Consent Cannot Take Away Jurisdiction- Civil Procedure Code

It is settled law that consent cannot confer or take away jurisdiction upon a court. Exclusive jurisdiction clauses in civil suits are an exception to this rule. The general rule of law is that two or more parties cannot consent to confer of take away the jurisdiction of a court. Sec 28 of the Indian Contract Act, 1872 makes agreements in restriction of legal proceedings void[1].  This provision means, if a court has inherent jurisdiction over subject matter to hear a case, an agreement between parties cannot deprive the court of hearing the matter. The same way, a court which does not have inherent jurisdiction over subject matter to hear a case cannot be given the power to hear a matter by way of private agreement.

Exclusive Jurisdiction clauses are an exception to this rule. For eg, Cause of action has arisen in two jurisdictions in a suit, the parties can enter into an agreement to choose one of those two jurisdictions and by effect oust one of them. Although, an agreement between parties cannot under any circumstance confer jurisdiction upon a court which has no jurisdiction to hear the matter. Courts are to hear all civil suits unless an express or implied bar exists under Sec 9, Civil Procedure Code, 1908.[2] Hence, exclusive jurisdiction clauses are only applicable when dual or more jurisdictions already existed.

In Hakam Singh v. Gammon India, the Supreme Court held when two or more valid jurisdictions exist, limiting proceedings to one of the valid jurisdictions is not in violation of S. 28 and S 23 of the Indian Contract Act, 1872[3]. Parties can agree to oust the other jurisdiction and it is not a violation of [4]public policy. In a suit, there are mostly three possible jurisdictions under Sec 20 of CPC, 1908[5]. Place of residence and business, performance of contract and place of making the contract. Parties can agree to choose one of these jurisdictions whilst ousting the others.

In ABC Laminart v. AP Agencies, in this case valid jurisdiction existed in Gujarat and Tamil Nadu. The exclusive jurisdiction clause in the contract read “Any dispute arising out of this sale shall be subject to Kaira (Gujarat) jurisdiction”.  Although, when the parties were in dispute, proceedings were filed in Tamil Nadu. The issue in front of the court was whether the jurisdiction clause ousted the jurisdiction of Tamil Nadu. It was held, words like ‘only’ and ‘exclusive’ in the clause can be construed to mean consent by parties to limit jurisdiction. When these words don’t exist in the clause, the maxim “Expressio Unis est exclusio alterus” i.e., the expression of one is exclusion of the other is applicable. The court said that the facts of each case must be looked into while deciding whether the clause can be interpreted as exclusion of a jurisdiction. In the current facts, exclusion of Tamil Nadu was not excluded hence both the courts had jurisdiction.

In Swastik Gases v Indian Oil Corporation[6], the Court held that exclusionary words like ‘only’, ‘exclusive jurisdiction’ are not necessary in clause to determine whether it is an exclusionary jurisdiction clause or not. If one jurisdiction is mentioned, it is valid to presume the ouster of other valid jurisdictions. Justice Madan B. Lokur in his judgement said that the presence of an exclusionary jurisdiction clause makes the intention of the parties clear and that when a jurisdiction is specified, it is inferred that other jurisdictions have been ousted.

In Harshad Chiman Lal Modi v. DLF Universal, the parties entered into an agreement to give Delhi High Court jurisdiction and contended that the jurisdiction clause shall be upheld.[7] The Delhi high Court did not have inherent jurisdiction to hear the matter hence the parties cannot confer jurisdiction upon it by consent. Courts have to decide whether a jurisdiction has the inherent jurisdiction to hear a matter. In this case, the property in dispute was in Gurgaon, the High Court in Gurgaon was competent to hear the matter as per Sec 16 of CPC[8].

If a court has jurisdiction to hear a matter is the question that needs to be decided first when hearing a suit on exclusive jurisdiction. In Dhulabhai v. State of MP, the court held that if a statue gives finality of orders to special tribunals, the jurisdiction of a civil court to hear the mater can be excluded if the statue provides alterative remedy to do what the civil court would have done.[9] Parties cannot consent or enter into an agreement to confer jurisdiction upon a tribunal, if it doesn’t have an inherent jurisdiction to hear the matter. [10]

In Shridhar Vyapaar v. Gammon India, the court held that if parties have entered into an agreement with an exclusive jurisdiction clause, they can be made bound to adhere to the limited jurisdiction as decided by in the agreement, if their conduct shows intent to give effect to the clause. In some cases, even in spite of the jurisdiction clause and intention to act by it, if the jurisdiction has arisen overwhelming in another jurisdiction and it would be oppressive to drag the parties to the jurisdiction decided in agreement.

The Supreme Court in 2020 reiterated that it is no longer an open question of law that whenever a cause of action has arisen in two or more jurisdiction, parties can always enter into an agreement to choose one jurisdiction while effectively ousting the other jurisdictions.[11] This is valid, legal, and enforceable. Exclusive jurisdiction clauses can help limit proceedings while helping parties initiate proceedings in an affordable and convenient manner. 

[1] Indian Contract Act 1872 s 28

[2] Civil Procedure Code 1908 s 9

[3] Hakam Singh v. Gammon India (1971) 3 SCR 314, Indian Contract Act s 28, Indian Contract Act s 23.

[4] APC Laminart v. AP Agencies (1989) AIR 1239.

[5] Civil Procedure Code 1908 s 20

[6]  Swastik Gases (P) Ltd v. Indian Oil Corporation Ltd (2013) SC 564.

[7] Harshad Chiman Lal Modi v. DLF Universal (2005) 7 SCC 791

[8] Civil Procedure Code 1908 s 16

[9] C.K. Takwani, Civil Procedure with Limitation Act, 1963 (first published in 1983, 8th edition, 2017) 53.

[10] Bhagwan Singh v. M.D. Central Warehousing Corp (2020).

[11] EXL Careers Ors v. Frankfinn Aviation Services Pvt. Ltd (2020) SC 2904.

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