Delhi District Court
Servotech Power Systems vs United Bank Of India on 4 October, 2025
IN THE COURT OF MS. HEMANI MALHOTRA
PRINCIPAL JUDGE, FAMILY COURTS,
NORTH EAST DISTRICT, KARKARDOOMA COURTS,
DELHI
CS (COMM) No: 617/2019
CNR No.DLND010174562019
In the matter of :-
SARVOTECH POWER SYSTEMS LTD.
THROUGH ITS AR NIMESH MALHOTRA
S/O SH. G.K. MALHOTRA
AGED ABOUT 31 YEARS,
OFFICE AT :-
806, CROWN HEIGHTS,
HOTEL CROWN PLAZA,
SECTOR-10, ROHINI,
DELHI-110085. ....PLAINTIFF
VERSUS
1 THE GENERAL MANAGER
UNITED BANK OF INDIA
P-90/08, J.C. DAS BUILDING,
CONNAUGHT CIRCUS,
NEW DELHI-110001.
2 THROUGH DIRECTOR
UTTAR PRADESH NEW &
RENEWABLE ENERGY
DEVELOPMENT AGENCY (UPNEDA)
VIBHUTI KHAND, GOMTI NAGAR,
LUCKNOW, UTTAR PRADESH,
PIN-226010.
Digitally signed
by HEMANI
HEMANI MALHOTRA
MALHOTRA Date:
2025.10.04
16:11:00 +0530
CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 1 /14
3 STATE OF UTTAR PRADESH
THROUGH SECRETARY
DEPARTMENT OF
ADDITIONAL SOURCE OF ENERGY
GOVERNMENT OF UP. ....DEFENDANTS
Date of Institution : 24.09.2019
Arguments concluded : 04.09.2025
Date on which judgment pronounced : 04.10.2025
JUDGMENT
1. The present commercial suit is filed by the plaintiff against the defendants seeking permanent and mandatory injunction along with costs.
2. Brief facts pertaining to the present case as detailed in the plaint are that the plaintiff is a duly incorporated Public Limited Company under the name and style of Servotech Power Systems Ltd. Defendant no.1 is a Nationalized Bank and defendant no.2, an agency which is run and controlled by defendant no.3.
3. Defendant no.2 published a tender bearing No.UPNRDA/SPV/OG/SPP/2019/02 (hereinafter referred to as the Tender) on its website for supply, installation (including wiring up to critical and electrical loads) & commission with 5 years comprehensive maintenance of Solar TV Power Plants of 500 watt to 50 KW in various Districts of Uttar Pradesh. The plaintiff submitted its offer dated Digitally signed by HEMANI HEMANI MALHOTRA MALHOTRA Date:
2025.10.04 16:11:06 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 2 /14 03.07.2019 for supply, installation, commissioning of Solar Power Generator/Plants of various capacities with battery backup with 5 years warranty comprehensive maintenance at the identified sites by Uttar Pradesh New and Renewable Development Agency (UPNEDA). Pursuant thereto, the defendant no.2 demanded e-tender security (earnest money) of Rs.15,20,000/- in the shape of bank guarantee from the plaintiff. It was agreed vide clause no. 3.7.4 of the Tender document that e-tender security may be forfeited under two conditions (i) if a Bidder withdraws its e-tender during the period of e-tender validity specified by the Bidder in the e-
tender (ii) if the successful Bidder fails to sign the contract within the stipulated period. Accordingly as per the terms and conditions, at the request of plaintiff, defendant no.1 bank issued a Bank Guarantee dated 03.07.2019 on 05.07.2019 for value of Rs.15,20,000/- valid upto 03.01.2020 in favour of defendant no.2.
4. It is further averred that after submission of e-tender and bank guarantee, defendant no.2 vide letter dated 26.08.2023 raised objection regarding the rates of abnormally low price of goods mentioned by the plaintiff in the e-tender. In response, plaintiff vide reply dated 29.08.2019 stated that due to wrong mentioning of serial number in excel sheet in financial bid regarding the price of the goods, the price was shown as low in comparison to the item head as 'Very Low'. The plaintiff neither stated for Digitally signed by HEMANI HEMANI MALHOTRA MALHOTRA Date:
2025.10.04 16:13:01 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 3 /14 withdrawal from e-tender nor sought any amendment in the e-tender.
5. Vide letter dated 18.09.2019, plaintiff sought release of bank guarantee furnished to defendant no.2 but defendant no.2 vide letter dated 20.09.2019 informed forfeiture of bank guarantee on the ground of rejection of financial bid of plaintiff. Thereafter, plaintiff, vide email dated 22.09.2019 requested defendant no.1 not to encash the bank guarantee in favour of defendant no.2 but there was no response from defendant no.1. Hence, the plaintiff filed the present suit for permanent and mandatory injunction along with application u/o XXXIX Rules 1 and 2 CPC seeking ex-parte ad-interim injunction restraining defendant no.1 from allowing the encashment of bank guarantee in favour of defendant no.2 and restraining defendant no.2 from encashing the bank guarantee.
