Change of Jurisdiction in case of dispute referred to Arbitration
A public limited company, leading manufacturer of Textiles, in Mumbai appointed their “Franchisee” in all major towns of India. I, was running a sole proprietorship business and having a retail outlet in the main commercial hub of Jaipur, approached the company to award “Franchisee” in Jaipur ( Rajasthan) to which they agreed. The company’s CEO visited Jaipur and wanted me to execute the “Franchisee Agreement” which was valid for six years. Besides normal commercial terms, one of the Clauses of “Franchisee Agreement” was related to the Jurisdiction of the Court. It indicated that all disputes are subject to Arbitration & all disputes are subject to Mumbai Courts Jurisdiction. I objected to this clause which Company’s CEO that these are normal conditions and I should not be worried. The agreement was NOTORISED in Jaipur and payment of Security Deposit was made from Jaipur. The merchandise was indented from Jaipur and received in Jaipur and day to day payment was also released from Jaipur. After three years of agreement period, the company abruptly terminated the Franchisee agreement and with held the security deposit and other funds payable to me, to the tune of Rs. 36,00,000/-. I challenged the Agreement in the High Court of Jaipur and Hon’ble High Court directed both the parties to appear in Jaipur for Mediation. Three meetings of Mediation were held but nobody appeared on behalf of Company. I attended all the three meetings. Now the Company is opposing in High Court that Arbitration proceedings must continue in Mumbai as per Agreement Clause whereas I wish to carry on the Arbitration Proceedings in Jaipur. Please intimate and confirm whether I will succeed in my efforts and the circumstances in which place of Arbitration can be awarded by the High Court in Jaipur. Please attach 3 or 4 Supreme Court or High Court rulings to strengthen my case.
Asked in Business Law from Jaipur, Uttarakhand
1) the terms of contract are sacrosanct
2) if there i clause in agreement that all disputes shall be subject to exclusive jurisdiction of courts at Mumbai only and that venue of arbitartion shall be at mumbai only in such case mumbai courts alone would have jurisdiction
3) disputes cannot be referred to arbitration in Jaipur
The company is right as the jurisdiction clause would oust the jurisdiction of the courts in Jaipur. The arbitration clause cannot be unilaterally revoked by one party to the contract. You are bound to fail in the High Court unless there is some other clause in the contract which has a repelling effect on the jurisdiction clause. There is no SC ruling which says that the jurisdiction clause can be disregarded by the courts. Be that as it may, get the contract vetted by a lawyer to know if there is an escape route for you.