P.R Transport Agency V. Union of India (2005): Case Comment

P.R. TRANSPORT AGENCY V. UNION OF INDIA (2005): CASE COMMENT

Author: Pavitra M, School of Law, SASTRA Deemed University

Court: Allahabad High Court

Bench: S Harkauli, U Pandey

Decided on: 24TH September 2005

Citation: AIR 2006 All 23

FACTS:

In the case at hand, an e-auction was held by Bharat Coking Coal (hereinafter referred to as BCC for the allocation of coal. BCC accepted the bid of P.R. Transport Agency (hereinafter referred to as PRTA) for 4000 metric tons of coal at Rs. 1,625/- per metric tons from Dobari Colliery. On 19th July the acceptance letter of the bid was sent by e-mail to PRTA’S e-mail address.

A sum of Rs. 81.12 Lakhs was deposited by PRTA towards the cheque drawn in favour of BCC in terms of the ‘Terms of Allocation’. PRTA accepted the cheque but failed to deliver the coal.

An e-mail was sent by BCC canceling the cheque deposited by PRTA owing to technical issues and unavoidable reasons. However, the actual reason was that some other person’s bid was higher than that of PRTA. The higher bid was not considered due to a flaw in the software. PRTA approached the Hon’ble High Court of Allahabad, aggrieved by this letter.

ISSUES:

  1. Whether this court has territorial jurisdiction to entertain and hear this writ petition?
  2. Whether the ouster clause (No. 10.5) of the tender agreement has the effect of excluding the writ jurisdiction of this Court?

Answer to issue 1: The Court has jurisdiction to entertain and hear this petition since the communication was received at U.P. by PRTA. The place of contract is one of the determinative factors in deciding the territorial jurisdiction in an action based on breach of contract.

Answer to issue 2: A statute creates the jurisdiction of civil courts and it cannot be bestowed upon a court which lacks territorial or pecuniary or other jurisdiction just by the consent of the parties.

According to Section 28 of the Indian Contract Act, 1872, the parties cannot bar the jurisdiction of civil courts which has been created by a statute but where various civil court has been conferred with territorial jurisdiction by a statute then parties may limit itself to one or more such civil courts by agreement and this would not be violative of Section 28 of the Indian Contract Act. The Supreme Court held that courts which have jurisdiction under Section 20 (c) of Code of Civil Procedure, 1908 (hereinafter referred to as CPC) would not be ousted of their jurisdiction.

The most important question is whether the ouster clauses can bar the jurisdiction under Article 226 of the Indian Constitution. Sec 20 C.P.C. and Article 226 of the Constitution are similar to the extent that they permit the exercise of territorial jurisdiction where the cause of action arises in full or in part within their territories. The most important difference is that the High Court has the power to act suo moto, to issue writs, order or directions while the civil court cannot act suo moto. It was held that ouster clauses can oust a territorial jurisdiction of civil courts only and not of the High Court under Article 226 provided High Court has such power on account of part of cause of action arisen within its territorial jurisdiction.

SUBJECT:

Civil

LAW APPLIED:

Code of Civil Procedure, 1908 (CPC) – Section 20

Constitution of India – Article 226

Indian Contract Act, 1872 – Section 28

Information Technology Act, 2000 – Section 13(3)

JUDGEMENT:

The Court relied on Section 13(3) of the Information Technology Act and held that the mail sent was intended to be for the address where the Company was working i.e. Chamauli and Varanasi. Since both of the places fell within U.P., the High Court had jurisdiction as the partial cause of action arose within the High Court to exercise its jurisdiction. The Court also held that the territorial jurisdiction can be ousted only for civil courts and not that of a High Court, provided power is vested in the High Court on account of part of the cause of action having arisen within its territorial jurisdiction. Further, it was held that the Respondents (i.e. BCC) fall within the meaning of Article 12 of the Constitution of Indian and cancellation of the bid at a belated stage without hearing the Petitioner was held to be violative of the principles of natural justice. The Respondents were directed to handover the coal to the Petitioner in accordance with the bid.

COMMENT:

The working of trade in India has changed drastically with the evolution of technology. This has led to widening the scope of the law in e-contracts. For any commercial transactions, contracts are the most basic document. They are now executed in e-formats due to the growth in virtual space. The Indian Contract Act, 1872 and the Specific Relief Act, 1963 are the principal laws governing rights and obligations under the contracts for its specific performance. The rights and duties in a contract are decided by the parties themselves. E-Contract saves valuable time as the execution of the contract is in the virtual space. The Information Technology Act (“IT Act”) comes into play along with the principal Acts of contracts.

In the instant case, the dispute was regarding the jurisdiction of the court to entertain the case since the laws pertaining to offer and acceptance in a letter or telephonic agreement are different from the functioning of an E-contract.

The intent of the legislature and judiciary are clear that any legal act performed electronically or digitally would be valid as long as it contains the attributes of a legally valid contract as prescribed by the applicable laws.

The issue of jurisdiction was clarified by the Allahabad High Court where it was held that the jurisdiction is subject to the agreement between the parties and in the absence of an agreement Section 13 of the IT Act would apply. This Section provides that the cause of action would arise at the place where the originator has his place of business and where the addressee has his place of business.

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