Unilateral Affirmation By One Party, Without Being Specifically Accepted By Other Party Doesn't Confer Exclusive Jurisdiction: Kerala High Court

In a significant judgment, the Kerala High Court held that a unilateral affirmation by a party to a contract, without being specifically accepted by the other party, doesn't confer exclusive jurisdiction, since the ouster of jurisdiction of courts cannot be lightly assumed or presumed.

The Single Judge Bench of Justice V.G. Arun found that a unilateral affirmation by one of the parties to the contract, without the same being specifically accepted by the other party, will not confer exclusive jurisdiction on any court by overlooking the conferment of jurisdiction as stipulated in Section 20(c) of the Code of Civil Procedure (CPC). 

Section 20(c) of CPC states that a suit can be instituted in a court within the local limits of whose jurisdiction the cause of action, wholly or in part, arises.

Relying on the Apex Court decision in A.B.C. Laminart (P) Ltd v A.P. Agencies, Salem (1989), that where there is an ouster clause in an agreement, it would be pertinent to see whether there is an ouster of jurisdiction of other courts, as well, the Court reiterated:

"When the clause is clear, unambiguous and specific, accepted notions of contract would bind the parties and unless the absence of ad idem is shown, the other courts should avoid exercising jurisdiction. Therefore, when words like “alone”, “only”, “exclusive” have been used, there is no difficulty. But even in the absence of such words, in appropriate cases the maxim “expressio unius est exclusio alterius”- expression of one is the exclusion of another- can be applied. What is an appropriate case shall depend on the facts of the case". 

Regarding the absence of terms such as 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' in terms and conditions of a contractual clause conferring jurisdiction, Justice Arun thereby went on to hold:

"In the absence of proof regarding consensus as to the jurisdiction, either implied or by conduct, the maxim 'expressio unius est exclusio alterius' has no application". 

The factual matrix reveals that the revision petitioner/defendant expressed interest in hiring a crane, pursuant to which it issued a purchase order containing the commercial terms and conditions for hiring the crane, which was accepted by the respondent/plaintiff with certain modifications. However, it is noted that the defendant thereafter failed and neglected to pay the hire charges, even after the issuance of repeated demand notices, as a result of which the present suit was filed. 

The defendant contended that the Munsiff Court, Ernakulam lacked territorial jurisdiction in the matter since no part of the cause of action arose at Ernakulam. It was further contended that as per Clause 17 of the terms and conditions of the purchase order, only the courts in Secunderabad, Hyderabad, had jurisdiction with respect to the disputes arising out of the agreement.

The plaintiff however averred that as per the letter dated March 14, 2016, issued in reply to the purchase order, amendments regarding working hours and payment of hire charges had been suggested and that the revision petitioner had not objected to those amendments. It was added that in the reply letter, it was also specified that the actions of the plaintiff would be subject to Cochin jurisdiction alone. 

The Munsiff Court dismissed the application seeking the return of plaint, finding the contention regarding lack of territorial jurisdiction to be untenable.

It was thus contended by the defendants in the present revision petition that since the parties had agreed to confer exclusive jurisdiction on the courts situated in the places mentioned in the purchase order, the court below grossly erred in relying on the printed words in the letter to hold that the court at Ernakulam had jurisdiction. The counsel asserted that silence on the part of the plaintiff regarding exclusive jurisdiction clause amounted to consent.

The counsel for the revision petitioner/defendant contended that as per the decision in India Roadway Corporation v. Unneerikutty (1990), the printed words 'subject to Cochin jurisdiction', at the bottom of the letterhead, could not be treated as a special contract conferring exclusive jurisdiction on Cochin Courts. 

The counsel for the respondent however argued that the parties had not entered into any written agreement to confer exclusive jurisdiction on any court, while the letterhead stipulated that disputes would be subject to Cochin jurisdiction.

"...the only inference possible is that the revision petitioner had accepted the jurisdiction of the Cochin courts to decide disputes. Even otherwise, there is nothing to show that the respondent had acceded or consented to the exclusionary clause in the purchase order. It is contended that part of cause of action had arisen at Ernakulam since the payment was effected to the respondent's account maintained with a bank at Ernakulam and the correspondences pertaining to the transaction were issued from the registered office of the respondent situated in Ernakulam," the counsel submitted. 

The Court reiterated that it was the settled position of law that even if two or more courts may have jurisdiction based on the cause of action, it would be open for the parties to confer exclusive jurisdiction on one of the courts by consent.

Particularly, it took note that terms such as 'alone', 'only', 'exclusive' indicating conferment of exclusive jurisdiction were absent in condition No. 17 of the Purchase Order. 

When faced with the conflicting contention that implied consent would have to be inferred from the silence with respect to condition No.17, the Court ascertained that the question before it was whether there was consensus ad idem with respect to the exclusionary clause in the said condition. 

Relying on the decision in Unneerikutty (Supra), while holding that the words printed at the bottom of the letterhead with respect to jurisdiction could not be treated as a special contract conferring exclusive jurisdiction on the court mentioned therein, the Court in this case went on to hold that the printed words 'subject to Cochin jurisdiction' does not confer exclusive jurisdiction on the courts at Cochin. 

On the question as to whether the respondent had accepted the jurisdictional clause by conduct, the Court observed that a contract is concluded when, in the mind of each contracting party, there is consensus ad idem and a modification or revocation of the contract requires a like consensus. 

"Therefore, the courts have to examine the evidence and find out whether, in the facts and circumstances of the case, the conduct of the offeree amounted to unequivocal acceptance of the offer made. If the facts disclose that there was no reservation in the acceptance by conduct, it follows that the offer has been accepted. On the other hand, if the evidence discloses that the offeree had reservation in accepting the offer, his conduct may not amount to acceptance of the offer in terms of Section 8 of the Contract Act," it said. 

On the basis of the said dictum, the Court thus found that available documents did not reveal consensus between the parties with respect to the conferment of jurisdiction on any particular court. 

The Court thus dismissed the revision petition, finding that the court below was justified in rejecting the prayer for the return of the plaint.

Counsel for the Revision Petitioner: Advocates P. Sanjay, and A. Parvathi Menon

Counsel for the Respondent: Advocate Manu Roy

Citation: 2024 LiveLaw (Ker) 38

Case Title: Sangha Erectors Pvt. Ltd. v. Laxmi Cranes and Trailers Pvt. Ltd. 

Case Number: CRP NO. 288 OF 2019

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