Bombay High Court Upholds Exclusive Jurisdiction Clause in Contractual Dispute Between Chowgule Industries and ICRA Limited
Court affirms Delhi's jurisdiction in defamation suit linked to contractual obligations, dismisses appeal from Goa-based Chowgule Industries
In a significant ruling on September 19, 2025, the Bombay High Court's Goa Bench dismissed an appeal filed by Chowgule Industries Private Limited against ICRA Limited, reinforcing the enforceability of exclusive jurisdiction clauses in contractual agreements. The judgment, delivered by Justice Nivedita P. Mehta, concluded that the contractual stipulation conferring exclusive jurisdiction to Delhi courts was valid and applicable even in tort claims connected with the agreement.
Chowgule Industries, an automobile dealership based in Vasco Da Gama, Goa, had challenged the order of the Civil Judge Senior Division, Vasco, which allowed ICRA's application for returning the plaint due to lack of territorial jurisdiction. The dispute arose from Chowgule's allegations of defamation in credit rating reports published by ICRA pursuant to a Multi-Product Rating Agreement (MPRA) signed in December 2020.
The MPRA included a clause granting exclusive jurisdiction to Delhi courts for disputes arising out of or in connection with the agreement, whether contractual or non-contractual. Chowgule contended that the defamation claims were independent of the contract and should be adjudicated in Goa, where the alleged harm to its reputation occurred.
Justice Mehta, however, highlighted that the defamation claims were intrinsically linked to the performance of contractual obligations under the MPRA. The court noted that the exclusive jurisdiction clause was clear and binding, as it explicitly covered all disputes, including tortious claims like defamation, connected to the agreement.
The judgment cited precedents such as *Swastik Gases Pvt. Ltd. v. Indian Oil Corporation Ltd.* and *Rakesh Kumar Verma v. HDFC Bank Ltd.*, emphasizing the legal principle that parties can choose a forum with exclusive jurisdiction, provided the chosen court has competent authority. The court found the plaint deficient in establishing the territorial jurisdiction of the Vasco Court, thus validating the trial court's decision to return it for presentation in Delhi.
Chowgule Industries had argued that the defamation was a civil wrong independent of the contractual arrangement, but the court determined that the wrongful act stemmed from the contractual relationship itself. Consequently, the appeal was dismissed, and the company was directed to file its suit in Delhi.
This ruling underscores the judiciary's endorsement of jurisdictional clauses in commercial contracts, reinforcing the importance of clear contractual terms and the parties' intentions. It also highlights the legal precedence given to exclusive jurisdiction clauses when linked directly to contractual obligations, despite the nature of the claims.
Bottom Line:
Exclusive jurisdiction clause in a contract is enforceable and binding, even for tortious claims, if the tortious act is connected with contractual obligations.
Statutory provision(s): Code of Civil Procedure, 1908 Order VII Rule 10, Code of Civil Procedure, 1908 Section 19, Contract Act, 1872 Section 28
