Delhi High Court
United Bank Of India vs National Research Development ... on 14 February, 2011
Author: Valmiki J. Mehta
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ RFA No.291/2001
% 14th February, 2011
UNITED BANK OF INDIA ...... Appellant
Through: Mr. Abhinav Malhotra, Adv.
VERSUS
NATIONAL RESEARCH DEVELOPMENT CORP. ...... Respondent
Through: Mr. J.M.Kalra, Adv.
CORAM:
HON'BLE MR. JUSTICE VALMIKI J.MEHTA
1. Whether the Reporters of local papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest? Yes
VALMIKI J. MEHTA, J (ORAL)
1. The challenge by means of this regular first appeal under Section 96 of
the Code of Civil Procedure, 1908, is to the impugned judgment and decree
dated 16.1.2001 whereby the suit of the respondent against the appellant was
decreed with respect to the amount payable under the bank guarantee dated
6.4.1983, exhibited as Ex.P-2 before the trial court.
2. The appellant had contested the suit on various grounds and one of
which was that the courts of Delhi did not have territorial jurisdiction. Issue
no.1 was framed in this regard and which issue reads as under:-
RFA No.291/2001 Page 1 of 6
"i) Whether this Court has no jurisdiction to try the suit, if so its
effect? OPD"
3. This issue has been decided by the trial court with the following
observations:
"ISSUE NO.1
The onus to prove this issue was on the deft. Nothing has
come in the statement of D.W.1 to show that the Courts at Delhi
lacks the territorial jurisdiction to try the present suit. The suit is
based on the bank guarantee Ex.P-2 which has been furnished at
the office of the plff. at Delhi. The payment to the pltf. was also to
be made as per bank guarantee at Delhi. Hence the Court at Delhi
are vested with the territorial jurisdiction to try the present suit.
This issue is decided in favour of the pltf. and against the deft."
4. On a first reading, it appeared that the issue was validly decided,
however, once we refer to the bank guarantee, we find that the findings and
conclusions in this regard are clearly illegal and perverse because neither the
Bank Guarantee was executed at Delhi and nor the payment under the same
was to be made at Delhi. The bank guarantee document reads as under:
"Bank Guarantee No.20/83
The Managing Director,
National Research Development
Corporation of India,
20-22, Zamroodpur Community Centre,
Kailash Colony Extension
New Delhi:11 00 48
1. Whereas the National Research Development Corporation of
India, New Delhi (hereinafter called „the Corporation) has agreed to
grant Shri Om Prakash Drolia, S/O Shri Chhedi Lal Drolia, Proprietor of
RFA No.291/2001 Page 2 of 6
M/s Drolia Fuels, Bariyatu Road, Ranchi, a licence for the manufacture
of weather Resistant Smokeless Hard and Moulded Fuels developed at
Central Fuel Research Institute, Dhanbad for consideration of
Rs.50,000/- (Rupees fifty thousand only) as lumpsum premium for the
transfer of the knowhow.
2. Whereas the said Corporation has agreed for receiving the
payment of Rs.50,000/- (in two instalments as under:
(a) Rs.25,000/- at the time of handing over the engineering
drawing of six months from the effective date of licence agreement,
whichever is earlier.
2.b) Remaining amount of Rs.25,000/- within one year from the
effective date of licence agreement.
3. In consideration of your accommodation to Shri Om Prakash
Drolia of payment of premium by way of instalments at their request,
we, the United Bank of India, Bokaro Steel City, Industrial Estate,
Bankers of the Grantee hereby guarantee irrevocably to the
Corporation for a sum of Rs.50,000/- (Rupees fifty thousand only)
payable by the said grantee to the Corporation in instalments as
stated in Sub-para „a‟ & „b‟ of para-2.
4. This Bank Guarantee will remain in force for a period of 2 years
from the date of its issue.
Stamp of the Bank and Signature.
For & on behalf of
Date: 6.4.1983 (Name of the Bank)
Witness: Agent/Manager"
5. With respect to a contract, a suit can be filed where the contract is
executed or where the same has to be performed or where the contract is
breached or where payment under the contract has to be made. This is the
ratio of the judgment of Supreme Court reported as A.B.C. Laminart Pvt. Ltd
& Anr. Vs A.P.Agencies, Salem AIR 1989 SC 1239. ( A reading of the Bank
Guarantee shows that the contract of bank guarantee was executed and came
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into existence at Bokaro and not at New Delhi. The contract therefore in
question being the bank guarantee was executed and completed in Bokaro
itself. Payment under this bank guarantee was to be made at Bokaro and not
at New Delhi as has been wrongly held by the trial court. There is nothing on
record or anything contained in the bank guarantee Ex.P-2 that the payment
under the same had to be made at New Delhi. Bank Guarantee is not like a
bank draft which could have been payable at a place other than where it had
been executed, and assuming it was to be so, it ought to have been stated in
the bank guarantee that it was to be payable at New Delhi. A reference to the
bank guarantee, which is reproduced above, does not show that payment
under the same was to be made at New Delhi. Payment therefore under the
bank guarantee has to be made by the branch which issued the bank
guarantee and which branch was located at Bokaro Steel City,Bihar.
6. In view of the above, the courts at New Delhi have no territorial
jurisdiction. I am not referring to any of the aspects on merits because once it
is held that a court does not have jurisdiction, then the said court cannot give
any findings on merits because findings given by the court which lacks
jurisdiction would be non-est and such findings would not bind the court which
has the appropriate jurisdiction.
7. Learned counsel for the respondent states that the courts at New Delhi
have territorial jurisdiction because the bank guarantee was addressed to the
respondent at New Delhi and was received at New Delhi. I am afraid I am
RFA No.291/2001 Page 4 of 6
unable to agree. The contract in question become complete once the bank
guarantee was executed by the appellant bank at its Bokaro Industrial Estate
Branch in Bihar and once the execution of contract is complete, nothing further
remained for enforcing liability thereunder. Communication of the bank
guarantee to the appellant was only to serve the purpose that the appellant
bank had stood as a guarantor, however, the contract was completed when it
was executed at Bokaro city.
I may take help also from the decision of the Supreme Court in the case
Bhagwan Das Vs. Girdharilal AIR 1966 SC 543 in which it is held that in a
contract which is entered into by correspondence the contract is completed at
the place where the letter of acceptance is posted. If we take the bank
guarantee as acceptance of the contract of liability by the appellant bank, the
contract becomes complete on acceptance/execution of the bank guarantee at
Bokaro. The argument of the learned counsel for the respondent that the
contract of Bank Guarantee was concluded at New Delhi is therefore
misconceived.
8. Accordingly, I accept the appeal and set aside the impugned judgment
and decree dated 16.1.2001. The plaint be therefore returned under Order 7
Rule 10 CPC to the respondent for being filed in the court of appropriate
territorial jurisdiction. The respondent to appear before the Registrar of this
court on 14.3.2011 on which date, the Registrar shall return the plaint along
with the court fees on the plaint to the respondent. The appeal is therefore
RFA No.291/2001 Page 5 of 6
disposed of as allowed by returning the plaint under Order 7 Rule 10 CPC for
filing in the court of appropriate jurisdiction. The amount deposited by the
appellant in this court be returned back to the appellant and such monies in the
hands of the appellant will be subject to further directions of the court of
appropriate territorial jurisdiction. Trial court record be sent back.
February 14, 2011 VALMIKI J. MEHTA, J.
ib
