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Suit can be file where both the parties decided the jurisdiction as per contract

Suit can be file where both the parties decided the jurisdiction as per contract

Parties are bound to perform their choosen Jurisdiction to file/Initiate the proceeding at their chosen jurisdiction only.

Section20. Other suits to be instituted where defendants reside or cause of action arises.
Subject to the limitations aforesaid, every suit shall be instituted in Court within the local limits of whose jurisdiction-
  • The defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
  • Any of the defendants, where there are more than one, at the time of the commencement of the suit actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
  • The cause of action, wholly or in part, arises.
2[Explanation].-A corporation shall be deemed to carry on business at its sole or principal office in
3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.
“Whether parties to a contract may agree to have their disputes resolved
by a foreign court of their choice as a neutral forum according to law applicable to
that court ?
Here is the judgment passed by the Hon”ble High Court of Delhi:-
Date of reserve : 03.10.2007
Date of decision : 09.10.2007
CRP No.95/2006
U.CAN Migrate Consultants Pvt. Ltd. …. Petitioner
Canadian Connections Groups Ltd. …. Respondent
Advocates who appeared in this case :
For the petitioner : Mr. V.K. Singh and Mr. L.B. Rai, Advocates.
For the respondent : None.
1. The controversy in the case in hand pivots around a very interesting
question, “Whether parties to a contract may agree to have their disputes resolved
by a foreign court of their choice as a neutral forum according to law applicable to
that court”“ I have heard the counsel for the petitioner but it is unfortunate that the
counsel for the respondent did not appear to assist the court. This case was fixed
for 3rd October, 2007. Counsel for the respondent did not turn up despite second
call till 2.30 p.m. The respondent company was served vide notice dated
12.03.2007 on 15.03.2007 in this case. The order sheet dated, 17.05.2007, before
the Registrar, shows that Mr. Amrendra Singh appeared for the respondent. Again
on 06.08.2007 Mr. J.K. Chawdhary appeared on behalf of the respondent. On
06.09.2007 Mr. Amrendra Singh proxy counsel appeared on behalf of the
respondent. Today none has appeared on behalf of the respondent. Record reveals
that no vakalatnama was filed on behalf of the respondent. Since, the respondent
was served and represented by an advocate, therefore, the order is being passed in
respondent’s absentia.
2. The respondent filed a suit under Order XXXVII of the CPC for recovery of
Rs.4,90,000/- along with pendente lite and future interest before the trial court on
17.02.2003. The petitioner moved an application for leave to defend. In para 4 (B)
of the application they have taken a specific plea that the jurisdiction to try and
entertain the present suit vests with Ontario courts, as per provincial law of
Ontario, Canada and it was agreed between the parties that in case of dispute the
parties shall be governed by the above said court. However, the trial court presided
over by Mr. D.C. Anand, ADJ, did not find favour with this plea vide its order
dated 14.02.2006. It, however, granted leave to defend in favour of the petitioner
subject to its depositing Rs.1,45,000/-. Aggrieved by that order the instant petition
was filed in this court. 3. I have perused the copy of contract filed before me. Its
relevant portions are reproduced as hereunder:- “1. CONTRACT Canadian
Connections Group Ltd. having its office located at 245 Galloway Road Toronto
Ontario M1E 1X5 Canada. Hereinafter called the party of the first part and referred
to as the “CONSULTANT”. And Ucan Migration Consultants P. Ltd., having their
US office at 1240, I 85 south and Freedom Drive Charlotte, NC 28208 USA and
Registered Office in India. Hereinafter referred to as the party of the second part
and referred to as the “CLIENT”. Whereas The Client hereby retains the services
of the Consultant for the purposes of receiving follow up report from Canadian
Authorities with respect to prospective Twenty Eight (28) as per Annexure-A
permanent immigration cases/Client’s client already filed by the client. The follow
up on Application, on behalf of the client and their applicants / accompanying
family members, the Consultant hereby accept such mandate, subject to the
following terms and conditions. 2. DUTIES OF THE CONSULTANT The
Consultant shall : 1. Assess the Client’s referred applicant’s files for CANADIAN
permanent resident immigration. 2. Request the Client for the required information
from the applicants; 3. Submit the required information, application and supporting
documentation to the processing visa office; 4. Advice the Client for the selection
interview with the processing Visa office; 5. Effect all additional written and / or
verbal representations to the processing Visa office and related authorities
processing the application for permanent resident status of the applicant i.e.
immigration office/Embassy/ High Commission as is deemed necessary by the
Consultant, advice the client of the ongoing requirement by the Visa office with
respects the Client’s applications; 6. Never direct contact with the Applicants
referred by the Client.
will not refund any fee to the clients for the reasons given below: 1. If the client
fail to make any of the payments as prescribed in the agreement, then the firm will
no longer act as my immigration services company and will cease the follow up
immediately. 2. If the applicant and their spouse fails medical, security or criminal
requirements and if it is determined that the applicant, and my spouse have
misrepresented or were untruthful about any material fact to the firm, or visa
officer, or immigration officer, or change the disposition regarding immigration to
Canada or abandon the application. 3. Where the application is rejected / revoked
by the Embassy due to false representation, submission of wrong documents by the
client, failing in personal technical /communication interview.
