Punjab-Haryana High Court
M/S Semi Conductor Complex Limited vs M/S Netica Solution Private Limited & ... on 23 January, 2024
Author: Alka Sarin
Bench: Alka Sarin
RSA No.704 of 2015 -1- 2024:PHHC:008365
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
226 RSA No.704 of 2015 (O&M)
Reserved on : 12.01.2024
Date of Decision: 23.01.2024
M/s Semi Conductor Complex Limited ....Appellant
VERSUS
M/s Netica Solution Pvt. Ltd. and Another ....Respondents
CORAM : HON'BLE MRS. JUSTICE ALKA SARIN
Present : Mr. S.K. Sharma, Senior Panel Counsel and
Mr. Rajat Sharma, Advocate for the appellant.
Mr. Harjaap Singh Mann - respondent No.1 in person.
None for respondent No.2.
ALKA SARIN, J.
1. The present appeal has been preferred by the defendant-
appellant challenging the judgment and decree dated 21.12.2012 passed by
the Trial Court and judgment and decree dated 28.01.2015 passed by the
First Appellate Court.
2. The brief facts relevant to the present lis are that the plaintiff-
respondent No.1 instituted a suit against the defendant-appellant and
defendant-respondent No.2 averring therein that the plaintiff-respondent
No.1 and defendant-appellant had entered into a Memorandum of
Understanding (hereinafter referred to as the 'MOU' for the sake of brevity)
on 25.06.2002 to set up a center at Chandigarh/Mohali to promote a training
program for Engineering and MCA final year students and graduates. As per
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clause 4 of the MOU, the plaintiff-respondent No.1 was required to pay a
licence fee of Rs.10,00,000/- to the defendant-appellant. 40% was to be paid
initially on signing of the MOU. A bank guarantee for the balance amount
was required to be submitted within 15 days. 40% of the fee was to be paid
on the commencement of 3rd year operations and 20% on the
commencement of 4th year operations. The defendant-appellant was to be
given annual royalty of 25% per student if the collection would be upto
Rs.20,00,000/-, 27% if the collection would be more than Rs.20,00,000/- or
less than Rs.30,00,000/- and 32% if it was above Rs.30,00,000/-. The
defendant-appellant in turn was to furnish the facility for the course at the
center, prescribe standards, period of training, method of review of
performance of students/trainees in different modules of training and classes.
The first batch commenced in August 2002 and was completed in February
2003 as the period for training was six months. Before the commencement
of each batch, permission was sought from the defendant-appellant for
releasing the advertisement, notice etc. It was further averred that the
defendant-appellant did not reimburse 40% share of the expenses incurred
on the advertisement etc. by the plaintiff-respondent No.1. The courseware
which was supposed to be provided by the defendant-appellant was infact
developed by the plaintiff-respondent No.1 themselves. However, later the
defendant-appellant complained of deficiency in the courseware. It was
further the case set up that the application of plaintiff-respondent No.1 for
fixing the test date was not entertained by the defendant-appellant and rather
the defendant-appellant started raising objections and pointed out to the
deficiency qua the courseware, faculty etc. The plaintiff-respondent No.1
also started negotiations with a U.S. based company for the software tools at
RSA No.704 of 2015 -3- 2024:PHHC:008365
subsidized rate to provide high quality education but the defendant-appellant
delayed the permission to commence the course. The inaction on the part of
the defendant-appellant caused huge losses to the tune of Rs.30,00,000/-.
Due to the delay the remaining seats could not be filled for batches in
February and July 2004. On 28.06.2004 a letter was issued by the plaintiff-
respondent No.1 seeking permission to release the advertisement, which was
to be released by 01.07.2004, as the advertisement rates were going to be
revised. Instead of approving the letter, a letter was received from the
defendant-appellant on 13.08.2004 directing the plaintiff-respondent No.1 to
pay Rs.4,00,000/- towards licence fee. In response the plaintiff-respondent
No.1 informed the defendant-appellant that the course was already behind
schedule and requested to defer the MOU clause for commencement of the
3rd year by 08 months and ensured to extend the bank guarantee. However,
the defendant-appellant threatened to get the bank guarantee invoked.
