FAO 12/2008 BEFORE THE HON’BLE MR JUSTICE T VAIPHEI THE HON’BLE MR JUSTICE BD AGARWAL This first appeal is directed against the judgment and order dated 19-5-2008 pas sed by he learned Civil Judge (Senior Division), No. 1, Guwahati in Misc. (J) Ca se No. 129 of 2007 as well as the order dated 19-5-2008 passed in the connected Money Suit No. 20 of 2007 returning the plaint on the ground that he had no terr itorial jurisdiction to entertain the suit. 2. The appellant as the plaintiff i.e. Candid Drug Distributors, Gu wahati had instituted the money suit in question against the respondent/defenda nt, namely, Wanbury Ltd. Mumbai, before the learned Civil Judge (Senior Division ) No. 1, Guwahati for recovery of Rs. 1,71,24,267/-.This is how the dispute aros e. The appellant was appointed by the respondent on 30-3-2001 as Distributor on consignment basis (’DCB’) in terms of the agreement executed between them, and t he nature of this appointment was subsequently converted to Carrying and Forward ing Agent ( C&FA ) with reduced commission due to poor performance on the part o f the appellant. In clause 36 of the agreement dated 30-3-2001, it had been agre ed by the parties that in the event of any dispute arising between them warranti ng litigation, the Courts in Mumbai alone would have the jurisdiction to decide such a dispute. Clause 35 of the said agreement also incorporates similar agreem ent. Clause 43 was incorporated in the agreement dated 13-1-2003 stipulating tha t the court in Greater Mumbai only will have the jurisdiction to decide all matt ers arising out of the agreement. For better appreciation of the controversy, bo th the clauses are reproduced below: 35. In the event of any disputes arising between the company and the C&FA neces sitating legal redress the courts in Mumbai will alone be the competent courts t o decide the issues. This agreement is entered into in Mumbai and supersedes pre vious agreements, if any. 43. It is hereby expressly agreed and declared that this Agreement shall be dee med to have been made in Mumbai and that the court in Greater Mumbai only will h ave jurisdiction on all matters arising out of this agreement. 3. There is no dispute at the bar that the agreement dated 13-1-200 3 was for a period of one year i.e. it was to remain in force until 12-1-2004 un less (i) it was determined by either party in the manner hereinafter provided an d (ii) mutually extended by the parties hereto in writing. There is also no disp ute at the bar that there was no express determination of the agreement by eithe r party or mutual extension of the agreement by either party after 12-1-2004. Th e respondent contested the suit and promptly filed a petition under Section 21 C PC before the learned Civil Judge praying for return of the plaint on the ground that his territorial jurisdiction to adjudicate the dispute in question stood o usted by clause 43 of the agreement dated 13-1-2003. According to the respondent , though the agreement dated 13-1-2003 was not mutually extended by the parties in writing, for all intent and purpose, the parties continued to govern themselv es by the terms and conditions thereof in respect of all transactions after 12-1 -2004 till the C&FA was terminated with effect from 31-5-2006 by closing down th e operation for the reasons assigned in the various communications made: such co mmunications would go to show that the claims and counter-claims of the parties arose out of the agreement dated 13-1-2003. As there was specific agreement bet ween the parties to oust the jurisdiction of all other courts, contended the app ellant, the learned Civil Judge had no territorial jurisdiction to entertain the suit filed by the appellant. The petition was opposed by the appellant by filin g its written objection. It was contended by the appellant that the petition was merely a device to stall the smooth proceedings of the suit and that as the iss ue raised by the respondent was a mixed question of fact and of law, the same co uld not be decided as a preliminary issue, more so, when written statement was y et to be filed by the respondent. It was also the contention of the appellant th erein that as the clauses relating to jurisdiction relied on by the respondent i n the agreement dated 13-1-2003 had spent its force by efflux of time on 12-1-20 04, the conferment of jurisdiction upon the courts in Mumbai stood exhausted, an d it is only the Civil Court (Senior Division), Guwahati, where the respondent h as its subordinate office, which would have the ordinary territorial jurisdictio n to entertain the suit: no cause of action thus accrued in Mumbai. After hearin g the parties, the learned Civil Judge passed the impugned order returning the p laint by holding that he had no jurisdiction to adjudicate the dispute and that the appellant had the liberty to present the same in the appropriate forum at Mu mbai. 4. Clause 35 of the agreement dated 13-1-2003, simply stated, says that if there arises any dispute between the Company and the C&FA i.e. the respo ndent and the appellant, necessitating legal redress, the courts in Mumbai alone will have the competence to decide the issues. Under clause 43 of the same agre ement, the parties expressly agree and declare that the agreement should be deem ed to have been made in Mumbai and that the Court in Greater Mumbai only will ha ve the jurisdiction on all matters arising out of the agreement. In other words, during the currency