Suit No.783 of 2007

31st March, 2015.

Petitioner Counsel: Mr. MOHAN BIR SINGH, Adv. a/w. Ms. FATIMA DARBAR
Respondent Counsel: Mr. ROHAN RAJADHAYAKSHA, Adv. a/w. Mr. RAM KAKKAR, Adv. i/b. AZB PARTNERS

Cases Cited:
Hakam Sing Vs. M/s. Gammon (India) Ltd., (1971) 1 SCC 286 [Para 21]
Shriram City Union Finance Corporation Ltd. Vs. Rama Mishra, (2002) 9 SCC 613 [Para 21]
Balaji Coke Industry Pvt. Ltd. Vs. Maa Bhagwati Coke Gujarat Pvt. Ltd., 2009 ALL SCR 2604=(2009) 9 SCC 403 [Para 21]
Control Print (India) Ltd. Vs. CAB Machines S A & Anr., 1998(2) ALL MR 351=Vol.99(3) 187 [Para 22]
Swastik Gases Private Ltd. Vs. Indian Oil Corporation Ltd., 2013(5) ALL MR 885 (S.C.)=(2013) 9 SCC 32 [Para 23,28]
A B C Laminart Pvt. Ltd. Vs. A P Agencies, 2014 ALL SCR (O.C.C.) 89=AIR 1989 SC 1239 [Para 23,25,26]
Hanil Era Textiles Ltd. Vs. Puromatic Filters (Pvt.) Ltd., 2004(5) ALL MR 534 (S.C.)=(2004) 4 SCC 671 [Para 25]
Modi Entertainment Network Vs. W S G Cricket PTE Ltd., 2002(3) ALL MR 89=(2003) 4 SCC 341 [Para 27]
Controller of Insurance Vs. Vanguard Insurance Co. Ltd., AIR 1966 Madras 437 (V 53 C 144) [Para 29]
The Aerens Gold Souk International Ltd. Vs. M/s. Parthas Textiles, Kerala, CRP 604/2010, Dt.9/12/2011 [Para 31]
Sukanya Holdings Pvt. Ltd. Vs. Jayesh H Pandya, 2003(3) ALL MR 325 (S.C.)=(2003) 5 SCC 531 [Para 32]

JUDGMENT

JUDGMENT :- The issue of territorial jurisdiction has to be decided as per the order of the Division Bench dated 2nd March, 2015.

2. The issue of jurisdiction is framed as follows :

1. Whether this Court has territorial jurisdiction to try the above suit of plaintiff Nos.1, 2 and 3.

3. The suit is filed by three plaintiffs. Plaintiff No.1 is a partnership firm. Plaintiff No.2 is a limited company. Plaintiff No.3 is the director of plaintiff No.1 and a partner of plaintiff No.2. The defendant is a manufacturing company.

4. As per the averments in paragraphs 2, 3 and 4 of the plaint the plaintiff No.2 was appointed as the sole selling agent of the defendant. This was under three agreements dated 30th January, 1978, followed by the agreement dated 1st October, 1989 and then the agreement dated 1st January, 1999, the last of which subsisted between the plaintiff No.2 and the defendant.

5. The agreement dated 1st January, 1999 Exh.C to the plaint has been entered into and signed only by plaintiff No.2 as the agent and the predecessor-in-title of the defendant as the company.

6. Under clause 16(1) of the agreement the parties agreed that the agreement would be governed and construed in accordance with English law.

Under clause 16(2) the parties agreed that the agent (plaintiff No.2) submitted to the jurisdiction of the English Courts. It appointed an attorney's office as his agent in Mumbai for service of process. Under the said agreement the parties excepted the company (the defendant) to apply to any Court for injunction or other like remedy against the agent from committing breach or anticipated breach of that agreement or for damages or other consequential relief.

