ORDER
G. Rohini, J.
1. This Revision Petition is directed against the order dated 16.10.2000 in I.A. No. 718 of 1999 in O.S. No. 311 of 1997 on the file of the Court of the IV Senior Civil Judge, City Civil Court, Hyderabad. The 3rd defendant, who is the petitioner in I.A. No. 718 of 1999 is the revision petitioner. The plaintiffs are the respondents 1 and 2. The defendants 1 and 2, who were set ex pane in the suit are not made parties to this Revision Petition. I shall refer the parties as plaintiffs and 3rd defendant for the sake of convenience.
2. The brief facts which are necessary for determination of the issue involved in this revision petition are as follows: The plaintiffs filed O.S. No. 311 of 1997 seeking a decree against defendants 1 to 3 for recovery of a sum of Rs. 3,77,799/- alleged to be due from the defendants. The defendants 1 and 2 were set ex parte. The defendant No. 3 filed LA. No. 718 of 1999 under Order 14 Rule 2 read with Order 7 Rule 10 of Civil Procedure Code to return the plaint for presenting before the proper Court. In the affidavit filed in support of the said petition it is stated that the suit has been filed on the basis of an agreement said to have been entered on 19.7.1995 between the plaintiffs and defendant No. 1 and as per Clause 12 of the said agreement all the disputes between the parties are subject to Pune jurisdiction and therefore the Court has no jurisdiction to decide the suit. Accordingly the 3rd defendant contended that it is necessary either to return the plaint for presentation before the proper Court at Pune or in the alternative the suit shall be dismissed for want of jurisdiction.
3. The said application was opposed by the plaintiffs. In the counter it was stated that under the letter-cum-agreement dated
19.7.1995 the 1st plaintiff was appointed as Super distributor for the products of the defendant No. 1 in the districts of Mahabubnagar, Kurnool and Anantapur. The said agreement was executed at Hyderabad and was delivered to the 1st plaintiff at Hyderabad. Thus the entire cause of action arose within the jurisdiction of the Court at Hyderabad. Further since the 1st defendant-Company has its branch office at Hyderabad and since the entire transaction was routed through the said branch office i.e., 2nd defendant, the objection raised by the defendant No. 3 as to the jurisdiction of the Court at Hyderabad is unsustainable.
4. The Court below having considered the rival contentions by order dated 16.10.2000 dismissed the application holding that the Court is having jurisdiction to try the suit. Aggrieved by the said order the 3rd defendant preferred this Civil Revision Petition.
5. Heard both sides. The learned Counsel for the revision petitioner-3rd defendant contended that since the entire suit is based on the agreement dated 19.7.1995, both the parties are bound by the specific clause that the agreement is subject to Pune jurisdiction only and therefore the jurisdiction of the Court at Hyderabad is ousted. He contended that the Court below failed to properly appreciate the facts of the case and erroneously dismissed the application on irrelevant and extraneous grounds. He further contended that the suit is not maintainable and liable to be returned for presentation in the proper Court.
6. On the other hand the learned Counsel for the respondents/plaintiffs submitted that no part of suit transaction took place at Pune and even the Branch Office of the 1st defendant is located at Hyderabad and the agreement was signed and executed at Hyderabad and therefore, the suit is properly presented in the Court at Hyderabad. He contended that the conclusion of the Court below that the jurisdiction of the Courts at Hyderabad is not ousted is in accordance with the settled principles of law and therefore the order under Revision does not warrant any interference.
7. I have perused the order under revision as well as the other material on record. As can be seen from the plaint the 1st plaintiff is a proprietary concern carrying on the business as Pharmaceuticals distributor. The 2nd plaintiff is the proprietor of the 1st plaintiff concern. The 1st defendant is a Company carrying on business in manufacture and distribution of AMIC soaps having its registered office at Pune. Defendant No. 2 is the branch Office of defendant No. 1 Company at Hyderabad. Defendant No. 3 is the Director of the 1st defendant-Company. As per the plaint averments the defendant No. 1 by letter dated 19.7.1995 appointed the 1st defendant as Super distributor of AMIC range of products for the districts of Mahabubnagar, Kurnool and Anantapur. The said letter-cum-agreement was executed at Hyderabad and was issued to the 1st plaintiff at Hyderabad. In pursuance of the same the plaintiffs paid a sum of Rs. 1.00 lakh to the 1st defendant by way of demand draft towards security deposit. The plaintiffs also pleaded that as per the directions of the defendants orders were placed for 150 cases of AMIC range of products and a sum of Rs. 1,55,466/- was paid by the plaintiffs to the 1st defendant by way of demand draft and the stocks were supplied to the plaintiffs at Hyderabad by the 2nd defendant. It appears that certain disputes arose regarding the supplies made and consequently the plaintiffs demanded repayment of the amounts paid to the defendants together with interest. Since the defendants failed to return the amount the plaintiffs filed the suit for recovery of the amount. According to the plaintiffs the suit transaction took place within the jurisdiction of the Courts at Hyderabad. However, the 3rd defendant disputed the jurisdiction of the Court oh the basis of Clause 12 of letter-cum-agreement dated 19.7.1995. The said clause runs as follows:
“This agreement is subject to Pune jurisdiction only.”
