Jeevan Ram Ram Lakhan vs State of U.P.

J.C. Mishra, J.—This appeal has been filed by the defendant against the .judgment and decree passed by Hi Additional District Judge, Bahraich allowing the appeal preferred by the plaintiff against the judgment and decree passed by the Civil Judge, Bahraich on 21.9.78 decreeing the suit for recovery of money.

2, The respondent, State of U.P. through Chief Engineer, Public Works Department, Lucknow instituted suit in the court of Civil Judge, Bahraich for realisation of Rs. 11,332,71 Ps. together with interest pendente lite and future from the defendant M/s, Jeevan Ram Ram Lakhan (hereinafter called the defendant firm'' for short). The plaintiff''s case is that the Public Works Department (hereinafter referred to as ''the department'') needed iron ingots and iron rods for constructing building at Bahraich and Barabanki. The defendant firm submitted quotation, which was accepted by the officers of the department at Bahraich and ordered the defendant firm to supply the materials noted therein. The cost of the material ordered was 2,40,844/. The plaintiff paid an advance of Rs. 2,16,760/ through cheque on 26.1.74. The defendant firm supplied 81.945 tonnes materials detailed at serial Nos. 2 and 5 costing Rs. 2,00929.81. The plaintiff instead of enforcing the contract prayed for return of the balance money together with interest.

The defendant firm contested the suit. It accepted the payment of advance through cheque dated 26.1.74. it, however, disputed the plaintiff''s contention that it supplied only 81,945 tonnes materials and contended that it had supplied 86.775 tonnes material costing Rs. 2,18,062.24 inclusive of freight. Thus the supply was more than that could be supplied against the amount advanced by the plaintiff. The plaintiff firm was liable to pay the additional sum of Rs. 1.302.24 together with interest. The defendant also pleaded that as no material was supplied at Bahraich or Barabanki, no cause of action arose at Bahraich and the suit was beyond the territorial jurisdiction of the court. Furthermore, there was an agreement between the parties that all the disputes would be subject to Kanpur jurisdiction only. Therefore, on this ground as well the suit was not cognizable at Bahraich due to lack of territorial jurisdiction.

The parties adduced oral and documentary evidence in support of their case. The learned Civil Judge held that the suit was cognizable at Bahraich. He, therefore, decided the issue against the defendant. On merits the learned Civil Judge accepted the defendants'' case that the material was supplied at Kanpur and as the agent of the plaintiff had taken supply of 87.775 M.T. of iron and steel, the defendant was not liable to pay any amount to the plaintiff. He, therefore, dismissed the suit.

The plaintiff felt aggrieved preferred appeal, which as stated above, was allowed and this suit was decreed.

I have heard Sri R.N. Tewari, learned counsel for the appellant and learned Standing Counsel.

The learned counsel for the appellant contended that the Civil Judge, Bahraich had no jurisdiction to entertain the suit and finding to the contrary is against law. He also challenged the finding of the appellate court that no delivery of the goods supplied, was taken at Kanpur and the goods were transported to Bahraich or Barabanki by the agent of the defendant at its risk and it is. therefore, responsible for the return of the money which was received in excess.Coming to the first question regarding lack of territorial jurisdiction, the learned counsel referred to the quotation, which was accepted by the Executive Engineer. On the top of the quotation it was printed "All disputes subject to Kanpur jurisdiction exclusively". The learned counsel for the appellant vehemently argued that as it was printed in the quotation that only the courts at Kanpur would have jurisdiction to adjudicate upon any controversy, Civil Judge, Bahraich had no jurisdiction to entertain the suit. He further contended that if cause of action arises within the jurisdiction of two or more courts it is permissible to the parties to choose jurisdiction of a particular court and such an agreement is binding between the parties. In support of his contention he referred to some pronouncements.

In A.B.C. Laminart Pvt. Ltd, and another v. A.P. Agencies, Salem reported in AIR 1989 Supreme Court 1239, the Supreme Court held that "Where there may be two or more competent Courts, which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Sec. 23 and 28 of the Contract Act.

The Supreme Court further observed that under Sec. 23 of the Contract Act the consideration or object of an agreement is lawful, unless it is opposed to public policy. Every agreement of which the object or consideration is unlawful is void. Hence there can be no doubt that an agreement to oust absolutely the jurisdiction of the Court will be unlawful and void being against the public policy. However, such will be the result only if it can be shown that the jurisdiction to which the parties have agreed to submit had nothing to do with the contract. If on the other hand it is found that the jurisdiction agreed would also be a proper jurisdiction in the matter of the contract it could not be said that it ousted the jurisdiction of the Court. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction, which would otherwise also be a proper jurisdiction under the law, their agreement to the extent cannot be said to be void as being against public policy.

