Ajamera Brothers vs Suraj Mal Naresh Kumar Jain

Narasimham, C.J.—The question for consideration in this revision petition is whether where a suit is maintainable at two places, namely, Patna and Bombay, the parties can validly enter into an agreement to the effect that the suit would be filed only in the courts at Bombay. The learned Additional Munsif, Patna, has held that such a contract would be hit by Section 23 of the Contract Act as being opposed to public policy, though he recognised that it may not come within the prohibition of Section 28 of the Contract Act.

The law on the subject has been well settled by repeated decisions of the High Courts and apparently the learned additional Munsif has not fully studied the necessary case law on the subject. I need only refer to Hoosen Kasam Dada (India) Ltd. Vs. Motilal Padampat Sugar Mills Co. Ltd., where on entire discussion of the various decisions of the Madras, Bombay, Calcutta and Allahabad High Courts, the learned Judges held that where there are two competent courts which could deal with the subject matter of litigation, it is open to the parties to a contract to agree that dispute in respect thereof should be adjudicated upon by one of the two competent courts.

It is true that in that judgment their Lordships have discussed mainly the question as to whether such a contract would offend Section 28 of the Contract Act, but in paragraph 15 they have also considered the question as to whether such a contract would offend Section 23 of the Contract Act as being opposed to public policy, though they have not expressly referred to that section. But they have relied on a single Judge decision of the Madras High Court in Kondepu Raghavayya Vs. Elukooru Vasudevayya Chetty, where Section 23 of the Contract Act was also expressly referred to. This view of the Madras High Court has also been followed in a Divisional Bench Judgment of the Calcutta High Court in Continental Drug Co. Ltd., Bombay Vs. Chemoids and Industries Ltd., Calcutta, and also in Libra Mining Works v. Beldota Brothers AIR 1962 A P 452.

The only judgment in favour of the view taken by the learned Munsif is a single Judge Judgment of the Madhya Bharat High Court in Dwarka Rubber Works v. Chhotelal AIR 1956 MP 120 which apparently influenced the learned lower court. In that Judgment, the preponderance of judicial opinion in favour of the opposite view has been noticed, but the learned single Judge thought that in those decisions Section 23 of the Contract Act was not considered. For instance, he has referred to Hoosen Kasam Dada (India) Ltd. Vs. Motilal Padampat Sugar Mills Co. Ltd., , but he has overlooked paragraph 15 of that judgment where the question of such a contract offending public policy was duly considered and negatived. The learned Judge is, therefore, not quite right in saying that in the previous decisions Section 23 of the Contract Act in its entirety was not considered. No other decision in favour of the view taken by the learned Judge on any subsequent occasion has been cited before us. He has also relied on two English decisions, but they deal with case of complete ouster of the jurisdiction of the courts by agreement between the parties which was rightly held to be unenforceable.

In this state of the case law, with great respect we are not inclined to follow the view taken in AIR 1956 M B 120 and would prefer the Division Bench judgments referred to above which again are based on several previous decisions of the various High Courts. Following the same, therefore, we allow this petition, set aside the order of the learned Additional Munsif, Patna, and held that the courts in Patna have no jurisdiction to try this litigation in view of the agreement between the parties.

There will be no order for costs.

U.N. Sinha, J.

I agree.