@JUDGMENTTAG-ORDER
Mr. R.K. Gauba, J.—The civil suit in which application (IA 1121/2015) seeking return of the plaint under Order 7, Rule 10 of the Code of Civil Procedure, 1908 ("CPC") has been presented by the first defendant ("Punj Lloyd Ltd.") was instituted in September 2014 by M/s. Hadia Abdul Latif Jameel Co. Ltd. ("plaintiff"), a company incorporated and having its registered office in Jeddah, Saudi Arabia Besides the applicant ("first defendant"), concededly a company incorporated under the Companies Act, 1956 having its registered office and operational branch at Delhi within the jurisdiction of this court, Dayim Punj Lloyd Construction Contracting Company Ltd. ("second defendant") has also been impleaded as a party to the suit, it being a joint venture company incorporated in Saudi Arabia and having its principal office in Riyadh, Oliyah, the first defendant being a partner of the said joint venture company on one hand with HRH Prince Khalid Bin Bandar Bin Sultan Bin Abdul Aziz of the Kingdom of Saudi Arabia being the other.
2. For purposes of adjudication upon the application at hand seeking return of the plaint, only certain very basic facts, as culled out from the pleadings of the plaintiff or documents filed therewith, need to be noted.
3. It appears that after the joint venture company ("second defendant") had been formed, it required a premises to be taken on lease. Thus, pursuant to the negotiations undertaken, the premises described as a luxury penthouse on top of a building known as Jameel Square owned by the plaintiff was taken on lease in terms of a formal contract described as "office lease agreement" dated 05.10.2008 ("OLA", for short). Needless to add, the OLA indicated the term of the lease (five years) in addition to the rental and other charges payable thereunder by the lessee besides obligations for the premises to be suitably modified/designed or equipped. The sixth clause of the OLA obliged the second defendant to obtain and furnish the corporate guarantee by the first defendant ("applicant"). Pursuant to the said contractual terms, the first defendant statedly provided the corporate guarantee dated 12.11.2008.
4. According to the case of the plaintiff, suitable modifications or designing of the demised premises were carried out and the premises made available but the second defendant ("lessee") having paid rent for some period indulged in defaults on that account. This led to exchange of certain communications or notices between the parties, the reply dated 17.05.2013 sent by the first defendant indicating that the OLA had been effectively determined in September 2011 and no rent was due or payable. The plaintiff disputes this position pleading that no notice of such termination of the OLA had been received.
5. Be that as it may, against the above backdrop, the plaintiff decided to invoke the corporate guarantee dated 12.11.2008 given by the first defendant. Since the demand for payment under the corporate guarantee, or the lease agreement, were not complied with, the suit was instituted with the averment that both the defendants are jointly and severally liable to pay the arrears of rent and charges along with interest.
6. The plaint itself noted that the fifth clause of the corporate guarantee dated 12.11.2008, which had been executed at New Delhi pursuant to the OLA, provided as under (the clause having been extracted from the English translation of the document, as filed at pages 46 to 50 of plaintiff''s documents in part III) :-
"5. This guarantee agreement and the lease agreement shall both be governed by and construed in accordance with Saudi Law. For any dispute arising from the interpretation and/or performance of both agreements the parties submit to the jurisdiction of the courts of Saudi Arabia. Notwithstanding the foregoing, the landlord may also take legal action against client before any court inside of Saudi Arabia or abroad."
7. The plaint was accompanied by an application (IA 17244/2014) whereby the plaintiff sought leave to file and prosecute the case against the second defendant, concededly an entity residing or carrying on business outside the jurisdiction of this court, in terms of Section 20(b) CPC. This application was allowed by order dated 19.09.2014 of the Joint Registrar which was not brought to challenge in any manner. Referring to the said application, the plaint prayed for a decree against both the defendants so as to hold them liable jointly and severally to pay the amount due under the lease agreement and corporate guarantee.
8. The first defendant having been served with the summons moved the application for return of plaint and also filed its written statement taking similar preliminary objection to the maintainability of the suit in this court on identical grounds. It may be mentioned here that second defendant has also filed a written statement contesting the suit, raising almost similar issues concerning jurisdiction.
9. The prime reasons on which the first defendant presses application at hand are that both the plaintiff and the second defendant are residents of Saudi Arabia where the demised premises is situate, the corporate guarantee having been furnished by the first defendant respecting a transaction in Saudi Arabia. Above all, the applicant (first defendant) refers to the afore-quoted fifth clause of the corporate guarantee to submit that the parties having agreed to be governed, in the case of dispute, by the laws of Saudi Arabia and to be subject to the jurisdiction of the courts in that country, the present suit cannot be entertained. The applicant also raises the argument of forum convenience.
10. The applicant (first defendant) relies upon judgments of Supreme Court in South East Asia Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. and Ors. (1996) 3 SCC 443 and Modi Entertainment Network and Anr. v. W.S.G. Cricket Pte Ltd., (2003) 4 SCC 341 and of a learned single Judge of this court in Piramal Healthcare Ltd. v. Diasorin S.P.A., (2010) 172 DLT 131. Per contra, the plaintiff relies on Citibank N.A., New Delhi v. Juggilal Kamlapat Jute Mills Co. Ltd., Kanpur, AIR 1982 Delhi 487; and Horlicks Ltd. and Anr. v. Heinz India Pvt. Ltd. 164 (2009) DLT 539.
11. Having heard the learned senior counsel on both sides, this court is of the view that the issues raised by the application at hand are covered by settled law and, therefore, the case does not present an uncharted territory for this court to "reinvent the wheel".
