* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 2054/2012
Reserved on: 06.01.2015
Date of decision: 21.01.2015
IN THE MATTER OF:
BHARAT HEAVY ELECTRICALS LTD ..... Plaintiff
Through: Mr. A.S. Chandhiok, Sr. Advocate
with Mr. Prashant Mehta, Mr. Himanshu
Kapoor, Ms. Harleen Singh and Mr. Abhimanyu
Walia, Advocates
versus
PUBLIC POWER CORPORATION S.A & ORS ..... Defendants
Through: Mr. Sumeet Lall, Advocate with
Mr. Jayant Malik and Ms. Anu Goel, Advocates
for D-2.
Mr. R.P. Vats, Advocate for D-3/Bank.
CORAM
HON'BLE MS.JUSTICE HIMA KOHLI
HIMA KOHLI, J.
I.A. 16803/2014 (by the defendant No.2 u/O VII R 10 r/w Order VII R 11 CPC)
1. The present application has been filed by the defendant No.2 praying inter alia that the plaintiff/BHEL's plaint be returned/rejected on the ground that the present suit is barred by law in view of clause 20 of the General terms and conditions of the Contract dated 05.02.2009 that stipulates that the courts in Athens would have the CS(OS) 2054/2012 Page 1 of 17 exclusive jurisdiction to settle all the differences/disputes between the parties and according to the Greek Law.
2. Before recording the submissions advanced by the counsels for the parties, it is necessary to refer to the relief sought by the plaintiff. The plaintiff/BHEL has instituted the accompanying suit praying inter alia for a decree of declaration, permanent and mandatory injunction against the defendants No.1/PPC and the defendant No.2/company, both based in Athens, Greece and the defendant No.3/SBI for restraining the defendants No.1 and 2 from forfeiting/encashing the bank guarantee offered by the defendant No.3/SBI to the defendant No.1 at its request. Additionally, the plaintiff/BHEL has sought a decree of permanent and mandatory injunction and for declaration against the defendants No.1 and 2.
3. Records reveals that summons were issued in the suit on 18.07.2012 and on the very same day, after hearing the counsel for the plaintiff/BHEL and upon perusing the documents placed on record, it was directed that till the next date of hearing, the defendants No.1 and 2 shall not encash the subject bank guarantee of 7,54,707 Euro offered by the defendant No.3/SBI on behalf of the plaintiff/BHEL, subject to the condition that the plaintiff/BHEL shall ensure that the CS(OS) 2054/2012 Page 2 of 17 subject bank guarantee is kept alive during the pendency of the present proceedings. On 24.02.2014, appearance was entered by the defendant No.2 through counsel who had informed the Joint Registrar that that the defendant No.2, was a 100% subsidiary of the defendant No.1 and it had demerged from the said defendant. However, it was stated by learned counsel that the order passed on 24.2.2014 had erroneously recorded that the defendant No.1 has merged with the defendant No.2. On the said date, the defendant No.2 was directed to file the written statement and the pleadings were directed to be completed. Thereafter, the present application has been filed by the defendant No.2 stating inter alia that the plaint deserves to be rejected and returned on the ground that the suit is barred by law as it has been instituted in a court that is not vested with the jurisdiction to entertain the same.
4. Mr. Sumeet Lall, learned counsel for the defendant No.2 had submitted that in the averments made in the plaint spreading over fifty pages, the plaintiff/BHEL has deliberately failed to mention clause 20 of the subject Contract, which deals with the settlement of differences between the parties and vests the jurisdiction for deciding the differences between the parties in courts in Athens and according to CS(OS) 2054/2012 Page 3 of 17 Greek Law. He had argued that the plaintiff/BHEL has been indulging in forum shopping inasmuch as after instituting the present suit on 16.07.2012, in the month of August, 2012, it had filed a petition against the defendants No.1 and 2 before the Multimember First Instance Court of Athens, challenging the termination of the subject Contract and seeking interim orders, but its application for interim relief was rejected by the concerned court vide order dated 28.03.2013 and the suit is still pending. It was submitted that thereafter, the plaintiff/BHEL had approached the Single Judge of the First Instance Court of Athens for the same relief and the said petition is pending adjudication but the interim application for preventing invocation of the bank guarantee offered by the defendant No.3/SBI on behalf of the plaintiff, has been rejected.