of the agreement, the parties mutually had agreed to confer exclusive jurisdiction upon the Courts in Greater Mumbai the jurisdiction to en tertain any suit arising out of the agreement. Section 28 of the Indian Contract , 1872 renders any agreement void to the extent it restricts absolutely a party from enforcing his contractual rights by usual proceedings in ordinary courts; o r it limits the time within which he may enforce his rights. It, however, saves two types of contract, namely, (a) when there is an arbitration clause which is valid and binding under the law; and (b) when parties to a contract agree as to the jurisdiction to which dispute in respect of the contract shall be discharged . But Section 28 does not apply where the restriction is not absolute. Thus, whe re one out of two competent jurisdictions is excluded by agreement, it does not amount to absolute ouster of jurisdiction, and such a clause does not violate Se ction 28. Conversely, parties cannot, by private agreement, confer upon a court jurisdiction which it does not possess, nor can they divest a court of jurisdict ion which it possesses under the ordinary law. The principle that parties cannot by consent confer jurisdiction on a court or deprive a court of jurisdiction ha s been stated to apply to cases of inherent jurisdiction of court over the subje ct matter of the suit, but the question of territorial jurisdiction is not a que stion of inherent jurisdiction. Thus, where two courts have jurisdiction to try a case, there is nothing contrary to law in an agreement between parties that th eir disputes should be tried at the one court rather than the other. If such con tract is clear, unambiguous and not vague, it is not hit by Section 28. This sec tion renders void only those agreements which absolutely restrict a party to a c ontract from enforcing the rights under that contract in ordinary courts. It doe s not apply where a party agrees not to restrict the enforcement of his rights i n the ordinary courts, but only agrees to a selection of one of those ordinary c ourts in which ordinarily a suit would be tried.?See New Moga Transport Co. v. U nited India Insurance Co. Ltd. and others, (2004) 4 SCC 677 and Patel Roadways L imited v. Prasad Trading Company, (1991) 4 SCC 270. A perusal of the agreement d ated 13-1-2003 would go to show that the parties are within the four corners of Section 28 of the Contract Act in ousting the jurisdiction of the courts in Guwa hati for trying any suit arising out of the agreement executed by them during th e currency thereof. 5. Coming now to the bone of contention between the parties, it may be appropriate to refer to Sections 15 to 20 of the Code of Civil Procedure, wh ich deal with the place of suing. Section 15 says every suit shall be instituted in the court of the lowest grade competent to try it. Section 16 is about the p lace where suits for recovery of or for determination of any other right to or i nterest in immovable property, of mortgage, of compensation for wrong to immovab le property or of recovery of movable property under restraint or attachment wit h which we are not concerned. Then, Section 17 deals with the place of suing for suits relating to immovable property situated within jurisdiction of different courts. Section 18 comes into play only when the place of suing where local limi ts of jurisdiction of courts are uncertain, whereas Section 19 deals with suits for compensation for wrongs to person or movables. Section 20 is, however, relev ant, which reads thus: Section 20. Other suits to be instituted where defendants reside or cause of a ction arises ? Subject to the limitations aforesaid, every suit shall be institu ted in a court within the local limits of whose jurisdiction? (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, o r carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on busin ess, or personally work for gain, provided that in such case either the leave o f the court is given or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or (c) the cause of action, wholly or in part, arises. * * * Explanation ? A corporation shall be deemed to carry on business at its sole or principal office in India or, in respect of any cause of action arising at any p lace where it has also a subordinate office, at such place. Section 20 is a general provision embracing all personal actions . Clauses (a), (b) and (c) of Section 20 are independent of each other. The prin ciple underlying Section 20(a) and Section 20(b) is, that the suit is to be instituted at the place where the defendant can defend the suit without undue trouble. But, under Section 20(c), the plaintiff has the option of suing the de fendant, irrespective of where he resides, where the cause of action has accrued . It may, however, be noted that the expression Defendant includes corporation or a company registered under the Companies Act. This then takes us to the Expl anation to Section 20, which is really an explanation to clause (a) of Section 2 0 and is in the nature of a clarification on the scope of clause (a) viz. as to where the corporation can be said to carry on business. The scope of the Explana tion to Section 20 has been succinctly explained by the Apex Court in New Moga T ransport Co. (supra) in the following manner: 9. Normally, under clauses (a) to (c) the plaintiff has a choice of forum and cannot e compelled to go to the place of residence or business of the defendant