12. The decision of a division bench of this court in Horlicks Ltd. and Anr. (supra) authoritatively settled the principle that argument of forum non convenience cannot be raised in conjunction with the argument of lack of jurisdiction in a civil suit governed by the Code of Civil Procedure. Reliance on South East Asia Shipping Co. Ltd. (supra) in the present case is misplaced as the jurisdiction of this court is not invoked "merely because ...guarantee was executed at Delhi". In Citibank N.A. (supra), it was held that the bank guarantee is an independent contract and the guarantor can be sued thereunder.
13. In Piramal Healthcare Ltd. (supra), a learned single judge of this court had the occasion to deal with the entire gamut of issues concerning propriety of the jurisdiction to entertain for adjudication a dispute arising out of a contract wherein one of the parties was a foreign constituent wherein stipulations were incorporated conferring exclusive or non exclusive jurisdiction of a foreign court. After detailed discussion of various precedents on the subject, the learned single judge summarized the conclusions (in para 9.1) as under :-
"9.1 In my view what emerges from the discussion above is as follows:
(i) a distinction would have to be borne in mind in respect of cases where a contract obtains between parties which specifically incorporates an exclusive or a non- exclusive jurisdictional clause as against those cases where there is no written contract.
(ii) Where there is a foreign constituent in the contract. For example where the jurisdictional clause confers exclusive or non-exclusive jurisdiction on a foreign court ordinarily parties will be held to their bargain.
(iii) Contracts which contain a clause conferring exclusive or non-exclusive jurisdiction on foreign court which could be a neutral court having nothing to do with parties; the contract or; the dispute: are not per se violative of Section 23 or 28 of the Contract Act. [See Modi Entertainment Network (supra)]. Contracts would violate provisions of Section 23 and 28 of the Contract Act if there is no recourse to courts.
(iv) In determining whether action filed in India (that is courts governed by CPC) is validly instituted, the provisions of CPC would apply but that by itself would not divest the court of its discretion to determine as to whether in a given case it ought to hold parties to their bargain. When a court directs the plaintiff in such circumstances to approach say a foreign/neutral court; it issues such a direction not because it has no jurisdiction, but in the given circumstances it takes a view that parties should be held to their bargain. In a given case equally, the court may choose not to hold parties to their bargain.
(v) The only caveat to what is stated by me in clause (iv) above is: that when a jurisdictional clause operates qua courts to which CPC applies, the principle applicable would be: that parties by contract cannot confer jurisdiction on a court which otherwise (bearing in mind the provisions of CPC) in law does not have jurisdiction. This principle does not apply to a foreign court, which in a given case could be a neutral court.
(vi) If the courts in India (to which CPC applies) choose not to entertain a suit, which is, pivoted on a contract, containing a jurisdictional clause, whereby jurisdiction is vested on a foreign court/neutral court, it would make a distinction between circumstances which ought to be in the contemplation of parties at the point in time when contract was arrived at between parties and those it had no occasion to foresee.
14. This court, having gone through the relevant case law which has been substantially covered by the discussion in the judgment in Piramal Healthcare Ltd. (supra) finds it to be reflecting the correct position of law and thus, adopts it as a view deserving to be followed.
15. In the case at hand, however, the fifth clause of the corporate guarantee furnished by the first defendant (as quoted above) was clearly never intended by the parties to the contract to cover exclusive jurisdiction of the courts in Saudi Arabia. The last sentence of the fifth clause of the corporate guarantee, noticeably, begins with the non-obstante clause ("notwithstanding the foregoing"). It is well settled that the expression "notwithstanding" is to be read in contra-distinction to the phrase "subject to", such non-obstante clause in the contract or document indicating that what follows "will have its full operation", in spite of what preceded or, even further, that in case of conflict, the contractual clause mentioned in the non-obstante provision would have an "overriding effect". [see South India Corporation Page 478 and Chandavarkar Sita Ratna Rao v. Ashalata S. Guram, (1986) 4 SCC 447 and South India Corpn. (P) Ltd. v. Secretary, Board of Revenue, Trivandrum, AIR 1964 SC 207, 215, (1964) 4 SCR 280].
16. Read and understood in light of the plain language employed in the fifth clause of the corporate guarantee, extracted above, it is clear that the general agreement of the parties was that in the event of dispute arising they would be governed by the law of Saudi Arabia and be subject to the jurisdiction of courts of Saudi Arabia. The last sentence (non-obstante clause), however, qualified (or, shall one say, diluted) the said general agreement and indicated that the landlord (i.e. the plaintiff herein) reserved unto itself the discretion to pursue the legal remedies (take legal action) before "any court" whether inside Saudi Arabia "or abroad".
17. In these circumstances, the first defendant having agreed, by the corporate guarantee to be subject to jurisdiction of courts not only in Saudi Arabia but also abroad cannot be allowed to urge that the suit instituted is against the spirit of the contract. To borrow the expression from the conclusions in Piramal Healthcare Ltd. (supra), in the present case the court must "hold parties to their bargain" and resultantly reject the objection of the first defendant to the institution of the suit in this court for relief on the basis of the corporate guarantee. Since the second defendant is concededly a company incorporated in India under the Indian Companies Act and has its principal place of business within the territorial jurisdiction of this court within the meaning of Section 20 CPC, the grounds on which prayer for return of the plaint is made are wholly devoid of substance. The fact that the corporate guarantee was executed in New Delhi (India) only adds to the said view in as much as it provided part of the cause of the action within the meaning of last clause of Section 20 CPC.
18. In aforementioned facts and circumstances, the decision in Modi Entertainment Network and Anr. (supra) relied upon by the defendant (applicant) has no application, it being distinguishable on facts.
19. Thus, the application for return of plaint is dismissed.
