SUPREME COURT ON APPLICATION OF EXCLUSIVE JURISDICTION CLAUSES
M/S Swastik Gases Pvt.Ltd vs Indian Oil Corp.Ltd
(2013) 9 SCC 32
Respondents, Indian Oil Corporation (IOC) and IBP Ltd, (collectively “the Company“), was engaged in the business of storage, distribution of petroleum products and other related products. Appellant, M/s. Swastik Gases Private Limited, dealt in storage, distribution of petroleum products including lubricating oils in Rajasthan and its registered office is situated at Jaipur.
An agreement was entered into between the Appellant and the Respondent on 13.10.2002 whereby the Appellant was appointed as Respondent’s agent for marketing lubricants at Jaipur (Rajasthan). In November, 2003, disputes arose between the parties as huge quantity of stock of lubricants could not be sold by the Appellant and on 16.07.2007, the Appellant sent a notice to the Respondent claiming a sum of Rs. 18,72,332/- failing which they could take recourse to legal action against the Respondent.
Thereafter, on 25.08.2008 another notice for invoking arbitration was sent by the Appellant appointing a retired judge of High Court as its arbitrator and requesting the Respondent to name another arbitrator within 30 days failing which they could proceed as per Section 11 of the Arbitration Act.
Since the Respondent did not appoint any arbitrator, the Appellants approached the High Court under Section 11 for appointment of arbitrator. The Respondent contended that Rajasthan High Court lacks territorial jurisdiction (because clause 18 specifies that agreement shall be subject to jurisdiction of the Courts at Kolkata) under Section 11 of the Arbitration Act.
The bench applied A.B.C. Laminart Pvt. Ltd. and Anr. vs. A.P. Agencies, Salem and held that Rajasthan High Court did not have any territorial jurisdiction to entertain the application and dismissed the same while giving liberty to the Appellant to file the case in the Calcutta High Court due to which the present appeal arose.
- Whether Rajasthan High Court has territorial jurisdiction?
- Whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur?
Whether Rajasthan High Court has territorial jurisdiction?
Appellant: This is for the reason that: (i) The regional office of the Respondent – company is situate at Jaipur; (ii) the agreement was signed at Jaipur; (iii) the consignment agency functioned from Jaipur; (iv) all stock of lubricants was delivered by the company to the Appellant at Jaipur; (v) all sales transactions took place at Jaipur; (vi) the godown, showroom and office of the Appellant were all situated in Jaipur; (vii) various meetings wsere held between the parties at Jaipur; (viii) the company agreed to lift the stock and make payment in lieu thereof at a meeting held at Jaipur and (ix) the disputes arose at Jaipur.
Respondent: That Clause 18 of the agreement, it was apparent that the parties intended to exclude jurisdiction of all courts other than the courts at Kolkata.
When it comes to the question of territorial jurisdiction relating to the application Under Section 11, besides the above legislative provisions, Section 20 of the Code is relevant. The explanation appended to Section 20 clarifies that 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., there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter.
Whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur?
Appellant: The contention of the learned Counsel for the Appellant was that even though Clause 18 confers jurisdiction to entertain disputes inter se (among) parties at Kolkata, it does not specifically bar/oust jurisdiction of courts at Jaipur where also part of the cause of action has arisen.
Respondent: If no ouster words (like only, exclusively etc.) have been used then the maxim expression unius est exclusion alterius (which means expression of one is the exclusion of another) comes into play as there is nothing to indicate to the contrary. As per the above maxim making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other Courts. The Respondent relied on the following decisions among others-
Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, we think that an inference may be drawn that parties intended to exclude all other courts as per the maxim of expression unius est exclusionalterius. Therefor a clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor is it against the public policy. It does not offend Section 28 of the Contract Act in any manner.
Appeal was dismissed and appellant was given liberty to approach Calcutta High Court.
Author: Kaushik Babu | Editor: Vivek Verma | Image from here