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CS 31 of 2016

Shridhar Vyapaar Private Limited v. Gammon India Limited

2018 SCC OnLine Cal 11749 : AIR 2019 Cal 178 : (2019) 4 ICC 585

In the High Court of Calcutta

(BEFORE MOUSHUMI BHATTACHARYA, J.)

Shridhar Vyapaar Private Limited

v.
Gammon India Limited
CS 31 of 2016 and GA 44 of 2018
Decided on August 9, 2018, [Heard on: 23.07.2018, 27.07.2018, 31.07.2018 and
01.08.2018]
Advocates who appeared in this case :
For the Plaintiff: Mr. Ashok Kumar Singh, Adv.
Mr. Anuj Singh, Adv.
Mr. S.E. Hunda, Adv.
Mr. Amrin Khatoon, Adv.
For the Defendant: Mr. Ratnanko Banerji, Sr. Adv.
Mr. Swatarup Banerjee, Adv. Mr. Rohit Mukherji, Adv.
Mr. Sayon Ganguly, Adv.
The Judgment of the Court was delivered by
MOUSHUMI BHATTACHARYA, J.:— This is an application for revocation of leave under
Clause 12 of the Letters Patent, 1865, and for rejection of the plaint filed in the suit.
The suit was filed in May 2016 for non-realisation of dues in respect of invoices raised
for supplies made by the plaintiff to the defendants under purchase orders issued by
the latter.
2. The defendant's case is that no part of the cause of action has arisen from within
the jurisdiction of this Court which would be evident from the following:—
• The purchase orders issued by the defendant were addressed to the plaintiff at
the plaintiffs' offices located in the States of Chhattisgarh and Maharashtra and
were received at those places.
• The supplies were made by the plaintiff in Andhra Pradesh, Assam,
Chhattisgarh, Karnataka and other states outside West Bengal.
• The invoices were issued by the plaintiff from its offices located at Nagpur and
Raipur. A substantial number of the invoices required payments to be made in the
aforesaid places.
• The registered office of the defendant is located in Mumbai. Master data
maintained with the Ministry of Corporate Affairs, Government of India shows that
the registered office of the plaintiff is located outside the jurisdiction of this Court.
3. The most important fact according to the defendant is that the invoices on the
basis of which the plaintiff has filed the suit contains a forum selection clause by which
disputes pertaining to the agreement are required to be referred to either Raipur or
Nagpur, to the exclusion of all other jurisdictions. The Clause mentioned in the
invoices which the defendant relies on contains the specific words
“Subject to RAIPUR Jurisdiction Only”.
4. The invoices further mention the address of the plaintiff as being Agrasan Chowk,
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Raipur and also mention that “payment shall be made by RTGS/Cheque or Bank Draft
payable at Raipur Only”. The next set of invoices relied on by the defendant contains
the Clause
“Subject to Nagpur Jurisdiction Only”
and that “Payment shall be made by RTGS/Cheque or Bank Draft payable at
RAIPUR/NAGPUR Only”. The address of the plaintiff has been described at a location at
Nagpur.
5. Mr. Ratnanko Banerji, Senior Counsel appearing for the defendant/applicant
submits that the only basis for the plaintiff instituting the suit in this Court is an
alleged oral agreement between the parties pursuant to which the defendant placed
orders upon the plaintiff for supplying iron and steel scrap. The only other fact pleaded
by the plaintiff for invoking the jurisdiction of this Court is that payment was made by
the defendant through RTGS into the bank account of the plaintiff maintained at IDBI
Bank Park Street Branch. Mr. Banerji relies on a Company Master data of 29th
December 2017 which shows that the registered office of the plaintiff is located at AJC
Bose Road, outside the jurisdiction of this Court and which admittedly has not been
disclosed in the plaint or the cause title thereto. Counsel further relies on the vague
and inconsistent stand taken by the plaintiff in its affidavit-in-opposition where it has
been alleged that the purchase orders relate to several unconnected transactions but
emanated from an oral contract. Counsel finally relies on the balance of convenience
aspect in that both the purchase orders and invoices were issued from and received
outside the jurisdiction of this Court and the goods forming the subject matter of the
dispute were also delivered by the plaintiff to the defendant outside the State of West
Bengal. Counsel submits that the forum selection clause, agreed to by the parties and
unambiguously stated in the invoices, has been suppressed in the plaint.
6. Mr. Anuj Singh, counsel for the plaintiff submits that the arrangement between
the parties did not fructify into a concluded contract. Counsel puts the onus on the
defendant to retract from the forum selection clause in the invoices (issued by the
plaintiff) and contends that in failing to do so, the contract remained unconfirmed. He
stresses that there was no meeting of mind in that the parties never agreed to be
bound by an exclusive jurisdiction clause ousting the jurisdiction of all other Courts.
Counsel relies on an oral agreement being entered into between the parties at its
registered office within jurisdiction and payments having been made - and accepted-at
the plaintiff's bank within the jurisdiction of this court. He fairly concedes that
paragraph 3 of the plaint with regard to the location of the plaintiff's office is a
misstatement of the correct factual position. He urges that the invoices cannot be the
basis of a binding contract between the parties, unless mutually agreed upon, and
neither can the exclusive jurisdiction clause therein determine the fate of the suit on
