The main legal point established in the judgment is that the territorial jurisdiction of a court is determined by the cause of action and cannot be excluded by an agreement clause that is void under the Indian Contract Act, 1872.

Dharam Chand Chaudhary, Judge (Oral) The challenge herein is to the order dated 01.09.201 1 passed by learned District Judge, Sirmour at Nahan in Civil Suit No. 2-CS/1 of 2009/08 answering thereby preliminary issue in respect of territorial jurisdiction, against the defendants and posting the suit for trial.

2. On 26.10.2005, the parties to the lis entered into an agreement Annexure P-5 qua installation of 33 KV Sub-Station and allied equipment at Phase-I in the premises of defendant No. 1-company at Nihalgarh, Tehsil Paonta Sahib, District Sirmour. As per condition No. 8 of the agreement, time was the ‘essence’ of contract and the work was required to be completed within three months from its commencement. The petitioners (hereinafter referred to as the ‘plaintiffs’) delayed the performance of contract on their part, therefore, on account of that the work could not be executed within the stipulated period, leading to the stopping of the work by the defendants. On account of that the plaintiffs allegedly suffered huge financial losses hence the suit for recovery of Rs. 11,99,175.47/- together with interest @ 18% per annum and also on account of its machinery and other equipments having been retained by the defendants in its premises,.

3.In the written statement, besides contesting the suit on merits and also filing the counter-claim for the recovery of a sum of Rs. 13,49,069.90/- together with interest @ 12% per annum, the defendants have questioned the maintainability of the suit on account of territorial jurisdiction in preliminary issues, which read as follows:

“1. That this Ld. Court has not no territorial jurisdiction to entertain and try the present suit, because as per clause no. 16 of the Agreement Dt. 26/10/2005, entered into between the parties to the suit, it has been specifically agreed by the parties to the agreement, on the basis of which the present suit has been filed, that in case of any question or dispute arising out of or in any way connected with this agreement, the same shall be heard ad decided only by the Courts at Mumbai, who alone shall have the jurisdiction to entertain and try the suit and as such the suit filed by the plaintiff is liable to be dismissed.”

4.This has led to settlement of the following issues:

1.Whether this Court has territorial jurisdiction to try this Suit ? 2.What is the effect of the filing of the counter claim by the defendants regarding the territorial jurisdiction of this Court ? ...OPP 3.Relief.

5.The issues, so framed, being legal in nature were taken as preliminary and decided by the impugned order Annexure P-6, after hearing the parties on both sides and also taking into consideration the relevant provisions of law. The trial Court while answering both issues in favour of the plaintiffs has held as under :

“ The aforesaid provision of Section 20 of the CPC, hence, depicts that, it, is not necessary, that, all the defendants, if more, than one, are required to be, at the time of commencement of the suit, actually and voluntarily residing, or carrying on business, within the territorial jurisdiction of this Court. Compliance, is, begotten even, if, one of the defendants does so reside or voluntarily works for gain within the territorial limits of the jurisdiction of this Court, as, one of the defendant, in, the instant suit so does, as, apparent on a reading of the same and address of the defendant in the memo of parties and its disclosing that one of the defendants also resides and, is, as such carrying on business within the territorial limits of the jurisdiction of this Court. The other prescription under the provision of Section 20 CPC envisages, that, a Court whose local limits of whose jurisdiction the cause of action has arisen, enjoys the jurisdiction to try the lis. In the above regard, it is found, that since, a unit was set up at Paonta Sahib, by the defendants, as such, obviously, for want of payment of money to the plaintiff by the defendants qua mater