Whale Stationery Products Ltd. vs Kores C.E. Gmbh and Another

S. Muralidhar, J.

IA No. 10591 of 2013 (Order VII Rule 11 CPC)

This is an application under Order VII Rule 11 of the Code of Civil Procedure, 1908 (''CPC'') by Defendant No. 1 seeing rejection of the plaint

on the ground of lack of territorial jurisdiction of this Court to entertain the suit. The background to this application is that the Plaintiff, a part of

Whale group of companies having its office in New Delhi, is engaged in the manufacture of stationery products. A memo of understanding

(''MoU'') was entered into between the Plaintiff and Defendant No. 1 Kores Austria, in October 2006 which was signed by the Plaintiff in India

and Defendant No. 1 at Austria, under which the Plaintiff imported various stationery products from Defendant No. 1 which was to be marketed

under the trademark ''RADEX'' (a brand owned by Kores C.E.). The Plaintiff states that it undertook various sales promotion and marketing

activities to promote ''RADEX'' brand of Defendant No. 1 in India. According to the Plaintiff, there was concern about the quality of the product

imported by the Plaintiff from Defendant No. 1, as a result of which the Plaintiff was put to loss. In the circumstances, a fresh MoU was executed

between the parties in September 2007, which was to be valid till September 2008.

The Plaintiff states that, soon after the second MoU, it was surprised to learn of Suit No. 3028 of 2007 filed by Defendant No. 2 Kores India

Pvt. Ltd., in the Bombay High Court against the Plaintiff and Defendant No. 1, wherein Defendant No. 2 claimed that it was the lawful owner of

the trademark ''KORES'' and that the said mark could not be used either by the Plaintiff or Defendant No. 1 in India. In the plaint, it was stated

that Defendant No. 2 was originally a company set up by Mr. Peter Koreska, and sometime in 1950, the shareholding was transferred by the

Koreska family to the present management of Defendant No. 2. The Plaintiff states that it was unaware of any understanding between Defendants

1 and 2 and sought relevant information from Defendant No. 1 in order to protect the business interests of both the Plaintiff and Defendant No. 1.

However, the efforts by the Plaintiff to elicit information from Defendant No. 1 were in vain. It was only on the insistence of the Plaintiff that

Defendant No. 1 agreed to share the litigation expenses with the Plaintiff in the sum of Euros 5000.

The Plaintiff states that it was during the pendency of the aforementioned suit that it learnt of a tacit understanding between Defendants 1 and 2

to eliminate the Plaintiff. Without the help of Defendant No. 1, it would not have been possible for the Plaintiff to defend the proceedings, as a

result of which the Plaintiff would have to suffer an injunction. The Plaintiff states that since Defendant No. 1 did not come forward to defend the

suit filed by Defendant No. 2 in the High Court of Bombay, an order dated 6th December 2007 came to be passed by the Bombay High Court

directing, inter alia, the seizure of all products bearing the endorsement of KORES.

On 13th February 2008, the Plaintiff received a letter from Mr. Helmut Sonn claiming to be a Patent Attorney for Defendant No. 1, informing of

the cancellation of the MoU dated 1st September 2007 with immediate effect on the ground that the purchase turnover for 2007 for RADEX

products ex Vienna had not been reached. The Plaintiff issued a legal notice dated 28th April 2008 addressed to Defendant No. 1 protesting

against the arbitrary termination of the MoU and demanded compensation in the sum of Euro 65,000. In para 39 of the plaint, the Plaintiff has

given the break-up of the losses and damages suffered by it in the sum of Rs. 36,77,993.25.

Para 33 of the plaint sets out the cause of action for the suit and reads as under:

The cause of action for filing the present suit arose in October 2006 when the Plaintiff entered into a MoU with the Defendant No. 1. The

cause of action arose thereafter from time to time when the Plaintiff undertook the business promotion/sales promotion for the products of the

Defendant No. 1. and imported these products into India for sale and distribution. The cause of action thereafter arose in September 2007 when

the parties entered into the 2nd MoU. The cause of action thereafter arose when the Defendant No. 2 filed the suit against the Defendant No. 1

and the Plaintiff herein before the Hon''ble High Court of Bombay. The cause of action further arose on 6.12.2007 when the Bombay High Court

passed an order injuncting the plaintiff. The cause of action arose on 13.2.2008 when the Defendant sought to unilaterally and illegally terminate the

MoU. The cause of action also arose on 28.4.2008 when the Plaintiff served a legal notice on the Defendant No. 1. The cause of action is of

continuing nature. The present suit is within the period of limitation.

Accordingly, the present suit has been filed claiming the aforementioned amount along with interest @ 18% compounded quarterly from 23rd

February 2007 till the date of payment and for a permanent injunction restraining Defendant No. 2 from exporting to India, directly or indirectly,

the products under the brand names ""KORES"" and ""RADEX"" except after indemnifying and compensating the Plaintiff.

Summons in the suit was directed to be issued on 19th February 2011. After service of summons, Defendant No. 1 filed the present application

seeking rejection of the plaint.

This Court has heard the submissions of Mr. Samridh Bhardwaj, learned counsel for Defendant No. 1, Mr. Amit Jain, learned counsel for

Defendant No. 2 and of Mr. Jayant Mehta, learned counsel for the Plaintiff.

