Conflict of Laws

Upendra Baxi*

I. INTRODUCTION

THE YEAR under review has failed to produce any case-law on the
choice of law aspects of the conflicts law; but, as usual, some
interesting decisions on foreign judgments, jurisdiction prorogation,
and domicile are available. The year 1974 already promises a more
exciting outcropping of conflicts cases;1 but, for the present, one has to
be content with the modest fare.

The conflicts case-law manifests continuities other than those of the

modesty of reach and similarity of theme. Unhappily, we have to note
as we did in 1967, that the Bar and the Bench have been generally
immune to what Cheshire called "the fatal fascination" of the subject.
Owing perhaps to a lack of suitable text-book on Indian conflict law
and inadequate indexing of cases in the leading law reports,* many
useful decisions over the past quarter century given by Indian courts
(and juristic commentation thereon) are not even referred to. 3 English

*B.A. (Gujarat); LL.M. (Bombay); LL.M., J.S.D. (Berkeley, California), Pro-

fessor of Law, Delhi University.
1. See Shankaran v. Lakshmi, A.LR. 1974 S.C. 1764 {per Mathew J.) concerning
the scope of defence of fraud in recognition of foreign judgments; and Teja Singh v.
Satya (unreported) overruling the recognition of a Nevada divorce decree in Punjab
and Haryana High Court {per Chandrachud J.)
2. Cases under the head "Private International Law" are indexed rarely in
All India Reports. One has therefore to go very carefully through the other rubrics
of the Reports to garner cases on domicile, jurisdiction, prorogation, etc.
3. See the decision in F.E. Steamship Line v. Union of India, infra note 25 et seq
(and the text accompanying) for a recent example of this tendency. No landmark
pro-prorogation Indian "precedents" are even referred to.
This vice (if we may so call it, with respect) affects most Indian courts. Writings
of Indian scholars on the subject seem to have proved elusive both for the Bench
and the Bar. Scholars, even in this area where there is no abundance of juristic
commentation, of course feel somewhat discouraged when their efforts are not per-
ceived as relevant at the moment of judicial decision. The point involved here is
not so much a claim to personal recognition for the academic lawyei, although this
too is important for the blossoming of a tradition of legal scholarship, but it is
rather that decision-makers should have available to them juristic critiques of their
work which could probably lead to rational development of law.

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decisions are being referred to, but only through headnotes or through
summaries of the main principles afforded in leading, and authoritative,
English treatises on conflict of laws.4 This, of course, remains unjustifia-
ble, however plausible the arguments of excessive workload of the appe-
llate courts may be.

The real problem seems to be that there are very few lawyers interes-
ted or competent in the subject; and, what is worse, the number of
academic specialists in the subject is pitifully small. The latter has the
consequence far more fateful than the present professional illiteracy of
the Bar. Unless a whole generation of students is trained soundly in the
substantive domain of conflicts law, the development of conflicts juris-
prudence in this country will continue to be retarded. Law schools in
India may well consider making instruction in the subject with adequate
reference to Indian materials compulsory, rather than optional. Of course,
similar demands can be made for other subjects; but it remains incon-
trovertible that conflict of laws is among the least developed subjects in
, India. To let an entire field of law, affecting human lives in multifarious
ways, virtually unattended5 is a default for which law teachers must
remain accountable to lawmen specially and the community generally.

II. DOMICILE

In the year under review, questions involving determination of

domicile have arisen, as before, in the context of the citizenship consti-
tutional provisions. However, two decisions of the Allahabad High
Court bring into sharp focus some hitherto unperceived complexities of
article 7 of the Constitution, even though they do not significantly add
to the already richly developed dichotomy between "domicile" and
"migration" in the constitutional context.6 The other decision of the
Calcutta High Court, however, does not invite us to tread into the
thicket of the citizenship provisions; but it beckons us to the interesting

4. For facile, and totally misleading, reliance on headnotes see Badat v. East
India Co., A.I.R. 1964 S.C. 538 and the critique by U. Baxi, Allepey Turmeric Fin-
gers and Arbitral Awards : Spices in the Conflict of Laws 10 J.I.L.L 150 at 163-65
(1968). And for judicial overreliance on case-summaries in English text-books see
infra note 36 et seq.
5. Virtually unattended not, however, wholly so. See for the bibiliography of
available literature footnotes 6 and 40 in U. Baxi, Conflict of Laws IV A.S.I.L.
227 at 229, 257 (1967-68).
6. Compare Shanno Devi v. Mangaidas Sain, A.LR. 1961 S.C. 58 with Kulathil
MammuY. State of Kerala, A.I R. 1966 S.C. 1614 and see Baxi, supra note 4 at
232-43.

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Vol. IX] Conflict of Laws 509

pathways of conflict of laws. We study the latter decision first.

Domicile and the Hindu Marriage Act, 1955

In Prem Singh v. Dulari Bai1 some interesting questions were raised,

and answered, (albeit by way of obiter) by the Calcutta High Court,
concerning the scope of the domiciliary requirement in sections 1 and 2
of the Hindu Marriage Act, 1955. Under section 2(1) (a) and (fe).the
Act applies to "any person" who is "a Hindu by religion, in any of its
forms and developments" and also to any person who is a "Buddhist,
Jaina or Sikh by religion". In addition, section 2(1) (c) also extends
the application of the Act to "any other person domiciled in the territo-
ries to which this Act extends" who is not a "Muslim, Christian, Parsi
or Jew by religion...".8 The Act (by section 1) extends to the "whole of
India except the State of Jammu and Kashmir" and also "to Hindus
domiciled in the territories to which this Act extends who are outside the
said territories".9 The trial court ruled in Dulari Bai that the appellant,
a Nepali Gorkha, was not a Hindu under section 2(1) (a) and (b), and
must be proved to have acquired an Indian domicile in order to attract
the application of the provisions of the Act.10 The trial court held that
Prem Singh, having not obtained a domicile of choice in India, could
not sue for restitution of conjugal rights under the Act.

The Calcutta High Court reversed the decision holding that "for the
purpose of the application of the Hindu Marriage Act one need not

7. A.LR. 1973 Cal. 425.

8. The Hindu Marriage Act, 1955, s. 2 :
(1) This Act applies :
{a) to any person who is a Hindu by religon in any of its forms or
developments including a Vaishanav, a Lingayat or a follower of the
Brahmo, Prarthana or Arya Samaj,
(b) to any person who is a Buddhist, Jaina or Sikh by religion, and
{c) to any other person domiciled in the territories to which this
Act extends who is not a Muslim, Christian, Parsi or Jew by religion, unless
it is proved that any such person would not have been governed by the
Hindu Law or by any custom or usage as part of that law in respect of any
of the matters dealt with herein if this Act had not been passed.
9. The Hindu Marriage Act, 1955, s. 1 :
(1) This Act may be called the Hindu r Marriage Act, 1955.
(2) It extends to the whole of India except the State of Jammu and
Kashmir and applies also to Hindu domiciled in the territories to which
this Act extends who are outside the said territories.
JO. A.I.R, 1973 Cal. 425,426r

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necessarily prove that he has either a domicile of origin or of choice in

India".11 Section 2(1) (a) and (6), according to the court, contemplated
"intra-territorial" application of the Act; whereas section 2(1) (c)
contemplated an "extra territorial" application. For the former, the
application of the Act does not depend on any showing of the Indian
dpmicile, of origin or of choice. This is so, because the language of
section 2(1) (a) and (b) predicates the application of the Act to "any
person" of Hindu religion, broadly defined. The statute could well have
stipulated a requirement of Indian domicile but it has not done so. The
court rejects the appellant's contention that the domiciliary requirement
must be read into section 2(1) (a) and {b). Even so, the court imports
a requirement of "residence", in view of its determination that section
2(1) (a) and (b) provide for an "intra-territorial" operation of the Act.12
This requirement, it must be stressed, does not find express mention in
the statutory text either.

