Holding

A clause fixing the law for interpretation does not oust the territorial jurisdiction of Indian courts; where any part of the cause of action arises in Delhi, the Delhi court has jurisdiction despite the agreement’s choice of Hong Kong law.

Summary

Prodigy Electronics Ltd., a Hong Kong company, employed Laxman Prasad as its India marketing manager. After resigning, Prasad allegedly breached the employment contract by soliciting customers, using the company's trade name at a Delhi trade fair, and registering a similar domain name. Prodigy filed a suit in the Delhi High Court for injunction and damages, and Prasad moved to dismiss the suit under Order VII Rules 10 and 11, arguing that Clause 18 of the contract made Hong Kong law applicable and that only Hong Kong courts had jurisdiction. The High Court rejected the objection, holding that the agreement only fixed the governing law and did not divest Delhi courts of territorial jurisdiction because part of the cause of action arose in Delhi. On appeal, the Supreme Court affirmed that "cause of action" and "applicability of law" are distinct concepts and that a suit may be instituted where any part of the cause of action accrues, regardless of a choice‑of‑law clause. Consequently, the appeal was dismissed and the costs order was upheld.

Issues considered

The agreement’s clause fixing Hong Kong law for interpretation bars Indian courts from exercising jurisdiction?
Whether the Delhi High Court had territorial jurisdiction over the suit despite the choice‑of‑law clause.
Whether the plaint disclosed a cause of action warranting rejection under Order VII Rule 11.

Legislation cited

Code of Civil Procedure, 1908s. 20(c), s. Order 39 Rule 1, s. Order 39 Rule 2, s. Order 7 Rule 10, s. Order 7 Rule 11, s. Section 151, s. Sections 16-20

Subjects

Territorial jurisdictionCause of actionApplicability of lawEmployment contract breachInjunctionOrder VII Rule 10Order VII Rule 11Hong Kong lawJurisdiction clauseCosts

Judgment

LAXMAN PRASAD A
-;.
v.
PRODIGY ELECTRONICS LTD. AND ANR.
DECEMBER 10, 2007
[C.K. THAKKER AND ALTAMAS KABIR, JJ.] B

Code of Civil Procedure, 1908: s.20(c), Or. 7, rr. JO and 11
- Territorial jurisdiction - Agreement stipulating that terms/
conditions contained therein to be interpreted in accordance with
laws of Hongkong - Breach of agreement - Suit filed in Delhi - c
Maintainability of - Held: Applicability of law is distinct and
different from cause of action - Since part of cause of action
arose in Delhi, suit filed in Delhi is maintainable-Application of
defendant under Or. 7 rr. 10 and 11 rightly rejected by High Court.
D
Cost - Imposed by court - On defendant for filing application
to delay progress ofsuit - Interference with - Held: Not called for.
Words and phrases: 'Cause of action' - Meaning of
The plaintiff company-respondent No.I was incorporated E
under the laws of Hongkong and engaged in the business of
trading PCB product under the name and style of 'Prodigy
Electronics'. The defendant-appellant joined plaintiff company
for marketing PCB products. In September, 2004, an employment
contract was entered into between the defendant and the plaintiff F
.. " company. The terms of employment contract stipulated that on
resignation or termination, the employee would not engage
himself in a similar or competitive business for two years nor
would he contact or solicit any customer or the supplier with
whom the plaintiff company conducted business during the G
employment and that the defendant would maintain confidentiality.
,,,_ Clause 18 of the agreement declared that terms and conditions
of the agreement would be interpreted in accordance with the
laws of Hongkong.
13 H
-L
14 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

