The High Court of Bombay at Goa, presided over by Justice Nivedita P. Mehta, has ruled that an exclusive jurisdiction clause in a commercial agreement is binding even for non-contractual claims, such as defamation, if the claim is “inextricably linked” to the contract. The Court dismissed an appeal filed by Chowgule Industries Private Limited against an order of the Civil Judge, Senior Division, Vasco, which returned a defamation suit for presentation before the competent court in Delhi, upholding the jurisdiction clause in the agreement with credit rating agency ICRA Limited.
Background of the Case: The appellant, Chowgule Industries Private Limited, a company with its registered office in Vasco da Gama, Goa, entered into a Multi-Product Rating Agreement (MPRA) with the respondent, ICRA Limited, on December 15, 2020. Pursuant to this agreement, ICRA published three credit rating reports on May 31, June 7, and July 15, 2024.
Chowgule Industries alleged that these reports, accessible on ICRA’s website, contained “incorrect, misleading, and defamatory statements” concerning its group affiliations, shareholdings, and financial transparency. The company claimed these publications caused significant harm to its reputation, creditworthiness, and commercial relationships with banks and financial institutions operating within Vasco, Goa.
After a legal notice seeking retraction was not fully complied with, Chowgule Industries filed Special Civil Suit No. 8/2025 before the Civil Judge, Senior Division at Vasco-da-Gama, seeking damages for defamation and a permanent injunction. In response, ICRA filed an application under Order VII Rule 10 of the Code of Civil Procedure, 1908, requesting the court to return the plaint due to a lack of territorial jurisdiction, citing an exclusive jurisdiction clause in the MPRA that designated the courts at Delhi as the sole venue for disputes.
On April 25, 2025, the trial court allowed ICRA’s application, holding that the dispute emanated from the MPRA and was therefore subject to the exclusive jurisdiction clause. Chowgule Industries subsequently appealed this order before the High Court of Bombay at Goa.
Arguments of the Parties:
Appellant’s Submissions (Chowgule Industries): Mr. Shivan Desai, counsel for the appellant, argued that the trial court erred because the suit was founded on defamation, a tortious claim independent of any contractual relationship. He contended that jurisdiction for such a suit is governed by Section 19 of the Code of Civil Procedure, which permits filing where the wrongful act was committed or where its consequences ensued—in this case, Vasco, Goa, where the appellant’s reputation was harmed. It was submitted that a forum selection clause in a contract cannot override statutory provisions governing tortious liability. The appellant’s counsel asserted that the claim did not pertain to a breach of the MPRA but to the publication of defamatory material, which was a “unilateral and discretionary” act by the respondent.
Respondent’s Submissions (ICRA Limited): Mr. Prashant Pakhiddey, representing the respondent, argued that the parties had contractually conferred exclusive jurisdiction upon the courts at Delhi for all disputes, “whether such disputes are contractual or non-contractual in nature.” He contended that the credit rating reports were prepared and disseminated pursuant to the MPRA, making the alleged tort “intrinsically connected to the performance of the contractual duties.”
Counsel drew attention to Clause T(IV) of the MPRA, which subjected the agreement and “any contractual or non-contractual obligations arising from or connected to it” to the exclusive jurisdiction of Delhi courts. Furthermore, Clause O (Limitation of Liability) explicitly contemplated liability in “contract, tort (including negligence), breach of statutory duty, or otherwise,” demonstrating that the parties had foreseen the possibility of tortious claims and agreed on the forum for their adjudication.
High Court’s Analysis and Decision: Justice Nivedita P. Mehta, upon a careful consideration of the pleadings and submissions, found the appellant’s arguments unsustainable. The Court held that “the entire cause of action pleaded by the Appellant emanates from the contractual relationship established under the MPRA.” It observed that the alleged wrongful act—the issuance of credit rating reports—was “inextricably linked to and arises directly from the contractual obligations undertaken by the Respondent.”
The judgment emphasized the express and unambiguous nature of the exclusive jurisdiction clause in the MPRA. The Court noted that Clause T(IV) and Clause O collectively demonstrated the parties’ clear intent to govern all disputes, including tortious ones, under the jurisdiction of Delhi courts.
The Court found that the Supreme Court’s decision in Rakesh Kumar Verma v. HDFC Bank Ltd. was “squarely applicable” and extensively quoted from it. Citing the precedent set in Swastik Gases (P) Ltd. v. Indian Oil Corporation Ltd., the Court reiterated the principle: “By making a provision that the agreement is subject to the jurisdiction of the courts at Kolkata, the parties have impliedly excluded the jurisdiction of other courts.”
The High Court distinguished the cases cited by the appellant, stating they did not address situations where parties had entered into an agreement with an explicit exclusive jurisdiction clause. Addressing the definition of tort from Jaya Laxmi Salt Works (P) Ltd. Vs. State of Gujarat, the Court reasoned that for an act to be a tort, it must be “not exclusively the breach of a contract.” In this case, the respondent’s actions were a “contractually contemplated and governed activity,” making the exclusive jurisdiction clause prevail.
Finding no infirmity in the trial court’s order, the High Court concluded that the parties had, with full understanding, agreed to confer exclusive jurisdiction upon the courts at Delhi. It held that the appellant “cannot be permitted to resile from such a clause merely by characterising the grievance as one in tort.”
The appeal was dismissed, and the appellant was granted liberty to present the plaint before the appropriate court in Delhi.
