Bharat Heavy Electricals Ltd vs Public Power Corporation S.A & Ors
2015 Latest Caselaw 590 Del

*      IN THE HIGH COURT OF DELHI AT NEW DELHI

+                       CS(OS) 2054/2012

                                         Reserved on:       06.01.2015
                                        Date of decision:   21.01.2015

IN THE MATTER OF:
BHARAT HEAVY ELECTRICALS LTD                    ..... Plaintiff
                   Through: Mr. A.S. Chandhiok, Sr. Advocate
                   with Mr. Prashant Mehta, Mr. Himanshu
                   Kapoor, Ms. Harleen Singh and Mr. Abhimanyu
                   Walia, Advocates

                   versus

PUBLIC POWER CORPORATION S.A & ORS              ..... Defendants
                  Through: Mr. Sumeet Lall, Advocate with
                  Mr. Jayant Malik and Ms. Anu Goel, Advocates
                  for D-2.
                  Mr. R.P. Vats, Advocate for D-3/Bank.

CORAM
HON'BLE MS.JUSTICE HIMA KOHLI

HIMA KOHLI, J.

I.A. 16803/2014 (by the defendant No.2 u/O VII R 10 r/w Order VII R 11 CPC)

1. The present application has been filed by the defendant No.2

praying inter alia that the plaintiff/BHEL's plaint be returned/rejected

on the ground that the present suit is barred by law in view of clause

20 of the General terms and conditions of the Contract dated

05.02.2009 that stipulates that the courts in Athens would have the

exclusive jurisdiction to settle all the differences/disputes between the

parties and according to the Greek Law.

2. Before recording the submissions advanced by the counsels for

the parties, it is necessary to refer to the relief sought by the plaintiff.

The plaintiff/BHEL has instituted the accompanying suit praying inter

alia for a decree of declaration, permanent and mandatory injunction

against the defendants No.1/PPC and the defendant No.2/company,

both based in Athens, Greece and the defendant No.3/SBI for

restraining the defendants No.1 and 2 from forfeiting/encashing the

bank guarantee offered by the defendant No.3/SBI to the defendant

No.1 at its request. Additionally, the plaintiff/BHEL has sought a

decree of permanent and mandatory injunction and for declaration

against the defendants No.1 and 2.

3. Records reveals that summons were issued in the suit on

18.07.2012 and on the very same day, after hearing the counsel for

the plaintiff/BHEL and upon perusing the documents placed on record,

it was directed that till the next date of hearing, the defendants No.1

and 2 shall not encash the subject bank guarantee of 7,54,707 Euro

offered by the defendant No.3/SBI on behalf of the plaintiff/BHEL,

subject to the condition that the plaintiff/BHEL shall ensure that the

subject bank guarantee is kept alive during the pendency of the

present proceedings. On 24.02.2014, appearance was entered by the

defendant No.2 through counsel who had informed the Joint Registrar

that that the defendant No.2, was a 100% subsidiary of the defendant

No.1 and it had demerged from the said defendant. However, it was

stated by learned counsel that the order passed on 24.2.2014 had

erroneously recorded that the defendant No.1 has merged with the

defendant No.2. On the said date, the defendant No.2 was directed to

file the written statement and the pleadings were directed to be

completed. Thereafter, the present application has been filed by the

defendant No.2 stating inter alia that the plaint deserves to be rejected

and returned on the ground that the suit is barred by law as it has

been instituted in a court that is not vested with the jurisdiction to

entertain the same.

4. Mr. Sumeet Lall, learned counsel for the defendant No.2 had

submitted that in the averments made in the plaint spreading over fifty

pages, the plaintiff/BHEL has deliberately failed to mention clause 20

of the subject Contract, which deals with the settlement of differences

between the parties and vests the jurisdiction for deciding the

differences between the parties in courts in Athens and according to

Greek Law. He had argued that the plaintiff/BHEL has been indulging

in forum shopping inasmuch as after instituting the present suit on

16.07.2012, in the month of August, 2012, it had filed a petition

against the defendants No.1 and 2 before the Multimember First

Instance Court of Athens, challenging the termination of the subject

Contract and seeking interim orders, but its application for interim

relief was rejected by the concerned court vide order dated

28.03.2013 and the suit is still pending. It was submitted that

thereafter, the plaintiff/BHEL had approached the Single Judge of the

First Instance Court of Athens for the same relief and the said petition

is pending adjudication but the interim application for preventing

invocation of the bank guarantee offered by the defendant No.3/SBI

on behalf of the plaintiff, has been rejected.

5. Learned counsel for the respondent No.2 stated that the

plaintiff/BHEL has failed to disclose before the court in Athens that it

had already obtained an ex-parte injunction order in the present

proceedings and having regard to the fact that aggrieved by the

purported illegal termination of the subject Contract, BHEL has elected

to approach the Courts in Athens by its own admission, the present

suit would not be maintainable in the courts in India. To demonstrate

that the defendant No.2 has stepped into the shoes of the defendant

No.1/PPC for all intents and purposes, learned counsel for the

defendant No.2 had referred to the Greek National Gazette dated

22.08.2011, whereunder the legal and operational unbundling of the

activity of the defendant No.1 had taken place and the defendant

No.2, who was earlier a subsidiary company, was demerged from the

defendant No.1.

6. The reply stated to have been filed by the plaintiff/BHEL in

opposition to this application is not on record. However,

Mr. Chandhiok, learned Senior Advocate appearing for the

plaintiff/BHEL had waived the reply and sought leave to address

arguments in response. He vehemently opposed the present

application and questioned the locus standi of the defendant No.2 to

file the present application on the ground that it is not a contracting

party in the subject Contract that was a Bilateral document, executed

between the plaintiff/BHEL and the defendant No.1/PPC. He urged

that the assignment clause in the Contract had stipulated that the

plaintiff/BHEL, being the seller, could not assign the same to any third

party without the prior written consent of the purchaser, namely, the

defendant No.1/PPC, but there was no such reciprocal clause that

entitled the defendant No.1/PPC to assign the Contract in favour of a

third party. He asserted that in the absence of any stipulation in the

contract that empowered the defendant No.1/PPC to assign its

obligations under the contract to a third party, the defendant No.2

cannot claim that it had automatically stepped into the shoes of the

defendant No.1/PPC upon issuance of the Greek National gazette dated

22.08.2011.

7. To substantiate the above submission, the attention of the Court

was particularly drawn to the averments made in paras 48, 49 and 74

of the plaint and learned counsel further submitted that vide

communication dated 15.03.2012 received from the defendant

No.1/PPC, the plaintiff/BHEL was informed that the said defendant will

get substituted by the defendant No.2, upon signing an

addendum/supplements for each of the contracts executed between

the parties and for replacing/modifying the good performance letters

of guarantee but thereafter, no such steps were taken by either of the

two defendants and in the absence of any fresh documentation, the

defendant No.2 cannot take a plea that it has stepped into the shoes

of the defendant No.1/PPC. Learned counsel had also alluded to the

communication dated 08.05.2012 issued by the defendant No.1/PPC to

the plaintiff/BHEL, stating inter alia that it would inform the defendant

No.3/SBI for making necessary changes in the subject bank guarantee

by substituting itself for the defendant No.1/PPC as the beneficiary,

but it had failed to take any steps in furtherance thereto.

8. As for the submission made by the other side that the

plaintiff/BHEL has withheld material information from this Court by

failing to inform it that the parties are governed by the Greek Law, the

same is sought to be rebutted by learned counsel for the plaintiff by

drawing the attention of the Court to para 74 of the plaint, wherein it

has been averred that the Contract is governed by the provisions of

the Greek Civil Court. It was further highlighted that the plaintiff/BHEL

had specifically reserved its right to initiate appropriate proceedings

against the defendants No.1 and 2 in respect of the subject Contract

and after instituting the present proceedings, it had approached the

concerned courts in Athens, to question the legality and validity of the

action taken by the defendant No.1/PPC in terminating the subject

Contract.

9. The aforesaid submissions made by the counsel for the

plaintiff/BHEL were refuted by the other side. Mr. Lall, learned counsel

for the defendant No.2 submitted that once the National gazette of

demerger was issued by the Greek Government on 22.08.2011, the

defendant No.2 has deemed to have automatically stepped into the

shoes of the defendant No.1/PPC and resultantly, it stood substituted

for all the rights, obligations and relations of the defendant No.1 in

relation to its Distribution Segment. He argued that a fallout of the

aforesaid gazette is that it was not necessary for the parties herein to

execute a supplementary agreement/addendum to ratify the aforesaid

decision and it has to be assumed that the defendant No.2 had been

automatically substituted for the defendant No.1/PPC in the subject

Contract executed with the plaintiff/BHEL, irrespective of the fact that

the assignment clause was silent on this aspect.

10. The Court has heard the arguments advanced by the counsels

for the parties and carefully considered their submissions in the light of

the documents placed on record.

