Calcutta High Court
Burn Standard Co. Ltd. vs Oil And Natural Gas Corporation Limited on 16 May, 2000
Equivalent citations: AIR2000CAL283, [2001]103COMPCAS541(CAL), AIR 2000 CALCUTTA 283, (2001) CAL WN 317
Author: Ashok Kumar Mathur
Bench: Ashok Kumar Mathur, Altamas Kabir
JUDGMENT Ashok Kumar Mathur, C. J. 1. This is an appeal arising out of an order dated 14th March, 2000 passed by the Learned single Judge in W.P. No. 2924 of 1999 whereby the Learned single Judge held that there was no fraud or any reference to any special equity made therefore it has no jurisdiction to interfere in enforcement of the bank guarantee. Consequently the writ petition was dismissed. Aggrieved against the aforesaid order passed by the learned single Judge the present appeal has been filed by the petitioner/appellant. 2. The brief facts which are necessary for disposal of the above appeal are that the appellant Burn Standard and Co. Ltd. challenged the notice of invocation of bank guarantee dated 19th November, 1999 issued by the respondent No. 1 in a letter dated 25/ 30th December, 1999 issued by the United Bank of India, the respondent No. 2. It is alleged that the petitioner is a sick industrial unit within the meaning of West Bengal Relief Undertaking (Special Provisions) Act, 1972 (hereinafter referred to as the Act of 1972 and also under Section 3(1)(o) of the Sick Industrial Company (Special Provisions) Act, 1985 (hereinafter referred to as SICA. A scheme was framed by the BIFR under SICA for rehabilitation. Thereafter the invocation of the bank guarantee dated 11th June, 1999 issued by the United Bank of India on behalf of the petitioner is arbitrary and illegal. The petitioner also invoked Section 6 of the Act of 1972 that all recoveries stand suspended. 3. A contract was entered into between the petitioner and the respondent No. 1, Oil and Natural Gas Corporation Limited on 7th September, 1996 for complete rehabilitation work of "EE Platform" for a lump sum price of Rs. 69,60,000/- inclusive of taxes and duties as applicable at Bombay in pursuance of tender floated by respondent No. 1. As per the contract the petitioner was obliged to furnish performance guarantee and security deposit. On 11th July, 1996 the petitioner furnished on demand irrevocable bank guarantee for a sum of Rs. 69.60 lakhs to be paid without any demur, protest or reservation to respondent. The said bank guarantee at extended till 31st May, 2000. Since the petitioner could not complete the work in terms of the said contract a dispute arose between the parties and a meeting was held on 10th June, 1999 whereby the petitioner requested to short close the contract and the respondent No. 1 agreed to consider the same subject to award of left over work to alternative agency and also upon due analysis of payment as per the provisions of the contract. The respondent No. 1 by letter dated 11th November, 1999 wrote to the United Bank of India making a demand in writing requesting to remit a sum of Rs. 69.60 lakhs by invoking the bank guarantee furnished by the petitioner/appellant, by letter dated 25/30th November. 1999 the United Bank of India addressed a letter to the petitioner requesting them to make immediate arrangement of the said fund. Hence a writ petition was filed by the petitioner for quashing the aforesaid communication. The grievance of the appellant was that by invocation of the said bank guarantee the petitioner/appellant company will suffer irreparable loss and injury. It was also contended that the delay in completion of the work could not call for invocation of the bank guarantee and the petitioner company did not commit any wrong therefore there is no case for failing to honour any of the commitments. It was contended that the option of the respondent in invocation of the bank guarantee was not warranted. It was also contended that the said dispute is between two public sector undertaking therefore the matter should be referred to the arbitration of the Government. As against this, Mr. Sen, Learned counsel appearing for the respondent submitted that no injunction can be granted against invocation of the bank guarantee as there is no plea of fraud or special equity. He raised a preliminary objection as to the jurisdiction of this High Court to entertain this writ petition. It was alleged that the bank guarantee stipulates that the place wherefrom tender was floated would alone have exclusive jurisdiction. He also contended that the plea of the petitioner that it is a sick company and there is a scheme prepared by BIFR under SICA cannot be invoked for seeking injunction against the invocation of the bank guarantee. He also submitted that the bank guarantee is a separate and independent contract. The contract of the bank guarantee is between the bank and the beneficiary and declaration of sickness under the Act of 1972 or framing of scheme by BIFR under SICA is irrelevant. Similarly, it is also contended that the provisions of the Act of 1972 cannot come in the way of invocation of the bank guarantee. Mr. Sen invited our attention to decision of Apex Court and unreported division bench Judgment of this Court in Turnkey International Limited v. Allahabad Bank (Appeal No. 960 of 1992) and also relied on another division bench Judgment in Madalasa International v. Central Bank of India reported in 1999 Company Cas 153: (AIR 1998 Bombay 247). The Learned single Judge after examining the whole matter and with reference to other decisions of the Apex Court declined to interfere in the writ petition and consequently dismissed the writ petition. Hence the present appeal. 