6. It is relevant to note that initially the present suit was filed before the Court of the Ld. ADJ-03, Patiala House Court, New Delhi. On assignment of the suit, the Ld. ADJ heard the arguments on application u/o XXXIX Rules 1 and 2 CPC and vide order dated 24.09.2019 was pleased to reject the application of plaintiff. Consequently, the plaintiff preferred an appeal against the order dated 24.09.2019 before the Hon'ble High Court of Delhi wherein the Hon'ble High Court of Delhi during the pendency of the Digitally signed by HEMANI HEMANI MALHOTRA MALHOTRA Date:
2025.10.04 16:13:06 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 4 /14 appeal was pleased to grant stay against encashment of bank guarantee.
7. In the meantime, the present suit was transferred to the Learned predecessor of this court as the dispute between the parties fell within the ambit of Commercial Courts Act.
Thereafter, summons were issued to defendants and written statement was filed by defendant nos.1 and 2.
8. In the written statement filed on behalf of defendant no.1, defendant no.1 admitted that it had issued a bank guarantee of the value of Rs.15,20,000/- on 05.07.2019 which was valid upto 03.01.2020. Defendant no.1 also averred that since plaintiff had obtained a stay on revocation of bank guarantee, defendant no.1 had already informed defendant no.2. Defendant no.1, however, denied receipt of email dated 22.09.2019 from plaintiff requesting defendant no.1 not to encash bank guarantee in favour of defendant no.2.
9. In the written statement filed on behalf of defendant no.2, defendant no.2 claimed that in terms of clause 5 of General conditions of Contract as contained in E-tender documents, the jurisdiction of this Court was excluded and only the High Court of judicature at Allahabad and the Courts subordinate thereto, at Lucknow only had jurisdiction, therefore, the suit was not maintainable before this Court. It was also claimed that E-tender documents further provided Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:13:12 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 5 /14 Arbitration being the mode of resolution and adjudication of any dispute between the plaintiff and defendant no.2. Hence, for this reason as well the suit was not maintainable.
10. On merits, it was averred that defendant no.2 was an autonomous body under Uttar Pradesh Government, which was formed for research and development of Non- Conventional Energy Development in the State and the said agency was also functioning as nodal agency for implementation of various schemes in the State. To achieve its primary goal to provide a source of renewal energy to remote areas of the State, defendant no.2 had invited bid vide E-Tender No.UPNEDA/SPV/GEN/OG/SPP/2019/02 on its website for supply, installation (including wiring up to critical electrical loads) and commissioning with 05 years comprehensive maintenance of Solar PV Power Plants of 500 watt to 50 KW in various District of Uttar Pradesh. Plaintiff was one of the bidder, who participated vide bid dated 03.07.2019 and as per terms of bid, also submitted a bank guarantee bearing No.027619ILFIN6627 dated 05.07.2019 for the sum of Rs.15,20,000/- which was an irrevocable bank guarantee with the condition that defendant no.2 has the right to encash the said bank guarantee if the tenderer withdraws or amends, impairs or derogates from the tender in any respect within the period of validity of tender. Upon examining the financial bid, defendant no.2 found the bid of plaintiff as 'Abnormally Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:13:17 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 6 /14 Low'. Thus, in terms of the E-Tender documents, defendants no.2 vide letter dated 26.08.2019 sought clarification from plaintiff. In reply dated 29.08.2019, the plaintiff admitted that plaintiff had filed wrong financial bid and requested that 'its bid may not be accepted and its tender be rejected', which tantamount to withdrawal from the bid. Thus, in view of the said voluntary withdrawal by the plaintiff from its bid, defendant no.2 by virtue of clause 3.7.4 was well within its legal rights to forfeit the earnest money amount as deposited by plaintiff by way of bank guarantee. The intimation to this effect was sent to defendant no.1 vide letter dated 20.09.2019. In the said circumstances, there was no cause of action in favour of the plaintiff and suit was liable to be rejected.
11. It is noteworthy to mention here that despite service, neither defendant no.3 appeared nor filed written statement on its behalf and hence, vide order dated 26.08.2021, defendant no.3 was proceeded ex-parte.
12. In the rejoinder to the written statement of defendant no.2, the plaintiff denied the allegations of defendant no.2 and reiterated the averments made in the plaint.
