Madhya Pradesh High Court
M/S Sunil Hi Tech Engineers Ltd. vs Nic Construction (India) Pvt. Ltd. on 17 March, 2017
HIGH COURT OF MADHYA PRADESH JABALPUR
WRIT PETITION NO. 1128 of 2017
M/S SUNIL HI-TECH ENGINEERS LTD.
Vs.
NIC CONSTRUCTION (INDIA) PVT. LTD. & ANOTHER
For Petitioner : Mr. Jaideep Sirpurkar, Advocate.
For Respondents/State : Mr. Atual Anand Awasthy, Advocate.
Order posted for: 17.03.2017.
(SUJOY PAUL)
JUDGE
HIGH COURT OF MADHYA PRADESH JABALPUR
WRIT PETITION NO. 1128 of 2017
M/S SUNIL HI-TECH ENGINEERS LTD.
Vs.
NIC CONSTRUCTION (INDIA) PVT. LTD. & ANOTHER
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For Petitioner : Mr. Jaideep Sirpurkar, Advocate
For Respondents : Ms. Atul Anand Awasthy, Advocate
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ORDER
(17.03.2017.) Per : Sujoy Paul J.
This petition filed under Article 227 of the Constitution of India, takes exception to the order passed by the Court below in Case No. MJC (AV) 51/2016 dated 08.12.2016.
2. Briefly stated, the facts are that the petitioner is a registered company engaged in the business of construction. The petitioner has its head office at Noida and a branch office at Nagpur. The petitioner was awarded with a contract for construction of LIG & EWS house at Kanpur. The petitioner, as per the terms of the contract, delegate part of construction work to the respondent No.1. As per Clause 4 of letter of intent (Annexure-P/1) the respondent No.1 was required to furnish a Bank Guarantee equivalent to 2% of the value of the work. The respondent No.1 accordingly furnished a Bank Guarantee to the tune of Rs.77,85,468/- (Annexure-P/2).
3. Mr. Sirpukar, learned counsel for the petitioner submits that the Bank Guarantee contains a clause relating to jurisdiction, whereby the parties have agreed that the Court at Nagpur will alone have jurisdiction to deal with any dispute. It is urged that certain shortcomings came in execution of the work by the respondent No.1, therefore, the petitioner by letter of invocation dated 16.08.2016 (Annexuer-P/3) invoked the Bank Guarantee.
4. The respondent No.1 filed MJC (AV) 51/2016 under Section 9 of the Arbitration and Conciliation Act, 1996 (for short the "Arbitration Act"). The petitioner filed reply pregnant with preliminary objection with regard to the territorial jurisdiction of Court at Bhopal. In addition, the petitioner filed an application under Section 20 of the Code of Civil Procedure (in short "CPC") (Annexure-P/6) and raised objections with regard to jurisdiction of the Court at Bhopal. The said objection has been rejected by the Court below by impugned order.
5. Learned counsel for the petitioner submitted that the Bank Guarantee contains jurisdiction clause pursuant to which parties can file appropriate proceedings at Nagpur alone. It is canvased that such an agreement is valid in view of law laid down by Apex Court in 2004 (4) SCC 677 [New Moga Transport Co. vs. United India Insurance Co. Ltd. & others]. 1996(3) SCC 443 [South East Asia Shipping Co. Ltd. vs. Nav Bharat Enterprises Pvt. Ltd. & others] , was referred to contend that merely because the Bank Guarantee was executed at Bhopal and has been transmitted from one place to another place for performance, the Courts at Bhopal can not have jurisdiction. Mr. Sirpukar, learned counsel for the petitioner argued that the impugned order passed by the Court below runs contrary to aforesaid legal position. In support of this contention written synopsis are also produced.
