Mohd. Ghous v. Subhash Taneja

Delhi High Court · 07 Aug 2023 · 2023:DHC:5647

Chandra Dhari Singh

C.R.P. 204/2023

2023:DHC:5647

civil petition_dismissed Significant

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The Delhi High Court upheld the Trial Court's order holding that part of the cause of action arose in Delhi and that the exclusive jurisdiction clause in the contract was valid, dismissing the revision petition under Section 115 CPC.

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C.R.P. 204/2023
HIGH COURT OF DELHI
Date of order: 7th August, 2023

C.R.P. 204/2023 & CM APPL. 39959/2023 & CM APPL. 39960/2023
MOHD. GHOUS ..... Petitioner
Through: Mr. Chirag Mittal, Advocate

VERSUS

SUBHASH TANEJA ..... Respondent
Through: Nemo

CORAM:

HON'BLE MR. JUSTICE CHANDRA DHARI SINGH
CHANDRA DHARI SINGH, J (Oral)

ORDER

1. The instant revision petition under Section 115 of the Code of Civil Procedure, 1908 (‘Code’ hereinafter) has been filed on behalf of the petitioner seeking the following reliefs: “a) set aside the impugned order dated 18.05.2023 passed by the Court of Sh. Virender Bhat, Ld. District Judge Commercial Court, North Rohini, Delhi wherein the application under Order VII Rule 10 as well as application under Order VII Rule 11 CPC filed by the Petitioner/Defendant in the Civil suit (commercial) NO. 645/2022 titled as Subhash Taneja Versus Mohd. Ghous were dismissed by the Ld. District Judge (Commercial). b) pass any such other or further order which this Hon 'ble Court may think fit and proper in the interest of justice.”

2. The parties in the instant case are engaged in the business of buying and selling apples, regularly entering into agreements for the purchase and sale of the said commodity. The respondent/plaintiff had supplied the goods worth Rs. 32,00,000/- to the petitioner/defendant but the amount was not paid by the petitioner on account of financial difficulties.

3. On 6th September, 2019, the parties entered into a settlement agreement for a total amount of Rs. 15,00,000/-, to be paid by the petitioner/defendant in 10 installments of Rs. 1,50,000/- each, but the same was also defaulted by the petitioner except the initial installment of Rs. 1,50,000/-.

4. On 2nd November, 2022, the respondent/plaintiff filed a suit in Rohini District Court, Delhi, against the petitioner for the recovery of an amount of Rs. 40,56,500/-. In the said suit, the petitioner filed applications under Order VII Rule 10, of the Code seeking return of the plaint on the grounds that no cause of action arose within the territorial jurisdiction of the Courts at Delhi, and under Order VII Rule 11 of the Code, seeking rejection of the plaint on the grounds that the alleged payment has already been made to the respondent.

5. The learned Trial Court vide order 18th May, 2023 dismissed the applications filed by the petitioner and held that the cause of action partly arose in favor of the respondent/plaintiff as the respondent had supplied goods to the petitioner from its office in Azadpur, Delhi and the payment was required to be made by the petitioner/defendant in the bank account of the respondent/plaintiff which also falls within the territorial jurisdiction of the Courts situated in Delhi. Aggrieved by the same, the petitioner has preferred the present revision petition under Section 115 of the Code against the impugned order.

6. The learned counsel appearing on behalf of the petitioner submitted that the learned Trial Court failed to appreciate that the suit filed by the respondent is based on a settlement agreement executed between the parties in Telangana and no cause of action arose in favor of the respondent within the territorial jurisdiction of the Delhi Courts.

7. It is submitted that the learned Trial Court passed an order without considering that the respondent had failed to provide bank account details of the concerned person and the Court solely relied upon the oral contentions of the respondent regarding the existence of a bank account in Azadpur, Delhi, which erroneously established that a portion of the cause of action arose in Delhi.

8. It is further submitted that the learned Trial Court had subsequently referred to clause 5 of the agreement where it was stated that disputes, if any, between the parties shall be subject to the jurisdiction of the courts in Delhi, but the same is only applicable when there is jurisdiction of the two competent Courts, which is not there in the present case and the Courts at Telangana have the sole jurisdiction to try and entertain the suit as the petitioner resides and works at Adilabad, Telangana.

