Author: Komal Bhati,2nd year student at ICFAI Law School ,Hyderabad.
Citation: (2013) 9 SCC 32
Date of Judgement: 3rd July,2013
Bench: R.M. Lodha, Madan B. Lokur, Kurian Joseph
Original Copy: View
Issues in Question:
- Whether the courts in Rajasthan have jurisdiction, as the cause of action also arose in Jaipur?
- Whether in respect of Clause 18 of the agreement signed between the parties, if any dispute arises the exclusive jurisdiction lies with Kolkata courts or not?
Background of the Case:
- In this case of exclusive jurisdiction, the respondent collectively, Indian Oil Corporation (IOC) and IBP Ltd carried out the business of storing, distributing petroleum products and also dealt with the manufacturing and sales of lubricating oils, fluid, grease and coolant. On 13th October 2002, the company entered into an agreement with the appellant, thereby appointing him as their consignment agent in Jaipur, Rajasthan. The appellant was a marketing agent of lubricants.
- Later, in November 2003, the appellant and the respondent got into disputes regarding the appellant’s failure to sell huge quantities of lubricants. It was requested by the appellant to the respondent that they should either pay back the appellant by taking back all the goods or liquidate the stocks. Even after several attempts, the parties failed to resolve the matter.
- On 16th July 2007, the appellant through a notice claimed an amount of Rs 18,72,332 from the respondent. The appellant also stated that if the respondent fails to make the payment of the claimed amount the appellant would take legal action against the respondent.
- On 25th August 2008 through another notice, the appellant invoked an arbitration clause and named a retired judge as his arbitrator and requested the respondent to name their arbitrator. The appellant stated that if the respondent fails to name their arbitrator within 30 days, the appellant shall file an application under Section 11 of the Arbitration and Conciliation Act,1996.
- When the respondent failed to name their arbitrator, the appellant moved to the Rajasthan High Court and made an application regarding the dispute that arose between the parties under Sec 11 of the said Act asking for the appointment of an arbitrator.
- The respondent took the defence that of a lack of territorial jurisdiction. The respondent pleaded that according to clause 18 of the agreement which read as “The Agreement shall be subject to jurisdiction of the courts at Kolkata.” the Rajasthan High Court lacked territorial jurisdiction in the agreement as the agreement was subjected to the jurisdiction of courts in Kolkata.
- The court analysed that the absence of words that state that the jurisdiction lies exclusively with the courts in Kolkata does not make a difference when it is stated through a clause in the agreement that the jurisdiction regarding it lies with the courts at Kolkata it implies that they intend to exclude the jurisdiction of other courts. The maxim “expressio unius est exclusio alterius” can be applied in this case.
- In an earlier case, Hakam Singh v. M/s Gammon (India) Ltd. it was held that even if more than one court would have jurisdiction but if through the agreement it is specified that the jurisdiction lies with one particular court then the disputes cannot be tried in courts other than the said court.
- Hence, the appeal was dismissed and the appellant was given the option by the Supreme Court of filing an application before the courts in Kolkata.
- This is one of the cases that came in front of the Supreme court regarding the issue of exclusive jurisdiction of a court. It was not disputed in the case that the cause of action has arisen in Kolkata along with Jaipur but the issue of the case was whether according to clause 18 of the agreement the appellant can take the case in the courts of Jaipur or not, or in that matter any other court other than the courts in Kolkata.
- Talking about territorial jurisdiction, if a company has its principal office in one state and a number of subordinate offices in other places then the dispute can be taken to courts in the place where the cause of action took place. Whereas, if through a clause the jurisdiction is exclusively held with the courts in a specific place then the disputes can not be taken to any other courts. In this case, clause 18 of the agreement signed between the parties specified that the jurisdiction in the matter of any dispute lies with the courts in Kolkata. Even though the word “exclusive” was missing in the clause, the intention was clear and the court took that in consideration while giving the judgement. Such clauses are lawful and hence the court resorted to the maxim “expressio unius est exclusio alterius” to clarify the situation, which means that when one of the options or possibilities is expressed then the other is excluded by default.