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Harji Engineering Works Pvt. Ltd. v/s Hindustan Steelworks Construction Ltd.

    General Application Nos. 3191 of 2018, 613 & 781 of 2019 & Civil Suit No. 212 of 2018

    Decided On, 03 January 2020

    At, High Court of Judicature at Calcutta

    By, THE HONOURABLE MR. JUSTICE DEBANGSU BASAK

    For the Appearing Parties: Abhrajit Mitra, Chayan Gupta, Dwip Raj Basu, Sweta Gandhi Murgai, Urmila Chakraborty, Kasturi Dasgupta, Advocates.



Judgment Text


1. Three applications are taken up for analogous hearing as they are in the same suit. Old GA No.781 of 2019, New GA No.4 of 2019 is an application of the defendant for rejection and/or dismissal of the instant suit. For the sake of convenience, the application is referred to as the demurrer application. GA No.3191 of 2018 is an application of the plaintiff for judgment on admission. There is another application at the behest of the defendant being Old GA No.613 of 2019, New GA No.3 of 2019 for extension of time to file affidavit-in-opposition in GA No.3191 of 2018.

2. Learned advocate appearing for the defendant submits that Old GA No.613 of 2019, New GA No.3 of 2019 has become infructuous since, affidavits in GA No.3191 of 2018 are complete.

3. In such circumstances, Old GA No.613 of 2019, New GA No.3 of 2019 in CS No.212 of 2018 is dismissed as infructuous.

4. The demurrer application is taken up for consideration first.

5. Learned advocate appearing for the defendant submits that, the claim of the plaintiff is ex facie barred by limitation. In support of such contention, she relies upon the averments made in the plaint. She submits that, the claim of the plaintiff is based upon the two invoices, both of which are dated July 5, 2008. The suit was filed some time in 2018. Therefore, according to her, the claim of the plaintiff on the basis of such two invoices is ex facie barred by the laws of limitation.

6. Learned advocate appearing for the defendant refers to the award of contracts made by the defendant in favour of the plaintiff on March 3, 2004 and May 31, 2004. She submits that, the clauses of the contract documents specify that, the parties agree to have the disputes settled by way of arbitration. Moreover, according to her, there is a forum selection clause which ousts the jurisdiction of this Hon'ble Court. In support of her contention, she refers to and relies upon Clauses 22.0.0 and 23.2.0 of the award of contract.

Learned advocate appearing for the defendant submits that, since the claim of the plaintiff is barred by limitation and since, there is a forum selection clause with the parties agreeing to settle the disputes by way of arbitration, the Court should be pleased to reject the plaint.

7. Learned senior advocate appearing for the plaintiff submits that, the defendant promised to pay the claim of the plaintiff over a period of time. He refers to the correspondence exchanged between the parties in this regard. He submits that, there are acknowledgments of liabilities apart from the promise to pay made by the defendant. Moreover, according to him, the cause of action of the plaintiff is based not only upon the two unpaid invoices but also on the failure on the part of the defendant to return the equipments and machineries despite promises being made. According to him, the promises were made within the period of limitation.

8. Referring to the so called forum selection clause in the award of contract, learned senior advocate appearing for the plaintiff submits that, there are two several Memorandum of Understandings both dated April 12, 2004, where the parties agreed that, the Courts at Kolkata will have jurisdiction. In any event, a part of the cause of action of the suit should arise within the chosen jurisdiction for the chosen Court to assume jurisdiction. In the present case, the defendant did not place any material before the Court to suggest, let alone substantiate that, a part of the cause of action arose within the territorial jurisdiction of the Courts of Delhi. On the face of the clause itself, according to him, the clause is vague.

9. Relying upon (SCG Contracts India Pvt. Ltd. vs. K.S. Chamankar Infrastructure Pvt. Ltd.& Ors.,2019 SCCOnLineSC 226), learned senior advocate appearing for the plaintiff submits that, the suit being a suit governed by the provisions of the Commercial Courts Act, 2015, a period of 120 days expired since the service of writ of summons on the defendant. The defendant cannot have the luxury of filing a written statement at the stage.

10. Learned senior advocate appearing for the plaintiff refers to the application for judgment on admission and submits that, there are acknowledgements of liability made by the defendant in writing. He refers to pages 298 onwards of the application and submits that, by letters dated October 1, 2012 and January 9, 2013 and even subsequent thereto, the defendant acknowledged its liability to pay the plaintiff. Therefore, according to him, the plaintiff is entitled to a decree on judgment on admission.

11. In response, learned advocate appearing for the defendant submits that since limitation is a triable issue, no decree need be passed at this stage. She submits that, since the suit was not filed in the Commercial Division, the same was directed to be transferred to the Commercial Division on November 14, 2019. The Court however on November 14, 2019 did not invoke the provisions of Section 15(4) of the Act of 2015 and prescribe new timeline or issue any direction for the disposal of the suit. Therefore, according to her, the Court retains the jurisdiction to allow the defendant to file written statement.

12. In the present suit, the plaintiff seeks money decree for Rs. 27,69,21,542/- against the defendant on account of two invoices both dated July 5, 2008. The plaintiff also seeks a decree for specific delivery of equipments described in annexure E to the plaint and in the event of non-returning of the equipments, a decree for a sum of Rs. 5,20,00,000/- against the defendant. In the alternative, the plaintiff seeks a decree on enquiry into the damages.

