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1966 Supreme(Mad) 354

Madras High Court
ALAGIRISWAMI
Jhun Jhunwala - Appellant
Versus
N.K.M.Subbaramier - Respondent
Decided On : 11/29/1966

Advocates:
V. Thyagarajan and V.R. Nagarajan for Petitioners; K Sanjeevi Naidu, K. Kumaraswami and P. Kannan, for Respondent.

A contractual ouster of jurisdiction is valid and enforceable, and a court specified in such a contract will have exclusive jurisdiction to hear the suit.

Headnote:

JURISDICTION - PROVINCIAL SMALL CAUSE COURTS ACT, 1887 - SECTION 25 - CONTRACTUAL OUSTER OF JURISDICTION - VALIDITY - EFFECT.

Fact of the Case:

The plaintiff sued to recover excise duty collected by the defendant, who claimed it was due on goods supplied to the plaintiff after a certain date. The defendant objected to the jurisdiction of the Madurai Court, arguing that the contract between the parties specified that only Cuttack Courts would have jurisdiction.

Finding of the Court:

The court held that the contractual ouster of jurisdiction was valid and that the Madurai Court did not have jurisdiction to hear the suit. The court noted that the contract specifically stated that it was subject to the jurisdiction of Cuttack Courts only.

Issues: Whether the contractual ouster of jurisdiction was valid and whether the Madurai Court had jurisdiction to hear the suit.

Ratio Decidendi: The court relied on several precedents holding that parties can agree that only one of two courts with jurisdiction will have jurisdiction to try a suit. The court found that the contract in this case clearly ousted the jurisdiction of the Madurai Court and that the suit could only be filed in Cuttack.

Final Decision: The court allowed the petition to revise the judgment and decree of the Madurai Court and directed that the plaint be returned for presentation to the proper court in Cuttack.

ORDER :- This is a petition under S. 25 of the Provincial Small Cause Courts Act by the defendant in O. S. No. 583 of 1962 on the file of the Subordinate Judge's Court, Madurai, to revise the judgement and decree, decreeing the plaintiff's suit.

2. The plaintiff sued for recovery of a sum of Rs. 1077-45 being the excise duty collected by the defendant from him which he alleged he was not entitled to do. The defendant has got his factory near Cuttack and he supplied some soda bottles to the plaintiff at Madurai. In his bill he had claimed excise duty which was newly levied on the goods which according in him were produced after 1-3-1961. The defendant took objection to the jurisdiction of the Madurai Court to try the suit. He also raised other objections with which we need not concern ourselves in the view that I take on the question of jurisdiction.

3. Ex. B-4 is the relevant document which reads as follows :

"Dear Sir,

Please supply the under-noted goods as per your terms of contract, printed on the back and despatch the same on our account and risk to Madurai."

The terms of the contract printed on the back of Ex. B-4 in so far as they are relevant read as follows -

"This order is subject to confirmation by the Works at Barang, S. E. Rly, and shall be considered as having been made at Barang and subject to the jurisdiction of Cuttack courts only."

The learned Subordinate Judge in dealing with the question of jurisdiction remarked that part of the cause of action arose in Madurai and therefore the Madurai Court has also got jurisdiction. He did not specifically consider the point that only the Cuttack Courts have got jurisdiction and not the Madurai Court under the terms of the contract.

4. The established position in law is where there are two courts which will have jurisdiction it is open to the parties to agree that only one of those courts will have jurisdiction to try the suit. The question in this case therefore reduces itself to this : "Whether the contract as evidenced by Ex. B-4 in this case ousts the jurisdiction of the Madurai Court" ? It will be necessary to refer to certain decisions in this connection.

5. In Achratlal Keshavalal Mehta and Co. v. Vilayam and Co; AIR 1925 Mad 1145, the term of the contract was 'in all legal disputes arising out of this contract Ahmedabad will be understood as the place where the cause of action arose." It was held that this agreement is valid and must be given effect to and it is not open to the Madras Court of Small Causes to entertain the suit.

6. In Raghavayya v. Vasudevavya Chetti, AIR 1944 Mad 47 the term in the contact required that the suits should be filed in Nandyal. But the suit was actually filed in Bezwada and the court held that the suit could not be filed in Bezwada.

7. In Hoosem Kasam Dada (India) Ltd. v, Motilal Padampat Sugar Mills Co. Ltd. ILR 1954 Mad 855 : (AIR 1954 Mad 845) the relevant clause in the contract read as follows : All disputes in respect of this contract shall be settled by arbitration failing which shall be settled in court of seller's jurisdiction where this contract shall be deemed to have been entered into". It was held that this was a valid contract and therefore, the suit could be entertained only by the court within which the seller had his place of business.

8. The only decision which takes a slightly different view is the one in M/s Patel Bros. v. M/s. Vadilal, AIR 1959 Mad 227. There the words 'subject to Bombay jurisdiction' were found in the bill issued by the defendant. Ramachandra Aiyar, J. as he then was observed as follows -

"Ex. P-1 says that the transaction is 'subject to Bombay jurisdiction.' But it does not exclude the jurisdiction of any other Court. In my opinion ouster of Jurisdiction of a court to which a person is entitled to resort to under the Civil Procedure Code or any other statute cannot be a matter of assumption or presumption but one to be proved by express words contained in the contract or at least by necessary or inevitable i



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