Pee Tee Engineers Associates vs Chairman, N.T.P.C.
1998 Latest Caselaw 192 Del

JUDGMENT

S.N. Kapoor, J.

1. The question "Whether this Court has any territorial jurisdiction to entertain this petition under Sections 8 and 20 of the Arbitration Act, 1940 itself? is required to be considered for the disposal of IA No. 2318/97. In this LA. the plaintiff seeks injunction for restraining the respondents from encashing two Bank guarantees referred to hereinafter.

2. According to the petitioner Mr. P. Banerjee, is the sole proprietor of the firm M/s Pee Tec Engineering Associates. Being an Engineer and building contractor he entered into a contract with National Thermal Power Corporation Limited (hereinafter called "the NTPC" for short) for construction of an administrative building on 28th September, 1992 for a sum of Rs. 2,10,86,320.66. The petitioner had pledged two Bank guarantees in favour of the respondent as security for issue of materials free of cost for the execution of work contract as under :

B-C NO.

Value

Extension of validity period

1. 12/92

Rs.2 lacs

Original valid upto 28.1.94 extended upto 27.1.95 further extended upto 27.1.1996

2. 4/93

Rs. 1 lacs

Original valid upto 30.4.94 extended upto 30.12.94 with its further extension

This contract includes an arbitration agreement. Disputes arose, as mentioned in para 9 of the petition, out of and relating to the contract between the parties and they are required to be adjudicated upon. The Chairman and Managing Director, respondent No. 1 is personal designate to appoint Sole Arbitrator. The petitioner accordingly requested respondent No. 1 vide letter dated 11th March, 1995 to appoint an Arbitrator. But the respondent No. l failed to appoint any Arbitrator. The work was illegally terminated on 12th April, 1995. Since the Bank Guarantee No. 12/92 expired on 27.1.1996 and Bank Guarantee No. 4/93 expired on 30.12.1994 the Bank is not liable to encash the Bank guarantee nor the petitioner is liable to make any payment under the said Bank guarantees. The United Bank of India, Chittaranjan Park, New Delhi have asked the petitioner to provide with a cover amounts immediately to encash the Bank guarantees in favour of the respondents. Hence the prayer seeking injunction for restraining the respondents from encashing the two bank guarantees.

3. The respondents are contesting this application on the ground that the Bank guarantees are separate and independent contract between the Bank and the beneficiary and has nothing to do with the termination of the contract. In view of the settled law the petitioner is not entitled to the relief of ad interim injunction restraining the encashment of Bank guarantees unless the petitioner makes out a case of misrepresentation or fraud at the time of invocation of the Bank guarantees. It has been clearly stipulated under the Bank guarantees to pay to the respondents on demand any or all moneys to the extent of Rs. 2 lacs and Rs. 1 lacs respectively with respect of Bank Guarantee Nos. 12/92 and 4/93. It is further submitted that this Court has no territorial jurisdiction to try this case because the letter of award of contract was accepted in Ghaziabad by the petitioner and the two Bank guarantees and the terms and conditions of the contract were executed at Vidyl Nagar, Ghaziabad. As per Clause 12.1 of the contract, Ghaziabad Courts alone shall have jurisdiction over any dispute which may arise out of the said contract. There is subordinate office of NTPC at Vidyut Nagar, Ghaziabad where the entire cause of action arose. It is also claimed by the respondent that the Bank guarantees were extended even after 28th January, 1994 and 31st April, 1994 respectively. Due to some technical objection the Bank guarantees were sent back by the respondent for resubmission and the petitioner never submitted the correct extension with the respondent. The respondents claim that on 22nd March, 1994 in respect of Bank Guarantee No. 4/93 and on 22nd December, 1994 in respect of Bank Guarantee No. 12/92 request was also made either to pay the Bank guarantee amount or to give further extensions. Subsequently, NTPC has lodged its claim by letter of invocation dated 9th/12th December, 1996. The letter dated 28th February. 1997 annexed by the petitioner itself explains that the Bank was not having any covering amount over the said Bank guarantees. The respondents claim that it is now the duly of the Bank to pay the amount.

4. I have heard the learned Counsel for the parties and gone through the records.

5. In so far as the question of territorial jurisdiction, certain facts mentioned hereinafter are relevant. The Bank guarantees were given in the name of the respondents NTPC Limited, NTPC Bhawan, Scope Complex, 7, Institutional Area, Delhi and from Annexures A, B and C it is apparent that Bank guarantees were extended in favour of National Thermal Power Corporation Limited, NTPC Bhawan, Scope Complex, 7, Institutional Area, New Delhi. It is also not in dispute that the head office of the NTPC

is located in Delhi and respondent No. 1, the Managing Director is also holding his office in Delhi. There is no dispute in between the parties that NCPP was to be executed at Ghaziabad and not at Delhi. The letter of intent was issued by Shri Ajay K. Atray, Manager, Contracts, NTPC, Vidyut Nagar, Ghaziabad. It may be mentioned that the contract was admittedly given vide letter No. LOA No. 08/CONT/AL-92/92 DATED 28.9.1992 and this very letter is mentioned in paragraph 2 of the petition. The petitioner failed to file the same. Ultimately Counsel for the respondents was asked to produce copy of the said letter. Sh. R. Rajappan, Counsel for the petitioner, could not dispute it. Clause 12.1 of "Detailed letter of Award for construction of Administrative Building including services at NCPP" reads as under:

12.0 SETTLEMENT OF DISPUTES AND ARBITRATION :

12.1. It is specifically agreed by and between the parties that all the differences or disputes arising out of the contract or touching the subject matter of the contract shall be decided by process of settlement and arbitration as specified in General Conditions of Contract for Civil Works and the provisions of Indian Arbitration Act, 1940 shall, apply. Ghaziabad Courts atone shall have jurisdiction over the same. The Arbitrator shall give reasoned award."

6.1. From the above facts while it is evident that in ordinary course Delhi Courts as well as Ghaziabad Courts both may have jurisdiction. But in view of Clause 12.1 referred to above which forms basis of this petition, only Ghaziabad courts shall have jurisdiction. In this regard learned Counsel for the respondents finds support from the following observations of the Supreme Court in the case of A.B.C. Laminari Pvt. Ltd. and Anr. v. A.P. Agencies, Salem,

"18. Thus it is now a settled principle that where there may be two or more competent Court which can entertain a suit consequent upon a part of the cause of action having arisen therewithin, if the parties to the contract agreed to vest jurisdiction in one such Court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague it is not hit by Secs. 23 and 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Mercantile Law and practice permit such agreements.

6.2. Learned Counsel for the respondents also relies upon the judgment of Division Bench of this Court in Korbu Super Thermal Power Project v. Radha Madhav Engineering Enterprises, FAO (OS) 37/95 and Haryana Breweries Limited v. Haryana Beer Agencies and Ors., .

6.3. In view of the foregoing there cannot be any dispute about the proposition of law that when more than one Court is having jurisdiction to try the suit, if the parties to the contract agreed to vest jurisdiction in one such Court, it would be valid and not against public policy.

7. In view of the above observations, it is evident that in view of the arbitration clause itself this Court does not have jurisdiction to try this petition. I need not, therefore, ex-

press any further opinion on this IA No. 2381/97, for this petition No,994A/95 is required to be returned. IA No. 2381/97 is dismissed for want of territorial jurisdiction.

8. Petition No. 994A/95 is ordered to he returned for presentation before the District Judge, Ghaziabad after making requisite endorsement under Order 7, Rule 10(2), CPC subject to the provisions of Order 7, Rule 10A, CPC and payment of cost of Rs. 5,000/-.