4. Mr. Bhattacharjee, learned counsel for the appellant strenuously urged before us that since the present company is a sick company by virtue of the provisions of Section 6 of the Act of 1972 all the recoveries stand suspended. Therefore, the bank guarantee cannot be invoked. As against this the learned counsel for the respondent submitted that this question need not be examined for simple reason that this Court has no jurisdiction to interfere into the matter for simple reason that there is a special clause being Clause 9 in the bank guarantee which clearly stipulates that it excludes the jurisdiction of this Court and all disputes can only be agitated at the place where tenders have been invited. The learned counsel for the respondent invited our attention to Clause 9 of the bank guarantee which reads as under: "...the bank also agrees that this guarantee shall be governed and construed in accordance with Indian law and subject to the exclusive jurisdiction of Indian Courts of the place from where tenders have been invited." 5. Therefore, the learned counsel has submitted that this Court should not enter into an exercise that whether it is a sick company, or the provisions of the Act of 1972 will be applicable or the matter is pending with the BIFR under the SICA, or the invocation of the bank guarantee stands suspended. The Learned counsel submitted that because of the exclusion of the jurisdiction of all Courts except where tenders have been invited alone will have the jurisdiction, therefore this Court should not go into this exercise. In fact, after going through the judgment it appears what was contended before the learned single Judge was that the bank guarantee should not be invoked as it is arbitrary and illegal though the question of fraud and special equity was also raised before the learned single Judge but the Learned single Judge found that there is no basis in the petition and therefore the learned single Judge declined to interfere in the matter. However, before us Mr. Bhattacharjee, learned counsel for the appellant, strenuously pressed into service Section 6 of the Act of 1972 that petitioner/ appellant being a sick company all recoveries stand suspended. After having heard the learned counsel for the parties and perusing the record we are of the opinion that the objection of the learned counsel for the respondent deserves to be upheld that in view of the special provisions contained in the bank guarantee that Courts where tenders have been invited shall have exclusive jurisdiction to decide the matter excludes the jurisdiction of this Court to interfere in the matter. As we have quoted Clause 9 of the bank guarantee which clearly lays down the Indian law and subject to the exclusive jurisdiction of Indian Courts from where tenders have been invited shall have exclusive jurisdiction of the matter. This clause of the bank guarantee confers as per the stipulation the parties that the Courts where tenders have been invited shall alone have jurisdiction. This is a voluntary act of the parties to choose a particular forum. Therefore, this Court does not have jurisdiction to entertain this dispute. The contract was executed at Bombay in pursuance tender invited from Bombay. Simply because communication has been received from the United Bank of India to the petitioner that the captioned bank guarantee valid up to 31st May, 2000 has been invoked by Oil and Natural Gas Corporation Limited for non-fulfilment of the contractual obligations and instructed the bank to make payment of the guaranteed amount of Rs. 69.60 lakhs by means of draft on top priority basis that alone cannot give them a cause of action to file a petition before this Court in view of the stipulation contained in Clause 9 of the bank guarantee. The bank guarantee has been given on behalf of the petitioner company and they are bound by that and they cannot wriggle out from that stipulation. The aforesaid stipulation is binding on the petitioner and the Courts where tenders have been floated alone have jurisdiction that excludes the jurisdiction of this Court on account of the selection of forum voluntarily done by the parties. Mr. Sen learned counsel for the respondent in support of his preliminary objection with regard to jurisdiction of this Court invited our attention to a decision of the Apex Court in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem : wherein it was observed: "So