Safiya Malik

The High Court of Karnataka, Division Bench of Chief Justice Vibhu Bakhru and Justice C.M. Poonacha set aside the interim injunction granted by the Bengaluru Commercial Court in a dispute arising from a Debenture Trust Deed (DTD). The Court held that when parties to a contract have expressly agreed to confer exclusive jurisdiction on a particular court, a suit filed elsewhere is not maintainable even if part of the cause of action arises within that other jurisdiction. Observing that the DTD vested exclusive jurisdiction in the courts at Mumbai, the Bench concluded that the Bengaluru Commercial Court lacked authority to entertain the matter and vacated its interim orders.

The appeal was filed by Baboon Investments Holding B.V., a Netherlands-based company, challenging an order dated April 25, 2024, passed by the LXXXII Additional City Civil and Sessions Judge (Commercial Court), Bengaluru. The respondent, Atria Brindavan Power Private Limited, had instituted a commercial suit seeking multiple declaratory and injunctive reliefs concerning the Debenture Trust Deed (DTD) executed on December 5, 2016. The plaintiff alleged that the Deed of Assignment dated February 13, 2024, executed between certain defendants, was void and that subsequent communications by the assignees were invalid in law.

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Atria Brindavan Power sought, inter alia, a declaration that the securities created under the DTD stood discharged, that the defendant’s assignment rights were void, and injunctions restraining the defendants from exercising any rights, title, or interests under the said DTD. The appellant, Baboon Investments, who was arrayed as Defendant No. 2, contended that the Commercial Court in Bengaluru lacked territorial jurisdiction to entertain the matter since Clause 72 of the DTD expressly conferred exclusive jurisdiction upon courts and tribunals in Mumbai, Maharashtra.

Despite this clause, the Commercial Court had prima facie held that part of the cause of action had arisen in Bengaluru and that one of the defendants, Omkara Asset Reconstruction Private Limited, was not a party to the DTD, thereby assuming jurisdiction. Baboon Investments, aggrieved by this finding, approached the High Court under Section 13(1A) of the Commercial Courts Act, 2015, seeking to set aside the impugned order and vacate the injunction.

The Bench noted: “As is apparent from the plain language of paragraph 72.1 of the DTD, the parties to the DTD had agreed that the Courts and Tribunals in Mumbai, Maharashtra shall have the exclusive jurisdiction to settle any disputes which may arise out of or in connection with the debenture documents.”

Citing the Supreme Court’s decision in Renusagar Power Co. Ltd. v. General Electric Co. (1984) 4 SCC 679, the Court observed that the expressions “arising out of” or “in connection with” must be interpreted broadly. The Bench quoted the Supreme Court’s observation that a claim is considered to arise out of a contract if recourse to the contract is necessary to determine whether such a claim is justified or otherwise. Applying this principle, the Bench held that the reliefs sought in the suit, including declarations on assignment and securities under the DTD, were directly and inextricably connected with the Debenture Trust Deed and, therefore, fell within the ambit of its jurisdiction clause.

The Bench referred to the Supreme Court’s judgment in Swastik Gases (P) Ltd. v. Indian Oil Corporation Ltd. (2013) 9 SCC 32, stating: “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.” Applying this rationale, the Bench found that the agreement between Baboon Investments and Atria Brindavan Power effectively excluded the jurisdiction of any court other than those in Mumbai.

The Court rejected the Commercial Court’s reasoning that Defendant No. 3 not being a signatory to the DTD justified local jurisdiction, noting that Defendant No. 3 claimed rights only through Defendant No. 1, a party to the DTD. Hence, the jurisdiction clause bound all derivative claims. The Bench concluded that the Commercial Court’s finding on jurisdiction was “unsustainable” and that the injunction granted was “founded on an ex facie erroneous finding.”

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The judgment stated: “Concededly, in view of the above, the interim orders granted by the learned Commercial Court cannot be sustained; they are founded on an ex facie on an erroneous finding – although on a prima facie basis – that the Commercial Court would have jurisdiction to entertain the suit.”

“In view of our conclusion and Mr Nandkumar’s statement, we do not consider apposite to examine other issues relating to merits of the dispute. We clarify that all rights and contentions of the parties on merits are reserved. We, accordingly, allow the present appeal and set aside the impugned order for the reasons as set out above. The parties are left to bear their own costs. Pending application also stands disposed of.”

Advocates Representing the Parties:
For the Appellant: Sri. Tamarra Sequeira, Advocate.
For the Respondents: Sri. C.K. Nandakumar, Senior Advocate, assisted by Ms. Ashwini Patil and Sri. Ajay J. Nandalike; Sri. Udaya Holla, Senior Advocate, assisted by Sri. Avinash Balakrishna; Sri. Srinivasan V. Raghavan, Senior Advocate, assisted by Sri. Vinay Kuttappa; Sri. S. Ramakrishnan, Advocate.

Case Title: Baboon Investments Holding B.V. v. Atria Brindavan Power Private Limited & Others
Neutral Citation: 2025: KHC:40885-DB
Case Number: COMAP No. 209 of 2024
Bench: Chief Justice Justice Vibhu Bakhru; Justice C.M. Poonacha