Gujarat NRE Coke Limited and Others vs Jindal Steel & Power Limited and Others

Soumen Sen, J.—This is an application at the instance of the defendant No. 2 for revocation of leave under Clause 12 of the Letters Patent.

The plaintiff No. 1 i.e. Gujarat NRE Coke Limited and the plaintiff No. 2 i.e. Gujarat NRE Mineral Resources (hereinafter referred to as the "plaintiffs") have filed the present suit claiming damages to the tune of Rs. 970,00,00,000 (Rupees Nine Seventy Crores only) towards loss of profit, loss of market shares and loss of reputation and other separate severable reliefs from the other defendants.

The plaintiff and the applicant (formerly known as India NRE Minerals Limited) have entered into a Purchase Agreement dated 11th May, 2007 by and under which the plaintiff No. 1 agreed to accept and purchase the ROM Coal produced by the applicant. The applicant says that the agreement was signed by the defendant No. 2 at Australia and the contract was concluded at Australia. The applicant says that the agreement entered into between the plaintiff No. 1 and the defendant No. 2 specifically provides that the said contract shall be governed by the New South Wales Australia and the Commonwealth of Australia and the plaintiff No. 1 and the defendant No. 2 shall submit to the exclusive jurisdiction of the Courts of New South Wales and Australia to settle their disputes.

The applicant further says that the plaintiff alleged that the Jindal group, mainly Jindal Steel & Power (Mauritius) Ltd. and Jindal Steel & Power (Australia) Pty Ltd. acquired a major stake in defendant No. 2/applicant, which is a separate legal entity. Thereafter, it is alleged that they took over the management and control of defendant No. 2/applicant and started interfering in the management of defendant No. 2/applicant, which was earlier a subsidiary of plaintiff No. 1. It also alleged that after taking over the management of defendant No. 2/applicant, the defendant No. 2/applicant stopped payment of the freight charges to the shipping company and thus, prevented the supply of coal to the plaintiff No. 1 under the Purchase Agreement and hence, the present suit. This dispute cannot be decided by this forum as this Hon''ble Court by reason of Clause 21 of the Agreement does not have the territorial jurisdiction to try and determine the suit.

Mr. Sudipto Sarkar, learned Senior Counsel appearing with Mr. Ratnanko Banerjee, Senior Advocate and Ms. Mousumi Bhattacharya, Advocate submits that the claim against the defendant No. 2 is distinct and separate inasmuch as a bare perusal of the claim shows that the plaintiffs are making a claim in view of failure on the part of the defendant No. 2 to supply in terms of the Purchase Agreement dated 11th May, 2007. It is submitted that when an agreement contains a exclusive jurisdiction clause, it necessarily excludes all other jurisdiction and in this regard the learned Senior Counsel has relied upon the following decisions:-

i) Swastik Gases P. Ltd. Vs. Indian Oil Corporation Ltd., ;

ii) Excel Dealcomm Private Limited Vs. Asset Reconstruction Company (India) Limited and Others ;

iii) B.E. Simoes Von Staraburg Niedenthal Vs. Chhattisgarh Investment Ltd.-->

iv) Sahaj E-Village Limited Vs. Oracle India Pvt. Ltd.-->

Per contra, Mr. Jishnu Saha, learned Senior Counsel appearing on behalf of the plaintiff submits that the cause of action pleaded in the plaint is a rolled up action which involves the presence of the defendant. The plaintiff has pleaded in the plaint that consequent upon taking over the management of the defendant No. 2 by the defendant No. 1, the defendant No. 1 was induced by the defendant No. 2 not to supply the coal under the Purchase Agreement dated 11th May, 2007 thereby causing loss and damage to the plaintiffs. The plaintiff by reason of such breach of contract induced by the defendant No. 1 has, in turn, failed to discharge his obligation under the agreement with the defendant No. 1 entered into on 27th August, 2013. The defendant No. 2 is a proper and necessary party in deciding the issues involved in the suit and, accordingly, the leave obtained under Clause 12 of the Letters Patent cannot be revoked. The learned Senior Counsel has relied upon two decisions of our High Court in Pidilite Industries Pvt. Ltd. Vs. Sanjib Paul & Ors. reported at and Electrosteel Castings Limited Vs. Madhya Pradesh, Laghu Udyog Nigam Limited & Ors. reported at for the proposition that for the purpose of considering an application for revocation of leave under Clause 12 of the Letters Patent, it has to be demonstrated that the plaintiff does not have any cause of action against the defendant inasmuch as that when a part of the cause of action has arisen within the jurisdiction of this Court and the presence of the defendant No. 2 is essential to decide the matter, the Court cannot rely upon the agreement exclusively entered into between the plaintiffs and the defendant No. 2 and revoked the leave granted earlier. If the presence of the defendant No. 2 in the frame of the suit is essential and necessary for proper adjudication of the issues involved in the lis then irrespective of the fact whether the plaintiffs may have a separate agreement with the defendant No. 2, the presence of the defendant cannot be dispensed with, more so, when the plaintiff is not enforcing the agreement between the plaintiffs and the said defendant.

