D.K. Infrastructure Pvt. Ltd. vs Jainco Enterprises Pvt. Ltd. and Others

Alok Sharma, J—A challenge has been made to the order dated 24-7-2015 passed by the District Judge Kota whereby an application under Section 21 of the Code of Civil Procedure, 1908 (CPC) filed by the petitioner-non-applicant (hereinafter ''the non-applicant challenging the court''s territorial jurisdiction to hear an application under Section 9 of the Arbitration and Conciliation Act, 1996 (hereinafter ''the 1996 Act'') filed by M/s. Jainco Enterprises Private Limited, the respondent No. 2-applicant (hereinafter ''the applicant'') has been dismissed.

The facts of the case are that the applicant filed an application under Section 9 of the 1996 Act against the non-applicant impleading therein also the ICICI Bank, Branch aerodrome circle, Industrial Estate through its Manager at Kota as the second non-applicant (hereinafter ''the Bank''). It was stated that in terms of agreement dated 29-7-2011 between applicant and the non-applicant any dispute arising from the contracted work was arbitrable. And such a dispute having arisen, the non-applicant be restrained from invoking/encashing the bank guarantee executed by the applicant on 16-8-2012, the issuing ICICI Bank from acting on the Non-applicant''s invocation thereof and no amount whatsoever be paid to the non-applicant thereunder. Vide an ex-parte order dated 29-6-2015, the trial court directed that ICICI Bank not encash the bank guarantee dated 16-8-2012 despite it being invoked by the non-applicant

The non-applicant on receipt of notice filed an application under Section 21 of the CPC before the trial court challenging its territorial jurisdiction, as albeit part of cause of action did indeed arise at Kota under the agreement dated 29-7-2011 for reason of the works under the agreement being executed at Kota, yet clause 24 of the aforesaid agreement had an agreed outer clause which confined the adjudication of all disputes between the parties to the jurisdiction of the courts at Mumbai alone where the agreement was executed. Specific reference was made to clauses 24 and 23, which read as under:-

"24. Jurisdiction:

The contract shall be subject to the laws of Government of India and any disputes under the contract shall be subject to the jurisdiction of the courts in Mumbai.

Arbitration

(i) The dispute arising out of this Agreement either during the execution of the work or on completion which could not be solved by the Engineer shall be referred to the Director of the lead member i.e. D.K. Infrastructure Pvt. Ltd. who is overall in charge for the work for his decision.

(ii) Any unresolved disputes by the above method only shall be referred to the Arbitrator appointed as per the Indian Arbitration & Conciliation Act, 1996 or any statutory modification or re-enactment thereof and the rules made therein and for the time being in force shall apply to the Arbitration proceedings. The Chairman THE PRINCIPAL will nominate a Sole Arbitrator not lower than the rank of Retd. Chief Engineers of State/Central/Public Sector undertakings or any one from the Panel of Arbitrators approved by the Indian Council of Arbitration. The Arbitrator shall be the decision of the Sole Arbitrator shall be final and binding on both the parties.

(iii) The venue of Arbitration shall be at Mumbai."

The application filed by the non-applicant was inevitably opposed by the applicant. It was first stated that the jurisdiction conferred on Mumbai Courts under clause 24 of the agreement dated 29-7-2011 was not exclusive in nature and therefore did not exclude the jurisdiction of the court at Kota where the cause of action admittedly also arose for reason of the works under the agreement being executed there. It was further submitted that albeit the agreement dated 29-7-2011 did indeed record it being executed at Mumbai, yet in fact a concluded contract had come into existence at Kota, as the agreement dated 29-7-2011 after being signed by the non-applicant at Mumbai had been sent to Kota where it was signed on behalf of the applicant. It was submitted that in these circumstances the concluded contract under the agreement dated 29-7-2011 having come into existence at Kota, not Mumbai, hence the Mumbai courts could not have any jurisdiction at all over the dispute between the parties. It was contended that the conferment of jurisdiction on the Mumbai courts was thus of no avail and clause 24 of the agreement dated 29-7-2011 a non-starter. It was further submitted that the application under Section 21 of CPC objecting to the Kota court''s jurisdiction was not maintainable and it was incumbent upon the non-applicant to file reply to the application under Section 9 of the 1996 Act and take its objection with regard to Kota Court''s territorial jurisdiction therein, if so advised. It was also submitted that the question of jurisdiction of courts at Mumbai, on disputes under the agreement dated 29-7-2011 thus being a disputed one, the issue be adjudicated on the basis of evidence thereon in a trial.

