Holding

A contractual agreement to exclusive jurisdiction of the Madras High Court is binding and cannot be displaced by leave under clause 12 of the Bombay High Court's Letters Patent; therefore, the Bombay suit must be transferred to the Madras High Court.

Summary

Cholamandalam Investments & Finance Co. Pvt. Ltd. filed a suit in the Madras High Court for recovery of money under a hire‑purchase agreement that contained a clause granting exclusive jurisdiction to Madras courts. Radhika Synthetics Ltd. later instituted a suit in the Bombay High Court claiming damages, relying on a leave obtained under clause 12 of the Bombay High Court's Letters Patent. Cholamandalam filed a transfer petition seeking to move the Bombay suit to the Madras High Court, arguing that the contractual jurisdiction clause was binding. The respondents opposed, contending that the cause of action and payments were centred in Bombay and that the leave under the Letters Patent should prevail. The Supreme Court held that a contractual agreement to exclusive jurisdiction cannot be overridden by a leave under the Letters Patent and that the Bombay suit must be transferred to the Madras High Court. Accordingly, Transfer Petition No. 870/93 was allowed and Transfer Petition No. 196/94 was dismissed.

Issues considered

Whether a contractual clause granting exclusive jurisdiction to a particular High Court can exclude the jurisdiction of another High Court.
Whether leave granted under clause 12 of the Letters Patent of the Bombay High Court can override a contractual exclusive jurisdiction clause.
Whether the suit pending in the Bombay High Court should be transferred to the Madras High Court or stayed under Section 10 of the CPC.
Whether Article 139A(2) of the Constitution empowers the Supreme Court to transfer the suit in the circumstances.

Legislation cited

Code of Civil Procedure, 1908s. 10, s. 20, s. 25, s. 9
Constitution of Indias. Article 139A(2)

Subjects

jurisdictionexclusive jurisdiction clauseforum selection clausetransfer of suitArticle 139ACode of Civil ProcedureLetters Patenthire purchase agreementcounter suit

Judgment

!
CHOLAMANDALAM INVESTMENTS AND A
FINANCE CO. PVT. LTD.
v.
RADHIKA SYNTHETICS AND ANR.

JANUARY 16, 1996
B
[A.M. AHMADI, CJ. AND B.P. JEEVAN REDDY, JJ.]
)

• Code of Civil Procedure, 1908 :

S.9, 10, 20, 25-Suitfor recovery of money---Jurisdiction-High Courts
of Bombay and Madras having jurisdiction-Parties agreeing to submit to c
Jurisdiction ~f Madras High Court-Plaintiff .filing suit in Madras High
Court-field, where two courts have jurisdiction, parties by contract can
submit to jurij·diction of one court and exclude jurisdiction of other--Another
suit .filed later in Bombay High Court in respect of same subject matter trans-
' ferred to Madras High Court. D
... Constitution of India :

Article 139 A(2)-Suit alleging breach of contract-Plaintiff filing suit
iu Madras High Court-Defendant raising no objection to jurisdiction-Later
d4endant filing another suit in respect of same subject matter before Bombay E
Hii(h Court-Petition for transfer of Suit pending in Bombay High Court to
Madras High Court--Allowed.

Letters Patent (Bombay High Court).

Clause 12-Suit arising out of breach of agreement-Parties agreeing to F
submit to jurisdiction of Madras High Court-Suit for recovery of money filed
in Madras High Court-De.fendant raising no objection to
jurisdiction-D~fendant later .filing another suit in respect of same subiect
mailer in Bombay High Court after obtaining leave of Bombay High
Court-Held, leave granted under clause 12 o.f letters patent cannot exclude
j!Jrisdiction of High Court o.f Madras in view of agreement between parties.
G

