Two parties entered into an Agreement at Calcutta for supply of chemicals manufactured by the Respondent to the Petitioner. In continuation of the aforesaid Agreement, the parties arrived at a Mutual Understanding whereby the Respondent would adjust the advance lying with it and would exclusively supply to the Petitioner its two products. The Understanding between the parties included other terms and conditions as well. The terms of the Understanding entered into between the parties were reduced into writing in an agreement and the same was executed, reiterating the terms of the Understanding and containing an additional clause indicating that “any dispute arising out of this agreement will be subject to Calcutta jurisdiction only.”
Since certain differences arose between the parties relating to the supply of goods in question, the Petitioner herein filed the Original Suit in the Calcutta High Court for recovery of its alleged dues from the Respondent, after giving due adjustment of the amount of the Invoices raised by the Respondent and filed its claim only for the balance amount, along with penalties etc. Upon receiving summons of the suit filed by the Petitioner, the Respondent filed a separate suit against the Petitioner at Vijayawada for recovery of a certain sum of money and also sought recovery of supplies made under the Invoices raised by the Respondent upon the Petitioner.
Out of the several issues raised by the Petitioner while contesting the suit filed by the Respondent, one was the issue relating to the jurisdiction of the Vijayawada Court to entertain the Suit on account of the exclusion clause by which all actions arising out of the Agreement and the Memorandum of Understanding were to be subject to the Calcutta jurisdiction only. Rejecting this objection relating to jurisdiction, the Principal Senior Civil Judge, Vijayawada ruled in favour of the respondent. The Petitioner filed an appeal before the Andhra Pradesh High Court against the aforesaid judgment. The learned Single Judge of the High Court dismissed the Appeal filed by the Petitioner. It is against the aforesaid judgment of the learned Single Judge of the Andhra Pradesh High Court in the First Appeal preferred by the Petitioner that the present Special Leave Petition has been filed.
ISSUE(S) RAISED
Whether the clause regarding exclusive jurisdiction of the courts at Culcutta is binding upon the parties to the contract?
CASES REFERRED
A.B.C. Laminart Pvt. Ltd. and Anr. v. A.P. Agencies
In this case, the Hon’ble Supreme Court observed that where there might be two or more competent Courts which could entertain a suit consequent upon a part of cause of action having arisen there within, if parties to contract agreed to vest jurisdiction in one such Court to try dispute which might arise as between themselves, agreement would be valid.
JUDGEMENT
The Hon’ble Court in the present case observed that in various decisions ranging from the aforementioned A.B.C Laminart case in the year 1989 to the case of Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd. in 2004, the Court has repeatedly taken a stand that if a contractual dispute falls under the jurisdiction of two courts in different places and the parties sign an agreement to exclude on of these courts, such an agreement would be held valid in the eyes of law.
CONCLUSION
Hence, it can now be assumed that in the Indian legal system, it is a well settled principle that that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the cause of action having arisen there within, if the parties to the contract agreed to vest jurisdiction in one such Court to try the dispute which might arise as between themselves, the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague, it is not hit by Sections 23 and 28 of the Contract Act and cannot also be understood as parties contracting against the statute.
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