The trial court took the view that ex-facie from a bare reading of the agreement dated 29-7-2011 it was executed at Mumbai and there was no material before it to hold that it was executed at Kota by the applicant or conclude that the contract came into existence at Kota. However, the trial court held that clause 24 of the agreement dated 29-7-2011 did not confer exclusive jurisdiction on the courts at Mumbai for the reason that the words "only" "exclusive" "alone" "exclusive jurisdiction" to evidence an ouster of jurisdiction of Civil Courts at Kota. In these circumstances the trial court refused to construe clause 24 of the agreement dated 29-7-2011 as an ouster clause, excluding the jurisdiction of the courts at Kota and conferring it only on the courts at Mumbai. Hence aggrieved, this petition under Article 227 of the Constitution of India by the non-applicant.

Mr. Ashok Mehta, learned Senior counsel appearing with Mr. Devendra Sharma on behalf of the non-applicant submitted that the learned trial court has misdirected itself in law in coming to the conclusion that clause 24 of the agreement dated 29-7-2011 could not be construed as an ouster clause wherefrom jurisdiction of the courts other than the courts at Mumbai stood excluded. He submitted that reliance placed on the judgment in the case of R.S.D.V. Finance Co. Pvt. Ltd. Vs. Shree Valllabh Glass Works Ltd., AIR 1993 SC 2094 : (1993) 1 JT 617 : (1993) 1 SCALE 262 : (1993) 3 SCC 518 Supp : (1993) 2 SCC 130 by the trial court to hold that clause 24 of the agreement dated 29-7-2011 was not an ouster clause was misplaced as the facts of the said case were wholly distinct from the facts of the instant case. Therein the ouster clause was invoked on the basis of a unilateral condition set out on the cash receipt issued by a party to the contract, even though the contract had no such condition or ouster clause. It was submitted that such facts do not obtain in the present case where the ouster clause i.e. clause 24 was a part of the agreement dated 29-7-2011 signed by both the parties and provided that the courts at Mumbai would have jurisdiction over dispute arising out of the contract dated 29-7-2011. The exclusion, of the jurisdiction of courts other than at Mumbai by necessary implication thus inevitably followed. That the agreement dated 29-7-2011 so intended is evident from clause 24 of the agreement dated 29-7-2011. That was a term/condition of the agreement on which the parties were ad idem. There can be no going back on the said covenant. It was submitted that if it were held that the courts at Kota would also have jurisdiction on disputes between the contracting parties, clause 24 of the agreement dated 29-7-2011 would be rendered otiose and redundant-and the agreement dated 29-7-2011 in effect re-written. Reliance has been placed on Swastik Gases P. Ltd. Vs. Indian Oil Corporation Ltd., (2014) 2 AD 325 : (2013) 3 ARBLR 161 : (2013) 115 CLA 174 : (2013) 5 CTC 527 : (2013) 10 JT 35 : (2013) 171 PLR 789 : (2014) 1 RCR(Civil) 52 : (2013) 8 SCALE 433 : (2013) 9 SCC 32 to submit that exclusion of jurisdiction of a court/s by parties under an agreement duly signed need not necessarily be express by use of the words such as "alone", "only", "exclusive" or "exclusive jurisdiction", but such exclusion/ouster of jurisdiction could also be construed by way of necessary implication conveying the unequal intent to do so. It was submitted that while coming to the said conclusion and delineating the statement of law the Hon''ble Supreme Court has also considered its judgment in the case of RSDV Finance Co. Ltd. (supra) and distinguished it on its own special facts. And thereafter it has been held that in the jurisdiction clause of an agreement, the mere absence of words like "alone", "only", "exclusive" or "exclusive jurisdiction" was neither decisive nor did it make any material difference in deciding the jurisdiction of a court. The Hon''ble Apex Court held that the very reference to a specific place in the jurisdiction clause in an agreement made the intention of the parties to an agreement quite clear i.e. that the court referred to was to have exclusive jurisdiction to the exclusion of all others. Learned Senior counsel referring to clause 24 of agreement dated 29-7-2011 emphatically submitted that as per the said clause appropriately construed the courts at Mumbai and none other had jurisdiction-the bald averments by the respondent-applicant, contrary to the contract recording that it was signed at Mumbai in its application under Section 9 of the 1996 Act notwithstanding. It has been submitted that it is a fundamental rule of law as reflected in Sections 91 and 92 of the Evidence Act, 1872 that when the terms of a contract have been reduced to the form of a document, no evidence of any oral agreement shall be admitted for the purpose of contradicting, varying, adding to or subtracting from its terms. For this reason, submitted counsel, the averments in the application under Section 9 of the 1996 Act that the agreement dated 29-7-2011 was signed at Kota, seeking to negate the recitation to the contrary in the said agreement are of a non-sequitur. And the trial court itself has held that the agreement was signed at Mumbai. It has been prayed that hence the impugned order dated 24-7-2015 be set aside and the application under Section 9 of the 1996 Act before the court of District Judge at Kota be dismissed.

