Madras High Court
M/S.Secursys Technologies (P) Ltd vs M/S. Ivrcl Limited on 9 February, 2015
Author: K.Kalyanasundaram
Bench: K.Kalyanasundaram
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Orders reserved on 09.01.2015
Orders pronounced on 09.02.2015
CORAM:
THE HONOURABLE MR.JUSTICE K.KALYANASUNDARAM
C.R.P.(NPD) No.3323 of 2014
and
M.P.Nos.1 & 2 of 2014
M/s.Secursys Technologies (P) Ltd.,
Registered office: No.312 Arcot Road,
D1, Doshi Gardens, Vadapalani,
Chennai 600 026.
Rep. by its Director Mr.N.Narayanan. ... Petitioner
Vs.
1. M/s. IVRCL Limited,
Registered Off: M22/3RT, Vijayanagar colony,
Hyderabad 500 057.
Rep.by its Managing Director
2. M/s. Bank of India,
104, Thyagaraya Road,
T.Nagar, Chennai 600 017.
Rep. by its Chief Manager ... Respondents
PRAYER: Civil Revision Petition filed under Article 227 of the Constitution of India against the Fair and Decreetal order passed by the Learned XII Assistant City Civil Judge, Chennai in I.A.No.11817 of 2014 in O.S.No.3695 of 2014 dated 19.08.2014.
For Petitioner : Mr.Fazulul Haq
for M/s. Haq Law Office
For Respondents No.1 : Mr. J.Ravikumar
For Respondents No.2 : Mr.J.M.Dharma Sanjeevi
O R D E R
This civil revision petition is directed against the order passed by the Learned XII Assistant City Civil Judge, Chennai in I.A.No.11817 of 2014 in O.S.No.3695 of 2014 dated 19.08.2014.
2. The petitioner is the plaintiff in O.S.No.3695 of 2014. He filed the suit against the respondents/defendants for permanent injunction restraining the second respondent from making payment of Rs.12,16,800/- to the first respodnent by invoking the Bank Guarantee dated 11.01.2013. The petitioner has stated that the first respondent has awarded contract to the petitioner company for installing security gadgets and other equipments at their registered office in Hyderabad, that for the total project value, the petitioner company had given a PBG (Performance Bank Guarantee) of 5% (i.e) Rs.12,16,800/- executed with the second defendant. The project execution was started in December, 2012,/January, 2013, which was going on smoothly till about October, 2013, but there was abnormal delay in executing civil and allied works and hence, the petitioner's /plaintiff's work also got delayed since the plaintiff's work can be carried out only after the execution of the plaintiff's civil work.
3. It is further alleged that in the month of January, 2014, the plaintiff and the first defendant had agreed to decrease the scope of works and the plaintiff company had asked the first defendant to return the Bank Guarantee, so that a fresh Bank Guarantee for the new project may be submitted; that approvals for the work to be carried forward have not come till date, but the plaintiff was put under tremendous pressure to do the work; that the first defendant had also not paid the outstanding amount of approximately Rs.8,00,000/- to the plaintiff despite completion of work, however, the first defendant with some ulterior motive and malafide intention, terminated the contract awarded to the plaintiff and also sent a letter dated 02.07.2014 to the second defendant for invoking the Bank Guarantee.
4. In the suit, the plaintiff filed I.A.No.10026 of 2014 praying for interim injunction restraining the second defendant from making payment of the Bank Guarantee of Rs.12,16,800/-. The first defendant filed I.A.No.11817 of 2014 under Section 8 of the Arbitration and Conciliation Act, 1996 to refer the parties to Arbitration as per clause 28.1 of the General conditions of Contract dated 22.10.2012 and dismiss the suit as not maintainable.
5. The petition was opposed by the petitioner stating that the first defendant filed Ex.R1 piece rate work contract dated 22.10.2012. The trial Court after perusing Ex.R1, held that the first defendant is entitled for the relief of referring the matter to Arbitration as per clause 28.1 of the contract. Questioning the order, the present civil revision petition is filed.
