* 1 * Revn Appln.710.2002 30.8.2011 IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICITON CIVIL REVISION APPLICATION NO. 710 OF 2002 1. RHODIA LIMITED, an English Public Limited Company incorporated under the English law and having its registered office at Oak House, Reeds Crescent, Watford, Hertfordshire, United Kingdom 2. RHODIA CHEMICALS INDIA LIMITED, an Indian Company incorporated under the Indian Companies Act, 1956 and having its registered office at Rhone Poulenc House, S.K. Ahire Marg, Worli, Mumbai-400 025, India 3. RHODIA ORGANIQUE FINE LIMITED, an English Public Limited Company incorporated under the English law and having its registered office at Oak House, Reeds Crescent, Watford, Hertfordshire, United Kingdom .... Applicants/ (Orig. Defendants) : VERSUS : NEON LABORATORIES LIMITED an Indian Company, incorporated under the Indian Companies Act, 1956 and having its registered office at 140 Damji Shamji Industrial Complex, M. Caves Road, Andheri (East), Mumbai-400 093, India .... Respondent/ (Ori. Plaintiff) * 2 * Revn Appln.710.2002 30.8.2011 Mr. S. Aney, Senior Counsel a/w Ms. Ruby Kerawala, Ms. Seema Bhatnagar, Ms. Saxmitha De i./by Little & Co. for applicants. Mr. Vijay Thorat, Senior Counsel with Mr. Phiroz Palkhiwala and Mr. Vinayak Vengurlekar i/by Crawford Bailey & Co. for respondent. Coram : Smt. R.P. SondurBaldota, J. Date : 30th August, 2011. PC:- 1. This Revision Application takes exception to the order dated 19th March, 2002 passed by the Civil Judge, Junior Division, Palghar on the preliminary issue framed under Section 9A Civil Procedure Code regarding jurisdiction of his court to entertain and try Special Civil Suit No. 9 of 2002 filed by the respondent herein. The order impugned holds that the court at Palghar has territorial jurisdiction in addition to the jurisdiction of English Court. 2. The revision application had earlier been allowed by another Bench of this court by its order dated 19th March 2002 with a direction to the trial court to rehear the preliminary issue and decide the same after giving an opportunity to the parties to adduce necessary evidence. The respondent-plaintiff challenged the order by preferring Civil Appeal No.991 of 2003 to the Hon’ble Supreme * 3 * Revn Appln.710.2002 30.8.2011 Court. By the order dated 18th November 2004, on the concession granted by the applicant herein, the Hon’ble Supreme Court, set aside the order of this Court and remitted the case for a fresh decision in accordance with the relevant law including it’s two judgments i.e. i) Modi Entertainment Network V/s W.S.G. Cricket Pte. Ltd., reported in (2003) 4 SCC 341 and ii) Man Roland Druckimachinen AG Vs. Multicolour Offset Limited and Anr, reported in (2004) 7 SCC 447. All the contentions to be raised by either of the parties before this court were left open. In the circumstances, the revision application has been reheard by this court. 3. For the sake of convenience, the parties are hereinafter referred to by their original nomenclature. The applicants are original defendants no. 1 to 3. The respndent is the original plaintiff. The plaintiff and defendant no.2 are Indian Companies incorporated in India having their registered offices at Mumbai. Defendants no. 1 and 3 are English companies incorporated under the English law having their registered offices in England. 4. On 1st August 1997, defendant no.1 as manufacturer and seller entered into a distribution agreement with the plaintiff titled Isoflurane and Nalothane Distribution Agreement India” granting “ * 4 * Revn Appln.710.2002 30.8.2011 exclusive right to market and distribute the two products in the specified territory of India, Srilanka, Bangladesh and Nepal. The term of the agreement was for three years. The agreement was re- executed on 30th November 1998 with certain amendments to it and was called Amendment 1, MOHIT PROJECT” with the plaintiff “ and defendants no. 1 and 2 as parties to it. Under the amended agreement, defendant no.2 was to co-ordinate on behalf of defendant no.1, the activities of the plaintiff as the distributor. Defendant no.1 was to provide training courses, documentation and technical support to enable the plaintiff to build and start a filling and packaging plant for Isoflurane and Halothane compound at Palghar in respect of which distribution agreement had already been executed. In the year 2000, the defendants terminated the distribution agreement with effect from 31st December 2000. Therefore on 22/1/2002, the plaintiff filed the suit herein at Palghar interalia for a declaration that termination of the `Isoflurane and Halothane Distribution Agreement India’ dated August 1, 1997 and Amendment 1: MOHIT PROJECT dated November 30, 1998 is illegal, for specific performance thereof by the defendants, for damages in lieu of the specific performance and for mandatory and prohibitory