JUDGMENT
J.D. Kapoor, J.
1.This is a petition under Section 20 of the
Arbitration Act, 1940 seeking directions to the respondent
to file arbitration agreement dated 20.8.1994 and refer
the disputes to the arbitrator.
2. Short question that calls for determination is
as to which court namely Delhi Court or Madras Court has
jurisdiction. Petitioner has placed reliance upon letter
dated 4.11.1993 wherein Clause 12 relating to jurisdiction
is as under:-
“This offer is subject to jurisdiction
of Courts of Delhi/New Delhi.”
3. However this offer was accepted by respondent on
9.11.1993 without reservation . Admittedly work was
commenced by the petitioner in November 1993 itself.
4. On the other hand, the respondent is invoking
clause 16 pertaining to jurisdiction contained in the
letter of acceptance forwarded on August 20, 1994. This
clause reads as under:-
16. JURISDICTION: This order is
subject to jurisdiction of the Courts of
Madras.”
5. It is in this letter of acceptance that the
arbitration Clause 15 was included.
6. It is settled law that the communications
exchanged between the parties at the stage of negotiation
become irrelevant once the parties enter into final
written agreement which becomes binding and concluding
agreement.
7. As is apparent form the clauses of the letters
dated 4.11.1993 and 20.8.1994, no exclusivity has been
attached to the jurisdiction of the courts. It is the
final agreement which is binding upon the parties. The
petitioner is invoking Clause 15 of the final agreement.
In the letter of offer, there was no clause of
arbitration. Similarly letter dated 9.11.1993 was silent
for arbitration.
8. On the one hand, petitioner is invoking clause
15 of the agreement dated 20.8.1994 whereas on the other
hand he has placed reliance upon Clause 12 of the letter
sent by him. Such a course is not open to the petitioner.
Either he has to rely entirely upon letter of offer sent’
on 4.11.1993 and the letter dated 9.11.1993 received by
him which according to the petitioner is the letter of
acceptance or he has to rely upon final agreement
concluded between the parties. In the letter of offer,
there was no arbitration clause. It is the final
agreement between the parties which contained arbitration
clause and therefore Clause 16 of the final agreement has
to be given effect to as far as question of jurisdiction
is concerned.
9. Now arises the question whether Clause 16 has
element of exclusivity or not.
10. Wherever there is ouster clause, it has to be
clear, unambiguous and specific as various causes of
action arise in matter of contracts. For instance cause
of action may arise where contract is made or where it
should heave been performed or where its breach occurred.
The nature of contract may provide jurisdiction to more
than one courts but if the parties agree to vest
jurisdiction in one of the courts, such an agreement
between the parties is neither against public policy nor
against the provisions of procedural code governing the
jurisdiction of courts vis-a-vis causes of action.
11. According to Mr.Sanjeev Puri, learned counsel
for the petitioner Clause 16 of the agreement does not
have element or ingredient of exclusiveness as the word
‘alone’ is missing where courts of Madras have been vested
with the jurisdiction. Mr. Puri has placed reliance upon
A.B.C. Laminart Pvt. Ltd. and Anr. v. A.P. Agencies,
Salem wherein a view was taken that where
the clause under which it is claimed that there is ouster
of jurisdiction of courts only stated that any dispute
arising out of sale would be subject to jurisdiction of
Court within whose jurisdiction order was placed but there
were no words like ‘exclusive’, ‘alone’ and the like,
other jurisdictions having connecting factors were not
clearly, unambiguously and explicitly excluded. The above.
ratio was handed down in view of clause 11 of the
agreement which was as under:-
“Any dispute arising out of this sale
shall be subject to kaira jurisdiction.”
12. It was observed that when the Court has to
decide the question of jurisdiction pursuant to an ouster
clause it is necessary to construe the ousting expression
or clause properly. Often the stipulation is that the
contract shall be deemed to have been made at a particular
place. This would provide the connecting factor for
jurisdiction to the Courts of that place in the matter of
any dispute on or arising out of that contract and
therefore it would ipso facto take away jurisdiction of
the courts. Where an ouster clause occurs, it is
pertinent to see whether there is ouster of jurisdiction
of other courts. The difficulty arises where the words
‘alone’, ‘only’, ‘exclusive’ and the like are not used.
It was observed that even without such words in
appropriate cases the maxim ‘expressio unius est exlusio
alterius’ i.e. expression of one is the exclusion of
another is applicable.
13. Where there are two or more competent courts
which can entertain a suit consequent upon a part of the
cause of action having arisen but if the parties to the
contract agree to vest jurisdiction in one such court to
try the dispute which might arise between themselves the
agreement would be valid and if such a contract is clear,
unambiguous and explicit and not vague, it is not hit by
Section 23 & 28 of the Contract Act. This is so because
of commercial practices and the mercantile law, otherwise,
the salutary principle is that the parties cannot confer
jurisdiction even with consent.
14. Coming to the facts of the case in hand,
ambiguity has crept firstly in the letter of offer dated
4.11.1993 whereby jurisdiction of courts other than New
Delhi was ousted. The said offer was accepted
unequivocally and without any reservation. However, while
entering into agreement wherein arbitration clause was
there and that too when the petitioner had commenced work
and started executing the work on the presumption that the
jurisdiction of courts of Delhi/New Delhi would be
invocable that clause 16 was introduced in the letter
dated 20th August, 1994 vesting the jurisdiction in courts
at Madras. Another relevant factor is that the contract
was to be performed at Delhi; so much so application
under Section 20 of the Act was also moved at earlier
point of time at Delhi. Since both the clauses do not
have element or ingredient of exclusivity so the courts of
Delhi and courts of Madras have jurisdiction. At the time
of commencement of negotiations, the petitioner laboured
under the belief that the courts at Delhi would have
jurisdiction but after eight months, a letter was
dispatched by the respondent wherein it was mentioned that
the order was subject to jurisdiction of the courts at
Madras. In situation like this the factor as to the place
where the contract is to be performed and where breach
occurs becomes more significant and determining factor.
15. Taking overall view of the conspectus of facts
as referred above particularly the place of performance of
contract and the letter of acceptance of offer given in
the letter dated November 1994, the petitioner cannot be
put to hardship or jeopardy by submitting to the
jurisdiction of Madras courts.
16. Apart form this, Sub-section (4) of Section 31
specifically provides that where in any reference, any
application under this Act has been made in a Court
competent to entertain it, that court alone shall have
jurisdiction over the arbitration proceedings and all
subsequent applications arising out of that reference, and
the arbitration proceedings shall be made in that court
and in no other court. The words “competent to entertain”
has great significance and encompass in their fold all
those courts in whose jurisdiction whole or part of cause
of action arises. Since the instant application was filed
much earlier than the one filed by the respondent, the
petitioner has to be given the benefit of Sub-section (4)
of Section 31 of Arbitration Act, 1940 besides other
factors.
17. Foregoing reasons pursuance me to allow the
petition. Mr.Justice C.L. Chaudhary, a retired Judge of
this court is appointed as Arbitrator. The learned
Arbitrator shall fix his own fee. The parties shall
appear before the learned Arbitrator on 30th April, 2002.
18 Copy of this order along with relevant record be
sent to the learned Arbitrator.