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PATEL ROADWAYS LTD, BOMBAY V/S PRASAD TRADING COMPANY

where the corporation has a subordinate office 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

Case name: Patel roadways ltd, Bombay V/S Prasad trading company
Case number: Civil appeal number-3050-3051 of 1991
Court: The supreme court of india
Bench: Justice ojha
Decided on: AUGUST 06, 1991
Relevant Act/Sections: Section 115, 20 of the Code of Civil Procedure, 1908
  • BRIEF FACTS AND PROCEDURAL HISTORY:
  • M/s Prasad Trading Company, the respondent in the Civil Appeal arising out of SLP (C) No. 14660 of 1990 who is a dealer in cardamom entrusted a consignment of 850 kilograms of cardamom to the appellant at its subordinate office at Bodinayakanur in Tamil Nadu to be delivered at Delhi. After the goods had been transported by the appellant and kept in a godown at Delhi the same got destroyed and damaged in a fire as a result whereof the consignee refused to take delivery. The respondent instituted a suit in the Court of Subordinate Judge, Periakulam within whose territorial jurisdiction the subordinate office of the appellant where the goods were entrusted for transport is situate for damages alleging that the fire was due to the negligence and carelessness on the part of the staff of the appellant.
  • M/s Tropical Agro Systems Private Limited, the respondent 1 in the Civil Appeal arising out of SLP (C) No. 14692 of 1990 on the other hand entrusted certain packets of pesticides insured with the second respondent, M/s Oriental Insurance Company Limited to the appellant at its subordinate office at Madras for being carried to New Delhi. According to the respondents the goods aforesaid were delivered at New Delhi in a damaged condition resulting in loss to the first respondent and a suit was instituted for recovery of the loss so sustained by the respondents in the Court of the Third Assistant Judge, City Civil Court, Madras.
  • PROCEDURAL HISTORY:
  • In both the suits the appellant inter alia took the plea in its defence. that in the contract entered into between them the parties had agreed that jurisdiction to decide any dispute between them would be only with the courts at Bombay and consequently the courts in Madras where the two suits referred to above had been instituted had no jurisdiction.
  • This plea was repelled in both the suits by the trial court. The order of the trial court in each of the two suits was challenged by the appellant before the High Court of Judicature at Madras under Section 115 of the Code of Civil Procedure (hereinafter referred to as the Code). This challenge having failed in each of the civil revisions, the appellant has preferred these civil appeals.
  • ISSUE BEFORE THE COURT:
  • The question which arises in both these civil appeals, therefore, is as to whether in view of the relevant clause in the contract between the parties the courts at Bombay alone had jurisdiction and the jurisdiction of the courts at Madras where the two suits were instituted was barred?
  • Whether in any of these two suits the courts at Bombay also had jurisdiction apart from the courts within whose jurisdiction the goods were entrusted to the appellant for purposes of transport?
  • RATIO OF THE COURT:
  • The court observed in Hakam Singh v. M/s. Gammon (India) Ltd., [1971] 3 SCR Page 314 it was held that “corporation” referred to in Section 20  meant not only a statutory corporation but also a company registered under the Indian Companies Act. It was also held that it is not open to the parties by agreement to confer jurisdiction on any court which it did not otherwise possess under the Code. But where two courts have jurisdiction under the Code 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 nor does such an agreement contravene Section 28 of the Contract Act.
  • In that case also there was a clause in the agreement being clause No. 13 which provided that notwithstanding the place where the work under the contract was to be executed the contract shall be deemed to have been entered into between the parties at Bombay and the court in Bombay alone shall have jurisdiction to adjudicate thereon. The trial court had held that the entire cause of action had arisen at Varanasi and the parties could not by agreement confer jurisdiction on the courts at Bombay which they did not otherwise pos- sess. In a civil revision filed by the respondent the Allahabad High Court held that the courts at Bombay had also jurisdiction and in view of clause 13 of the agreement the jurisdiction of the courts at Varanasi stood ousted. It is in the appeal against the said judgment of the High Court that the propositions of law referred to above were laid down by this Court.
  • It was held that since the respondent had its head office at Bombay the courts at Bombay also had ‘jurisdiction by virtue of Section 20 of the Code read with its Explanation and in view of clause 13 of the agreement between the parties the courts in Bombay alone had jurisdiction in the matter. The appeal was accordingly dismissed. This view was reiterated by this Court in Globe Transport Corporation v. Triveni Engineering Works and Another, [1983] 4 SCC Page 707.
  • The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will “be deemed to carry on business” at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a princi- pal office at one place and has also a subordinate office at another place. The words “at such place” occurring at the end of the Explanation and the word “or” referred to above which is disjunctive clearly suggest that if the ease 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 shall have jurisdiction “in respect of any cause of action arising at any place where it has also a subordinate office”.
  • The court stated that the interpretation which we have placed on this section does not create any practical or undue difficulties or disadvantage either to the plaintiff or a defendant corporation. It is true that, normally, under clauses (a) to (c), the plaintiff has a choice of forum and cannot be compelled to go to the place of residence or business of the corporation and can file a suit at a place where the cause of action arises. If a corporation desires to be protected from being dragged into litigation at some place merely because a cause of action arises there it can save itself from such a situation by an exclusion clause as has been done in the present case.
  • The clear intendment of the Explanation, however, is that, where the corporation has a subordinate office 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, in spite of the corporation having a subordinate office at the place where the cause of action arises such plaintiff is to be compelled to travel to the place where the corporation has its principal place. That place should be convenient to the plaintiff; and since the corporation has an office at such place, it will also be under no disadvantage. Thus the Explanation provides an alternative locus for the corporation’s place of bussiness, not an additional one.
  • DECISION HELD BY COURT:
  • In this case the judgement was given by JUSTICE OJHA that the above interpretation would preclude him from filing a suit in that place of business common to both parties and compel him to go to a court having jurisdiction over the place where the cause of action has arisen.
  • In this view of the matter since in the instant two cases clause (c) is not attracted to confer jurisdiction on courts at Bombay and the appellant has admittedly its subordinate offices at the respective places where the goods in these two cases were delivered to it for purpose of transport the courts at Bombay had no jurisdiction at all to entertain the suits filed by the respondents and the parties could not confer jurisdiction on the courts at Bombay by an agreement. Accordingly no exception can be taken to the findings in this behalf recorded by the trial court and the High Court in these two cases.
  • In the result, the court found no merit in any of these two appeals and they are accordingly dismissed but in the circumstances of the case the parties shall bear their own costs.

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