Hence, in September 2004 the present suit was filed for permanent
injunction for restraining the defendants from encashing/invoking the bank
guarantee given by the plaintiff-respondent No.1. The defendant-appellant
filed written statement raising preliminary objections. On merits the
averments made in the plaint were denied. It was averred that the plaintiff-
respondent No.1 was under an obligation to develop the infrastructure but
the plaintiff-respondent No.1 was not able to conduct the course as per
requirements of MOU. It was alleged that plaintiff-respondent No.1 was
only concerned with making money and that the accounts had not been
settled by the plaintiff-respondent No.1 with the defendant-appellant
regarding fees paid by students. Though the students were to pay fee in
name of SCL by cash or cheque and then after deducting 25% of royalty the
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payment was to be paid to the plaintiff-respondent No.1 but the plaintiff-
respondent No.1, with malafide intention, made only those payments which
had been paid through cheques and the money received in cash had been
misappropriated by it. It was alleged that the plaintiff-respondent No.1 did
not send the records of the students and due to defect in the service by
plaintiff-respondent No.1 the strength had been reduced to only 7. It was
also alleged that the plaintiff-respondent No.1 in the garb of a government
department had tried to smuggle certain software which was neither a part of
MOU nor the defendant-appellant had any knowledge. It was submitted that
the bank guarantee already stood invoked by letter dated 06.09.2004 which
was duly received by bank. Replication was filed by plaintiff-respondent
No.1 to the written statement filed by the defendant-appellant.
3. From the pleadings of the parties the following issues were
framed :
1. Whether the plaintiff is entitled to the relief of permanent
injunction as prayed for ? OPP
2. Whether the suit of the plaintiff is not maintainable ?
OPD
3. Whether the plaintiff has not come to the court with clean
hands ? OPD
4. Whether the suit of the plaintiff is barred for want of
service of notice under Section 80 CPC ? OPD
5. Whether the suit is bad for mis-joinder and non-joinder
of necessary parties ? OPD
6. Relief.
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4. The Trial Court vide judgment and decree dated 21.11.2012
decreed the suit of the plaintiff-respondent No.1. Aggrieved by the said
judgment and decree an appeal was preferred by the defendant-appellant,
which was also dismissed vide judgment and decree dated 28.01.2015.
Hence, the present regular second appeal.
5. Learned counsel for the defendant-appellant would contend that
the suit itself was not maintainable as there was an arbitration clause No.19
in the MOU and hence the civil court had no jurisdiction. It is further the
contention that on the commencement of the 3rd year operations 40% of the
fee was to be paid, however, the said amount was not paid by the plaintiff-
respondent No.1.
6. Per contra Mr. Harjaap Singh Mann has appeared in person on
behalf of the plaintiff-respondent No.1. It has been contended by Mr. Mann
that vide letter dated 28.06.2004 (Ex.PW1/10), the defendant-appellant was
requested for the release of the advertisement for the next batch of students.
However, instead of approving the advertisement a letter dated 13.08.2004
(Ex.PW1/11) was sent by the defendant-appellant requesting for payment of
Rs.4,00,000/- which the defendant-appellant claimed was due. Vide letter
dated 20.08.2004 (Ex.PW1/12) the plaintiff-respondent No.1 requested that
the 3rd year operations be deferred by 08 months and assured to extend the
bank guarantee on procedural and other grounds. Vide letter dated
30.08.2004 (Ex.PW1/13) the defendant-appellant informed the plaintiff-
respondent No.1 that until valid concerns relating to adequate infrastructure,
updated courseware, provisioning of software/hardware tools, quality faculty
and establishing proper business practices are addressed, it would not be
proper and viable business case to commence operations. It is the contention
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of Mr. Mann that since the operation itself did not commence the question of
payment of 40% of the amount as per the MOU did not arise.
7. I have heard learned counsel for the defendant-appellant and
Mr. Mann appearing on behalf of the plaintiff-respondent No.1.
8. In the present case both the Courts below found that the
defendant-appellant itself was at fault in not commencing operations for the
3rd year. The plea of arbitration was for the first time raised in the year 2009
i.e. after 05 years of institution of the suit. On a query by the Court as to
whether any application was ever moved before the civil court for referring
the matter to the arbitration, the response by the counsel for the defendant-
appellant was in the negative. As found by the First Appellate Court, the
terms of the bank guarantee indicate that it was conditional guarantee subject
to loss suffered by the defendant-appellant due to non-fulfilment of
contractual obligation by the plaintiff-respondent No.1 as per MOU. Learned
counsel for the defendant-appellant has not been able to convince this Court
that any loss was suffered by the defendant-appellant due to non-fulfillment
of it's contractual obligations by the plaintiff-respondent No.1 as per the
MOU. The letter written by the defendant-appellant themselves i.e. PW1/13
makes it amply clear that it was they who did not permit the commencement
of operations. The defendant-appellant cannot take benefit of its own wrong
as has also been held by the First Appellate Court. Once there was no loss
suffered by the defendant-appellant due to the alleged inaction by the
plaintiff-respondent No.1 the defendant-appellant was not entitled to invoke
the bank guarantee. No other point was argued.
9. In view of the above, I do not find any merit in the present
appeal. No question of law, much less any substantial question of law, arises
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in the present case. The appeal is accordingly dismissed. Pending
applications, if any, also stand disposed off.
( ALKA SARIN )
23.01.2024 JUDGE
jk
NOTE: Whether speaking/non-speaking: Speaking
Whether reportable: YES/NO
