Final Order 1

Order Details: Notice of Motion
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MHCC010066392019 Presented on : 01072019
Registered on : 01072019
Decided on : 23082021
Duration : Y M D
02 01 28
BEFORE THE CITY CIVIL COURT, MUMBAI
( Court No.14 )
(Presided Over by S. U. Hake)
NOTICE OF MOTION/102401/2019
IN
COMMERCIAL SUIT NO.599 OF 2021
ELEKRONIK LAB,
A firm duly registered under the Indian
Partnership Act, having their office at
R/13, Navroze Baug, Lalbaug, Mumbai400 012
Through its Partner Bahadur B.Sanjana ..Plaintiff
Versus
KELVIN HUGHES LTD.
(i) New North Road,
Hainault, III Ford,
Essex IG 6 2UR, UK.
(ii)Voltage, Mollison Avenue, Enfield
EN3 7XQ, United Kingdom ..Defendant
__________________________________________________________
Ld. Advocate Ghogari for plaintiff.
Ld. Advocate Nandini Joshi along with Adv. Bharat Jain and Adv.
Riya Makwana i/b IC Legal for defendant.
__________________________________________________________
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ORAL ORDER
(Dated 23/08/2021)
1. This Notice of Motion is taken out by defendant
praying for return of the plaint under order VII Rule 10 of Code of
Civil Procedure .
2. Heard both the sides.
Defendant's Case :
3. Defendant is a company registered at companies
House under the law of England and Wales. Plaintiff firm and
defendant company entered into a 'NonExclusive Distribution
Agreement' on 02/08/2010. Right and obligations of the parties
are governed by said agreement. Agreement was executed in
Mumbai, India and Hainault, England. As per the terms of
agreement, plaintiff's representative received the training in
England. Materials were dispatched from England. Thus,
substantial part of the cause of action arose in England.
4. As per clause no.26 of the agreement, plaintiff and
defendant agreed to be governed by English laws and submitted
to exclusive jurisdiction of the English courts. Defendant by email
dated 21/10/2016 terminated aforesaid agreement. As per
averments in the plaint, claim arises out of termination of said
agreement. Plaintiff has deliberately suppressed the terms and
conditions of the agreement and intentionally did not file the
agreement. Clause no.26 of the agreement is binding upon the
parties and as per said clause English Courts have exclusive
jurisdiction to try the suit.
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5. By making all these submissions, defendant prayed to
return the plaint as per order VII rule 10 of C.P.C.
Plaintiff's Reply
6. Plaintiff by filing it's reply affidavit strongly resisted
the notice of motion. It is contended that matter involves disputed
question of facts and it can not be decided in a notice of motion.
Defendant contends that substantial part of cause of action arose
in England and agreement was executed in Mumbai. These
statements in the notice of motion shows that part of cause of
action arose in Mumbai. Plaintiff in paragraph 18 of the plaint
has set out as to how this Court has jurisdiction to try and
entertain the suit. Defendant company has given distribution
agency to the plaintiff's firm at Mumbai. Goods were ordered
from Mumbai. Services were provided by the plaintiff at Mumbai.
Money was payable by the defendant to the plaintiff at Mumbai.
Thus, cause of action to file the present suit arose within
jurisdiction of this Court. For deciding application Under order
VII Rule 10 only averments in the plaint are required to be
considered and Court cannot read the defence raised by
defendant.
7. It is further submitted that defendant relied upon
clause no.26 of the agreement. Clause no. 26.1 provides that the
terms and conditions of the agreement and the matters relating to
them are governed by English laws and parties hereby submit to
the exclusive jurisdiction of the English Court. Clause no.26.2
provides that parties should attempt to settle their dispute by
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negotiations and mediations, whereas clause no. 26.3 provides
that nothing in clause no. 26.2 precludes any party from
commencing or continuing proceedings in any court at any time.