Mr. N.K. Maloo, learned Senior Counsel appearing with Mr. Leeladhar on behalf of respondent-applicant, in view of the judgment of the Hon''ble Supreme Court in the case of Swastik Gases (P.) Ltd. (supra) has fairly accepted that in the obtaining legal position it is not necessary that the words "alone", "only", "exclusive" or "exclusive jurisdiction" should be used to exclude the jurisdiction of courts which otherwise would have jurisdiction under Section 20 CPC. He fairly concedes that exclusion of jurisdiction of courts, which otherwise would have jurisdiction for reason of part cause of action having arisen therein, can also be excluded by expressly conferring it on one such court.

Mr. Maloo has however strenuously submitted that averments in application under Section 9 of the 1996 Act having been made that agreement was finally executed by the applicant at Kota after it had been executed at Mumbai by the non-applicant would entail clause 24 of the agreement dated 29-7-2011 of no effect as no cause of action at all arose at Mumbai. The Mumbai course circumstances could not be conferred jurisdiction even by in the agreement dated 29-7-2011. It has been submitted that in any event, the case set up by the applicant in its application under Section 9 of the 1996 Act on the issue of jurisdiction ought to have been adjudicated by the trial court on taking of evidence. He submitted that the trial court in the circumstances erred in holding that the agreement dated 29-7-2011 was executed at Mumbai. Albeit no challenge to the said finding has been laid by the applicant as the non-applicant''s application under Section 21 of CPC was dismissed, now that the matter is before this court on a challenge to the order dated 24-7-2015 passed by the trial court, the applicant has right to challenge the said finding a la the provision of Order 41 Rule 22 CPC.

Heard counsel for the parties and perused the impugned order passed by the trial court.

Section 91 of the 1872 Act inter alia provides that when terms of a contract have been reduced in the form of a document, no evidence shall be given in proof of the terms of such contract except by way of the document itself, or by way of secondary evidence of its contents in cases in which secondary evidence is admissible under the Evidence Act. Section 92 of the 1872 Act provides that when the terms of any such contract have been reduced to the form of a document in terms of Section 91 of the 1872 Act no evidence of any oral agreement or statement shall be admitted as between the parties to any such instrument or their representatives in interest for the purpose of contradicting, varying, adding to, or subtracting from its terms.