13. On completion of pleadings, the Learned Predecessor of this Court, vide order dated 21.03.2022 framed the following issues :-
Digitally signed by HEMANIHEMANI MALHOTRA MALHOTRA Date:
2025.10.04 16:13:23 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 7 /14
1.Whether the plaintiff is entitled to equitable relief of permanent injunction restraining the defendant no.1/its officials/employees from encashing the bank guarantee no.027619ILFIN6627 amounting to Rs.15,20,000/- in favour of defendant no.2, as prayed for? OPP
2. Whether the plaintiff is entitled to equitable relief of permanent injunction restraining defendant no.2 from encashing the bank guarantee or using it for any other purpose, as prayed for? OPP
3. Whether the plaintiff is entitled to mandatory injunction qua directing the defendants to revoke the bank guarantee no.027619ILFIN6627 issued in favour of defendant no.2 and release the amount of Rs.15,20,000/- in favour of the plaintiff, as prayed for? OPP.
4. Whether the suit of the plaintiff is maintainable in view of the provisions in Clause 5 of E-tender document, as prayed for ? OPD-2.
5. Whether the e-tender document provides for arbitration being the mode of resolution and adjudication of dispute between plaintiff and defendant no.2 in view of Clause 8 of the Contract ? OPD-2.
6. Relief.
14. The plaintiff to prove its case, examined Sh. Nimesh Malhotra, Director of plaintiff company, and Ms. Priya Pandey, Company Secretary of plaintiff company, as PW-1 and PW-2 respectively.
15. Whereas, defendant no.2 have examined Sh. Sumit Sapra, Digitally signed by HEMANI MALHOTRA HEMANI Date: MALHOTRA 2025.10.04 16:13:28 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 8 /14 Chief Manager of Punjab National Bank, and Sh. Sriram, Senior Project Officer of Uttar Pradesh New and Renewable Development Agency (UPNEDA) as DW-1 and DW-2 respectively.
16. I have heard Sh. Rajat Asija, learned counsel for plaintiff, Sh. Rishabh Yadav, learned counsel for defendant no.1 and Sh Arun Mahajan, learned counsel for defendant no.2. I have also perused the Court record with utmost care.
17. During the perusal of the court record and on examining of facts/ documents, more specifically the written statement of defendant no.2, it transpired that defendant no.2 had emphatically denied the territorial jurisdiction of this court in terms of Clause 5 of E-tender document Ex.PW1/3 but inadvertently, no issue was framed to that effect. Accordingly, the following issue is framed:
Issue no. 7 Whether this court is not vested with territorial jurisdiction in terms of Clause 5 of E-tender document to try the present suit? OPD-2
18. Since issue nos. 5 and 7 go to the very root of the matter, the same are being decided the first.
Issue no. 5 Whether the E-tender document provides for arbitration being the mode of resolution and adjudication of the dispute between the plaintiff and defendant no. 2, in view of Clause 8 of the Contract?OPD-2 Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:13:40 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 9 /14 Issue no. 7 Whether this court is not vested with territorial jurisdiction in terms of Clause 5 of E-tender document to try the present suit? OPD-2 To adjudicate the aforesaid issues, it is extremely essential to note that despite the fact, defendant no. 2 which is the necessary and proper party, in para nos. 2 and 3 of the Preliminary Objections of its written statement and para 14 of evidence by way of affidavit (Ex.DW2/1) had claimed that this court lacked territorial jurisdiction to decide the present suit, except for a bald denial, no averment was made by the plaintiff to deny the claim of defendant no.2.
19. In so far as issue no. 5, is concerned, the defendant no. 2 admittedly did not prefer any application u/s 8 of the Arbitration and Conciliation Act but took the said objection in its written statement. The Hon'ble High Court of Delhi in judgment cited as EASTERN MEDIKT v/s R.S SALES CORPORATION AND ANR (2007) 137 DLT 626 held that a preliminary objection of the defendants with respect to existence of an Arbitration Clause contained in the written statement can be treated as an application u/s 8 of the Arbitration and Conciliation Act. This view was subsequently upheld by the Division Bench of Hon'ble High Court of Delhi in the judgment of SHARAD P. JAGTANI vs. EDELWEISS SECURITIES LTD, (2014) 208 Digitally signed by HEMANI HEMANI MALHOTRA MALHOTRA Date:
2025.10.04 16:13:45 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 10 /14 DLT 487. Consequently, this court now has to consider, if the present dispute should be referred to Arbitration as enumerated in Clause 8 of the E-tender document Ex.PW1/3. For convenience, Clause 8 is reproduced here as under:-
"If any question, dispute or difference whatsoever shall arises between UPNEDA and the contractor/bidder, in the connection with the agreement except as to matters, the decisions for which have been specifically provided, either party may forthwith give to the other notice in writing of existence of such question, dispute or difference and the same shall be referred to the sole arbitration of the Principal Secretary/Secretary of the Uttar Pradesh or a person nominated by him not below the rank of Secretary. This reference shall be governed by the Indian Arbitration & Conciliation Act, 1996 and the rules made thereunder. The award in such arbitration shall be final & biding on both the parties....."
