M/S Alfa Therm Limited vs The Canara Bank & Anr.
2009 Latest Caselaw 4016 Del

     *IN THE HIGH COURT OF DELHI AT NEW DELHI

+                  CS(OS) No.580/2008

%                                   Date of decision: 06.10.2009

M/S ALFA THERM LIMITED                                    ....Plaintiff
                         Through:    Mr. Rakesh Tikku      &   Mr.   Aditiya
                                    Bhardwaj, Advocate.

                                 Versus

THE CANARA BANK & ANR.                                    ... Defendants
                         Through: Mr. Azim H. Laskar, Mr. Rajneesh
                         Singh & Mr. D. Saikia, Advocates for the
                         Defendant No.2.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

1.     Whether reporters of Local papers may
       be allowed to see the judgment?   Yes

2.     To be referred to the reporter or not?     Yes

3.     Whether the judgment should be reported
       in the Digest?  Yes


RAJIV SAHAI ENDLAW, J.

1. Issue No.3, of the issues framed on 13th February, 2009 and

ordered to be treated as a preliminary issue, as to the territorial

jurisdiction of this court to entertain the suit, is for consideration.

2. The plaintiff has instituted this suit for declaration and

permanent injunction vis-à-vis a bank guarantee, issued at the

instance of the plaintiff by the defendant No.1 bank in favour of the

Government of Assam (Defendant No.2).

3. The defendant No.2 Government of Assam had on 7th April,

2007 invited bids for supply of equipment installation,

commissioning etc. all at Assam. The plaintiff company, stated to be

having its registered office at Delhi was one of the bidders. The bank

guarantee with respect whereto the suit has been instituted is a bank

guarantee for EMD (bid security) issued by the defendant No.1 bank

having its branch at New Delhi and for the benefit of the Defendant

No.2 Government of Assam. The defendants No.1 bank under the

said guarantee bound itself to pay to the defendant No.2 the sum of

Rs.6 lacs in the event of the plaintiff withdrawing its bid during the

period of bid validity and/or if the plaintiff after having been notified

of the acceptance of its bid by the defendant No.2 during the period

of the bid validity fails or refuses to execute contract form or fails or

refuses to furnish the performance security in accordance with the

clauses of tender. The defendant No.2 invoked the said bank

guarantee; according to the plaintiff wrongfully. The plaintiff

instituted the suit for the relief of declaration that the plaintiff is not

at fault in executing/signing the proposed agreement/contract as

sent by the defendant No.2 and as a consequence to the said

declaration seeks permanent injunction restraining the defendant

No.1 from honouring and/or encashing and/or remitting Rs.6 lacs

covered by the said bank guarantee.

4. The plaintiff has in the plaint pleaded that this court has

territorial jurisdiction since the cause of action had accrued at Delhi;

the defendant No.1 had received the invocation letter at Delhi and

since the defendant No.1 had forwarded intimation thereof to the

plaintiff at Delhi; territorial jurisdiction of this court was also

justified since the defendant No.1 bank works and carries on

business at Delhi and the defendant No.2 Government of Assam also

has its office at Delhi through its Resident Commissioner at Delhi.

5. The suit was instituted on 29th March, 2008. The suit was

accompanied with an application for interim relief. The suit and the

application came up before this court first on 1st April, 2008 when

summons/notice thereof was issued to the defendant No.2, the

counsel for the defendant No.1 having appeared before this court.

The suit thereafter came up before this court on 8th April, 2008 when

it was inter-alia ordered "all actions of the defendant shall be subject

to order of this court". The defendant No.1 failed to file the written

statement and vide order dated 31st October, 2008 the right of the

defendant No.1 bank to file the written statement was closed. The

counsel for the defendant No.2 informed on that date that the bank

guarantee had already been encashed and the monies thereunder

received by the defendant No.2. Even though relief claimed in the

suit was for declaration and injunction only but notwithstanding the

encashment of the bank guarantee, the suit was held to have not

become infructuous for the reason of the order dated 8th April, 2008

making the action of the defendants subject to the orders of the

court.