A The defendant tendered his resignation and his employment
-.\-
came to an end in December, 2004. The plaintiff company found
that the defendant contacted potential customers of the company
and informed them that he was representing plaintiff company.
The defendant also participated in the Trade Fair in Delhi in
B 2005 and used the goodwill and the trade name of the plaintiff
company.
The plaintiff company filed a suit in Delhi High Court for
permanent and mandatory injunction against the defendant as
c also for damages. It also filed an application for interim injunction
restraining the defendant from using the trade name 'Prodigy'.
The defendant filed written statement and also an
application under Or. 7 rr. 10 and 11 CPC praying for rejection/
return of the plaint for presentation to proper Court on the
D ground that the plaint disclosed no cause of action and that
clause 18 of the agreement granted exclusive jurisdiction to
Courts in Hongkong and on that ground also Delhi Court had no
jurisdiction in the matter. The High Court dismissed the
application and also imposed cost of Rs. 4000/-, holding that the
E agreement did not take away jurisdiction of the court and the
application was filed only to delay the progress of the suit.
Defendant challenged the said order by filing the present appeal.
Dismissing the appeal, the Court
F HELD: 1. No case has been made out by the defendant-
appellant from which it can be said that Delhi Court had no
jurisdiction. (Para 13] (21-B]
2.1. 'Cause of action' and 'applicability of law' are two
G distinct, different and independent things and one cannot be
confused with the other. The expression 'cause of action' has
not been defined in the Code of Civil Procedure, 1908. It is, -i-
however, settled law that every suit pre-supposes the existence
of a cause of action. If there is no cause of action, the plaint has
H
LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 15
ANDANR.
-f to be rejected under o.7 r.11 CPC. Cause of action means a A
right to sue. It consists of material facts which are imperative
for the plaintiff to allege and prove to succeed in the suit. Under
s.20(c) CPC, a suit would lie in a court within the local limits of
whose jurisdiction the cause of action has arisen, wholly or partly.
S. 20 has been designed to secure that justice must be brought B
as near as possible to every man's hearthstone and that the
._<
defendant should not be put to the trouble and expense of
travelling long distances in order to defend himself.
[Paras 15, 20, 21] [22-A, B, C, 23-H, 24-A]
c
2.2. The argument of the defendant that the agreement
was executed in Hong Kong and hence suit could have been
instituted only in that country is not well founded. It is no doubt
true that the suit could have been instituted in Hong Kong as
well. That, however, does not take away the jurisdiction of Delhi D
-y' Court where a part of cause of action has arisen. The defendant
committed breach of terms and conditions of agreement during
the Trade Fair in February, 2005 held in Pragati Maidan, Delhi.
It was, therefore, open to the plaintiff Company to institute a
suit in a competent Court within the jurisdiction of Delhi. So far E
as applicability of law is concerned, obviously as and when the
suit will come up for hearing, the Court will interpret the clause
and take an appropriate decision in accordance with law. It has,
however, nothing to do with the local limits of the jurisdiction of
·" the Court. [Paras 22, 31] (24-B, C, D, E, 27-B, CJ F
British India Steam Navigation Co. Ltd. v. Shanmughavilas
Cashew Industries & Ors. (1990) 3 SCC 481 - held inapplicable.
British India Steam Navigation Co. Ltd. v. Shanmughavilas
Cashew Industries & Ors. (1990) 3 SCC 481; A.B.C. Laminar! G
Pvt. Ltd. v. A.P Agencies (1989)2 SCC 163; National Thermal
+ Power Corporation v. Singer Company & Ors. (1992) 3 SCC
551; Technip SA. V. S.MS. Holding (P) Ltd. & Ors. (2005) 5 sec
465 - referred to.
H
16 SUPREMECOURTREPORTS [2007] 13(Addl.)S.C.R.

A 3. So far as imposition of costs is concerned, normally it
is in the discretion of the Court. When the Court, in the light of
the facts before it, was satisfied that the defendant wanted to
delay the proceedings and ordered him to pay costs of Rs.4,000/
-, it would not be appropriate to interfere with that part of the
B order. [Para 32) [27-E, F]
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 5751
of 2007
From the final Judgment/Order dated 26.04.2006 of the High
C Court of Delhi at New Delhi in I.A. No. 9562 of2005 in Civil Suit
(OS) No. 819 of 2005.
Manoj Swarup, Ajay Kumar and Arun Kumar Beriwal for the
Appellant
D Nikhil Nayyar, Ankit Singhal and TVSR Sreyaj for the
Respondents.
The Judgment of the Court was delivered by
C.K. THAKKER, J. 1. Leave granted.
E
2. The present appeal is directed against the judgment and order
passed by the High Court of Delhi on April 26, 2006 in I.A. No. 9562
of2005 in Civil Suit (OS) No. 819 of2005. By the said order, the
High Court dismissed an application filed by the appellant herein under
p Order VII, Rules 10 and 11 of the Code of Civil Procedure, 1908
(hereafter referred to as 'the Code').
3. Shortly stated the facts are that 'Prodigy Electronics Ltd.' -
plaintiff (respondent No.1 herein) ('the Company' for short) was formed
and incorporated under the laws of Hong Kong and is engaged in the
G business of trading electronic goods under the name and style 'Prodigy
Electronics', Hong Kong. The main area of business of the Company
is Printed Circuit Board (PCB). The business carried on by the
Company involves keen understanding of the requirements of the
customers in order that the products may be manufactured to the
H
I
}-

LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 17
AND ANR. [THAKKER, J.]
specific needs of the customers and they may be made available at A
competitive prices. The Company is, therefore, required to take care
of the consumer-complaints, if any. It also involves a reach into the
market identifying the potential consumers of the products which involves
substantial investment of time, effort and finance. According to the
Company, it has developed solid reputation in India under the trade B
name and trade mark 'Prodigy Electronics' in the field of electronics
.J generally and PCBs particularly.
4. According to the plaintiff-Company, on July 22, 2002, the
defendant (appellant herein) joined Prodigy Electronics in India as a c
representative for marketing PCB products of the Company in India.
An employment contract was entered into on October 2, 2003 between
the defendant-employee and the plaintiff-Company. Under the said
contract, the defendant was given full-time employment in the Company
at Hong Kong in the capacity of 'International Business Development D
.., Manager'. He was given job profile of conducting all business of the
Company in India. Subsequently, at the request of the defendant who
1
put forward personal reasons, he was relocated to India and a new
' employment agreement dated September 13, 2004 was signed by the
parties. It was agreed that the job location of the appellant would be E
India. The defendant's tenure in India started from October 1, 2004.
The Company was to bear all expenditure, including travel-expenses
of the defendant. According to the Company, however, after relocation
to India in October, 2004, the defendant tendered his resignation by
-~
e-mail on the ground of personal problems. It was also stated that he F
would decide his next course of action later on. Though the Company
gave assurance to the defendant to support in his personal problems,
the defendant did not withdraw the resignation and thus his employment
came to be terminated on December 20, 2004. According to the
Company, the defendant sent another e-mail on December 20, 2004 G
giving assurance to the Company that though he would continue to be
..,_, involved in marketing of PCB products, he would be associating himself
with manufacturers other than the customers and suppliers of the
Company.
H
18 SUPREME COURT REPORTS [2007] 13 (Addi.) S.C.R.

i'
A 5. It is the allegation of the Company that the defendant contacted
potential customers of the Company and informed them that he was
representing 'Prodigy'. He also submitted quotes for PCB products.
It was also the case of the Company that the defendant participated
in the Trade Fair in Delhi (Componex/Electronic India, 2005) which
B was held between February I, 2005 to February 4, 2005 at Pragati
Maidan, New Delhi. In the said Trade Fair, the defendant used the
goodwill and passed on the trade name of the plaintiff-Company. In
the course of inquiries about the data generated about PCB customers,
the organizers of the Trade Fair informed the Company that Multi
C Circuit Board (CHINA) Ltd., Hong Kong had participated in the fair
and information could be obtained from them. It was averred that the
Company was shocked to receive the said information since Multi
Circuit Board (CHINA) Ltd. was the manufacturer from whom the
Company used to source its products for its Indian customers. The
D further inquiry by the Company revealed that the said Multi Circuit ·;....

Board (CHINA) Ltd. had a representative in India and he was none
else but the defendant who operated under the name and style of
"Prodigy Circuit Boards". On being contacted, Multi Circuit Board
(CHINA) Ltd. also confirmed that it had executed a contract with the
E defendant. It also came to the notice of the Company that the defendant
had registered a deceptively similar domain name
'www.prodigycircuits.com' as far back as on October 5, 2004 while
he was still in the employment of the Company. The Company was
thus convinced that the defendant had not resigned on account of
'-
F personal reasons or family problems but he wanted to misuse
confidential information which he had received from the Company and
he wanted to take undue advantage in spite of the agreement entered
into with the Company. The Company also discovered that the defendant
had incorporated a Company under the name and style of 'Canton
G Treasure Corporation Ltd.' on July 16, 2004 when he was stationed
in Hong Kong and was still serving with the Company. Thus, obvious
breach of employment contract was committed by the appellant.
6. In view of the above facts and breach of contract by the
H defendant, the plaintiff-Company on May 28, 2005, filed a suit being
)

}-

LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 19
AND ANR. [THAKKER, J.]