Section (2)(1) (c), on the other hand, does refer to "any other person
domiciled in the territories to which this Act extends". The court observes,
as regards this provision, that it

contemplates extra-territorial operation in the sense that the persons

domiciled in other territory to which this Act may extend, if gover-
ned by Hindu Law, even though residing outside the territory
would come within the purview of this Act.13

This formulation, as indeed the entire holding, is highly questionable.

In what sense can the Hindu Marriage Act, 1955, have an extra-territo-
rial application to persons domiciled outside India ? Surely, the Indian
Parliament is not superior to the island of Tobago whom Lord Ellenbo-
rough so memorably denied, in 1808, global competence in Buchanan v.
Rucker.u It is clear, even from a quick perusal of sections 1 and 2 of the
Act that the Indian Parliament had no grandiose ambitions to bind the
whole world. Section 1(2) specifically says that the Act

extends to the whole of India except the State of Jammu and

Kashmir and applies also to Hindus domiciled in the territories to
which this Act extends who are outside these territories (emphasis
added).

11. Id. at 426.

12. Id. at 427.
13. Id. at 426 (emphasis added).
14. (1808) 9 East 193,

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Vol. IX] Conflict of Laws 511

Clearly, the Act applies to Hindus domiciled in the territories (broadly

India) to which this Act extends. Indeed, if we read section 2 of the
Act in the light of section (1), it can be strongly argued that sub-clauses
(a) and (b) of section 2 apply only to those persons who are Hindus and
who are domiciled in the territories to which the Act applies. No doubt,
section 1 speaks of the "extension" of the Act while section 2 refers
to its "application". But at even the merely verbal level it should be
clear that the application of the Act must be construed within the area of
its extension, or its territorial domain ! The Calcutta High Court was
not self-evidently correct in rejecting the appellant's argument th3t the
words "any person" in clauses (l)(rf) and (b) of section 2 of the Act
necessarily imported a domiciliary requirement, although counsel for
the appellant seems to have presented the argument rather feebly by
reference merely to that requirement in section 2(1) (c).

Moreover, the latter section makes the Act applicable "to any other
person domiciled in the territory to which the Act extends" who is a
Hindu (not Muslim, Christian, Parsi or Jew)

unless it is proved that any such person would not have been
governed by the Hindu Law or by any custom or usage as a part
of that law in respect of any of the matter dealt with herein if this
Act had not been passed.

This section does not bear the interpretation proffered by the court.
Instead of its applying to "persons domiciled in other territories" and
"governed by Hindu Law", it applies to persons domiciled in India
(save Jammu and Kashmir) who are neither manifestly Hindus in the
broad sense of the Act nor Muslims, Christians, Parsis or Jews but who
are, by way of rebuttable presumption, governed by Hindu law or usage
or custom. The court itself seems (with respect) to appreciate this
limited import of section 2(1) (c) when it observes that the "GorKhas of
Nepal of persons like the appellant belonging to the Gorkha tribe must
be regarded normally as Hindus unless contrary is established by proper
evidence . ."1B

It may be thought that the suggested analysis of the extension and

applicability provisions of the Act has the consequence that the applica-
tion of the Act to all persons covered by it would have to depend on vexed
questions of the proof of domicile. It is notoriously difficult to prove
animus ei factum, hence the Act will be avoided in some cases altogether.

15. Supra note 10 at 427,

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All this is true; but this does not justify any conception of "extra-terri-
torial" reach of the Act. Moreover, under the rules of private inter-
national law, both lex loci celebrations and lex domicilii rules will operate
so as to enhance the ambit of the application of the Act. In fact, the
Act embodies the substance of the conflicts lex domicilii rule concerning
the essential validity of marriage. The Act applies thus to all other
persons who, being Hindus or governed by Hindu law, are domiciled in
Indian territories (save Jammu and Kashmir), even though they may be
"outside the said territories".

Fortunately, the appellant's case remained unaffected by what appears

to us to be an inaccurate judicial gl6ss on application of the Act. His ma-
rriage was solemnized in India "before the Act came into force" and was
valid by the simple operation of the rule lex loci celebrations, regardless
of the question of domicile. In the absence of the relevant evidence, he
was also presumed to be governed by the Hindu law under section 2(1) (c)
of the Act. Nevertheless, the views expressed by the Calcutta High
Court regarding any extra-territorial application of the Act need to be
suitably revised before too long, as they claim competence for Indian
legislatures and courts which the conflicts canons have, rightly, proscribed
as early as in 1808.

Domicile : the constitutional context

Articles 5 to 9 of the Indian Constitution provide for various ways in

which citizenship can be obtained and lost. Under article 5, a person
must have a "domicile" in India at the commencement of the Constitu-
tion and he or his parents must have been born in India or he must have
been "ordinarily resident for not less than five years immediately prece-
ding" the commencement' of the Constitution. A person who has
"migrated" from Pakistan before 19 July, 1948 and has been "ordinarily
resident" in India since then is deemed to be a citizen of India under
certain circumstances specified in article 6. Notwithstanding articles 5
and 6, a person who has migrated after 1 March, 1947 to Pakistan is not
to be deemed to be a citizen of India under article 7, unless he returns
to India under a permit for permanent return or resettlement.16

16. Arts. 5, 6 and 7 of the Indian Constitution read :

5. At the commencement of this Constitution, every person who has his
domicile in the territory of India(a) who was born in the territory of
India; or (b) either of whose parents was born in the territory of India ;
or (c) who has been ordinarily resident in the territory of India for
not less than five years immediately preceding such commencement,
shall be a citizen of Jndia.

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Vol. IX] Conflict of Laws 513

In State v. Wall Mohmmad17 and Fida Hussain v. Sr. Supdt. of Police18

a novel and interesting argument was raised, before the Allahabad High
Court, concerning the application of article 5. It was contended that it
came into operation immediately from the date of adoption of the
Constitution, declared in the Preamble to be 26 November 1949, by virtue
of article 394. The latter article declares that articles 5 to 9, among
others, "shall come into force at once" and "the remaining provisions
shall come into force on the twenty-sixth day of January, 1950, which day
is referred to in the Constitution as the commencement of this Constitu-
tion". Wali Mohmmad, the Indian-born respondent, had migrated to
Pakistan some time before 26 November, 1949 though after March 1,
1947; Fida Hussain, also an Indian-born petitioner, claimed that he
migrated to Pakistan in the last week of December, 1949. Counsel in
both cases contended that article 5, which came into operation on 26
November 1949 by virtue of article 394, operated so as to confer Indian
citizenship on their respective clients.

