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1989 Supreme(Ker) 304

Judges : VARGHESE KALLIATH
National Starch & Chemicals - Appellant
Versus
Wakefield Products Co.(India) - Respondent
Case No : C.R.P. No. 1201 of 1987
Decided On : 08/14/1989
Advocates Appeared :
M. Balagovindan; For Petitioner S. Subramani; For Respondent

The exclusion of jurisdiction must be explicitly expressed or clearly implied, and the agreement should be clearly and plainly spelled out either by express words or by necessary implication on the factum of exclusive jurisdiction.

Headnote:

ouster of jurisdiction - Civil Revision Petition - S.23, S.28 of the Contract Act - [Jurisdiction, Ouster of Jurisdiction, Agreement] - The court discussed the power of parties to choose a court for filing a suit, the criteria for ouster of jurisdiction, and the implications of the agreement on the jurisdiction of the court. The court emphasized that the exclusion of jurisdiction must be explicitly expressed or clearly implied, and that the agreement should be clearly and plainly spelled out either by express words or by necessary implication on the factum of exclusive jurisdiction.

Fact of the Case:

The plaintiff supplied goods to the defendant as per a purchase order, but the defendant returned the goods stating they were not supplied in time. The plaintiff filed a suit in Trivandrum Sub Court, but the defendant contended that the court had no jurisdiction based on the terms of the contract.

Finding of the Court:

The court found that the agreement between the parties to choose a specific court for filing a suit is valid, and the suit is entertainable by Trivandrum Court.

Issues: The main issue was whether there was a clear and unambiguous agreement whereby the parties agreed that the courts at Poona alone can entertain the suit, thereby excluding the jurisdiction of courts at Trivandrum.

Ratio Decidendi: The court emphasized that the exclusion of jurisdiction must be explicitly expressed or clearly implied, and that the agreement should be clearly and plainly spelled out either by express words or by necessary implication on the factum of exclusive jurisdiction.

Final Decision: The court set aside the orders of the courts below and held that the suit is entertainable by Trivandrum Court. The Civil Revision Petition was allowed.

Judgment :-

1. This Civil Revision Petition concerns a question of ouster of jurisdiction. The short facts are these:--The plaintiff was directed to supply certain goods by the defendant. For the supply of goods, the defendant placed a purchase order. As per the purchase order, the plaintiff supplied the goods to the defendant. The defendant returned the goods stating that the goods have been supplied not in time. When the goods were returned, the plaintiff filed the present suit in Trivandrum Sub Court. The defendant contended that the Trivandrum Sub Court has no jurisdiction to entertain the suit by virtue of certain terms of the contract entered into between the parties evidenced by the purchase order.

2. Though the parties cannot confer jurisdiction on a court which has no jurisdiction over the subject matter, the parties have got the right to choose one of the courts where a suit can be filed if the suit is entertainable in different courts. This choosing of a court by the agreement of parties is not hit by S.23 and 28 of the Contract Act.

3. In short, the power to choose one of the forums where the suit has to be maintained is a matter for the parties to contract. Here the parties are not contracting out a court, which has got jurisdiction or to oust the jurisdiction of the court in its true sense but electing one of the courts having jurisdiction. When once the parties agree as to a particular court which has got jurisdiction for settling the dispute the parties are bound by that agreement and the court has to give effect to that agreement.

4. In this case, there is no difficulty to find the courts at Trivandrum and courts at Poona have got jurisdiction to try the suit. The court below, which found that the suit has to be instituted at Poona and that Trivandrum courts cannot entertain the suit also found that the courts at Poona and Trivandrum have got jurisdiction. The courts below found that the ouster of jurisdiction of courts at Trivandrum happened because of the agreement between the parties. So the only question that has to be considered is whether there is a clear and unambiguous agreement whereby the parties agreed that the courts at Poona alone can entertain the suit whereby by agreement the parties have excluded the jurisdiction of courts at Trivandrum for the settlement of the dispute. As I said earlier, the parties are bound by the agreement, so the only question which this court has to consider is what is the nature of the term of the agreement concerning the ouster of jurisdiction of a court, which normally can entertain the suit by the terms of the agreement.

5. Now I turn to the term of the agreement relevant in this case. The term of the agreement reads thus:--

"Jurisdiction - All transactions are subject to Poona jurisdiction".

I have to examine whether the above quoted condition is sufficient to exclude the jurisdiction of the court, which has got jurisdiction to entertain the suit, in this case Trivandrum Sub Court. Ouster of jurisdiction is a matter on which the courts must be too vigilant and careful when holding that a court, which has got jurisdiction has lost its jurisdiction by virtue of an agreement. What is the criteria to be applied in deciding this matter has been plainly laid down by the recent decision of the Supreme Court reported in AIR 1989 S.C.1239 (A.B.C. Laminart Pvt. Ltd. and another v. A.P. Agencies, Salem). Saikia, J. speaking for the court observed thus:

" When the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause properly. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting factor for jurisdiction to the Courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other Courts. Thus, in Salem Chemical Industries v. Bird and Co., AIR










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