5. Learned counsel for the respondent No.2 stated that the plaintiff/BHEL has failed to disclose before the court in Athens that it had already obtained an ex-parte injunction order in the present proceedings and having regard to the fact that aggrieved by the purported illegal termination of the subject Contract, BHEL has elected to approach the Courts in Athens by its own admission, the present suit would not be maintainable in the courts in India. To demonstrate CS(OS) 2054/2012 Page 4 of 17 that the defendant No.2 has stepped into the shoes of the defendant No.1/PPC for all intents and purposes, learned counsel for the defendant No.2 had referred to the Greek National Gazette dated 22.08.2011, whereunder the legal and operational unbundling of the activity of the defendant No.1 had taken place and the defendant No.2, who was earlier a subsidiary company, was demerged from the defendant No.1.
6. The reply stated to have been filed by the plaintiff/BHEL in opposition to this application is not on record. However, Mr. Chandhiok, learned Senior Advocate appearing for the plaintiff/BHEL had waived the reply and sought leave to address arguments in response. He vehemently opposed the present application and questioned the locus standi of the defendant No.2 to file the present application on the ground that it is not a contracting party in the subject Contract that was a Bilateral document, executed between the plaintiff/BHEL and the defendant No.1/PPC. He urged that the assignment clause in the Contract had stipulated that the plaintiff/BHEL, being the seller, could not assign the same to any third party without the prior written consent of the purchaser, namely, the defendant No.1/PPC, but there was no such reciprocal clause that CS(OS) 2054/2012 Page 5 of 17 entitled the defendant No.1/PPC to assign the Contract in favour of a third party. He asserted that in the absence of any stipulation in the contract that empowered the defendant No.1/PPC to assign its obligations under the contract to a third party, the defendant No.2 cannot claim that it had automatically stepped into the shoes of the defendant No.1/PPC upon issuance of the Greek National gazette dated 22.08.2011.
7. To substantiate the above submission, the attention of the Court was particularly drawn to the averments made in paras 48, 49 and 74 of the plaint and learned counsel further submitted that vide communication dated 15.03.2012 received from the defendant No.1/PPC, the plaintiff/BHEL was informed that the said defendant will get substituted by the defendant No.2, upon signing an addendum/supplements for each of the contracts executed between the parties and for replacing/modifying the good performance letters of guarantee but thereafter, no such steps were taken by either of the two defendants and in the absence of any fresh documentation, the defendant No.2 cannot take a plea that it has stepped into the shoes of the defendant No.1/PPC. Learned counsel had also alluded to the communication dated 08.05.2012 issued by the defendant No.1/PPC to CS(OS) 2054/2012 Page 6 of 17 the plaintiff/BHEL, stating inter alia that it would inform the defendant No.3/SBI for making necessary changes in the subject bank guarantee by substituting itself for the defendant No.1/PPC as the beneficiary, but it had failed to take any steps in furtherance thereto.
8. As for the submission made by the other side that the plaintiff/BHEL has withheld material information from this Court by failing to inform it that the parties are governed by the Greek Law, the same is sought to be rebutted by learned counsel for the plaintiff by drawing the attention of the Court to para 74 of the plaint, wherein it has been averred that the Contract is governed by the provisions of the Greek Civil Court. It was further highlighted that the plaintiff/BHEL had specifically reserved its right to initiate appropriate proceedings against the defendants No.1 and 2 in respect of the subject Contract and after instituting the present proceedings, it had approached the concerned courts in Athens, to question the legality and validity of the action taken by the defendant No.1/PPC in terminating the subject Contract.
9. The aforesaid submissions made by the counsel for the plaintiff/BHEL were refuted by the other side. Mr. Lall, learned counsel for the defendant No.2 submitted that once the National gazette of CS(OS) 2054/2012 Page 7 of 17 demerger was issued by the Greek Government on 22.08.2011, the defendant No.2 has deemed to have automatically stepped into the shoes of the defendant No.1/PPC and resultantly, it stood substituted for all the rights, obligations and relations of the defendant No.1 in relation to its Distribution Segment. He argued that a fallout of the aforesaid gazette is that it was not necessary for the parties herein to execute a supplementary agreement/addendum to ratify the aforesaid decision and it has to be assumed that the defendant No.2 had been automatically substituted for the defendant No.1/PPC in the subject Contract executed with the plaintiff/BHEL, irrespective of the fact that the assignment clause was silent on this aspect.
10. The Court has heard the arguments advanced by the counsels for the parties and carefully considered their submissions in the light of the documents placed on record.
11. In the first instance, it is considered relevant to peruse the contract to examine as to who are the signatories and the mode and manner in which the Contract could have been assigned. A perusal of a copy of the Contract filed by the plaintiff/BHEL alongwith the documents reveals that there are only two contracting parties therein, namely, the plaintiff/BHEL, who is the seller and the defendant CS(OS) 2054/2012 Page 8 of 17 No.1/PPC, who is the purchaser. Clauses 17 and 20 of the subject Contract that deal with "Assignment" of contract and "Settlement of differences", are reproduced hereinbelow for ready reference :-
"17. ASSIGNMENT 17.1 With the exception of the supply of materials and accessories required for the construction of the object of the Contract, the Seller cannot assign the Contract or any part of it to any third party, without the Purchaser's prior written consent. If the Purchaser approves of such an assignment, the Seller shall be entirely responsible for the actions and/or omissions of the assignee or his personnel, as if there were actions and/or omissions of the Seller himself.
