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1995 DIGILAW 426 (BOM)

Balaji Traders and another v. Indian Bank and another

1995-08-30

V.S.SIRPURKAR

body1995
JUDGMENT - V.S. SIRPURKAR, J.:---Admit. Heard finally with the consent of the parties. 2. Both these appeals can be disposed of by this common judgment since the facts and grounds raised therein are common. 3. The present two appeals are against the order passed by the trial Court, holding that it has no territorial jurisdiction to try the suits and on that count directing the return of the plaints for institution in proper Court. 4. The appellant in Appeal from Order No. 44 of 1995 M/s Shri Balaji Traders and the appellant in Appeal from Order No. 45 of 1995, Suraj Salt Traders (hereinafter referred to as 'the plaintiffs') have filed Special Civil Suit No. 110 of 1995 and Special Civil Suit No. 109 of 1995 respectively, before the Civil Judge (Senior Division), Amravati, impleading therein the first respondent-Indian Bank (hereinafter referred to as 'the defendant No. 2') and the second respondent-Maharashtra State Electricity Board (hereinafter referred to as 'the defendant No. 1'). These were the suits for declaration and injunctions and the plaintiffs has sought a declaration that unless and until request of the plaintiffs about variations and escalation in the price is decided by the defendant No. 1 either way, the defendant No. 1 cannot be allowed or permitted to fasten any liability or allege any breach as against the plaintiffs under any pretext and that on such contentions the defendant No. 1 be declared as not entitled to invoke the bank-guarantee or claim amount from the defendant No. 2 under any pretext. In that, the injunction of a prohibitory nature was prayed for against the defendant No. 1 restraining it from invoking the bank-guarantee, and by a further prayer, even an injunction was claimed against the defendant No. 2-Bank restraining it from making payment to the defendant No. 1 under the garb of the bank-guarantee. 5. Shortly stated, the case of the plaintiffs was that the defendant No. 1 had invited the tender from the reputed businessmen for supply of the common salt Industrial Grade-2 to the various Thermal Power Stations. It was pleaded that the plaintiffs had submitted the tender forms and ultimately their tenders were accepted and the work-orders were issued to them. The total value was to the tune of Rs. 81,61,600/- in respect of the plaintiff Shri Balaji Traders and Rs. It was pleaded that the plaintiffs had submitted the tender forms and ultimately their tenders were accepted and the work-orders were issued to them. The total value was to the tune of Rs. 81,61,600/- in respect of the plaintiff Shri Balaji Traders and Rs. 89,41,800/- in respect of plaintiff M/s. Suraj Salt Traders, and the supply of the same salt was to be made to various Thermal Power Stations under the defendant No. 1. It is pleaded that there was a clause for the bank-guarantee which was to be given in lieu of the security deposit, for the contract. The giving of the bank-guarantee would have saved the plaintiffs from depositing any cash, the earnest money or the security deposit. The bank-guarantee was for Rs. 5,00,000/- invokable at the instance of the defendant No. 1, in case of any breach of the contract on the part of the plaintiffs. It was contended by the plaintiffs further in their plaints that because of the unforeseen circumstances, the rates of the said goods zoomed up, thereby making the contract completely non-feasible for them and inviting great financial debacle for them. In that view of the matter, it is further contended that they represented to the authorities of the defendant No. 1 to consider these aspects of the unprecedented zoom in the prices. In short, it has been spelt out in the plaint that the plaintiffs were liable to get the prices adjusted. The further part of the plaints is rather interesting. It says that on account of the plaintiffs' request for the adjustment in prices having made to the defendant No. 1, the defendant No. 1 was likely to proceed ahead and invoke the bank-guarantees issued by the defendant No. 2, which they had executed at Amravati with the defendant No. 2 Bank, and the defendant No. 2 Bank was likely to pay Rs. 5,00,000/- each to the defendant No. 1, in pursuance of those bank-guarantees, for which separate agreements were entered into by the plaintiffs with the defendant No. 2. The plaintiffs pleaded that this invoking of the bank-guarantee at the instance of the defendant No. 1, the beneficiary should be restrained by the Court. 5,00,000/- each to the defendant No. 1, in pursuance of those bank-guarantees, for which separate agreements were entered into by the plaintiffs with the defendant No. 2. The plaintiffs pleaded that this invoking of the bank-guarantee at the instance of the defendant No. 1, the beneficiary should be restrained by the Court. In order of spell out the jurisdiction, in para-16 of both the plaints, the plaintiffs averred that the said bank-guarantees have been issued at Amravati, where they could be invoked by lodging the claim with the defendant No. 2 Bank. Since the defendant No. 2 Bank was operating within the territorial jurisdiction of the Court at Amravati, the trial Court had the necessary jurisdiction to try the suit. In short, though tacitly the plaintiffs have almost admitted the breach of contract on their part, they averred that the bank-guarantees should not be allowed to be invoked. 