SUBJECT:

CODE OF CIVIL PROCEDURE & LIMITATION ACT, 1908-I

“CONUNDRUM OF 'AGREEMENT AS TO THE CHOICE OF COURT' UNDER

SECTION 15 OF C.P.C.”

Name: Sannidhi Mahesh Sawant

Division: B
PRN: 22010126181
Year: 2nd Year
Semester: III (2023)
Course: B.B.A., LL. B (Hons.)

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Batch: 2022-2027

Table of Contents

Abstract:....................................................................................................................................2

Introduction:...........................................................................................................................2

Agreement as to the choice of Court:.....................................................................................3

The Ouster Clause and its applicability:.................................................................................4

Analysis of Exclusivity of Jurisdiction:.................................................................................6

Conclusion:.............................................................................................................................6

References:.............................................................................................................................7

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 ARTICLE WRITING:

“CONUNDRUM OF 'AGREEMENT AS TO THE CHOICE OF COURT' UNDER

SECTION 15 OF C.P.C.”

Abstract:

The Code of Civil Procedure’s Section 15 provides for the jurisdiction of a civil court of the
lowest grade to entertain a suit. A unique tool in the hands of the parties entering a
contractual obligation is the choice of jurisdiction of the forum having a natural jurisdiction.
The objective of this research is to study the ratio of relevant case laws that throw light on
the question of jurisdiction especially when exclusivity has been agreed upon. The analysis
highlights the power vested in the contract and its implementation for the innate power of
natural jurisdiction. The heavy dependence of facts and circumstances of the case in the
absence of exclusive wordings is also a prominent consensus in deciding the case. The
research nonetheless, with various examples like the foreign jurisdiction clause, ouster
clause etc. seeks to understand the provision of the code with the exclusivity contract
agreement.

Keywords: * Choice of court, Competency, Contract, Exclusivity, Jurisdiction.

Introduction:

In the ever-evolving landscape of international and domestic litigation, the question of

jurisdiction and the mechanisms for its determination remain pivotal. Within the labyrinthine
corridors of Indian procedural law, Section 15 of the Code of Civil Procedure (C.P.C) stands
as a sentinel guarding the door to a complex and often confounding realm—the realm of

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'Agreement as to the Choice of Court.' 1Legal professionals, academics, and litigants alike
continue to be perplexed by this regulation, despite it appearing to be obvious in its meaning.

The Code of Civil Procedure, 1908 is a civil procedure law that owes to its various
procedural aspects to consolidate and amend laws relevant to the practices and procedure that
is followed in Indian civil courts. The aim of the code is primarily for the facilitation of
justice to seek an end to litigation instead of any form of penalties and punishment. The
purpose is to execute the standards of substantive law guaranteeing fair justice to uphold
rights.2 Section 153 of the Code specifically plays an important role to determine the
institution of suits. The law enshrined under this Section states about the institution of every
suit in the lowest court of grade with competence to try the suit.4

The objective here is the ease and convenience of the suitor 5 to bring the suit in the court of
the lowest grade, that is competent to try it to avoid overburdening of the higher courts with
suits. Additionally, it also prevents ousting the jurisdiction of the courts of higher grades,
herein the court of the higher grade should return the suit to the appellant to file the suit in the
court of lowest grade competent to try it.6 The section elaborates on the procedural rule more
than its jurisdiction. As the jurisdiction is laid down over a subject matter, but when there is
an agreement under the Indian Contract Act, 1872 concerning the trial is any one of the
courts having jurisdiction under the Code of Civil Procedure, it essentially does not violate
provisions of the contract law.

Research Objectives

 To assess implications of Section 15 on legal practice and policy.

 To analyze how the Indian courts have interpreted and applied the section in various
cases.
 To scrutinize the applicability of the ouster clause in Agreements as to the choice of
court.
 To propose recommendations and reforms under Section 15.
1
Kulwinder Kaur v. Kandi Friends Education Trust (2008) 3 SCC 659
2
Vinit Singh, Aim and Scope of Civil Procedure Code, 1908, TAX DOSE (May. 26, 2020),
https://www.taxdose.com/aim-and-scope-of-civil-procedure-code-1908-c-p-c/.
3
Code of Civil Procedure, 1908, § 15, No. 5, Acts of Parliament, 1908 (India).
4
6 TAKWANI, CIVIL PROCEDURE (Eastern Book Company 2009).
5
Germanthangi v. F. Rokunga, AIR 2004 Gan 42.
6
18 MULLA, THE CODE OF CIVIL PROCEDURE 425 (LexisNexis 2014).

