KHANDESH LAKSHMIVILAS MILLS CO Vs. VINAYAK ATMARAM KARPURKAR

JUDGEMENT

(1.) The principal question in this appeal is whether the parties to a contract, one of whom resides at Jalgaon and the other in Bombay, may validly agree that litigation arising out of the contract should be tried in Bombay and not in Jalgaon, it being admitted that apart from the agreement such litigation might be tried in either place. The plaintiff is a company owning oil mills in Jalgaon. The defendant is a resident of Bombay. He agreed to supply funds to the company for the purpose of carrying on their business in groundnuts which were to be purchased and milled in the plaintiff's mill at Jalgaon. He failed to supply the money, and in consequence the company brought a suit to recover Rs. 7,500 damages, that being what, it is alleged, the company would have earned in the business if the defendant had supplied the funds. There was a formal written agreement between the parties, one clause of which provides ;- If any dispute arises in respect of the aforesaid business between us under this agreement, the same shall be referred to the Bombay High Court or in such Courts in the Town and Island of Bombay, as shall have jurisdiction in the matter.

(2.) In spite of this clause the plaintiff company filed their suit for damages in the Subordinate Court of Jalgaon. The trial Judge upheld the objection of the defendant that in view of the agreement between the parties the suit could only be tried in Bombay. The question in this appeal is whether that finding is right, and in my opinion it is.

(3.) The learned advocate who appears for the appellant-plaintiff has admitted that he cannot call in aid the provisions of Section 28 of the Indian Contract Act. That section provides that every agreement, 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, is void to that extent. But here obviously there is no absolute restriction. Both the Jalgaon Court and the Courts in Bombay would ordinarily be competent to entertain the suit. All that has happened is that the parties have agreed to select one of two competent tribunals for the disposal of their disputes. Mr. Pradhan contends that parties cannot by agreement make such a change in the law. But if the case does not come within the mischief of Section 28-and it clearly does not-then, as far as I am aware, it is not contrary to any law. Moreover, agreements of the same kind have been held valid (see A, Milton & Co. V/s. Ojha Automobile Engineering Co. (1930) I.L.R. 57 Cal. 1280 following Achratlal Kesavlal Mehta & Co. V/s. Vijayam & Co. (1925) 49 M. L. J. 189).