The main legal point established in the judgment is that while parties can lawfully enter into an agreement to restrict a dispute to a particular court having jurisdiction, the ouster clause cannot take away the jurisdiction of a court that admittedly has jurisdiction. The court also has discretion to ignore an ouster clause if it is considered oppressive and unjust, particularly when the defendant has a presence within the local limits of the court.

1. Issue No.1 raised in O.S. 497/1984 on the file of the Munsiff's Court, Kozhikode reads: "Whether this Court has got territorial jurisdiction to try the suit?"

The Court answered the issue in favour of the plaintiffs. This finding is challenged in revision.

2. Second plaintiff (second respondent) consigned goods from Calicut to Sohranpur for carriage by the defendants (revision petitioners), who constitute a transport undertaking. Consignment was not delivered at the destination. Goods had been insured with the first plaintiff (first respondent) Insurer paid value of the goods to the second plaintiff and both of them filed the suit for recovery of damages from the transport undertaking. Head Office of the transport undertaking is at Calcutta. Contract was entered into and the branch office of the transport undertaking is also situate at Calicut, within the jurisdiction of the Munsiff's Court. Calicut. Consignment was to be delivered at a place within the jurisdiction of the Calcutta Court. There is no dispute that parts of the cause of action arose within the jurisdiction of the two courts and both courts have jurisdiction to entertain and try the suit for damages. Further, defendants' branch office being situate within the jurisdiction of the Calicut court, for that reason also, the Calicut court has jurisdiction. Thus, the plaintiffs have choice of forums and they have exercised their choice, as they are entitled to do. This is clear from the provisions of S.20 of the Code of Civil Procedure (for short 'the Code').

3. S.20 of the Code incorporates rules regarding the forum on the basis of territorial jurisdiction. Where only one court has territorial jurisdiction, the suit must necessarily be filed in that court. It is not open to the parties to agree to confer territorial jurisdiction on any forum which has. no such inherent jurisdiction. Agreement cannot confer jurisdiction where there is inherent lack of jurisdiction. However, where law allows choice of forums, as in this case, it is open to the parties to agree that the dispute resolution shall take place only in one of them Such a contract cannot be treated as contravening the provisions of S, 28 of the Indian Contract Act (for short'the Act'). S.28 of the Act states that 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 What this provision bars is absolute restriction against enforcement of rights under a contract by the usual legal proceedings in the ordinary tribunals. Where law allows choice of forums and the parties agree that the dispute shall be settled only in one of such forums, that would not amount to absolute restriction against rights and therefore S.28 will not act as a bar. Ordinarily, courts will stand by such agreement and ensure that parties stand upto the agreement.

4. The above proposition is well settled in Hakam Singh v. Gammon (AIR 1971 S.C. 740). Shah, C.J., speaking for the court observed:

"It is not open to the parties, by agreement, to confer by their agreement jurisdiction on a court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy. Such an agreement does not contravene S.28 of the Contract Act".

This principle was followed by the Travancore-Cochin High Court in Orient Ship Supply Co., Ltd. v. Kalamarsand Steam Ship Co. (AIR 1951 T.C. 1) and Thevi Amma v. Subbarayayen (AIR 1954 T.C. 461). This principle has been recognised by this Court in Hassan Stores v. Larsen & Toubro Ltd. (1961 K.L.T. 314), National Nut Company Cashew Exporter v. Haridas Damodar Anandji Filhos Ltd. (196