The petitioner in Transfer Petition No. 870of1993, had its registered
office at Madras. It filed a civil suit in the Madras High Court against the
respondents on the ground that they did not pay the amount due under
the hire purchase agreement dated 26.4.1989 and supplemental agree- H
495
496 SUPREME COURT REPORTS (1996] I S.C.R.
A ments entered into between the parties. The plaint of the suit state that
the cause of action for the suit arose partly at Madras where the moneys J.
were due and payable under the agreements. The hire purchase agreement
also stipulated that only Madras Courts would have jurisdiction to try the
arbitration or legal proceedings arising out of any dispute regarding the
agreenient. The respondents did not raise any objection about the juris-
B
diction. Later, the respondents filed a suit in the Bombay High Court
against .the petitioner claiming damages for failure on latter's part. to
comply with the terms of the said hire purchase agreement. The petitioner
filed a Transfer Petition (T.P. No. 870 of 1993) seeking transfer of suit No.
6920 of 1992 to Madras High Court. The respondents also filed on T.P. No. •
C 96 of 1994. The respondents opposed the Transfer Petition No. 870/93 on
the grounds that the petitioner also had an office in Bombay, the entire
documentation was done at Bombay, the payments made by the respond-
ents were made at Bombay and the entire cause of action arose at Bombay;
and that, the respondents had filed the suit in the Bombay High Court
D after obtaining leave under clause 12 of Letters Patent from the Bombay
High Court.

Allowing Transfer Petition No. 870 of 1993 and rejecting the other
transfer petition, this Court

E HELD : 1.1. Where two courts have jurisdiction to adjudicate upon
any dispute, the parties by a contract can submit to the jurisdiction of one
and exclude the jurisdiction of the other. In that view, the parties in the
instant case are bound to submit to the jurisdiction of the High Court of )
Madras. [499-F]
'
F 1.2. Both the High Courts of Madras and Bombay can be said to
have jurisdiction over th" subject-matter of the dispute although by virtue
of clause 20 of the hire purchase agreement the parties submitted to the
jurisdiction of Madras Courts and are bound by that clause. The supple-
mental agreements have not totally superseded the original agreement and
G therefore the question whether they were executed at Bombay or Madras
as they purport to be lrn;es significance. [499-H; 500-A-B]

2. So far as the High Court of Bombay is concerned, the leave .
granted under clause 12 of the Letters Patent cannot exclude the jurisdic-
tion of the High Court ol' Madras, particularly in view of the agreement
H between the parties. [500-B)
I CHOLAMANDALAM INVESTMENT & FINANCE CO., LTD. ~·. RADHIKA SYNTHETICS 497
3. Besides the suit at Madras was first in point of time and in the A
counter of that suit also the respondents claimed to have suffered damage.
The suit at Bombay was filed almost six months after the institution of the
Madras suit and that is why it is described as a couuterblast. The issues
arising in both the suits are likely to be common in many respects. (500-B-C]

4. Two courses are open : (i) to transfer the Bombay suit to Madras B
to be tried along with the latter; or (ii) to stay the Bombay suit under
Section 10 of the Code of Civil° Procedure till the disposal of the Madras
suit. In order that all the issues are finally thrashed out by and between
the parties and the litigati•m is not unnecessarily and unduly protracticed,
the first course of action is commendable. [500-C-D] c
5. Article 139 A(2) of the Constitution empowers this Court to
transfer any case pending before any High Court to any other High Court.
This is a fit case to exercise that power and transfer the suit No. 6920 of
1992 pending in the Bombay High Court to the High Court of Madras to
be tried along with C.S. No. 1161 of 1991. (500-D-C] D
-.. CIVI.L ORIGINAL JURISDICTION : Transfer Petition (C) No. 870 of
1993 Etc.

(Under Article 139A of the Constitution of India.)
E
P. Chidambaram, V.A. Bobde, Rajeev Dhawan, CA. Sundararn, G.K.
Jain, Mukul Mudgal, Rajiv K. Garg, N.D. Garg and Kailash Vasdev for the
appearing parties.

