Control And Switchgear Company ... vs Maharashtra State Electricity ...
2007 Latest Caselaw 1296 Del

JUDGMENT

J.M. Malik, J.

1. CM No. 8814/2007 (for exemption)

Allowed subject to just exception.

Application stands disposed of.

RSA No. 172/2007 and CM No. 8813/2007 (for stay)

2. The whole controversy centres around the jurisdiction of civil courts in Delhi. Both the courts below came to the conclusion that the courts in Delhi have got no jurisdiction to entertain the suit filed by the appellant for permanent injunction against the respondents. The case of the appellant is this. Maharashtra State Electricity Board invited bids (tenders) for design, engineering, manufacture, assembly, testing at words, supply, installation, testing and commissioning of LT Switchgear, L.T. Busduct and distribution boards for New Parli Thermal Project (1 X 250 MW) Unit No. 1. The bids were to be accepted on or before 23rd November, 2004, however, in a pre-bid conference held in the office of respondent No. 1, the bid submission date was extended up to 30th November, 2004 In response to the said invitation, the appellant offered his bid along with security/earnest money deposit in the sum of Rs. 7 lakhs by way of bank guarantee valid up to 28th December, 2005, and drawn on State Bank of India, New Delhi, which was acknowledged by respondent No. 1, vide its letter dated 4th December, 2004 The respondent No. 1 vide letter dated 4th January, 2005, informed the appellant that the opening of price bid would be held on 6th January, 2005 and asked the appellant to attend the same. Vide letter dated 5th January, 2005, the appellant was informed that the price bid, which was to be held on 6th January, 2005, had been postponed and revised date would be informed in due course. Further, vide another letter dated 5th January, 2005, respondent No. 1 informed the appellant that in the absence of experience/performance certificates, the appellant's offer cannot be considered. The bid was awarded to M/s. Controls and Schematics Ltd. Thereafter, the appellant was informed through letter dated 30th May, 2005, that the respondent No. 1 had invoked the bank guarantee given by the appellant for some dues owed by the appellant against some other job performed by it. However, the condition Clause 16.5 of Section 1 at Page 15 of the Tender Document specifically stated that 'the bid security of unsuccessful bidders shall be discharged/returned as promptly as possible but in any case within one month beyond the validity of the bid'. Vide letter dated 14th June, 2005, Respondent No. 2, State Bank of India, informed the appellant that the bank guarantee given by it had been debited in the accounts of respondent No. 1. The appellant lodged its protest against the said action of respondent No. 1 through its letter dated 14th June, 2005.

3. Thereafter, the appellant filed a suit for declaring the said invocation of bank guarantee as illegal, unreasonable, improper, unconstitutional, unjust and unlawful and restraining respondents from proceeding with the said notice. The learned Additional District Judge vide his order dated 17th June, 2005, restrained the respondent No. 1 from encashing the pay order issued by respondent No. 2 towards invocation of bank guarantee and respondent No. 2 was restrained from encashing the same.

4. Subsequently, the file was transferred to the Court of Civil Judge, who framed a preliminary issue regarding the territorial jurisdiction. The learned Civil Judge vide its judgment dated 4th July, 2006, observed that the civil court in Delhi had no jurisdiction and returned the plaint to the appellant to file it before the appropriate court. Thereafter, the first appeal filed by the appellant before the Additional District Judge was also dismissed vide order dated 9th March, 2007.

5. I have heard the learned Counsel for the appellant. Counsel for the appellant pointed out that the plaint was rejected on the ground of territorial jurisdiction despite the fact that:

i. a part of the cause of action arose in Delhi within the territorial jurisdiction of the Court;

ii. the suit was on fraud, a part of which was being committed in Delhi;

iii. the bank guarantee was executed in Delhi;

iv. the gaurantee was executed at the instance of the Appellant, who is situated at Delhi;

v. the fraud was being played on the Appellant and the Bank, who are both located at Delhi;

vi. the stamp paper for the guarantee was purchased at Delhi;

vii. the invocation of the bank guarantee was at Delhi;

viii. the rejection of the appellant's bid was communicated to it at Delhi;

ix. the bank guarantee had to be returned at Delhi in view of the appellant's bid being rejected.