11. In the first instance, it is considered relevant to peruse the

contract to examine as to who are the signatories and the mode and

manner in which the Contract could have been assigned. A perusal of a

copy of the Contract filed by the plaintiff/BHEL alongwith the

documents reveals that there are only two contracting parties therein,

namely, the plaintiff/BHEL, who is the seller and the defendant

No.1/PPC, who is the purchaser. Clauses 17 and 20 of the subject

Contract that deal with "Assignment" of contract and "Settlement of

differences", are reproduced hereinbelow for ready reference :-

"17. ASSIGNMENT

17.1 With the exception of the supply of materials and accessories required for the construction of the object of the Contract, the Seller cannot assign the Contract or any part of it to any third party, without the Purchaser's prior written consent. If the Purchaser approves of such an assignment, the Seller shall be entirely responsible for the actions and/or omissions of the assignee or his personnel, as if there were actions and/or omissions of the Seller himself.

17.2 Any assignment by the Seller of any claim against the Purchaser deriving from the present Contract is forbidden and considered null and void if made without the Purchaser's prior written consent.

                   xxx              xxx               xxx

      20. SETTLEMENT OF DIFFERENCES

In case of disagreement between Purchaser and Seller, effort shall be made for the settlement of the differences by representatives of the contracting parties. If the above negotiation, which is not obligatory, is not effectual the differences shall be settled exclusively in Athens Courts and according to Greek Law."

12. Clause 17 entitles the plaintiff/BHEL to assign the contract or any

part of it to a third party only upon obtaining prior written consent of

the defendant No.1/PPC. However, no such reciprocal option has been

made available to the defendant No.1/PPC for purposes of assigning its

duties and obligations envisaged under the contract. Even if the matter

had rested there, the Court might have been persuaded to accept the

arguments advanced by learned counsel for the defendant No.2 that

having stepped into the shoes of the defendant No.1/PPC for all effects

and purposes, in the absence of any word or expression in the

Contract prohibiting assignment or transfer of rights against the

defendant No.1/PPC, the defendant No.2 ought to be treated as an

assignee/transferee of all the legal rights flowing in favour of the

original contracting party, namely the defendant No.1/PPC.

13. However, having perused the letter dated 15.03.2012 addressed

by the defendant No.1/PPC itself to the plaintiff/BHEL, stating inter

alia that the defendant No.2 shall take over its obligations and claims

in terms of the gazette notification dated 12.08.2011 and going on to

elaborate that in view of the aforesaid development, an

addendum/supplementary agreement would be signed with the

plaintiff for each of its contracts that are in validity, wherein the

defendant No.2 would be counter contracting party and thereafter,

good performance letters of guarantee shall be replaced by the

plaintiff, this court is not inclined to accept the submission made on

behalf of the defendant No.2 that the plaintiff/BHEL cannot question its

locus standi to file the present application or that defendant No.2

ought to be treated as a contracting party on the strength of the

aforesaid publication.

14. It may be emphasized here that when it comes to international

contracts like the present one, then each and every term and condition

of the contract including the words used, to the point of placement of

punctuation marks, assumes significance. The obligations and duties

cast on the contracting parties are spelt out in clear and unequivocal

terms in the written document so as to rule out any ambiguity or

uncertainty that may leave the parties flailing at a later stage. The

endeavour is to neatly sew up the contract and leave no scope for

adding to/reading into it, conditions that have not been incorporated.

It has to be assumed that unless intended otherwise, any omission

made in such a contract, is deliberate and for adequate reasons.

15. In this background, there can hardly be any scope for this Court

to read into the subject contract, conditions that have been omitted or

not incorporated by the contracting parties. If there are terms that do

not find mention in the contract, then ordinarily, the assumption is

that they were not meant to be spelt out or given effect to. Therefore,

if the contract envisages giving an option only to one party to take

certain steps, there can be no play in the joints available for the Court

to make deductions or to arrive at inferences by unilaterally extending

the same to the opposite party or by supplying the gaps, as sought to

be urged by learned counsel for the defendant No.2.

16. Another relevant factor that has weighed with the Court to

disallow the present application is the nature of averments made by

the defendant No.3/SBI in its written statement. In paras 49 and 52 of

the written statement, defendant No.3/Bank has averred that under

the bank guarantee dated 06.03.2009, the Bank had a privity of

contract only with the defendant No.1/PPC and in case the said

defendant had assigned its part of the contract in favour of the

defendant No.2, then the Bank stood discharged from all its obligations

under the guarantee for the reason that neither the contract, nor any

of the parties to the contract could be changed without the consent of

the Bank. Defendant No.3/Bank has also stated that it did not receive

any communication either from the defendant No.1/PPC or from the

defendant No.2 regarding invocation of the guarantee. In the light of

such clear assertions by the defendant No.3/Bank that it is not liable to

pay any amount to anyone except for the defendant No.1/PPC for the

invocation of the guarantee dated 06.03.2009 issued by it, the

defendant No.2 cannot be heard to argue to the contrary.

