THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA C.M.A.No. 997 of 2005. JUDGEMENT: (per Hon’ble Sri Justice B.N.Rao, Nalla) Aggrieved by the Judgement and decree dt. 13.10.2004 in O.S.No. 160 of 1999 on the file of the learned Ist Additional Chief Judge, City Civil Court, Secunderabad returning the plaint to be presented before the proper court, the plaintiff filed the present appeal. The appellant filed suit O.S.No. 160 of 1999 for recovery of a sum of Rs. 11,40,750/- with future interest @ 24.5% p.a. from the defendant. According to the appellant, the appellant is a company registered under the Companies Act and it is having its registered office at Secunderabad. The appellant is engaged in the business of manufacturing and purchasing of all types of ferrous and non-ferrous metals, their alloys, to generate, harness, develop, accumulate, distribute and supply electricity either hydro, thermal, gas, air, diesel oil or through renewable energy source such as solar, photovoltaic, wind mill and /or any other means. The respondent/defendant is a thermal power station under the control of Tamil Nadu Electricity Board promoted by the Tamil Nadu State Government and that the respondent/defendant placed a purchase order dt. 21.11.1995/6.12.1995 for purchase of Cupro Nickel Tubes from the appellant and the appellant supplied the same under various invoices for a total value of Rs. 51,23,664/-. The respondent/defendant agreed to pay 95% of the value of the invoice against despatch of documents through bank and the balance of 5% within 30 days from the date of receipt of the material and that the appellant also deposited a sum of Rs. 34,000/- with the respondent towards earnest money deposit on 18.8.1995 by way of demand draft. The appellant supplied the material to the respondent on 30.3.1996, but the respondent failed to pay 95% of the value of the material as agreed for about 7 to 10 months from the date of despatch of the documents through bank and that the respondent also failed to pay the balance of 5% of the invoices even after expiry of 30 days from the date of receipt of the material from the appellant. Hence, the appellant filed the suit for recovery of a sum of Rs. 11,40,750/- with future interest at 24.5% p.a. from the defendant. The respondent/defendant filed written statement contending that the respondent is a statutory Corporation and that the appellant was a successful bidder to the Tender Notification No. CE 787 dt. 23.8.1995 and accepting the quotation dt. 16.8.1995 of the appellant, the respondent placed a draft purchase order which contains various terms and conditions and the same were accepted by the appellant on 17.11.1995 and that the respondent placed purchase order on 21.11.1995/6.12.1995 for supply of Cupro nickel tubes as per specifications and terms of the agreement. It was further contended that the terms and conditions of Clause 10 of Annexure-I of purchase order deals with the institution of suits and as per the said clause, the Ist Additional Chief Judge, City Civil Court, Secunderabad has no territorial jurisdiction to entertain the suit as the entire cause of action arose at Ennore Madras and therefore the suit has to be filed within Madras jurisdiction. It was further contended that the appellant did not protest at the time of receipt of 95% of the payment and therefore he is not entitled to claim any interest and that the appellant tried to rectify the damaged tubes manually instead of doing hydraulic test and as the appellant failed to conduct hydraulic test, it is not entitled to receive the balance 5% of payment and it is also not entitled to claim interest on 5% balance payment.. It was further contended that the appellant failed to despatch the goods as per the invoices within the specified period and even then the respondent paid the entire amount soon after they have inspected the material at the transporters’ go-down and therefore the appellant is not even entitled for interest on 95% of the value of invoice as claimed in the plaint and in addition the appellant has to pay Rs. 1,00,000/- towards damages for supplying damaged goods. It was specifically pleaded that since the cause of action took place within the jurisdiction of Chennai, the suit has to be dismissed for want of territorial jurisdiction. On the above pleadings, the trial court framed the following issues: 1) Whether this court has jurisdiction to try the suit? 2) Whether the plaintiff supplied the material as pleaded in the plaintiff and if so, whether they are entitled for the suit amount? 