6. Heard Mr.Fazulul Haq, learned counsel for the petitioner, Mr.J.Ravikumar, learned counsel for the first respondent and Mr.J.M.Dharma Sanjeevi, learned counsel for the second respondent and perused the records.
7. The learned counsel for the petitioner submitted that the first respondent has filed only xerox copy of the agreement, which was marked as Ex.P1 and failed to file the original or duly certified copy of the same as contemplated under Section 8(2) of the Act, so the application itself is not maintainable; that the second respondent is not a party to the agreement and hence, the suit cannot be referred to arbitration; that the jurisdiction of the Civil Court is not ousted when admittedly one of the defendant is not a party to the agreement. It is further submitted that when admittedly the petitioner is enjoying the order of interim order, the learned judge erred in closing the application in an arbitrary manner. The learned counsel has relied upon the judgments reported in 2003 (2) CTC 431.
8. In Sukanya Holdings Pvt.Ltd., Vs. Jayesh H.Pandya and another reported in 2003 (2) CTC 431, it is held as follows;
12. For interpretation of Section 8. Section 5 would have no bearing because it only contemplates that in the matters governed by Part I of the Act, Judicial authority shall not intervene except where so provided in the Act. Except Section 8, there is no other provision in the Act that in a pending suit, the dispute is required to be referred to the arbitrator. Further, the matter is no required to be referred to the arbitral Tribunal, if (1) the parties to the arbitration agreement have not filed any such application for referring the dispute to the arbitrator; (2) in a pending suit, such application is not filed before submitting first statement on the substance of the dispute; or (3) such application s not accompanied by the original arbitration agreement or duly certified copy thereof. This would, therefore, mean that Arbitration Act does not oust the jurisdiction of the Civil Court to decide the dispute in a case where parties to the Arbitration Agreement do not take appropriate steps as contemplated under sub-sections (1) & (2) of Section 8 of the Act.
9. The learned counsel also relied on the following judgments 2008 (2) CTC 856 (Atul Singh and others Vs. Sunil Kumar Singh and others), 2008 (4) CTC 275 ( Ceebros Property Development Pvt. Ltd., 19/1, III Cross Road, R.A.Puram, Chennai 600 028) and (2010) 1 SCC 72 ( N.Radhakrishnan Vs. Maestro Engineers and others) for the proposition that in order to satisfy the requirement of Sub Section (2) of Section 8, the defendant should have filed the original arbitration agreement or a duly certified copy thereof along with the application. Since the defendant failed to do so, the order of referring the dispute to arbitration could not have been passed in the suit.
10. Per contra, the learned counsel for the respondents submitted that the suit was mainly laid against the first defendant. The contract between the plaintiff and the first defendant was terminated on 05.06.2014 and the first defendant has invoked the Bank Guarantee on 02.07.2014. The original work order is with the plaintiff and suppressing the termination of the contract, the plaintiff has filed the suit on 07.07.2014.
11. It is further submitted that the Bank Guarantee is an unconditional one. The plaintiff has wrongly taken the defence that the original was not filed. It is further submitted that the plaintiff cannot take a technical defence to defeat the right of the first defendant. The learned counsel further submitted that on 02.07.2014, the first defendant invoked the Bank Guarantee and as per the normal procedure, within 48 hours the bank guarantee could be encashed, but the second defendant, colluding with the plaintiff delayed the invocation of the bank guarantee. The learned counsel would further submit that the first defendant has already invoked the bank guarantee and the suit itself has become infructuous.
