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It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -
(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or
(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.
Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.
Q. ‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusive jurisdiction to decide the dispute. In the given situation, which of the following statements is true?
  • a)
    Clause 6 is void and Clause 7 is valid.
  • b)
    Clause 6 is valid and Clause 7 is void.
  • c)
    Both Clause 6 and Clause 7 are valid.
  • d)
    Both Clause 6 and Clause 7 are void.
Correct answer is option 'D'. Can you explain this answer?
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Explanation:

Validity of Clause 6 and Clause 7:
- Clause 6:
- Clause 6 of the agreement allows the parties to approach a court in either Ahmedabad or Ranchi, or opt for alternative dispute resolution within six months of entering into the contract.
- This clause is valid as both Ahmedabad and Ranchi are proper places of jurisdiction for the dispute.
- Clause 7:
- Clause 7 stipulates that after six months, the courts in Chennai would have exclusive jurisdiction to decide any disputes between the parties.
- This clause is invalid as it seeks to exclude the jurisdiction of all courts except for the courts in Chennai, which would be considered an agreement in restraint of legal proceedings.
- Such a clause contravenes Section 28 of the Indian Contract Act, 1872, and is therefore void.
Therefore, in the given situation, Clause 6 is valid, and Clause 7 is void. Both parties can approach courts in either Ahmedabad or Ranchi or opt for alternative dispute resolution within the first six months of entering into the contract. However, the provision giving exclusive jurisdiction to the courts in Chennai after six months is not valid as it seeks to exclude the jurisdiction of all other courts.
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The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Viru Sahastrabuddhi entered into an agreement with Ranchordas Chachand for supply of laboratory equipment. The agreement document had an arbitration clause stating that in a situation of dispute arising during the transaction, the parties would resort to arbitral proceedings before initiating an action in the court of law. The dispute arose between the parties regarding the untimely supply of the equipment and delayed payment made by Viru Sahastrabuddhi. Ranchordas filed a petition under the MSME Act stating that the facilitation council should adjudicate over the matter before proceeding to the arbitration. On the basis of reading of the passage, determine the maintainability of the pleadings made by Mr. Chachand.

The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Porwal Sales, the Buyer in this case, filed an application under section 11 of the Arbitration Act for appointment of an arbitral tribunal under an arbitration agreement between the parties. One of the objections raised by Flame Control Industries was that since it was a supplier within the meaning of the MSME Act, and in light of section 18(4), the jurisdiction of the court to entertain an application under section 11 of the Arbitration Act would be ousted. On the reading of the passage, determine whether the pleading of the Supplier would be entertained?

The primary objective of the Micro Small and Medium Enterprises Development Act, (“MSME Act”) is to facilitate the promotion and development and enhance the competitiveness of micro, small and medium enterprises. The MSME Act contains provisions for dispute resolution which are applicable to disputes involving suppliers. Section 18 of the MSME Act provides that any party with a dispute regarding amount due to a Supplier may make a reference to the MSME Facilitation Council (“Council”) for conciliation. If conciliation is unsuccessful, the Council may either take up the dispute itself for arbitration or refer the parties to an arbitral institution. Section 18(4) further provides that the Council or center providing the alternative dispute resolution services shall have jurisdiction to act as an arbitrator or conciliator in a dispute between the Supplier located within its jurisdiction and a buyer located anywhere in India.Section 18 became contentious when multiple cases arose where a party involved in a dispute with a Supplier filed proceedings in court challenging its applicability to their dispute in light of the arbitration agreement entered between the parties. In general, presence of an arbitration agreement would not invalidate arbitration proceedings that have been initiated under the MSME Act, since the MSME Act is a special statute which would override any agreement between the parties. This position was also upheld by the Supreme Court. However, in those cases, the Supplier had initiated proceedings under section 18 of the MSME Act before the Buyer invoked arbitration under the agreement. These cases did not deal with a scenario where the Buyer invoked arbitration under the agreement where there was no reference of a dispute to the Council. For such situations, it has been held that, if the intention of section 18(4) of the MSME Act was to create a legal bar on a party who has a contract with a Supplier under the MSME Act from invoking section 11 of the Arbitration Act, then the legislature would have expressly provided that the MSME Act overrides any arbitration agreement entered under the MSME Act. Section 18(4) would come into play only in cases where a reference was made to the Council under section 18(1). The Court noted the use of the word “may” in section 18(1) and held that in light of the language used, it cannot be said to be mandatory for a Buyer to refer its dispute to the Council under section 18. Since the jurisdiction of the Council had not yet been invoked, there was nothing barring the court from appointing an arbitrator in terms of the arbitration agreement between the parties.By making section 18 of the MSME Act directory, Buyers have been given a way out to circumvent the provisions under the MSME Act.Q. Which among the following is consistent with the objective of the MSME Act?

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It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer?
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It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? for CLAT 2024 is part of CLAT preparation. The Question and answers have been prepared according to the CLAT exam syllabus. Information about It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? covers all topics & solutions for CLAT 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer?.
Solutions for It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? in English & in Hindi are available as part of our courses for CLAT. Download more important topics, notes, lectures and mock test series for CLAT Exam by signing up for free.
Here you can find the meaning of It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer?, a detailed solution for It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? has been provided alongside types of It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? theory, EduRev gives you an ample number of questions to practice It is a well settled principle of contract law that parties cannot by contract exclude the jurisdiction of all courts. Such a contract would constitute an agreement in restraint of legal proceedings and contravene Section 28 of the Indian Contract Act, 1872. However, where parties to a contract confer jurisdiction on one amongst multiple courts having proper jurisdiction, to the exclusion of all other courts, the parties cannot be said to have ousted the jurisdiction of all courts. Such a contract is valid and will bind the parties to a civil action. Section 28. Agreements in restraint of legal proceedings, void-Every agreement, -(a) by which any party thereto is restricted absolutely from enforcing his rights under or in respect of any contract, by the usual legal proceedings in the ordinary tribunals, or which limits the time within which he may thus enforce his rights; or(b) which extinguishes the rights of any party thereto, or discharges any party thereto, from any liability, under or in respect of any contract on the expiry of a specified period so as to restrict any party from enforcing his rights, is void to the extent.Parties cannot by agreement confer jurisdiction on a court which lacks the jurisdiction to adjudicate. But where several courts would have jurisdiction to try the subject matter of the dispute, they can stipulate that a suit be brought exclusively before one of the several courts, to the exclusion of the others.Q.‘A’, a resident of Ahmedabad, and ‘B’, a resident of Ranchi, enter into an agreement for sale and supply of goods. The transaction takes place partly in Ahmedabad and partly in Ranchi. Clause 6 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ within six months of the entering into contr act, they can approach a court in either Ahmedabad or Ranchi (as both are proper places of jurisdiction), or take recourse to any alternative dispute resolution mechanism to settle the dispute. Clause 7 of the agreement stipulates that in the event of a dispute arising between ‘A’ and ‘B’ af ter the expiry of six months of entering into contract, the courts in Chennai would have exclusivejurisdiction to decide the dispute. In the given situation, which of the following statements is true?a)Clause 6 is void and Clause 7 is valid.b)Clause 6 is valid and Clause 7 is void.c)Both Clause 6 and Clause 7 are valid.d)Both Clause 6 and Clause 7 are void.Correct answer is option 'D'. Can you explain this answer? tests, examples and also practice CLAT tests.
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