Rule of Jurisdiction for Wrong done to Persons or Movables – Section -19
Where a suit is for compensation for wrong done to the person or to movable property, if the wrong was done within the local limits of the jurisdiction of one Court and the defendant resides, or carries on business, or personally works for gain, within the local limits of the jurisdiction of another Court, the suit may be instituted at the option of the plaintiff in either of the said Courts.
Illustrations
(a) A, residing in Delhi, beats B in Calcutta. B may sue A either in Calcutta or in Delhi.
(b) A, residing in Delhi, publishes in Calcutta statements defamatory of B. B may sue A either in Calcutta or in Delhi.
Section 19 is based on the maxim mobilia sequuntur personam i.e. movable follow the person. This section provides for alternate jurisdiction. It states that where the wrong to person or movable property is committed or cause of action arises in local limits of one court and defendant resides or carries on business or personally works for gain in local limits of another court, the plaintiff has an alternative to institute the suit in either of those courts. Here actually and voluntary has not been used. The wrong is any wrong for which legal remedy lies.
In other words The suit as provided u/S 19 of CPC, has to be filed at a place.
(i) where the wrong is done
(ii) where the Defendant resides or carries on business or personally works for gain.
Under Section 19 there are two twin conditions which have to be fulfilled; first is that the wrong has been done within the jurisdiction of one Court and the defendant resides outside the jurisdiction of the Court where the wrong has been done.
Unless both these conditions together are available no question of option or choice for forum can conceivably, arise. The conjunction “and” in the qualifying clause is very much indicative of this result, leaving aside the cases where these conditions together are not available, the matters, of such suit are still governed by other provisions of the Code
In a suit for compensation “wrong done” “or” “complained of” is the cause of action by which Code understands and contemplates all the bundle of necessary facts capable on proof of sustaining the relief claimed.
Compensation clearly posits an injury resulting in loss and damage. Mere injury or wrong without anything more would not suffice to sustain the claim for compensation. It is clear that the phrase “wrong done” is not used in any narrow sense but has to be understood in all its amplitude so as to afford forum and necessary relief. That clearly takes in both cause and effect. Injury or actual wrong may occur at place A but its effect may be felt at places other than ‘A’ and may effect places ‘B’ or ‘C’ Act or actions taking place at a given place may still give rise at places quite different and at all these places and for all those effects, cause would arise seeking compensation.
Without resultant loss or its proof restitutive justice may not afford any relief nor there could be any remedy in vacuum. Thus the phraseology used by Section 19 about “the wrong done” would clearly take in not only the initial action complained on but its result an effect.
CPC Section 20. Other suits to be instituted where defendants reside or cause of action arises.
Subject to the limitations aforesaid, every suit shall be instituted in 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, or 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 business, or personally works for gain, provided that in such case either the leave of 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 3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place
Illustrations
(a)A is a tradesman in Calcutta, B carries on business in Delhi. B, by his agent in Calcutta, buys goods of A and requests A to deliver them to the East Indian Railway Company. A delivers the goods accordingly in Calcutta. A may sue B for the price of the goods either in Calcutta, where the cause of action has arisen or in Delhi, where B carries on business.
(b) A resides at Simla, B at Calcutta and C at Delhi A, B and C being together at Benaras, B and C make a joint promissory note payable on demand, and deliver it to A. A may sue B and C at Benaras, where the cause of action arose. He may also sue them at Calcutta, where B resides, or at Delhi, where C resides; but in each of these cases, if the non-resident defendant object, the suit cannot proceed without the leave of the Court.
OTHER SUITS [SECTION 20]
Section 20 provides for all the cases not covered by any of the Other rules. Section 20 may include other suits. Other suits may include many other kinds of suit.
This Section is designed to secure that the justice might be brought as near as possible to every man and that the defendant should not be put to the trouble and expenses of travelling long distances in order to defend himself in cases in which he may be involved.
UOI v. Ladulal Jain AIR 1963 1681
Forum shopping or Legal Tourism refers to the practice adopted by some litigants of having their case heard in the court which is most likely to provide a favourable judgment. In India, so-called forum shopping is not permitted as such.
Defendants are often harassed by the plaintiffs, who chose to file suits at distant places , so the major object of the Legislature in enacting Section -20 is to save the litigants from this type of immoral practices and rescue from hardship during trial.