7. What is material to consider in the determination of the territorial jurisdiction of this Court is the submission by the agent (plaintiff No.2) to the jurisdiction of English Courts. The agent (plaintiff No.2) would, therefore, not submit to the jurisdiction of any other Courts. The English Courts would, therefore, have the agreed jurisdiction in respect of the agreement.

8. The conferment jurisdiction upon English Courts as agreed by the parties would be upon their position under the contract entered into by them.

9. The manufacturing company was in England. The agent was in India. The agent was appointed as such for the sale of products in India. The agent agreed to accept the appointment upon the terms and conditions in the agreement.

Under clause No.3 of the agreement the agent was to promote and extend the sales of the companies products, refer enquiries and orders to the company, take orders for the sales of the products of the company, submit details of the orders to the company, act loyally and faithfully to the company, obey the company's orders and instructions etc.

Under clause 5 of the agreement the company undertook to fulfill the orders submitted by the agent, not to appoint any other person as the agent for sale of its products, contribute towards the cost of advertising etc.

Under clause 7 of the agreement the company was to pay commission to the agent @ 2.5% of the net invoice of the products' sale.

Under clause 8 of the agreement travel and other expenses incurred by the agent were to be incurred by the agent in the performance of its duties.

Under clause 10 of the agreement the company could terminate the appointment if the agent defaulted in performing its obligations, compounded with its creditors, became bankrupt, etc.

Under clause 11 of the agreement upon termination of the agency, the agent had to promptly return all the stocks and samples and list of customers to the company. The rights granted by the company to the agent would be relinquished. Neither party would be liable for loss or damage arising from the termination. The agent waived any compensation that would otherwise be payable by reason of the termination.

Under clause 13 of the agreement the notice to any party was to be sent to the address given.

Under clause 15 of the agreement all the previous agreements between the parties were superseded. (those would be the agreements dated 30th January, 1978 and 1st October, 1989.)

10. The submission to the jurisdiction of the Court would, therefore, be during the pendency of the agreement for any dispute that would arise between the parties giving either of the parties a cause of action to sue for enforcing the duties and undertakings of the parties under clause Nos.3 and 5 of the agreement, for disbursement relating to payment of commission under clause 7 of the agreement, or upon termination of the agreement and its effect under clauses 10 and 11 of the agreement.

11. The submission to the jurisdiction would, therefore, be on each of these counts. The submission of the jurisdiction was by the agent (plaintiff No.2). There was no submission of jurisdiction by the company; the company was carrying on business in England. The parties agreed that the contract would be governed by the English Law with regard to any of the aforesaid matters which would give it a cause of action or in regard to which it would have to defend an action. It was because the agent was a company registered in India having its registered office in Mumbai, India that the agent was required to and submitted to the jurisdiction of English Courts, in view of the contract itself agreed to have been construed in accordance with English Law.

12. Consequently, suits, if any, to be filed by and between the parties under the agreement (as in this suit) would be in English Courts. English Courts alone would, therefore, have jurisdiction in respect of any suit filed by either party to enforce or claim any of the terms of the agreement or rights under the agreement respectively. The conferment of the said jurisdiction was, therefore, by consent of the parties under the clause 16(2) of the agreement.

13. The plaintiffs including plaintiff No.2 have instead sued in this Court. The plaintiffs would contend that clause 16(2) would not debar the plaintiff from suing in India upon the plaintiffs' termination of the contract. The contract with plaintiff No.2 has indeed been terminated. This suit is not for declaration or any injunction with regard to the termination. The suit is a money claim. The plaintiff has sued for recovery of 2.5% commission due to plaintiff No.2 (not all the plaintiffs), for loss on account of drop in sale, for loss to plaintiff Nos.1 and 2 on account of under invoicing, for loss to the plaintiffs image and business reputation, for payment on account of retrenchment and terminal dues of the plaintiffs' staff and for reimbursement of expenses incurred by the plaintiffs in advertising the products of the defendant.

