Parties cannot by agreement confer jurisdiction on a court that inherently lacks jurisdiction under the CPC.

The respondent (plaintiff) filed a commercial suit against the petitioner (defendant) seeking compensation of Rs. 2,35,15,275/- for breach of contract, plus 24% interest

The petitioner filed an application under Order VII Rule 11 of the CPC for rejection of the plaint, contending that: (i) the plaint did not specify when the cause of action arose; (ii) the Commercial Court at Bhopal lacked territorial jurisdiction as the contract vested exclusive jurisdiction in Guntur courts; and (iii) the plaintiff failed to file a "Statement of Truth"

The District Judge (Commercial Court), Bhopal, dismissed the application on 21.08.2024, observing that the petitioner failed to prove Guntur courts had inherent jurisdiction and that the "Statement of Truth" was subsequently filed

The petitioner challenged this dismissal before the High Court under Article 227 of the Constitution

1. Whether a forum selection clause can confer exclusive jurisdiction on a court that inherently lacks territorial jurisdiction under the Code of Civil Procedure

2. Whether the non-filing of a "Statement of Truth" in a commercial suit is a fatal defect necessitating the rejection of the plaint under Order VII Rule 11

3. Whether the plaint disclosed a sufficient cause of action to survive a challenge under Order VII Rule 11

The Court primarily applied Sections 19 and 20 of the CPC, which dictate that suits must be instituted where the defendant resides, carries on business, or where the cause of action arises

It relied on Maharashtra Chess Assn. v. Union of India, establishing that while parties may choose one of several competent courts, they cannot confer jurisdiction on a court that inherently lacks it

Regarding the "Statement of Truth," the court followed Harji Engineering Works Pvt. Ltd. v. Hindustan Steel Works Construction Ltd., holding that such defects are curable and do not debar a suit if rectified

The Court also referenced Hakam Singh v. Gammon (India) Ltd. regarding the principal place of business for corporations under Section 20 CPC

The Court reasoned that under Section 20 CPC, a corporation is deemed to carry on business at its principal office or at a subordinate office if the cause of action arises there

While the petitioner claimed Guntur had jurisdiction based on the contract and the location of its Agri Business Division, the Court found no evidence at the preliminary stage that Guntur was either the principal office or a subordinate office where the cause of action arose

Conversely, the cause of action arose in Khandwa, and the petitioner had an office in Bhopal

The Court emphasized that a forum selection clause is only valid if the chosen court is otherwise competent to hear the matter

Since the petitioner failed to establish the inherent jurisdiction of the Guntur court through cogent material (beyond a limited Power of Attorney), the Bhopal court's jurisdiction could not be ousted by agreement

Furthermore, the Court held that the subsequent filing of the Statement of Truth cured the initial procedural defect

It held that parties cannot by agreement confer jurisdiction on a court that lacks it under the CPC

The Court found the objections regarding the cause of action and the Statement of Truth to be without substance due to subsequent compliance and a holistic reading of the plaint

The petitioner may raise the jurisdictional objection again during the trial if supported by evidence, but the plaint cannot be rejected at the threshold

No order as to costs was made