M/S SHIV SHAKTI INTERNATIONAL PVT LTD v. PURSIYA JITENDER KUMAR & ANR

1. The present Appeal is filed under Section 13 of the Commercial Courts Act, 2015 read with Section 104 of Code of Civil Procedure, 1908 (“CPC”) being aggrieved by the order dated 08.04.2024 (“impugned order”) passed by learned District Judge, West District, Tis Hazari Courts, New Delhi (“District Court”) in Civil Suit (Commercial) No. 488/2023 (“Suit”).

2. Vide impugned order the learned District Court has allowed the application filed by the respondents under Order VII Rule 10 of CPC on the ground of lack of territorial jurisdiction. Being aggrieved by the impugned order, the Appellant has preferred the present Appeal.

3. The Appellant is in the business of trading of hardwood, softwood and the allied products such as plywood, timber, etc. The Appellant has its registered office at Delhi and carries out its business operations from Delhi only.

4. Respondent No. 1 is engaged in retail business of wood product and Respondent No. 2 is the concerned official of Respondent No. 1. The Respondents approached the Appellant at its registered office in Delhi to purchase the imported timber (“products”). After negotiations the Appellant agreed to supply the products to the Respondents against the payment agreed between the Parties.

5. Since October 2019, the Respondents placed several orders for the supply of the products. The Respondents made part payments to the Appellant, for which the GST returns pertaining were filed by the Appellant from its Delhi office. The Respondents had also taken the Input Tax Credit against the GST paid by the Appellant, which showed the successful delivery of the products to the Respondents. After some time, the Respondents stopped making payments to the Appellant and despite various assurances by Respondent No. 2, the Respondents failed to release the outstanding amounts.

6. In view of the huge outstanding dues, the Appellant filed the Suit before the District Court for recovery of ₹84,35,145/- including interest @ 18% per annum from the date of default till 01.04.2021 from the Respondents.

7. The learned District Court vide order dated 22.09.2023 issued summons to the Respondents. The Respondents filed the Written Statement along with Affidavit of admission and denial. The Respondents also filed 3 Applications including an Application under Order VII Rule 10 of CPC. The Respondents submitted that the self-generated invoices filed by the Appellant along with the Suit stated that “SUBJECT TO GANDHIDHAM JURISDICTION” and, therefore, the learned District Court did not have territorial jurisdiction to adjudicate the Suit.

8. The learned District Court vide impugned order allowed the Application under Order VII Rule 10 of CPC and returned the Plaint to the Appellant to be presented in the Court having territorial jurisdiction. The learned District Court observed that since the issue of territorial jurisdiction goes to the root of the matter, the Application under Order VII Rule 10 of CPC be decided at the outset. It was further observed that the Appellant had supplied the products to the Respondents against invoices that were generated by the Appellant itself and filed along with the Suit, which mention a clause conferring jurisdiction to Courts at Gandhidham. The invoices were generated in Gandhidham, Gujarat and the products were supplied to the Respondents in Bengaluru, Karnataka. Paragraph No. 19 of the Plaint stated that since the Respondents approached the Appellant at Delhi and the cheques issued by the Respondents were presented by the Appellant in Delhi, the part of cause of action had arisen within the jurisdiction of the learned District Court.

9. The learned District Court has observed in the impugned order that the law is well-settled where part of cause of action arises within the jurisdiction of multiple Courts, the parties are free to confer exclusive jurisdiction upon one of such Courts provided that the parties by their agreement, cannot confer jurisdiction upon a Court, where no part of cause of action has arisen. As the invoices were generated by the Appellant, the Appellant was not entitled to claim that the Appellant did not intend to act on the terms and conditions of the invoices generated by itself.

10. The learned District Court examined the decision of the Supreme Court in Swastik Gases (P) Ltd. v. Indian Oil Corpn. Ltd. (2013) 9 SCC 32, which held that it is not necessary to use words like “alone”, “only”, “exclusive” or “exclusive jurisdiction” whilst providing for jurisdiction clause in the agreement and if the agreement clearly and unambiguously provides that Courts at one of the places where the cause of action has arisen shall have jurisdiction, that Court alone shall have the jurisdiction. This is because the expression of one is the exclusion of another. By making a provision in the agreement with regard to the jurisdiction of one of the Courts, the parties impliedly excluded the jurisdiction of other Courts. Where the contract specifies a jurisdiction of the Courts at a particular place and such Courts have jurisdiction to deal with the matter, an inference may be drawn that parties intended to exclude all other Courts.

11. In view of the above, the learned District Court held that the Parties were clear and unambiguous that the Courts at Gandhidham shall have jurisdiction and there is nothing to indicate to the contrary. When part of cause of action arose within the jurisdiction of Gandhidham Courts, the jurisdiction clause agreed to by the Parties has to be acted upon. Accordingly, the learned District Court held that when the Parties agreed to confer jurisdiction to the Court at Gandhidham, the learned District Court lacked territorial jurisdiction in view of the judgment of the Supreme Court in Swastik Gases (supra).

12. The learned Counsel for the Appellant has submitted that when two Courts have jurisdiction to entertain the Suit, the Appellant has an option to choose the Court where the Suit can be filed by the Appellant. Since the Respondents had approached the Appellant at its registered office in New Delhi and even the cheques given by the Respondents were presented and dishonoured at New Delhi, the learned District Court had the territorial jurisdiction to decide the Suit as part of cause of action had arisen at Delhi within the jurisdiction of the learned District Court. Given that the invoices did not use the expression “only”, “alone” or “exclusive” in the jurisdiction clause, the jurisdiction of the learned District Court was not excluded.

13. The learned Counsel for the Appellant relied upon the decision of the 2-Judge Bench of the Supreme Court in A.B.C. Laminard Pvt. Ltd. & Ors. v. A.P. Agencies, Salem (1989) 2 SCC 163. The learned Counsel for the Appellant also relied upon the decision of 2-Judge Bench of the Supreme Court in R.S.D.V. Finance Co. Pvt. Ltd. v. Shree Valabh Glass Works Ltd. (1993) 2 SCC 130, wherein it was held that the cause of action had arisen where the amount was paid by cheque and the same was deposited. When the jurisdiction clause does not contain the ouster clause, the maxim “expression unius est exclusio alterius” cannot be applied.

14. The learned Counsel for the Appellant relied upon the decision of 2- Judge Bench of the Supreme Court in New Moga Transport Company v. United India Insurance Company & Ors. (2004) 4 SCC 677, wherein it is held that if two Courts or more have jurisdiction to try a Suit, an agreement between the parties that dispute between them to be tried in any one of such Courts will not exclude the jurisdiction of the other Court unless such intention to exclude is reflected in clear, unambiguous, explicit and specific terms. In such case only the exclusion of the jurisdiction would bind the parties.

15. The learned Counsel for the Appellant has sought to distinguish Swastik Gases (supra) relying upon the findings in A.B.C. Laminart (supra) and R.S.D.V. Finance (supra). The learned counsel for the Appellant has also replied upon various decisions of the High Courts including this Court.