14. Though the agreement has been admittedly entered into by and between with plaintiff No.2 and the defendant and has been so averred and specified in paragraph 4 of the plaint (as also the earlier agreements entered into as averred and specified in paragraphs 2 and 3 of the plaint,)the plaintiffs have described the plaintiffs as the agents in paragraph 4 of the plaint and thereafter.

15. Thus in paragraph 5 of the plaint the products in respect of which the plaintiffs were appointed are set out. It is averred in paragraph 7 of the plaint that the plaintiffs were continued to be the exclusive agent of the defendant in India and as such receiving the notice of termination of the agreement dated 1st January, 1999 w.e.f. 31st March, 2004. The plaintiffs have also contended that the plaintiffs have invested time, money and effect and promoted the sale of the defendant's products, that the plaintiffs have been exposed to financial liabilities and, therefore, that the plaintiffs sought reimbursement of those expenses. It is also averred in paragraph 8 of the plaint that the plaintiffs have invested amounts in the promotion and the sale of the products of the defendant and that the plaintiffs had ultimate expectation that they would continue as sole selling agents of the defendant in India. In paragraph 10 of the plaint it is averred that the commission @ 2.5% aggregating to Rs.13.5 lacs was payable to the plaintiffs. In paragraph 11 of the plaint it is averred that the agreement can be terminated only in terms of the contract (dated 1st January, 1999) if the plaintiffs failed to achieve their target and that the plaintiffs did not fail to achieve the target.

16. Consequently it is specifically shown by counsel on behalf of the defendant that the agreement dated 1st January, 1999 was entered into by and between only plaintiff No.2 and the defendant. All the plaintiffs cannot sue under the agreement. All the plaintiffs have sued under the agreement. The plaintiffs have claimed various amounts as shown in the particulars of claim upon the termination of the agreement dated 1st January, 1999. All the plaintiffs have claimed to be sole selling agents of the defendant under that agreement and all the plaintiffs have claimed rights jointly under the agreement. Hence it is argued that either plaintiff Nos.1 and 3 must be taken to have submitted to the jurisdiction of English Courts as did plaintiff No.2 under clause 16(2) of the agreement dated 1st January, 1999, Exh. C to the plaint or this suit in this Court at least cannot be filed by plaintiff No.2, it having submitted to the jurisdiction of the English Courts and it having sued under the agreement in which it is so submitted to such jurisdiction.

17. Indeed a reading of the plaint would show that the plaintiff No.2 alone signed the agreement dated 1st January, 1999 but that all the plaintiffs have claimed rights under the said agreement dated 1st January, 1999. All the plaintiffs are seen to be aggrieved by the notice of termination of the agreement dated 1st January, 1999 and claim reliefs upon such termination of the agreement dated 1st January, 1999.

18. The Court is not concerned with the merits of the plaintiffs' claim whilst deciding the territorial jurisdiction of the Court. Plaintiff Nos.1 and 3 may sue as they have not submitted to the jurisdiction of the English Court alone. Whether or not plaintiff Nos.1 and 3 are entitled to any reliefs under the agreement dated 1st January, 1999 would be seen in the suit. They not having submitted to the jurisdiction of any other Court may sue in this Court upon showing this Court the cause of action that has accrued to them or at least a part of the cause of action that has accrued to them within the territorial limits of this Courts jurisdiction.

The plaintiff No.2, however, can never sue in this Court for claiming any rights under or pursuant to or upon termination of the agreement dated 1st January, 1999 to which it was a party and in which it submitted to the jurisdiction of the English Courts.