8. As per clause no. 26.3 of the agreement, parties can
file the suit in any Court at any time. Suit is tenable as
substantial part of cause of action took place within the
jurisdiction of this Court. So also, plaintiff's claim does not arise
out of or any connection with distributorship agreement. It is
mainly for reimbursement of charges. Rights and obligations of
the plaintiff and the defendant are not governed by the said
agreement. No part of cause of action arose in England and
therefore England Courts shall not have jurisdiction to try this
suit. By making these submissions, plaintiff prayed for dismissal of
the notice of motion.
9. In rejoinder affidavit, defendant submitted that suit
claim arises out of the termination of the agreement. There is no
question of leading evidence as there can not be oral evidence
contrary to the terms of the agreement . Clause no.26.3 is to be
read alongwith clause no. 26.1 and clause no.26.2. If all the
clauses are read together, this Court will not have jurisdiction to
try and entertain the suit. Plaintiff's claim arises out of
distributionship agreement.
10. Following points arise for determination, findings
thereon for the reasons to follow are as under:
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Sr.No. Points Findings
1. Whether this Court has
jurisdiction to try the suit ?
No
2. What order? Plaint is returned as per
per final order.
REASONS
Point No.1
11. Learned counsel appearing for the defendant made
following submissions:
(a) Plaintiff contends that defendant company unilaterally
decided to cancel the plaintiff's agency . In para.19 of the plaint,
it is contended by the plaintiff that defendant was liable to pay
the money on termination of the agency and the same was
terminated on 21/10/2016. Thus, suit is based on the agreement
of agency.
(b) Plaintiff has set out conditions of the agreement in para.5
of the plaint. Plaintiff's claim is based upon termination of the
agreement, but plaintiff has suppressed the terms of the
agreement and has not filed copy of the agreement on record.
(c) Defendant has filed on record copy of the agreement
alongwith affidavit. Clause no.26.1 of the agreement clearly
provides that parties are governed by English Laws and the
parties submit to the exclusive jurisdiction of England Courts.
Plaintiff is not disputing the terms of agreement, therefore, terms
of the agreement regarding submission to the exclusive
jurisdiction of England Court would be binding on the plaintiff.
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(d) Substantial part of cause of action took place in England.
Therefore, the term of the agreement regarding submission of
jurisdiction to the England court is valid and binding upon the
parties . Resultantly , it ousts jurisdiction of this court .
12. To bolster up above submissions ,defendant relied
upon the following judicial pronouncements :
1. Hanil Era Textiles Ltd Vs. Puromatic
Filters (P) Ltd.
(2004) 4 SCC 671
2. Hakam Singh V/s M/s. Gammon
(India) Ltd.
1971(1)SCC 286
3. Hindustan Construction & Commercial
Corporation V/s Union of India
(2014) SCC online
Cal 668
4. A.B.C. Laminart (P) Ltd & Anr V/s
A.P.Agencies, Salem
(1989) 2 SCC 163
5. Ms.Swastik Gases Pvt. Ltd. V/s The
Indian Oil Corp Ltd
(2013) 9 SCC 32
6. Bharat Heavy Electronics Limited V/s
Electricity Generation Incorporation
AIR 2018 Del.28
7. Pantaloon Retail (India) Ltd. V/s
Amer Sports Malaysia SDN BHD
(2012) SCC Online
Del 2677
13. In case of Hanilal Era ( Cited supra ) , Hon'ble
Supreme Court held that it is not open to the parties to confer by
their agreement, jurisdiction on a court which it does not posses
under the code . But, where two or more courts have under the
Code of Civil Procedure, jurisdiction to try the suit or a
proceedings , an agreement betweem the parties that the dispute
between them shall be tried in one of such courts is not contrary
to public policy . Such an agreement does not contravene section
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28 of the Contract Act . In this case , Hon'ble Supreme Court ,
relied upon case of Hakam Singh ( Cited Supra) .
14. In case of Hindustan Construction ( Cited Supra) ,
Hon'ble Supreme Court held that the forum selection clause is
required to be construed strictly . It is to be seen from ouster
clause whether jurisdiction of the courts were ousted or not .
When the ouster clause is clear , unambiguous and specific then
such clause would oust the jurisdiction of other courts .
15. Other judicial pronouncements relied upon by the
plaintiff also enunciated the same propositions .
