Decided on August 14,1968

M/S The National Nut Company Cashew Exporter Appellant
M/S. Haridas Damodar Anandji Filhos Ltd. And Another Respondents


E.K. Moidu, J. - (1.) THE question that arises for decision in this civil miscellaneous appeal is whether the court of the Subordinate Judge, Quilon has jurisdiction to entertain the appellant's suit. The Subordinate Judge answered the question in the negative, and hence the appeal by the plaintiff. The suit against defendants 1 and 2 (respondents 1 and 2 herein) is based upon a contract of sale evidenced by Ex. P1 to recover damages to the tune of Rs. 38,718.75 inclusive of interest for breach of that contract. The 1st respondent is a resident at Mozambique, East Africa and the appellant is a resident at Quilon (Kerala). Ext. P1 dated 30 -11 -1963 was executed by the 1st respondent at Mozambique and by the appellant at Quilon for the sale of 125 tons of dry cashew -nuts at the rate of Rs. 841.25 a ton to be shipped and delivered to the appellant at Port Cochin on payment of 95 % of the invoice value under the Bill of Lading. On arrival of the cashew -nuts, it was found that the nuts did not conform to the quality contracted for. So, in the presence of the 2nd respondent, who is the agent of the 1st respondent at Bombay, a cutting test of the samples was conducted at Cochin, when it was found that 42 1/33 % of the nuts consigned were useless and, therefore, allowing the agreed margin of 10 % for tolerance the extent of the damage was fixed at 33 1/3 % by mutual agreement. On the basis of this, the loss of the appellant was arrived at Rs. 33,491.24 P. which is sought to be recovered as damages from respondents 1 and 2 with interest at 6% from 30 -11 -63.
(2.) THERE is a provision in Ex. P1 contract that only the Bombay court shall have jurisdiction for any legal proceeding in connection with or arising out of the contract. It is basing upon this clause in the contract that it is contended on behalf of the respondents that the jurisdiction to try the suit vests only in the Bombay court and not in the Quilon court. Section 20 of the Civil Procedure Code provides that every suit shall be instituted within the local limits of whose jurisdiction the defendants reside or carry on business or work for gain or where the cause of action arises wholly or in part. In the instant case, it is admitted that the whole of the cause of action had risen within the local limits of the Subordinate Judge's court, Quilon. Therefore, the Subordinate Judge, Quilon has jurisdiction to try and dispose of the suit but for the bar of jurisdiction to which the parties had subscribed in Ex. P1, which provides Bombay as the sole place for suing if the parties resorted to court on account of the breach of the contract. If two courts have concurrent jurisdiction to try a case, there is nothing contrary to law in an agreement between the parties that the dispute between them should be tried by one court rather than the other. But, the parties cannot by agreement oust the jurisdiction of a court having jurisdiction and vest jurisdiction in a court otherwise not competent. On this point reference may be made to the relevant portion of Section 28 of the Indian Contract Act. It runs as follows: - - Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.
(3.) THE section lays down the principle that an agreement in restraint of legal proceedings is void. In the instant case, no part of the cause of action under the contract arose within the jurisdiction of the Bombay court. The 1st respondent being a permanent resident of East Africa, it cannot also be contended that the test of residential qualification will be complied with by the institution of the suit in the court in Bombay. The 2nd respondent is not a party to the contract. His residence at Bombay is therefore no consideration for holding that the suit should be filed in Bombay as he is not a party to Ex. P1. Having found that Bombay is not the place for instituting the suit either as the place in which the cause of action has arisen or as the place where the 1st respondent lives, the court in Bombay cannot be invested with jurisdiction by agreement of parties as it would offend the statutory provision contained in Section 28 of the Contract Act. On this principle, Koshi, C.J. after considering the relevant authorities, observed as follows at page 203 of the reports in Mohammed Kasim Haji Ahamed Kunju v. Sree Hanuman Industries (A.I.R. 1956 T.C. 200). The passage referred to from Pollock and Mulla's contract Act and Mulla's Civil Procedure Code, the two decisions of this court and the Madras decision cited at the beginning of the judgment referred to in the Madras case clearly show that an agreement seeking to invest a court which has no jurisdiction with authority to try disputes arising out of a contract is void and cannot be pleaded as a bar to a suit brought in violation of that agreement - -see also - -'Crawley v. Luchmee Ram', 1 Agra HCR (Civ.) 129 (R) and - -38 Cochin LR 208 (S).;

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