injunctions as claimed therein. * 5 * Revn Appln.710.2002 30.8.2011 5. In that suit, the defendants, on entering their appearance, filed the application (Exh.22) under Section 9A C.P.C. for framing preliminary issue of jurisdiction of the court at Palghar and decision thereon. They contended that the court at Palghar has no territorial jurisdiction to entertain and try the suit as no part of cause of action had arisen within the jurisdiction of that court. Secondly the parties had agreed by choice to be governed by the English law and that the courts in England alone will have jurisdiction in respect of any disputes arising under the agreement. In the alternative, the defendants contended that the forum convenient in India for the parties could only be the High Court of Bombay since the plaintiff and defendant no.2 have their registered offices in Mumbai. 6. The defendants contend that execution of the Distribution agreement by defendant no.1 and execution of Amendment 1. Mohit Project by defendants No. 1 and 3 was in England. The products to be distributed under the agreement were supplied to the plaintiff from England. The registration documents for the product licence were supplied to the plaintiff by defendant no.1 from England. Similarly the entire technical information and other materials were provided from England. The representatives of the plaintiff had visited England for the purpose. Therefore according to them, the * 6 * Revn Appln.710.2002 30.8.2011 cause of action had arisen in England. 7. Article 15 of the Distribution Agreement relied upon by the defendants indicating choice by the parties of the court is reproduced below. There is no dispute that Article 8 of the Amendment 1 Mohit Project is verbatim article 15 of the Distribution Agreement. “ARTICLE 15- GOVERNING LANGUAGE AND LAW : 15.1 : The governing language of this Agreement shall be English. This agreement shall in all respects, including the formation thereof and performance thereunder, be governed by and construed in accordance with the English law. 15.2 : All differences on the interpretation or performance of this Agreement which will not be settled by amicable means, will be settled by the English Courts.” 8. The plaintiff on the other hand without making any reference to the article in the Distribution Agreement and Amendment 1 Mohit Project seeks to justify jurisdiction of the court at Palghar with following averments at paragraph-48 of the plaint. The loss suffered by the plaintiff has been suffered at “ Palghar. The plaintiff relied upon the false representation of the Defendants and invested more than Rs.2 Crores, in setting up and commissioning the said plant at Palghar. A part of the cause of action has therefore arisen within the jurisdiction of this Hon’ble Court. This Hon’ble Court therefore has jurisdiction in the matter”. 9. Since the Apex Court has remitted this application for fresh decision in accordance with the relevant law with specific reference * 7 * Revn Appln.710.2002 30.8.2011 to two of it’s decisions i.e. in Modi’s case and Man Roland’s case, it is only appropriate to look into the two decisions before going further into the facts of the case and the submissions made by the two sides. 10. Modi’s case (supra) involved examination of the principles governing grant of an anti-suit injunction by a court of natural jurisdiction against a party to a suit before it restraining him from instituting and/or prosecuting the suit, between the same parties, if instituted, in a foreign court of choice of the parties. The contract between the parties in that case, contained a non-exclusive jurisdiction clause of English Court in accordance with English law. The appellant had filed a suit in this Court claiming damages against the respondent alleging illegal actions on its part. Subsequently, the respondent filed an action in English Court claiming arrears of consideration. The appellant then took out Notice of Motion seeking anti-suit injunction against the respondent in regard to the action in English Court, on the ground that the Indian Court was a natural forum for adjudication of the dispute and that continuance of the proceedings in the English Court would, on the facts of the case, be vexatious and oppressive. The respondent contested the motion relying on the non-exclusive jurisdiction clause in the contract. A Single Judge of this Court granted an ad-interim * 8 * Revn Appln.710.2002 30.8.2011 injunction on 30th January, 2002 and ordered notice of motion. The respondent filed an appeal. The Division Bench heard the Notice of Motion finally alongwith the Appeal and dismissed the same. Before the Apex Court, the appellants gave two reasons to justify a departure from the contractual obligation in respect of jurisdiction of the English Court: (i) that the English Court was forum non- conveniens in view of the alleged breach of the agreement by the respondent in a manner not foreseen, and (ii) that the English Court had no connection with either of the parties or the subject matter and was not a court of natural jurisdiction. 