-1
Civil Suit (OS) No. 819 of2005 in the High Court of Delhi at New A
Delhi (Original Jurisdiction) for permanent and mandatory injunction
against the defendant as also for damages by ordering rendition of
accounts. Alongwith the plaint, the Company filed an application under
Order XXXIX, Rules 1and2 read with Section 151 of the Code for
interim injunction restraining the defendant from using the name B
'Prodigy', 'Prodigy Circuit' or any other identical or deceptively similar
name or from passing off any such identical or deceptively similar trade
mark or trade name.
7. Notice was issued to defendant. He filed his written statement c
on November 10, 2005. The defendant also filed an application under
Order VII, Rules 10 and 11 of the Code praying for rejection/return
of plaint for presentation to proper Court. It was contended by the
defendant that the plaint disclosed no cause of action and was liable
to be rejected. It was further stated that no requisite Court fee had D
been paid within the time granted by the Court and on that ground
also, the plaint deserved to be rejected. It was also asserted that there
was an agreement between the plaintiff-Company and the defendant
by which exclusive jurisdiction was granted to Courts in Hong Kong
and jurisdiction of all other Courts had been ousted and on that ground E
also Delhi Court had no jurisdiction in the matter.
8. The High Court, as observed earlier, considered the application
of the defendant and by the impugned order, dismissed it holding that
j
the agreement did not take away jurisdiction of the Court as contended
by the defendant and the application had been filed only with a view F
to delay the progress of the suit which was liable to be dismissed and
it was accordingly dismissed with costs ofRs.4,000/-.
9. The appellant-defendant has challenged the said order by
filing the present appeal. On August 7, 2006, notice was issued by this G
Court and in the meantime further proceedings in the suit were stayed.
10. We have heard learned counsel for the parties.
11. The learned counsel for the appellant contended that the
High Court was wholly wrong in holding that Courts in India could H
20 SUPREME.COURT REPORTS [2007] 13 (Addi.) S.C.R.

A entertain a Civil Suit and the application filed by the defendant-appellant
was liable to be rejected. According to the learned counsel, the
agreement entered into between the parties made it expressly clear
that the law applicable, in case of dispute between the parties would
be law of Hong Kong Special Administrative Region and, hence, Indian>
B Courts have no jurisdiction to entertain, deal with and decide such
question. It was also submitted by the learned counsel that in the light
of the agreement between the parties, only remedy available to the
plaintiff-Company was to take appropriate proceedings in accordance
with law in a competent Court in Hong Kong and no Indian Court
C could have jurisdiction inasmuch as jurisdiction of all Courts in India
is barred by necessary implication. The counsel also contended that
the High Court committed an error in holding that Delhi High Court
had jurisdiction as the defendant was residing in Delhi. In the plaint
itself, the plaintiff gave the address of the defendant of Ghaziabad
D which is not in Delhi but in Uttar.Pradesh (U.P.). The counsel also
made grievance that the High Court was not right in observing that the
defendant wanted to delay the proceedings and was-not justified in
imposing costs of Rs.4,000/-. It was, therefore, submitted that the
appeal deserves to be allowed by setting aside the order passed by
E the High Court.
12. The learned counsel for the respondent-Company, on the
other hand, supported the order passed by the High Court. He submitted
that the only thing which was relevant in the agreement was as to
F applicability of laws. As per settled legal position, a suit could be
instituted in Delhi as part of cause of action had arisen within the
territorial jurisdiction of that Court. The High Court was right in
observing that applicability oflaw had nothing to do with situs of a suit
and since the defendant had used the trade mark/trade name of the
G plaintiff in Delhi in Trade Fair, it was open to the plaintiff Company to
institute a suit in Delhi. It was submitted that it is really surprising that
though Hong Kong based Company institutes a suit in Delhi where the
defendant had used the trade mark/trade name, where he resides and
thus it is much more convenient to him to defend the suit, yet he
H objects to the proceedings which clearly goes to show that the only
I