6. Notwithstanding anything in article 5, a person who has migrated to

the territory of India from the territory now included in Pakistan shall
be deemed to be a citizen of India at the commencement of this Consti-
tution if
{a) he or either of his parents or any of his grand-parents was born in
India as defined in the Government of India Act, 1935 (as originally
enacted); and
{b) (i) in the case where such person has so migrated before the nineteenth
day o.u July, 1948, he has been ordinarily resident in the territory
of India since the date of his migration, or
(ii) in the case where such person has so migrated on or after the
nineteenth day of July, 1948, he has been registered as a citizen of
India by an officer appointed in that behalf by the Government
of the Dominion of India before the commencement of this
Constitution in form and manner prescribed by that Government ;
Provided that no person shall be so registered unless he
has been resident in the territory of India for at least six months
immediately preceding the date of his application.
7. Notwithstanding anything in articles 5 and 6, a person who has after the
first day of March, 1947, migrated from the territory of India to the terri-
tory now included in Pakistan shall not be deemed to be a citizen of
India :
Provided that nothing in this article shall apply to a person who, after
having so migrated to the territory now included in Pakistan has returned to
the territory of India under a permit for resettlement or permanent return
issued by or under the authority of any law and every such person shall for
the purposes of clause {b) of article 6 be deemed to have migrated to the
territory of India after the nineteenth day of July, 1948.
17. A.I.R. 1973 All. 44 (hereafter called Wali Mohammad).
18. A.I.R. 1973 All. 364 (hereafter called Fida Hussain),

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Shukla J. (on his behalf and on behalf of Seth J.) negatived this conten-
tion in both the cases. In effect, the court decided in both the cases,
that article 5 in terms speaks of "rights which would accrue at the com-
mencement of the Constitution" which latter term, according to article
394, means 26 January 1950. Shukla J. concedes that articles 5 to 9,
among other articles, came into effect on 26 November 1949; but he feels
"that fact cannot be equated with the commencement of the Constitu-
tion".19 On this point, the court's reasoning is not so clear as one would
(with respect) wish it to be. No doubt, article 5 in terms confers citizen-
ship upon persons who were domiciled in the territory of India (and who
also fulfilled some other requirements) "at the commencement of the
Constitution". But if this latter phrase were to be construed to refer
only to 26 January 1950, what meaning can one give to the command of
article 394 that article 5, along with others, "shall come into force at
once ?" What, if anything, in article 5 is to come into force at once if
the term "commencement of this Constitution" is to compel us to make
26 January 1950 as the date decisive for the operation of article 5 ?

There can indeed be no doubt that there is a clear antinomy between

the two aspects of article 394. One commands immediate operation of
article 5 from 26 November, 1949; the other aspect, by necessary impli-
cation, relegates the effective operation of article 5 to 26 January 1950.
The Constitution-makers committed a mistake of draftsmanship. It is a
bad mistake; but one of the numerous mistakes in an over-written Consti-
tution, and perhaps also one not of any decisive significance. Nevertheless,
our courts should expose the manifest antinomy in article 398 and not
gloss over it by overrecourse to the non-obstante claues in articles 6 and
7. The words "notwithstanding Article 5" do not exonerate us from
understanding what article 5 means in all its aspects.

Counsel for Wali Mohmmad and Fida Hussain relied on the first
part of article 394 and made it basis to their whole argument. The
ingenious argument proceeded somewhat as follows (though this is not
how it appears to have been made or appreciated by the court) : (i) arti-
cles 5 and 7 came into operation on November 26, 1949, by virtue of the
first part of article 394; (ii) their clients were Indian citizens by virtue of
that part of article 394 as they were domiciled (and born) in India as on
26 November 1949; (iii) they left for Pakistan only after 26 November
1949; (iv) the persons migrating after 1 March 1947 who are not to be
deemed citizens of India are only those who were not domiciled in India
on 26 November 1949, the day when article 5 came into force.

19. Wali Mohammad 46 ; Fida Hussain 367, 368.

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Vol. IX] Conflict of Laws 515

This is an impressive argument; the Allahabad High Court (with

respect) answers it through the familiar constitutional orthodoxy concern-
ing the citizenship provisions. Article 7 begins with a non-obstante clause;
hence how could anything in article 5 be relevant to article 7? The court
reasons that if someone "migrates" to Pakistan after 1 March 1947, he
forfeits the Indian citizenship by the deeming aspect of article 7.20 The
court rejects altogether the relevance of Justice Das Gupta's hold-
ing in Shanno Devi v. Mangaldas Sain.21 The learned judge there held
that the requirement of ordinary residence (under article 6(b) for a per*
son migrating/ram Pakistan to India before 19 July 1948, meant that he
should be ordinarily resident in India from the period his migration
became complete to 26 November 1949.22 It was enough, however, for
the Allahabad High Court to say (as it did) that Shanno Devi was a deci-
sion on article 6; and that what was presently involved in the instant
cases is article 7.23

But does this orthodox way of distinguishing the two situations have
any reasoned basis? Both articles 6 and 7 open with non-obstante clauses.
Article 6 excludes article 5; article 7 excludes both articles 5 and 6. The
scope of the non-obstante clause in article 7 is thus undoubtedly wider;
but this aspect is scarcely so decisive as to make Shanno Devi reasoning
altogether and automatically irrelevant.

Rather, other similarities need judicial recognition. Both articles 6

and 7 came into force on 26 November 1949. Both depend for their
application on the range of the meaning given to the term "migration", and
its relationship with the notion "domicile" used in article 5, and in con-
flict of laws.24 Both articles are designed to cover the chaotic and cruel
situation of the partition of the sub-continent. Both articles take an
arbitrary cut-off date (19 July 1948 for article 6 and 1 March 1947 for
article 7) as the period of "migration". If for article 6 the relevant period
for reclaiming Indian citizenship, inter alia, is migration to India at any
point of time before 19 July 1948 coupled with ordinary residence up to
26 November 1949, why should the period for the loss of Indian citizen-
ship by migration to Pakistan be reckoned from any time after 1 March
1947 to 26 January 1950 ?

Surely (as noted before) articles 6 and 7 came into operation on 26

20. Ibid.
21. Wali Mohammad 47.
22. Wali Mohammad 46-47 ; Fida Hussain 366-67.
23. Supra note 21.
24. See supra note 6.

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 516 Annual Survey of Indian Law [1973

November 1949; not on 26 January 1950. Why then should the latter
date come into operation in the construction of relevant (and decisive)
time-periods in article 7 but not in article 6? This question is completely
independent of the perplexities of article 5 and the antinomies of article
394.

