Eternit Everest Limited vs State Bank Of India
1997 Latest Caselaw 683 Del

JUDGMENT

Vijender Jain, J.

(1) This is a suit filed by the plaintiff against the defendants for permanent injunction. Defendant No. 1 is State Bank of India and defendant No. 2 is Mr. Vijay Jaiswal, sole proprietor of M/s Three Circle. The plaintiff in this suit prayed that the defendant No. 1 be restrained from encashing the bank guarantee No. 87/86 and/or from making any payment to the defendant No. 2 and/or withdrawing any money in this behalf from the account of the plaintiff. From the pleadings of the parties, the following issue were framed on 18.07.1996. :-

(2) Whether the Bank Guarantee No. 87/86 dated 14.11.1987 given on behalf of the plaintiff in favour of the defendant No. 2 has already expired? Relief.

(3) It has also been recorded in the order dated 18.07.1996 that no other Issue was pressed by the parties and it was on the consent of the parties that no oral evidence was led in this case, they argued the matter on the basis of the documents filed on record and exhibited.

(4) MR.ABHINAV Vashisht, learned counsel appearing for the plaintiff, has vehemently contended that the agreement of the bank guarantee was only upto 31.12.1988 and the last date of the lodging of that claim was 31.03.1989. Learned counsel for the plaintiff has contended that in view of the limited cover given by the agreement of guarantee, the invocation of bank guarantee by the defendant is illegal after expiry of the relevant dates. Another argument advanced by the learned counsel for the plaintiff is that if the defendant has got any grievance in view of the letter written by the bank, i.e. defendant No. 1, dated 6.6.1989, which is Ex. `P-3', stating that the guarantee expired on 31.12.1988 and no request having been received for the extension of the guarantee by the plaintiff, the defendant ought to have filed a suit for specific performance of the contract which it has not filed and, therefore, in the absence of any extension by the plaintiff, the interim order made earlier should be confirmed.

(5) Alternatively, another contention was raised by the learned counsel for the plaintiff that in terms of the agreement of guarantee and in view of Clause 6(b) of the said agreement without determining and adjudicating about the goods being supplied and determining as to whether buyer has failed to take delivery during the agreed period, the agreement of guarantee cannot be invoked.

(6) MR.VASHISHT contended that from the bare perusal of the proviso of Clause 6 (e) of the agreement, there is no automatic extension otherwise the words have been so chosen in the said Clause. Repelling the contentions of Mr.Rajiv Nayar, learned counsel appearing for defendant No. 2, that this Court has no jurisdiction in view of Clause 6(f) of the Agreement, Mr.Vashisht has argued that this Court has got the jurisdiction as the jurisdiction is not exclusively barred and in his support and has cited the case of Abc Laminart Pvt. Ltd, & Anr. Vs. A P Agencies, Salem , in which the Apex Court has held :- "FROM the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of jurisdiction of other Courts. When the clause is clear unambiguous and specific accepted notions of contract would blind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction. As regards construction of the ouster clause when words like `alone', `only' `exclusive', and the like have been used there may no difficulty. Even without such words in appropriate cases the maxim 'expression unius est exclusio alterius' - expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all others from its operation may in such cases be inferred. It has therefore to be property construed."

(7) In this background, the learned counsel for the plaintiff was argued that no such words like `alone', `only', `exclusive' have been used, therefore, this Court has jurisdiction to adjudicate the matter.

(8) On the other hand, Mr.Rajiv Nayar, learned counsel appearing for defendant No. 2 has contended that pursuant to the disputes between the parties, the matter has been referred to the arbitrator and arbitrator has given an award. He contended that the agreement of guarantee itself envisages an automatic extension in the event of parties invoking the arbitration. Mr.Nayar has contended that in the agreement this situation was postulated and that is how Clause 6(c) and Clause 6(e) find mention in the agreement. Mr.Nayar has further contended that an ex parte ad interim stay was obtained without bringing to the notice of the Court these particular Clauses of the agreement. Yet another contention raised by the learned counsel for the defendant No. 2 is that in any event of the matter, after award having been made in favour of the defendant, this Court should not stop recovery of the amount under Bank guarantee by restraining the defendant-bank and the defendant No. 2.