The plaintiffs made the following averments for invoking the jurisdictional clause of this Court under Clause 12 of the Letters Patent:-

"50. The plaintiff''s cause of action in the suit against the defendants arose for the first time on 16th October, 2013 when the management and control of defendant No. 4 was taken over by Jindal Group and the defendant Nos. 2 and 3 at the instance of the defendant No. 1 stopped supply of NRE Australian hard coking coal to the plaintiff No. 1 in breach of their obligations under the purchase agreements dated 11th May, 2007 and 4th November, 2007 respectively. As such no part or portion of the plaintiffs'' claims in the same is barred by limitation.

As has been stated hereinabove, both the purchase agreements and the coal purchase agreement were entered into at the registered office of the plaintiff No. 1 within the jurisdiction of this Hon''ble Court. The breach of the purchase agreements was, however, procured by the defendant No. 1 and/or its subsidiaries at Australia as also at various places in India including at the registered office of the plaintiff No. 1 both outside and within the aforesaid jurisdiction. Similarly, the defendant No. 1 prevented the performance of the coal purchase agreement by the plaintiff No. 1 at the registered office of the said plaintiff within the aforesaid jurisdiction as also at the plants of the plaintiff No. 1 outside the aforesaid jurisdiction. The correspondence exchanged in this regard were all addressed by the plaintiff No. 1 from its registered office within the aforesaid jurisdiction to the defendant No. 1 outside the aforesaid jurisdiction and were in turn addressed by the defendant No. 1 from outside the aforesaid jurisdiction to the plaintiff No. 1 within the aforesaid jurisdiction. A part of the plaintiffs'' cause of action as stated in paragraphs 1 to 37, 8, 28, 30, 44, 51 hereinabove have as such arisen within and a part thereof as stated in paragraphs 4, 37, 41, 44, 51 hereinabove have arisen outside the aforesaid jurisdiction. The plaintiffs are accordingly entitled to and pray for leave under Clause 12 of the Letters Patent to institute the instant suit in this Hon''ble Court.

The plaintiffs'' right to relief against the defendants arise out of the same series of acts or transactions and if separate suits are brought against them, common questions of law or fact would arise."

I have considered the Purchase Agreement. Clause 21 of the Purchase Agreement lays down the governing law and is the jurisdiction clause. The said clause reads:-

"21. GOVERNING LAW

21.1. Governing Law

This Agreement shall be governed by the laws current in the State of New South Wales Australia and the Commonwealth of Australia and the parties submit to the exclusive jurisdiction of the Courts of New South Wales and Australia and only Courts that hear appears therefrom.

21.2. Convention on the International Sale of Goods

Subject to clause 16, questions concerning the formation of this Agreement and the rights and obligations of India NRE and GNCL that are not settled by the terms stated in this Agreement shall be settled in conformity with those provisions of the United Nations Convention on Contracts for the International Sale of Goods that do not conflict with the terms stated in this Agreement."

There is no dispute that the applicant is a company incorporated under the appropriate laws of Australia, having its registered office at 7 Princess Highway, Cnr Bellambi Lane, Corrimal, NSW 2518, Australia and the applicant is carrying on its business from the registered office. The execution of the agreement is also not in dispute. The said agreement provides for exclusive jurisdiction to the Australian Court. When the parties with their eyes wide open have entered into an agreement by which the parties have agreed to settle their dispute in a manner indicated in the agreement, the concept of natural forum pales into insignificance and is substituted by the "Court of choice of parties". This, of course, however, does not mean that by agreement between the parties, a Court can be conferred with the jurisdiction if it otherwise inherently lacks the jurisdiction. In the instant case, it cannot be said that the Court at Australia would have the jurisdiction since one of the parties is having its office at Australia and the part-performance of the contract is to happen at Australia. It is well-settled that for a breach of contract a suit can be filed either at the place where the contract was concluded or to be performed or the breach had taken place. In the instant case, although the plaintiff claims that the contract was concluded at Calcutta even then having regard to the jurisdictional clause and the contract involves supply of coal from Australia to the plaintiff and an alleged breach had occurred.

The law with regard to the ouster of jurisdiction is well-settled. In A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, the Hon''ble Supreme Court held that where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as being against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. It was further held that even when words like ''alone'', ''only'', ''exclusive'' and the like have been used in the contract if the Court is of the view that the parties intended to have their dispute resolved by a particular court or forum, the Court shall refer the dispute to have particular court and may refuse to exercise its jurisdiction to decide the dispute. This view has been recently followed and clarified in Swastik Gases P. Ltd. Vs. Indian Oil Corporation Ltd., . The parties with their eyes wide open had agreed to submit their dispute to a Court which otherwise would have jurisdiction to decide the lis between the parties.

