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Swastik Gases Pvt Ltd vs Indian Oil Corp. Ltd

Appellants: Swastik Gases P. Ltd.

Vs.

Respondent: Indian Oil Corporation Ltd.

FACTS: The Appellant, M/s. Swastik Gases Private Limited, mainly deals in storage, distribution of petroleum products including lubricating oils in Rajasthan and its registered office is situated at Jaipur. An agreement was entered into between the Appellant and the company on 13.10.2002 whereby the Appellant was appointed the company's consignment agent for marketing lubricants at Jaipur (Rajasthan). There is divergent stand of the parties in respect of the place of signing the agreement. The company's case is that the agreement has been signed at Kolkata while the Appellant's stand is that it was signed at Jaipur.

In or about November, 2003, disputes arose between the parties as huge quantity of stock of lubricants could not be sold by the Appellant. The Appellant requested the company to either liquidate the stock or take back the stock and make payment thereof to the Appellant. The parties met several times but the disputes could not be resolved amicably.

On 16.07.2007, the Appellant sent a notice to the company claiming a sum of Rs. 18,72,332/- under diverse heads with a request to the company to make payment of the above amount failing which it was stated that the Appellant would pursue appropriate legal action against the company.

Thereafter, on 25.08.2008 another notice was sent by the Appellant to the company invoking arbitration clause wherein name of a retired Judge of the High Court was proposed as the Appellant's arbitrator. The company was requested to name their arbitrator within thirty days failing which it was stated that the Appellant would have no option but to proceed Under Section 11 of the 1996 Act.

The company did not nominate its arbitrator within thirty days of receipt of the notice dated 25.08.2008 which led to the Appellant making an application Under Section 11 of the 1996 Act in the Rajasthan High Court for the appointment of arbitrator in respect of the disputes arising out of the above agreement.

The company contested the application made by the Appellant, inter alia, by raising a plea of lack of territorial jurisdiction of the Rajasthan High Court in the matter. The plea of the company was that the agreement has been made subject to jurisdiction of the courts at Kolkata and, therefore, Rajasthan High Court lacks the territorial jurisdiction in dealing with the application Under Section 11.

ISSUE: The issue that arises for consideration whether, in view of Clause 18 of the consignment agency agreement dated 13.10.2002, the Calcutta High Court has exclusive jurisdiction in respect of the application made by the appellant under Section 11 of the Arbitration and Conciliation Act, 1996.

HELD: In the instant case, the appellant does not dispute that part of cause of action has arisen in Kolkata. What appellant says is that part of cause of action has also arisen in Jaipur and, therefore, Chief Justice of the Rajasthan High Court or the designate Judge has jurisdiction to consider the application made by the appellant for the appointment of an arbitrator under Section 11. Having regard to Section 11(12)(b) and Section 2(e) of the 1996 Act read with Section 20(c) of the C.P.C., there remains no doubt that the Chief Justice or the designate Judge of the Rajasthan High Court has jurisdiction in the matter. The question is, whether parties by virtue of Clause 18 of the agreement have agreed to exclude the jurisdiction of the courts at Jaipur or, in other words, whether in view of Clause 18 of the agreement, the jurisdiction of Chief Justice of the Rajasthan High Court has been excluded. For answer to the above question. Court have to see the effect of the jurisdiction clause in the agreement which provides that the agreement shall be subject to jurisdiction of the courts at Kolkata. It is a fact that whilst providing for jurisdiction clause in the agreement the words like 'alone', 'only', 'exclusive' or 'exclusive jurisdiction' have not been used but this is not decisive and does not make any material difference.

The intention of the parties--by having Clause 18 in the agreement--is clear and unambiguous that the courts at Kolkata shall have jurisdiction which means that the courts at Kolkata alone shall have jurisdiction. It is so because for construction of jurisdiction clause, like Clause 18 in the agreement, the maxim expressio unius est exclusio alterius comes into play as there is nothing to indicate to the contrary. This legal maxim means that expression of one is the exclusion of another. By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts.

Where the contract specifies the jurisdiction of the courts at a particular place and such courts have jurisdiction to deal with the matter, an inference may be drawn that parties intended to exclude all other courts. A clause like this is not hit by Section 23 of the Contract Act at all. Such clause is neither forbidden by law nor it is against the public policy. It does not offend Section 28 of the Contract Act in any manner.

  • Section 11 of Arbitration and Conciliation Act
  • (2013) 9 SCC 32
  • Supreme Court Judgement Dated- 03.07.2013

BY : Shardul Srivastava

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