(9) I have given my careful consideration to the arguments advanced by the learned counsel appearing for both the parties. Dealing first with the submission of the learned counsel for the defendant No. 2 that this Court has no jurisdiction in view of Clause 6(f) of the agreement of guarantee, it is, imperative to quote Clause 6(f), which is as follows :-

(10) All disputes and claims out of or in respect of this deed are to be settled at, or be triable at any competent Court situated in Bombay.

(11) The authority cited by the learned counsel for the plaintiff of the Apex Court Abc Laminart Pvt. Ltd. & Anr. Vs. A.P. Agencies, Salem's case (supra) where the Apex Court while considering some what similar clause, held that:- ".........WHENthe clause is clear, unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction. As regards like construction of the ouster clause when words like `alone', `only' `exclusive', and the like have been used there may no difficulty .......................In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all other from its operation may in such cases be inferred. It has therefore to be properly construed."

(12) While interpreting Clause-11 of the agreement, Supreme Court held :- "WHERE the clause under which it was claimed that there was ouster of jurisdiction of Courts only stated that any dispute arising out of sale would be subject to jurisdiction of Court within whose jurisdiction order was placed but there were no exclusive words like `exclusive', `alone', `only' and the like other jurisdictions having connecting facts were not clearly, unambiguously and explicitly excluded."

(13) In that case the Supreme Court held that the Court at Salem which Court otherwise had jurisdiction under law had the jurisdiction. Following the ratio of the Abc Laminart Pvt. Ltd. & Anr. Vs. A P Agencies, Salem's case (supra) this question raised by Mr.Nayar, counsel for the defendant No. 2, is, therefore, answered in favour of the plaintiff.

(14) Coming to the main argument whether invocation of the Bank guarantee in the facts and circumstances was justified and whether this Court may grant permanent injunction in view of the contentions raised before me by the learned counsel for the plaintiff. Let us examine the three Clauses of Bank agreement of guarantee. Clauses 6 (c), (d) and (e) of the agreement of guarantee are as follows :-

"(C)The Bank shall on demand made in writing by the buyer duly supported by the award of Arbitrator pay such sums as the Arbitrator determines to be payable by the seller to the buyer under the terms and conditions of the agreement to the extent of Rs. 15 Lacs (Rupees Fifteen Lacs only).

(D)It is made clear that the award of the Arbitrator supported by the demand of the buyer shall be honoured by the bank upto the said extent of Rs. 15,00,000/= (Rupees Fifteen Lakhs only) and such amount shall be payable despite and even if any proceedings are instituted challenging such award. However, in the event of such proceedings being instituted, the buyer and seller shall be bound by the decision of the competent Court or tribunal.

(E)This guarantee shall remain in full force upto 31st December 1988. Unless a demand or claim under this guarantee is received by the bank within 3 months from the date of expiry of this agreement that is before 31st March 1989, all rights of the buyer under the guarantee shall be forfeited and the bank shall be relieved and discharged from all liabilities thereunder.

PROVIDED that in the event of any arbitration proceedings as mentioned above, this guarantee shall be extended until the conclusion of the said proceedings and for two weeks thereafter."