The agreement dated 29-7-2011 itself states to have been entered into between the parties at Mumbai. I am therefore of the considered view that in terms of Sections 91 and 92 of the 1872 Act no oral evidence with regard to the place of the execution of the agreement dated 29-7-2011 is/was permissible. The trial court in its impugned order dated 24-7-2015 has held so. In the facts of the case, I find the bald contentions of Mr. Maloo that the applicant signed the agreement dated 29-07-2011 at Kota wholly untenable. Even otherwise it has been held by the Hon''ble Supreme Court that pleadings are only allegations and averments of facts and without material in support do not even make out a prima facie case. No evidence on this count in a trial is/was admissible. Such a situation obtains in this case. In the case of Tulsi and Others Vs. Chandrika Prasad and Others, AIR 2006 SC 3359 : (2006) 4 CTC 766 : (2006) 8 JT 158 : (2006) 8 SCALE 515 : (2006) 8 SCC 322 : (2006) 6 SCR 255 Supp : (2006) AIRSCW 4905 : (2006) 6 Supreme 582 the Hon''ble Supreme Court has held that Section 91 of the Evidence Act lays down the best evidence rule and prohibits proving the contents of a writing otherwise than by the writing itself. However parties can adduce evidence in case of ambiguity in the agreement. Similarly in the case of Tamil Nadu Electricity Board and another Vs. N. Raju Reddiar and another, (1996) 4 AD 393 : AIR 1996 SC 2025 : (1996) 2 ARBLR 210 : (1996) 2 BC 1 : (1996) 2 CTC 193 : (1996) 6 JT 14 : (1996) 4 SCALE 180 : (1996) 4 SCC 551 : (1996) 1 SCR 739 Supp the Hon''ble Apex Court has held that proving the terms of a contract in writing with reference to oral or parol evidence is barred unless the contract does not contain the whole agreement or is ambiguous.

The agreement dated 29-7-2011 does not suffer from any such ambiguity and is unequivocal on the issue of jurisdiction of the Mumbai courts in respect of any dispute arising out of the agreement. In the case of Roop Kumar Vs. Mohan Thedani, AIR 2003 SC 2418 : (2003) 96 CLT 409 : (2003) 3 SCALE 611 : (2003) 6 SCC 595 : (2003) 3 SCR 292 : (2003) AIRSCW 2425 : (2003) 3 Supreme 296 the Hon''ble Supreme Court has held that "it is likewise a general and most inflexible rule that wherever written instruments are appointed, either by the requirement of law, or by the contract of the parties, to be the repositories and memorials of truth, any other evidence is excluded from being used either as a substitute for such instruments, or to contradict or alter them. This is a matter both of principle and policy. It is of principle because such instruments are in their own nature and origin, entitled to a much higher degree of credit than parol evidence. It is of policy because it would be attended with great mischief if those instruments, upon which men''s rights depended, were liable to be impeached by loose collateral evidence".

Section 9 of the 1996 Act provides that a party may before or during arbitral proceedings or at any time after the making of the arbitral award but before it is enforced in accordance with Section 36 of the 1996 Act may inter alia apply to a court for an interim protection/direction inter alia such as an injunction. Section 2(e) of the 1996 Act defines the "court" to mean the principal civil court of original jurisdiction in a district and include the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the question forming the subject matter of the arbitration if the same had been the subject matter of a suit. In the instant case the agreement dated 29-7-2011 having been signed in Mumbai and works thereunder executed at Kota in the ordinary course both courts at Mumbai and Kota would have had jurisdiction in terms of Section 20 of the 1996 Act. However, clause 24 of the agreement dated 29-7-2011 operating as an ouster clause excluded the jurisdiction of courts other than that at Mumbai. The courts at Kota thus had no jurisdiction to entertain the application under Section 9 of the 1996 Act filed by the applicant qua the disputes between the parties arising out of the agreement dated 29-7-2011.

Consequently in view of the judgment of the Apex Court in the case of Swastik Gases Private Limited (supra) and in view of clause 24 of the agreement dated 29-7-2011 being a perfectly valid ouster clause, the courts at Mumbai alone have jurisdiction to try application under Section 9 of the 1996 Act in so far it seeks inter alia relief qua an arbitrable dispute between the parties to see said agreement. The courts at Kota had no jurisdiction on the application filed by the respondent-applicant. Consequently, the impugned order 24-7-2015 passed by the trial court is liable to be quashed and set aside. It is so set aside. The application under Section 9 of the 1996 Act filed by the applicant is accordingly dismissed as non-maintainable. The application be returned to the applicant. Consequences to follow.

The petition stands allowed accordingly.