19. Consequently this Court's territorial jurisdiction would not be barred for the claim made by plaintiff Nos.1 and 3.

20. The bar of the jurisdiction in favour of plaintiff No.2 would be considered in accordance with the precedents cited by the parties with regard to the conferment of jurisdiction upon a Single Court otherwise having jurisdiction. It is easy to see that the English Courts to which the jurisdiction was conferred by the submission of plaintiff No.2 to the jurisdiction of English Courts were the Courts having jurisdiction in any suit to be filed by plaintiff No.2 because the defendant carries on business in England. Of course, the Courts in Mumbai, India would also have jurisdiction because plaintiff No.2 was appointed sole selling agent of the products of the defendant in India and had its address in Mumbai, India which was specified in the agreement itself. Hence there was no other Court which would have any territorial jurisdiction. Between the English Courts and the Indian Courts the parties conferred jurisdiction upon English Courts by plaintiff No.2 submitting to the jurisdiction of the English Courts. It would have to be seen whether upon and after such submission the Indian Courts in Mumbai, where plaintiff No.2 carries on business and where plaintiff No.2 had to sell the products of the defendant would have any jurisdiction with regard to any dispute under the agreement for the purpose of the aforesaid terms of the agreement or upon the termination of the agreement.

21. The earliest case of Hakam Sing Vs. M/s. Gammon (India) Ltd. (1971) 1 SCC 286 which was followed in the case of Shriram City Union Finance Corporation Ltd. Vs. Rama Mishra (2002) 9 SCC 613 is the authority for the proposition that when there are 2 or more courts having jurisdiction and the parties choose one of them, it would be binding on them and a suit filed in the other court would be invalid. The case of Balaji Coke Industry Pvt. Ltd. Vs. Maa Bhagwati Coke Gujarat Pvt. Ltd. (2009) 9 SCC 403 : [2009 ALL SCR 2604] went further to hold that the suit filed in the court not chosen by the parties and whose jurisdiction was thus ousted by the parties was unable to be conferred upon that Court as the jurisdiction chosen by the parties.

22. Counsel on behalf of the plaintiffs relied upon the judgment of the Single Judge of this Court in the case of Control Print (India) Ltd. Vs. CAB Machines S A & Anr., Bom H C, Vol.99(3) 187 : [1998(2) ALL MR 351] which was also a contract of agency for the plaintiff to work in India in which the defendant who carried on business in Switzerland appointed the plaintiff as its exclusive agent for sale of their equipments in India. Under clause 5 of that contract the parties agreed that the contract would be under the jurisdiction of the Swiss Law and all the disputes arising from the contract would be submitted exclusively to the competent courts in the canton of Vaud in Switzerland. The Court nevertheless held that the contract was in substance performed in India. The termination notice was received in India. The essential witnesses were in India and the plaintiffs were the exclusive agents in India so that it would be unjust to allow the defendant to terminate the plaintiffs' agency in India and then avoid the jurisdiction of Indian Courts.

Hence this Court held that this Court had jurisdiction because it was only just to have such jurisdiction.

23. This judgment is taken to be impliedly overruled in the case of Swastik Gases Private Ltd. Vs. Indian Oil Corporation Ltd., (2013) 9 Supreme Court Cases 32 : [2013(5) ALL MR 885 (S.C.)] which is the judgment of three Judges, which is the latest case on the submission of territorial jurisdiction and the relevant part of the Supreme Court judgment in the case of A B C Laminart Pvt. Ltd. Vs. A P Agencies, AIR 1989 Supreme Court 1239 : [2014 ALL SCR (O.C.C.) 89], which is judgment of Division Bench of the Supreme Court. The judgment in the case of Swastik, [2013(5) ALL MR 885 (S.C.)] (Supra) must be first considered because it is the authority that now prevails and by which this Court is bound and the case of parties in this suit is covered. The three judges have held that for questions of conferment of jurisdiction by exemption, exclusion or restriction of jurisdiction the words "alone", "only", "exclusion" or "exclusive jurisdiction" are not necessary. It is essential to see the intention of the parties to the agreement. The judgment extensively considered the case of ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) as also various other judgments relating to the exclusion of the jurisdiction of the Courts and grant of jurisdiction upon a Single Court that concluded that except in the case of ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) the Court would see such exclusion or conferment of jurisdiction even in the absence of words "alone", "only", "exclusively" and the like.

