Premium Industries India Ltd., Calcutta vs Quality Fabricators and 2 others

The petitioner who is the first defendant in the suit in O.S.No.4323 of 1995 on the file of the II Assistant City Civil Court, Madras, has filed the

above revision aggrieved against the order passed in I.A.No.8725 of 1995 in O.S.No.4323 of 1995, dated 20.09.1995, which was confirmed by

the learned III Additional City Civil Judge, Madras in C.M.A.No.146 of 1995.

The plaintiff/first respondent filed a suit in O.S.No.4323 of 1995 praying for a decree for permanent injunction restraining the defendants from in

any way releasing, sending/despatching, encashing the bank guarantee provided by the plaintiff, through the second defendant bearing Bank

guarantee Nos.D2/CC11/43/93-94, dated 3.8.1994 and D2/CC1147/47/93-94, dated 17.8.1994. Pending the suit, the petitioner filed an

application in I.A.No.8725 of 1995, under Order 39, Rule 1 of the Code of Civil Procedure, seeking an order of interim injunction restraining the

second defendant officials from in any way despatching/sending/releasing the Demand Draft drawn in favour of the first respondent which

represents the amount covered under the two Bank Gurantees dated 3.8.1994 and 17.8.1994 issued by the second respondent. The first

respondent/plaintiff also filed another application in I.A.No.8726 of 1995 with which we are not concerned in this revision. The trial court in its

common order dated 20.9.1995 held that it has jurisdiction to try the suit and also on merits granted injunction only with respect to the Bank

Guarantee dated 17.8.1994 and rejected the prayer for injunction with respect to the Bank Guarantee dated 3.8.1994. Aggrieved against the

same, the plaintiff/first respondent filed C.M.A.No.134 of 1995 on the file of the Principal City Civil Court, Madras. The Petitioner/first defendant

filed another appeal in C.M.A.No.146 of 1995 on the file of the III Additional City Civil Court, Madras. The lower appellate court while dealing

with the said appeals in common, dismissed the appeals filed by the plaintiff and the first defendant. The said order passed in C.M.A.No.134 of

1995 filed by the plaintiff was confirmed by this Court in C.R.P.No.222 of 1996, by dismissing the said revision. The first defendant/petitioner has

therefore filed the present revision, aggrieved against the orders of the courts below, granting injunction with respect to the bank guarantee dated

17.8.1994.

The learned counsel appearing for the petitioner has submitted that between the parties it was agreed, with respect to the jurisdiction of the civil

court, as follows:-

239 It has been further agreed by both the parties that if there is any dispute in this deal, it will be decided in the jurisdiction of Dhanbad courts.

On the basis of the abovesaid clause of the agreement arrived at between the parties in the meeting held on 13.5.1992, the learned counsel has

submitted that the City Civil Court, Madras has no jurisdiction to try the suit and consequently any order passed in the said application cannot be

sustained. On merits, the learned counsel has submitted that since the plaintiff/first respondent has given bank guarantee in favour of the

petitioner/first defendant as a condition for discharging some obligation, and, if the said obligation is not discharged, the first defendant is entitled to

enforce the said bank guarantee, and its rights cannot be injuncted.

Contrary to this submission, the learned counsel appearing for the first respondent/plaintiff has submitted that since there is no exclusion of the

jurisdiction of other courts, the City Civil Court, Madras has jurisdiction to try the suit. On merits, the learned counsel has further submitted that

since the petitioner/first defendant has not paid the second and third installments of Rs.30,00,000 as agreed, the first respondent/plaintiff is justified

in asking for an order of injunction as prayed for.

The clause in the bank guarantee which was dated 17.8.1994, which is marked as Ex.p-18 is as follows:-

And whereas the purchaser has agreed to advance an amount of Rs.30,00,000 (Rupees thirty lakhs only) to the contractor exclusively for the

purpose of aforesaid upon the contractor furnishing to the purchaser an irrevocable bank guarantee of Rs.20,00,000 in such form and content as

the purchaser shall prescribe from any of the schedule banks

In view of the abovesaid clause, it will be clear that the bank guarantee of Rs.20,00,000 was furnished only to safeguard the advance payment of

30,00,000 to the plaintiff. The said bank guarantee is an independent contract, and, non-performance of the main contract entered into between

the parties will not have any bearing to invoke the bank guarantee given under Ex.P-18. Since the petitioner/first defendant has not discharged his

obligation by paying the said sum of Rs.30,00,000 to prevent the irretrievable injustice, the plaintiff is seeking an order of injunction from enforcing

the said bank guarantee. Without even performing his obligation by paying the corresponding amount of Rs.30,00,000 to the first

respondent/plaintiff, if the petitioner is allowed to enforce the bank guarantee it would cause irretrievable injustice to the first

respondent/plaintiff/and the suit itself will become infructuous.