the instant demurrer application. He suggests that the forum selected in the invoices
was a new term incorporated but not agreed upon by the defendant and relies upon
sections 2 and 7 of The Indian Contract Act, 1872 on the touchstone of proposal and
acceptance ultimately cementing a binding contract between parties. He buttresses his
argument by urging that unlike the invoices, the Purchase Orders do not mention any
forum.
7. I have considered the submissions of counsel appearing for the parties.
8. The decisions cited by Mr Singh can be broadly divided into two categories; first,
where from the materials on record, the court concluded that the parties had failed to
arrive at a firm agreement as to where the disputes would be addressed. Second,
where despite a clause indicating a choice of forum, the court found that there were
other factors which justified filing proceedings elsewhere. In National Insurance v.
A.B.C. India reported in ILR 1991 Kar 4100, although the particular clause conferred
exclusive jurisdiction on courts in Calcutta, the undisputed facts were that the goods
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originated from and were entrusted to a carrier in Bangalore and were lost in transit at
Andhra Pradesh. In Secretary, Vikalanga Sevaka v. Sheth reported in 1983 KLT 652
the clause pointed to Delhi but the court held that driving the parties to Delhi would
be oppressive having regard to the surrounding circumstances. Indian Mineral v.
Deutsche Bank reported in (2004) 12 SCC 376 was not a case on deciding the effect of
choice of forum but simply a case on revocation of leave on the ground of absence of
cause of action for attracting the jurisdiction of this court. United India v. Associated
Transport reported in AIR 1988 Ker 36 following Hakam Singh v. Gammon India,
(1971) 1 SCC 286 : AIR 1971 SC 740 held that the printed words containing the
ouster clause without further affirmation by the parties was simply not enough to bind
the parties to such clause. Rickmers Verwaltung reported in (1999) 1 SCC 1 dwelt on
the particular facts to arrive at the finding that there was no meeting of mind between
the parties to show a concluded bargain. There cannot be any contrary view to the
principle laid down in S. Vanathan Muthuraja reported in (1997) 6 SCC 143 which was
a decision on the assumption of jurisdiction of civil courts to try all suits under section
9 of the CPC unless specifically barred except that it has little relevance to the case in
hand. Since Hakam Singh has provided the basis in several of these cases, paragraphs
17 and 18, of the said decision set out below, should be seen in context;
“(17) When there is choice of forum, it is certainly open to the parties to agree
on an exclusive forum for settlement of disputes. But such an agreement must be
clearly spelled out either by express words or by necessary implication. Ouster of
jurisdiction of Courts cannot be lightly assumed or presumed. If there is such a
concluded agreement, it will certainly operate as estoppel against the parties to the
contract. If it is merely a unilateral affirmation or statement made by one of the
parties, as long as it is not shown that the statement has been accepted by the
other party as a term or condition of the agreement, it cannot be held that there is
an agreement to confer exclusive jurisdiction on any Court. Particular caution is
necessary in regard to such a clause contained in a printed form, as in this case.
Where the printed form is signed by both the parties or where a form printed by
one party is signed by the other party and forwarded by the latter to the former and
the printed form contains clear words conferring exclusive jurisdiction on a Court at
any particular place or ousting jurisdiction of the Court at any other place, it may
not be difficult to hold that the parties have agreed on such a term. Even in such
cases, Courts must remember that people often sign order forms containing a good
deal of printed matter, without caring to read what is printed. It cannot always be
said that everything which is printed may be deemed to form part of the contract.
Where a form printed by one party is signed only by that party and delivered to the
other party, without anything more it will be difficult for the Court to hold that there
has been consensus ad idem in regard to the particular clause. Of course, if there is
some other material to indicate acceptance or consent of the party who received the
printed form, then the Court is free to infer that the clause formed party of the
agreement.
(18) If it can be held that the printed clause in the consignment note in this case
formed part of the agreement, there is clearly ouster of jurisdiction of Courts at
Caliuct. The form was not printed by the transport undertaking. It was signed by an
employee of the undertaking. It was not signed by the consignor, second plaintiff. It
was merely delivered to the consignor. Contract was entered into not by
correspondence. It was a case of a single transaction covered by a single bill. The
words themselves are printed in small letters at the very bottom of the way bill.
There is no other material before the Court to show that this printed material was
brought to the notice of the second plaintiff or that the second plaintiff had
accepted the same. In these circumstances, I hold that this particular clause did not
form part of the agreement between the parties. Parties did not agree to oust the
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jurisdiction of the Court at Calicut or to vest exclusive jurisdiction in Courts at