17.2 Any assignment by the Seller of any claim against the Purchaser deriving from the present Contract is forbidden and considered null and void if made without the Purchaser's prior written consent.
xxx xxx xxx
20. SETTLEMENT OF DIFFERENCES
In case of disagreement between Purchaser and Seller, effort shall be made for the settlement of the differences by representatives of the contracting parties. If the above negotiation, which is not obligatory, is not effectual the differences shall be settled exclusively in Athens Courts and according to Greek Law."
12. Clause 17 entitles the plaintiff/BHEL to assign the contract or any part of it to a third party only upon obtaining prior written consent of the defendant No.1/PPC. However, no such reciprocal option has been made available to the defendant No.1/PPC for purposes of assigning its CS(OS) 2054/2012 Page 9 of 17 duties and obligations envisaged under the contract. Even if the matter had rested there, the Court might have been persuaded to accept the arguments advanced by learned counsel for the defendant No.2 that having stepped into the shoes of the defendant No.1/PPC for all effects and purposes, in the absence of any word or expression in the Contract prohibiting assignment or transfer of rights against the defendant No.1/PPC, the defendant No.2 ought to be treated as an assignee/transferee of all the legal rights flowing in favour of the original contracting party, namely the defendant No.1/PPC.
13. However, having perused the letter dated 15.03.2012 addressed by the defendant No.1/PPC itself to the plaintiff/BHEL, stating inter alia that the defendant No.2 shall take over its obligations and claims in terms of the gazette notification dated 12.08.2011 and going on to elaborate that in view of the aforesaid development, an addendum/supplementary agreement would be signed with the plaintiff for each of its contracts that are in validity, wherein the defendant No.2 would be counter contracting party and thereafter, good performance letters of guarantee shall be replaced by the plaintiff, this court is not inclined to accept the submission made on behalf of the defendant No.2 that the plaintiff/BHEL cannot question its CS(OS) 2054/2012 Page 10 of 17 locus standi to file the present application or that defendant No.2 ought to be treated as a contracting party on the strength of the aforesaid publication.
14. It may be emphasized here that when it comes to international contracts like the present one, then each and every term and condition of the contract including the words used, to the point of placement of punctuation marks, assumes significance. The obligations and duties cast on the contracting parties are spelt out in clear and unequivocal terms in the written document so as to rule out any ambiguity or uncertainty that may leave the parties flailing at a later stage. The endeavour is to neatly sew up the contract and leave no scope for adding to/reading into it, conditions that have not been incorporated. It has to be assumed that unless intended otherwise, any omission made in such a contract, is deliberate and for adequate reasons.
15. In this background, there can hardly be any scope for this Court to read into the subject contract, conditions that have been omitted or not incorporated by the contracting parties. If there are terms that do not find mention in the contract, then ordinarily, the assumption is that they were not meant to be spelt out or given effect to. Therefore, if the contract envisages giving an option only to one party to take CS(OS) 2054/2012 Page 11 of 17 certain steps, there can be no play in the joints available for the Court to make deductions or to arrive at inferences by unilaterally extending the same to the opposite party or by supplying the gaps, as sought to be urged by learned counsel for the defendant No.2.
16. Another relevant factor that has weighed with the Court to disallow the present application is the nature of averments made by the defendant No.3/SBI in its written statement. In paras 49 and 52 of the written statement, defendant No.3/Bank has averred that under the bank guarantee dated 06.03.2009, the Bank had a privity of contract only with the defendant No.1/PPC and in case the said defendant had assigned its part of the contract in favour of the defendant No.2, then the Bank stood discharged from all its obligations under the guarantee for the reason that neither the contract, nor any of the parties to the contract could be changed without the consent of the Bank. Defendant No.3/Bank has also stated that it did not receive any communication either from the defendant No.1/PPC or from the defendant No.2 regarding invocation of the guarantee. In the light of such clear assertions by the defendant No.3/Bank that it is not liable to pay any amount to anyone except for the defendant No.1/PPC for the CS(OS) 2054/2012 Page 12 of 17 invocation of the guarantee dated 06.03.2009 issued by it, the defendant No.2 cannot be heard to argue to the contrary.