4. This Agreement will supercede all oral, written statements that may have been
given / communicated to the Clients by any and all employees of the Consultant on
signing this agreement by both the parties. 5. This Consultant shall be governed,
interpreted and enforced in accordance with the Provincial Laws of Ontario
Canada. All disputes will be subject to Ontario courts Jurisdiction and as per the
Provincial Laws of Ontario, Canada. 6. x x x x” 4. Counsel for the petitioner has
drawn my attention towards three authorities. First is reported in Shriram City
Union Finance Corporation Ltd. Vs. Rama Mishra, 2002 (9) SCC 613, wherein it
was held :- “In case parties under their own agreement expressly agree that their
dispute shall be tried by only one of them then the parties can only file the suit in
that court alone to which they have so agreed. In the present case, as we have said,
through clause 34 of the agreement, the parties have bound themselves that in any
matter arising between them under the said contract, it is the courts in Calcutta
alone which will have jurisdiction. Once parties bound themselves as such it is not
open for them to choose a different jurisdiction as in the present case by filing the
suit at Bhubaneshwar. Such a suit would be in violation of the said agreement.”
5. He has cited another authority of the Apex Court reported in Hakam Singh Vs.
M/s. Gammon (India) Ltd., 1971 (1) SCC 286, which goes to buttress his case.
6. He has also cited another authority reported in New Moga Transport Co. Vs.
United India Insurance Co. Ltd., (2004) 4 SCC 677, it was held that :- “By a long
series of decisions it has been held that where two courts or more have jurisdiction
under CPC to try a suit or proceeding, an agreement between the parties that the
dispute between them shall be tried in any one of such courts is not contrary to
public policy and in no way contravenes Section 28 of the Indian Contract Act,
1872. Therefore, if on the facts of a given case more than one court has
jurisdiction, parties by their consent may limit the jurisdiction to one of the two
courts. But by an agreement parties cannot confer jurisdiction on a court which
otherwise does not have jurisdiction to deal with a matter.”
7. I am also able to locate few authorities reported in Modi Entertainment Network
and another Vs. W.S.G. Cricket PTE. Ltd., (2003) 4 SCC 341, it was held :- “In
regard to jurisdiction of courts under the Code of Civil Procedure(CPC) over a
subject-matter one or more courts may have jurisdiction to deal with it having
regard to the location of immovable property, place of residence or work of a
defendant or place where cause of action has arisen. Where only one court has
jurisdiction it is said to have exclusive jurisdiction; where more courts than one
have jurisdiction over a subject-matter, they are called courts of available or
natural jurisdiction. The growing global commercial activities gave rise to the
practice of the parties to a contract agreeing beforehand to approach for resolution
of their disputes thereunder, to either any of the available courts of natural
jurisdiction and thereby create an exclusive or non-exclusive jurisdiction in one of
the available forums or to have the disputes resolved by a foreign court of their
choice as a neutral forum according to the law applicable to that court. It is a wellsettled
principle that by agreement the parties cannot confer jurisdiction, where
none exists, on a court to which CPC applies, but this principle does not apply
when the parties agree to submit to the exclusive or non-exclusive jurisdiction of a
foreign court; indeed in such cases the English courts do permit invoking their
jurisdiction. Thus, it is clear that the parties to a contract may agree to have their
disputes resolved by a foreign court termed as a “neutral court” or “court of
choice” creating exclusive or non-exclusive jurisdiction in it.” It was further held :-
“It is a question of interpretation, governed by the proper law of the contract,
whether a jurisdiction clause is exclusive or non-exclusive, or whether the claim
which is the subject-matter of the action falls within its terms. If there is no express
choice of the proper law of the contract, the law of the country of the chosen court
will usually, but not invariably, be the proper law.”
8. In Man Roland Druckimachinen AG Vs. Multicolour Offset Ltd. and another,
(2004) 7 SCC 447, it was held:- “9. Undoubtedly, when the parties have agreed on
a particular forum, the courts will enforce such agreement. This is not because of a
lack or ouster of its own jurisdiction by reason of consensual conferment of
jurisdiction on another court, but because the court will not be party to a breach of
an agreement. Such an agreement is not contrary to public policy nor does it
contravene Section 28 or Section 23 of the Contract Act. This has been held in
Hakam Singh Vs. Gammon (India) Ltd., AIR 1971 SC 740, A.B.C. Laminart (P)
Ltd. Vs. A.P. Agencies, (1989) 2 SCC 163 and Modi Entertainment Network Vs.
