Patel
Roadways Limited, Bombay Vs. Prasad Trading Company [1991] INSC
172 (6 August 1991)
Ojha, N.D. (J) Ojha, N.D. (J) Rangnathan, S. Fathima Beevi,
M. (J)
CITATION:
1992 AIR 1514 1991 SCR (3) 391 1991 SCC (4) 270 JT 1991 (3) 337 1991 SCALE
(2)257
ACT:
Civil
Procedure Code, 1908: Section 20--Explanation--Suits-Institution of--Whether
parties entitled to agree that only a certain court would have jurisdiction.
HEAD NOTE:
The
appellant in both the appeals carried on the busi- ness of a carrier and transported
goods on hire. It had its principal office at Bombay and branch offices at various other places.
The
respondent in the first appeal a dealer in cardamom entrusted a consignment of
cardamom to the appellant at its branch office at Bodinayakanur in Tamilnadu to
be delivered at Delhi. After the goods had been
transported by the appel- lant and kept in a godown at Delhi the same got destroyed and damaged
in a fire as a result whereof the consignee refused to take delivery. The
respondent instituted a suit in the sub-court within whose territorial
jurisdiction the branch office of the appellant was situated for damages
alleging that the fire was due to the negligence and care- lessness on the part
of the staff of the appellant.
Respondent
No. 4 in the second appeal entrusted certain packets of pesticides insured with
the second respondent Insurance Company to the appellant at its branch office
at Madras for being carried to Delhi. The respondent alleged that the
goods were delivered at New
Delhi in a damaged
condition resulting in loss and a suit was instituted for recovery of the loss
in the City Civil Court at Madras.
In
both the aforesaid civil suits the appellant pleaded in defence that in the
contract entered into between them, the parties had agreed that jurisdiction to
decide any dispute between them would be only with the courts at Bom- bay, and
consequently the courts in Madras ' where the two suits had been instituted had
no jurisdiction. This plea was repelled by the Trial Court in each of the suits.
The
aforesaid orders were challenged by the appellant in the High 392 Court under
Section 115 C.P.C. and having failed, the appel- lant appealed to this Court.
In the
appeal, it was contended on behalf of the appel- lant that since the courts at
two places namely Madras and Bombay had jurisdiction in the matter, the
jurisdiction of the courts in Madras was ousted by the clause in the con- tract
whereunder the parties had agreed that jurisdiction to decide any dispute under
the contract would be only in the courts at Bombay.
On the
question: whether in view of the relevant clause in the contract between the
parties the courts at Bombay alone had jurisdiction and the jurisdiction of the
courts at Madras where the two suits were instituted was barred.
Dismissing
the appeals, this Court,
HELD:
1. The courts at Bombay in these two cases did not at all
have jurisdiction and consequently the agreement between the parties conferring
exclusive jurisdiction on courts at Bombay is of no avail. [401D]
2. Clauses
(a) and (b) of Section 20 refer to a court within the local limits of whose
jurisdiction the defendant "carries on business". Clause (c) on the
other hand refers to a court within the local limits of whose jurisdiction the
cause of action wholly or in part arises. [397H-398A]
3.
Section 20 of the Code before its amendment by the Code of Civil Procedure
(Amendment) Act, 1976 had two Expla- nations being Explanation I and II. By the
Amendment Act Explanation I was omitted and Explanation II was renumbered as
the present Explanation. [398G]
4. The
Explanation is in two parts, one before the word "or" occurring
between the wOrds "office in India" and the words "in respect of" and the other thereafter.