Generally, the plaintiff can file the suit in the following courts
- Where the defendant or each of the defendant (where more than one) (a) Actually and voluntary resides, or
(b) Carries on business, or
(c) Personally works for gain, or
In case there is more than one defendant against whom a suit is to be instituted, either the permission of the court has to be obtained or the assent of all the defendants of assuming a particular jurisdiction without objection has to be proved.
- Where cause of action wholly or partly arises.
Explanation in the provision provides if the defendant is a corporation and the suit is attempted to be instituted at its place of business then if there are more than one subordinate offices conducting such business, then as of general rule the suit must be instituted at its principal office as its place of business however, where the cause of action arose in any of its subordinate offices (other than principal office) then that subordinate office will be deemed to be the place of business for the purpose of the provision
Suits to be instituted where subject-matter situate – Section – 16
Exclusive Jurisdiction Clauses in a Contract: Key issues
| Sec -23 of Contract Act
What consideration and objects are lawful, and what not.—The consideration or object of an agreement is lawful, unless— —The consideration or object of an agreement is lawful, unless—” it is forbidden by law;14or is of such a nature that, if permitted, it would defeat the provisions of any law; or is fraudulent; or involves or implies, injury to the person or property of another; or the Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void |
Sec – 28 of Contract Act
8 Agreements in restraint of legal proceedings, void. — 17 [Every agreement,—(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or (b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to that extent. |
Exclusive jurisdiction clauses enunciate a choice by parties to limit the place of institution of the suit to one forum. Section 23 of the Indian Contract Act, 1872 (‘Contract Act’) mandates, inter alia, that there cannot be a contract which is forbidden by or defeats any provision of law. Section 28 makes an absolute restraint on a legal recourse or ability to enforce rights under a contract, void. However, through a conjoint reading of Section 20 of the Civil Procedure Code and Sections 23 & 28 of the Contract Act, there is scope for a partial restriction by limiting parties’ recourse to one forum. Exclusive jurisdiction clauses occupy this space between an absolute restraint and convenience-based forum shopping.
HAKAM SINGH VS M/S GAMMON (INDIA) LTD., AIR 1971 S.C. 740
In Hakam Singh v. Gammon (India) Ltd [1971 SCR (3) 314], the contractual validity of choice of forum clauses was discussed. In that case, the Petitioner approached the Court of the Subordinate Judge at Varanasi for an order referring the parties to the arbitration. The contract between the parties had a stipulation that the Courts of Mumbai alone will have jurisdiction. The trial court concluded 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 possess. While dealing with this case, the Supreme Court stated that when two courts had the jurisdiction to entertain a dispute, a choice of one by agreement, would not amount to restraint of legal proceedings, or violate public policy, under Sections 28 and 23 of the Contract Act respectively. However, the parties could not, by agreement confer jurisdiction on a court that would otherwise not have jurisdiction in law to adjudicate the dispute in question. This position has been affirmed in subsequent decisions of the Supreme Court
Two other important holdings in the decision are that
(1)by the terms of Section 20(a) read with Explanation II (as it then existed) of the Code the Company was liable to be sued in Bombay where it had its principal place of business and
(2) that the word “corporation” in the Explanation does not mean only a Statutory Corporation but includes a Company registered under the Companies Act.
Conclusion
It is remarkable that from HAKAM SINGH (Supra) of 8th January, 1971 to SANDEEP POLYMERS (Supra) of 20th July 2007 there is no discordance among the above decisions of the Supreme Court in the matter of place of suing vis-à-vis ouster clause.
The core principle throughout has been that although parties cannot confer jurisdiction on a court which does not possess it under the Code or any other law the parties can, if there are more courts than one competent under the law, by a clear, unambiguous, explicit and valid contract, select one among them. Parties will be bound by such a contract and the courts will enforce the contract.
Section 20 Explanation deals with Question of Office. What is the place of office?
On this point, The Supreme Court has said that Explanation to Section 20 has to be read subject to principle laid down in Section 20 i.e. explanation cannot be interpreted beyond the meaning of main section. And for proper understanding it can be divided and written as follows:-
- In case of corporation which has its sole office and no subordinate office then the place of business will be deemed to be where the sole office is located.
- Where corporation has its principal office as well as subordinate office if cause of action arises at subordinate office then place of business will be that of subordinate office
- If corporation has its principal office as well as subordinate office then if cause of action does not arise at subordinate office rather it arises at other place then place of business will be deemed to be principal office.
- Use of word “or” plays a disjunctive role and therefore the word such in the end of Explanation refers only to subordinate office and not to Principal Office.
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