9. Hence, in view of the foregoing discussions, it is prayed on behalf of the petitioner that the impugned order passed by the learned Trial Court be set aside.

10. Heard the learned counsel for the petitioner and perused the records.

11. In this revision petition, the order passed by the learned Trial Court rejecting the applications filed under Order VII Rule 10 and Order VII Rule 11 is under challenge. At the outset, it becomes imperative to discuss the scope of revision under Section 115 of the Code. It is well settled that scope of revision is very limited and the same was enacted with a view to enable the Courts to correct certain classes of errors of jurisdiction committed by the Subordinate Courts. The said provision is reproduced herein:

115. Revision- [(1)] The High Court may call for the record of any case which has been decided by any Court subordinate to such High Court and in which no appeal lies thereto, and if such subordinate court appears— (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or

(c) to have acted in the exercise of its jurisdiction illegally or with material irregularity, the High Court may make such order in the case as it thinks fit: [Provided that the High Court shall not, under this section, vary or reverse any order made, or any order deciding an issue, in the course of a suit or other proceeding, except where the order, if it had been made in favour of the party applying for revision, would have finally disposed of the suit or other proceedings.] [(2) The High Court shall not, under this section, vary or reverse any decree or order against which an appeal lies either to the High Court or to any Court subordinate thereto.] [(3) A revision shall not operate as a stay of suit or other proceeding before the Court except where such suit or other proceeding is stayed by the High Court.] [Explanation.—In this section, the expression “any case which has been decided” includes any order made, or any order deciding an issue, in the course of a suit or other proceeding.]

12. On bare perusal of the above provision, it is clear that the High Court can only interfere with the orders of the Subordinate Court if the Court has committed illegality or material irregularity in exercise of its jurisdiction. It is imperative to note that under the revisional powers, this Court cannot attack the findings on the facts by the Subordinate Court and can only interfere if any infirmities are found with the exercise of jurisdiction of the Court and not when the courts erroneously decide the cases.

13. The primary object of the revision powers conferred to the High Courts is to prevent subordinate courts from acting arbitrarily, capriciously and illegally while they exercise their jurisdiction. The objective and scope of revisional powers under Section 115 of the Code has been discussed by the courts in a catena of judgments. In D.L.F. Housing & Construction Co. (P) Ltd. v. Sarup Singh, (1969) 3 SCC 807, the Hon’ble Supreme Court delved into the aspect of limited revisional powers given to the High Courts under Section 115 of the Code and held that:

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“5. The position thus seems to be firmly established that while exercising the jurisdiction under Section 115, it is not competent to the High Court to correct errors of fact however gross or even errors of law unless the said errors have relation to the jurisdiction of the Court to try the dispute itself. Clauses (a) and (b) of this section on their plain reading quite clearly do not cover the present case. It was not contended, as indeed it was not possible to contend, that the learned Additional District Judge had either exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction so vested in him, in recording the order that the proceedings under reference be stayed till the decision of the appeal by the High Court in the proceedings for specific performance of the agreement in question. Clause (c) also does not seem to apply to the case in hand. The words “illegally” and “with material irregularity” as used in this clause do not cover either errors of fact or of law; they do not refer to the decision arrived at but merely to the manner in which it is reached. The errors contemplated by this clause may, in our view, relate either to breach of some provision of law or to material defects of procedure affecting the ultimate decision, and not to errors either of fact or of law, after the prescribed formalities have been complied with. The High Court does not seem to have adverted to the limitation imposed on its power under Section 115 of the Code. Merely because the High Court would have felt inclined, had it dealt with the matter initially, to come to a different conclusion on the question of continuing stay of the reference proceedings pending decision of the appeal, could hardly justify interference on revision under Section 115 of the Code when there was no illegality or material irregularity committed by the learned Additional District Judge in his manner of

dealing with this question. It seems to us that in this matter the High Court treated the revision virtually as if it was an appeal.”