and can file a suit at a place where the cause of action arises. If the defendan t desires to be protected from being dragged into litigation at some place merel y because the cause of action arises there it can save itself from such a situat ion by an exclusion clause. The clear intendment of the Explanation, however, is that where the Corporation has a subordinate office in the place where the caus e of action arises it cannot be heard to say that it cannot be sued there becaus e it does not carry on business at that place. Clauses (a) and (b) of Section 20 inter alia refer to a court within the local limits of whose jurisdiction the d efendant inter alia carries on business . Clause (c) on the other hand refers t o a court within the local limits of whose jurisdiction the cause of action whol ly or in part arises. 10. On a plain reading of the Explanation to Section 20 CPC it is clear that the Explanation consists of two parts: (i) before the word or appearing between t he words office in India and the words in respect of , and (ii) the other th reafter. The Explanation applies to a defendant which is a corporation, which te rm would include even a company. The first part of the Explanation applies only to such corporation which has its sole or principal office at a particular place . In that event, the court within whose jurisdiction the sole or principal offic e of the company is situate will also have jurisdiction inasmuch as even if the defendant may not actually be carrying on business at that place, it will be dee med to carry on business at that place because of the fiction created by the Exp lanation. The latter part of the Explanation takes care of a case where the defe ndant does not have a sole office but has a principal office at one place and ha s also a subordinate office at another place. The expression at such place app earing in the Explanation and the word or which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone has the jurisdiction in respect of any cause of action arising at any place wh ere it has also a subordinate office . (Underlined for emphasis) 6. Thus, the clear intendment of the Explanation appears to be that where the corporation or, for that matter, the company, has a subordinate offic e in the place where the cause of action arises, it cannot be heard to say that it cannot be sued there because it does not carry on business at that place. It would be a great hardship if, despite the company having a subordinate office at the place where the cause of action arises, the plaintiff is to be compelled to travel to the place where the company has its principal office. The place shoul d be convenient to the plaintiff; since the company has an office at such place, it will also be under no disadvantage. The Explanation provides an alternative locus for the corporation place of business, and not additional one. In the inst ant case, we can, for the purpose of determining as to whether the learned Civil Judge at Guwahati would have the territorial jurisdiction to entertain the suit or not, proceed on the assumption that the statements made in the plaint are tr ue. It is a settled principle of law that if at any time, it appears to the Cour t on the averments in the plaint itself that it has no jurisdiction, either pecu niary or territorial, to entertain the suit, the Court can always direct return of the plaint. In such a case, there is no need to frame a preliminary issue on the question of jurisdiction nor can the Court insist that the defendant should first file his written statement. The position of law is explained by the Apex C ourt in Exphar SA v. Eupharma Laboratories Ltd., (2004) 3 SCC 688 at para 9: 9. Besides, when an objection to jurisdiction is raised by way of demurrer and not at the trial, the objection must proceed on that basis that the facts as ple aded by the initiator of the impugned proceedings are true. The submission in or der to succeed must show that granted those facts the court does not have jurisd iction as a matter of law. In rejecting a plaint on the ground of jurisdiction, the Division Bench should have taken the allegations contained in the plaint to be true. However, the Division Bench examined the written filed by the responden ts in which it was claimed that the goods were not at all sold with9n the terri torial jurisdiction of the Delhi High court and also that Respondent 2 did not c arry on business within the jurisdiction of the Delhi High court. Having recorde d the appellants’ objections to these factual statements by the respondents, sur prisingly the Division Bench said: ’Admittedly, the goods are being traded outside India and not being traded within India and as such there is no question of infringement of trade mark with in the territorial limits of any court in India what to say of Delhi.’ 10. Apart from the ex facie contradiction of this statement in the judgmen t itself, the Division Bench erred in going beyond the statements contained in t he plaint. 