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 Judicial Pronouncements

 Gopal v. Shamrao (1941)7

A suit must be filed in the court of the lowest grade that is qualified to hear it, according to
Section 15 of the Code of Civil Procedure, 1908. Due of this rule's procedural nature, it has
no bearing on the courts' authority. Thus, an order issued by a higher court cannot be said to
have been issued without jurisdiction, as the Nagpur Bench of the Bombay High Court noted
in this case. Following is a description of Section 15's dual purpose:
1) Reduce burden of higher courts;
2) Offer convenience to the parties and witnesses who may be asked to testify in these
lawsuits.

 Mazhar Husain and Anr. v. Nidhi Lal (1885)8

The goals of Section 15 of the Code of Civil Procedure, 1908 were established in the pre-
independence case of Mazhar Husain and Anr. vs. Nidhi Lal (1885), which was heard by the
Allahabad High Court. The following lists the targets that have been attained:
1) To prevent overloading higher-level courts with lawsuits;
2) In order to render it convenient for the parties and witnesses who might be questioned
in such lawsuits.

Agreement as to the choice of Court:

The genesis of the conundrum lies in the fundamental tension between freedom of parties to
contractually choose a forum for settling disputes and the requirement for a legal framework
that protects the principles of justice and public policy is the source of the conundrum. In
seeking this balance, Section 15 of the C.P.C.9 has raised many questions.

With the advent of technology and spurred globalisation connecting commercial activities all
over the globe, the practice of contracting parties agreeing in advance for the approach
mechanism of their dispute resolution has also risen. As per the Code of Civil Procedure, one
7
Gopal v. Shamrao 1961 AIR 1206 1961 SCR (3) 930.
8
Mazhar Husain and Anr. v. Nidhi Lal (1885) ILR 7 All 436
9
Yashwant Sinha and Ors. v. Central Bureau of Investigation and Ors. AIR 2019 SC 1802, 2019 (6) SCALE
171, (2019) 6 SCC 1

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or more courts may be empowered with the jurisdiction to try a particular case over the
subject matter concerning the location of immovable property or place of residence or
workplace of a respondent or place of cause of action. When one court has jurisdiction over a
said, it is referred to as having exclusive jurisdiction, whereas when more than one court has
jurisdiction over a subject matter, it is referred to courts of natural or available jurisdiction. 10

The practice of agreeing to resolve future disputes in any of the courts of natural or available
jurisdiction creates an indirect exclusive or non-exclusive jurisdiction in one of the forums.
The other practice followed involves having the disputes resolved by a foreign court of the
party's choice under the agreement for a neutral forum. 11 Usually, as per Section 2012 of the
Code of Civil Procedure, the appellant under a choice of the forum of jurisdiction cannot be
coerced to file a suit at the place of business or residence of the respondent and has the choice
to present the suit where the cause of action arises. An exclusion clause can save the litigant
from being dragged at one of the natural jurisdictions. 13 An agreement to present a suit of
dispute in a foreign court is not void and it cannot deprive the jurisdiction of the Indian
courts, and when the agreement is contravened with the suit being filed in India is valid.14

In an insurance-related case15, the Gujarat High Court held about the non-obstante clause an
insurance policy that provides a choice for the forum does not compel the policyholder. It is
not contrary to public policy when there is an agreement between parties to try a suit or a
proceeding in one of the courts when more than one has the jurisdiction to try it. Such an
agreement is held to be valid and does not even contravene Section 2816 of the Indian
Contract Act, 1872.17 Therefore, when one or more courts have the competency of local limits
of jurisdiction, parties agreeing to any one of them is not unlawful even though it excludes
the natural jurisdiction of the other courts. Such happens because the appellant here
voluntarily has agreed to waive his right to present the suit in one particular forum of

10
Id.
11
New Moga Transport Co. v. United India Insurance Co. Ltd, AIR 2004 SC 2154.
12
Code of Civil Procedure, 1908, § 20, No. 5, Acts of Parliament, 1908 (India).
13
When the court has to decide: Chhattisgarh High Court, PRIME LEGAL (June. 15, 2021),
https://primelegal.in/2021/06/15/when-the-court-has-to-decide-the-question-of-jurisdiction-
pursuant-to-an-ouster-clause-it-is-necessary-to-construe-the-ousting-expression-or-clause-
properly-chhattisgarh-high-court/ .
14
LT Societa v. Lakshminarayan, AIR 1959 Cal 669.
15
Isaq Mahmad v. United India Fire & General Insurance Co., AIR 1978 Guj 46.
16
Indian Contract Act, 1872, § 28, No. 9, Acts of Parliament, 1872 (India).
17
18 MULLA, THE CODE OF CIVIL PROCEDURE 425 (LexisNexis 2014).