14. In Nawab Shaqafath Ali Khan v. Nawab Imdad Jah Bahadur, (2009) 5 SCC 162, the Hon’ble Supreme Court decided the issue related to the jurisdiction of a Court in a civil revision application and held that the jurisdictional questions may not arise only when the Courts act wholly without jurisdiction, but can also arise where other jurisdictional errors are committed by the Subordinate Court. The relevant paragraph is reproduced herein:

“43. A civil revision application although must necessarily having regard to the terminologies used in Section 115 of the Code of Civil Procedure involve the question of jurisdiction, the question which would arise is as to what are the jurisdictional questions. A jurisdictional question may arise not only when a court acts wholly without jurisdiction but also in a case where jurisdictional errors are committed while exercising jurisdiction. There are various facets of “jurisdictional errors”. Taking into consideration any irrelevant fact or non-consideration of a relevant fact would involve jurisdictional issue.”

15. Hence, from the foregoing discussion, it is clear that the High Courts have a limited scope under Section 115 of the Code. Even though the phrases ‘failure of justice’ and ‘irreparable injury’ as used in the provision confer a wide discretionary power to decide whether the interference is called for or not, the same has a limited scope and the Courts can only decide the revision application if the question involves the jurisdiction conferred to the Subordinate Courts.

16. In the instant revision petition, the petitioner has raised the issue of territorial jurisdiction. Therefore, it is imperative to examine whether the learned Trial Court exceeded their powers in adjudicating the matter if the cause of action did not arise in the territorial jurisdiction of the Court.

17. The Clause 5 of the agreement clearly elucidates the power conferred to the Courts in Delhi to adjudicate the dispute, if any, arising out of the settlement agreement. The said clause reads as under: “5 Any dispute or litigation in the above matter shall be under the jurisdiction of Delhi Court.”

18. On perusal of the aforesaid clause, it is clear that the parties agreed to exclusively confer power to the Courts in Delhi to adjudicate the dispute between them, however, it is imperative to examine whether it is legally permissible to mutually decide the exclusive jurisdiction upon the Courts at one of those places to the exclusion of the courts at remaining places.

19. In Angile Insulations v. Davy Ashmore India Ltd., (1995) 4 SCC 153, the Hon’ble Supreme Court delved into the question of whether the parties are legally permitted to confer exclusive jurisdiction to one location and held as under:

“5. So, normally that court also would have jurisdiction where the cause of action, wholly or in part, arises. But it will be subject to the terms of the contract between the parties. In this case, clause (21) reads thus:

“This work order is issued subject to the jurisdiction of the High Court situated in Bangalore in the State of Karnataka. Any legal proceeding will, therefore, fall within the jurisdiction of the above court only.” A reading of this clause would clearly indicate that the work order issued by the appellant will be subject to the jurisdiction of the High Court situated in Bangalore in the State of Karnataka. Any legal proceeding will, therefore, be instituted in a Court of competent jurisdiction within the jurisdiction of High Court of Bangalore only. The controversy has been considered by this Court in A.B.C. Laminart (P) Ltd. v. A.P. Agencies [(1989) 2 SCC 163]. Considering the entire case law on the topic, this Court held that the citizen has the right to have his legal position determined by the ordinary Tribunal except, of course, subject to contract (a) when there is an arbitration clause which is valid and binding under the law, and (b) when parties to a contract agree as to the jurisdiction to which dispute in respect of the contract shall be subject. This is clear from Section 28 of the Contract Act. But an agreement to oust absolutely the jurisdiction of the court will be unlawful and void being against the public policy under Section 23 of the Contract Act. We do not find any such invalidity of clause (21) of the contract pleaded in this case. On the other hand, this Court laid that where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen therewith, if the parties to the contract agreed to vest jurisdiction in one such court to try the dispute which might arise as between themselves, the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague, it is not hit by Sections 23 and 28 of the Contract Act. This cannot be understood as parties contacting against the statute. Mercantile law and practice permit such agreements.”

20. In Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd., (2013) 9 SCC 32, the Hon’ble Supreme Court adjudicated the question of whether jurisdiction clause in the agreement is forbidden by law or against the public policy and replied in negative. The relevant paragraph is reproduced herein:

“31. In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, the Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the Code, there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of the Chief Justice of the Rajasthan High Court has been excluded? 32. For answer to the above question, we have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” have not been used but this, in our view, is not decisive and does not make any material difference. The intention of the parties— by having Clause 18 in the agreement—is clear and

unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By 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. 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. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.”