If, therefore, a person has migrated to Pakistan after 1 March 1947

and also after 26 November 1949, does article 7 act so as to cause a loss
of Indian citizenship otherwise available under the relevant provisions?
Shukla J. for the Allahabad High Court, seems to answer this question
in the affirmative and in the process ignores (with respect) the clear man-
date of article 394 that article 5 shall come into force at once on 26
November 1949. But this mandate cannot thus be ignored, specially in
the absence of compelling reasons of social policy or justice. At any
rate, it should not be ignored by a mere reference to the non-obstante
clause excluding article 5 in article 7 matters, for the simple reason that
that clause does not exclude the operation of article 394 itself. And, in
any event, the problematic relation between article 5 and 394 can only
be adequately appreciated after the determination of the non-applicability
article 7 is firmly made.24**

One can only hope that on so momentous a matter for the individuals
concerned as Indian citizenship the judiciary in the future will not give
to the questions here posed so short a shrift.

III. PROROGATION AND PROFESSIO JURIS STIPULATIONS

F.E.Steamship Line v. Union of India26 involved a typical question of both

professio juris (choice of law) and prorogation stipulation (choice of forum)
in a maritime transportation contract between the appellant Russian
navigation company and the Indian Union, the respondent. The dispute
concerned the shortage of delivery of urea carried from Japan by the
Soviet Shipping Company's freighter at Nagapattinam port. Despite the
express stipulation in the contract that "all claims and disputes arising

24a And this determination could scarcely be made by reference to article 5

as Shukla J. appears to do in Wali Mohammad at 46 where he observes: "Therefore,
Article 7 must be read in conjunction with Article 5 and must relate to the same
crucial date as the date of commencement of the Constitution". Clearly, article
7 does not use the expression "commencement of the Constitution"; equally clearly,
article 7 comes into effect at once {i.e., 26 November, 1949) by the express mandate
of article 394.
25. A.I.R. 1973 Mad. 169,

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Vol. IX] Conflict of Laws 517

under and in connection with this bill of lading shall be judged in the
U.S.S.R.", the Union of India filed in India a suit for recovery of
Rs. 4,792.62 for the alleged short delivery of the cargo. The trial judge
determined that Indian courts had jurisdiction bult referred the matter to
the city civil court, Madras, to find an authoritative answer to the question
as to where the cause of action arose under sections 19 and 20 of the
Civil Procedure Code, 1908.26 The latter coprt directed the case further
to the Division Bench for a "fresh look" upon the matter in view of
compelling and conflicting policy considerations.27

Kailasham J. of the city civil court, Madras, pointedly referred to

the decision by Veeraswami C.J. in Mjs B.S.S. Line v. The Minerals and
Metal Trading Corporation.2* In this case too, the contract of afreight-
ment was between the appellant Russian Shipping Company and an Indian
corporation; and there were contractual stipulations requiring all claims
and disputes to be "judged in U.S.S.R." in accordance with the Merchant
Shipping Code of that country. Veeraswami CJ. there formulated the
rule of decision thus:

The parties who make their choice of the Tribunal should normally
be bound by their contract. That should especially be the case as
to the choice of the law applicable to the contract. But it seems to
me that enforcement by the Indian courts of the choice of foreign
tribunal cannot be ruled as imperative, but it should depend on the
balance of convenience in particular circumstances and the
exigencies of justice.29

The learned Chief Justice further considered the view of Cheshire that
unless the court's discretion "in favour of allowing the English action to
continue is exercised sparingly, there is a danger that foreign merchants
will lose faith in the efficacy of arbitration clauses".30 But he felt that
the "prospect of the danger apprehended by Cheshire" should not out-
weigh a judicious and just exercise of the inherent discretion of the
court.81

26. Ibid.
27. Ibid.
28. 1970-71 Madras L.J. 548.
29. Id. at 549 (emphasis added).
30. Ibid; see G.C. Cheshire and P.M. North, Cheshire's Private International Law
206 n. (8th edn., 1970).
31. Ibid.

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518 Annual Survey of Indian Law [1973

No doubt, there were two related considerations stated cryptically,

which influenced the outcome of this case. The court notes innocuously
in the last paragraph of the judgment that first the petitioner Russian
company had "accredited agents in Madras" and second that the "claim
is so small that it would be unrealistic and unfair to drive the respondent
to resort to Russian Courts".32

In the instant case, the court upheld the professio juris stipulation;
accordingly, all "questions and disputes" could only be determined in
accordance with the provisions of the Merchant Shipping Code of the
U.S.S.R. The court found that there were no "sufficient" reasons to
"bail the Union of India out" of a deliberate undertaking concerning the
application of Soviet law.83

However, as regards the prorogation clause, the court preferred to

ignore the rule that the forum selection by parties must prevail in favour
of exceptions to it arising "not merely on balance of convenience" but
also from "considerations to meet the ends of justice in particular
cases".34 The court preferred to follow the guidelines formulated by
Brandon J. in The Eleftheria case35 for situations when the court may,
in its discretion, overrule the contractual prorogation clause. After
quoting these guidelines,86 the court observes that judicial enforcement
of prorogation clauses is not "invariably5' demanded by principles of

32. 1970-71 Madras L.J. 548 at 557.

33. A.I.R. 1973 Mad. 169.
34. Ibid.
35. In Re Eleftheria (P.D.A.) (1969) 2 W.L.R. 1073.
36. supra note 25 at 169-70. The guidelines are as follows:
In particular, but without prejudice to taking into account all the circumstances
of the particular case, the following matters, where they arise, may properly be
regarded:
(i) in what country the evidence on the issues of fact is situated, or more
readily available, and the effect of that on the relative convenience and
expense of trial as between the English and foreign courts;
(ii) whether the law of the foreign court applies, and if so, whether it differs
from English law in any material respects;
(iii) with what country either party is connected and how closely ;
(iv) whether the defendants genuinely desire trial in the foreign country, or are
only seeking procedural advantages;
(v) whether the plaintiffs would be prejudiced by having to sue in the foreign
court because they would (a) be deprived of security for that claim, (b)
be enable to enforce any judgment obtained, fc) be faced with a time-
bar not applicable in England, or (d) for political, racial, religious or other
reasons be unlikely to get a fair trial.

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Vol. IX] Conflict of Laws 3l0

conflict of laws.37 Nor, according to the court, that its views will
"necessarily impede or hamper international trade".38

The court also felt that the amount of Rs. 5,000 was too small to
justify the expense of "driving the Union of India to Russian Courts".39
The size of the amount claimed under a suit, and the expense of recover-
ing it in foreign courts, is "one of the circumstances which can legitimately
be taken into account in enforcing a foreign jurisdiction clause".40

This approach of the Madras High Court is, with respect, contrary to
the growing modern common law hospitality to prorogation clauses, also
shared abundantly by the Indian courts.41 What were the grounds in
this case justifying the departure from the prima facie rule that the con-
tractual stipulation concerning forum selection should be respected ? The
fact that courts have not always and invariably enforced the forum-
selection clause cannot indeed be a ground for not enforcing such a clause
in a particular case. This fact by itself only testifies to possibilities of
exceptions being made to the rule in proper situations. It does not and
cannot mean that the rule has, or should have, as many as frequent
exceptions as courts may desire.

