Judicial Analysis Court Copy Headnote Facts Arguments Court observation

SUPREME COURT OF INDIA
Ruma Pal & P. Venkatarama Reddi, JJ.
MAN ROLAND DRUCKIMACHINEN AG—Appellant
versus
MULTICOLOUR OFFSET LTD. & ANR.—Respondents
Civil Appeal No. 7244 of 1999 from Judgment &Order dated 24.8.1999 of Monopolies and Restrictive Trade Practices Commission, New Delhi in Compensation Application No. 383 of 1997—Decided on 19.4.2004

Counsel for the Parties :
For the Appellant:Mr. Sunil Gupta, Sr. Adv. with Ms. Mohan Lal, Mr. Rajiv Mehta, Advocates.
For the Respondents:Mr. Arvind Minocha, Mr. Ravi Sharma, Mr. V.K. Rao, Mr. Satish Kumar and Ms. Madhu Sikri, Advocates.

The jurisdictional clause in a contract does not apply to proceedings under the Monopolies and Restrictive Trade Practices Act, and the effect of an unfair trade practice must be an 'unfair trade practice' within India for the Commission to have jurisdiction.

Headnote:
Monopolies and Restrictive Trade Practices Act - Jurisdiction - Section 12B - Sections 28 and 23 of the Contract Act - International Chamber of Commerce Rules
Fact of the Case:

The appellant challenged the jurisdiction of the Commission under the Monopolies and Restrictive Trade Practices Act, 1969 to entertain the respondent's claim for compensation under Section 12B of the Act. The appellant argued that the applicable law in the event of any dispute would be German Law and disputes between the parties should be resolved through arbitration conducted in accordance with the International Chamber of Commerce Rules.
Finding of the Court:

The Court held that the jurisdictional clause in the contract was not contrary to public policy and did not contravene the Contract Act. However, the Court concluded that the jurisdictional clause did not apply to proceedings under the Act, as the remedies available under the Act are additional to the usual remedies available under the Contract Act to the parties.
Issues: The issues included the jurisdiction of the Commission to entertain the claim for compensation under the Act, the applicability of the jurisdictional clause in the contract, and the alleged unfair trade practices by the appellant and the respondent No. 2.
Ratio Decidendi: The Court determined that the jurisdictional clause in the contract did not apply to proceedings under the Act, as the remedies available under the Act are distinct from proceedings before a Civil Court. The Court also clarified that the effect of an unfair trade practice must be an 'unfair trade practice' within India for the Commission to have jurisdiction.
Final Decision: The Court directed the Commission to deal with the second aspect of the preliminary objection on evidence and dismissed the respondent No. 1's complaint without deciding the matter on merits if the appellant does not carry on business in India and the alleged unfair trade practice did not take place in India.

JUDGMENT

Ruma Pal, J.—The appellant has challenged the order of the Commission set up under the Monopolies and Restrictive Trade Practices Act, 1969 (referred to as the Act) by which the Commission held it had the jurisdiction to entertain the respondent's claim for compensation under Section 12B of the Act against the appellant and the respondent No. 2.

2. The appellant carries on its business of manufacturing printing machines in Germany. It was incorporated under German Law and has its registered office at Offenbach, Main, Germany. The respondent No. 1 and the respondent No. 2 have their registered offices at Mumbai.

3. Pursuant to the agreement a printing machine was sold to the respondent No. 1 by the appellant, The machine was shipped by the appellant from Germany to Mumbai. on 16th June, 1994. It was off-loaded at Mumbai on 5th August, 1994 and cleared by the respondent No. 1 from the customs warehouse on 22nd April, 1997.

4. In November, 1997 the respondent No. 1 filed two applications before the Commission viz. Unfair Trade Practices Enquiry (UTPE) No. 388 of 1997 in effect complaining of unfair trade practices by the appellant and the respondent No. 2 relating to the supply of the printing machine. Compensation Application (CA) No. 383 of 1997 was filed claiming over Rs. 13 crores towards the cost of the machine, customs duty paid by respondent No. i on the machine interest on the cost and customs duty and damages. However, UTPE No. 388 of 1997 was withdrawn in August, 1999.

5. The appellant had raised objections to the Commission's jurisdiction to entertain the respondent's application for compensation. The first ground was that the parties had agreed that the applicable law in the event of any dispute would be German Law. It was also agreed that disputes between the parties should be resolved either by proceedings brought in German Courts or alternatively through arbitration conducted in accordance with the International Chamber of Commerce Rules. The second ground on which the jurisdiction of the Commission was questioned by the appellant was that the appellant neither provided any service nor carried on any trade or trade practice in India for the purpose of the Act and even the machine in question had been sold to the respondent No. 1 outside India.

6. The Commission rejected both the submissions of the appellant. As far as the first ground was concerned, it was held that the clause regarding the choice of form was contrary to Sections 28 and 23 of the Contract Act and was void.

7. The memorandum of understanding executed between the appellant and the respondent No. 1 on 21st December, 1993 contained a clause to the following effect :

“13. Arbitration

As claims and disputes arising out of the contract shall be settled amicably between the parties as far as possible. But in case of failure all disputes arising in connection with this Contract shall be finally settled under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more Arbitrators appointed in accordance with the Rules. The venue of such Arbitration shall be Paris (France) and the proceedings shall be conducted in English language

8. Pursuant to this memorandum, a formal offer was sent by the appellant to respondent No. 1 on 24th January, 1994 to sell the printing machine. This was accepted by the respondent No. 1's letter dated 2nd February, 1994 to the appellant. On the same date, the appellant acknowledged receipt of the order and the fact of sale of the machine subject to, infer alia, the following condition:

"XVI. jurisdiction and Arbitration

1 The place of jurisdiction for all disputes arising out of the contract — including actions on negotiable legal instruments and documents — shall be the place of the Works supplying goods concerned i.e. Augsburg or Offenbach MR may also bring an action at the place of the purchaser's registered office.

2. In the event arbitration proceedings being agreed with a purchaser having

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The jurisdictional clause in a contract does not apply to proceedings under the Monopolies and Restrictive Trade Practices Act, and the effect of an unfair trade practice must be an 'unfair trade practice' within India for the Commission to have jurisdiction.

Cases Referred (6)