11. The Apex Court after extensively considering the case law cited before it and also the Rules formulated in The Conflict of Laws by Dicey and Morris (18th Edition) formulated the following principles at paragraph-24 of the judgment:- 24. From the above discussion the following principles emerge “ : (1) In exercising discretion to grant an anti-suit injunction the court must be satisfied of the following aspects : - (a) the defendant, against whom injunction is sought, is amenable to the personal jurisdiction of the court; (b) if the injunction is declined the ends of justice will be defeated and injustice will be perpetuated; and (c) the principle of comity – respect for the court in which the commencement or continuance of action/proceeding is sought to be restrained - must be * 9 * Revn Appln.710.2002 30.8.2011 borne in mind; (2) in a case where more forums than one are available, the Court in exercise of its discretion to grant anti-suit injunction will examine as to which is the appropriate forum (forum conveniens) having regard to the convenience of the parties and may grant anti-suit injunction in regard to proceedings which are oppressive or vexatious or in a forum non-conveniens; (3) Where jurisdiction of a court is invoked on the basis of jurisdiction clause in a contract, the recitals therein in regard to exclusive or non-exclusive jurisdiction of the court of choice of the parties are not determinative but are relevant factors and when a question arises as to the nature of jurisdiction agreed to between the parties the court has to decide the same on a true interpretation of the contract on the facts and in the circumstances of each case; (4) A court of natural jurisdiction will not normally grant anti-suit injunction against a defendant before it where parties have agreed to submit to the exclusive jurisdiction of a court including a foreign court, a forum of their choice in regard to the commencement or continuance of proceedings in the court of choice, save in an exceptional case for good and sufficient reasons, with a view to prevent injustice in circumstances such as which permit a contracting party to be relieved of the burden of the contract; or since the date of the contract the circumstances or subsequent events have made it impossible for the party seeking injunction to prosecute the case in the court of choice because the essence of the jurisdiction of the court does not exist or because of a vis major or force majeure and the like; (5) Where parties have agreed, under a non-exclusive jurisdiction clause, to approach a neutral foreign forum and begoverned by the law applicable to it for the resolution of their disputes arising under the contract, ordinarily no anti- suit injunction will be granted in regard to proceedings in such a forum conveniens and favoured forum as it shall be presumed that the parties have thought over their convenience and all other relevant factors before submitting * 10 * Revn Appln.710.2002 30.8.2011 to non-exclusive jurisdiction of the court of their choice which cannot be treated just an alternative forum; (6) A party to the contract containing jurisdiction clause cannot normally be prevented from approaching the court of choice of the parties as it would amount to aiding breach of the contract; yet when one of the parties to the jurisdiction clause approaches the court of choice in which exclusive or non-exclusive jurisdiction is created, the proceedings in that court cannot per se be treated as vexatious or oppressive nor can the court be said to be forum non-conveniens; and (7) The burden of establishing that the forum of choice is a forum non-conveniens or the proceedings therein are oppressive or vexatious would be on the party so contending to aver and prove the same.” 12. In the facts before the Apex Court, since there was no dispute between the parties that the clause of jurisdiction contained in the agreement between them was non-exclusive jurisdiction of the English Courts, it noted that it was relieved of the interpretation of the jurisdiction clause and proceeded to consider the other facts of the case to observe :- As is apparent the appellants brought the suit in the court “ of natural jurisdiction for adjudication of the disputes arising under the contract for which the parties have agreed to submit to the non-exclusive jurisdiction of the English Court in accordance with English law though the English Court has no nexus with the parties or the subject-matter and is not the natural forum. But then the jurisdiction clause indicates that the intention of the parties is to have the disputes resolved