Full Judgment Text
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3
PETITIONER:
CHOLAMANDALAM INVESTMENTS & FINANCE CO. PVT. LTD.
Vs.
RESPONDENT:
RADHIKA SYANTHETICS AND ANR.
DATE OF JUDGMENT: 16/01/1996
BENCH:
AHMADI A.M. (CJ)
BENCH:
AHMADI A.M. (CJ)
JEEVAN REDDY, B.P. (J)
CITATION:
1996 AIR 1098 1996 SCC (2) 109
JT 1996 (1) 372 1996 SCALE (1)324
ACT:
HEADNOTE:
JUDGMENT:
WITH
TRANSFER PETITION NO.196 OF 1994
Radhika Synthetics and Anr.
V.
Cholamandalam Investments & Finance Co. Pvt. Ltd.
J U D G M E N T
AHMADI, CJI :
M/s. Cholamandlam Investments & Finance (P) Ltd. with
its registered office at Madras filed a suit being C.S.
No.1161/91, in the High Court of Madras against M/s 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 further contends that it had
earlier filed C.S. 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
agreements, C.S. No.716 of 1990 was withdrawn.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 M/s Primatex Machinery Private Limited,
Dombivli, Thane. M/s Radhika Synthetics Limited had certain
complaints about the machinery supplied to them. About that
M/s. Cholamandlam 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 M/s
Primatex Machinery Private Limited. In para 12 of the suit
in the Madras High Court, it is stated that the cause of
action for the suit arose partly at Madras where the monies
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3
are due and payable under the original agreement as well as
the supplemental agreements.
M/s. Cholamandlam Investments & Finance (P) Ltd. filed
some interim 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
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.
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 the hire
purchase agreement between M/s Radhika Synthetics Limited
and M/s. Cholamandlam Investments & Finance (P) Ltd. were
executed. Coming to jurisdiction M/s Radhika Synthetics
Limited in their suit allege that M/s. Cholamandlam
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
Bombay, that the plaintiffs suffered loss and damages at
Bombay, and that all the material part of cause of action
has arisen at Bombay. M/s 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 M/s. Cholamandlam
Investments & Finance (P) Ltd. was opposed by M/s. Radhika
Synthetics and Anr. inter alia on the ground that M/s.
Cholamandlam Investments & Finance (P) Ltd. has an office in
Bombay, that the entire documentation was done at Bombay
that the payments made by M/s Radhika Synthetics Limited
were made at Bombay and were received by M/s. Cholamandlam
Investments & Finance (P) Ltd. at Bombay, that the entire
cause of action arose at Bombay. In reply to this on behalf
of the M/s. Cholamandlam Investments & Finance (P) Ltd. it
was stated in the rejoinder that their office in Bombay is a
small forwarding office, that the hire purchase agreement
was executed at Madras, that a few instalments were also
paid at Madras and that as per terms 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 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 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
http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3
MADRAS Courts 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 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 on behalf of the M/s Radhika Synthetics Limited
at Bombay as appears from their letter dated 18.4.1991, 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 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 leave granted under clause 12 of the Letters
Patent cannot exclude the jurisdiction of the High Court of
Madras, particularly, 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 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
between the parties and the litigation is not unnecessarily
and unduly protracted, the first course of action commends
us. Article 139A(2) empowers this Court 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 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.