17. In the aforesaid context, it would also be necessary to consider the averments made by the plaintiff/BHEL in the plaint. In para 48 of the plaint, it has been stated by the plaintiff/BHEL that vide communication of March, 2012 received from the defendant No.1/PPC, the plaintiff was informed that it will get substituted by the defendant No.2 in the contract, by signing an addendum to the contract but the same had not been done and the plaintiff did not accept any unilateral/illegal assignment of the contract. Further, in para 49, the plaintiff/BHEL has averred that the defendant No.2 had issued a general communication dated 08.05.2012, informing it that it would intimate the defendant No.3/Bank for making necessary changes in the bank guarantee by replacing the defendant No.1/PPC and describing itself as a beneficiary thereunder but no such action had ever taken place and nor was the same accepted by the plaintiff or the defendant No.3/Bank.
18. In the corresponding para of the written statement filed by the defendant No.2, issuance of the communication dated 15.03.2012 by the defendant No.1/PPC to the plaintiff/BHEL has not been denied. CS(OS) 2054/2012 Page 13 of 17 Similarly, the defendant No.2 has not denied issuing the general communication dated 08.05.2012. Instead, it has studiously skipped the said averments made by the plaintiff/BHEL in the relevant paras and has simply referred to the press release dated 01.05.2012, pertaining to "the spin off of the distribution of the defendant No.1 in compliance with the directives issued by the European Union regarding organization of the electricity market". The defendant No.2 has also denied that any substitution could take place only after the consent of the plaintiff and upon executing an addendum to the Contract.
19. Coming to the final argument addressed by the counsel for the defendant No.2 that the plaintiff's own conduct in approaching the Courts in Athens for raising the disputes, subject matter of the contract bear out its submission that the parties are governed by the Greek Law and as a result, the plaintiff/BHEL could have only approached the courts in Athens to seek its legal remedies, it is pertinent to note that the plaintiff has not disputed the existence of clause 20 of the general terms of the Contract or the right of the defendant No.1/PPC to invoke the same. Its only objection is that the defendant No.2, who is not a contracting party, cannot invoke the said CS(OS) 2054/2012 Page 14 of 17 clause to non-suit the plaintiff insofar the relief sought in the present suit is concerned.
20. In the opinion of this Court, had the defendant No.1/PPC, being a contracting party, raised an objection as to the maintainability of the suit in view of clause 20 of the general terms of the Contract, the situation would have been different. But having regard to the fact that the defendant No.2 has not taken any legal steps to substitute itself in place of the defendant No.1/PPC in the subject Contract and having failed to execute an addendum/supplementary agreement to the Contract alongwith the defendant No.1/PPC and the plaintiff/BHEL pursuant to the issuance of the gazette dated 22.8.2011, it does not lie in the mouth of the said defendant to claim that the disputes between the parties can be exclusively settled in the courts in Athens and the present suit as instituted is liable to be rejected for want of jurisdiction. As of now, the defendant No.2 remains a rank outsider to the contract.
21. Having perused the averments made in the plaint, the contention of the counsel for the defendant No.2 that the plaintiff/BHEL has deliberately withheld from this Court the aforecited clause contained in the Contract, is found to be devoid of merits and rejected. It has been CS(OS) 2054/2012 Page 15 of 17 noted above that the plaintiff/BHEL has made a categorical averment in para 74 of the plaint that the subject Contract is governed by the provisions of the Greek civil court and the relief in the present suit is only in respect of the purported fraudulent action of the defendants No.1 and 2 in seeking to forfeit the bank guarantee issued by the defendant No.3/Bank.
22. In the absence of any document placed on record by the defendant No.2 to establish that on publication of the Greek National gazette dated 22.08.2011 and pursuant to the communication dated 15.03.2012 issued by the defendant No.1/PPC to the plaintiff/BHEL, and the general communication dated 8.5.2012 issued by the defendant No.2, both the defendants No.1 and 2 had executed an addendum/supplement agreement with the plaintiff/BHEL in respect of the subject Contract, whereunder the defendant No.2 has been substituted in place of the defendant No.1/PPC in accordance with law, simply because the plaintiff/BHEL has invoked its legal remedies against the defendant No.1/PPC in the courts in Athens in accordance with clause 20 of the general conditions of the Contract governing both the parties, would not be a ground available to the defendant No.2, a non-contracting party as of now, to urge that the present suit as CS(OS) 2054/2012 Page 16 of 17 instituted by the plaintiff/BHEL against the defendants No.1 and 2 is liable to be rejected outright for lack of jurisdiction.
23. Accordingly, the prayer made in the present application is declined and the same is dismissed.
(HIMA KOHLI)
JANUARY 21 ,2015 JUDGE
rkb/mk
CS(OS) 2054/2012 Page 17 of 17