8. In the background of the above facts and having regard to the rival contentions raised by the parties, the question that arises for consideration is whether in view of Clause 12 of the agreement the jurisdiction of the Courts at Hyderabad is ousted.
9. Section 20 of Civil Procedure Code which provides for the place of instituting the suits runs as follows:
20. Other suits to be instituted where defendants reside or cause of action-arises:–Subject to the limitations aforesaid, every suits shall be instituted in a Court within the local limits of whose jurisdiction:–
(a) 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
(b) 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 cany on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises.
Explanation :–A Corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any place where it has also a subordinate Office, at such place.
10. As can be seen Clause (a) and Clause (b) of Section 20 state that every suit shall be instituted in a Court within the local limits of whose jurisdiction the defendant actually and voluntarily resides or carries on business. As per Clause (c) the suit can also be instituted in a Court within the limits of whose jurisdiction the cause of action wholly or in part arises. It is well settled that where under the law several Courts have concurrent jurisdiction it is open for the parties to submit themselves to one of the Courts having jurisdiction. However, the parties by agreement cannot confer jurisdiction on a Court which lacks jurisdiction to try a case. An agreement between the parties to submit themselves to a Court which lacks jurisdiction to decide the case is void being against public policy. Such an agreement is also hit by Sections 23 and 28 of the Contract Act and cannot be enforced.
11. Therefore, while determining the issue whether the agreement between the parties to submit themselves to a particular Court is binding and enforceable, the first question to be considered is whether such Court is having jurisdiction to try the case. The next question to be considered is whether the particular clause under the agreement has absolutely ousted the jurisdiction of the other Courts. If the clause under the agreement is clear and unambiguous and explicit, it can be concluded that the jurisdiction of the other Court or Courts is ousted, of course, subject to the condition that such a clause does not allow the parties to submit themselves to a Court which lacks jurisdiction.
12. The Apex Court in A.B.C. Laminart Pvt Ltd. v. A.P. Agencies, Salem, , has reviewed the entire case law on this issue and held as follows:
“Under Section 23 of the Indian Contract Act the consideration or object of an agreement is lawful, unless it is opposed to public policy. Every agreement of which the object or consideration is unlawful is void. Hence there can be no doubt that an agreement to oust absolutely the jurisdiction of the Court will be unlawful and void being against the public policy. Ex dolo malo non oritur actio. If therefore it is found in this case that Clause 11 has absolutely ousted the jurisdiction of the Court it would be against public policy. However, such will be the result only if it can be shown that the jurisdiction to which the parties have agreed to submit had nothing to do with the contract. If on the other hand it is found that the jurisdiction agreed would also be a proper jurisdiction in the matter of the contract it could not be said that it ousted the jurisdiction of the Court.”
“So long as the parties to a contract do not oust the jurisdiction of all the Courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy.”
“….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. This cannot be understood as parties contracting against the statute. Mercantile law and practice permit such agreements.”
13. The said principle has been reiterated in Angile Insulations v. Davy Ashmore India Ltd., .
14. In the light of the aforesaid principles of law, now I shall examine whether Clause 12 of the agreement in the instant case can be construed to have excluded the jurisdiction of the Court at Hyderabad.
15. The case of the plaintiffs is that the entire cause of action for the suit transaction arose at Hyderabad, since the agreement between the parties which forms the basis for the suit was executed at Hyderabad and the entire transaction is routed through defendant No. 2 at Hyderabad.