long as the parties to a contract do not oust the jurisdiction of all the Courts which would otherwise have jurisdiction to decide the cause of action under the law it cannot be said that the parties have by their contract ousted the jurisdiction of the Court. If under the law several Courts would have jurisdiction and the parties have agreed to submit to one of these jurisdictions and not to other or others of them it cannot be said that there is total ouster of Jurisdiction. In other words, where the parties to a contract agreed to submit the dispute arising from it to a particular jurisdiction which would otherwise also be a proper jurisdiction under the law their agreement to the extent they agreed not to submit to other jurisdictions cannot be said to be void as against public policy. If on the other hand the jurisdiction they agreed to submit to would not otherwise be proper jurisdiction to decide disputes arising out of the contract it must be declared void being against public policy. Would this be the position in the instant case?. .... It was further observed:-- From the foregoing decisions it can be reasonably deduced that where such an ouster clause occurs, it is pertinent to see whether there is ouster of Jurisdiction of other Courts. When the clause is clear unambiguous and specific accepted notions of contract would bind the parties and unless the absence of ad idem can be shown, the other Courts should avoid exercising jurisdiction. As regards construction of the ouster clause when words like "alone", "only", "exclusive" and the like have been used there may be no difficulty. Even without such words in appropriate cases the maxim "expressio unius est exclusio alterius" -- expression of one is the exclusion of another may be applied. What is an appropriate case shall depend on the facts of the case. In such a case mention of one thing may imply exclusion of another. When certain jurisdiction is specified in a contract an intention to exclude all other from its operation may in such cases be inferred. It has therefore to be properly construed." 6. This case squarely supports the contention of Mr. Sen that the parties by mutual agreement can exclude the jurisdiction of Courts where it could have jurisdiction to entertain dispute. But if the parties by mutual agreement select forum where disputes can be resolved then such agreement of the parties cannot be said to be against public policy. In the present case as pointed out above as per Clause 9 of the bank guarantee it was stipulated that Courts where tenders have been floated shall "alone" have jurisdiction. Therefore, in our opinion. This Court has no jurisdiction to entertain this dispute. Our attention was also invited to a decision in Oil and Natural Gas Commission v. Utpal Kumar Basu . In this case the question was that the construction work was carried at Aligarh and it was further contemplated that in case of any dispute Courts at Aligarh alone will have jurisdiction. A case was instituted in Calcutta High Court because the respondent was a Calcutta based firm, the Apex Court held that no part of the cause of action arose within the territorial Jurisdiction of the Calcutta High Court therefore the exercise of jurisdiction by the Calcutta High Court was in abuse of the jurisdiction. 7. Our attention was also invited to a decision in State of Rajasthan v. Swaika Properties . In this case a proceeding initiated by the State of Rajasthan in respect of land situated in Jaipur of a Calcutta based company that the land stood vested in the State by virtue of the notification issued by the State Government. That was challenged before the Calcutta High Court and their Lordships held that Calcutta High Court had no jurisdiction. The petitioner filed the petition before the Calcutta High Court on the basis that the notice was issued by the State Government under Section 52(2) of the Rajasthan Urban Improvement Act, 1959 to the petitioner at their registered office at Calcutta. The question arose that could such service of the notice be said to be integral part of the cause of action and could it invest the Calcutta High Court with jurisdiction to entertain the petition challenging the notification of the State Government under Section 52(1) of the Act. The Apex Court answering the question in negative held: "The cause of action neither wholly nor in part arose within the territorial limits of the Calcutta High Court. The mere service of notice under Section 52(2) of the Act on the respondents at their registered office within the territorial limits of the State of West Bengal, could not give rise to a cause of action within that territory unless the service of such notice was an integral part of the cause of action. The entire cause of action culminating in the acquisition of the land under Section 52(1) arose within the territorial jurisdiction of the Rajasthan High Court at the Jaipur Bench. Therefore, for the remedy by way of grant of relief the respondents should have filed a writ petition before the Jaipur Bench of the Rajasthan High Court." 