A question of jurisdiction

Read it or not - generally no one does - invariably in every cash memo, bill, invoice or service contract, there appears a clause (legible or illegible) providing that only courts at a particular place will have jurisdiction to adjudicate a dispute arising from the said transaction.

You buy a refrigerator or an air conditioner from a dealer in Delhi.

Now, though the manufacturer has a branch office or a service centre in Delhi, the warranty stipulates that only a court in Mumbai (where the manufacturer's registered office is located) will resolve the dispute, if any.

You buy some plant and machinery in Chandigarh and get it installed at Sonepat. If it is found to be defective, you file a suit at Sonepat but you are told that the dispute can be settled only in a court at Mumbai because the invoice had so provided. Is such a provision in the contract valid? You have agreed thereto and can you challenge its validity? The question of validity of such a provision was thoroughly gone into by the Supreme Court in ABC Laminart v. A. P. Agencies 1999 (2) SCC 163 and in its judgment the apex court laid down the law by observing that "where the parties to a contract agreed to submit the disputes arising from it to a particular jurisdiction, which could otherwise also be a proper jurisdiction under the law, their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand, the jurisdiction they agreed to submit to would not be otherwise proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy". So, in the first instance given in the first paragraph above, the stipulation that the court in Mumbai alone will have jurisdiction is unsustainable because the court in Mumbai being alien to the contract can in no way have the power to try the dispute. But in the second instance, the clause that a court in Chandigarh alone will have the jurisdiction would be valid as part of the cause of action that has arisen at both Sonepat and Chandigarh and parties to the contract can validly choose either of the two.

Despite enunciating the law clearly, a loophole later found that such an exclusion clause can be invoked only if both the parties to the contract have been fully informed about it. So, in the case of cash memos, bills, consignment notes and warranties, which were issued without making the consumer understand the implications about the exclusion of jurisdiction of the courts, the exclusion clause was held to be void, especially by the consumer courts.

Not anymore. The above plea was recently rejected by the Supreme Court in a judgment delivered on July 4, 2011 in Civil Appeal No. 4925 of 2011 - Interglobe Aviation Ltd v. N. Satchidanand . In this case the complainants claimed a compensation of Rs 5 lakh for harassment and sufferings because the flight by which they were to travel was cancelled and they were stranded at the airport for 11 hours. A suit was filed in Hyderabad.

A plea was put forward by the airlines that the courts in Delhi alone had jurisdiction as per the terms and conditions.

The complainants' defence was that such a clause would apply only if it was fully explained to them. The matter reached the Supreme Court, which has, after analysing the law on the subject, held that "the mere fact that a passenger may not read or may not demand a copy of the terms does not mean that he will not be bound by the terms of contract of carriage". Reversing the judgment of the high court, the apex court observed that the term relating to the exclusive jurisdiction cannot be ignored on that ground.

Now that the law on the subject of specifying the jurisdiction of a particular court has been held to be valid and that the consumer's plea that they had not been fully informed about it would not cut any ice, they must read between the lines of the bills, cash memos and other documents to avoid future troubles.

- The author is an advocate and editor of Consumer Protection and Trade Practices Journal (CTJ)