P L D 1971 Lahore 199 (PLP)

"Paragraph No. 7 of the plaint is legal. The defendants have nothing to say against it." After receiving the replication, the Court on 20‑7‑1966, framed as many as 13 issues in the case, which are not necessary to be reproduced here. One significant feature, however, is that the counsel for the parties on that date made a joint statement which is to the following effect:‑ "We agree that the issues framed above are correct add have no other issue to claim." The case was then adjourned for the affirmative evidence of the plaintiff. The plaintiff produced Jafar Ali (P. W. 1), Manager and S. Safdar Hussain (P. W. 2) Assistant of the Bank. These witnesses deposed about the various matters involved in the case. On 20‑10‑1966, Mirza Bashir Ahmad learned counsel for the plaintiff tendered certain documents in evidence including letter of pledge (Exh. P. 12) and closed the case in the affirmative reserving the right to lead rebuttal. The case was adjourned to 14‑12‑1966. On that date i e., 14‑12‑1966, the defendants filed an application under Order XIV, rule 5, C. P. C. claiming that in the letter of pledge (Exh. P. 12), there was a clause (being clause No. 22), in which it was laid down that, "in the event of any suit or proceedings, Karachi Courts alone will have jurisdiction", The defendants averred that they had no knowledge of the said document or its terms and conditions. After so pleading they submitted that an additional issue be struck in the case as to whether in view of the stipulation contained in Exh. P. 12, the Court had jurisdiction or not. It was further submitted in the application that this issue should be decided as preliminary. A regular reply was filed to this application in which the plaintiff averred that no doubt the original agreement (Exh. P. 12) was produced in Court on 20‑10‑1966, but its copy had already been annexed alongwith the plaint over two years ago and the pleas of the defendants that they were not aware of the same or its contents are not correct. It was also pleaded that the defendants were precluded by their conduct from raising any such claim. However, the counsel for the plaintiff, on 17‑12‑1966 made a statement in Court that so far as the mere stricking of an issue was concerned, he had no objection and that the issue may be struck. Consequently, the learned Civil Judge on the said date struck an issue being Issue No. 13‑A in the case, which reads as follows:‑ "13‑A. Whether in view of the document Exh. P. 12, the civil Court at Wazirabad has the jurisdiction to try the case?" and further directed that it will be decided alongwith the other issues collectively. The case then lingered on and after the parties closed their evidence, the learned Court heard arguments fin the case as a whole. However, the learned Civil Judge chose to decide merely Issue No. 13‑A and holding that in view of clause 22 of the agreement hereinbefore mentioned, Wazirabad Court had no jurisdiction, he directed that the plaint be returned to the plaintiff for presentation to a proper Court of competent jurisdiction. This order was passed by the learned Civil Judge on 19‑9‑1968. The plaintiff Bank has come up in appeal against the aforesaid order.

2. Mirza Bashir Ahmad learned counsel for the appellant Bank argued that no doubt as held in Musa Ji Lukman Ji v. Durga Das (A I R 1946 Lah. 57), an agreement between the parties to a contract, where a suit can be tried within the territorial limits of several Courts, to the effect that it will only be tried in one of the Courts having territorial jurisdiction and that the parties will be limited to have recourse to only one of several competent Courts is valid and enforceable, but (he submitted) cases should be distinguished, where for example one of the Courts which is selected by the parties has otherwise no jurisdiction to try the suit. In that eventuality, he says, selection of such a forum is of no avail, because jurisdiction cannot be conferred by consent where otherwise it does not exist. Such contracts, he submits, which purport to confer jurisdiction on Courts of no jurisdiction are invalid and will be hit by the provisions of section 28 of the Contract Act. The arguments in general has the support of case‑law. In Crawley v. Luchmee Ram ((1869) 1 A H C R 129), it was held that a clause in a bill of lading whereby it was agreed that the question arising in the bill should be heard by High Court at Calcutta instead of the Court at Mirzapur, which was the proper Tribunal to try the question was void and could not be pleaded in bar of a suit brought in the Mirzapur Court. To the same strain are Louis Dreyfus & Co. v. Miran Bux Kudir Bux and another (1909 3 S L R 45 =11 1 C 965), Abnash Chandar v. Auto Supply Co. Ltd., Lahore (A I R 1930 Lah. 611) and Dhan Mal Marwari v. Jankidas Baijnath ((1945) 49 C W N 123). After laying these premises, the learned counsel argued that in view of the facts and circumstances of the present case, no suit could at all be instituted in Karachi, because Karachi Courts had no jurisdic tion in the matter as they did not fall under any of the provisions of section 20, C. P. C., which indicate as to in which Court a, suit can ordinarily be filed. He submitted that as the loan or money was advanced in Wazirabad; goods were pledged in Wazirabad; documents were executed in Wazirabad; and account was operated in Wazirabad, therefore, all the causes of action having arisen in Wazirabad, it was the civil Court of Wazirabad which alone had jurisdiction in the matter. He argued that no part of cause of action arose in Karachi and from that point of view, Karachi Courts possess no jurisdiction and as such mere agreement of the parties could not confer jurisdiction on Karachi Courts and clause 22 of the Agreement (Exh. P. 12) was void. It was argued that consent of the parties cannot confer jurisdiction on a Court which otherwise does not possess it. The gravamen of the argument is correct but whether a particular clause in a contract making the Court of a particular place as the choice forum is valid or not, is not to be examined merely on general principles but from an overall point of view after referring to the facts and circumstances of each particular case. Reverting to clause 22 of the agreement (Exh. P. 12) (which has. already been reproduced in para. I earlier), its perusal will show that it covers suits both by or against the Bank. Take for instance a suit against the Bank. In that context (leaving the concept of cause of action for the present apart), it is a common ground that the Principal Office of the Bank is in Karachi. Section 20 of the C. P. C., reads as follows:‑ "

20. Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction‑ (a) the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or (b) any of the defendants, where there are more than one; at the time of the commencement of the suit, actually and voluntarily resides, or carries on" business or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in. such institution; or (c) the cause of action, wholly or in part, arises. Explanation l.‑Where a person has a permanent dwelling at one place and also a temporary residence at another place, he shall be deemed to reside at both places in respect of any cause of action arising at the place where he has such temporary residence. Explanation IL‑A corporation shall be deemed to carry on business at its sole or principal office in (Pakistan) or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place." According to this section, a suit against a Corporation can be filed where it carries on business. According to Explanation If of the section, as laid down in Messrs Rahmania Trading Company v. Messrs Eagle Star Insurance Company Limited (P L D 1960 S C 202), Bhola Nath Agarwal and another v. The Empire of India approving Life Assurance Co. Ltd. (A I R 1948 Lah. 56), it can be held that where the defendant is a Corporation, it is deemed to be carrying on business at its sole or principal office irrespective of whether the cause of action has arisen there, as well as at the place, where it has its subordinate office provided the cause of action arises there. This will show that if the debtor‑company had to file any suit against the Bank, with regard to agreement (Exh. P. 12), it could well be filed in Karachi and the civil Courts of Karachi, in the context, could not be called Courts of no jurisdiction. The clause under discussion, it will thus appear is not an invalid clause.

3. Examining the clause from the point of view where the Bank itself is the plaintiff, the result is not dissimilar so far as the facts and circumstances of the present case are concerned. It is in the deposition of plaintiff's own witness Jaafar Ali (P. W. 1), dated 20‑7‑68, that the limit of the loan to be advanced to the defendants was sanctioned by the Central/Principal Office of the Bank which is in Karachi. He also stated that as a matter of fact, the period of loan, the terms and conditions of loan and the extension in the period of payment and other changes in the terms of loan etc., are all done by the Principal office. This shows that the offer of the defendants to take loan was accepted by the Principal Office of the Bank in Karachi, which settled the terms thereof though the formal documents (thereafter) were executed in Wazirabad. In Bengal Insurance and Real Property Co. Ltd., Calcutta and another v. Velayammal (A I R 1937 Mad. 571) and Hasi v. The Industrial & Prudential Assurance Co. (A I R 1937 Sind 17), it was held that where the approval is given by a Head Office, a cause of action can be said to have arisen there for the purposes of filing suits in that locality. The cases hereinbefore mentioned are of Insurance and may not be relevant from that point of view, but the principal enunciated is of a general nature and can be referred to. Reference at this stage can be made to demand Promissory‑note (Exh. P. 9), which was specifically pleaded and relied upon in the plaint and which also is a basis of the suit. It was executed by the defendants on the 13th of January 1960, in favour of the plaintiff‑Bank. In this document the place of execution is mentioned but the place of payment of the amount is not indi cated. It was held in Nanu Mal v. Firm Shibba Mal Nand Kishore and others (AIR 1939 Lah. 18) that where no place of payment is specified in a promissory‑note, the presumption is that the payment is to be made at the usual place of business of the creditor. As shown earlier, Karachi is a place of ordinary business of the Bank and the payment could very well be made there as well. Karachi, therefore, is a place where a part of cause of action in view of .the overall circumstances of the case can be said to have arisen. From that point of view, on the facts as brought out on the record, both the Courts of Karachi and Wazirabad were competent to entertain and try this suit. Clause 22 of the Agreement, therefore, cannot be struck down as invalid on the ground that it purported to bestow jurisdiction on a Court of no jurisdiction. So far as the civil Court at Wazirabad is concerned, it is a common‑ground that that Court, on the facts pleaded in the plaint, has jurisdiction to try this case and save for the contractual clause under discussion, there is no defect in its inherent or territorial jurisdiction to try the same.