The Court has given good reason for its conclusion thus :

The reason for this is quite obvious. The parties would not have included the ouster clause in their agreement were it not to carry any meaning at all. The very fact that the ouster clause is included in the agreement between the parties conveys their clear intention to exclude the jurisdiction of courts other than those mentioned in the clause concerned. Conversely, if the parties had intended that all courts where the cause of action or a part thereof had arisen would continue to have jurisdiction over the dispute, the exclusion clause would not have found a place in the agreement between the parties.

24. This indeed would stand to reason. The conferment of the jurisdiction upon one Court would be specifically the exclusion of jurisdiction of all other Courts. The conferment of jurisdiction would have to be honoured and respected as that would constitute the intention of the parties. The jurisdiction would be even more apparent in case of submission of a party to the jurisdiction of a particular Court.

25. Counsel on behalf of the plaintiff argued and took the Court through paragraph Nos.13, 14 and 26 of this judgment to contend that ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) was in fact followed by the Supreme Court. If that was so it was notwithstanding what the Supreme Court observed in the aforesaid cited para. In fact ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) could have been partly followed because paragraph 21 of ABC Laminart would itself show when the conferment / exclusion of the jurisdiction would be upheld. What the Division Bench of the Supreme Court observed in paragraph 21 in the case of ABC Laminart is thus :

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 'expression 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.

Thus ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) has considered the binding effect of conferment of jurisdiction on one Court and the ouster of jurisdiction on the other Courts. (Also see Hanil Era Textiles Ltd. Vs. Puromatic Filters (Pvt.) Ltd., (2004) 4 SCC 671 : [2004(5) ALL MR 534 (S.C.)]).

26. What is interesting to note in the case of ABC Laminart, [2014 ALL SCR (O.C.C.) 89] (Supra) is the observation of the Court in paragraph 22 of the judgment that Kaira Court (which was conferred jurisdiction) would even otherwise have had jurisdiction".

27. On the same analogy in the case of Modi Entertainment Network Vs. W S G Cricket PTE Ltd. (2003) 4 SCC 341 : [2002(3) ALL MR 89] the non-exclusive jurisdiction of the English Court as the forum chosen by the parties, despite the courts in India and Singapore having territorial jurisdiction, was held entitled to be respected and honoured and could be taken to be forum non-conveniens as oppressive or vexatious so that an anti suit injunction could not be granted restraining the defendant from suing in the court of express choice of the parties.

28. It is, therefore, settled position in law that conferment of jurisdiction upon one Court would necessarily oust the jurisdiction of another as held in the case of Swastik, [2013(5) ALL MR 885 (S.C.)] (Supra). The submission to the jurisdiction of the English Court would, therefore, oust the jurisdiction of the Indian Courts.

29. Counsel on behalf of the plaintiff relied upon the judgment in the case of Controller of Insurance Vs. Vanguard Insurance Co. Ltd., AIR 1966 Madras 437 (V 53 C 144), on the premise that when the defendant had filed a suit in this Court it cannot take exception to the jurisdiction of the Court in a similar suit later filed by the plaintiff.

In this case the defendant sued plaintiff No.3 as a sole proprietor of one M/s. Gateway Park Paper Industries being Summary Suit No.2547 of 2005. The defendant did not sue plaintiff No.2. The suit was, therefore, only against plaintiff Nos.1 and 3. The suit has been filed for and in respect of certain goods supplied to plaintiff Nos.1 and 3 herein as the defendants in that suit. Plaintiff Nos.1 and 3 were, therefore, the customers brought by plaintiff No.2 as any other customer in the capacity of plaintiff No.2 being the agent of the defendant.

This suit is quite different. This suit is filed purportedly by the plaintiffs as sole selling agents and not as the customers of the defendant. This is filed specifically under the agreement dated 1st January, 1999, Exh.C to the plaint. That suit was not filed under the agreement dated 1st January, 1999, Exh.C to the plaint.