W.S.G. Cricket Pte. Ltd., (2003) 4 SCC 341, SCC at p.351. The decision of the
Delhi High Court in Rajendra Sethia Vs. Punjab National Bank, AIR 1991 Del 285
relied on by the Commission which holds to the contrary is, therefore, clearly
9. In a recent authority reported in Harshad Chiman Lal Modi Vs. DLF Universal
and anr., AIR 2005 SC 4446 while quoting Halsbury’s Laws of England, (4th
edition), Reissue, Vol. 10; para 317; it was held:- “317. Consent and waiver.
Where, by reason of any limitation imposed by statute, charter or commission, a
court is without jurisdiction to entertain any particular claim or matter, neither the
acquiescence nor the express consent of the parties can confer jurisdiction upon the
court, nor can consent give a court jurisdiction if a condition which goes to the
jurisdiction has not been performed or fulfilled. Where the court has jurisdiction
over the particular subject matter of the claim or the particular parties and the only
objection is whether, in the circumstances of the case, the court ought to exercise
jurisdiction, the parties may agree to give jurisdiction in their particular case; or a
defendant by entering an appearance without protest, or by taking steps in the
proceedings, may waive his right to object to the court taking cognizance of the
proceedings. No appearance or answer, however, can give jurisdiction to a limited
court, nor can a private individual impose on a judge the jurisdiction or duty to
adjudicate on a matter. A statute limiting the jurisdiction of a court may contain
provisions enabling the parties to extend the jurisdiction by consent.” It was further
held:- “It is, no doubt true, as submitted by Ms. Malhotra that where two or more
courts have jurisdiction to entertain a suit, parties may be agreement submit to the
jurisdiction of one court to the exclusion of the other court or courts. Such
agreement is not hit by Section 28 of the Contract Act, 1872, nor such a contract
can be said to be against public policy. It is legal, valid and enforceable. Before
more than thirty years, such question came up for consideration before this court in
Hakam Singh Vs. Gammon (India) Ltd., 1971 (1) SCC 286. It was the first leading
decision of this court on the point. There, a contract was entered into by the parties
for construction of work. An agreement provided that notwithstanding where the
work was to be executed, the contract ‘shall be deemed to have been entered into at
Bombay’ and Bombay Court ‘alone shall have jurisdiction to adjudicate’ the dispute
between the parties. The question before this Court was whether the court at
Bombay alone had jurisdiction to resolve such dispute.”
10. In National Thermal Power Corporation Vs. Singer Company and others,
(1992) 3 SCC 551, it was held :- “13. Dicey and Morris in The Conflict of Laws,
11th edn., Vol. II (‘Dicey’) refer to the ‘proper law of a contract’ thus: “Rule 180 “
The term ‘proper law of a contract’ means the system of law by which the parties
intended the contract to be governed, or, where their intention is neither expressed
nor to be inferred from the circumstances, the system of law with which the
transaction has its closest and most real connection.” The expression ‘proper law of
a contract’ refers to the legal system by which the parties to the contract intended
their contract to be governed. If their intention is expressly stated or if it can be
clearly inferred from the contract itself or its surrounding circumstances, such
intention determines the proper law of the contract. In the words of Lord Herschell,
L.C.: “…..In this case, as in all such cases, the whole of the contract must be looked
at, and the contract must be regulated by the intention of the parties as appearing
from the contract. It is perfectly competent to those who, under such circumstances
as I have indicated, are entering into a contract, to indicate by the terms which they
employ which system of law they intend to be applied to the construction of the
contract, and to the determination of the rights arising out of the contract.”
11. In A.B.C. Laminart Pvt. Ltd. and another Vs. A.P. Agencies, Salem, (1989) 2
SCC 163, it was held :- “21. From the foregoing decisions it can be reasonably
deduced that where such an ouster clause occurs, it is pertinent to see whether
there is ouster of jurisdiction of other courts. When the clause is clear,
unambiguous and specific accepted notions of contract would bind the parties and
unless the absence of ad idem can be shown, the other courts should avoid
exercising jurisdiction. As regards construction of the ouster clause when words
like ‘alone’, ‘only’, ‘exclusive’ and the like have been used there may be no
difficulty. Even without such words in appropriate cases the maxim ‘expressio
unius est exclusio alterius’ “ expression of one is the exclusion of another “ may be
applied. What is an appropriate case shall depend on the facts of the case. In such a
case mention of one thing may imply exclusion of another. When certain
jurisdiction is specified in a contract an intention to exclude all others from its
operation may in such cases be inferred. It has therefore to be properly construed.”
12. In the light of the discussion, I hold that above said court in Canada has the
jurisdiction as per clause 5 of the above said Contract. Delhi courts have no
jurisdiction. I set aside the order passed by the trial court. The plaint be returned to
the respondent for filing it before the proper court. Revision petition stands
accepted and the case stands disposed of.
October 09, 2007 J.M. MALIK, J.

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