4. This however is not the end of the matter. The next question which arises for consideration is even though clause 22 (hereinbefore reproduced) of agreement (Exh. P. 12), is a lawful and valid clause, should it have been given effect to by the learned trial Judge at the stage and in the manner in which it was invoked before him. My answer is in the negative and I have various reasons to hold so. Firstly, the clause in hand is merely of a contractual nature and 'as laid down in section 22 of the Specific Relief Act (I of 1877), the jurisdiction to decree specific performance is discretionary and the Court is not bound to A grant such relief merely because it is lawful to do so. The learned Civil Judge has not kept this aspect of the case in view, and without attending to the relevant circumstances or judging the case in that light has mechanically enforced the clause. Probably, he was not aware that he had a discretion to refuse its enforcement. His judgment is vitiated on account of the failure to comprehend this part of jurisdiction and discretion which vested in him. Secondly, as I have held earlier both Courts, namely, of Karachi and Wazirabad had jurisdiction to try the present suit. From that point of view, there was no inherent lack of jurisdiction in them. The question in that context was merely of territorial jurisdiction, namely, within which of the two competent Courts, the suit should be filed. As held in Hira Lal Patni v. Sri Kali Nath (AIR 1962 SC 199), an objection of this kind can be waived by a party. At page 201 of the said report, it was observed as follows:‑ "It was well‑settled that the objection as to local jurisdiction of a Court does not stand on the same footing as an objection to the competence of a Court to try a case. Competence of a Court to try a case goes to the very root of the jurisdiction and where it is lacking it is a case of inherent lack of jurisdiction. On the other hand, an objection as to the lack of jurisdiction of a Court can be waived and this principle has been given a statutory recognition by enactments like section 21 of the Code of Civil Procedure." Respectfully adopting the view, I hold that in the instant case also objection to invoke contractual jurisdiction could be and was waived by the defendants. They filed written‑statement on 21‑5‑1966 in which various types of objections were raised but no objection to invoke a contractual‑jurisdiction was taken. The written‑statement was given on merits and in Para. 7 (as already reproduced earlier), it was specifically averred that the defendants had nothing to plead against the jurisdiction of the Court. Filing of a written‑statement on merits (Ramanlal and another v. Ramgopal (A I R 1954 Raj. 135), raising no objection to jurisdiction of Wazirabad Court, claiming no issue on this point, allowing the plaintiff to lead evidence and prove its case in the affirmative on merits, are all facts which clearly prove waiver of the objection or the right contained in clause 22 of the Agreement. Thirdly, the stage at which this objection was raised was very late and the stage at which it was accepted by the learned trial Judge was all the more belated. The objection was raised by means of an application made on 14‑12‑1966. The learned Civil Judge got reply from the plaintiff on 17‑12‑1966 and struck Issue No. 13‑A on that very date. He was not inclined to give effect to this objection at that very time and rather directed that it will be attended to, towards the end of the case in final arguments, and virtually, though he heard the entire arguments on merits on various issues he did not decide them and threw out the plaint simply on this count on 18‑9‑1968. The procedure adopted by the learned Civil Judge in the circumstances of the case cannot be approved because he failed to keep regard for the rights and interests of the parties and the implications of the delay and time lapse in the context. Fourthly, the learned Civil Judge held that the objection was taken by the defendants at the earliest. This is not correct and the finding of the learned Civil Judge is vitiated by misreading or omission to read the record. The relevant dates in the case have already been given. The suit was filed on 10‑10‑1964. In the plaint, agreement (Exh. P. 12), was specifically pleaded and relied upon. In the written‑statement which was filed on 21‑5‑66, no exception was taken to this document (which in other words was admitted). If the defendants were not aware of that document, or its terms and conditions, they could have so pleaded in the written‑statement. They did not do so. A copy of that document was filed alongwith the plaint and it duly existed on the record. In these circumstances, to aver that the defendants were not aware of this document or that they took the objection at the earliest is not correct. If this was the earliest stage, I fail to understand which would have, in the circumstances of the case, been a belated stage. Fifthly, the case seems to me to be analogous to the one where for instance parties agree that a particular dispute shall be referred to an arbitrator. If in that case, without going to arbitration, a plaintiff files straightway a suit in a Court of law, then the defendant has a right, before taking steps in the case, to invoke the arbitration clause. If he does not do so but files a written‑statement on merits and takes part in the proceedings, then he is supposed to have waived the objection. Both types of agreements namely, containing stipulation for arbitration, or stipulation for trial in a choice‑forum put restraint on legal rights to proceed in a competent Court of jurisdiction. If this contractual restraint is not invoked before filing written‑statements or taking steps in the proceedings, then it is always considered to have been waived.

5. The upshot of the above discussion is that the appeal is accepted, the judgment and order of the learned Civil Judge are set aside and the case is remanded to the trial Court for further proceedings and disposal in accordance with law. The defendants shall bear the costs throughout. S. Q. Appeal accepted.