21. Therefore, from the foregoing discussion, it is crystal clear that insertion of jurisdiction clause in the agreement is neither against the public policy nor forbidden by law. It is well settled that the parties are bound to an agreement containing a clause conferring exclusive jurisdiction on a specific court and the only exception provided, despite there being such a clause, is when the cause of action arose wholly and overwhelmingly in another jurisdiction.

22. The cause of action means the circumstances forming infraction of the right or immediate occasion for action. It is well settled that a suit can only be instituted when there is a cause of action and there can be no suit without a cause of action having accrued in favor of the plaintiff. The jurisdiction of the court in a matter of contract is dependent on the situs of the contract and the cause of action arising through connected factors.

23. In the instant revision petition, the petitioner has argued that the cause of action wholly and substantially arose in Telangana as the petitioner resides in Adilabad, Telangana, however, it is on record that the goods were supplied to the petitioner from Azadpur which is situated in Delhi and the amount to be received by the respondent was mutually decided to be deposited in a bank situated in Delhi.

24. It is not in dispute that clause 5 of the agreement as referred to by the Trial Court provides exclusive jurisdiction to Courts in Delhi to adjudicate the dispute that arise between the parties. Though the agreement was duly signed by the petitioner yet the petitioner has raised objections to the said clause in the application filed before the learned Trial Court as well as in the instant revision petition.

25. In the impugned order dated 18th May, 2023, the learned Trial Court had explained the reasons for part of cause of action accrued within the territorial jurisdiction of Delhi. The relevant paragraph of the impugned order is reproduced herein: “Clause 5 of the above noted settlement agreement reached between the parties clearly states that the defendant shall make the payment in the account of the plaintiff which, as per the contentions of the plaintiff, is at Azadpur, Delhi within the territorial jurisdiction of this Court. Moreover, it is clearly stated in the para NO. 16 of the plaint that goods were supplied to the defendant by the plaintiff from his office at Azadpur, Delhi which also is situated within the territorial jurisdiction of this Court. It is well settled by now that cause of action for filing a suit arises also at the place from where the goods were dispatched as well as at the place where the plaintiff was to receive the payment from the defendant. Hence, since in the instant case, the plaintiff had supplied goods to the defendant from its office in Azadpur, Delhi and the payment was also required to be made by the defendant in the bank account of the plaintiff which is at Azadpur, Delhi within the territorial jurisdiction of this Court, it cannot be said that this Court lacks territorial jurisdiction to try this suit. Clearly, part of cause of action had accrued to the plaintiff at Azadpur, Delhi within the limits of territorial jurisdiction of this Court.”

26. On perusal of the relevant paragraph of the impugned order as well as the foregoing cases, it is clear that the learned Trial Court had rightly rejected the applications filed by the petitioner. The fact that the respondent had supplied goods from Delhi and was legally entitled to receive payment in a bank situated in Delhi is sufficient enough to establish that part of cause of action arose in Delhi and the Courts in Delhi are conferred jurisdiction on the basis of the same. It is also established that the agreement entered into between the parties also exclusively conferred the jurisdiction to the Courts in Delhi.

27. As discussed in the foregoing paragraphs, the Trial Court considered the arguments and objections raised on behalf of the petitioner in his applications filed under Order VII Rule 10 and Order VII Rule 11 of the Code and also appreciated the law laid down qua the objections so raised. There is nothing in the impugned order which suggests that there is any error of jurisdiction or other error which goes to the root of the matter and invites the intervention of this Court while exercising its revisional powers.

28. Therefore, keeping in view the facts, circumstances, the arguments advanced as well as the contentions raised and also the scope of revisional powers settled by law and reiterated by the Hon’ble Supreme Court, this Court is not inclined to allow the instant petition. There is no error in the impugned order dated 18th May, 2023 that warrants interference by this Court in exercise of its revisional powers under Section 115 of the CPC.

29. Accordingly, the instant petition stands dismissed.

30. Pending applications, if any, also stands dismissed.

31. The order be uploaded on the website forthwith.

Mohd. Ghous v. Subhash Taneja

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