Nor were most of the Eleftheria grounds present. The only Eleftheria
ground conceivably relevant in this case was the first: namely, "in what
country the evidence on issues of fact is situated, or more readily available,
and the effect of that on the relative convenience and expense of trial"
as between the Indian court and the foreign court.42 No doubt, the
relevant evidence of short delivery was available relatively easily at Naga-
pattinam port in India. But then such evidence is always available at the
port of delivery. The real question is: would the presentation of this
evidence in a Russian court cause so much inconvenience and expense
as to justify Indian courts assuming jurisdiction regardless of an express
contractual stipulation to the contrary?

The Eleftheria is instructive on this point. In this case, a large number

of parcels of Roumanian beechwood and plywood were shipped from the

37. Supra note 25 at 169-70.

38. Ibid.
39. Ibid.
40. Ibid.
41. See Baxi, Conflict of Laws IV A.S.I.L. 227 at 667-273 (1967-68) ;
Goodbye to Unification ? The Indian Supreme Court and the United Nations
Arbitration Convention 15 J.I.L.l. 353 esp. at 363 (1973).
42. See supra note 36.

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 520 Annual Survey of Indian Law [I9l3

Rumanian port of Galatz for carriage to London and Hull, aboard a

Greek freighter. There were, besides the professio juris ar\d prorogation
clauses (making Greek courts the forum), stipulations enabling the
shipowner to discharge the cargo at "the port of landing or any other
safe or convenient port in case the discharge was prevented by reason
of epidemics, quarantine, ice-labour troubles, labour obstructions, strikes,
lockouts, etc. Discharge to ports other than those designated as ports
of discharge in the above-specified situations was deemed to be *'due
fulfillment" of the contract.43 Owing to alleged labour troubles, only a
part of London cargo was discharged at London; the rest of London
cargo, and all of Hull cargo, was discharged at Rotterdam. When cargo-
owners instituted action in London, the Greek Shipping Company peti-
tioned for stay of suit.

Brandon J. recognized the fact that it will cause "substantial incon-

venience and expense" for the plaintiff cargo-owners to litigate the matter
in Athens. The evidence, moreover, would have to be interpreted to
Greek courts, enhancing further the substantial inconvenience and ex-
pense. Even so, Brandon J. did not think that the inconvenience and
expense would be in "any way overwhelming or insuperable".44 He took
judicial notice of the fact that many "commercial and Admiralty disputes
are tried or arbitrated in England every year, in which most or all of
evidence comes from abroad".45 On this and other related grounds, he
granted a stay of suit.

Compared to the magnitude of inconvenience and expense to the

plaintiff in this English case, it must be admitted that the inconvenience
and expense to the Union of India was relatively miniscule. In any
event, it was very far from being in "any way overwhelming and insuper-
able". Moreover, since the Madras High Court upheld the professio
juris stipulation, it ought to have recognized (as the Eleftheria court did)
that the foreign law applicable may be substantially and materially diffe-
rent from the lex fori. To ignore this very important aspect is to drain
all significance out of & prof essio juris stipulation; to affirm its validity in
such circumstances is merely a meaingless ritual.

The only other ground involved, which is original to the Madras High
Court's reasoning in the instant case, is simply the smallness of the
amount at issue. Is this at all a justifiable policy consideration? It is

43. In Re Eleftheria, (1969) 2 WX.R. 1073 at 1075.

44. Id. at 1081.
45. Ibid.

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Vol IX] Conflict of Laws 521

(with respect) a queer rule, unbenknown to the conflicts jurisprudence of

any civilized country, that a prorogation clause should depend for its
enforcement upon the size of the amount in dispute. Had the amount
involved in this case not been Rs. 4,792.62 but Rs. 10,000, would the
court have directed the Union of India to Russian courts ? If we are to
escape or minimize judicial arbitrariness in the application of this sort of
"criterion", we would need to look at the total value of the cargo before
we make judgments of "smallness" or "bigness". If the worth of the
cargo is, for example, Rs. 10,000 is Rs. 4,792.62 a small amount ?

The main point we wish to emphasize is simply that Indian courts

should not attempt to usurp the role of international traders. Whether
the amount is big or small, its convenient recovery by Indian nationals,
in the teeth of a prorogation clause reinforced by the professio juris clause,
must not be decisive for the Indian courts. If indeed the amount is small,
by any recokning, and parties chose not to fulfil their contractual obli-
gations by going to foreign tribunals or courts, the parties should forfeit
the amount as a business loss. It is certainly not for the courts to help
Indian traders to recover "small" amounts by entertaining actions,
against all principles of private international law and comity of nations.
International trade and commerce is a bilateral activity. If Indian traders
expect Russian courts to respect contractual stipulations obligating
Russian counterparts to Indian courts and Indian law, Indian courts
must also respect the corresponding expectations of the Russian traders.
Brandon J. stated the heart of the matter succinctly in Eleftheria when
he observed :

I think that it is essential that the court should give full weight to
the prima facie desirability of holding plaintiff's to their agreements.
In this connection, I think that the court must be careful not just to
pay lip service to the principle involved and then fail to give effect to
it because of a mere balance of convenience.

The Madras High Court has paid in the instant case only lip service to
the principle. It is evident that neither counsel nor the court studied
the Eleftheria decision carefully. Instead, regrettably, the court merely
followed the principles which Brandon J. formulated on the basis of
previous decisions,47 missing altogether the crucial fact that even their
application did not result in a refusal of the stay of the suit in that case.

46. Supra note 36 at 1080 (emphasis added).

47. And this too perhaps from a bald summation in a leading textbook like
Cheshire's : see supra note 30.

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522 Annual Survey of Indian Law [1973

The decision of the Calcutta High Court in Union of India v. N.M.

Bulgare*8 directing the Union to litigate its claim in Bulgarian courts in
accordance with a prorogation clause in the contract of affreightment
provides a welcome relief from (with respect) the insular and parochial
approach of the Madras High Court. In this case, the cargo was carried
on a Bulgarian vessel from the Bulgarian port of Bourgas to Vishakha-
patnam and Calcutta. On the basis of short delivery of cargo, the Union
of India suited for recovery of Rs. 1,76,425.78 and the Bulgarian
company moved for a stay of suit.

Recalling the salutary principles laid down by the same High Court
in the landmark case of Mjs Laxminarayan Ramniwas v. Lloyd Tristino...^
Justice S. Mukharji ruled that the parties must be held to their con-
tractual stipulation, unless some unfairness or injustice may actually
result in so doing. Where such a result was proved to the satisfaction
of the court, the court may allow the local action.50

Although the Calcutta High Court does not even refer to the Eleftheria
decision (unlike the Madras High court), it arrives at an outcome which
is substantially similar to the Eleftheria.61 The court rejects the argu-
ment that Calcutta is a more convenient judicial forum since the Bul-
garian company has its agents there (indeed all over the world) by obser-
ving that the plaintiff in this case is the Union of India, which too has
similar facilities for initiating suits in foreign fora. Underlying this
rejection of the Union's argument is the wise principle that the mere fact
that a foreign shipping company's agents are located within the jurisdic-
tion of an Indian court is not by itself at all decisive of the enforceability
of a prorogation clause. Merchant shipping operations^ require such
agencies at almost all major ports in the world. Shipping companies can-
not be fairly asked to wind up their agencies if their prorogation clauses
are to be judicially enforced.

