Case Note & Summary
The dispute arose from a suit filed by the respondent in the Bombay High Court for recovery of commission in respect of certain share transactions at Agra. The appellant had wished to acquire shares in John Mills at Agra and engaged the respondent to negotiate the deal. The bargain was concluded and the appellant, along with another person, purchased the entire interest of Major A. U. John by an indenture of sale dated July 10, 1946. The respondent instituted Suit No. 3718 of 1947 on the original side of the Bombay High Court, claiming a commission of one lakh rupees. The plaint was filed after obtaining leave under clause 12 of the Letters Patent. The appellant, as defendant, raised a defence in his written statement that the suit was outside the territorial jurisdiction of the Bombay High Court because the entire cause of action had arisen at Agra. The suit was eventually referred to arbitration of Mr. W. E. Pereira, administrator of the estate of Major A. U. John. The arbitrator made an award in favour of the respondent for seventy-five thousand rupees as commission with interest at 6% per annum pendente lite. The Bombay High Court dismissed the appellant's petition to set aside the award as frivolous with costs, and a Division Bench dismissed the appeal on January 21, 1952. The award was incorporated in a decree of the High Court. The decree was transferred to the court of the District Judge, Agra, for execution. On February 5, 1952, execution proceedings were instituted before the Civil Judge, Agra, to realise approximately one lakh ten thousand rupees. The appellant, as judgment-debtor, filed an objection under sections 47 and 151 of the Code of Civil Procedure, challenging the jurisdiction of the Bombay High Court to entertain the suit and to make the award a decree. He contended that no part of the cause of action arose within the territorial jurisdiction of that court and therefore all proceedings were without jurisdiction. The High Court of Allahabad, in execution first appeal, rejected the objection, leading to the present appeal by certificate to the Supreme Court. The Supreme Court considered whether the objection to territorial jurisdiction could be raised in execution proceedings, whether consent/waiver can cure a defect of territorial jurisdiction, and whether the decree could be challenged on that ground. The Court held that an objection to territorial jurisdiction does not go to the competence of a court and can be waived. The appellant, by agreeing to refer the matter to arbitration through court, was deemed to have waived his objection. The validity of a decree can be challenged in execution proceedings only on the ground that the court which passed it was lacking in inherent jurisdiction in respect of the subject matter of the suit or over the parties to it. The Court distinguished Ledgard v. Bull, (1886) L.R. 13 I.A. 134, where the suit had been instituted in a court entirely lacking jurisdiction and consent could not cure that inherent lack. Here, the Bombay High Court was competent to try a suit of that kind, and the objection was only to territorial jurisdiction, which could be waived. The Court held that the appellant was estopped from challenging the jurisdiction of the Bombay High Court to entertain the suit and to make the reference to the arbitrator, and equally estopped from challenging the authority of the arbitrator to render the award. Accordingly, the appeal was dismissed with costs.
Headnote
A) Civil Procedure - Waiver of Territorial Jurisdiction - Objection to local jurisdiction does not go to competence and can be waived - Code of Civil Procedure, 1908, Section 21; Letters Patent (Bombay), Clause 12 - The appellant raised objection to Bombay High Court's territorial jurisdiction in written statement but later consented to arbitration through court; Held that by agreeing to reference through court, he waived the objection; Distinction drawn between inherent lack of jurisdiction and local jurisdiction; Section 21 CPC recognizes waiver (Pages 748-752). B) Execution Proceedings - Challenge to Decree - Decree can be challenged only on ground of inherent lack of jurisdiction - Code of Civil Procedure, 1908, Sections 47, 51; Letters Patent (Bombay), Clause 12 - The appellant filed objection under ss.47 and 151 CPC in execution, contending Bombay High Court lacked territorial jurisdiction and all proceedings null; Held that validity of decree cannot be challenged in execution on ground of territorial jurisdiction; Only inherent lack of jurisdiction over subject matter or parties can invalidate decree; Correctness of leave order under clause 12 cannot be agitated in execution (Pages 748-752). C) Estoppel - Consent to Arbitration - Party estopped from challenging court's jurisdiction and arbitrator's authority - Code of Civil Procedure, 1908, Section 21 - Having consented to arbitration through court, defendant deprived himself of right to question authority of court or arbitrator; Held appellant estopped from challenging Bombay High Court jurisdiction and arbitrator's award; Ledgard v. Bull, (1886) L.R. 13 I.A. 134 distinguished where consent cannot cure inherent lack of jurisdiction (Pages 751-752).
Issue of Consideration
Whether the appellant, who had raised objection to territorial jurisdiction in written statement but later agreed to arbitration through court, could challenge the Bombay High Court's jurisdiction to entertain the suit and make the award a decree in execution proceedings; Whether consent/waiver can cure defect of territorial jurisdiction; Whether validity of decree can be challenged in execution on ground of lack of territorial jurisdiction
Final Decision
The Supreme Court dismissed the appeal with costs, holding that the appellant had waived his objection to territorial jurisdiction by consenting to arbitration through court, and that the decree could not be challenged in execution on the ground of lack of territorial jurisdiction. The appellant was estopped from challenging the jurisdiction of the Bombay High Court and the arbitrator's authority. Distinguished Ledgard v. Bull.
Law Points
- Objection to territorial jurisdiction of a court does not go to competence and can be waived
- Consent to arbitration through court waives earlier objection to territorial jurisdiction
- Validity of decree can be challenged in execution only on ground of inherent lack of jurisdiction over subject-matter or parties
- Party estopped from challenging jurisdiction and arbitrator's authority after consent
- Section 21 CPC gives statutory recognition to waiver of local jurisdiction objection