16. The learned Counsel for the respondents/plaintiffs strenuously contended that the Courts at Pune have no jurisdiction and therefore Clause 12 in the agreement is not enforceable. While referring to the Explanation to Section 20 of Civil Procedure Code the learned Counsel contended that the location of the subordinate office within the local limits of which a cause of action arises is the relevant place for filing a suit and not the principal place of business. He further contended that though the principal office of the 1st defendant is located at Pune, since the office of the 2nd defendant, which is a branch of the 1st defendant-Company is located at Hyderabad, and since the cause of action arose only at Hyderabad, it cannot be said that the Courts at Pune are having jurisdiction. In support of his contention the learned
Counsel placed reliance upon Patel Roadways Limited v. Prasad Trading Company, . The learned Counsel for the respondents has also relied upon Kitex Ltd. v. D. Surekha, , in support of his contention that the parties cannot confer jurisdiction on a Court which lacks jurisdiction.
17. There is absolutely no quarrel about the ratio laid down in the aforesaid decisions. However, on a careful consideration of the material on record, I am unable to agree with the contention of the learned Counsel for the respondents that the Courts at Pune lack jurisdiction to decide the case on hand.
18. It is pertinent to note that the suit is instituted against three defendants. As per the plaint, whereas the 1st defendant is a Company having its principal office at Pune, the 2nd defendant is the Branch of the 1st defendant located at Hyderabad. The 3rd defendant is an individual and described as Director of the 1st defendant-Company, who is a resident of Pune. The plaintiffs sought a decree against all the defendants jointly and severally. Since the defendant No. 3, admittedly resides at Pune, as per Clause (a) of Section 20 of Civil Procedure Code the suit could have been instituted at Pune i.e., the place of residence of the 3rd defendant. Therefore, even if the plea of the plaintiffs that the Court at Hyderabad where the subordinate Office of the 1st defendant-Company is located and where the cause of action arose is having jurisdiction is accepted the suit cannot be instituted at Hyderabad without obtaining the leave of the Court under the provisions of Clause (b) of Section 20.
19. Even otherwise, I am of the view that the learned Counsel for the respondents is not correct in submitting that the entire cause of action arose at Hyderabad.
Clause 5 of the agreement shows that both the parties agreed that the payments should be made by way of demand draft payable at Pune only. The plaintiffs specifically pleaded in paras 4 and 5 of the plaint that they have paid a sum of Rs. 1.00 lakh towards security deposit and Anr. sum of Rs. 1,55,466/- to the 1st defendant by way of demand drafts. It is well settled that the cause of action for a suit based on breach of contract arises not only where the goods were to be delivered but also where the price would be payable on such delivery. Therefore, a part of cause of action has arisen certainly at Pune where the payment has been made by the plaintiffs in terms of the agreement. Thus, in my considered opinion, the Courts at Pune are also competent to decide the suit and the suit could have been filed in the Courts at Pune as well since the defendant No. 3 is a resident of Pune and also in view of the fact that a part of cause of action arose at Pune.
20. Then the next question to be considered is whether Clause 12 of the agreement can be said to have excluded the jurisdiction of the Court at Hyderabad. This issue has also been considered by the Apex Court in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem (supra) and it has been observed as under:
” … 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.”
“….In the clause ‘any dispute arising out of this sale shall be subject to Kaira jurisdiction1 ex facie we do not find exclusionary words like ‘exclusive’, ‘alone’, ‘only’ and the like. Can the maxim ‘expressio unius ext exchtsio altering be applied under the facts and circumstances of the case ? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which Court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded.”
21. In the instant case, Clause 12 of the agreement contains exclusive word “only”. The clause is unambiguous and it clearly and explicitly excludes the jurisdiction of the other Courts.
22. As expressed above, the Courts at Pune are also having jurisdiction to decide the case and it cannot be said that the parties have contracted against the statute. The agreement is not hit by Sections 23 and 28 of the Contract Act since the Courts to which the parties have agreed to confer jurisdiction is a competent Court which can entertain the suit.
23. For the reasons stated above, I am of the view that the plaintiffs having agreed to vest the jurisdiction on the Court situated
at Pune are not entitled to institute the suit in a Court at Hyderabad. Hence as rightly contended by the revision petitioner/defendant No. 3, the Court at Hyderabad has no jurisdiction to try the suit and the plaint is liable to be returned for presentation in proper Court.
24. On a perusal of the order under revision, 1 am of the view that the Court below failed to appreciate the issue in question in the correct perspective and misdirected itself in observing that there is no evidence to say that both parties have accepted Pune jurisdiction. The learned Judge has apparently proceeded with the case ignoring the pleadings on record. The order under revision is therefore vitiated by illegality and material irregularity in exercise of jurisdiction vested under law and cannot be sustained.
25. Accordingly, the order under revision is set aside and I.A. No. 718 of 1999 is allowed. The Court below is directed to return the plaint for presentation before proper Court. The Revision Petition is allowed. In the circumstances, there shall be no order as to costs.