The Explana- tion applies to a defendant which is a corporation which term,
would include even a company such as the appellant in the instant case. The
first part of the Explanation applies only to such a corporation which has its
sole or principal office at a particular place. In that event the courts within
whose jurisdiction the sole or principal office of the defendant is situate
will also have jurisdiction inas- much as even if the defendant may not be
actually carrying on business at that place, it will "be deemed to carry
on business" at that place because of the fiction created by the
Explanation. [398C-F] 393
5. The
latter part of the Explanation takes care of a case where the defendant does
not have a sole office but has a principal office at one place and has also a
subordinate office at another place. The words "at such place"
occurring at the end of the Explanation and the word "or" referred to
above which is disjunctive clearly suggest that if the case fails within the
latter part of the Explanation it is not the court within whose jurisdiction the
principal office of the defendant is situate but the court within whose juris-
diction it has a subordinate office which alone shall have jurisdiction
"in respect of any cause of action arising at any place where it has also
a subordinate office". [398E-F]
6. The
Explanation is really an explanation to clause (a). It is in the nature of a
clarification on the scope of clause (a) viz. as to where the corporation can
be said to carry on business. This, it is clarified, will be the place where
the principal office is situated (whether or not any business actually is
carried on there) or the place where a business is carried on giving rise to a
cause of action (even though the principal office of the corporation is not
located there) so long as there is a subordinate office of the corporation
situated at such place. The linking together of the place where the cause of
action arises with the place where a subordinate office is located clearly
shows that the intention of the legislature was that, in the case of a
corporation, for the purposes of clause (a), the location of the subordinate
office, within the local limits of which a cause of action arises, is to be the
relevant place for the filing of a suit and not the principal place of
business. [399G-400B]
7. If
the intention was that the location of the sole or principal office as well as
the location of the subordinate office (within the limits of which a cause of
action arises) are to be deemed to be places where the corporation is deemed to
be carrying or business, the disjunctive "or" will not he there.
Instead, the second part of the explanation would have read "and, in
respect of any cause of action arising at any place where it has a subordinate
office, also at such place' '. [400C]
8. The
clear intendment of the Explanation, however, is that, where the corporation
has a subordinate office in the place where the cause of action arises, it
cannot be heard to say that it cannot be sued there because it does not carry
on business at that place. It would be a great hard- ship if, in spite of the
corporation having a subordinate office at the place where the cause of action
arises (with which in all probability the plaintiff has had dealings), such
plaintiff is to be compelled to travel to the place where the corporation has
its principal place. That place should be convenient to the plaintiff; and
since the corpo- ration 394 has an office at such place, it will also be under
no disad- vantage. Thus the Explanation provides an alternative locus for the
corporation's place of business, not an additional one. [400F-G]
9. In
the instant two cases since clause (c) is not attract- ed to confer
jurisdiction on courts at Bombay and the appel- lant has admittedly its
subordinate offices at the respec- tive places where the goods in these two
cases were deliv- ered to it for purposes of transport, the courts at Bombay
had no jurisdiction at all to entertain the suits filed by the respondents and
the parties could not confer jurisdic- tion on the courts at Bombay by an agreement.
Accordingly, no exception can be taken to the findings in this behalf recorded
by the trial court and the High Court. [401C-D] Hakam Singh v. M/s. Gammon (India) Ltd., [1971] 3 SCR page 314,
referred to.
CIVIL
APPELLATE JURISDICTION: Civil Appeal Nos. 3050- 305 1 of 199 1.
From
the Judgment and Orders dated 23.8.90 & 13.6.1990 of the Madras High Court
in Civil Revision Petition Nos. 1236/85 and 2758 of 1988.
T.S.K.
lyer, Rajiv Datta and Shahid Azad for the Appellant.
M.S. Nargolkar,
D.M. Nargolkar and A.T.M. Sampath for the Respondents.
The
Judgment of the Court was delivered by OJHA, J. Special leave granted.
Since
in both these appeals an identical question of law arises they are being
decided by a common judgment.
Facts
in a nutshell necessary for appreciating the question involved may be stated.
M/s Patel Roadways (P) Limited, the appellant in both these appeals carries on
the business of a carrier and transports goods on hire. It has its principal
office at Bombay and branch offices at various other
places which shall hereinafter be referred to as subordinate of- fices.
M/s
Prasad Trading Company, the respondent in the Civil Appeal arising out of SLP
(C) No. 14660 of 1990 who is a dealer in 395 cardamom entrusted a consignment
of 851) kilograms of carda- mora to the appellant at its subordinate office at Bodinaya-
kanur in Tamil Nadu to be delivered at Delhi. After the goods had been
transported by the appellant and kept in a godown at Delhi the same got destroyed and damaged
in a fire as a result whereof the consignee refused to take delivery.
The
respondent instituted a suit in the Court of Subordinate Judge, Periakulam
within whose territorial jurisdiction the subordinate office of the appellant
where the goods were entrusted for transport is situate for damages alleging
that the fire was due to the negligence and carelessness on the part of the
staff of the appellant.