f-
LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 21
AND ANR. [THAKKER, J.]
intention on the part of the defendant is to delay the proceedings. The A
High Court was, therefore, right in dismissing the application and in
ordering payment of costs by him. It was, therefore, submitted that the
appeal deserves to be dismissed.·
13. Having heard the learned counsel for the parties, in our B
opinion, no case has been made out by the appellant from which it can
be said that Delhi Court had no jurisdiction. Both the learned counsel
_,, referred to the agreement dated September 13, 2004 entered into
between the parties. Clause 10 of the agreement relates to "Resignation
and Termination of Service". In-accordance with the said clause, the c
appellant herein left the plaintiff-Company. Clause 10 stipulates that in
the event of resignation or termination for any reason, the employee
would not engage himself in a similar or competitive business for a
period of two years, nor he would contact or solicit any customer or
supplier with whom the employer conducted business during the D
employment. Clause 14 provides for 'Conflict of Interest'. Clause 15
i deals with 'Confidentiality'. It recites that upon accepting employment
with Prodigy, the defendant would maintain confidentiality which would
mean that he would not disclose any 'Prodigy confidential information'
either during or after his employment to anyone outside the Company, E
nor would use it for personal benefit. Clause 18 is material for the
purpose of controversy and may be reproduced:
18. The terms and conditions as stipulated above shall be
interpreted in accordance to the laws ofihe Hong Kong
Special Administrative Region. F
J
" (emphasis supplied)
' 14. It is this Clause (Clause 18), which requires interpretation.
According to the appellant, since the terms and conditions in the
agreement have to be interpreted in accordance with the laws of Hong G
Kong, no Court in any country other than a Court in Hong Kong shall
have jurisdiction to entertain a suit, petition, application or any other
,.,. proceeding. The submission of the respondent-Company, on the other
hand, is that what is agreed upon is not territorial jurisdiction of a
Court but applicability of laws. Clause 18 deals with the second H
j_

22 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A eventuality and declares that terms and conditions of the agreement
would be interpreted in accordance with the laws of Hong Kong.
15. We find considerable force in the submission of the learned
counsel for the respondent Company. In our view, 'cause of action'
B and 'applicability of law' are two distinct, different and independent
things and one cannot be confused with the other. The expression
'cause of action' has not been defined in the Code. It is however
settled law that every suit presupposes the existence of a cause of -..
action. If there is no cause of action, the plaint has to be rejected [Rule
C ll(a) of Order VII). Stated simply, 'cause of action' means a right to
sue. It consists of material facts which are imperative for the plaintiff
to allege and prove to succeed in the suit. The classic definition of the
expression ('cause of action') is found in the observations of Lord
Brett in Cooke v. Gill, (1873) 8 CP 107: 42 LJ CP 98.
D 16. His Lordship stated;
"Cause of action means every fact which it would be necessary
for the plaintiff to prove, if traversed, in order to support his right
to the judgment of the court".
E 17. In A.B.C. Laminar! Pvt. Ltd. v. A.P Agencies, (1989) 2
SCC 163, this Court said;
"A cause of action means every fact, which, if traversed, it
would be necessary for the plaintiff to prove in order to
F support his right to a judgment of the Court. In other words,
it is a bundle offacts which taken with the law applicable
to them gives the plaintiff a right to relief against the
defendant. It must include some act done by the defendant
since in the absence of such an act no cause of action can
G possibly accrue. It is not limited to the actual infringement
of the right sued on but includes all the material facts on
which it is founded It does not comprise evidence necessary
to prove such facts, but every fact necessary for the plaintiff
to prove to enable him to obtain a decree. Everything which
H if not proved would give the defendant a right to immediate
LAXMANPRASADv. PRODIGYELECTRONICSLTD. 23
AND ANR. [THAKKER, J.]
iudgment must be part of the cause of action. But it has no A
relation whatever to the defence which may be set up by the
defendant nor does it depend upon the character of the
relief prayed for by the plaintiff'.
(emphasis supplied)
B
18. Now, Sections 16 to 20 of the Code deal with territorial
jurisdiction of a Court (place of suing). Whereas Sections 16 to 18
-1 relate to immovable property, suits for compensation for wrongs to
persons or movables have been dealt with under Section 19. Section
20 of the Code is a residuary provision and covers all cases not falling C
under Sections 16 to 19.
19. The relevant part of Section 20 reads thus;
20. Other suits to be instituted where defendants reside or
cause of action arises.-Subject to the limitations aforesaid, D
every suit shall be instituted in a Court within the local limits of
1 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 E
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 F
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 or business, or personally
work for gain, as aforesaid, acquiesce in such institution;
or G
(c) the cause of action, wholly or in part, arises.
"r· . . . . . . . . . . . . . . . . . . . . . . . . . . . (emphasis supplied)