6. Along with the suits, applications under Order 39, Rules 1 and 2 of the Code of Civil Procedure, were also filed and the trial Court granted an ex-parte ad-interim injunction in favour of the plaintiffs. 7. At the outset, the defendant No. 1 came out with an objection, vide Exhibit 15, whereby it objected to the territorial jurisdiction of the trial Court and on that count sought the vacation of the ad-interim injunction order. In its application, the defendant No. 1 averred that in the tender agreement under Clause 11 of section II, there was a specific clause regarding the jurisdiction, in case of the disputes between the parties regarding the contract, and the clause was as under :- "The Court of Bombay shall have exclusive jurisdiction on all matters and disputes, if any, arising under the said contract." It was claimed that since the tender was floated at Bombay by the defendant No. 1; since the plaintiffs gave their tender forms at Bombay; since all other formalities regarding the tenders were completed at Bombay and since the bank-guarantees issued from defendant No. 2 was furnished by the plaintiffs to the defendant No. 1 at Bombay itself, there was no part of cause of action which had arisen in the territorial jurisdiction of Amravati Court, and it was on that account, the Court at Amravati had no jurisdiction to try the suits, let apart issuing any injunction order. It was averred in the said application that the language of the ouster clause of the jurisdiction was absolutely clear and unambiguous and, therefore, there was no question of any injunction being issued by the Amravati Court, particularly because of lack of its territorial jurisdiction. There are other averments made in the reply regarding the merits of the injunction order, but that will not deter me here and I do not consider it necessary to reproduce the same, since the matter was disposed of only on the question of territorial jurisdiction. 8. The trial Court came to the conclusion, on the basis of the averments in the plaintiffs and other documents produced before it, that it had no territorial jurisdiction to try the suits. The trial Court, therefore, passed the order below Exhibit 21, holding that it had no jurisdiction and, therefore, returning the plaints to the plaintiffs for the institution in the competent Court. It is this order which is challenged by the appellants in these two appeals. 9. Shri V.C. Daga, learned Counsel appearing on behalf of the appellants in both the appeals, strenuously contended that the trial Court had committed an error of law in holding that it had no jurisdiction. According to him, the trial Court had not read the ouster clause properly and, in that, he contended that, in fact, the clause on which the trial Court relied, being Clause 11 of section II, was not the relevant clause but, according to him, the relevant clause was in the agreement between the plaintiffs and the defendant No. 2- Bank for the bank-guarantees. He contended that, as a matter of fact, the contract of bank-guarantees was an independent contract of the original contract between the plaintiffs and the defendant No. 1 and, therefore, since the agreements of bank guarantees were executed at Amravati and since those agreements did not in any manner have a specific ouster clause, it should have been held that the Amravati Court had the jurisdiction. According to Shri Daga, for the purposes of deciding as to whether the trial Court had the jurisdiction or not, the contract between the plaintiffs and the defendant No. 1 was irrelevant. His case is that since the trial Court has not relied upon proper documents and has not properly read the document on which it has relied, there is an error committed by the trial Court. His case is that since the trial Court has not relied upon proper documents and has not properly read the document on which it has relied, there is an error committed by the trial Court. 9-A At the outset, Shri Daga takes me to the contract of bank-guarantee and points out the concerned clause regarding the jurisdiction which runs as under :- "In case of any dispute arising out of or in connection with the extension or encashment or bank-guarantee, the Court in Bombay will-have jurisdiction." Shri Daga vehemently contends that this clause may create a jurisdiction in Bombay Court, but it nowhere ousts the jurisdiction of the Amravati Court and, therefore, the trial Court has completely erred in misreading this Clause. According to Shri Daga, the ouster of jurisdiction clause has to be definite and conclusive and the Court, before dealing with an ouster clause, must come to a definite opinion that the parties to the contract agreed that the jurisdiction of a particular Court was completely ousted. Unless there is such a finding, there could not be any ouster of jurisdiction of the Court, which ordinarily has jurisdiction. In order to buttress his contention, Shri Daga relied upon (National Starch and Chemicals v. Weikfield Products Co. India)1, A.I.R. 1990 Kerala 291. The learned Single Judge of the Kerala High Court has held in this case that unless the language of the ouster clause is specific so as to exclude the jurisdiction of a particular Court expressly, the ouster cannot be held. In that case, the dispute was whether the jurisdiction of the Trivandrum Sub-Court was excluded specifically. In that case, the language was in the following form: "Transactions are subject to Poona jurisdiction." There was no specific ouster of Trivandrum Sub-Court's jurisdiction, inasmuch as there was no mention of the words, 'only', 'exclusively' etc., while restricting the jurisdiction to Poona Court. In that view of the matter, the learned Single Judge held that it could not be said that there was an ouster of Trivandrum Sub-Court's jurisdiction which also have jurisdiction to try the suit. There can be no dispute with the law laid down in this judgment. 