7. Mr. D. Baruah, the learned counsel for the appellant, submits th at the trial court has failed to appreciate that the jurisdictional clause in th e agreement dated 13-1-2003, being a negative covenant, stood expired along with the agreement itself on 13-1-2004 by efflux of time when the agreement was not extended by the parties: the decision of the trial court that it had no jurisdic tion to entertain the suit was thus based on misconception of law as well as fac t. Moreover, contends the learned counsel, once the agreement dated 13-1-2003 ca me to an end either by efflux of time, the restrictive covenant in the nature of restraint on legal proceeding in a particular place of suing cannot longer oper ate as in the case of restraint of trade provided for in Section 27 of the contr act Act: this aspect of the law has been completely overlooked by the trial cour t, which, in the process has acted illegally. Strong reliance is placed by him u pon the decision of the Division Bench of the Bombay High court in Zaheer Khan v . Percept D’ Mark (India) Private Limited and anr., AIR 2004 Bom 363, which was affirmed by the Apex Court in Percept D’ Mark (India) Private Ltd. v. Zaheer Kha n and anr., (2006) 4 SCC 227 in support of his contention. It is the contention of the learned counsel for the appellant that CPC confers no jurisdiction upon t he court to try a suit on mixed issues of law and fact as a preliminary issue a nd where the decision on issue of law depends on decision of fact, as is the cas e here, it cannot be tried as a preliminary issue. He strongly relies on the dec ision of the Apex Court in Ramesh B. Desai v. Bipin Vadilal Mehta, ((2006) 5 SCC 638, to buttress this contention. According to the learned counsel, the trial c ourt has completely overlooked the various judicial pronouncement on the provisi ons of Order VII, Rule 10 CPC which say that in deciding whether the plaint is t o be returned or not, the court should take the allegations contained in the pla int to be true: para 3 of the plaint says that the agreement dated 13-1-2003 had , in the absence of mutual extension thereof in writing, ceased to exist: this a lone renders the impugned order liable to be set aside. The learned counsel main tains that as there is no evidence to show that the agreement dated 13-1-2004 go t extended by the conduct of the parties, the trial court has misdirected itself in applying the doctrine of agreement sub silentio: such finding arrived at wit hout adducing evidence by either side is unwarranted and cannot be sustained in law. In any case, submits the learned counsel for the appellant, as the parties had entered into a written agreement with express stipulations, it is absolutely undesirable to extend the period of the agreement by implications; the presumpt ion is that having expressed some, they have expressed all the conditions by whi ch they had intended to be bound under the said agreement: expressio unius est e xclusion alterius (the express mention of one thing implies the exclusion of ano ther). The learned counsel points out that the appellant had specifically mentio ned in the plaint, which is not denied by the respondent, that the cause of acti on arose within the jurisdiction of the learned Civil Judge at Guwahati and that there is no whisper of statement made by the respondent in its application unde r Section 21 CPC that some cause of action had arisen within the jurisdiction of the courts at Mumbai and, therefore, contends that the trial court has thus fal len into gross error of law in holding that the courts at Mumbai alone would hav e the jurisdiction to adjudicate the dispute between the parties. He, therefore, strenuously urges this Court to set aside the impugned judgment and order and d irect the trial court to proceed with the suit in accordance with law. 8. While supporting the impugned order, Mr. K. Agarwal, the learned counsel for the respondent, maintains that though the parties to the agreement dated 13-1-2003 did not expressly extend by mutual consent the tenure of the agr eement, the conduct of the parties as evidenced from their subsequent conduct un mistakably shows that they continued to govern themselves by the terms and condi tions of the agreement. According to the learned counsel, the proved facts and c ircumstances which can be culled from the various correspondences annexed to the plaint are indicative of the fact that there was an agreement sub silentio. Sin ce there is demonstrably an agreement sub silentio between the parties about the continuation of the agreement dated 13-1-2004, argues the learned counsel, the clause in the said agreement with respect to ouster of jurisdiction of courts in Guwahati for any dispute arising out of the same agreement, ipso facto, continu ed and as such the trial court is perfectly right in holding that the courts in Mumbai alone would have the jurisdiction to entertain the suit. The learned coun sel refutes the contention of the learned counsel for the appellant that the obj ection to the territorial jurisdiction raised by the respondent involves mixed q uestions of law and of fact, which could not be decided as a preliminary issue a nd contends that the various communications made by the parties, which are annex ed to the plaint, till the termination of the C&FA with effect from 31-5-2004 wo uld go to show that their claims and counter-claims arose out of the agreement d ated 13-1-2003. He, therefore, submits that the impugned order is perfectly in o rder and does not call for the interference of this court. In support of his var ious contentions, the learned counsel relies on the following decisions: (a) Hak am Singh v. M/s Gammon (India) Ltd., AIR 1971 SC 740; (b) ABC Laminart Pvt. Ltd. v. AP Agencies, (1989) 2 SCC 163; (c) M/s Angile Insulation v. Davy Ashmore Ind ia Ltd. & anr., (1995) 4 SCC 153; (d) Hamil Era Textile Ltd. v. Puromatic Filter s (P) Ltd., (2004) 4 SCC