6. This is indeed a side show and not the heart of the problem. The learned Counsel for the appellant has failed to show that the authorities cited by the first appellate court do not dovetail with the facts of this case. I have perused those authorities and I am of the considered view that those authorities apply to the facts of this case on all fours. The First Appellate Court placed reliance on an authority of the Apex Court reported in South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd. and Ors. (1996) SCC 443, wherein it was held:

It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e. within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained. We, therefore, hold that the learned Single Judge was right in his conclusion that no part of the cause of action had arisen within the jurisdiction on the original side of the High Court of Delhi and direct to return the plaint for presentation to the proper court.

7. The First Appellate Court also placed reliance on an authority reported in Association of Co-operatives and Apex Societies of Handloom v. State of Bihar and Anr. .

8. From a reading of the Maharashtra Sate Electricity Board, New Parli Thermal Project (1 X 250 MW), Unit No. 1 bid documents, Volume - I, Commercial and General, filed by the appellant himself along with the appeal, this is apparent that the site of the contract was situated within the jurisdiction of Mumbai. The performance of contract was to be done within the jurisdiction of Mumbai. S.I., Instructions to the Bidders, Clause 1 titled as introduction, mentions as under,

1.1 Maharashtra State Electricity Board constituted under the Indian Electricity Act 910 and with its registered office at Hong Knog Bank Building, 3rd floor, M.G. Road, Fort, Mumbai 400 023 hereinafter called the "owner" acting through the Chief Engineer (Gen. Pand P), 'Prakashgad', 3rd floor, Bandra (East), Mumbai 400 051 wishes to appoint a Contractor for Design, engineering, manufacture, supply, packing into properly sized units, shipping and delivery to site, receipt, handling and storage at site, erection, testing, commissioning and handing over of L.T. Switchgear with all accessories, auxiliaries Along with supply of mandatory spares, special tools and tackles and 3 years operation and maintenance soares as prescribed in the bid documents. In pursuance of this objective, the owner wishes to invite competitive bids from experienced and competent Bidders.

1.3.1 The proposed project site is located at about 2.5 Kilometre from the existing Parli Thermal Power Station. This project site shall be connected to the Parli Viajanath Railway siding as well as existing Railway siding through broad gauge rail system. MSEB's Railway siding as project site shall be available in March 2005 only and till then the contractor shall be required to unload the material either at Parli Vaijnath Railway Station or MSEB's existing Railway Siding and make arrangements for transportation of the same by Road to project site at their risk and cost. Further, an unloading platform shall also be constructed by MSEB for unloading the material received through railway wagon.

9. Annexure 4 is the performa of bank guarantee for bids security. The relevant portion is reproduced as follows:

In case of any dispute arising out of or in connection with the extention or encashment of Bank Guarantee, the courts in Mumbai will have jurisdiction. Our liability under this Gaurantee is restricted to Rs. 7,00,000/- (Rupees seven lakhs only). Our Guarantee shall remain in force until (date) 28.12.2005 unless a suit or action to enforce a claim under the guarantee is filed against us within six months from the date, all your rights under the said guarantee shall be forfeited and we shall be relieved and discharged from all out liability there under.

It is thus clear that the contract was to be concluded at Mumbai. Its performance was to be done at Mumbai. There is no inkling in the records produced before me which may go to show that some act was to be done by the respondents in Delhi.

10. I am also able to locate few latest authorities which certainly go to buttress the respondent's case. In Union Bank of India v. Seppo Rally , the facts were these. Bank guarantee for the purpose was invoked at Saharanpur and payment was also made by the Saharanpur Branch of the Bank, which was situated within the State of U.P. The complaint was against the Bank for deficiency in service in encashing bank guarantee. It was held that no part of cause of action arose in Delhi. It was further held that the State Commission at Delhi had no jurisdiction in the matter and the dispute arising in one State cannot be taken up by State Commission of other State.

11. This view is further fortified by the latest authorities of Apex Court reported in A1 Chemist Limited and Anr. v. State Bank of Sikkim and Ors. and Union of India v. Adani Exports Ltd. .

12. In view of the discussion above, I find that appeal filed by the appellant is meritless. The same is dismissed at admission stage along with pending application.