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jurisdiction and hence cannot object to any order of other courts that returns the aggrieved to
present his suit to the court agreed by him upon the contract enforcement.18

The Ouster Clause and its applicability:

In another case, wherein there was a dispute in a contract executed in Kolkata, the
respondent’s office of business was in Kolkata. As per the contract, execution of the work
was monitored through Kolkata and the seat of arbitration for disputes was also to be Calcutta
High Court’s jurisdiction. The Bombay High Court here held that the absence of certain
words like alone, only, exclusively etc in the contract would not imply the non-applicability
of the exclusive jurisdiction that was conferred upon the Calcutta High Court.19

The Supreme Court has interpreted that when the court has the power to decide upon the
court’s jurisdiction upon an ouster clause, it becomes paramount to understand such a clause
in its entirety and with caution as mostly such a clause is made at a particular location. Such a
factor proves to be a tie between the jurisdiction of the forum of the place in any dispute that
may arise out of the agreement and it would not ipso facto make the other courts devoid of
their natural jurisdiction.20 Furthermore, it can be observed that when such an ouster clause is
present, the presence of other court’s ouster clause’s clarity and unambiguity binds the
parties. So, when the absence of ad idem is clear, the other courts should avoid exercising the
jurisdiction.

Apart from ouster clause words like only, excluding, alone etc, maxim like “expressio unius
est exclusio alterius” also apply to the exclusion. The maxim means “Express Mention and
Implied Exclusion” and the appropriate suit depends on the facts and circumstances of each
case. In another Supreme Court case 21, the contract clause mentioned subjecting the legal
proceedings arising out of order to the courts in Mumbai. When parties entered into a contract
at the place where the corporation has its subordinate office, and no clause of exclusivity of
jurisdiction was agreed to, the cause of action arose about a transaction held at the same

18
Rajendra Mills v. HVM Haji Hasan Dada, AIR 1970 Cal 342.
19
Pacific Refractories Ltd. v. Stein Heurtey India Projects Pvt. Ltd., AIR 2006 Bom 231.
20
ABC Laminart Pvt. Ltd. v. A.P. Agencies, AIR 1989 SC 1239.
21
Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd, AIR 2004 SC 2432.

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office. In such a situation, the civil court having competent jurisdiction at the place of the
office is not disqualified from taking the suit.22

Here, in the absence of words like only, alone or exclusively, facts and circumstances play a
vital role in the inference of exclusion of jurisdiction of courts. Carrying out other mandates
of the case like advance payment, order at their branch office of Mumbai implied the clear
intention of the parties to confine the jurisdiction to Mumbai and exclude it from other
courts.23

Analytical Observation of Exclusivity of Jurisdiction:

As observed from precedents and the provision’s interpretation, when two or more courts
have jurisdiction, parties in a harmonious agreement can choose either one giving the court
exclusive jurisdiction. When such an agreement is explicit, unambiguous, clear it is not in
contravention of Section 28 of the Indian Contract Act, 1872. The provision thus empowers
the choice of such parties in the agreement unless the agreement is oppressive, it is
enforceable by the court.24 In the light of this, it becomes an accepted norm that even though
the choice of courts made by consent is respected, the courts cannot rule out the enforcement
of the same in all conditions. This heavily being dependent on facts of the case, the court may
not enforce the clause where the enforcement becomes oppressive for the appellant. Where
there is no independent material to prove an agreement in consensus which proves the
exclusivity clause, the court believing its jurisdiction to be ousted only based on a clause
agreed would be hence unsustainable. But the choice of jurisdiction cannot be enforced upon
a contract where only one court has the competency.25

Ambiguities

In both its legislative text and actual application, the implementation of Section 15 of the
Code of Civil Procedure (C.P.C.) creates a plethora of uncertainties and difficulties. The goal

22
National Hydroelectic Power Corpn. Ltd. v. Sova Enterprises, AIR 1991 Cal 324.
23
B.V.R.Sarma, Agreements which restrain legal proceedings–An analysis, MANUPATRA 1, 1-12 (2014).
24
EDI Parry (India) Ltd v. Sanami Transport, AIR 1980 AP 30.
25
GM, ONGC, Sibsagar v. Raj Eng. Corpn, AIR 1987 Cal 165.