M/s
Tropical Agro Systems Private Limited, the respond- ent 1 in the Civil Appeal
arising out of SLP (C) No. 14692 of 1990 on the other hand entrusted certain
packets of pesticides insured with the second respondent, M/s Oriental
Insurance Company Limited to the appellant at its subordi- nate office at
Madras for being carried to New Delhi. Ac- cording to the respondents the goods
aforesaid were deliv- ered at New Delhi in a
damaged condition resulting in loss to the first respondent and a suit was
instituted for recov- ery of the loss so sustained by the respondents in the
Court of the Third Assistant Judge, City Civil Court, Madras. In both the suits the appellant
inter alia took the plea in its defence. that in the contract entered into
between them the parties had agreed that jurisdiction to decide any dispute
between them would be only with the courts at Bombay and consequently the courts in Madras where the two suits re- ferred to
above had been instituted had no jurisdiction.
This
plea was repelled in both the suits by the trial court.
The
order of the trial court in each of the two suits was challenged by the appellant
before the High Court of Judica- ture at Madras under Section 115 of the Code of Civil Proce- dure (hereinafter
referred to as the Code). This challenge having failed in each of the civil
revisions, the appellant has preferred these civil appeals. The question which
arises in both these civil appeals, therefore, is as to whether in view of the
relevant clause in the contract between the parties the courts at Bombay alone had jurisdiction and the
jurisdiction of the courts at Madras where
the two suits were instituted was barred.
It has
been urged by the learned counsel for the appel- lant that apart from the
courts within whose territorial jurisdiction the goods were delivered to the
appellant for transport, the courts at Bombay also had jurisdiction to
entertain a suit arising out of the contract between the parties in view of the
Explanation to Section 20 of the Code inasmuch as the principal office of the
appellant was situ- ate in 396 Bombay. According to learned counsel for the
appellant since courts at two places namely Madras and Bombay had jurisdic- tion in the matter,
the jurisdiction of the courts in Madras was ousted by the clause in the contract whereunder the parties had
agreed that jurisdiction to decide any dispute under the contract would be only
in the courts at Bombay.
Consequently
the courts where the two suits were instituted had no jurisdiction to entertain
them and the trial court in each of the two cases as well as the High Court
erred in law in taking a contrary view.
Having
heard learned counsel for the parties we find it difficult to agree with this
submission. For the sake of convenience Section 20 of the Code except the
illustrations is reproduced hereunder:
"20.
Other suits to be instituted where de- fendants reside or cause of action
arises:- Subject to the limitations aforesaid, every suit shall be instituted
in a Court within the local limits of whose jurisdiction :-- (a) the defendant,
or each of the defendants where there are more than one, at the time of the
commencement of the suit, actually and voluntarily resides, or carries on
business, or personally works for gain; or (b) any of the defendants, where
there are more than one, at the time of the commencement of the suit, actually
and voluntarily resides, or carries on business, or personally works for gain,
provided that in such case either the leave of the Court is given, or the de- fendants
who do not reside, or carry on busi- ness, or personally work for gain, as
afore- said, acquiesce in such institution; or (c) the cause of action, wholly
or in part, arises.
Explanation:-
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." In Hakam Singh v. M/s. Gammon (India) Ltd., [1971] 3 SCR Page 314 it was held that "corporation"
referred to in Section 20 397 meant not only a statutory corporation but also a
company registered under the Indian Companies Act. It was also held that it is
not open to the parties by agreement to confer jurisdiction on any court which
it did not otherwise possess under the Code. But where two courts have
jurisdiction under the Code to try a suit or proceeding an agreement between
the parties that the dispute between them shall be tried in one of such courts
is not contrary to public policy nor does such an agreement contravene Section
28 of the Contract Act.
In
that case also there was a clause in the agreement being clause No. 13 which
provided that notwithstanding the place where the work under the contract was
to be executed the contract shall be deemed to have been entered into between
the parties at Bombay and the court in Bombay alone shall have jurisdiction to
adjudicate thereon. The trial court had held that the entire cause of action
had arisen at Varanasi and the parties could not by
agreement confer jurisdiction on the courts at Bombay which they did not otherwise pos- sess. In a civil revision
filed by the respondent the Alla- habad High Court held that the courts at Bombay had also jurisdiction and in view
of clause 13 of the agreement the jurisdiction of the courts at Varanasi stood ousted. It is in the appeal
against the said judgment of the High Court that the propositions of law referred
to above were laid down by this Court. It was held that since the respondent
had its head office at Bombay the courts at Bombay also had 'jurisdiction by virtue of
Section 20 of the Code read with its Explanation and in view of clause 13 of
the agreement between the parties the courts in Bombay alone had jurisdic- tion in the matter. The appeal was
accordingly dismissed.