16. Learned Counsel appearing for plaintiff contravened
above submissions. Plaintiff's arguments may be summarized as
under :
a Plaint has to be read as a whole. In para.18 of the
plaint, plaintiff in clear terms pleaded as to how this Court has
jurisdiction to try and entertain this suit.
b Plaintiff is not making any claim as per the terms of
the agreement. The claims are raised as plaintiff was required to
incur certain expenses outside the terms of agreement. The claim
does not fall within the ambit of distribution agreement.
c Learned Counsel for plaintiff has drawn the attention
of the Court towards para. No.13 of the plaint and submitted that
claims are raised in October 2016 i.e.after termination of
agreement of agency. The claims raised by plaintiff are not
concerned with the terms and conditions of the agreement.
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d As per clause no.26.3 of the agreement, parties are at
liberty to file the suit in any Court. Agreement is executed in
Mumbai. The goods are received in Mumbai. The payments are
made from Mumbai. Therefore, this Court is competent to try this
suit.
e Clause no.26.1 and clause no.26.3 of the agreement
are contrary to each other. Therefore, issue of jurisdiction can be
decided by giving opportunity of leading evidence to both the
parties. By making these submissions, Ld. Counsel prayed for
dismissal of the notice of motion.
17. Considered the submissions advanced on behalf of
both the sides. It is well settled that cause of action is a bundle of
facts which taken with the law applicable to the parties , gives the
plaintiff a right to claim relief against the defendant. It must
include some act done by the defendant, since in the absence of
such an act, no cause of action would possibly accrue or would
arose . If the contents of the plaint are read as a whole , it is clear
that part of the cause of action took place in England and part of
the cause of action took place in India. During the course of
arguments , this aspect is not seriously disputed by the parties.
Plaintiff has opposed the notice of motion mainly on two grounds
i.e.
I) Clause no.26.3 permits parties to file the suit in any
Court and therefore this Court is competent to try the suit.
II) Plaintiff's claim does not arise out of terms and
conditions of the distribution agreement and therefore terms and
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conditions of distribution agreement are not applicable for
deciding the jurisdiction in the present suit.
18. Considering the rival contentions, it would not be out
of place to reproduce here, clause no.26 of the agreement which
runs under:
26. Applicable Law and Jurisdiction
26.1 The interpretation, construction and enforcement of this
Agreement and the Terms and Conditions, and matters relating to
them shall be governed in all respects by English law and the
Parties hereby submit to the exclusive jurisdiction of the
English Courts. The Distributor will accept service by prepaid
letter of any claim form or summons in any such action as its
address specified in accordance with clause no.22
notwithstanding it may be outside the jurisdiction of the English
Courts.
26.2 Subject to no.26.3, before resorting to legal
proceedings, the parties shall attempt to settle by negotiations
between them in good faith all disputes or differences which arise
between them out of or in connection with this agreement. If
such negotiations failed to achieve a resolution of the dispute or
difference, the Parties will attempt to settle the dispute or
difference by mediation in accordance with the CEDR Model
Mediation Procedure. To initiate the mediation a party must give
notice in writing ("ADR notice") to the other party to the dispute
requesting a mediation. The parties shall seek to agree on a
mediator, and failing mutual agreement, the mediator will be
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nominated by CEDR. Both parties agree to cooperate fully with
such mediator and provide such assistance as is necessary to
enable the mediator to discharge his duties. Each party shall bear
its own costs and bear equally the fees and expenses of the
mediator, unless a different agreement is reached as part of the
settlement arrived at as a result of the mediation proceedings.
26.3 Nothing in clause 26.2 precludes any party from
commencing or continuing proceedings in any court at any time:
26.3.1 for an order (whether interim or final) to restrain the
other party from doing any act or compelling the other party to
do any act; or
26.3.2 for a judgment for a liquidated sum to which there is
no arguable defence; or
26.3.3 the purpose of which is to prevent a claim from
becoming timebarred due to the expiry of any statutory or
contractual limitation period.
26.4 Clause 26.3 shall not permit either party to continue
any court proceedings without compliance with clause 26.2.