The Supreme Court further proceeded to observe that "when the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause property. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting factor for jurisdiction to the Courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other Courts. Where an ouster clause occurs it is pertinent to see whether there is ouster of jurisdiction of other Courts. 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'', ''exclusively'' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim ''expressio uniusest exlusio aiterius'' ''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 other from its operation may in such cases be inferred. It has, therefore, to be properly construed.

"Where the clause under which it was claimed that there was ouster of jurisdiction of Courts only stated that any dispute arising out of sale would be subject to jurisdiction of Court within whose jurisdiction order was placed but there were no exclusive words like ''exclusive'', ''alone'', ''only'' and the like, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded."

The aforesaid decision was considered by the Supreme Court in M/s. Angile Insulations v. M/s. Davy Ashmore India Ltd, and another re; ported in AIR 1995 Supreme Court 1766. Referring to the observations the Supreme Court held that the parties are bound by the agreement to vest jurisdiction in one of the Courts if two or more competent Courts are empowered to entertain the suit.

The learned counsel also relied on a decision of this Court in M/s. Kanpur Sugar Supply Co. v. Harsukh Lal reported in AIR 1971 Allahabad 502. In that case there was contract between the parties and in the hundis, and also the bills and letters it was written at the top "Subject to Rajkot jurisdiction only". The High Court held that by accepting the hundi or the bill, the receiver thereof had agreed to the condition that only Rajkot Courts shall have exclusive jurisdiction over the dispute. Since in spite of the clear provision as to the exclusive jurisdiction of Rajkot courts, the party places a fresh order and accepts the condition no other inference can be drawn except that both the parties had agreed that Rajkot courts alone shall have the exclusive jurisdiction. Therefore, the High Court held that the remedy can be sought before the Rajkot courts only. The Courts at Kanpur could not take cognizance of the suit. The Additional District Judge, Kanpur was, therefore, directed to order the return of the plaint.

In view of the aforesaid provision it is now settled that there may be two or more competent courts which can entertain a suit consequent upon a part of cause of action having arisen therewith, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise between themselves the agreement would be valid. The Supreme Court, however, observed that such a contract must be clear, unambiguous, explicit and not vague.

We have to examine whether by accepting tender the Executive Engineer had accepted the jurisdiction of Kanpur courts exclusively. In other words whether the contract in this regard was clear, unambiguous and explicit.

It is no doubt it was printed at the top of the quotation that all the disputes are ''subject to the Kanpur jurisdiction exclusively'' but it may be mentioned that this exclusion clause is not mentioned in the terms and conditions which are detailed in the tender. A perusal of the quotation would show that the terms and conditions are printed. There is also an arbitration clause, which is contained in ciause5. It is mentioned that in all cases of disputes the matter will be referred to the sole arbitration of Shri Shiv Kumar Gupta S/o Shri Ram Lakhan Gupta. If the defendant intended to exclude the jurisdiction of courts other than Kanpur courts this condition must have been incorporated along with the arbitration clause contained in the terms and conditions. Clause8 also provides special condition if any. The exclusion clause could also be incorporated in this condition. In view of the fact that the terms and conditions are specifically stated in the quotation, which after acceptance became an agreement enforceable as contract the defendant cannot be permitted to rely on the words printed at the top of the quotation. The consistent view of the courts is that the exclusion clause must be unambiguous and explicit. On facts the decision of Allahabad High Court in M/s. Kanpur Sugar Supply Co. (supra) is clearly distinguishable. In that case the exclusion clause was not mentioned in the hundis but also on all the bills and letters sent to the defendant. In view of this fact this Court held that by accepting hundi or the bills, the receiver thereof had agreed to the condition that only the Rajkot courts had exclusive jurisdiction over the dispute. In that case, it appears, no terms and conditions were incorporated in the hundi. In the case before us since the terms and conditions have been incorporated in the quotation which was accepted by the defendant, the defendant cannot be permitted to rely on the exclusion clause printed at the top of the quotation but not incorporated in the terms and conditions. As the defendant could not prove the exclusion of the jurisdiction of the Bahraich court, as held by the learned Civil Judge, the arguments raised by the learned counsel for the appellants cannot be accepted. I find that the courts below committed no error in holding that the suit was executable by the Civil Court.

The learned counsel for the appellant contended that it was agreed that the iron rod and iron ingots would be delivered at Kanpur and according to the terms of the agreement the appellant delivered the goods, which were weighed in presence of the worksagent of the respondent and thereafter the goods were carried to Bahraich or Barabanki through carriers. He contended that the appellant was not responsible for shortage if any after delivery of the articles at Kanpur. The transit risk was of the plaintiffrespondent. The appellate court committed error in taking contrary view without considering the reasoning given by the trial court in support of the finding that the transit risk was of the respondent and, therefore, the appellant was not responsible for the shortage.

