Contract Act, 1872 – s.28 – Agreements in restraint of legal proceedings – Exclusive jurisdiction of courts – Appointment of two employees by the respondent Bank, one in Patna and other in Delhi and exclusive jurisdiction clause in the appointment letter that the courts in Mumbai will have jurisdiction with regard to any dispute – Termination of the service of both the employees due to allegations of fraud and misconduct – Employee appointed in Patna, instituted civil suit in Patna – Thereafter, the Bank filed petition u/Ord. 7 r.11 for rejection of the plaint since the courts in Mumbai had jurisdiction and not the court where the suit was instituted – Trial court dismissed the same – Revisional application thereagainst by the bank, allowed by the Patna High Court – In case of the suit filed by the employee appointed in Delhi challenging the termination, the trial court in Delhi held that jurisdiction clause did not fully oust the jurisdiction of courts in Delhi – Revisional application by the Bank, dismissed by the Delhi High Court – Correctness: Held: Bank justified in its claim that suits ought to have been instituted in Mumbai – Upon a perusal of the service contract and the exclusive jurisdiction clause, the Patna High Court offered a sound legal opinion while the Delhi High Court erred in dismissing the revisional application – For an exclusive jurisdiction clause to be valid, it should be in consonance with s.28, it should not absolutely restrict any party from initiating legal proceedings pertaining to the contract; the Court given exclusive jurisdiction must be competent to have such jurisdiction; and the parties must either impliedly or explicitly confer jurisdiction on a specific set of courts – Contracting parties were ad idem on the terms of the appointment letter/employment agreement which specified courts in Mumbai exclusively as the situs of dispute resolution – As long as an employment contract does not offend the provisions of any applicable legislation there should be no reason to interfere – Law treats all contracts with equal respect and unless a contract is proved to suffer from any of the vitiating factors, the terms and conditions have to be enforced regardless of the relative strengths and weakness of the parties – Exclusive jurisdiction clause does not take away the right of the employee to pursue a legal claim but only restricts the employee to pursue those claims before the courts in Mumbai alone – Courts in Mumbai did have jurisdiction – Clause in the contract clearly and explicitly barred the jurisdiction of all other courts by using the word “exclusive” – Impugned judgment of the Delhi High Court set aside and that of the Patna High Court affirmed to the extent stated – Patna High Court, while correctly holding in favour of Bank on the point of law, committed a fundamental error by allowing the application of the Bank u/Ord. VII, r.11 CPC that the plaint stands rejected – Proper course for the Patna High Court would have been to direct return of the plaint by the trial court u/Ord.7 r.10 for its presentation before the competent court in Mumbai – Code of Civil Procedure, 1908 – O.7 r.11. [Paras 18, 21, 23, 26, 29-33, 38]
As published in the Supreme Court Reports, Supreme Court of India. Headnotes prepared by: Nidhi Jain. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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