CONTINENTAL DRUG CO LTD Vs. CHEMOIDS AND INDUSTRIES LTD

JUDGEMENT

(1.) THIS Rule has been obtained by the defendants against an order made by the Subordinate Judge, 7th Court, 24-Parganas, in Title Suit No. 83 of 1953, by which the learned Subordinate Judge has decided the question as to whether he was competent to try the suit. The plaintiffs-opposite parties instituted the suit for a declaration that under an agreement dated 23-12-1950, the plaintiffs were the sole distributors of the defendants and also for a decree for accounts against the defendants and for recovery of certain sums of money as commission and damages. The agreement which was relied upon by the plaintiffs as the foundation of their claim contains a clause which runs as follows: "Any dispute arising between the parties, settlement of same legally or otherwise, will be decided in Bombay." The defendants raised a preliminary point to the effect that under the aforesaid clause of the agreement, it was only the Bombay Court which would be competent to try the suit. The learned Subordinate Judge has held in substance that the agreement in question amounts to an arbitration clause and as there was no proper application under Section 34, Arbitration Act, by the defendants he was not prepared to give effect to that clause and therefore overruled the plea raised by the defendants. Against this decision the defendants have obtained the present Rule.

(2.) MR. Mukherjea, appearing in support of the Rule, has placed before us decisions of different High Courts of India in which the effect of an agreement like this has been considered and MR. Ghose, appearing on behalf of the opposite parties, has also invited our attention to certain other decisions which according to him support his view. It is a well settled proposition of law that litigants cannot, by private agreement, confer jurisdiction upon a Court which it does not possess nor can they divest a Court of jurisdiction which it possesses under the ordinary law. In the case before us, it is conceded that both the Bombay Court and the Alipore Court have concurrent jurisdiction to try the suit. The question is whether the agreement by which the Bombay Court was chosen as the forum for the disposal of all disputes between the parties can be said to be void under Section 28, Contract Act. That section runs as follows:

(3.) THE view of Gentle J. was dissented from by a Division Bench of the Bombay High Court in the case of -- 'Bharat Bank Ltd. v. Deepak General Insurance Co. Ltd.', A. O. Nos. 70 and 71 of 1950 (Bom) (I), where Chagla C. J. and Gajendragadkar J. observed as follows: