“Exclusive Jurisdiction” Clause and its application

A person involved in negotiation or drafting of any Agreement will definitely agree that jurisdiction clause is one of the most important clauses of any Agreement. Jurisdiction clause assumes more importance in cases where the scope of the Agreement expands to more than one area or jurisdiction. Generally, parties to the Agreement, while negotiating, try to restrict the jurisdiction to court which is more convenient for them to approach.

Before we delve further in the discussion, the first question which comes to our mind is that whether an agreement which purports to oust the jurisdiction of the Court is contrary to public policy and hence void? It is a settled principle of law and there is no ambiguity that an agreement which purports to oust the jurisdiction of the Court absolutely is contrary to public policy and hence void. Section 28 of Indian Contract Act, 1872 also contains statutory provision to the effect thereto and reproduced below:

Every agreement, by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights, is void to that extent.

However, it is also a settled principle of law of that where two Courts or more have under the Code of Civil Procedure jurisdiction to try the suit or proceeding, an agreement between the parties that the dispute between them shall be tried in one of such Courts was not contrary to public policy and such an agreement did not contravene Section 28 of the Contract Act. Such clauses are valid as it does not amount to an absolute ouster of jurisdiction.

Now, we come to second question that how can the jurisdiction to deal with the disputes arising out of an Agreement be restricted to the identified courts? Generally, Parties to the Agreement tend to include exclusive jurisdiction clause in the Agreement, which reads as below:

The parties hereto agree that any matter or issues arising hereunder or any dispute hereunder shall be subject to the exclusive jurisdiction of the courts of situated at XYZ.

People use the wordings “only”, “exclusively”, “alone” etc. to explicit their intention that only identified court in the clause has the jurisdiction to try the matters connected or arising out of the concerned Agreement. As stated above, such ouster of jurisdiction do not amount to violation of public policy and did not contravene Section 28 of the Contract Act.

Now, we come to third and tricky question that what will happen if the jurisdiction clause does not use the word “only”, “exclusively”, “alone” etc. in the jurisdiction clause and simply includes below jurisdiction clause in the Agreement:

“The Agreement shall be subject to jurisdiction of the courts at XYZ”

The answer to the above question has been decided recently by Supreme Court in Swastik Gases Private Limited vs. Indian Oil Corporation Limited (Please click here to read full judgment)

In the present case, disputes arose between the parties and the appellant approached Rajasthan High Court for appointment of arbitrator in respect of the disputes arising out of concerned agreement. . The Respondent defended the application on the ground of lack of territorial jurisdiction of the Rajasthan High Court as the relevant clause related to jurisdiction of courts as per the agreement states that this agreement shall be subject to jurisdiction of the courts ar Kolkata. Relevant clause is reproduced herein below:-

“The Agreement shall be subject to jurisdiction of the courts at Kolkata.”

Supreme Court while deciding this case categorized the jurisdiction clause into two sets- (i) where the intention of the parties can be culled out from use of the expressions “only”, “alone”, “exclusive” and (ii) the other where such words like “only”, “alone” or “exclusively” are not used.

The present case falls under the second category where the maxim “expressio unius est exclusio alterius (expression of one is the exclusion of another)” would be applicable. It was held that the absence of words “alone”, “only”, “exclusive” is neither decisive nor does it make any material difference in deciding the jurisdiction of the court. The very existence of the clause clarifies the intention of the parties which is of utmost relevance.

Conclusion:

1) Parties to an Agreement may oust the jurisdiction of the Court. However, such ouster of jurisdiction of the Court should not be absolute. Such clauses do not amount to violation of public policy and does not contravene Section 28 of the Contract Act.

2) Usage of words “alone”, “only”, “exclusive” are not mandatory to oust the jurisdiction to one court. However, it is advised to use to use such wordings to avoid any confusion/ litigation related to territorial jurisdiction of the courts resulting into delays in adjudication of claims on merits

3) Where two or more courts have jurisdiction, if the parties by agreement have chosen one court, only the Court chosen in the agreement will have jurisdiction.

Stamp duty: Execution of document outside state

In this Article, I have tried to clarify the confusion prevailing on applicable stamp duty, if the documents have been executed outside the state but brought back in the state for different purposes including for the purpose of storage. Since Stap Duty is a state subject and most of the states have either passed their own stamp Act or have introduced a seperate schedule on stamp duty applicable in thier state. For the purpose of this Article I have taken the state of Maharashtra and Bombay Stamp Act, 1958 (applicable stamp act in the state of Maharashtra) for the purpose of illustration. we understand that the fundamental principle behind payment of stamp duty on documents executed in the state other than maharshtra (as explained in this Article below) shall remain the same for other states also, however, it is advised to the reader to check the provisions of stamp act applicable in their state.

Section 3 of the Bombay Stamp Act, 1958 (“Said Act”) being the charging section provides that where an instrument chargeable under schedule I to the Act which has been executed outside state of Maharashtra, is brought into the state of Maharashtra and relates to any property situated or to any matter or thing done or to be done in this State.

If an instrument chargeable under the said Act is executed outside the State of Maharashtra to which Section 3(b) applies, section 19 of the said Act will apply. Such an instrument will have to be stamped with the differential amount i.e. the amount to which such an instrument would be chargeable under Schedule I of the Said Act less the amount of stamp duty, if any, already paid under any law in force in India, excluding the state of Jammu and Kashmir, when such instrument was executed.

If an instrument is executed outside the state of Maharashtra and does not relate either to any property situated or to any matter or things done or to be done in this State, such instrument will not be liable to stamp duty under the said Act. If it is merely received in the State for the purpose of storage only, it would not attract stamp duty because it does not fulfill the ingredients of Section 3(b).

Unless both the ingredients of satisfied i.e. (i) the instrument relating to any property situate or to any matter or thing doe or to be done in this State; and (ii) the instrument being received in this State, section 3 (b) of the said Act will not be attracted. Mere receipt of the instrument in the State for storage without the other requisite conditions being satisfied will not result in the instrument being liable to stamp duty under the said Act in the State of Maharashtra.

In the matter of Antifriction Bearing Corporation v. State 1999 (1) Bom C.R. 13, it was observed by Bombay High Court that if an instrument is executed outside State of Maharashtra but whose filing is required with the Registration of Companies situated at Maharashtra under Companies Act, 1956 the such instrument would fall within Sec. 3(b) and would liable for stamp duty. If some stamp duty has already been paid in the state in which the instrument has been executed, the differential stamp duty as specified in Sec.19 of the said Act would have to be paid.

Another important aspect which is relevant to discuss here is that what will be the stamp duty, if an instrument has been executed by parties in different states. An instrument is said to be executed if it is signed by all persons who are required by the character of the instrument to sign it, in order to give that instrument effect according to the law. If the instrument is of such a character that only one party is required to sign it to give effect to it according to law, the instrument is executed when that paty signs the same. If, however, the instrument is of such a character that more than one party to the document is required to sign it to make it a binding instrument, it would be signed by all of them for the instrument to fall within the definition of execution under Section 2(i) of the said Act. The instrument will be deemed to be executed for the purpose of attracting stamp duty only when it is signed by the last last of the persons who are required to sign the same. Therefore, if an instrument required to be signed by two parties is signed first by one party in Maharashtra and thereafter by the second party who is required to sign it, outside the State of Maharashtra and would not attract stamp duty in Maharashtra unless it is received in the State of Maharashtra and conditions of Section 3(b) of the said Act are satisfied.

RIGHTS OF CREDIT CARD HOLDERS

Credit cards have become important part of our life. We use credit card for various things like- booking train/ bus tickets, online shopping, electricity/ phone bill payment etc. You may also find people cursing credit card companies for not disclosing the charges, non-redressal of their grievances or of using other unfair practices. Reserve Bank of India (“RBI”) is the authority which operates the operation of credit cards in India. RBI issues various guidelines to the credit card issuer bank/ companies to inter alia uniform credit card operations in India and protection of the rights of the customers. In this Article, I have reproduced the important extract of RBI guidelines, which a credit cardholder must know:

Rejection of Credit Card application

Banks should convey in writing the main reason / reasons of rejection of the credit card application.

Interest and Charges

Banks should publish on their website the interest rate charged and circumstances under which higher interest rate may be charged should be transparent.

Methodology of calculation of finance charges should be indicated with illustrative example.

Annualized percentage rates should be quoted with examples.

Minimum payment disclaimer should be added in the statement.

MITC (Most Important Terms and Conditions) should explain that free credit period is lost if balance is pending.

No additional charge without express consent.

Change of charge (other than interest) can be made only after giving notice of one month.

In June 2012, District Consumer Forum, Mumbai levied fine of Rs.25,000/- on HSBC Bank for recovering inapplicable surcharge from a customer on the basis of vague or misleading information as it amounts to unfair trade practice according to provisions of the Consumer Protection Act, 1986. (Click here to read the entire article.)

Pitfall of paying only minimum payment

Cardholders should understand that if minimum amount has been paid, the interest will be charged on amount after the due date of payment. Thus, RBI instructs card issuers to prominently display in all monthly statements following statements so as to cuation customers about the pitfalls in paying only the minimumamount due:

"Making only the minimum payment every month would result in the repayment stretching over years with consequent interest payment on your outstanding balance"

Insurance

Insurance for liability arising out of lost card should be optional.

In case of insurance cover, bank should obtain details of nominee and should indicate details of insurance company.

Wrongful biling

I guess this is the major reason of dispute between card issuing bank/ NBFC and the cardholder. It is the duty of card issuing bank/ NBFC to ensure that wrong bills are not raised. In case, if a customer protests any bill, the card issuing bank / NBFC should provide explanation along with necessary documentary evidence, if required.

Recovery Agents or any other third party

The card issuing bank / NBFC would be responsible as principal for all acts of amission or commission of their agents (DSAs / DMAs and recovery agents)

Grievance redressal

Grievance redressal machinery should be constituted at Bank and the details of concerned officer should be given on the Bill.

60 days time should be given to customer for raising grievance.

Escalation of unresolved complaint should be given on the website of the bank.

There should be a system of acknowledging customer’s complaint.

Block of lost card should be done immediately and should be followed by FIR within reasonable period.