It is not disputed between the parties that on the request of the plaintiffrespondent the defendantappellant had given quotation stating the terms and conditions. This quotation was accepted by the Executive Engineer. As the terms and conditions were reduced in writing and this document was filled by the plaintiff and was admitted by the defendant, the parties cannot be permitted to adduce oral evidence stating to the contrary. The contention of the plaintiff that only rate was accepted by the Executive Engineer and not the terms and conditions contained in the quotation cannot be accepted. If the plaintiff was not agreeable to the terms and conditions contained in the quotation he should not have accepted the quotation without modifying the terms and conditions contained therein. While accepting the quotation the Executive Engineer made an endorsement "Accepted as recommended by the A.E.". No material was brought on record to indicate that the Assistant Engineer had recommended that the terms and conditions be not accepted or some of the terms and conditions should be modified, in absence of any such evidence it must be accepted that the plaintiff while accepting the rate had also accepted the terms and conditions contained in the quotation.

Condition No. 4 deals with payment. Clause (b) of the aforesaid condition provides 100% payment on the proforma bills before delivery at Kanpur. In view of this condition there is no doubt that the goods were to be delivered at Kanpur and prior to the delivery 100% payment was to be made by the plaintiffrespondent.

From the plaint allegations it appears that the plaintiff was required to build construction at Barabanki and Bahraich, therefore, the goods were required to be transported from Kanpur to Barabanki or Bahraich. Therefore, it was further agreed between the parties that plaintiff respondent will arrange octroi passes and pay the transportation charges at the rate of Rs. 45/ per metric ton. It was further agreed that the department will arrange unloading at the site. This term was also incorporated in the quotation though it was not printed on it. The incorporation of this condition by handwritten endorsement further confirms the finding that the plaintiff respondent had agreed to the terms and conditions contained in the quotation and their agreement which was not printed was also incorporated.

The view taken by the appellate court was that since the transportation charges from Kanpur to Barabanki were to be paid by the plaintiff to the defendant it indicates that the defendant had agreed to transport the goods from Kanpur to Barabanki. The learned counsel for the appellant has challenged this finding on the ground that the defendant had not agreed to transport the goods from Kanpur to Barabanki but he had agreed to pay the transport charges to the carrier, in view of difficulties faced by the two in making advance payment. The defendant has stated in his evidence that the carriers were not agreeable to transport the goods without prior payment and as they were suspicious about the payment at the site the parties were left with no option but to require the defendant to make payment which was to be subsequently paid by the plaintiff or adjusted in the advance payment made by them. I find force in this contention. The explanation given by the defendant for paying the transport charges in advance to the carriers appears to be reasonable and proper. Furthermore, if the transit risk was with the defendant it must have been incorporated in the terms and conditions. Therefore, the inevitable inference that can be drawn is that the delivery was to be made at Kanpur and the defendant was only required to facilitate the transportation of goods by making payment to the carriers, which was to be charged from the plaintiff. The rest of the formalities were to be fulfilled by the plaintiff by arranging unloading of the goods at the site as also arrangement of octroi passes.

Both the courts found that according to the terms and conditions 100% advance was to be paid on proforma bills before delivery. The parties were at variance on the question whether this term was essence of the contract or not. Since the plaintiff did not file suit for award of damages, the question whether 100% payment was essence of the contract or not has lost its significance. There is no controversy between the parties regarding the amount paid by the plaintiff to the defendant. There is also no controversy regarding the short delivery of the goods at the site. The only question that was to be determined is whether the delivery was taken by the plaintiff or his agent at Kanpur and whether the defendant was required to bear the transit risk even after delivery. The trial court held that the transit risk was with the plaintiff as the goods had been delivered to Girdhari Lal, work agent of the plaintiff at Kanpur. The appellate court reversed the finding and held that the transit risk was the sole responsibility of the defendant. The learned counsel for the appellant has challenged this finding.

It appeared to the appellate court that Girdhari Lal work agent of the plaintiff went to Kanpur and did sign the note demonstrating that he saw the goods having been sent from there and it is clear by the document filed that thereafter the goods were sent to Barabanki and Bahraich by the respondent. It is surprising that if the delivery was not to be made at Kanpur why at all the plaintiff directed its officers and work agent Girdhari Lal to go to Kanpur. They could have waited at the site and would have taken delivery of the goods after weighment either at Bahraich or at Barabanki. The appellate court accepted the defendants'' case that the work agent of the appellant was at Kanpur and he had signed certain papers, namely, the memos and challans. He rejected this circumstance with the observation that the signature of Girdhari Lal was taken by mere formality. This inference does not appear to be correct. It is an admitted case of the parties that the goods were weighed in the presence of Girdhari Lal and Assistant/Junior Engineer. The purpose of sending officers of the department and work agent to Kanpur was necessarily for the purpose that the delivery was taken by them after weighment, �

The learned Additional District Judge also drew inference against the defendant/appellant on the ground that Girdhari Lal was not examined. This observation confirms the admitted fact that Girdhari Lal was work agent of the plaintiff. The Executive Engineer had directed him to go to Kanpur to take delivery of the goods. He was the best witness for the plaintiff who would have proved that his presence at Kanpur was mere formality and he had not taken delivery of the goods. Therefore, for nonexamination of this witness no adverse inference can be drawn against the defendant. The case of the plaintiff is that the conduct of Girdhari Lal became suspicious, therefore, he was removed from service. This contention of the plaintiff is not supported by any evidence on record. On the contrary it appears that he was retrenched as some posts were reduced in number. Anyway if the plaintiff suspected that Girdhari Lal had colluded with the defendant it must have impleaded him as defendant and should have sought relief against him at the earliest in the alternative. The plaintiff on the contrary kept silent. It neither impleaded him as defendant nor examined him in the evidence.

The appellate court also observed that the defendants charged and billed the transportation charges in addition to price of goods supplied. This was recorded as conclusive proof that delivery was not given by the defendant to Girdhari Lal at Kanpur but the defendant undertook to carry the goods to the destination. As discussed above this inference could not be drawn as the defendant was required only to arrange to make advance payment to the carriers, which was to be subsequently adjusted in the payment already made by the plaintiff.

The defendant at no stage had undertaken to supply the goods at the site. He had only agreed to make payment to the transporter to save the plaintiff from difficulties in making advance payment. The mere payment of advance to the transporter would not indicate that the carrier was agent of the defendant or the transit risk was with him.

From the evidence on record it apears that the goods when weighed at Kanpur were according to the bills. It is also proved that on weighment at the site the goods were only 81.945 M.T. If the defendant''s case is accepted that the goods were to be delivered at Kanpur and he was not responsible for transit risk the plaintiff would not be entitled to relief claimed.

The trial court discussed the evidence in proper perspective and recorded a categorical finding that the said goods were delivered at Kanpur according to the terms and conditions and the defendant was not responsible for transit risk. If there was any shortage in the quantity of the goods the plaintiff should have claimed damages either from the work agent or from the transporter. He referred to a letter (Ext.2) issued by Sri J.P. Agarwal which shows that all the terms and conditions including rates were accepted by the Executive Engineer. In view of this letter he disbelieved the evidence of Sri J.P. Agarwal. He held that in view of the terms and conditions contained in Ext. 1 the delivery of the goods was to be made at Kanpur. He also referred to the challans issued by the defendant to Girdhari Lal, work agent of the plaintiff showing that he received the iron bars and ingots on 28.1.74 and 19.1.74. Ext. A31 also contained signature of work agent Girdhari Lal appended on 7.2.74, which indicates that the delivery was to be made at Kanpur. He further observed that if the delivery was not to be made at Kanpur the consignor would not be the plaintiff himself but from Ext. A23 to A24, A26, A28, A29 and A30 it is evident that plaintiff himself was the consignor. He also referred to the evidence collected that after delivery at Kanpur neither the defendant nor his agent went to the sites to ensure proper transportation which also indicates that the responsibility of the defendant ceased after delivery at Kanpur. He also referred to the statement of Sri N.D. Jain (PW3), who admitted that receipts Ext.7, Ext.13, Ext.15, Ext.17 to Ext.21 were issued by Popular Dharm Kanta. He also referred to a letter dated 3.3.74 sent by Sri N.D. Jain to the defendant through which he had authorised Girdhari Lal, work agent for taking delivery of two trucks containing 6 mm iron bars. In view of the aforesaid evidence the trial court concluded that the plaintiff had taken delivery at Kanpur and no objection was raised by the Assistant Engineer or Junior Engineer regarding shortage. He held that had there been short supply of goods at Kanpur the Assistant Engineer or the Junior Engineer must have raised objection.

The finding recorded by the trial court is based on reasons derived from the evidence on record and its correct interpretation. The appellate court committed error in reversing the finding without considering all the reasons given by the learned Civil Judge. His finding of fact is the result of superficial and wrong approach. The appellate court was bound to examine the entire relevant evidence on record and then to draw inference on its basis. He committed error in procedure by reversing the finding without considering the entire evidence and all the reasons given by the trial court. The trial court''s conclusions were based on material on record and substantiated with reasons.

I find that the appellate court committed error in procedure and consequent error in reversing the finding based on material on record and supported by evidence.

The appeal is allowed with costs throughout. The judgment and decree passed by the appellate court is set aside and the decree of trial court is restored.

(Appeal alto wed)