in accordance with the principles of English law by an English Court. Unless good and sufficient reasons are shown by the appellants, the intention of the parties as evidenced by their contract must be given effect to. Even when the appellants * 11 * Revn Appln.710.2002 30.8.2011 had filed the suit earlier in point of time in the court of natural forum and the respondent brought action in the English Court which is the agreed forum or forum of the choice having regard to the expressed intention of the parties, no good and sufficient reason is made out to grant anti-suit injunction to restrain the respondent from prosecuting the English action as such an order would clearly be in breach of agreement and the court will not, except when proceedings in foreign court of choice result in perpetuating injustice aid a party to commit breach of the agreement. The Apex Court found that the appellant had failed to show good and sufficient reasons to justify departure from the contractual obligations and hence dismissed the appeal. 13. In Man Roland’s (supra) decision, proceedings had been filed claiming compensation before the Commission set up under the Monopolies and Restrictive Trade Practices Act. The appellant before the Apex Court had raised objections to the Commission’s jurisdiction to entertain the application for compensation on the grounds that, the parties had agreed that the applicable law in the event of any dispute would be German law and that the disputes between the parties should be resolved either by proceedings brought in German courts or alternatively through arbitration conducted in accordance with the International Chamber of Commerce Rules. The second ground on which the jurisdiction of the Commission was questioned, was that the appellant neither provided any service nor * 12 * Revn Appln.710.2002 30.8.2011 carried on any trade or trade practice in India for the purpose of the Act. The Commission rejected both the submissions of the appellant holding that it had the jurisdiction to entertain the complaint because : (1) the appellant carried on its trade practice of supply of the printing machinery to respondent in India through respondent no.2 who admittedly” was its Indian agent, (2) the contract between “ the appellant and respondent no.1 was required to be performed in India, and (3) the supply of the printing machinery pursuant to the sale transaction was within the definition of trade practice” in “ Section 2(u) of the Act and the effect of such trade practice would “ certainly be on the Indian soil as the printing machinery was to be supplied in India.” While deciding the appeal before it, the Apex Court held as follows :- 9. “ Undoubtedly when the parties have agreed on a particular forum, the Courts will enforce such agreement. This is not because of a lack or ouster of its own jurisdiction by reason of consensual conferment of jurisdiction on another Court, but because the Court will not be party to a breach of an agreement. Such an agreement is not contrary to public policy nor does it contravene Section 28 or Section 23 of the Contract Act. This has been held in Hakkam Singh V. M/s Gammon (India) Ltd. AIR 1971 SC 740; A.B.C Laminart Pvt. Ltd. V. A.P. Agencies 1989 (2) SCC 163 and Modi Entertainment Network V. W.S.G. Cricket Pte. Ltd. 2003 (4) SCC 341, 351. The decision of the Delhi High Court in Rajendra Sethia V. Punjab National Bank AIR 1991 Del. 285 relied on by the Commission which holds to the contrary is, therefore, clearly erroneous. * 13 * Revn Appln.710.2002 30.8.2011 10. But although the Commission rejected the first submission of the appellant on an untenable ground, nevertheless the conclusion arrived at was correct. The principle which we have outlined in the previous paragraph is applicable to a situation where the Court is called upon to enforce rights arising under a contract which contains such a jurisdictional clause. The principle does not apply to proceedings under the Act which provides for statutory remedies in respect of statutorily defined offences. The remedies available under the Act are additional to the usual remedies available under the Contract Act to the parties. This is clear inter alia from Sections 4(1) and 12 B (1) of the Act, both of which indicate that the proceedings under the Act are additional to, and therefore distinct from, proceedings before a Civil Court. The powers invoked by the complainant under the Act are not exercisable otherwise than under the Act and it is certainly not exercisable by Courts in Germany. The jurisdictional clause in the contract would therefore not apply to proceedings before the Commission. This is so even assuming that the Commission is a "Court" as contended by the appellant on the basis of Canara Bank V. Nuclear Power Corporation of India Ltd. 1995 Supp (3) SCC 81 and P. Sarathy V. State Bank of India 2000 (5) SCC 355.” 