20. It is relevant to note that as per Clause 8 of the Contract-E-
tender document Ex.PW-1/3, only if any dispute between plaintiff and defendant no. 2, in the connection with the agreement, except as to the matters, the decision for which has been specifically provided, can be referred to arbitration. The present dispute between the plaintiff and defendant no. 2, in my opinion falls within the four corners of exception and cannot be referred to arbitration. Clause 3.7.4 provides that the E-tender security (earnest money) may be forfeited, if a bidder withdraws its E-tender during the period of E-tender validity specified by the bidder in the E-tender. The plaintiff has not questioned this Clause or disputed this Clause. The plaintiff's case is essentially that Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:13:51 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 11 /14 its bid was rejected by defendant no. 2 and not withdrawn by plaintiff, therefore defendant no. 2 could not have forfeited the earnest money. The consequence of such action is already provided and for the said reason, the parties cannot be referred to arbitration.
21. However, as regards the territorial jurisdiction or the lack of territorial jurisdiction of this court, defendant no. 2 relied upon Clause 5 of the E-tender document which provides inter-alia that "The High Court of Judicature at Allahabad and Courts subordinate thereto, at Lucknow shall alone have jurisdiction to the exclusion of all the other courts."
Since the dispute between the plaintiff and defendant no. 2 falls within the excepted arena of Clause 8, the parties are in my opinion bound by Clause 5 of Ex.PW1/3.
22. What is significant is that inspite of the fact that defendant no. 2 categorically in its written statement and evidence by way of affidavit (Ex.DW2/1) took the stand that this court was devoid of territorial jurisdiction, as already stated above, except for a bald denial, plaintiff failed to give any response. Even in the cross-examination, no questions were put to DW-2/Sri Ram, Sr. Project Officer of UPNEDA with regard to lack of territorial jurisdiction of this court. In the celebrated judgment of A.B.C. LAMINART PVT. LID. & ANR. v. A.P. AGENCIES, SALEM decided on 13.03.1989 by Hon'ble Supreme Court, the Hon'ble Supreme Court has Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:13:55 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 12 /14 held that;
"Where the parties to a contract agreed to submit the disputes 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 agree to submit to would not otherwise be proper, jurisdiction to decide disputes arising out of the contract must be declared void being against public policy."
It also held that;
"Where there may be two or more competent courts which can entertain a suit consequent upon a part of the cause of action having arisen there-within if the parties to the contract agreed to vest jurisdiction on one such court to try the dispute which might arise as between themselves the agreement would be valid. If such a contract is clear, unambiguous and explicit and not vague, it is not hit by sections 23 & 28 of the Contract Act. This cannot be understood as parties contracting against the Statute. Mercantile Law and Practice permit such agreements."
23. In the instant case, Clause 5 of the E-tender document (Ex.PW-1/3) provides that only the Courts at Lucknow will have jurisdiction. The key expression here is "Courts subordinate thereto at Lucknow shall alone have jurisdiction to the exclusion of all the other courts." It is not in dispute that part cause of action arose in Lucknow. It is also not in dispute that address of defendant no.2 /UPNEDA is that of Lucknow, UP. Hence, courts at Lucknow are courts of competent jurisdiction. In this scenario, Clause 5 of the E-tender document (Ex.PW1/3) will be squarely applicable. Since plaintiff and defendant Digitally signed by HEMANI MALHOTRA HEMANI MALHOTRA Date:
2025.10.04 16:14:00 +0530 CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 13 /14 no. 2, by their agreement waived their right to institute any action, as aforesaid, except at Lucknow, the plaintiff precluded itself from going to any other court except at Lucknow which would be the proper court.
24. In the light of the above discussion, it is accordingly held that only the courts at Lucknow have the exclusive jurisdiction to try the present suit. Issue no.7 is thus held in favour of the defendant no.2 and against the plaintiff. In view of my this finding, the findings on the other issues are not warranted.
25. The plaint is resultantly returned. Necessary endorsement be made on the plaint in terms of Order VII Rule 10 (2) of the CPC.
26. File be consigned to record room.
Digitally signed by HEMANI HEMANI MALHOTRA
MALHOTRA Date:
2025.10.04
16:14:07 +0530
Pronounced in the open Court (HEMANI MALHOTRA)
on 04.10.2025 Principal Judge, Family Courts,
North East District,
Karkardooma Courts, Delhi
CS(COMM) : 617/19 Servotech Power Systems Ltd. v. The General Manager United Bank of India & Ors. Page 14 /14