6. The defendant No.2 in its written statement has contested the

territorial jurisdiction of this court leading to an issue with respect

thereto being framed. Since on the basis of the averments and the

documents, it was felt that the said issue of territorial jurisdiction of

this court did not require any evidence, the same was ordered to be

treated as a preliminary issue.

7. The counsel for the parties have been heard.

8. The counsel for the plaintiff has contended that since the bank

guarantee was furnished by the defendant No.1 bank from Delhi and

since the communication of the defendant No.2 invoking the bank

guarantee was addressed to the defendant No.1 bank at Delhi this

court would have territorial jurisdiction.

9. Per contra, the counsel for the defendant No.2 has pointed out

that the bank guarantee as per its terms is payable at Guwahati. He

has also drawn attention to Clause 46 of the invitation for bids which

is as under:-

"All disputes shall be subject to the jurisdiction of appropriate court situated at Guwahati. The contract shall be interpreted in accordance with the laws of India."

10. He has also contended that the payment under the bank

guarantee was received by the defendant No.2 from the defendant

No.1 bank, at Guwahati on 7th April, 2008 i.e. before the order dated

8th April, 2008 making the action of the defendants subject to the

order of the court. He has further contended that the place of

issuance of the bank guarantee is irrelevant. Reliance is placed on;

(i) Union Bank of India Vs. Seppo Rally OY (1999) 8 SCC 357

though in relation to Consumer Protection Act, holding that the

consumer fora at a place where the office of the party at whose

instance the bank guarantee is furnished would have no jurisdiction

to entertain the complaints qua the bank guarantee furnished by a

branch of the bank situated outside Delhi; (ii) A.B.C. Laminart Pvt.

Ltd. Vs. A.P. Agencies (1989) 2 SCC 163 on the proposition of the

parties being entitled to restrict the territorial jurisdiction to one of

the many courts having jurisdiction to entertain the disputes.

11. I may at the outset comment on a disturbing feature of this

case. The plaintiff along with the plaint and the application for

interim relief filed a list of documents dated 29th March, 2008 with

documents. At serial No.1, the document is "true photostat copy of

the bid document"; the same in the list of documents itself is

described as comprising of seven pages. The defendant No.2 along

with its written statement has also filed a list of documents dated

20th May, 2008 along with documents and at serial No.1 whereof also

is the bid document. The same is a original/printed copy. A perusal of

the bid document filed by the plaintiff and the bid document filed by

the defendant No.2 shows that the plaintiff has been selective in

filing portions of the bid document. The plaintiff has not filed the

page of the bid document containing Clause No.46 aforesaid relating

to territorial jurisdiction. Not only did the plaintiff conceal the

relevant portion of the bid document as to territorial jurisdiction but

also did not disclose the clause as to territorial jurisdiction in the

plaint. Such action of the plaintiff is found to be deliberate, to obtain

an order of injunction from this court to exclusion of whose

jurisdiction the plaintiff had agreed. The plaintiff has indulged in

judicial adventurism. The plaintiff, particularly Shri Harjot Singh

Chatha, Director of the plaintiff company who has instituted the suit

and signed and verified the plaint are thus found to be guilty of

abusing of the process of this court and which this court in Satish

Khosla Vs. M/s Eli Lilly Ranbaxy Ltd. 71 (1998) DLT 1 has held to

be amounting to contempt of the court. The plaintiff owed a duty

before approaching this court to make a clean breast of the state of

affairs. The plaintiff sought ex parte interim relief from this court.

The court relies upon the averments in the plaint and the documents

filed therewith and grants such relief wherever the plaintiff is found

entitled thereto. The plaintiff who seeks such a relief cannot be

permitted to indulge in such practices. If the plaintiff felt that

notwithstanding the aforesaid Clause 46 in the bid document it was

entitled to invoke the territorial jurisdiction of this court, the plaintiff

ought to have placed the same before this court and then made its

submissions. On the contrary, the plaintiff attempted to gain an

unfair advantage and steal a march.