Calcutta.”
9. The principle that printed words, unless unequivocally affirmed, cannot be held
to be sacrosanct, cannot be faulted on logic, but what Hakam Singh also qualifies is
that consensus can be gleaned from the acceptance or consent by a party who
received the clause selecting the forum. In other words, parties must show by conduct
or by ‘some other material’ that they intend to give effect to such clause. This
qualification is what the instant matter rests on. The plaintiff supplied the goods and
demanded payment through invoices by putting in the clause “subject to
Raipur/Nagpur jurisdiction only”, the defendant made payment to the plaintiff
(thereby accepting the forum-selection) and the plaintiff credited the payment to its
bank account. Hence the reasonable window provided in Hakam Singh to instances of
acceptance without a careful reading of the printed form, is not the case here at all. In
any event, in all the cases, the party seeking to resile from the clause was at the
receiving end - literally - of the ouster clause. In this case, it is the plaintiff who chose
Raipur/Nagpur and filed the suit in the Calcutta High Court.
10. The principle can be simplified thus; parties can be bound to an agreement
containing a clause conferring exclusive jurisdiction on certain courts, if by their
conduct subsequent to such selection, it can be shown that the parties intended to
give effect to the contract. The exception being where despite such a clause and a
consensus to act by it, the cause of action arose wholly and overwhelming-ly in
another jurisdiction and second, it would be oppressive to drag the parties to their
chosen forum having regard to other factors.
11. Two of the decisions cited by Mr. Banerji for the defendant, hinge on the forum
selection clause being circumvented by reason of extreme inconvenience caused to the
parties (Isha Distribution House v. Aditya Birla reported in AIR 2017 Cal 75) or the
facts warranting filing a suit elsewhere on the ground of balance of convenience
particularly where the entire evidence was found to be available at Madras and the
expenses of calling the witnesses to Kolkata was held to amount to injustice on the
said witnesses; The dictum followed by this Court in Karam Chand Thapar v. Inder
Mohan Kapoor reported in AIR 1972 Cal 82 was whether in acquiring jurisdiction,
serious prejudice would result to the defendant if the suit were to be proceeded within
the Court where it has been instituted with leave under Clause 12.
12. The facts in Carbon Management v. Yash Paper reported in 2017 SCC OnLine
Cal 3481 were somewhat similar to the case at hand. In that decision the forum
selection clause relied upon by the plaintiff was contained at the foot of the work
order. However, in that case, the issue was whether the forum selection clause
subsequently incorporated in the work order by the defendant, could be said to be
within the knowledge of the plaintiff. On facts, the plaintiff was found to have relied on
the said work order bearing the forum selection clause and the parties were thus held
to be bound by the agreement containing the particular clause. Swastik Gases v.
Indian Oil Corporation reported in (2013) 9 SCC 32 pitched the intention of parties
conferring jurisdiction on particular Courts on a higher plane of exclusivity even
without words signifying such exclusivity. The aforesaid finding was significant and
remains significant in all cases were a party to the contract takes the plea of either not
having knowledge of or not agreeing to the clause conferring jurisdiction to particular
Courts. The said decision was founded on an application under Section 11 of The
Arbitration and Conciliation Act, 1996, where the respondent in the application took
the plea that the Court in which such application was filed lacked territorial jurisdiction
in view of the underlying agreement being subjected to the jurisdiction of the Courts
at Kolkata.
13. The principle which emerges from the above decisions is that where parties
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have agreed to confer exclusive jurisdiction to a Court located at a particular place, the
intention of the parties to exclude all other Courts must be given primacy. An
exception to this would be where one of the parties to the agreement pleads ignorance
of the clause or proves by conduct supported by evidence that the clause was an
unilateral addition to the agreement by one party only and not affirmed by the other.
The other exception would be where despite both parties agreeing to confer exclusive
jurisdiction on certain Courts, filing or continuing proceedings in the Court agreed
upon would either be oppressive or cause insurmountable inconvenience to either of
the parties. A third exception can also arise from sheer practicality and common
sense; where the evidence forming the basis of the dispute and the witnesses who
would bring that evidence to light are located in a jurisdiction other than that agreed
upon by the parties. A fourth exception would be where parties have concurred to
confer jurisdiction of a Court which is otherwise not competent to try the proceedings.
The second and the third exceptions are of course connected in that both would
involve expenses of travel and avoidable hardship to either of the parties.
14. But what really emerges as the fundamental basis in the gamut of decisions
cited, is that, a forum selection clause is almost always challenged by the party who