More important is the court's rejection of the argument that the

necessary foreign exchange may not be easily available to litigate the matter
in Bulgarian courts. The Calcutta High court gives this argument the
short shrift that it so richly deserved. Surely, if parties stipulate a foreign

48. A.I.R. 1973 Cal. 526.

49. A.I.R. 1962 Cal. 601.
50. A.I.R. 1973 Cal. 526 at 528.
51. The court instead refers to an equally cosmopolitan decision of the U.S.
Supreme Court in Zapata Offshore Co. v, The "Bremert\ (1972) 2 Lloyd's Law
Reports 315 (per Burger CJ.).

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Vol. IX] Conflict of Laws 523

forum and chose foreign law to govern their transaction, they must be
assumed to have taken into consideration the foreign exchange aspects.
Besides, these are relevant not just to the Indian trader or corporation;
they are relevant to both the Indian and the foreign parties. We cannot
assume off hand that a Bulgarian corporation or any other foreign corpo-
ration would necessarily have the foreign exchange facilities which their
Indian counterparts do not have. Indeed, further, if there are govern-
mental restrictions, of a very drastic nature, on such use of foreign
exchange reserves one may even argue that the entire contract becomes
impossible of performance.

Without even hinting, let alone elaborating, at those and related

factors, Mukharji J. ruled: "There is no question of any difficulty of any
foreign exchange in case of the Government",62 and proceeded to clarify
that foreign exchange expenditure :

When this [Bulgaria] is a chosen forum between the parties. . . by

itself would not be a compelling circumstance. . . which can induce
this court to come to the conclusion that it would be unfair not
to stay the suit.53

The court qualifies this above observation by reference to the "facts and
circumstances of this case".64 Obviously, one fact and circumstance here
is that the Government of India is a party which pleads foreign exchange
difficulties. However, it is therefore, not to be assumed that the court
is thereby confining its observations to such a situation only.

It is obvious that there are other facts and circumstances in this case.
These are the professio juris and prorogation stipulations. In addition,
the court bears in view of the fact that the suit would not be time-barred
in the Bulgarian courts, if instituted within six months of the stay of the
Indian suit by the court. The Bulgarian Company agreed before the
court that it would not raise the question of limitation if the suit was so
filed before the Bulgarian court, although the suit was obviously time-
barred under the Hague rules.65

Moreover, the court decided to stay the action on the twin grounds
of the proper law of contract and the nature of dispute. The dispute

52. A.I.R. 1973 Cal. 526 at 529.

53. Ibid.
54. Ibid.
55. Ibid.

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524 Annual Survey of Indian Law [1973

being one of short shipment and/or short delivery, evidence was available
in Bulgaria and India. Part of the dispute, the court felt, had to be
decided by Bulgarian law and part by recourse to the Hague Rules.68 A
conflict between the two will need to be settled by judicial interpretation.

All these "facts and circumstances" led the court to order a stay of
the suit. But, above all, the court continually emphasizes the fact of forum-
selection by the parties and the pro-prorogation trend both in "inter-
national trade" and judicial attitudes in common law countries.67
Mukharji J. cites an American Supreme Court decision which unequivo-
cally affirmed that the

expansion of American business and industry will hardly be

encouraged if, notwithstanding solemn contracts, we insist on a
parochial concept that all disputes must be settled under our laws
and in our courts . . . . [I]n an era of expanding world trade and
commerce . . . . [we] cannot have trade and commerce in world
markets and international waters exclusively on our own terms,
governed by our laws and resolved in our courts.58

One must conclude with the hope that the Calcutta High Court's cos-
mpolitan approach, often endorsed by the Supreme Court, will eventually
oust all anti-prorogation tendencies in Indian courts.

IV. RECOGNITION AND ENFORCEMENT OF FOREIGN

JUDGMENTS AND NOTARIAL ACTS

Notarial acts

The only major decision under this rubric is Susma Bala v. Bibuti
Bhusan a Full Bench decision of the Calcutta ftigh Court. While the
fact-law complex was a peculiar one, the decision does transcend this
complex and is related to the conflict of laws principles.

In Susma Bala one basic question was whether an executory copy

(grosses' copy) of a notarial mortgage deed, equivalent to a judicial
decree under article 545 of the French Civil Code, can be regarded as a
foreign judgment or decree by the Indian courts and if so in what manner

56. Ibid.
57. Ibid.
58. See supra note 51.
59. A.I.R. 1973 Cal. 295.

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Vol. IX] Conflict of Laws 525

could it be enforced ? The grosses' copy of a notarial mortgage bond

did not require, in the French legal system, any further judicial interven-
tion; the holder had a substantive right to enforce it as if it was a subsi-
ting judgment, without obtaining any other judicial decree through a
suit. Under the Indian Civil Procedure Code, 1908, however, the
mortgagor has to file a suit for enforcing the mortgage and to obtain a
preliminary and final decree in order to sell the mortgaged property.

The facts thus stated represent a paradigm conflicts situation of recog-

nition of foreign decrees or notarial acts. However, it must be recalled that
the grosses copy-holder was an erstwhile resident of Chandernagore, a
French enclave, whose administration was de facto transferred to India on
May 2, 1950 followed by dejure transfer of sovereignty}n June 1952. The
notarial bond was executed on September 2, 1949 and sought to be
executed in 1956, by which time the Chandernagore (Merger) Act 1954
had extended all the laws of West Bengal to the annexed city and all
previous laws were repealed. However, the savings clauses in this Act,
and a regulation of 1952 preserved the right of the holders of notarial
bonds to execute it without recourse to suit.

S.C. Ghose J. (speaking for Mitra C.J., S. Mukherji and Janah JJ. and
himself) found that the right to execute the notarial mortgage bond is
"a substantive right" like the right of appeal, and is not a mere matter
"method or manner or process" of procedure.60 The right of the holder
is the right to "have the mortgaged property sold without filing a suit".61
The French notarial mortgage bond has, the learned judge admits, no
direct counterpart in Indian procedural law; but the latter does have an-
alogous situations where, for example, certificates issued under the Public
Demand Recovery Act or the Income Tax Act are "executed straight-
away".62 Ghose J. concedes at the same time the procedure in execution
is "a part of adjective law" and there is no "vested right in procedure".63
Accordingly, the notarial bond can be executed as a decree under the
Civil Procedure Code, 1908.

The concurring opinion of S.K. Daltta J. is better organized (with

respect) in fact and analysis than that of Ghose J. Datta J. altogether
avoids the terminology of "vested rights" and the dichotomy between

60. Id. at 297.

61. Ibid.
62. Ibid.
63. Ibid.

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526 Annual Survey of Indian Law [1973

"substance" and "procedure", a dichotomy often fatal to clear thinking.6*

Datta J. finds in a review of relevant regulations, Acts and a treaty that
the procedure for execution under French law "was no longer available
after? 1952" but he agrees with his bretheren that the notarial bonds "are
decrees as under the French law and to be deemed as such" for the
purposes of Indian law.65 The petition for execution having been drawn
in accordance with the provisions of order 21, rule 11, of the Civil
Procedure Code, 1908, and filed before a competent court, was therefore,
unimpeachable.

