Introduction 

• This is a landmark judgment which lays down that parties cannot confer jurisdiction on a court that does not possess it under the Code. 
• The Judgment was delivered by a 2- judge consisting of Justice JC Shah and Justice KS Hegde. 

Facts  

• On 5^th October 1960, Hakam Singh (appellant) agreed to do construction work for Gammon India Ltd (respondent), a company registered under the Indian Companies Act with its principal place of business in Bombay. 
• Clause 12 of the contract provided for arbitration in case of disputes. 
• Clause 13 stipulated that regardless of where the work was executed, the contract would be deemed to have been entered into in Bombay, and only Bombay courts would have jurisdiction. 
• When disputes arose, Hakam Singh filed a petition in the Varanasi court seeking arbitration under Section 20 of the Arbitration Act, 1940. 
• The respondent objected, arguing that only Bombay courts had jurisdiction per Clause 13. 

Issues Involved  

• Whether the courts at Bombay alone had jurisdiction over the dispute? 
• Whether Explanation II to Section 20(a) of the Code of Civil Procedure, 1908 (CPC) refers only to government corporations or also to companies registered under the Indian Companies Act? 

Observation 

• The CPC applies to proceedings under the Arbitration Act by virtue of Section 41 of the Arbitration Act, 1940. 
• Under Section 20(a) of the CPC read with Explanation II, the respondent company was liable to be sued in Bombay where it had its principal place of business. 
• Parties cannot confer jurisdiction on a court that does not possess it under the Code. 
• However, where two or more courts have jurisdiction under the CPC, an agreement between parties to try disputes in one of those courts is valid and not contrary to public policy. 
• Such agreements do not contravene Section 28 of the Indian Contract Act, 1872. 
• The term "corporation" in Explanation II to Section 20 includes companies registered under the Indian Companies Act, not just statutory corporations. 
• Since Bombay courts had jurisdiction under the CPC (as respondent's principal office was there), the agreement that only Bombay courts would have jurisdiction was binding. 
• The appeal was dismissed with costs.

Conclusion 

• This is a landmark judgment which discusses Section 20 of CPC and exclusive jurisdiction clause.  
• The Court clarified that parties cannot confer jurisdiction on a court that does not possess it under the Code.