10. However, the question is as to which clause is to be considered while considering the ouster of jurisdiction. There can be no dispute with the law laid down in this judgment. 10. However, the question is as to which clause is to be considered while considering the ouster of jurisdiction. Shri Daga also relied on three other cases, viz., A.I.R. 1989 Andhra Pradesh 206, (M/s. Sponge Iron India Ltd. v. M/s. Andhra Steel Corporation Ltd. Bangalore)2, A.I.R. 1991 Andhra Pradesh 53, (M/s. East India Transport Agency, Hyderabad v. National Insurance Co. Ltd.)3, and A.I.R. 1989 Supreme Court 1239, (A.B.C. Leminart Pvt. Ltd. v. A.P. Agencies, Salem)4. I shall deal with these cases a little later. However, before dealing with these cases, it will have to be seen as to which particular clause is relevant to the present case for deciding the jurisdiction of the Court. 11. In order to decide whether the plaintiff is entitled to the declaration sought for by him, the Court will have to consider the terms of agreement and contract between the plaintiffs and the defendant No. 1/Board. The bank guarantee agreements between the plaintiffs and the defendant No. 2 are wholly irrelevant for deciding the controversy in the suits. A mere reading of the plaints clearly brings out that position wherein it has been averred that under the terms of the contract in between the plaintiffs and defendant No. 1, the defendant No. 1 was not justified in invoking the bank-guarantees. Indeed nothing depends upon the clause of furnishing bank-guarantees, while deciding the rights of the plaintiff and the defendant No. 1 arising out of the contract agreement. Now, this contract agreement does have the ouster clause in shape of Clause 11 in section II. The very language of that clause, if it is to be read, suggests that there is a complete ouster of the jurisdiction of any other courts, except the courts at Bombay. The use of the word 'exclusively' would unhesitatingly point out such intended ouster of jurisdiction. Indeed, Shri Daga was also not able to suggest that there could be any other language and there could be any other interpretation of this clause suggesting no such ouster. However, his contention is that it is not that clause which is liable to be read for deciding as to whether the jurisdiction of the Court at Amravati was intended to be ousted. However, his contention is that it is not that clause which is liable to be read for deciding as to whether the jurisdiction of the Court at Amravati was intended to be ousted. He relied upon the bank-guarantee agreements between the plaintiffs and the defendant No. 2 and suggested that in those agreements, there is a clause which does not specifically spell out any ouster for jurisdiction. He suggested that in the bank-guarantee agreements, though it is said that the Court at Bombay will have the jurisdiction, it need not necessarily oust the jurisdiction of the Amravati Court where the bank-guarantee agreements have been executed. The argument is absolutely incorrect. In the present case, there is no dispute between the plaintiffs and the defendant No. 2-Bank in respect of the bank-guarantees, in the sense, once the plaintiffs have furnished the bank-guarantees, it has not come on the record that the defendant No. 2-Bank in any manner tried to avoid its responsibility to pay the amount agreed under the bank-guarantees, to defendant No. 1. It is also not that the defendant No. 2-Bank has in any manner repudiated the bank-guarantee agreements in any manner. Now, therefore, merely because there is a formality of a bank-guarantee agreements in any manner. Now, therefore, merely because there is a formality of a bank-guarantee agreement between the plaintiffs and the defendant No. 1, it cannot be said that the present suits involve any question regarding the bank-guarantee agreements between the plaintiffs and the defendant No. 1. The whole tenor of the plaints shows that it is the contention of the plaintiffs that the only substantial agreement which is in question is the agreement of contract between the plaintiffs and the defendant No. 1, and not the other bank-guarantee agreement. Therefore, these two are distinct and separate agreements. Yet, it cannot be said that in the present suits what is being averred is the breach of the bank-guarantee agreements, in any manner. The relevant document, therefore, would be, not the bank-guarantee agreement regarding which there is no dispute at all, but the agreement between the plaintiffs and the defendant No. 1. If this view of the matter is taken, then there is no question of the jurisdiction clause in the bank-guarantee agreements, being either read or considered. According to me, that clause would be wholly irrelevant for the purposes of the present controversy. 