6. Per contra, Mr. Atul Anand Awasthy, learned counsel for the respondent contends that the Court below has rightly exercised the jurisdiction and did not commit any legal error whatsoever in rejecting the application filed by the petitioner under Section 20 of CPC. He submits that the Court below's order is inconsonance of Section 20(b) & (c) of CPC. In support of this contention he relied on 1999 Bank Journal-268- Patna High Court [Sarraf Enterprises vs. Canara Bank], Air 1999 MP 271 [Jabalpur Cable Network vs. ESPN Software India] , AIR 1971 SC 741 [Hakam Singh vs. M/s Gammon (India) Ltd.] , AIR 1989 SC 1239 [ABC Laminart Pvt. Ltd. & another vs. A.P. Agencies. Salem], 2011 (1) MPHT 298 [Life Care International vs. Mahindra & Mahindra Ltd.] , 1991 (4) SCC 270 [Patel Roadways Ltd. vs. Prasad Trading Company], AIR 2004 SC 1998 [National Textile Corporation vs. Haribox Swalram] , II (1995) BC 372 (SC) [Angile Insulation vs. Davy Ashore India Ltd.].
7. No other point has been pressed by the learned counsel for the parties.
8. I have heard the parties at length and perused the record.
9. The Court below has rejected the application of the petitioner on the ground that the respondent No.2 is situate at Bhopal. The Bank Guarantee was issued by the respondent No.2 and it is sought to be invoked before the respondent No.2. This clearly shows that one of the defendants resides within the territory of the Court below and cause of action has arisen within the territory of the aforesaid Court. The core issue is that whether these reasons assigned by the Court below are proper, legal and in consonance with law. Section 20 of CPC reads as under:
"20. Other suits to be instituted where defendants resides or cause of action arises. - Subject to the limitations aforesaid, ever suit shall be instituted in a Court within the local limits of whose jurisdiction-
(a) the defendant or each of the defendant where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or
(b) any of the defendants, where there are more than one, at time of the commencement of the suit, actually or voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not resides, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) the cause of action, wholly or in part, arises."
10. Mr. Sirpurkar, learned counsel for the petitioner placed reliance in the case of South East Asian Shipping Company (Supra). In the said case the Apex Court was basically dealing with Section 20(c) CPC. While dealing with import and meaning of word "cause of action" it was held that it is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which if traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgment of the Court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e., within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained. This judgment was heavily relied by Mr. Sirpurkar, during the course of arguments. In my judgment, this judgment is not of much assistance to the present petitioner in the peculiar facts and circumstances of this case. It is noteworthy that in the case of Nav Bhart Enterprises (Supra) the Apex Court mainly dealt with Clause (c) of Section 20 of CPC and did not deal with the Clause 20(b) CPC. In the said case, the Bank Guarantee was executed at Delhi and transmitted to Bombay. In this factual back drop, it was held that it does not constitute cause of action to give rise to respondents to lay the suit before Delhi High Court on original side. In the present case, the Bank Guarantee not only signed at Bhopal but it is sought to be invoked at Bhopal. Section 20(b) of CPC makes it clear that suit can be filed wherein any of the defendant actually and voluntary resides or carries on business. In AIR 1963 SC 1681 [Union of India vs. Ladulal Jain] , the Apex Court has held that principle behind the provision of Clause (a) and (b) of Section 20 is that the suit be instituted at the place whereby the defendant be able to defend the suit without undue trouble. In the recent judgment reported in 2015 (10) SCC 161 [Indian Performing Rights Society Ltd. Vs. Sanjay Dalia & another] , the Apex Court laid down that Section 20 CPC enables plaintiff to file suit whereby the defendant resides or where the cause of action arose. Section 20(a) and (b) CPC usually provide venue where the defendants or all of them resides, carries on business or personally works for gains. Section 20(c) enables the plaintiff to institute the suit where cause of action wholly or in particular arises. It is further held that the "Corporation" in the Explanation to Section 20 CPC would mean not only statutory corporations but companies registered under the Companies Act. The domicile of the company is fixed by the situation of its principal place of business. In the case of companies registered under the Companies Act, the controlling power is, as a fact, generally exercised at the registered office, and that office is not only for the purposes of the Act, but for other purposes, the principal place of business. A Company may have subordinate or branch offices in fifty different jurisdictions and it may be sued in one of such jurisdictions in respect of a cause of action arising there. Usually clause
(a) to (c) of Section 20 CPC, a plaintiff has a choice of forum and cannot be compelled to go to a place of business or residence of the dependent and can file a suit where the cause of action arises.