17. In the aforesaid context, it would also be necessary to consider

the averments made by the plaintiff/BHEL in the plaint. In para 48 of

the plaint, it has been stated by the plaintiff/BHEL that vide

communication of March, 2012 received from the defendant No.1/PPC,

the plaintiff was informed that it will get substituted by the defendant

No.2 in the contract, by signing an addendum to the contract but the

same had not been done and the plaintiff did not accept any

unilateral/illegal assignment of the contract. Further, in para 49, the

plaintiff/BHEL has averred that the defendant No.2 had issued a

general communication dated 08.05.2012, informing it that it would

intimate the defendant No.3/Bank for making necessary changes in

the bank guarantee by replacing the defendant No.1/PPC and

describing itself as a beneficiary thereunder but no such action had

ever taken place and nor was the same accepted by the plaintiff or the

defendant No.3/Bank.

18. In the corresponding para of the written statement filed by the

defendant No.2, issuance of the communication dated 15.03.2012 by

the defendant No.1/PPC to the plaintiff/BHEL has not been denied.

Similarly, the defendant No.2 has not denied issuing the general

communication dated 08.05.2012. Instead, it has studiously skipped

the said averments made by the plaintiff/BHEL in the relevant paras

and has simply referred to the press release dated 01.05.2012,

pertaining to "the spin off of the distribution of the defendant No.1 in

compliance with the directives issued by the European Union regarding

organization of the electricity market". The defendant No.2 has also

denied that any substitution could take place only after the consent of

the plaintiff and upon executing an addendum to the Contract.

19. Coming to the final argument addressed by the counsel for the

defendant No.2 that the plaintiff's own conduct in approaching the

Courts in Athens for raising the disputes, subject matter of the

contract bear out its submission that the parties are governed by the

Greek Law and as a result, the plaintiff/BHEL could have only

approached the courts in Athens to seek its legal remedies, it is

pertinent to note that the plaintiff has not disputed the existence of

clause 20 of the general terms of the Contract or the right of the

defendant No.1/PPC to invoke the same. Its only objection is that the

defendant No.2, who is not a contracting party, cannot invoke the said

clause to non-suit the plaintiff insofar the relief sought in the present

suit is concerned.

20. In the opinion of this Court, had the defendant No.1/PPC, being

a contracting party, raised an objection as to the maintainability of the

suit in view of clause 20 of the general terms of the Contract, the

situation would have been different. But having regard to the fact that

the defendant No.2 has not taken any legal steps to substitute itself in

place of the defendant No.1/PPC in the subject Contract and having

failed to execute an addendum/supplementary agreement to the

Contract alongwith the defendant No.1/PPC and the plaintiff/BHEL

pursuant to the issuance of the gazette dated 22.8.2011, it does not

lie in the mouth of the said defendant to claim that the disputes

between the parties can be exclusively settled in the courts in Athens

and the present suit as instituted is liable to be rejected for want of

jurisdiction. As of now, the defendant No.2 remains a rank outsider to

the contract.

21. Having perused the averments made in the plaint, the contention

of the counsel for the defendant No.2 that the plaintiff/BHEL has

deliberately withheld from this Court the aforecited clause contained in

the Contract, is found to be devoid of merits and rejected. It has been

noted above that the plaintiff/BHEL has made a categorical averment

in para 74 of the plaint that the subject Contract is governed by the

provisions of the Greek civil court and the relief in the present suit is

only in respect of the purported fraudulent action of the defendants

No.1 and 2 in seeking to forfeit the bank guarantee issued by the

defendant No.3/Bank.

22. In the absence of any document placed on record by the

defendant No.2 to establish that on publication of the Greek National

gazette dated 22.08.2011 and pursuant to the communication dated

15.03.2012 issued by the defendant No.1/PPC to the plaintiff/BHEL,

and the general communication dated 8.5.2012 issued by the

defendant No.2, both the defendants No.1 and 2 had executed an

addendum/supplement agreement with the plaintiff/BHEL in respect of

the subject Contract, whereunder the defendant No.2 has been

substituted in place of the defendant No.1/PPC in accordance with law,

simply because the plaintiff/BHEL has invoked its legal remedies

against the defendant No.1/PPC in the courts in Athens in accordance

with clause 20 of the general conditions of the Contract governing both

the parties, would not be a ground available to the defendant No.2, a

non-contracting party as of now, to urge that the present suit as

instituted by the plaintiff/BHEL against the defendants No.1 and 2 is

liable to be rejected outright for lack of jurisdiction.

23. Accordingly, the prayer made in the present application is

declined and the same is dismissed.

                                                           (HIMA KOHLI)
JANUARY       21 ,2015                                        JUDGE
rkb/mk