26.4.1 If the proceedings were commenced in reliance
upon clause 26.3.1 or 26.3.2, once the court has ordered, or the
Parties have agreed in writing, that the defendant should have
permission to defend; or
26.4.2 if the proceedings were commenced in reliance
upon clause 26.3.3, once the proceedings have been issued and
served.
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19. Plaintiff submits that clause no.26.3 permits plaintiff
to file suit in any Court.
20. Clause no 26.1 provides that the interpretation,
construction and enforcement of this Agreement and the Terms
and Conditions, and matters relating to them shall be governed in
all respects by English law and the Parties submit to the exclusive
jurisdiction of the English Courts. Thus, clause no.26.1 provides
choice of law and choice of forum. As per clause no.26.1 parties
agreed to be governed by English Law and submitted to the
exclusive jurisdiction of the English Courts.
21. Clause no.26.2 provides that subject to clause
no.26.3 parties shall attempt to settle their dispute by
negotiations and mediations.
22. Clause no.26.3 provides that nothing in clause
no.26.2 precludes any party from commencing or continuing
proceedings in any court at any time. It further provides the
reliefs which can be claimed by the parties before resorting to
negotiations and mediations provided under clause 26.2.
23. As per clause no.26.3, parties can initiate
proceedings in any court
a for an order to restrain the other party from doing any act
or compelling the other party to do any act;
b for a judgment for a liquidated sum to which there is no
arguable defence; or
c the purpose of which is to prevent a claim from becoming
timebarred due to the expiry of any statutory or contractual
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limitation period.
Thus , clause no.26.3 permits parties to initiate proceedings in
any court without resorting to negotiations and mediation for the
contingencies provided in that clause only.
24. Clause no.26.4 further provides that clause no.26.3
shall not permit either party to continue any court proceedings
without compliance with clause no.26.2 once the court has
ordered, or the Parties have agreed in writing, that the defendant
should have permission to defend or if the proceedings were
commenced in reliance upon clause 26.3.3, once the proceedings
have been issued and served.
25. On perusal of clause no.26.3 and clause no.26.4, it is
clear ,as crystal, that clause no.26.3 provides remedy to the
parties for approaching to the Court under specific circumstances.
It is not the case of plaintiff that he is approaching the court in
the circumstances enumerated in clause no. 26.3 of the
agreement . No where it is pleaded that present suit is filed in
accordance with clause no.26.3 of the agreement . As per clause
no.26.1 , it is evident that parties agreed the forum as Courts in
England. Clause no.26.1 and clause no.26.3 are required to be
read together for proper appreciation of the jurisdiction clause
and 'any Court' as provided under clause no.26.3 has to be
construed as Court in England. Therefore, I do not find substance
in the submission of plaintiff that as per terms of the contract
clause no.26.3, plaintiff can file the suit at Mumbai.
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26. The second contention raised by plaintiff is that claim
does not arise out of the distributionship agreement. For deciding
this contention, the Court would be justified in relying upon
averments made in the plaint upon which edifiace of claim is
based .
(a) In the year 2009 , it was decided by the defendant
company and plaintiff firm that the plaintiff firm will act as the
distributor for defendant company in India.
(b) Plaintiff in para.5 of the plaint also pleaded the conditions
of the distributionship.
(c) Plaintiff's representative had taken training at foreign
maker's premises i.e. at defendant's place.
(d) Due to professional and marketing skills of plaintiff's firm,
defendant company was able to procure orders from reputed
Indian entities.
(e) Plaintiff has also pleaded the name of Indian entities.
(f) Plaintiff has done the extra work for Indian Coast Guard
Tender . Plaintiff relied upon minutes of the meeting dated
24/01/2012 and submitted that in the said meeting, defendant
agreed to pay for the extra work done by plaintiff.
(g) In the year 201112, plaintiff invested own money for
installation of Radar and gave trial to Indian Navy.
(h) On 21/10/2016, defendant unilaterally terminated the
agency. Plaintiff raised consolidated invoice after termination of
the agency.
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(i) Plaintiff set out in details claims regarding extra work done
for Coast Guard Tender, money spent on installation of Radar and
training expenses.
(j) Plaintiff further pleads that it has suffered huge loss due to
unilateral termination of the agreement.