20. Bare reading of Clause (c) leaves no room for doubt that a
suit would lie in a court within the local limits of whose jurisdiction the H
24 SUPREME COURT REPORTS [2007) 13 (Addi.) S.C.R.

A cause of action has ariseri, wholly or partly.
-l"-
21. Section 20 has been designed to secure that justice might be
brought as near as possible to every man's hearthstone and that the
defendant should not be put to the trouble and expense of traveling
B
long distances in order to defend himself.
22. According to the plaintiff-Company, a suit instituted on the
Original Side of the High Court of Delhi is maintainable since a part
of cause of action had accrued within the territorial jurisdiction of Delhi \-

Court (breach of agreement by defendant). The argument of the
c defendant that the agreement was executed in Hong Kong and hence
suit could have been instituted only in that country is, in our opinion,
not well founded. It is no doubt true that the suit could have been
instituted in Hong Kong as well. That, however, does not take away
a
the jurisdiction of Delhi Court where part of cause of action has
D arisen. In the plaint, it was specifically alleged by the plaintiff Company
that the defendant committed breach of terms and conditions of
agreement during the Trade Fair in February, 2005 held in Pragati
Maidan, Delhi. It was, therefore, open to the plaintiff Company to
institute a suit in a competent Court within the jurisdiction of Delhi and
E that is how the suit is filed in the High Court on its Original Side. In
our considered opinion, therefore, the contention of the appellant-
defendant that the agreement was executed in a foreign country or the
defendant was a resident of Ghaziabad (Uttar Pradesh) cannot take
away, exclude or oust the jurisdiction of Delhi Court in view of the
F averment made in the plaint that a part of cause of action had arisen
within the local limits of Delhi.
23. It was submitted by the learned counsel for the appellant that
once there is an agreement as to choice of Court or forum, the parties
G are bound by it. For the said proposition, our attention has been
invited to several decisions rendered by this Court. We do not intend
to burden our judgment on that point as the law is well settled and the
learned counsel for the respondent-Company has not disputed the
proposition. What was contended was that Clause 18 does not take
H away the jurisdiction of a competent Court and the agreement did not
J.
LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 25
AND ANR. [THAKKER, J.]
exclude territorial jurisdiction of any Court. A
··i
24. Learned counsel for the appellant relied on a decision of this
Court in British India Steam Navigation Co. Ltd. v. Shanmughavilas
Cashew Industries & Ors., (1990) 3 SCC 481. In that case, the
plaintiff purchased from the defendant-Company raw cashew nuts which B
were shipped in a vessel chartered by the Company incorporated in
England. Clause 3 of the Bill of Lading dealt with jurisdiction of the
-~
Court. The said clause read as under:
3. JURISDICTION: The contract evidenced by this bill oflading
shall be governed by English law and disputes determined in c
England or, at the option of the Carrier, at the port of destination
according to English law to the exclusion of the jurisdiction of the
Courts of any other country.
25. Though the above clause made it clear that the dispute D
should be determined in England, this Court held that the objection as
j to territorial jurisdiction had been waived by the defendant. So far as
the law is concerned, it was held that proper law to govern the contract
was English law.
26. The learned counsel for the appellant submitted that the ratio E
laid down in British India Steam Navigation Co. applies to the case
on hand and the High Court of Delhi committed an error oflaw in not
upholding the objection of the defendant that Indian Court had no
jurisdiction to deal with the matter.
F
27. We are unable to agree. Clause 3, as extracted hereinabove,
clearly provided that the contract would be governed by English law.
The High Court was, therefore, right in observing that the case is not
relevant so far as the question raised in the present matter.
28. The counsel also referred to National Thermal Power G
Corporation v. Singer Company & Ors., (1992) 3 SCC 551. The
-~
parties in that case by an agreement had chosen the jurisdiction of one
Court to the exclusion of the other. Likewise, they also agreed as to
the applicability oflaw. In the light of the fact situation, the Court held
H
-~