12. The learned counsel for the first respondent has relied on the judgment reported 2007 1 LW 772 (The General Manager, Northern Railway, Baroda House, New Delhi Vs. The Metal Powder Company Limited, rep. by the Managing Director, Administrative Office and Factory at Maravankulam, Thirumangalam and another), CDJ 2009 DHC 569,( M/s. Value Advisory Services Vs. M/s. ZTE Corporation & Others), CDJ 2011 MHC 1550, (M/s. Hydroair Tectonics (PCD) Ltd., Rep. by its Managing Director H.B.Singh Vs. M/s. Sirupooluvapatti Common Effluent, Rep.by its Managing Director N.V.Murthy and Another) and 2009 2 CTC 234.
13. In 2007 1 LW 772 (The General Manager, Northern Railway, Baroda House, New Delhi Vs. The Metal Powder Company Limited, rep. by the Managing Director, Administrative Office and Factory at Maravankulam, Thirumangalam and another) and in 2008 (6) CTC 447 (Thirumuruga Kirupananda Variyar Thavathiru Sundara Swamigal Medical Educational and Charitable Trust, rep. by Dr.A.S.Ganesan, Vict Chairman, Salem District, Tamil Nadu State Vs. 1. Sahu Trust, rep. by its Managing Trustee, Mr.Gangadhar Sahu, Khurda District, Orissa State and two others), in those cases, the original agreement or a certified copy of the sale was not filed along with the application under Section 8 of the Act, however, produced during the hearing of the petition. In the above facts, this Court has held that non production of the original agreement or certified copy of the sale along with the petition cannot be a ground to reject the application.
14. In CDJ 2009 DHC 569,( M/s. Value Advisory Services Vs. M/s. ZTE Corporation & Others), a petition under Section 9 of Arbitration and Conciliation Act was filed against a 3rd party to the Arbitration of agreement. The Delhi High Court has held as follows:
18. However, considering the nature of proceeding under Section 9, I find that the court is not bound to, where the third party, with respect to property/money in whose hands attachment is issued, denies liability and such denial raises disputed questions of fact which cannot be adjudicated without trial, to conduct trial. The court, in such cases in its discretion can on a prima facie view of the matter, either refuse to exercise powers under Section 9 or pass other appropriate order to protect the interest of all parties concerned.
15. In CDJ 2011 MHC 1550, (M/s. Hydroair Tectonics (PCD) Ltd., Rep. by its Managing Director H.B.Singh Vs. M/s. Sirupooluvapatti Common Effluent, Rep.by its Managing Director N.V.Murthy and Another), the Division Bench of this Court has held that in cases of invocation of bank guarantee, the bank guarantee cannot be injuncted except on the ground of fraud and irreparable loss. In my considered opinion, the judgments relied on by the first respondent do not have any bearing on the facts of this case.
16. The counsel for the second respondent would submit that the entire allegation made by the first defendant against the second defendant is false and the second defendant is ready to obey the order of the Court and the second defendant is only a formal party in this civil revision.
17. In the present case, undisputedly, the first defendant has neither produced the original agreement nor the certified copy of the agreement along with the application or subsequently. As per the decision of the Hon'ble Apex Court referred supra, the filing of the original deed or the certified copy is mandatory while filing the application under Section 8.1 of the Arbitration and Conciliation Act. In this case Ex.R1 peace rate work contract is not the original order. The first respondent ha snot produced the certified copy of the order also.
18. In the light of the decisions of the Hon'ble Apex Court, the order passed by the XII Assistant City Civil Court, Chennai in I.A.NO.11817 of 2014 cannot be sustained. Since the impugned order is liable to be set aside for non compliance of mandatory provision containing under Section 8.2. of the Act, I am not deciding the other contention raised in this Revision.
In the result, the civil revision petition is allowed. No costs. Consequently, connected miscellaneous petitions are closed.
09.02.2015
Index : Yes/No
Internet: Yes/No
sms
To
The Learned XII Assistant City Civil Judge, Chennai.
K.KALYANASUNDARAM, J.
sms
Pre-delivery order in
C.R.P.(NPD) No.3323 of 2014
and
M.P.Nos.1 & 2 of 2014
09.02.2015