Bajaj Electricals Limited vs Rana Sugars Limited

V.K. Jain, J.

IA No. 13207/2010 (under Order 37 rule 3(5) CPC by defendant for leave to defend)

This is a suit filed under Order XXXVII CPC for recovery of Rs. 60,24,345/-. The case of the plaintiff is that the defendant placed an order with it for supply of certain equipment and appliances and paid 10% advance to it at New Delhi. The plaintiff claimed to have supplied material worth Rs. 45,29,582.30 to the defendant between 8.2.2007 to 30.4.2007 vide 17 invoices mentioned in para 5 of the plaint. The defendant issued C-Form for the material purchased by it, but has not paid the amount of the invoices. The plaintiff has accordingly claimed the principal sum of Rs. 45,29,582.30 along with interest on that amount at the rate of 18% per annum, coming to Rs. 14,94,762.70, thereby making a total sum of Rs. 60,24,345/-. In this application for leave to contest, the defendant has taken a preliminary objection that this Court lacks territorial jurisdiction to try the present suit since Clause 13 of the Purchase Order clearly stipulated that any dispute between the parties would be subject to jurisdiction of Chandigarh Court alone. On merits, it has been alleged that the Purchase Order clearly stipulated that the GA and Foundation Drawings would be sent within three days from the issuance of the Purchase Order, but the plaintiff defaulted in performance of the aforesaid condition. It is further alleged that the equipment delivered by the plaintiff were not up to the quality and the goods were delivered much after the period of two weeks prescribed in the Purchase Order.

In Mechelec Engineers and Manufacturers Vs. Basic Equipment Corporation, , the Supreme Court set out the following principles:-

(a) If the Defendant satisfies the Court that he has a good defence to the claim on its merits the plaintiff is not entitled to leave to sign judgment and the defendant is entitled to unconditional leave to defend.

(b) If the defendant raises a triable issue indicating that he has a fair or bona fide or reasonable defence although not a positively good defence the plaintiff is not entitled to sign judgment and the Defendant is entitled to unconditional leave to defend.

(c) If the defendant discloses such facts as may be deemed sufficient to entitle him to defend, that is to say, although the affidavit does not positively and immediately make it clear that he has a defence, yet, shows such a state of facts as leads to the inference that at the trial of the action he may be able to establish a defence to the plaintiff''s claim the Plaintiff is not entitled to judgment and the Defendant is entitled to leave to defend but in such a case the Court may in its discretion impose conditions as to the time or mode of trial but not as to payment into Court or furnishing security.

(d) If the defendant has no defence or the defence set up is illusory or sham or practically moonshine then ordinarily the Plaintiff is entitled to leave to sign judgment and the Defendant is not entitled to leave to defend

(e) If the defendant has no defence or the defence is illusory or sham or practically moonshine then although ordinarily the Plaintiff is entitled to leave to sign judgment, the Court may protect the Plaintiff by only allowing the defence to proceed if the amount claimed is paid into Court or otherwise secured and give leave to the Defendant on such condition, and thereby show mercy to the Defendant by enabling him to try to prove a defence.

The plaintiff itself has placed on record five Purchase Orders issued to it by the defendant, three of 8.1.2007, one vide 21.1.2007 and one of 23.3.2007. Vide Clause 13 of the Purchase Orders dated 8.1.2007, it was stipulated by the defendant that they would try to settle all possible disputes in a friendly way, but the disputes which cannot be settled amicably, shall be subject to Chandigarh Jurisdiction only. The plaintiff having supplied goods to the defendant pursuant to the aforesaid purchase order, the term with respect to the jurisdiction of the Court by which the disputes between the parties could be decided is deemed to have been accepted by it. Therefore, any unresolved disputes between the parties were made subject to jurisdiction of the Chandigarh Court alone.

It is contended by the learned counsel for the plaintiff that since no cause of action arose in the jurisdiction of the Court at Chandigarh, the parties by agreement could not have conferred territorial jurisdiction on the said Court. There is no quarrel with the preposition of law that the parties cannot, by agreement, confer jurisdiction upon the Court which otherwise lacks jurisdiction to try the suit. However, in the present case, it would be difficult to say that the Court at Chandigarh had no jurisdiction to try the present suit. Admittedly, the registered office of the defendant company is at Chandigarh. The address of Chandigarh has been given in the plaint itself. Section 20 of the Code of Civil Procedure, to the extent it is relevant, provides that Subject to the limitations contained in Section 15 to 19, every suit shall be instituted in Court within the local limits of whose jurisdiction the defendant, at the time of commencement of the suit actually and voluntarily carries on business. The Explanation to Section 20 provides that 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. Since the defendant company is having its principal office at Chandigarh, it would be difficult to dispute that it was carrying on business at Chandigarh at the time this suit was instituted. Therefore, prima facie, Chandigarh Court also had jurisdiction to try the present suit and hence the parties by agreement could have restricted the territorial jurisdiction, to the Court at Chandigarh alone. Since prima facie, it appears to be that Delhi Court has no territorial jurisdiction to try the present suit that by itself would be a sufficient ground to grant leave to contest the suit to the defendant. Accordingly, the defendant is granted unconditional leave to defend the suit.

Written statement be filed within four weeks. Replication thereto can be filed two weeks thereafter.

The application stands disposed of.

IA No. 8828/2009 (under Order XXXVIII Rule 5 CPC)

The learned counsel for the defendant seeks a short adjournment to take instructions on this application from the defendant company with respect to transfer or sale of the Chandigarh property, in terms of order dated 24.11.2009, during pendency of the suit.

Hence, renotify on 01.02.2013.

CS(OS) 1259/2009

Written statement be filed four weeks. Replication thereto can be filed two weeks thereafter.

List before the Joint Registrar on 8.1.2013 for admission/denial of documents.

The matter be listed before the Court on 1.2.2013 for framing of issues.