2010 PLP 670 (CLD)

MIAN SAQIB NISAR, J.

The respondent vide an agreement dated 13-9-2002 accorded to grant permission and issued NOC to the appellant to set up CNG Filling Plants at the outlets mentioned therein. Subsequently, on account of the alleged violation of the agreement, the appellant instituted a suit for the damages inter alia against the respondent at Lahore, in which written statement was filed by the later raising an objection about the territorial jurisdiction of the Court; issues were framed and issue No.1 about the territorial jurisdiction was treated as a preliminary issue; thereafter, an application under Order VII, rule 10, C.P.C. was brought by the respondent, seeking the return of the plaint on the ground that in the noted agreement, there is an exclusive jurisdiction clause on account of which, it was agreed between them that "the parties shall submit to the jurisdiction of Karachi Courts", this application has been accepted by the learned trial Court vide order dated 19-12-2005 and the plaint was accordingly returned to the appellant for its presentation to the Court of competent (territorial) jurisdiction. Hence this appeal.

2. Learned counsel for the appellant contends that the respondent in fact has submitted to the jurisdiction of the Court at Lahore for the reason that the application under section 34 of the Arbitration Act earlier filed by it was withdrawn by the counsel, while making a statement that the matter shall be contested on the merits. Moreover, that prior to agreement dated 13-9-2002, a Memorandum of Understanding (hereinafter be called as MOU), was entered into between the parties, in which there is no exclusive jurisdiction clause and therefore, it is MOU, which shall prevail.

3. Heard. The following judgments, the portions whereof are being reproduced are quite relevant to the proposition: Tahir Tariq Textiles Mills (Pvt.) Ltd., through Chief Executive and 2 others v. National Development Finance Corporation 2003 CLD 1546. "Suit for damages by customer on account of alleged breach of finance agreement by Bank-Return of plaint for its presentation before Court at place K-Validity--Such agreement executed at place K provided that Court at place K would be the proper Court to entertain all matters arising out of or under such agreement--Such clause, wherein though words "Only" or "exclusive" were not mentioned, clearly spelt out intention of parties that in case of dispute arising between them with regard to breach of finance agreement which would include failure to disburse agreed facility or its recalling and very nature of dispute having nexus with finance agreements during their subsistence or even thereafter, would be tried by Court at place K, rather than any by any other Court--Subsequent establishment of letters of credit at place L or refusal of Bank to disburse amount by its office at place L or rescission of agreement by its office at place L, by itself would not be a cause of action taking case out of ambit of such clause--No error was found in impugned judgment--High Court dismissed appeal." "Two or more Courts having jurisdiction in matter-Parties could validly agree for conferment of jurisdiction upon one of such Courts to the exclusion of other." Chaudhry Mehtab Ahmad and another v. Mir Shakeel- ur-Rehman and 4 others 2004 MLD 662:-- "Territorial jurisdiction of Court

Suit between principal and agent instituted at place "K"

Agency agreement between parties was made at place "R" which was also place of their business

Parties through such agreement had agreed that in case of any dispute, only Court at place "R" would have jurisdiction to deal with same

Parties were required to abide by terms of- their agreement and submit their dispute to Courts at place "R"

Plaint was returned for its presentation before the proper Court." Light Industries (Pvt.) Ltd. through Director v. Messrs ZSK Stickmaschinen GmbH and another 2007 YLR 2346. "Exclusive jurisdiction clause in an agreement

Such clause in a contract is part of consideration of the agreement between the parties on the basis of which parties enter into a contract and such consideration should not be ignored lightly particularly merely at the whims of one of the parties to the contract." Messrs Saudi Arabian Airlines through Sales Manager, Lahore and another v. Miss Hira Khan and another 2002 CLC 204. "Territorial jurisdiction

Corporation having registered office outside Pakistan

Suit against the Corporation instituted in Pakistan

Objection was raised to the maintainability of the suit on the ground that the Courts in Pakistan lacked territorial jurisdiction over the matter

Application for rejecting/returning of the plaint was disposed of by the trial Court by framing issues on the total controversy between the parties including pleas forming subject-matter of the application-Validity--Question of territorial jurisdiction was a mixed question of fact and law which could not be decided otherwise than recording evidence

Trial Court had not committed any illegality while framing issues on the said questions but had definitely committed illegality in the exercise of its jurisdiction while proposing to decide the issues along with the issues on merits

Questions forming subject-matter of the Corporation's application under O.VII, Rr.10 and 11, C.P.C., being root questions should have been tried at the earliest without taking any further step in the proceedings

High Court directed the trial Court to decide the issues relating to territorial jurisdiction and lack of cause of action as preliminary issues

Revision was dismissed accordingly." On account of the above case-law, it may be safely held that the parties can validly agree for the conferment of territorial jurisdiction to one out of two or more Courts, which otherwise, shall have the jurisdiction; such agreements are g absolutely valid and enforceable under the law. In the instant matter, not only that the agreement dated 13-9-2002 has been executed at Karachi, even MOU was executed there and resultantly, only for the reason that a part of cause of action on the basis of any violation thereto has accrued to the appellant apart from Karachi, would not enable the appellant/plaintiff to file suit at Lahore, rather it shall be bound by the stipulation of exclusive jurisdiction clause. I am not convinced that only on account of withdrawal of the application under section 34 of the Arbitration Act, the respondent had submitted to the territorial jurisdiction of the Lahore Courts, because in the written statement filed by the latter, it was categorically objected that the Courts at Lahore does not possess such a jurisdiction and it is for this reason that the parties joined an issue in this regard. If during the pendency of the suit, the respondent moved an application under Order VII and 10, C.P.C. and as no factual inquiry was needed, the Court on the basis of exclusive jurisdiction clause has returned the plaint, such order does not suffer from any illegality, etc. on account of any alleged procedural formality as argued by the appellant side.

4. The argument of the appellant's counsel that because in the MOU, there is no exclusive jurisdiction clause, therefore, it shall prevail upon the stipulation of the agreement dated 13-9-2002, suffice it to say that MOU has been substituted by the subsequent agreement between the parties and it is good illustration of the rule of novation of contract; besides, the MOU in the law is only an understanding and executory instrument in nature and where the parties through a deliberated subsequent agreement on the same subject substitutes the MOU by adding the exclusive jurisdiction clause; MOU shall lose its relevance and it is only the succeeding instrument which shall determine the rights and obligations inter se the parties, resultantly, I do not find that on account of any part cause of action having arisen to the appellant at Lahore,, the Courts at Lahore have the jurisdiction, because the agreement between the parties is very clear and enforceable in terms provides otherwise. In the light of above, this appeal has no merits and the same is hereby dismissed. M.U.Y./T-8/L Appeal dismissed.