Thursday 25 July 2019

When jurisdiction of court will not be excluded even if there is ouster clause in contract?

Thus it is now a settled principle that where there may be two or more competent Courts which can entertain a suit consequent upon a part of the causes action having arisen there within, if the parties to the contract agree 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 can not be understood as parties contracting against the Statute
Mercantile Law and practice permit such agreements.
19. In Nazirrudtn v. V.A. Annamalai and Ors. 1978 (2) M.LJ. 254 where the question was whether Rule 35 of U.P. State Lottery Rules, 1969 confined the jurisdiction only to Lucknow. The Rule said:

35. Legal jurisdiction in all matters concerning the State lottery shall be Lucknow". The sole question for consideration therefore was whether the above Rule had the effect of vesting exclusive jurisdiction only in the Courts in Lucknow and thereby taking away the jurisdiction which the subordinate judge court at Vellore could have if it was established that the lottery ticket was stolen within the jurisdiction of that Court from the first respondent. Held, it was well established that the jurisdiction of a civil Court can be taken away only by an express provision or by necessary implication and ousting of a jurisdiction of civil Court should not and ought not be inferred from an ambiguous provision. In that particular case it was common case of the parties that Rule 35 did not expressly take away the jurisdiction of any other Court and vest the exclusive jurisdiction only in the Court at Lucknow A note of caution was sounded by M.P. Thakkar, J, as he then was, in Shehali Kumar Sarabhal v. E.T. Orgn. MANU/GJ/0070/1975 : AIR1975Guj72 observing that the ouster clause could operate as estoppel against the parties to the contract, but it could not tie the hands of the Court and denude it of the powers to do justice. Ordinarily, it was observed: the Courts would respect the agreement between the parties which was borne out of the meeting of their minds out of consideration of convenience, but the Courts were not obliged to do so in every case, and that a new approach to the question deserved to be made where the ouster clause was 'calculated to operate as an engine of oppression and as a means to defeat the ends of justice". In such a case the free consent may be wanting and injustice may be avoided.
20. When the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause properly. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting factor for jurisdiction to the Courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto take away jurisdiction of other Courts. Thus, in Salem Chemical Industries v. Bird & Co. MANU/TN/0285/1979 : AIR1979Mad16 where the terms and conditions attached to the quotation contained an arbitration clause provided that : "any order placed against this quotation shall be deemed to be a contract made in Calcutta and any dispute arising therefrom shall be settled by an Arbitrator to be jointly appointed by us" it was held that it merely fixed the situs of the contract at Calcutta and it did not mean to confer an exclusive jurisdiction on the Court at Calcutta, and when a part of the cause of action had arisen at Salem, the Court there had also jurisdiction to entertain the suit under Section 20(c) of the CPC.

21. From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction, As regards construction of the ouster clause when words like 'alone', 'only, 'exclusive' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim 'expressio unius est exclusio alterius' expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed.


Civil Appeal No. 2682 of 1982

Decided On: 13.03.1989

A.B.C. Laminart Pvt. Ltd. vs. A.P. Agencies, Salem

Hon'ble Judges/Coram:
G.L. Oza and K.N. Saikia, JJ.

Citation: 1989 Supreme Court Cases Volume-II page-163.
Read full judgment here: Click here

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