Another notable feature of Susma Bala is the rejection of the appellant's

contention that the notarial mortgage bond must, if treated as a foreign
decree, be enforced within three years; and, accordingly, the present bond
was time-barred for Indian courts. The relevant period of limitation
under the French Civil Procedure Code (article 2262) was thirty years.
The court held that when the Limitation Act, 1908, was extended to
Chandernagore the French law was expressly preserved in section 29(2)
of that Act.66

Recognition and enforcement of foreign judgments

Section 44-A of the Civil Procedure Code, 1908, as amended in 1952,

provides for the recognition and execution of money decrees of foreign
reciprocating territories in India. Under this provision, upon the filing
in an Indian district court of a certified copy of the decree of any of the
superior courts of the reciprocating territories, the decree "may be
executed in India as if it has been passed by the District Court". Recip-
rocating territories are so designated by the central government through
notification in the official Gazzette. Section 44-A(3) provides, inter alia,
that such a foreign decree may not be executed "if it is shown to the
satisfaction of the court that the decree falls within any of the exceptions
specified in clauses (a) to (f) of S.13" of the Civil Procedure Code.67

64. See, for provocative assaults on this dichotomy, W.W. Cook, The Logical
and Legal Bases of the Conflict of Laws 154-93 (1942) ; A. Ehrenzweig, A Treatise on
Conflict of Laws 331-33 (1962).
65. A.I.R. 1973 Cal. 295 at 302.
66. Id. at 302; see also for the position of foreign notarial bonds generally
InRe.K.K. Ray {Private) Ltd. A.I.R. 1967 Cal. 636, and the analysis in Baxi,
Conflict of Laws IV A.S.I.L. Ill at 249-51 (1967-68).
67. S. 44-A, Civil Procedure Code, 1908 : (as amended in 1952) :
44-A(l) Where a certified copy of a decree of any of the superior courts of
any reciprocating territory has been filed in a District court, the decree
may be executed in India as if it has been passed by the District court;

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Vol. IX] Conflict of Laws 527

In R.M. V. Vellachi Achi v. R.M.A.R. Chettiar** the problem of the

correlation between section 44-A and 13 of the Code arose for determi-
nation. The appellant-petitioner sought to execute the decree of
Rs. 3,90,432.01 obtained from the Singapore High Court at Cuddalore,
Tamil Nadu. The Singapore superior courts were declared to be the
courts of a 4'reciprocating territory" by a Gazzette notification on
September 1, 1955. The issues before the High Court were principally
whether the respondent had submitted to the jurisdiction of the Singapore
High Court and whether the decree did not fall within any of the
exceptions (outlined above) enumerated in section 13 (a) to ( / ) of the
Code.

The appellant, the respondent, and one N.V.S. Chettiar constituted

a firm doing moneylending business in Singapore since 1951. None of
the three partners resided outside India at any period, the business be-
ing carried on by an agent in Singapore under a general power of attorney
granted by the appellant. Thejp^rtnership was dissolved in 1962 but
during its subsistence the firm t ^ u g h its agents had filed several suits
in Singaporean courts for recovery of money. The respondent's main
argument was that the general power of attorney was granted by the
appellant in her individual capacity, and not on behalf of the firm.

The Madras High Court, accepting this contention, finds that the

(2) Together with the certified copy of the decree shall be filed a certificate
from such superior court stating the extent, if any, to which the decree had
been satisfied or adjusted and such certificate shall, for the purposes of
proceedings under this section, be conclusive proof of the extent of such
satisfaction or adjustment;
(3) The provisions of S. 47 shall as from the filing of the certified copy of the
decree apply to the proceedings of a District court, executing a decree
under this section, and the District court shall refuse execution of any
such decree, if it is shown to the satisfaction of the court that the decree
falls within any of the exceptions specified in clauses (a) to ( / ) of S. 13.
Explanation 1 : "Reciprocating territory" means any country or territory
outside India which the Central Government may, by notification in the Official
Gazettee, declare to be a reciprocating territory for the purposes of this section;
and 'superior courts' with reference to any such territory, means such courts
as may be specified in the said notification.
Explanation 2 : "Decree" with reference to a superior court means any decree
or judgment of such court under which a sum of money is payable, not being a
sum payable in respect of taxes or other charges of a like nature or in respect of
a fine or other penalty but shall in no case include an arbitration award, even
if such an award if enforceable as a decree or judgment,
$8, A.I.R. 1973 Mad. 14J,

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 528 Annual Survey of Indian Law [1973

general power of attorney was, in effect, filed by the appellant for herself;
and not in any representative capacity for the firm.69 Moreover, the
suits filed by the Singapore powerholder were, according to the court, not
"on behalf of the partnership".70 Accordingly, the court held that the
suit filed before the Singapore High Court "admittedly after the dissolu-
tion of partnership" and in the individual capacity of the appellant, did
not give rise to a decree of competent court which attracted section 44-A
of the Code.

If the court had rested on the fact-situation thus far presented the
present decision would have just been $n reiteration of familiar principles
of jurisdiction in the conflictual sense of the term. However, the court
does engage itself clearly with the question whether its decision would
have been different if the general power of attorney were executed clearly,
and the previous suits were also filed, on behalf of the firm. K Reddy
J. proceeds to say that even so the outcome would remain the same
because it was "the firm which submitted to the jurisdiction of the
Singapore court by filing suits and not the individuals constituting
partnership".71 To reinforce this conclusion the court cites the decision
in Guruswami v. Md. Khan Sahib,72 where despite the facts that the
British Indian defendant was a partner in a firm in Mysore State and
a cause of action arose out of the firm's business, the Bangalore court
(of the then native Indian State of Mysore) was held to be incompetent
as the defendant had not submitted to its jurisdiction.

The Chettiar court itself concedes that a foreign court will have
jurisdiction, where, inter alia "by an agreement a person has contracted
himself to submit himself to the forum in which the judgment is
obtained".73 If this is so, the question arises whether a partnership
agreement does not in itself, without more, by necessary implication, lead
to a submission to jurisdiction of the courts or the legal system under
the protection of which such an agreement is made. The Civil Procedure
Code recognizes that Indian courts have jurisdiction if "any of the
defendants .... at the time of commencement of suit...carries on business"
within Indian jurisdiction. Indian courts have also accepted the proposi-
tion that firms doing business in India by non-resident foreign partners
can be sued in India. Of course, the jurisdiction of Indian courts over

69. Id. at 143.

70. Ibid.
71. A.LR. 1973 Mad. 141,144.
72. A.I.R. 1933 Mad. 112,
73. Supra note 68 at 143,

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Vol. IX] Conflict of Laws 529

non-resident foreigners doing business in India through firms arises by

operation of law. But the underlying policy behind the statutory pro-
vision must, rationally speaking, be to protect Indian residents affected
by thefirm'soperations in India by giving them a day in Indian courts.
Nor, policywise, can it really be argued that an Indian court will be
forum bion conveniens (or inconvenient forum) since the firm's operations
are within the territory of India, deriving sustenance and protection
through the Indian legal system.