8. In the present case also the tender was floated from Bombay and contract was executed at Bombay and the bank guarantee which was given on behalf of the petitioner stipulated that the Courts where tenders have been floated will have exclusive jurisdiction. Therefore, simply because the bank guarantee is sought to be encashed by the respondent Oil and Natural Gas Corporation Limited and an intimation has been sent to the petitioner that will not provide the petitioner a cause of action so as to bring the petition before this Court. Just because an intimation has been received by the bank which furnished the bank guarantee on behalf of the petitioner cannot give a cause of action to the petitioner to file a writ petition before this Court in view of the clear stipulation in the bank guarantee that the Courts where tenders have been floated alone will have jurisdiction. Therefore this exclusion clause excludes the jurisdiction of this Court. Learned counsel for the appellant submitted that the respondent resides at Calcutta and it has its head quarter at Calcutta and bank intimation was received at Calcutta therefore he can maintain this petition here. We regret that this will not provide him this forum for redress of his grievance in view of the exclusion clause in the bank guarantee. 9. The learned counsel for the appellant invited our attention to a decision in M.F.I. (India) Ltd. v. M.D. Juverkar reported in 1989 Lab IC 224 (Guj). This is a service matter where the petitioner was dismissed from service and the order of dismissal was issued from Delhi and sent to Calcutta office where the employee was serving, but at the time when this notice was received at the Calcutta Office the incumbent was on leave and the order of dismissal was communicated to the incumbent at Ahmedabad. Therefore, the Apex Court held that the Gujarat High Court will alone have jurisdiction to entertain the petition. The rationale was that passing of a dismissal order was not enough, it cannot become effective unless it is published and communicated to the concerned employee. The order became effective when it is served and it was observed on the Incumbent at Ahmedabad, therefore, the Court held that Gujarat High Court alone will have jurisdiction and not any other. Therefore, this case does not provide any assistance to the appellant. Our attention was also invited to a decision in Patel Roadways Ltd. v. Prasad Trading Co. . This is a case with regard to interpretation of Section 20 of the Code of Civil Procedure. The question was that whether suit for damages could be filed by the parties where the goods were booked or at Bombay where the Corporation had its principle office and it was decided that any dispute under the contract will only be resolved by the Courts at Bombay. The Apex Court repelled the argument and held that the parties had a right to file civil suits at the places where they booked the goods as the Corporation has its subordinate office. Therefore while interpreting Section 20 it was held that the Court below had rightly repelled the objection of the petitioner that the Madras Courts had no jurisdiction to entertain the suit. The whole case turns on the question with regard to the fact that the Corporation had its subordinate office at places where goods where booked. This case is distinguishable on facts and it does not support the contention of the petitioner. 10. Our attention was also drawn to a decision in DRM Steel Industries Pvt. Ltd. v. Board for I. and F Reconstruction . This is a case under Industrial Disputes Act, 1947 and Sick Industrial Company (Special Provisions) Act, 1985 before the Learned single Bench of this Court wherein the petitioner company challenged the impugned order passed by the BIFR rejecting the reference made by the petitioner company under Section 15 of the Act by filing a writ petition wherein it was observed by this Court that the High Court at Calcutta have a territorial jurisdiction when the registered office of the company is situated in Calcutta within the territorial jurisdiction of the Calcutta High Court and because of the aforesaid rejection of such reference made by the BIFR legal injury has been suffered by the petitioner company at the registered office at Calcutta within the territorial jurisdiction of the Calcutta High Court. This case is also distinguishable on facts and it does not provide any assistance so far as the issue involved in the matter before us. 11. Therefore as a result of the above discussion we uphold the preliminary objection of Mr. Sen, Learned counsel for the respondent that this Court does not have jurisdiction to entertain the petition. However, this will not prevent the petitioner/ appellant to challenge the matter on merits before the competent forum and any observation made in this order will not prejudice its rights. Hence, the appeal is dismissed on preliminary objection. No order as to costs. Altamas Kabir, J.
12. I Agree.