3) To what relief? To prove its claim, the appellant examined Pw.1 and got marked Exs: A.1 to A.18. To substantiate its contention, the respondent examined DW.1 and got marked Exs:B.1 to B.31. The trial court, after appreciating the material brought on record, held that it has no territorial jurisdiction to entertain the suit and returned the plaint to the plaintiff to be presented before the proper court having jurisdiction to entertain the suit, by the impugned order. Aggrieved by the same, the plaintiff filed the present appeal. We have heard the Counsel for both sides. The learned Counsel for the appellant submitted that the learned trial Judge erred in holding that the parties by an agreement excluded the jurisdiction of other courts and conferred jurisdiction only on the courts within the jurisdiction of Tamil Nadu basing on Clause No. 10 of Ex:A.6. It is further contended that the learned trial Judge failed to see that Ex:A.6 is only a purchase order placed by the respondent and until and unless it is accepted by the appellant, it would not amount to an agreement or contract. It is further contended that clause 10 is one of the general terms of the purchase order and it was not intended to be acted upon as several other conditions in Annexure I of Ex:A.6 were given a go by. It is further contended that it is settled law that an agreement to confer exclusive jurisdiction on one court should be clear, unambiguous and explicit and that since Clause 10 of Ex:A.6 is not clear, the learned Judge erred in holding that it has no jurisdiction to entertain the suit. It is further contended that the reasons assigned by the learned Judge in support of the order under appeal are not cogent, convincing and sound and, therefore, the appeal may be allowed. On the other hand, the learned Counsel for the respondent supported the order under appeal. The trial court mainly relied on Ex:A.6, a purchase order dated 21.11.95/6.12.94, which is subject to the terms and conditions, mentioned in Annexure I. Clause 10 of Annexure-I deal with the institutions of suits. As per the said clause no suit or any proceedings in respect of any dispute arising out of the contract shall be instituted in any court save in the Civil Court of Madras or the Court of Small Causes in Madras and that it is agreed that no other court shall have jurisdiction to entertain any suit or proceedings even though a part of cause of action might arise within their jurisdiction and that in case of any part of cause of action arising within the jurisdiction of any of the courts in the State of Tamil Nadu nor in the Court of Madras city then it is agreed between the parties that such suits or proceedings shall be instituted in the court within the Tamil Nadu and no other court outside Tami Nadu shall have jurisdiction even though any part of the cause of action arises within the jurisdiction of such court. In view of terms and conditions of Clause 10 of Annexure I, the trial court concluded that since both the parties by an agreement excluded the jurisdiction of other courts and conferred jurisdiction only in the courts within the jurisdiction of Tamil Nadu. The trial court further held that since the purchase order was accepted by the appellant under Ex:A.7 and before placing the purchase order, a draft purchase order (Ex:B.11) was served on the representative of the appellant at Madras and he has agreed for the terms mentioned therein and made an endorsement thereon and in pursuance of the said acceptance, purchase order under Ex:A.6 was placed by the defendant and since both the parties have excluded the jurisdiction of other courts other than the courts in Tamil Nadu and relying on the decisions of the Supreme Court in M/s Patel Roadways vs. M/s Prasad Trading Company [1] and in Cholamandalam Investments & Finance Company Pvt., Ltd., vs. Radhika Synthetics [2], the trial court held that it has no jurisdiction to entertain the suit and held the issue No.1 against the appellant and retuned the plaint to the appellant for presentation before the proper court. Though under Order XIV Rule 2 CPC the trial court ought to have decided the issue No.2, it did not deal with the issue No.2 and did not render any finding on it (since the suit was not tried under sub-rule 2 of Rule 2 of Order XIV CPC). Now the point that arises for consideration is whether the order under appeal can be sustained in law. It is settled law that any agreement between the parties to the contract cannot validly take away the jurisdiction possessed by the Court, though ouster clause can operate as estoppel against the parties to the contract. But if more than one court has jurisdiction under the statute, it is always open to the parties to agree to the jurisdiction of one Court to the exclusion of the other. In such case, the plaintiff cannot insist that one court (whose jurisdiction is excluded) should try the suit ignoring the jurisdiction of the Court which the parties agreed to submit. In a leading case on the subject in Hakam Singh v Gammon (India) Ltd., [3] the appellant accepted the contract for construction of the respondent Gammon. Clause 13 of the contract provided that the contract shall be deemed to have been entered into in Bombay and the Courts in Bombay alone shall have jurisdiction to adjudicate the disputes. Disputes arose and Hakam Singh filed a petition beore Varanasi Court under Section 20 of the Arbitration Act, 1940, for reference to arbitrator. Placing reliance on clause 13, the petition was opposed, but