Defendant No. 1 contends that in the MoUs of October 2006 and September 2007 it was stated clearly that ""Austrian courts and laws"" would

apply. It is, therefore, submitted that since there is an express understanding between the parties to confer jurisdiction on the Austrian Courts and

to oust the jurisdiction of Indian courts, the present suit is not maintainable. It is submitted that, in any event, the claims pertained to the period 12th

September to 27th November 2007, whereas the suit was filed on or about 4th February 2011 and, therefore, was patently time barred. Reliance

is placed on the decisions in Hanil Era Textiles Ltd. Vs. Puromatic Filters (P) Ltd., Swastik Gases P. Ltd. Vs. Indian Oil Corporation Ltd., and

Piramal Healthcare Limited (Formerly Known as Nicholas Piramal India Ltd.) Vs. DiaSorin S.p.A.,

In response, Mr. Jayant Mehta, learned counsel for the Plaintiff, submits that the present suit involves two Defendants. While it can be said that

the MoU between the Plaintiff and Defendant No. 1 is governed by the jurisdiction clause incorporated therein, there was no MoU between the

Plaintiff and Defendant No. 2 and, therefore, as regards Defendant No. 2, it could not be said that this Court lacked territorial jurisdiction. He

pointed out that it is not possible to separate out the cause of action against Defendant Nos. 1 and 2 and file two separate suits. He submits that

the plaint discloses with sufficient clarity that the Plaintiff was not aware of the existence of Defendant No. 2 or of the arrangement between

Defendants 1 and 2. Defendant No. 2 had itself instituted the suit against Defendant No. 1 and, therefore, their interests were adverse to each

other. The present grievance of the Plaintiff stemming from the order dated 6th December 2007 of the Bombay High Court could not be

addressed without making both the Defendants parties to the litigation.

Mr. Mehta further submitted that the MoU was signed by the Plaintiff in Delhi, the products of Defendant No. 1 were imported into India at

Delhi for marketing and promotion, and the letter dated 13th February 2008 terminating the MoU was received by the Plaintiff at Delhi. He also

submitted that the effect of the order dated 6th December 2007 of the Bombay High Court was in Delhi since the goods belonging to the Plaintiff

were taken into custody by the Court Receiver at New Delhi. Reliance is placed on the decision in Wadi Vs. Amilal and Others,

In the recent decision in Swastik Gases P. Ltd. v. Indian Oil Corporation Ltd. (supra), the Supreme Court considered the effect of exclusory

clauses and revisited its earlier decision in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, The Court in Swastik Gases P. Ltd.

was interpreting a jurisdiction clause in a contract between the parties which stated that ""the agreement shall be subject to jurisdiction of the courts

at Calcutta."" It was held that, even in the absence of the words like ''alone'' ''only'' ''exclusive'' or ''exclusive jurisdiction'', the intention of the parties

was that the jurisdiction would vest only in the courts at Calcutta.

While the above legal position is unexceptionable, on the facts of the present case, it is seen that the dispute is not only between two parties-

the Plaintiff and Defendant No. 1. The dispute involves Defendant No. 2 as well. Thus the facts relied upon by the Plaintiff in the present case

would have to be examined in order to determine whether the dispute could be resolved without the participation of Defendant No. 2. In Mayar

(H.K.) Ltd. and Others Vs. Owners and Parties, Vessel M.V. Fortune Express and Others, the Supreme Court explained that the expression

''material facts'' would be those facts upon which a party relies for his claim on a defence and ''the facts which must be proved in order to establish

the Plaintiffs right to the relief claimed in the plaint or the Defendant''s defence in the written statement.'' Viewed in that light, it is seen that on the

facts pleaded by the Plaintiff, Defendant No. 2 is both a necessary and a proper party to the suit. The facts involving Defendant No. 2 cannot be

separated from the facts concerning Defendant No. 1. Admittedly, Defendant No. 2 has no contract with the Plaintiff and there is no ouster clause

as far as Defendant No. 2 is concerned.

While it is possible for Defendant No. 1 to urge that there is an ouster of the jurisdiction of courts in India under the MoUs between it and the

Plaintiff, it is not possible to reject only a part of the plaint. In Sopan Sukhdeo Sable v. Assistant Charity Commissioner (supra), it is pointed out

that Order VII Rule 11 CPC does not justify rejection of any particular portion of the plaint. Either the plaint has to be returned in toto or not all.

The Plaintiff is dominus litus and has justifiably invoked the jurisdiction of this Court, if one goes by what is stated in para 36 of the plaint. The

said para reads as under:

The Plaintiff is resident at New Delhi. The contracts being the two MoUs between the Plaintiff and the Defendant No. 1 were executed at

New Delhi. The parties had negotiated and corresponded at and from New Delhi and the Plaintiff had incurred various expenses from time to time

at New Delhi in terms of the arrangement between the parties. The effect of the order dated 6.12.2007 was entirely at New Delhi. In terms of the

said order, the goods belonging to the Plaintiff were taken into custody by the Court Receiver at New Delhi. In the circumstances, the entire cause

of action has arisen at New Delhi and as such this Hon''ble Court has the territorial jurisdiction to try and adjudicate the present suit.

For the purposes of the present application under Order VII Rule 11 CPC, the Court has to proceed on the basis that what is stated in the

plaint is true. By that standard, it cannot be said that this Court lacks jurisdiction to try the suit. Even as regards limitation, if the cause of action is

taken to have commenced from the date of the order of the Bombay High Court, then perhaps the suit is within time. In any event it is a mixed

question of law and fact. After an issue in that regard is framed and parties have led evidence, the said issue can be examined.

Consequently, this Court is not persuaded to accept the prayer in this application filed by Defendant No. 1. It is dismissed.

CS(OS) No. 328 of 2011

List before the Joint Registrar on 1st May 2014 for admission/denial of the documents. By that date, the parties will file their affidavits of

admission/denial and produce the originals of the documents relied upon by them respectively. List before the Court for framing of issues on 31st

July 2014.