12. If this view of the matter is taken, then there is no question of the jurisdiction clause in the bank-guarantee agreements, being either read or considered. According to me, that clause would be wholly irrelevant for the purposes of the present controversy. 12. Now, for this precise reason, the other authorities relied upon by Shri Daga, viz., National Starch and Chemicals v. Weikfield Products Co. India, A.I.R. 1990 Kerala 291, and (Suresh Arjundas Bhakhtiani v. Union of India)5, 1991 Bank Journal 618, would be of no consequence, inasmuch as in these two matters, the ouster clauses, which were considered, were the part and parcel of the contract agreement. Such is not the case here. As regards the other authority relied upon by Shri Daga, viz., M/s. East India Transport Agency, Hyderabad v. National Insurance Co. Ltd., A.I.R. 1991 Andhra Pradesh 53, really speaking this authority is not relevant in the facts of the present dispute, at all. There is no question of the interpretation of any ouster clause in this case. Another authority relied upon by the Shri Daga is M/s. Sponge Iron India Ltd. v. M/s. Andhra Steel Corporation Ltd., Bangalore, A.I.R. 1989 Andhra Pradesh 206. Here also the purchase order included the condition- "subject to jurisdiction of the Banglaore Courts". There was no specific ouster of the other courts. Holding that there was no such specific ouster, and in order to exclude the jurisdiction of any Court, the ouster clause must be specific, the Andhra Pradesh High Court held that not only the Bangalore Court but the other concerned Court has also the necessary jurisdiction to try the suit. I do not see how Mr. Daga takes support from this case, particularly because of the finding that in Clause 11 of section II of the relevant agreement, there is a specific mention of the Bombay courts having the jurisdiction exclusively. Last, but not the least, Shri Daga relied upon the judgment of the Apex Court in (Abdulla Bin Ali v. Galappa)6, A.I.R. 1985 Supreme Court 577. In fact, the gravamen of this case is that it is the allegations in the plaint which really decide the forum. I undoubtedly agree and respectfully follow the same. Last, but not the least, Shri Daga relied upon the judgment of the Apex Court in (Abdulla Bin Ali v. Galappa)6, A.I.R. 1985 Supreme Court 577. In fact, the gravamen of this case is that it is the allegations in the plaint which really decide the forum. I undoubtedly agree and respectfully follow the same. If the contents of the plaints in the present case are to be seen, then it would be clear that for reading the ouster clause, one has to go to the agreement between the plaintiffs and the defendant No. 1 only, and not to the bank-guarantee agreements. The said case, therefore, does not help Shri Daga. The other judgments, according to Shri Daga, follow the same view expressed by the Apex Court in Abdulla Bin Ali's case and, therefore, they need not be referred to. In short, it is found that the only clause which could have been read would be the clause in the agreement dated 4-1-1995, at Serial No. 11, in section II, which clearly spells out the ouster of Amravati Court's jurisdiction and, therefore, it will have to be held that the trial Court was right in holding that it had no jurisdiction to try the suit. In that view of the matter, the order of the trial Court dated 26th June, 1995, below Exhibit 21 in Special Civil Suit No. 110 of 1995 and 190 of 1995 is confirmed. 13. Shri Daga points out that the trial Court has on its own held that the bank is not a necessary party to the suits and if the order is confirmed as it is, that finding may adversely affect him in further stage of litigation. He is not right in his submission. The finding given regarding the bank not being a necessary party is not considered in this appeal on merits, as the trial Court could not have considered that question because of lack of territorial jurisdiction. 14. At this stage, Shri V.C. Daga, learned Counsel for the appellants in both the Appeals, files an application under the provisions of Order 7, Rule 10-B of the Code of Civil Procedure, wherein he prays that this Court should direct the plaints to be filed in the proper Court at Bombay and fix a date for the appearance of the parties in that Court. Shri K.H. Deshpande, learned Counsel for the respondent No. 2 in both the Appeals, has no objection to this prayer. In that view of the matter, the application is allowed. The appellants in both the appeals are directed to present the plaints in question before the Principal Judge of the City Civil Court at Bombay, after collecting them (plaints) from the 3rd Joint Civil Judge (Senior Division), Amravati. The plaints shall be collected from the Amravati Court on 1st September, 1995 and shall be presented in the Court of the Principal Judge City Civil Court, Bombay, on 4th, September, 1995. The parties are directed to appear before the Principal Judge, City Civil Court, Bombay, on 4th September, 1995. With these observations, both the appeals are dismissed with no order as to the costs. Hamdast of the operative part of the order is granted. Appeal dismissed. *****