the Subordinate Judge allowed the petition. The High Court of Allahabad set aside the same. Before the Supreme Court, it was urged that mere factum of carrying on business at Bombay would not vest Bombay Courts with jurisdiction to adjudicate the matter. The Supreme Court agreeing with the High Court, dismissing the appeal, observed as under: “By clause 13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the respondents have their principal office in Bombay and they were liable in respect of a cause of action arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a court which it does not possess under the Code. But where two courts or more have under the CPC jurisdiction to try a suit or proceeding an agreement between the parties that the disputes between them shall be tried in one of such Courts is not contrary to public policy. Such an agreement does not contravene Section 28 of the Contract Act.” (emphasis supplied) In ABC Laminart Pvt Ltd., v A.P. Agencies, Salem[4] under an agreement ABC Laminart having its registered office at Udyog Nagar in Gujarat within the jurisdiction of District Court of Kaira, agreed to supply metallic yarn to respondent having business at Salem in Tamil Nadu. Clause 11 of the agreement provided that disputes shall be subject to Kaira jurisdiction. When the disputes arose, respondent filed a suit before Subordinate Judge, Salem, for recovery of certain amounts, which was opposed, inter alia, on the ground of lack of jurisdiction. The trial Judge dismissed the suit agreeing with defendant but, appeal was allowed by High Court of Madras against which ABC Laminart preferred civil appeal by special leave. Apex Court dismissed the appeal following Hakam Singh (supra). The cause of action is explained by the Supreme Court as follows: “A cause of action means every fact, which, if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgement of the Court. In other words, it is a bundle of facts which taken with the law applicable to them gives the plaintiff a right to relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action can possibly accrue. It is not limited to the actual infringement of the right sued on but includes all the material facts on which it is founded. It does not comprise evidence necessary to prove such facts, but every fact necessary for the plaintiff to prove to enable him to obtain a decree. Everything which if not proved would give the defendant a right to immediate judgment must be part of the cause of action. But it has no relation whatever to the defence which may be set up by the defendant nor does it depend upon the character of the relief prayed for by the plaintiff. It was further held as follows: So long as the parties to a contract do not oust the jurisdiction of all the court which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of jurisdiction. In other words, where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit would not otherwise be proper jurisdiction to decide disputes arsing out of the contract it must be declared void being against public policy.” (emphasis supplied) From the decisions of the Supreme Court (supra), the law is clear that where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law, their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. In other words, where two courts or more have under the CPC jurisdiction to try a suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such courts is not contrary to public policy and such an agreement does not contravene Section 28 of the Contract Act. In the instant case, clause 10 of Annexure I of Ex:A.6 contemplates that no suit or any proceeding in respect of any dispute arising out of the contract shall be instituted in any court save in the Civil Court of Madras or in the Court of the Small causes in Madras. Since a part of cause of action arose in Tamil Nadu State and since by clause 10 of Annexure I of Ex:A.6, the parties to the contract excluded the jurisdiction of other courts and conferred jurisdiction only in the courts within the jurisdiction of Tamil Nadu, which would otherwise also be proper jurisdiction under the law, the agreement between the parties under Ex:A.6 prevails, in view of the law declared by the Supreme Court (supra). In the above circumstances, we are of the considered view that the impugned Judgement and decree does not suffer from any error warranting to be interfered with in this appeal. Hence, the appeal is devoid of merits and the same is liable to be dismissed. However, the appellant is given three weeks’ time from the date of receipt of a copy of this order to present the plaint before the appropriate court having jurisdiction, The C.M.A. is accordingly dismissed. There shall be no order as to costs. __________________ V.V.S.Rao,J ___________________ B.N.Rao Nalla,J 29.1.2010. Krb. THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE B.N.RAO NALLA C.M.A.No. 997 of 2005. Dt. 29.01.2010. [1] AIR SC 1514 [2] 1996(2) ACC 109 [3] (1971) SCC 286: AIR 1971 SC 740 [4] (1989) 2 SCC 163: AIR 1989 SC 1239.