.2018 via an email, informed the plaintiff that it was, generally, wanting to update its distributorship agreements across jurisdictions and, therefore, instead of renewing the subsisting MDA, it would enter into a "new agreement".
4.3 The record shows that on this aspect correspondence was exchanged between the parties followed by the defendant dispatching a Framework Agreement on 26.07.2019 [hereafter referred to as "Framework Agreement"] to the plaintiff.
4.4 In the interregnum, by sheer efflux of time, the MDA expired on 30.06.2019. Since parties were still negotiating, they entered into a Prolongation Agreement on 02.09.2019 [in short "PA"] which, in a nutshell, carried forward the rights and obligations under the MDA till such time parties could forge a new agreement.
4.5 However, the relationship between the parties frayed, which led to the defendant issuing a notice of termination dated 23.04.2020 [in short "Termination Notice"]. In the Termination Notice, the defendant adverted, broadly, to three grounds which, according to it, mandated that the plaintiff''s distributorship should be brought to an end:
i. First, the business was not being carried out by the plaintiff as required under the MDA. According to the defendant, the stores/shops were closed. In support of this assertion, the defendant appended photographs of the stores/shops which were taken in September 2019 and March 2020.
ii. Second, the minimum stock-level [as provided in Clause 7.14 of the MDA] was not maintained.
iii. Third, the plaintiff had failed to fulfil the annual minimum purchase obligation as contemplated in Clause 9.1 of the MDA. According to the defendant, the plaintiff''s minimum purchase obligation for the financial year 2019