This
view was reiterated by this Court in Globe Transport Corporation v. Triveni
Engineering Works and Another, [1983] 4 SCC Page 707.
Reliance
has been placed by learned counsel for the appellant on these two decisions and
if it can be held that the courts at Bombay also had jurisdiction in the two suits referred to above the judgments
appealed against will have to be set aside on the basis of these decisions. The
ques- tion, however, is as to whether in any of these two suits the courts at Bombay also had jurisdiction apart from
the courts within whose jurisdiction the goods were entrusted to the appellant
for purposes of transport. Having given our anxious consideration to the matter
we are of the opinion that the courts at Bombay in these two cases did not at all have jurisdiction and consequently
the agreement between the parties conferring exclusive jurisdiction on courts
at Bombay is of no avail.
Clauses(a)
and (b) of Section 20 inter alia refer to a court within 398 the local limits
of whose jurisdiction the defendant inter alia "carries on business".
Clause (c) on the other hand refers to a court within the local limits of whose
jurisdic- tion the cause of action wholly or in part arises. It has not been
urged before us on behalf of the appellant that the cause of action wholly or
in part arose in Bombay. Conse- quently clause (c) is not
attracted to the facts of these cases. What has been urged with the aid of the
Explanation to Section 20 of the Code is that since the appellant has its
principal office in Bombay it shall be deemed to carry on
business at Bombay and consequently the courts at Bombay will also have jurisdiction. On a
plain reading of the Explanation to Section 20 of the Code we find an apparent
fallacy in the aforesaid argument. The Explanation is in two parts, one before
the word "or" occurring between the words "office in India" and the words "in
respect of" and the other thereafter. The Explanation applies to a
defendant which is a corporation which term, as seen above, would include even
a company such as the appellant in the instant case. The first part of the
Explanation applies only to such a corporation which has its sole or principal
office at a particular place. In that event the courts within whose
jurisdiction the sole or principal office of the defendant is situate will also
have jurisdiction inasmuch as even if the defendant may not be actually carrying
on business at that place, it will "be deemed to carry on business"
at that place because of the fiction created by the Explanation. The latter
part of the Explanation takes care of a case where the defendant does not have
a sole office but has a princi- pal office at one place and has also a
subordinate office at another place. The words "at such place"
occurring at the end of the Explanation and the word "or" referred to
above which is disjunctive clearly suggest that if the ease falls within the
latter part of the Explanation it is not the Court within whose jurisdiction
the principal office of the defendant is situate but the court within whose
jurisdiction it has a subordinate office which alone shall have jurisdic- tion
"in respect of any cause of action arising at any place where it has also
a subordinate office".
Here
we may point out that the view which we take finds support from a circumstance
which, in our opinion, is rele- vant. Section 20 of the Code before its
amendment by the Code of Civil Procedure (Amendment) Act, 2976 had two Expla-
nations being Explanations I and II. By the Amendment Act Explanation I was
omitted and Explanation II was renumbered as the present Explanation.
Explanation I so omitted read as hereunder:- "Explanation I: Where a
person has a permanent dwelling 399 at one place and also temporary residence
at another place, he shall be deemed to reside at both places in respect of any
cause of action arising at the place where he has such tempo- rary
residence." This Explanation dealt with the case of place of resi- dence
of the defendant and provided with regard to a person having a permanent
dwelling at one place and also temporary at another place that such person
shall be deemed to reside at both places in respect of any cause of action
arising at the place where he has such temporary residence. The lan- guage used
in Explanation II on the other hand which is the present Explanation was
entirely different. Had the inten- tion been that if a corporation had its
principal office at one place and a subordinate office at another place and the
cause of action arose at the place where it had its subordi- nate office it
shall be deemed to be carrying on business at both places the language used in
Explanation II would have been identical to that of Explanation I which was
dealing with a case of a person having a permanent dwelling at one place and
also temporary residence at another place. The marked difference in the
language of the two Explanations clearly supports the view which we have taken
with regard to the interpretation of the present Explanation to Section 20 of
the Code which was Explanation II earlier as indicated above.