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of this section of the study article is to explain the complexities and subtleties of this
important aspect of choice-of-court agreements.

 Intersection with International Conventions:

Another level of intricacy is added by Section 15's alignment with international agreements
and treaties.

Consistency with Hague Convention Principles: The interpretation of Section 15 is affected

by India's participation to The Hague Convention on Choice of Court Agreements. It is
essential to examine whether Section 15 is consistent with the goals and tenets of the
Convention and to remedy 26any discrepancies.

Recognization and Enforcement of Foreign Judgements: Section 15's interaction with foreign
judgement recognition and enforcement adds complication. It is crucial to look into how
Indian courts have handled executing foreign judgements based on choice of court
agreements.27

 Conflicts with other Legal Provisions:

Conflicts that prevent Section 15 from being applied consistently may arise when it interacts
with other legal provisions:

Conflicts between Choice of Court Agreements and Arbitration Agreements: It is critical to

examine these conflicts and how Indian courts resolve them.

Enforcement between Indian States: Due to differences in how Section 15 has been
interpreted by various state High Courts, the enforcement of choice of court agreements
between Indian States may provide difficulties.28

Conclusion and Recommendations:

26
R. Viswanathan v. Rukn-Ul-Mulk Syed Abdul Wajid 1963 SCR (3) 22
27
Menaka Gandhi v. Rani Jethmalani AIR 468, 1979 SCR (2) 378 1979 SCC (4) 167
28
Y. Narasimha Rao and Ors v. Y. Venkata Lakshmi and Anr (1991) 3 SCC 451

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In a situation where two or more courts are competent to entertain a suit, the parties in a
contract can agree to vest the jurisdiction in one of such to obtain redressal of disputes. Also,
as long as the contracting parties do not exclude jurisdictions of all forums that would
otherwise have the jurisdiction under law, in its pursuant it cannot be construed that parties
have ousted the jurisdiction. I suggest that construing the exclusivity clause properly to
understand its clarity and specific nature in unambiguity become the accepted notions of a
contract that binds parties except when ad idem is detected. Illegal or arbitrary interference is
not recommended as a revisional court cannot interfere. It is only possible when the trial
court has reached a mala fide or perverse conclusion. In conclusion, the fact the stipulation is
made at a particular place, a connecting factor is created for the jurisdiction of that place in
case of any arising dispute in the contract. Hereby, not taking away jurisdiction of other
natural ones.

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 References:

Cases

1. ABC Laminart Pvt. Ltd. v. A.P. Agencies, AIR 1989 SC 1239....................................4

2. EDI Parry (India) Ltd v. Sanami Transport, AIR 1980 AP 30......................................5
3. Germanthangi v. F. Rokunga, AIR 2004 Gan 42...........................................................3
4. GM, ONGC, Sibsagar v. Raj Eng. Corpn. AIR 1987 Cal 165.......................................6
5. Hanil Era Textiles Ltd. v. Puromatic Filters (P) Ltd., AIR 2004 SC 2432....................5
6. Isaq Mahmad v. United India Fire & General Insurance Co., AIR 1978 Guj 46..........4
7. LT Societa v. Lakshminarayan, AIR 1959 Cal 669.......................................................4
8. National Hydroelectic Power Corpn. Ltd. v. Sova Enterprises, AIR 1991 Cal 324......5
9. New Moga Transport Co. v. United India Insurance Co. Ltd, AIR 2004 SC 2154.......3
10. Pacific Refractories Ltd. v. Stein Heurtey India Projects Pvt. Ltd., AIR 2006 Bom
231..................................................................................................................................4
11. Rajendra Mills v. HVM Haji Hasan Dada, AIR 1970 Cal 342......................................4

Statutes

Code of Civil Procedure, 1908...........................................................................................2, 3, 4

Books

1. 18 MULLA, THE CODE OF CIVIL PROCEDURE 425 (LexisNexis 2014)..........................3

2. 6 TAKWANI, CIVIL PROCEDURE (Eastern Book Company 2009)...................................2

Journals/ Articles

1. B.V.R.Sarma, Agreements which restrain legal proceedings–An analysis,

MANUPATRA 1, 1-12 (2014)...........................................................................................5
2. Vinit Singh, Aim and Scope of Civil Procedure Code, 1908, TAX DOSE, (May. 26,
2020),.............................................................................................................................2
3. When the court has to decide: Chhattisgarh High Court, PRIME LEGAL (June. 15,
2021)..............................................................................................................................3

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