has filed a suit in derogation thereof. Hence, in such cases it is the defendant (or
opponent) who invokes the forum selection clause to denude the Court of its
jurisdiction to try the suit. The decisions cited by Counsel will therefore, have to be
seen in the light of who is asserting the clause to confer exclusive jurisdiction on the
court concerned.
15. From the facts and documents on record, there is no doubt that the agreement
between the plaintiff and the defendant for sale and purchase of goods was entirely
contemplated to be performed outside the jurisdiction of this Court. The purchase
orders issued by the defendant/buyer are forum-neutral although they were addressed
to the plaintiff at Chhatisgarh and Maharashtra where they were also received. The
invoices raised by the plaintiff for supply of the goods in question contained an
unambiguous and specific forum selection clause. The choice made by the defendant
in inserting the clauses “subject to Raipur jurisdiction only” and “subject to Nagpur
jurisdiction only” indicate that the parties had agreed to be subjected only to Courts in
these jurisdictions. Indeed, the forum selection clause was acted upon and given
effect to almost immediately thereafter by the plaintiff/seller supplying the goods to
the defendant/buyer and the latter in turn making part payment towards the supplies
made. This factor assumes relevance in the light of the argument of counsel for the
plaintiff that the forum selection clause was a later addition to the oral agreement and
remained inconclusive in the absence of the defendant's confirming the same. This
argument is curious since it was the plaintiff who inserted the forum selection clause
in the invoice. Even if it were to be assumed that the plaintiff became unhappy later
on with the clause, there is no material to show that the parties agreed to modify the
forum selection clause by a subsequent agreement. In pursuance of the agreement,
the plaintiff not only supplied the goods at various places in Andhra Pradesh, Assam,
Chattisgarh, Karnataka and other states outside West Bengal, but also proceeded to
issue invoices from its offices located at Nagpur and Raipur. There is also no averment
that the plaintiff, being unhappy with the forum selection clause or otherwise,
returned the payments received from the defendants for supply of goods. In this
context, Mr. Singh has argued that money was accepted and credited to the account of
the plaintiff for the goods supplied. If this true, then what is the oral agreement on
which the plaint rests? And what is the cause of action in the suit for which the
plaintiff has claimed a decree for Rs. 1,30,42,129/? The plaintiff admittedly instituted
the suit in this Court by seeking and obtaining leave under Clause 12 of the Letters
Patent on the basis of the oral agreement entered into between the parties within the
jurisdiction of this Court and for payment having been received in the bank account of
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the plaintiff maintained at IDBI Bank, Park Street Branch within the jurisdiction of this
Court. What needs to be seen therefore, is whether the oral agreement and payments
being credited to the plaintiff within the jurisdiction of this Court outweighs the forum
selection clause inserted by the plaintiff which determined the cause of action between
the parties thereafter. The unambiguous words signifying the intention of the parties
to confer exclusive jurisdiction on Raipur and Nagpur (to the exclusion of all other
jurisdiction), would be a clear indicator of what the parties intended to be bound by.
16. Counsel for the plaintiff has urged there was no meeting of mind between the
parties and hence the particular clause cannot be given any weightage. If this is taken
to be true, one may ask what further evidence can be called for to show that the
parties were in perfect sync to be bound by the agreement including a choice of forum
to seek redress in case disputes arose under the agreement? No case has also been
made out by the plaintiff to show that approaching the Courts in Raipur or Nagpur
would be oppressive or that the evidence pertaining to the dispute is in Calcutta which
would result in inconvenience to either of the parties if the suits were to be tried in
Raipur or Nagpur. In any event, the plea of inconvenience should be taken by the
party who is resisting a forum selection clause either on the ground of expenses for
travel or for the reason that all material evidence is lying elsewhere and not at the
place which the parties have selected. None of the aforesaid two factors have been
urged in this case.
17. In view of the reasons stated above, there is no basis to presume that the
parties have given a go-by to the clause conferring exclusive jurisdiction to Raipur and
Nagpur. GA No. 44 of 2018 is accordingly allowed. There shall be an order in terms of
prayers (a) and (b) of the said application. The plaint filed in Civil Suit No. 31 of 2016
is directed be taken off the file of this Hon'ble Court.
18. The defendants have filed another application being GA No. 45 of 2018 for
grant of unconditional leave to defend the suit. Such application is allowed.
19. Urgent photostat certified copy of this order, if applied for, be supplied to the
parties upon compliance with all requisite formalities.
———
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