26 SUPREME COURT REPORTS [2007] 13 (Addl.) S.C.R.

A that the parties are bound by such Agreement and it has to approach
\,.---
a Court in consonance with the agreement. This judgment also does
not help the appellant in the instant case.
29. Our attention was also invited to Technip S.A. v. S.MS.
B Holding (P) Ltd. & Ors., (2005) 5 SCC 465. Even that case. also
does not help the appellant. What was held there was as to the law
applicable to the dispute and not the territorial jurisdiction of the Court.
On the contrary, para 23 of the said decision goes to show that
territorial jurisdiction of the Court and applicability of law are two
c different things and even if a matter is decided in the country other than
the country where the agreement has been executed, the law which
would apply would be the law agreed by the parties.
30. The Court stated;

D "23. The relationship of Technip to Cojlexip whether one of
control or not is really a question of their status. The
applicable law would t11erefore be the law of their domicil,
namely, French law. Having determined their status according
to French Law, the next question as to their obligation under
E the Indian Law vis a vis SEAMEC would have to be governed
exclusively by Indian law (in this case the Act and the
Regulations). SATs error lay in not differentiating between
the two issues of status and the obligation by reason of the
status and in seeking to cover both under a single system of
F law." ,__
(emphasis supplied)
31. In the case on hand, we have referred to the relevant clauses
of the agreement. Clause i 8 provides for applicability of law and it
specifically declares that the terms and conditions of the agreement
G shall be interpreted in accordance with 'the laws of Hong Kong Special
Administrative Region'. That, in our judgment, does not mean that a
suit can be instituted only in Hong Kong and not in any other country.
Territorial jurisdiction of a Court, when the plaintiff intends to invoke
jurisdiction of any Court in India, has to be ascertained on the basis .
H
LAXMAN PRASAD v. PRODIGY ELECTRONICS LTD. 27
AND ANR. [THAKKER, J.]
of the principles laid down in the Code of Civil Procedure. Since a A
part of' cause of action' has arisen within the local limits of Delhi as
averred in the plaint by the plaintiff Company, the question has to be
considered on the basis of such averment. Since it is alleged that the
appellant-defendant had committed breach of agreement by using trade
mark/trade name in Trade Fair, 2005 in Delhi, a part of cause of action B
has arisen in Delhi. The plaintiff-Company, in the circumstances, could
have filed a suit in Delhi. So far as applicability oflaw is concerned,
obviously as and when the suit will come up for hearing, the Court will
interpret the clause and take an appropriate decision in accordance
with law. It has, however, nothing to do with the local limits of the C
jurisdiction of the Court. The High Court, in our opinion, was right in
rejecting the application and in overruling preliminary objection. Since
prima facie the plaint disclosed a cause of action as also territorial
jurisdiction of the Court, the High Court rightly rejected both the
contentions and no error was committed by it in not rejecting plaint, D
nor returning it for presentation to proper Court. 'Applicability of
Hong Kong Law', 'entering into an agreement in Hong Kong' or
'defendant residing in Ghaziabad (Uttar Pradesh)' or any of them does
not take away the jurisdiction of Delhi Court since a 'cause of action'
at least in part, can be said to have arisen in Delhi. We, therefore, see E
no substance in the contention of the defendant- appellant.
32. So far as imposition of costs is concerned, normally it is in
the discretion of the Court. When the Court, in the light of the facts
),
before it, satisfied that the defendant wanted to delay the proceedings F
and ordered him to pay costs ofRs.4,000/-, it would not be appropriate
to interfere with that part of the order.
33. For the foregoing reasons, the appeal deserves to be dismiss¢
and is accordingly dismissed. However, in the facts and circumstance G
of the case, there shall be no order as to costs.
D.G Appeal Dismissed

H