(k) Defendant company was liable to pay money on
termination of the distributionship.
27. As discussed supra, plaintiff in reply affidavit
contends that his claim did not arise out of distribution
agreement. The plaintiff has not specifically pleaded the date of
execution of the agreement. However, it is specifically pleaded
that in the year 2009, it was agreed between plaintiff and
defendant that plaintiff's firm will act as a distributor of
defendant company . In para 5(a), (b) and (c) of the plaint,
Plaintiff has pleaded the terms and conditions of the agreement.
As per the terms of the agreement, plaintiff was required to incur
expenses regarding the training. Plaintiff has claimed the training
expenses in para 14(C) of the plaint contending that defendant
company unilaterally terminated the distributorship. Thus, on
perusal of the plaint, it becomes abundantly clear that the said
claim arose out of the distribution agreement and it is not outside
the terms and conditions of the distribution agreement.
28. Plaintiff further claimed that it was required to incur
extra expenses while doing the work of Indian Coast Guard
Tender. Plaintiff relied upon minutes of meeting dated
24/01/2012 to substantiate his claim. Plaintiff firm further
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claimed certain amount towards installation of Radar which it
was required to incur in the year 201112. It is pertinent to note
that plaintiff did not claim these amounts in the year 201112
from defendant. But, claimed these amounts on the termination of
agreement . In para.19 of the plaint, it is specifically contended
that defendant was liable to pay the claim amount on termination
of the distribution agreement. Thus, on perusal of the plaint, it is
manifestly clear that all the claims made by the plaintiff arose out
of the distribution agreement and therefore for deciding the
claim, the terms and conditions of the distribution agreement
would be applicable.
29. A last ditch effort was made to oppose the notice of
motion by submitting that Court has to consider only plaint and
documents filed alongwith plaint for deciding the issue of
jurisdiction.
30. It is true that plaintiff has not filed the agreement
dated 02/08/2010 alongwith plaint. But, as discussed supra, suit
is based upon the terms and conditions of the agreement.
Plaintiff claims cause of action on the termination of agreement.
Thus, suit is based upon distributionship agreement. As per order
VII Rule 14 of C.P.C. where plaintiff sues upon a document, he
shall produce it in Court alongwith plaint. But, plaintiff failed to
produce the document of distributorship agreement alongwith
plaint and therefore, this Court would be well justified in relying
upon the said document on being produced by defendant.
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31. As discussed above, plaintiff firm by entering into
contract submitted to the jurisdiction of the Court at particular
place i.e. England Courts. Part of cause of action took place in
England. Plaintiff firm signed the agreement knowing fully well
that it is subject to the jurisdiction of England Courts . Unless
there are special reason to the contrary, intention of the parties to
the contract must be given effect. Terms and conditions of the
contract regarding jurisdiction are valid as per Sec. 28 of the
Indian Contract Act. The clause no. 26 in the contract regarding
submission of the jurisdiction is clear, unambiguous and it
excludes jurisdiction of other Courts. The conspectus of the
aforesaid discussion is that this Court is not having jurisdiction to
try the suit. Therefore , point no.1 is answered accordingly. In
the result, following order:
ORDER
1. N/M No.2401/19 is made absolute in terms of prayer
clause (a).
2. Plaint be returned to the plaintiff for filing it in the Court
of competent jurisdiction.
3. No order as to costs.
4. N/M No.2401/19 is disposed of accordingly.
23/08/2021 S.U.HAKE
JUDGE,
CITY CIVIL COURT,
GR.MUMBAI.
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Dictated on : 23/08/2021
Transcribed on : 24/08/2021
Signed on : 25/08/2021
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CERTIFIED TO BE TRUE AND CORRECT COPY OF THE
ORIGINAL SIGNED JUDGMENT/ORDER”.
25/08/21 at 05.30 pm.
Mrs.Tanushree C.Kamble
Name of the Judge HHJ SHRI SU Hake
Date of Pronouncement of
judgment/order
23/08/21
Judgment and order signed by
P.O.
25/08/21
Judgment/order uploaded on 25/08/21
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