11. I have no scintilla of doubt that the application filed under Section 9 of the Arbitration Act filed by the respondent No.1 was maintainable because respondent No.2 is situate within the territory of Court below and cause of action has also arisen within the said territory. It is noteworthy that by preferring an application under Section 9 of the Arbitration Act, the respondent No.1 has prayed for an injunction so that till commencement of arbitral proceedings, the Bank Guarantee is not invoked. The Bank Guarantee will be invoked at Bhopal, and therefore, cause of action which is subject matter of adjudication under Section 9 has arisen within the territory of Court below. It is condign to see that under Section 9 of the Arbitration Act, a party before or during arbitral proceedings may approach the Court for certain purposes mentioned therein. It includes a protection relating to "securing the amount in dispute in the arbitration". Other interim protection may also be granted which in the opinion of Court are just and convenient. The respondent No.1 has filed the instant application under Section 9 of the Arbitration Act seeking protection from invocation of bank guarantee. I am unable to hold that for the said purpose, cause of action has not arisen at Bhopal. It is also important to note that present petitioner is not signatory to the Bank Guarantee. The Bank Guarantee is signed by respondent No.1 and respondent No.2. The judgment of Apex Court in New Moga Transport Company (Supra) cannot be pressed into service in the present case because the petitioner is not signatory to the Bank Guarantee, and therefore, in a dispute between him and respondent No.1, he cannot insist that jurisdiction to try the dispute is confined to the Courts at Nagpur. At the cost of repetition, it is mentioned that in the case of Nav Bharat Enterprises (Supra) the Supreme Court held that the cause of action is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief. Thus the facts situation of the case and law applicable put together decide the aspect of cause of action. In Nav Bharat Enterprises (Supra) the civil suit on the original side was filed before the Delhi High Court. The said matter was not arising out of Section 9 of the Arbitration Act. As analyzed above, Section 9 of the Arbitration Act is wide enough to bring within its purview the prayer of grant of interim relief in relation to invocation of Bank Guarantee or for other purposes mentioned in the said Section. Hence, in my view, the factual matrix of the present case and the law involved (Section 9 of the Arbitration Act) put together gives jurisdiction to the Court below. For these reasons, the judgment in Nav Bharat Enterprises (Supra) is of no assistance. This is trite law that a judgment cannot be construed as a statute. In other words, the judgment cannot be read as euclid's theorem. The Apex Court deprecated the practice of blindly relying on the judgment without considering the factual and legal position prevailing in the particular case (See: 2003 (11) SCC 584 [Ashwani Kumar Singh vs. U.P. Public Service Commission & others] , 2003 (2) SCC 11 Bhavnagar University vs. Palitana Sugar Mills Pvt. Ltd.], 2007 (11) SC 92 [U.P. State Electricity Board vs. Pooran Chandra Pandey], 2011 (5) SCC 701 [S Mohil Suri vs. CBI], 2015 (10) SCC 161 [Indian Performing Right Society Ltd. vs. Sanjay Dalia] , 2016 (3) SCC 762 [Vishal N. Kalsaria vs Bnak of India] ). In 2003 (2) SCC 111 [Bhavnagar University vs. Palitana Sugar Mill (P) Ltd. & others] it is laid down that a decision is a authority for which it is decided and not what can logically be deduced therefrom. The little difference in facts or an additional fact may make a lot of difference in the precedential value of the decision. In the factual matrix of case and in view of Section 9 of the Arbitration Act, I am of the considered view that the Court situate at Bhopal has jurisdiction to entertain the case.
12. In the opinion of this Court, the Court below has taken a plausible view. The order impugned does not suffer from any manifest procedural impropriety jurisdictional error or palpable perversity. Thus, interference under Article 227 of the Constitution is declined. Petition is dismissed.
(SUJOY PAUL) JUDGE s@if/YS