The courts below were able to differentiate the bank guarantees dated 3.8.1994 and 17.8.1994, and the order of the injunction was refused

with respect to the bank guarantee dated 3.8.1994, Further, as the plaintiff has proved special equity in his favour and established the prima facie

case with respect to the bank guarantee dated 17.8.1994, the courts below have rightly granted injunction as prayed for, pending the suit.

The learned counsel appearing for the petitioner has vehemently argued with respect to the jurisdiction of the City Civil Court, Madras to try the

suit filed by the first respondent/plaintiff. According to the learned counsel, as agreed to in the said clause No.23 extracted above of the minute, the

plaintiff cannot file the suit in the City Civil Court, Madras. In support of her submission, she has relied on the decision in South East Asia Shipping

Co. Ltd v. Nav Bharat Enterprises Pvt. Ltd., 1996 (3) SCC 433. In the said case, the respondent therein filed a suit on the Original Side of the

Delhi High Court for perpetual injunction against the appellant from enforcing the bank guarantee. The learned single Judge held that the

court/lacked jurisdiction to entertain the suit. The Division Bench, on appeal, on the basis of the fact that the bank guarantee was executed at Delhi

and payments were to be made in Delhi held that the High Court has jurisdiction to try the suit. Aggrieved against the same, the appellant filed

appeal before the Apex Court. On the basis of the fact that the appellant executed the bank guarantee at Delhi and transmitted/the same to

Bombay for performance of the contract held that 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 learned counsel appearing for the petitioner has also relied on the decision in M/s. Angile Insulations Vs. M/s. Davy Ashmore India Ltd.

and another, . Taking into consideration of the clause (21) of the contract between the parties in that case, the Apex Court has held as follows:-

In this view the law and in view of the fact that the agreement under which clause (21) was incorporated as one such clause, the parties are bound

by the contract. The contract had not been pleaded to be void and being opposed to Section 23 of the Contract Act. As seen, clause (21) is

unambiguous and explicit and that, therefore, the parties having agreed to vest the jurisdiction of the court situated within the territorial limit of High

Court of Karnataka, the Court of Subordinate Judge, Dhanbad in Bihar State has no jurisdiction to entertain the suit laid by the appellant.

Therefore, the High Court was right in upholding the order of the trial court returning the plaint for presentation.

The abovesaid decision cannot have any assistance to the petitioner''s case, as the clause (21) of the contract in that case excludes the jurisdiction

of other courts. So, while dealing with such a clause, the Aped Court held that the suit filed by the plaintiff would lie in the court agreed to by the

parties and the other courts situated within the territorial jurisdiction of High Court of Karnataka cannot entertain the suit.

The learned counsel appearing for the petitioner has further relied on the decision in M/s. Idcol Cement Ltd. Bargarh, Orissa v. M/s. Fuller India

Ltd., 1998 (II) M.L.J 654. In that case, clause (28) of the agreement between the parties came up for consideration, which reads as follows:-

28.3. The contract will be governed and constituted by the laws of India as applicable in Orissa and the courts of Bargarh courts having

jurisdiction over Bargarh shall have jurisdiction with respect to all matters related to this contract

Considering that clause, the learned Judge held that the suit can be filed only on the basis of the said clause and not in the City Civil Court, Madras,

whose jurisdiction is excluded under the said clause.

In the present case, as extracted above, clause (23) of the agreement reads as follows:-

It has been further agreed by both the parties that if there is any dispute in this deal, it will be decided in the jurisdiction of Dhanbad courts.

