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High Court Of Orissa
R. C. Patnaik, J.
PATTNAIK INDUSTRIES PVT.LTD. - Appellant
Versus
KALINGA IRON WORKS - Respondent
Civil Revn. 166 Of 1980
Decided On : 05/01/1984
JURISDICTION - CONTRACTUAL AGREEMENT - SECTION 20, 28 OF THE CIVIL PROCEDURE CODE, 1908 - SECTION 28 OF THE INDIAN CONTRACT ACT, 1872 - Where two or more Courts have 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. It does not contravene Section 28 of the Contract Act. However, the Court has the discretion to relieve a party from such an agreement if it is satisfied that the stipulation would operate harshly, is oppressive in character, inequitable or unfair, for the ends of justice.
Fact of the Case:
The petitioner, a private limited company, entered into a contract with the opposite party No. 1, a Government of Orissa Undertaking, for the purchase of scrap. A dispute arose between the parties, and the petitioner filed a Money Suit in the Court of the Subordinate Judge, Bhubaneswar. The opposite parties raised the question of jurisdiction of the Court to entertain the suit, relying on a clause in the contract stipulating that in case of dispute the "court at Keonjhar shall have jurisdiction to entertain the suit or proceeding". The trial court directed return of the plaint for presentation in the appropriate Court at Keonjhar.
Finding of the Court:
The High Court held that the agreement between the parties did not oust the jurisdiction of the Court at Bhubaneswar. It may operate as an estoppel against the parties but it cannot deprive the Court of its power to do justice. Ordinarily the Court would have regard to the choice of the parties: where, however, the Court whose jurisdiction has been ousted is satisfied that the stipulation would operate harshly, is oppressive in character, inequitable or unfair, for the ends of justice, it can relieve the party of the bargain. The ouster clause can be ignored.
Issues: 1. Whether a party can be relieved of an agreement that a dispute arising between him and the other contracting party shall be tried in one of the Courts where two or more Courts under the Civil P. C. have jurisdiction to try the suit or proceeding? 2. Whether the Court at Bhubaneswar had jurisdiction to entertain the suit filed by the petitioner?
Ratio Decidendi: 1. The agreement between the parties does not oust the jurisdiction of the Court. It may operate as an estoppel against the parties but it cannot deprive the Court of its power to do justice. 2. Ordinarily the Court would have regard to the choice of the parties: where, however, the Court whose jurisdiction has been ousted is satisfied that the stipulation would operate harshly, is oppressive in character, inequitable or unfair, for the ends of justice, it can relieve the party of the bargain. The ouster clause can be ignored.
Final Decision: The High Court dismissed the revision petition filed by the petitioner, holding that the trial court was correct in directing the return of the plaint for presentation in the appropriate Court at Keonjhar.
R. C. PATNAIK, J.
( 1 ) THE question posed for decision in this case is if a party can be relieved of an agreement that a dispute arising between him and the other contracting party shall be tried in one of the Courts where two or more Courts under the Civil P. C. have jurisdiction to try the suit or proceeding ?
( 2 ) THE facts leading to the present dispute in nutshell are as follows : The petitioner is a private limited company dealing in manufacture of Cast Iron articles. Opposite party No. 1 is a Government of Orissa Undertaking being a unit of Industrial Development Corporation of Orissa, opposite party No. 2. The petitioner entered into a contract with opposite party No. 1 for purchase of scrap. The petitioner has alleged that he deposited the security money. It appointed labourers for collection of materials and other staff for supervision thereof. It received a letter from opposite party No. 1 on 3-1-75 for payment of certain amount owed to opposite party No. 1 and to one Ferro Chrome Project. The petitioner was intimated that unless the amount was deposited lifting of the scrap would not be permitted. Despite protest, the petitioner was not allowed to lift the materials. On 27-1-75 it received a letter that fox non-payment of the outstanding dues the contract was cancelled. So, it fifed Money Suit No. 600 of 1977 in the Court of the Subordinate Judge, Bhubaneswar, claiming damages of a sum of Rs. 67,569. 43. The opposite parties besides other defences raised the question of jurisdiction of the Court to entertain the suit. The opposite parties relied upon Clause 5 (f) of the terms and conditions. Clause 5 (f) of Ext. B, the Tender Call Notice, is the same as Clause 12 in the letter of acceptance, Ext. A.
( 3 ) THE question of jurisdiction was taken as a preliminary issue and the Court relying upon the condition stipulating that in case of dispute the "court at Keonjhar shall have jurisdiction to entertain the suit or proceeding" directed return of the plaint for presentation in the appropriate Court.
( 4 ) THE learned counsel for the petitioner though initially vehemently urged that the Court at Keonjhar had no jurisdiction to entertain the suit, ultimately agreed that the Courts both at Keonjhar and at Bhubaneswar would have jurisdiction to try the suit. The case is covered by Clauses (a) to (c) of Section 20 of the Civil P. C. (for short 'the Code' ).
( 5 ) THE next ground of attack was that the opposite party No. 1 having cancelled the contract, it could not rely on Clause 5 (f) of Ext. B or Clause 12 of Ext. A for the purpose of ousting the jurisdiction of the Court at Bhubaneswar. The short answer is in Union of India v. Kishorilal Gupta, AIR 1959 SC 1362. Their Lordships relied upon a decision of the House of Lords in Heyman v. Darwine Ltd. , (1942) 1 All ER 337, where a contract was repudiated by one party and accepted as such by the other. The dispute arose in regard to damages under a number of heads covered by the contract The arbitration clause provided that any dispute between the parties in respect of the agreement or any of the provisions contained therein or anything arising thereout should be referred to arbitration. Lord Macmillan observed:
"i am accordingly of opinion that what is commonly called repudiation or total breach of a contract, whether acquiesced in by the other party or not, does not abrogate a contract, though it may relieve the injured party of the duty of further fulfilling the obligations which he has by a contract undertaken to the repudiating party. The contract is not put out of existence, though all further performance of the obligations undertaken by each party in favour of the other may cease. It survives for the purpose of measuring the claims arising out of the breach, and the arbitration clause survives for determining the mode of their settlement. . . . . . . . . "
To the same effect was the observations of Lord Wright:
"in such a case, if the repudiation is wrongful and
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