The Judgment of the Court was delivered by
F
AHMADI, CJ. MIS. Cholarnandlam Investments & Finance (P) Ltd.
with its registered office at Madras filed a suit being CS. No. 1161/91, in the
High Court of Madras against Mis. Radhika Synthetics Ltd. seeking a decree
for a sum of Rs. 65,82,850 with interest amounting to Rs. 62,75,778 on the
allegation that the amount was due under a hire purchase agreement dated 26th
April, 1989 and a Supplemental Agreement dated 1st June, 1989. The plaintiff G
further contends that it had earlier filed CS. No. 716/90 in the High Court of
"- Madras in which an Advocate Commissioner was appointed to seize the
machinery that were the subject matter of the agreement and that thereafter on
negotiation between the parties, two further supplemental agreements, both
dated 19th October, 1990, were executed and in view of the supplemental H
498 SUPREME COURT REPORTS [1996] 1 S.C.R.
A agreements, C.S. No. 716 of 1990 was withdrawn. The present suit before the
Madras High Court was filed as the defendant M/s. Radhika Synthetics Ltd.,
failed to pay the instalments from November, 1990 onwards. As per the
schedule annexed to the agreement dated 26th April, 1989, the machinery
were to be supplied by Mis. Primatex Machinery Private Limited, Dombivli,
Thane. Mis. Radhika Synthetics Limited had certain complaints about the
B
machinery supplied to them. About that Mis. Cholarnandlam Investments &
Finance (P) Ltd. contend in the suit that they were only the.financiers and were
not concerned with any defect in the machinery supplied by Mis. Primatcx "
Machinery Private Limited. In para 12 of the suit in the Madras High Court, I>
it is stated that the cause of action for the suit arose partly at Madras where
C the monies are due and payable under the original agreement as well as the
supplemental agreements.

M/s. Cholamandlam Investments & Finance (P) Ltd. filed some interest
applications presumably under Order 38 Rule 5 of the Code of Civil Procedure
for attachment before judgment It appears from the record that M/s. Radhika
D Synthetics Limited filed a counter affidavit in response to the application
under Order 38 Rule 5 of the Code of Civil Procedure. Copy of the counter
affidavit is on record. The objections to the application under Order 38 Rule
5 all relate to the plaintiff's responsibility for supplying defective machinery.
No objection about the jurisdiction was taken therein.
E
Radhika Synthetics Limited filed suit No. 692 of 1992 in the High Court
of Bombay against M/s. Cholamandlam Investments & Finance (P) Ltd. for
recovery of Rs. 2, 56,00,000 with interest holding them responsible for failure
to commence the production unit for which that hire purchase agreement
between Mis. Radhika Synthetics Limited and Mis. Cholarnandlam Invest-
F ments & Finance (P) Ltd. were executed. Coming to jurisdiction Mis. Radhika
Synthetics Limited in their suit allege that Mis. Cholarnandlam Investments &
Finance (P) Ltd. had agreed to install the machinery at the premises of M/s.
Radhika Synthetics Limited at Bombay, that the defective machinery was
supplied by the defendants at Bombay, that the agreement was executed at
G Bombay, that the plaintiffs suffered loss and damages at Bombay, and that all
the material part of cause of action has arisen at Bombay. Mis. Radhika
Synthetics further contend in their suit that they have obtained leave under
clause 12 of the Letters Patent from the High Court of Bombay.

The Transfer Petition filed by Mis. Cholamandlarn Investments &
H Finance (P) Ltd. was opposed by Mis. Radhika Synthetics and Anr. inter alia
;
I
CHOLAMANDALAM INVESThlENT & FINANCE CO., LTD. 1·. RADHIKA SYNTHETICS 499
on the ground that Mis. Cholamandlam Investments & Finance (P) Ltd. has A
an office in Bombay, that the entire documentation was done at Bombay that
the payments made by Mis. Radhika Synthetics Limited were made at Bombay
and were received by Mis. Cholamandalam Investments & Finance (P) Ltd.
at Bombay, that the entire cause of action arose at Bombay. In reply to this
on behalf of the Mis. Cholamandlam Investments & Finance (P) Ltd. It was
B
stated in the rejoinder that their office in Bombay is a small forwarding office,
that the hire purchase agreement was executed al Madras, that a few instal-
ments were also paid at Madras and that as per te1ms of the hire purchase
agreement all monies due and payable are to be paid at Madras.