14. The position of law established from the above two decisions can be deduced in the following manner :- In case of international contracts, when the parties have agreed to a particular forum, the Court will enforce such agreement because the courts will not be a party to breach of an agreement. An exception to this Rule, is to be made only for good and sufficient reasons with a view to prevent injustice in circumstances such as which permits a contracting party to be relieved of burden of the contract. The jurisdiction clause in the agreement can be exclusive or non-exclusive. For deciding * 14 * Revn Appln.710.2002 30.8.2011 whether the jurisdiction clause in a contract is exclusive or non- exclusive of the Court of choice of the parties, the recitals to the contract are not determinative but are only relevant factors. Therefore, when a Court has to look into the question of nature of jurisdiction agreed between the parties, the Court has to interprete the contract in the facts and circumstances of each case. The exercise of interpretation of jurisdiction clause, in order to find out whether the clause is exclusive or non-exclusive of the Court of choice of the parties is a material exercise, since exclusive jurisdiction clause requires the proceedings to be brought in a particular forum, whereas, a non-exclusive jurisdiction clause simply confers jurisdiction on the courts of a particular country without requiring proceedings to be brought there. In other words, it confers jurisdiction on the Courts of a particular country without prejudice to the right of the parties to institute proceedings in any other Court that may have jurisdiction. Further, it is seen that even exclusive jurisdiction clause is not a total bar to depart from it, much less, a non-exclusive clause. A party may be permitted to depart from the agreement choosing a forum, but only on establishment of an exceptional case for good and sufficient reasons i.e. with a view to prevent injustice or when it is impossible to prosecute the case in the * 15 * Revn Appln.710.2002 30.8.2011 Court of choice because the essence of the jurisdiction of the Court does not exist or because of a vis major. 15. Coming to the facts of the present case, this Court is required to first embark upon the task of finding out whether the jurisdiction clause herein is exclusive or non-exclusive. This could be deduced by simple interpretation of the terms of the contract or may require the evidence to be led of the parties depending upon the facts and the circumstances of the case. The pleadings herein disclose a dispute between the parties on the question of the nature of the jurisdiction clause. The defendants in their application dated 28th February, 2002 filed under Section 9A Civil Procedure Code have claimed specifically at more than one place that the English Courts alone have jurisdiction to entertain the suit and the choice of forum made by the parties is binding on them. As already noted above, the plaintiff has made no mention whatsoever in the plaint to the jurisdiction clause in the agreement with the defendants. However, in its order of remand, the Hon’ble Supreme Court has left all the contentions to be raised by either of the parties open for consideration of this Court. Therefore, the contentions raised by it in the present proceedings are also required to be considered. The plaintiff in its affidavit-in-reply to the present Revision Application * 16 * Revn Appln.710.2002 30.8.2011 has at paragraph-26 claimed in terms that the Clause confers non- exclusive jurisdiction on English Courts. The explanation given for this at paragraph-17 of the affidavit-in-reply reads as follows :- 17. “ I say that the entire performance of the Distribution Agreement and the Mohit Agreement was to be conducted in the Territory” as defined in the Agreements. I say that “ substantial, though not entire, performance of both the Agreements was to be and was in the territories of India, particularly in Palghar. The proper law of the contract in question was/is therefore Indian Law. It is therefore clear that both the agreements have their closest and most intimate and real connection with the laws of India and the jurisdiction of Indian Courts. No part of the performance under the agreements, was to be in England, and therefore, the English Courts would not otherwise have jurisdiction. Clause 15.2 and 8.2 had been added in the respective suit agreements, at the instance of original defendant no.1, merely to confer non- exclusive jurisdiction of English Courts. As per the understanding of the parties to the agreements, only non- exclusive jurisdiction was conferred on English Courts without ousting the jurisdiction of the Indian Courts which are competent to entertain, try and dispose of the disputes arising out the suit agreements.