What was held in the case of Controller of Insurance is the estoppel with regard to a similar application. It would not, therefore, apply to this case which is wholly different from the defendant's suit filed against plaintiff No.3 as the sole proprietor of plaintiff No.1.

30. There is, therefore, a clear bar against plaintiff No.2 suing in this Court.

31.It is argued by counsel on behalf of the defendant that the cause of action in favour of plaintiff Nos.1 and 3 on the one hand and plaintiff No.2 on the other hand is different and may be split to allow to plaintiff Nos.1 and 3 to sue but not plaintiff No.2. He has relied upon the judgment of the Kerala High Court in the case of The Aerens Gold Souk International Ltd. Vs. M/s. Parthas Textiles, Kerala, in CRP No.604 of 2010 dated 9th December, 2011. In that case the Court considered the provisions of the Order 2 Rules 3(1) and 6 of the CPC which runs thus :

3. Joinder of causes of action. -

(1) Save as otherwise provided, a plaintiff may unite in the same suit several causes of action against the same defendant, or the same defendants jointly; and any plaintiffs having causes of action in which they are jointly interested against the same defendant or the same defendant jointly may unite such causes of action in the same suit.

...

6. Power of Court to order separate trials.-

Where it appears to the Court that the joinder of causes of action in one suit may embarrass or delay the trial or is otherwise inconvenient, the Court may order separate trials or make such other order as may be expedient in the interests of justice.

32. In that case which was a claim of infringement of patents some of the parties had entered into an arbitration agreement. The suit was filed not only by and against those parties but others also. The suit could not be referred to arbitration as per the ruling in the case of Sukanya Holdings Pvt. Ltd. Vs. Jayesh H Pandya, (2003) 5 SCC 531 : [2003(3) ALL MR 325 (S.C.)]. The Court held that the cause of action of those parties who had agreed to refer their dispute to arbitration was different from the cause of action of the other parties who had not so agreed. Joinder of those causes of action would embarrass and delay the trial or make it inconvenient. Hence the Court ordered separate trials under Order 2 Rule 6 of the CPC.

33. Considering that plaintiff No.2 cannot sue in this Court and plaintiff Nos.1 and 3 are not debarred from suing in this Court, the suit against plaintiff No.2 cannot proceed but the suit against plaintiff Nos.1 and 3 must be allowed to proceed. Hence this is a fit case to separate the trials by exercising powers of Court under Order 2 Rule 6 of the CPC since the joinder of the causes of action in favour of plaintiff Nos.1 and 3 which is not under the agreement dated 1st January, 1999, Exh.C to the plaint is different from the cause of action in favour of plaintiff No.2 which is under the agreement dated 1st January, 1999, Exh.C to the plaint and which cannot be filed in this Court and this Court would restrain itself from exercising jurisdiction under that agreement in favour of plaintiff No.2 who has submitted to the jurisdiction of English Courts.

34. Hence the following order :

1. The issue of territorial jurisdiction in favour of plaintiff No.2 is answered in the negative holding that this Court has no jurisdiction to try the suit of plaintiff No.2.

2. The issue of jurisdiction in favour of plaintiff Nos.1 and 3 is answered in the affirmative holding that this Court has jurisdiction to try the suit of plaintiff Nos.1 and 3.

3. The trial of plaintiff No.2 is separated from the trial of plaintiff Nos.1 and 3.

4. The suit shall proceed as a suit of plaintiff Nos.1 and 3. The averments in the plaint shall be read accordingly. The trial has commenced. The witness of the plaintiff has to be cross examined. The cross examination shall continue as directed in the suit. The issue of jurisdiction as directed by the Division Bench is answered accordingly.

5. Written Statement is filed. Suit is adjourned to 19th June, 2015 for framing issues.

Ordered accordingly.