The copy of the hire purchase agreement dated 26th April, 1989 opens C
with the words "Memorandum of Agreement made at Madras". Clause 20 of
the agreement deals with jurisdiction which is as under :

"20. Jurisdiction : This agreement has been accepted and executed
by the Company at MADRAS and it has been agreed to between the
parties hereto that all the covenants, terms and conditions hereof shall D
be observed and performed at MADRAS and the Hirer specifically
agrees and undertakes that it or its representatives and agents shall
institute any arbitration or other legal proceedings only in MADRAS
Courts, concerning this agreement and the Hired Articles hereunder.
It is further agreed between the parties hereto that only MADRAS E
Court shall have exclusive.jurisdiction to try any arbitration or legal
proceedings or any suit in respect of any matter, claim or dispute
arising out of or in any way relating to this agreement in respect of
the Hired Articles."

It is settled law that where two courts have jurisdiction to adjudicate F
upon any dispute, the parties by a contract can submit to the jurisdiction of
one and exclude the jurisdiction of the other. In that view, it appears that the
parties are bound to submit to the jurisdiction of the High_ Court of Madras.

The supplemental agreements dated 19.10.1990 may have been signed
G
on behalf of the Mis. Radhika Synthetics Limited at Bombay as appears from
their letter dated 18.4.199 l, but they purport to have been made at Madras.
Both the supplemental agreements have a clause that all terms and conditions
covered by the original hire purchase agreement will continue to be in force.

Apparently, at best both the High Court of Madras and the High Court H
500 SUPREME COURT REPORTS [ 1996] 1 S.C.R.
A of Bombay can be said to have jurisdiction over the subject-matter of the
dispute although by virtue of clause 20 of the agreement the parties submitted
to the jurisdiction of Madras and are bound by that clause. The supplemental
agreements have not totally superseded the original agreement and therefore
the question whether they were executed at Bombay or Madras as they purport
to be loses significance. So far as the High Court of Bombay is concerned, the
B
leave granted under clause 12 of the Letters Patent cannot exclude the
jurisdiction of the High Court of Madras, piirticularly, in view of the agreement
between the parties. Besides the suit at Madras was first in point of time and )..
in that suit also, in the counter, the first respondent raised the contention that
they had suffered damage to the tune of Rs. 2.16 crores. The suit at Bombay
c was filed almost six months after the institution of the Madras suit and that
is why it is. described as a counterblast. The issues arising in both .the suits are
likely to be common in many respects. Two courses are open (i) to transfer
the Bombay suit to Madras to be tried along with the latter; or (ii) to stay the
Bombay suit under Section 10 of the Code of Civil Procedure till the disposal
of the Madras suit. In order that all the issues are finally thrashed out by and
D f
between the parties and the litigation is not unnecessarily and unduly pro-
tracted, the first course of action commends us. Article l 39A(2) emp'\wers this
Coun to transfer any case pending before any High Court to any other High
Court. We are satisfied that this is a fit case to exercise that power and transfer
the Suit No. 6920 of 1992 pending in the Bombay High Court to the High
E Court of Madras to be tried along with C.S. No. 1161 of 1991. Transfer
Petition No. 870 of 1993 shall stand allowed accordingly with no order as to
costs while Transfer Petition No. 196 of 1994 shall stand rejected with no
order as to costs.
'
R.P. T.P. No. 870/93 allowed.
T.P. No. 196/94 rejected.