In Swastik Gases (supra), the Hon''ble Supreme Court has considered both A.B.C. Laminart (supra) and Inter Globe Aviation (supra) in Paragraphs 13, 14. The said Paragraphs are reproduced below:-

"13. In A.B.C. Laminart, this Court was concerned with Clause 11 in the agreement which read, "any dispute arising out of this sale shall be subject to Kaira jurisdiction". The disputes having arisen out of the contract between the parties, the respondents therein filed a suit for recovery of amount against the appellants therein and also claimed damages in the Court of the Subordinate Judge at Salem. The appellants, inter alia, raised the preliminary objection that the Subordinate Judge at Salem had no jurisdiction to entertain the suit as parties by express contract had agreed to confer exclusive jurisdiction in regard to all disputes arising out of the contract on the Civil Court at Kaira. When the matter reached this Court, one of the questions for consideration was whether the Court at Salem had jurisdiction to entertain or the jurisdiction of the court in the matter of contract would depend on the situs of the contract and the cause of action arising through connecting factors. The Court referred to Sections 23 and 28 of the Contract Act, 1872 (for short "the Contract Act") and Section 20(c) of the Civil Procedure Code (for short "the Code") and also referred to Hakam Singh and in para 21 of the Report held as under:

"21......When the clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other courts should avoid exercising jurisdiction. As regards construction of the ouster clause when words like ''alone'', ''only'', ''exclusive'' and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim expressio unius est exclusio alterius - expression of one is the exclusion of another - may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed."

Then, in para 22 of the Report, this Court held as under:

"22......We have already seen that making of contract was a part of the cause of action and a suit on a contract therefore could be filed at the place where it was made. Thus, Kaira Court would even otherwise have had jurisdiction. The bobbins of metallic yarn were delivered at the address of the respondent at Salem which, therefore, would provide the connecting factor for Court at Salem to have jurisdiction. If out of the two jurisdictions one was excluded by Clause 11 it would not absolutely oust the jurisdiction of the court and, therefore, would not be void against public policy and would not violate Sections 23 and 28 of the Contract Act. The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause ''any dispute arising out of this sale shall be subject to Kaira jurisdiction'' ex facie we do not find exclusionary words like ''exclusive'', ''alone'', ''only'' and the like. Can the maxim expressio unius est exclusio alterius be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within Kaira, other jurisdictions having connecting factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at Salem which court otherwise had jurisdiction under law through connecting factor of delivery of goods thereat was expressly excluded."

When there is an express jurisdictional clause between the parties it is all the more necessary to find out the reason and motive behind impleading the defendant No. 2 in the frame of the suit. It is necessary to find out if the said defendant No. 2 was made in order to wriggle out of the jurisdictional clause in the agreement. Mr. Jishnu Saha, the learned Senior Counsel has referred to Paragraphs 44 to 49 of the Plaint and submitted that the primary object of the suit is to seek a relief against the defendant No. 1 since, according to the plaintiffs, the defendant No. 1 has procured a breach of the contract entered into between the plaintiffs and the defendant No. 2 with regard to supply of coal by the defendant No. 2 under the agreement dated 11th May, 2007. Although in the plaint it is alleged that the defendant No. 2 had refused to supply the coal at the instance of the defendant No. 1 but the fact remains that the defendant No. 2 alleged to have failed to supply the coal under the agreement dated May 11, 2007. The reason for alleged failure to supply the coal by the defendant No. 2 to the plaintiffs may be for various reasons. Whatever way one may look at the plaint there cannot be any doubt that the claim against the defendant No. 2 is arising out of alleged breach on the part of the defendant No. 2 to supply the coal to the plaintiffs. The obligation to supply the coal by the defendant No. 2 to the plaintiff is arising out of an agreement dated 11th May, 2007 which contains a jurisdictional clause. The Court, under such circumstance, is required to find out the primary and dominant object in juxtaposition to any other incidental or ancillary facts not forming integral part of the cause of action. This enquiry is essential in order to find out if a party has been impleaded in the suit in order to avoid the jurisdictional clause. There cannot be any cavil of doubt that the defendant No. 2 is impleaded in order to avoid the jurisdictional clause. The same suit could have been filed in the Australian Court seeking the self-same relief since the defendant No. 1 has not argued that the defendant No. 1 would be inconveniences if the trial takes place at Australia. Irrespective of the fact what the defendant No. 1 might feel having regard to the nature of the agreement which contains an exclusive jurisdictional clause, in my view, this suit cannot proceed against the defendant No. 2 in this forum.

Under such circumstances, G.A. No. 3946 of 2014 is allowed. The leave under Clause 12 of the Letters Patent against the defendant No. 2 stands revoked. The suit against the defendant No. 2 stands dismissed as this Court lacks territorial jurisdiction in view of the jurisdictional clause.

However, there shall be no order as to costs.

Urgent xerox certified copy of this judgment, if applied for, be given to the parties on usual undertaking.