(15) Aforesaid agreement if harmoniously construed makes it manifestly clear that the guarantee is covered for the period 14.11.1987 to 31.12.1988 and the last date of lodging of the claim was 31.3.1989 where in view of Clauses 6(c), (d) and (e), the agreement of guarantee cannot be invoked after 31.3.1989? The answer is to be found in the relevant Clauses aforementioned. Clause 6(c) specifically postulates that in the event of an award of the arbitrator, bank shall pay a sum to the buyer only to the extent of Rs. 15 lakhs. Clause (d) of the agreement has used the expression that once the award of the arbitrator supported by the demand of the buyer is made same shall be honoured by the bank and such amount shall be payable despite and even if any proceedings are instituted challenging such award. The intention of incorporating said Clause in the agreement is in consonance with the spirit to mean that once an award is given by the arbitrator, bank cannot withhold the amount even if the award is challenged, however, subject to the orders made in this regard by competent Court having jurisdiction where proceedings to challenge the award have been filed. In such an eventuality, the period of 31.3.1989 loses significance.

(16) SUB-CLAUSE (e) of Clause 6 of the agreement makes it more clear that guarantee shall remain in full force upto 31.12.1988 and unless a demand or claim is received by the bank within three months from the date of expiry of agreement, i.e. before 31.3.1989, all the rights of buyer under guarantee shall be forfeited and Bank shall be relieved and discharged from all liabilities thereunder.

(17) Consciously, a proviso has been added to this Sub-clause (e) of Clause 6 that in the event of any arbitration proceedings this guarantee shall be extended until the conclusion of the said proceedings and for two weeks thereafter. If the intention of the plaintiff while executing this guarantee was not to extend the guarantee in the event of any arbitration proceedings then this Clause becomes redundant, therefore, in my considered opinion, the argument advanced by the learned counsel for the plaintiff that in the event of specific words `that the guarantee stands extended', there is no automatic extension, is devoid of any force. Language of the proviso makes it clear that the plaintiff has given this guarantee and agreed `for this Clause for extension of guarantee in the event of arbitration proceedings commencing until its conclusion and thereafter for two weeks. Proviso to Clause 6(e) of agreement makes it clear that the period as mentioned in other Clauses of the guarantee will have no application in the event of commencement of arbitration proceedings. In modern trade and commerce proviso to Clause 6(e) assumes importance and significance. Plaintiff knew that time may be spent in completion of arbitration proceedings and that is why has incorporated proviso to Clause 6(e). For these reasons also operative part of the guarantee limiting period of liability cannot be read in isolation in the event of arbitration proceedings.

(18) I do not see any force in the argument of the learned counsel for the plaintiff that vide Ex. `P-3', i.e. letter dated 6.6.1989, defendant No. 1 having written to defendant No. 2 that in the absence of any letter requesting extension of guarantee from the plaintiff, nothing survives in the matter. Defendant No. 2 in his letter dated 5.5.1989 addressed to defendant No. 1 has referred the aforesaid Clauses of the agreement of guarantee. Defendant No. 2 in the said letter has also made reference of the letter written by defendant No. 2 dated 29.12.1988, inter alia, requesting the bank to keep the guarantee extended as the arbitration proceedings have been initiated in the matter. The argument of the counsel for the plaintiff that in the absence of any extension by the plaintiff, the guarantee cannot be invoked, is not tenable. As a matter of fact, Clause 6(e), would operate after arbitration proceedings, has commenced. What was required to be done by defendant No. 2 has been done after the defendant No. 2 has intimated to the plaintiff as well as to the bank vide their letter dated 29.12.1988 regarding the factum of commencement of arbitration proceedings. As a matter of fact, it was incumbent upon the plaintiff not to have raised the matter in view of the express proviso to sub-clause (e) of Clause 6 of the agreement. In view of the express provisions in the agreement of guarantee, there was no need for the defendant No. 2 to have even sought for extension. I do not see any force in the arguments of the learned counsel for the plaintiff that in the absence of adjudication regarding the supplies as to whether buyer has filed to take delivery during the agreed monthly period, the Bank guarantee cannot be invoked. This Court is not concerned with this aspect of the controversy.

(19) In view of the above discussions I do not find any merit in the submissions of the learned counsel for the plaintiff, issue is decided accordingly. Interim order granted on 5.1.1996 is vacated. Suit is dismissed with no order as to costs.