Arbitration and Conciliation Act, 1996 — Section 11(12)(b) r/w Section 2(1)(e)

August 26th, 2013

Arbitration and Conciliation Act, 1996 — Section 11(12)(b) r/w Section 2(1)(e) — Appointment of Arbitrator — Territorial jurisdiction — Clause stipulating exclusive jurisdiction to one court, Effect of — Agreement between appellant and respondent company whereby the appellant was appointed the company’s consignment agent for marketing lubricants at Jaipur (Rajasthan) — Disputes arose between the parties — Appellant preferred an application before Rajasthan High Court for the appointment of arbitrator — Company raised plea of lack of territorial jurisdiction of the Rajasthan High Court in the matter, contending that agreement has been made subject to jurisdiction of the courts at Kolkata — By impugned judgment, Rajasthan High Court held that it did not have any territorial jurisdiction to entertain the application and dismissed the same — Appeal — Held, by making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts — Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, an inference may be drawn that parties intended to exclude all other courts — Appeal dismissed — Appellant shall be at liberty to pursue its remedy under Section 11 of the 1996 Act in the Kolkata High Court — Civil Procedure Code, 1908 — Section 20 — Territorial jurisdiction.

Hakam Singh v. M/s. Gammon (India) Ltd, (1971) 1 SCC 286, A.B.C. Laminart Pvt. Ltd. and Another v. A.P. Agencies, (1989) 2 SCC 163, R.S.D.V. Finance Co. Pvt. Ltd. v. Shree Vallabh Glass Works Ltd., (1993) 2 SCC 130, Shriram City Union Finance Corporation Limited v. Rama Mishra, (2002) 9 SCC 613, Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd., (2004) 4 SCC 671, New Moga Transport Co., through its Proprietor Krishanlal Jhanwar v. United India Insurance Co. Ltd. and others, (2004) 4 SCC 677, Shree Subhlaxmi Fabrics (P) Ltd. v. Chand Mal Baradia and Others, (2005) 10 SCC 704: 2005(1) R.A.J. 535, Balaji Coke Industry Private Limited v. Maa Bhagwati Coke Gujarat Private Limited; (2009) 9 SCC 403: 2009(4) R.A.J. 560 & A.V.M. Sales Corporation v. Anuradha Chemicals Private Limited, (2012) 2 SCC 315, Referred.

Interglobe Aviation Limited v. N. Satchidanand, (2011) 7 SCC 463 & Harshad Chiman Lal Modi v. DLF Universal Ltd. and Another; (2005) 7 SCC 791, Distinguished.

(Para 31, 34, 36, 38 & 62)

HELD: In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of clause 18 of the agreement, the jurisdiction of Chief Justice of the Rajasthan High Court has been excluded. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like `alone’, `only’, `exclusive’ or `exclusive jurisdiction’ have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties-by having clause 18 in the agreement-is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts. Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.

(Para 31)

(As per Madan B. Lokur, J.): I agree with my learned Brother that in the jurisdiction clause of an agreement, the absence of words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” is neither decisive nor does it make any material difference in deciding the jurisdiction of a court. The very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear and it is not advisable to read such a clause in the agreement like a statute. In the present case, only the Courts in Kolkata had jurisdiction to entertain the disputes between the parties.

(Para 62)

Swastik Gases P. Ltd. v. Indian Oil Corporation Ltd.[Bench Strength 3], Civil Appeal No. 5086/2013 (Arising out of SLP (C) No. 5595/2012)(03/07/2013), 2013(4) R.A.J. 30: 2013(8) SCALE 433: 2013(10) JT 35 [R.M. Lodha, J.: Madan B. Lokur, J.: Kurian Joseph, J.]

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