12. The plaintiff has in the replication to the written statement of

the defendant No.2 not controverted the aforesaid clause in the bid

document. The question which arises is whether in view of such

clause in the invitation for bid, this court even if has jurisdiction,

would have jurisdiction to entertain the suit. Undoubtedly, the clause

aforesaid qua territorial jurisdiction does not use the words

"exclusive" or "alone" or "only" or the like. However, the Supreme

Court in A.B.C. Laminart Pvt. Ltd.(Supra) and subsequently

reiterated in Hanil Era Textiles Ltd. Vs. Puromatic Filters (P)

Ltd. AIR 2004 SC 2432 has held that the absence of such words is

not determinative; even without such words, in appropriate cases the

maxim 'expressio unius est exclusio alterius' applies.

13. I find from the entirety of the facts in the present case that the

parties had agreed to the exclusive jurisdiction of the courts at

Guwahati. The terms of the invitation for bid were accepted by the

plaintiff by making a bid. It is not the plaintiff's case that its bid was

without agreeing to Clause No.46 (Supra). The defendant No.2 is the

Government of Assam. The invitation for bid was issued from

Guwahati for works to be performed in Guwahati and/or in the State

of Assam. In the circumstances, the Clause 46 aforesaid is to be read

as excluding the jurisdiction of courts at any other place even if

otherwise having jurisdiction. The jurisdiction of this court is ousted

for this reason alone and need is not felt to go into the question

whether this court would have jurisdiction for the reason of the

plaintiff as a bidder having furnished the bank guarantee of a bank

within the jurisdiction of this court even though guaranteeing

payment to the defendant No.2 at Guwahati. It does not stand to

logic that in such circumstances the place of bank issuing the

guarantee would have jurisdiction. The defendant No.2 while

entertaining the bids is not concerned with the address of the bank

issuing the guarantee so long as the payment under the guarantee is

assured at the place of residence of the defendant No.2 i.e.

Guwahati. It would be unfair to hold that territorial jurisdiction of

places where the branch of the bank issuing the guarantee is

situated can be invoked qua the disputes relating to the said

guarantee. In the present case, the plaintiff was free to arrange the

bank guarantee from a branch of the bank at any place and the

defendant No.2 cannot be made to run to that place for contesting a

suit. I also do not find any merit in the plea of the invocation letter

being issued to the defendant No.1 bank at Delhi. The invocation

letter would naturally be addressed to the bank issuing the bank

guarantee. However, the core dispute is between the plaintiff and

the defendant No.2. The relief of injunction claimed against the

defendant No.1 bank is consequent to the relief of declaration which

is qua the defendant No.2 only. If this court does not have the

territorial jurisdiction to entertain the dispute qua the relief of

declaration, the question of entertaining the lis even if this court

were to have jurisdiction qua the relief of injunction against the

defendant No.1 bank does not arise.

14. The preliminary issue qua territorial jurisdiction is thus

answered in favour of the defendant No.2 and against the plaintiff.

This court has no territorial jurisdiction to entertain the suit. The

plaint is accordingly ordered to be returned to the plaintiff for

institution in accordance with law in the court of appropriate

jurisdiction.

15. The plaintiff and particularly its Director Mr. Harjot Singh

Chatha however, cannot be allowed to go scot free for their actions

aforesaid of abusing the process of this court and playing fraud on

this court and on defendant No.2. As aforesaid, they are liable to be

proceeded against for contempt of court. The law should not be seen

to sit by limply, while those who defy it go free and those who seek

its protection lose hope. The plaintiff has made the defendant No.2

incur expenses in contesting this suit in a city whose jurisdiction had

been agreed to be excluded. Following the dicta in G.E.

Countrywide Consumer Financial Services Ltd. Vs. Shri

Prabhakar Kishan Khandare MANU/DE/9276/2006, and in Nectar

U.K. Ltd. Vs. Herbs Shop India Ltd. 93(2001) DLT 383, an

opportunity is given to plaintiff and its Director aforesaid to purge

the contempt by paying costs of Rs.20,000/- to the counsel for the

defendant No.2 and of Rs.30,000/- to the Delhi Legal Services

Authority. If they fail to do so they would be liable to be proceeded

against therefor.

List for reporting compliance of the same on 30th October,

2009.

RAJIV SAHAI ENDLAW (JUDGE)

October 6th , 2009 PP