V. JURISDICTION

The decision in C. W. Corporation v. Central Bank of India74, by the Full

Bench of the Andhra Pradesh High Court is noteworthy, from the con-
flicts standpoint, as it critically examines the nexus between the "carrying
of business" formula used in section 20 of the Civil Procedure Code, 1908,
on the one hand and the use of the same formula in relation to corpora-
tions in Explanation II to that section on the other. The relevant part of
section 20 of the Civil Procedure Code provides that "every suit shall be
instituted in a Court within the locfal limits of whose jurisdiction :

(a) the defendant, or each of the defendant when there are more
than one, at the time of the commencement of the suit...carries
on business or

(b) any of tjhe defendants, if there is more than one, at the time
of the commencement of suit...carries on business...or

(c) the cause of action, wholly or in part, arises.

Explanation II to section 20 provides

A Corporation shall be deemed to carry on business at its sole or

principal office in India or in respect of any cause of action arising
at any place where it has also a subordinate office at such place.

In a complex dispute-situation where the Central Bank of India had

afforded credit facilities to an agriculturist on the strength of fallible
deposit receipts offoodgrains issued by the Central Warehousing Corpo-
ration of India, the appellant corporation raised the question whether the
Hyderabad/Secundarabad city civil court had any jurisdiction to try the

74. A.I.R. 1973 A.P, 387.

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530 Annual Survey of Indian Law [1973

suit under section 20 of the Civil Procedure Code. Since the corporation
was held not to have raised any objection before the city civil court, the
High Court (rightly) held that it had already submitted to its jurisdiction
through its having "waived" the right of objecting to the court's jurisdic-
tion.76 Nevertheless, the Full Bench (in what must amount, under the
traditional approaches to the concept of precedent, to a massive obiter)
proceeded to examine the appellant's main arguments.

The court held, rightly, that section 20 (a) of the Code had no appli-
cation in the instant case, since the first defendant (the agriculturist)
was resident in the Nizamabad District and was not amenable to the
jurisdiction of Hydarabad/Secundrabad courts.76 As far as the appli-
cability of clauses (b) and (c) was concerned, the appellant corporation
argued that it did not "carry on business" in Hyderabad, as by virtue of
Explanation II, it must be deemed to carry on business only at its "head
office" in Delhi, as it had no subordinate office anywhere else. It was
contended that the second part of Explanation II was accordingly not at
all attracted in the present case.77 The court skips over section 20 (b)
altogether but decides that section 20 (c) establishes jurisdiction of the
local courts, in view of the fact that the cause of action arose, at least
in part within their local limits of jurisdiction.78

What is important from the conflicts standpoint, however, is the

court's opinion on the nexus between the section and Explanation IL
The court altogether rejects the argument of the appellant, based on its
earlier unreported decision, that the Explanation is a "special rule" to
which the *'general rules" of section 20 must necessarily yield.79 In
other words, it rejects the argument that as regards corporations, the
jurisdiction of the courts flows from Explanation II, rather than from
clauses (a) to (c) of section 20 of the Code. The court categorically rules
that there is

no question of explanations being special provisions and the

clauses being general provisions, so that the principle that a
general rule has to give way to a special or particular rule could
be invoked.80

75. Id. at 391.

76. Id. at 391-92,
77. Id. at 390-391,
78. Id.SL 392.
79. Id. at 393.
0. Id at 394.

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Vol. JX] Conflict of Laws 511

This rejection is altogether too categorical. It is true, though trite,

to say that the function of an "explanation" is to "explain" the parent
section to which is attached. But it is equally true that the explanation
may in some cases operate so as to diminish (or augment) the scope of
the parent section. One should not be seduced by the term "explanation":
so innocuous is that description that it is easy to attach almost un-
consciously it a secondary, auxiliary role. However, the real question
always is not what is explained but how and why thm what is explained.
The law here often revolts against commonsense; but a return to common
sense is hardly achieved by a priori, rather than functional, conceptions
of "explanations" in a statute.

On this commonsensical basis, it is clear that Explanation II to section

20 is only an explanation to its clauses (a) and (b)9 and not to the whole
section. In this respect, the earlier decision of the Andhra Pradesh High
Court was clearly wrong. This is so because section 20(c) is hardly
explained in any manner by Explanation II. The cause of action, that
chamelon-coloured phenomenon, may occur regardless of where the
corporation "carries on its business", as indeed was acknowledged by
the parties and by the court in the present case.

But Explanation II is relevant for clauses (a) and (b) of section 20, in
that it prescribes where a corporation, as distinct from any other person,
can be said to "carry on business". The Explanation creates a fiction
to the effect that the corporation is deemed to "carry on business" where
it has its head and subsidiary offices, regardless of the fact that it actually
does or does not so do. All that a plaintiff need establish is that the
corporation has a Head Office : in fact, once this is established, it must
even follow that (as the court holds in the present case) it must have
subordinate offices, as otherwise the idea of a "head office" simply does
not make sense.8* Once the existence of the "head office" is proven, the
question usually is not whether it has any subordinate offices at all but
where it may be deemed to have subordinate offices.

Despite this, the court rules that the Explanation is

merely enacted to explain the words "carrying on business" in

81. Id. at 345. This approach bears out the hope expressed by this writer
that "a liberal interpretation of the term 'subordinate office* can go a long way
to further limit the scope of the section" and the rigour of what is "awkwardly
9harapterized as the 'head office' theory," See Baxi, supra note 6 at 26J,

www.ili.ac.in The Indian Law Institute

532 Annual Survey of Indian Law [173

relation to a corporation and is not meant to confer or take away

the jurisdiction which is possessed by a court having regard to
clauses (a), (b) and (c) of Section 20.82

In so far as section 20(c) is concerned this statement is unimpeachable;

but as regards clauses (a) and (), the Explanation does confer, through
the device of legal fiction, greater jurisdiction upon the courts than they
would haVe in its absence. The Explanation results in more than mere
explanation or more clearly description of the general provisions or
"stress upon a particular thing which would ordinarily not appear
clearly from the provisions of the section."88 To that extent, it also
functions as a "special rule" having a compelling precedence over t&
"general rules" of the section (clauses (a) and (b)).

This approach to the Explanation is reinforced by the manner

which the court arrives at the conclusion that the Central Warehousin
Corporation had the subordinate office within the jurisdiction of the loca
courts. It was argued that all that the appellants were doing within thus
jurisdiction was to maintain a warehouse to receive and store goods H
that they did not transact any "administrative business" within the ju**
dictional limits of Hyderabad/Secunderabad courts. Predictably, the
authority of Tutika Basvavaju v. Parry and Co.,84 Taylor v. Crowland &*?
and Coke Co.86 and Dicey On The Conflicts of Laws were invoked. Ttr
court, rightly, insisted that the "administrative business" doctrine is **tot
widely put to be accepted."87 It ruled that "the question whether there is
a subordinate office having regard to Explanation II to Section 20 is
always a pure question of fact to be determined upon a scrutiny of the
course of business and trading."88

82. Supra note 74 at 395.

83. Id. at 394.
84. (1904) I.L.R. 27 Mad. 315.
85. (1855) 11 Ex. I.
86. Dicey Conflict of Laws 155 (1896; ist edn),
87. Supra note 82 at 395.
?8. Supra note 82 at 394-5,

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