We
would also like to add that the interpretation sought to be placed by the
appellant on the provision in question renders the explanation totally
redundant. If the intention of the legislature was, as is said on their behalf,
that a suit against a corporation could be instituted either at the place of
its sole or principal office (whether or not the corporation carries on
business at that place) or at any other place where the cause of action arises,
the provisions of clauses (a), (b) and (c) together with the first .part of the
explanation would have completely achieved the purpose.
Indeed
the effect would have been wider. The suit could have been instituted at the
place of the principal office because of the situation of such office (whether
or not any actual business was carried on there). Alternatively, a suit could
have been instituted at the place where the cause of action arose under clause
(c) (irrespective of whether the corpora- tion had a subordinate office in such
place or not). This was, Therefore, not the purpose of the explanation. The
explanation is really an explanation to clause (a). It is in the nature of a
clarification on the scope of clause (a) viz. as to where the corporation can
be said to carry on business. T'his, it is clarified, will be the place where
the principal office is ituated (whether or not any business actually is
carried on there) or the place where a business 400 is carried on giving rise
to a cause of action (even though the principal office of the corporation is
not located there) so long as there is a subordinate office of the corporation
situated at such place. The linking together of the place where the cause of
action arises with the place where a subordinate office is located clearly
shows that the intention of the legislature was that, in the case of a
corporation, for the purposes of clause (a), the location of the subordinate
office, within the local limits of which a cause of action arises, is to be the
relevant place for the filing of a suit and not the principal place of
business. If the intention was that the location of the sole or principal
office as well as the location of the subordinate office (within the limits of
which a cause of action arises) are to be deemed to be places where the
corporation is deemed to be carrying on business, the disjunctive
"or" will not be there. Instead, the second part of the explanation
would have read "and in respect of any cause of action arising at any
place where it has a subordinate office, also at such place".
As far
as we can see the interpretation which we have placed on this section does not
create any practical or undue difficulties or disadvantage either to the
plaintiff or a defendant corporation. It is true that, normally, under clauses
(a) to (c), the plaintiff has a choice of forum and cannot be compelled to go
to the place of residence or business of the corporation and can file a suit at
a place where the cause of action arises. If a corporation desires to be
protected from being dragged into litigation at some place merely because a casue
of action arises there it can save itself from such a situation by an exclusion
clause as has been done in the present case. The clear intendment of the
Explanation, however, is that, where the corporation has a subordinate office
in the place where the cause of action arises, it cannot be heard to say that
it cannot be sued there because it does not carry on business at that place.
It
would be a great hardship if, in spite of the corporation having a subordinate
office at the place where the cause of action arises (with which in all
probability the plaintiff has had dealings), such plaintiff is to be compelled
to travel to the place where the corporation has its principal place. That
place should be convenient to the plaintiff; and since the corporation has an
office at such place, it will also be under no disadvantage. Thus the
Explanation provides an alternative locus for the corporation's place of busi-
ness, not an additional one.
There
may be only one extra-ordinary situation in which this interpretation may cause
an apparent anomaly. This is where the plaintiff has also his/its place of
business at the same place as the 401 corporation but the cause of action has
arisen at some other place. The above interpretation would preclude him from
filing a suit in that place of business common to both parties and compel him
to go to a court having jurisdiction over the place where the cause of action
has arisen. But this is not really a hardship because such plaintiff must have
had some nexus or connection with the place since some part of the cause of
action had arisen there; if he can have dealings with the corporation at such a
place giving rise to the cause of action, there is no reason why he should find
it disadvantageous or difficult to file a suit at such place. Equally, the
corporation, having a subordinate office at the place, will suffer no
disadvantage.
In
this view of the matter since in the instant two cases clause (c) is not
attracted to confer jurisdiction on courts at Bombay and the appellant has
admittedly its subor- dinate offices at the respective places where the goods
in these two cases were delivered to it for purpose of trans- port the courts
at Bombay had no jurisdiction at all to entertain the suits filed by the
respondents and the parties could not confer jurisdiction on the courts at
Bombay by an agreement. Accordingly no exception can be taken to the findings
in this behalf recorded by the trial court and the High Court in these two
cases.
In the
result, we find no merit in any of these two appeals and they are accordingly
dismissed but in the cir- cumstances of the case the parties shall bear their
own costs.
Back