On a reading of the abovesaid clause, it cannot be said that it excludes the jurisdiction of the other courts. Such a conclusion is arrived at on the

basis of the decision in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, whether it is held as follows:-

The question then is whether it can be construed to have excluded the jurisdiction of the Court at Salem. In the clause any dispute arising out of

this sale shall be subject to Kaira jurisdiction'' ex facie we do not find exclusive words like ''exclusive'', ''alone'', ''only'', and the like. Can the maxim

''expressio unius est exclusio alterius'' be applied under the facts and circumstances of the case? The order of confirmation is of no assistance. The

other general terms and conditions are also not indicative of exclusion of other jurisdictions. Under the facts and circumstances of the case we hold

that while connecting factor with Kaira jurisdiction was ensured by fixing the situs of the contract within kaira, other jurisdiction having connecting

factors were not clearly, unambiguously and explicitly excluded. That being the position it could not be said that the jurisdiction of the Court at

Salem which Court otherwise had jurisdiction under law through connecting factors of delivery of goods thereat was expressly excluded. We

accordingly find no error or infirmity in the impugned judgment of the High Court"".

The Apex Court in the abovesaid decision has further held as follows:

When the Court has to decide the question of jurisdiction pursuant to an ouster clause it is necessary to construe the ousting expression or clause

properly. Often the stipulation is that the contract shall be deemed to have been made at a particular place. This would provide the connecting

factor for jurisdiction to the Courts of that place in the matter of any dispute on or arising out of that contract. It would not, however, ipso facto

take away jurisdiction of other Courts. Thus, in Salem Chemical Industries, a registered Firm Vs. Bird and Co. (P) Ltd., Calcutta, where the terms

and conditions attached to the quotation contained an arbitration clause provided that: ''any order placed against this quotation shall be deemed to

be a contract made in Calcutta and any dispute arising therefrom shall be settled by an Arbitrator to be jointly appointed by us'', it was held that it

merely fixed the situs of the contract at Calcutta and it did not mean to confer an exclusive jurisdiction on the Court at Calcutta, and when a part of

the cause of action had arisen at Salem, the Court there had also jurisdiction to entertain the suit u/s 20(c) of the Code of Civil Procedure.

From the foregoing decision 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 I 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 contracy an

intention to exclude all others from its operation may in such cases be inferred. It has therefore to be properly construed.

While construing similar clause regarding the jurisdiction of the court, the Apex Court in R.S.D.V. Finance Co. Pvt. Ltd. Vs. Shree Valllabh

Glass Works Ltd., has held as follows:-

We may also consider the effect of the endorsement ''subject to Anand jurisdiction'' made on the deposit receipt issued by the defendant. In the

facts and circumstances of this case, it cannot be disputed that the cause of action had arisen at Bombay as the amount of Rs. 10,00,000/- itself

was paid through a cheque of the Bank at Bombay and the same was deposited in the bank at Nariman point Bombay. The five post dated

cheques were also issued by the defendant being payable to the plaintiff at Bombay. The endorsement ''Subject to Anand jurisdiction'' has been

made unilaterally by the defendant while issuing the deposit receipt. The endorsement ''Subject to Anand jurisdiction'' does not contain the ouster

clause using the words like ''alone'', ''only'', ''exclusively'', and the like. Thus the maxim ''expressio unius est exclusio alterius'' cannot be applied

under the facts and circumstances of the case and it cannot be held that merely because the deposit receipt contained the endorsement ''Subject to

Anand jurisdiction'' it excluded the jurisdiction of all other courts who were otherwise competent to entertain the suit. The view taken by us finds

support from a decision of this Court in A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, .

As set out in clause 14 of the agreement, the parties agreed that the representatives of the plaintiff would provide necessary coverage for total

advance by providing suitable security and the mode of security will be finalised at Madras. From the above, it can be inferred that the bank

guarantees were finalised and accepted only at Madras. The bank guarantee were also admittedly given at Madras. So, it cannot be denied that

the cause of action has arisen, for filing the suit, at Madras. So, the decision in South East Asia Shipping Co. Ltd. Vs. Nav Bharat Enterprises Pvt.

Ltd. and Others, cannot be made applicable to the facts of this case.

In view of the above decisions of the Apex Court namely, A.B.C. Laminart Pvt. Ltd. and Another Vs. A.P. Agencies, Salem, and R.S.D.V.

Finance Co. Pvt. Ltd. Vs. Shree Valllabh Glass Works Ltd., , I am not relying on the decision in Idcol Cement Ltd. Vs. Fuller India Ltd. and

Another, .

So, I find that the City Civil Court, Madras has jurisdiction to try the suit, since the said clause 23 of the agreement in this case does not

contain the ouster clause using the words ''alone'', ''only'', ''exclusive'' and the like.

For the foregoing reasons, I do not find any merits in this revision. Accordingly, the same is dismissed. No costs. Consequently,

C.M.P.Nos.3753 and 3754 of 1996 are closed.