13. The cause of action of the plaintiff emanates out of notices inviting tenders dated September 6, 2003 and June 30, 2003 issued by the defendant. The defendant is a government of India undertaking. The plaintiff participated in such tender process and were awarded contracts by the defendant. The contracts were awarded on March 3, 2004 and May 31, 2004. There are similar clauses in the two contracts so far as forum selection clause is concerned. As a specimen the forum selection clause of the contract dated March 3, 2004 is taken into consideration. The relevant clause is clause 23.2.0 which is as follows :

"23.2.0 The laws applicable to this Contract shall be the laws in force in India. The Courts of Delhi alone shall have exclusive jurisdiction in all matters arising under this Contract."

14. There is a subsequent Memorandum of Understanding dated April 12, 2004. Such Memorandum of Understanding also contains a forum selection clause which is as follows :

"Any dispute between HSCL & HEWPL if not resolved amicably shall be referred to the appropriate Court of Law at Kolkata."

15. As rightly pointed out on behalf of the plaintiff, both the forum selection clauses in both the award of contract dated March 3, 2004 and the Memorandum of Understanding dated April 12, 2004 are vague. The forum selection clauses do not specify which of the Court at Delhi or at Kolkata will have the exclusive jurisdiction. Both Kolkata and Delhi have a number of Civil Courts which have specified territorial jurisdiction. The clauses referred to above do not specify any individual Court at Delhi or Kolkata.

16. Moreover, as pointed out on behalf of the plaintiff, a part of the cause of action should arise within the territorial jurisdiction of a Court at Delhi for such Court to assume jurisdiction. In the present case, the defendant is unable to show that any part of the cause of action of the plaintiff arose within the territorial jurisdiction of a Court at Delhi.

17. The contention that, this Court will not have jurisdiction in view of the forum selection clause in the award of contract, has no foundational basis.

18. The defendant did not apply for stay of the suit in view of the arbitration agreement. Therefore, the contention of the defendant on such aspect is not accepted.

19. The contention of the defendant that, the claim of the plaintiff is barred by limitation is also unaccepted in the facts of the present case. Limitation is a mixed question of fact and law. In considering the application under Order VII Rule 11 of the Code of Civil Procedure, 1908, the Court is to proceed on the basis that the statements made in the plaint are true and correct. On a meaningful reading of the plaint if the Court finds that the claim of the plaintiff is barred by limitation then the Court can invoke the provisions of Order VII Rule 11 of the Code of Civil Procedure, 1908 to dismiss the suit. There are pleadings in the plaint that, the defendant promised to pay the plaintiff and that such promises were made within the period of limitation. Moreover, the plaintiff pleads that, the defendant promised to return the plant and machineries in a meeting held on October 8, 2015 and that the defendant failed to do so. The prayers in the plaint as noted above contains not only reliefs with regard to the invoices but also reliefs with regard to the plant and machineries of the plaintiff which the defendant is allegedly holding onto. The plaint cannot be segregated in parts. Therefore taking the plaint as a whole it cannot be said that, on the strength of the pleadings in the plaint, the entirety of the claim of the plaintiff is barred by limitation at this stage. It would be appropriate to keep the issue of limitation open to be decided at the final hearing of the suit.

20. In view of the discussions above, the old GA 781 of 2019, new GA 4 of 2019 in CS 212 of 2018 stands disposed of without any order as to costs.

21. So far as the application for judgment on admission is concerned, there are letters emanating from the defendant which speaks of a promise to return the plants and machineries as also to pay the plaintiff. However, the issue as to whether the suit is within the period of limitation or not is yet to be decided finally. Therefore, since there is a issue of limitation involved in the suit, it would be inappropriate to pass a decree on judgment on admission without deciding on the issue of limitation finally. At this stage, therefore, the application for judgment and decree on the basis of the admission should not be allowed. GA 3191 of 2018 is disposed of accordingly without any order as to costs.

22. The instant suit was transferred to the commercial division on November 14, 2019 without the Court invoking the provision of Section 15(4) of the Act of 2015. SCG Contracts India Pvt. Ltd. (supra) is a case where a suit was filed in the commercial division and that the defendant did not file writte

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n statement within 120 days of the service of the Writ of Summons on the defendant. In such factual background, the Supreme Court held that the Court could not have extended the time for filing the written statement. The factual scenario in the present case are different. 23. As noted above, the suit was not filed in the commercial division. It was transferred to the commercial division of November 14, 2019 without the Court proceeding to pass any direction for time management. Section 15(4) of the Act of 2015 requires the Commercial Division to hold case management hearing in respect of transferred suit and prescribe a new timeline and issue further directions as may be necessary. In the facts of the present case, new time lines were not prescribed and a case management hearing did not take place. Therefore, in my view, it would be appropriate to permit the defendant to file written statement within seven days from the date. The parties will discover their documents within a fortnight thereafter. Inspection to be completed within seven days thereafter. The plaintiff will prepare the Judge's Brief of Documents. The parties are at liberty to mention the suit for early disposal.
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