w w w . L a w y e r S e r v i c e s . i n



M/s. Indo Unique Flame Ltd. v/s M/s. N.N. Global Merchantile Pvt. Ltd. & Others


Company & Directors' Information:- B N GLOBAL PRIVATE LIMITED [Active] CIN = U15400PB2014PTC038543

Company & Directors' Information:- K V GLOBAL PRIVATE LIMITED [Active] CIN = U24100DL2014PTC263567

Company & Directors' Information:- GLOBAL CORPORATION LIMITED [Active] CIN = L74999DL1992PLC048880

Company & Directors' Information:- T & I GLOBAL LTD. [Active] CIN = L29130WB1991PLC050797

Company & Directors' Information:- K G GLOBAL PRIVATE LIMITED [Active] CIN = U74999DL2000PTC104788

Company & Directors' Information:- A. V. GLOBAL CORPORATION PRIVATE LIMITED [Active] CIN = U63090DL2007PTC159315

Company & Directors' Information:- A N GLOBAL LIMITED [Active] CIN = U92110MH1985PLC035269

Company & Directors' Information:- D S GLOBAL PRIVATE LIMITED [Active] CIN = U74899DL1995PTC071516

Company & Directors' Information:- A B C GLOBAL PRIVATE LIMITED [Active] CIN = U51909PB2011PTC035103

Company & Directors' Information:- I A T GLOBAL COMPANY PRIVATE LIMITED [Active] CIN = U24116DL1997PTC084916

Company & Directors' Information:- J D GLOBAL PRIVATE LIMITED [Active] CIN = U51909DL1997PTC091270

Company & Directors' Information:- B N G GLOBAL INDIA LIMITED [Active] CIN = U52590DL2011PLC225377

Company & Directors' Information:- N K COMPANY (GLOBAL) PRIVATE LIMITED [Active] CIN = U52390WB2010PTC153624

Company & Directors' Information:- K B K GLOBAL PRIVATE LIMITED [Active] CIN = U24296DL2016PTC290487

Company & Directors' Information:- M & D GLOBAL PRIVATE LIMITED [Active] CIN = U31101UP1974PTC003937

Company & Directors' Information:- V R GLOBAL PRIVATE LIMITED [Active] CIN = U45200WB2007PTC120797

Company & Directors' Information:- M M GLOBAL PRIVATE LIMITED [Strike Off] CIN = U29120WB1986PTC041280

Company & Directors' Information:- R V GLOBAL PRIVATE LIMITED [Active] CIN = U74990MH2009PTC195301

Company & Directors' Information:- M M C GLOBAL INDIA PRIVATE LIMITED [Strike Off] CIN = U11200MH2010PTC206910

Company & Directors' Information:- S R GLOBAL PRIVATE LIMITED [Strike Off] CIN = U51109WB1997PTC084553

Company & Directors' Information:- H V GLOBAL PRIVATE LIMITED [Active] CIN = U18101DL2000PTC103960

Company & Directors' Information:- R P GLOBAL PRIVATE LIMITED [Strike Off] CIN = U74990MH2009PTC193409

Company & Directors' Information:- M S GLOBAL PRIVATE LIMITED [Active] CIN = U70100MH2008PTC213273

Company & Directors' Information:- R S V GLOBAL LIMITED [Strike Off] CIN = U51909DL1994PLC059032

Company & Directors' Information:- N B GLOBAL (INDIA) PRIVATE LIMITED [Active] CIN = U15122UP2012PTC051614

Company & Directors' Information:- UNIQUE INDIA PRIVATE LIMITED [Strike Off] CIN = U65999DL1985PTC021157

Company & Directors' Information:- A M GLOBAL PRIVATE LIMITED [Active] CIN = U74999MH2015PTC261061

Company & Directors' Information:- L S A GLOBAL INDIA PRIVATE LIMITED [Under Process of Striking Off] CIN = U74900TG2015PTC098308

Company & Directors' Information:- R L GLOBAL INDIA PRIVATE LIMITED [Strike Off] CIN = U52300HP2014PTC000764

Company & Directors' Information:- G R GLOBAL PRIVATE LIMITED [Active] CIN = U70102KA2013PTC069586

Company & Directors' Information:- H. E. GLOBAL PRIVATE LIMITED [Active] CIN = U72901GJ2016PTC092866

Company & Directors' Information:- INDO CORPN PVT LTD [Strike Off] CIN = U51909WB1951PTC020160

    Writ Petition No. 1801 of 2020

    Decided On, 30 September 2020

    At, In the High Court of Bombay at Nagpur

    By, THE HONOURABLE MR. JUSTICE ANIL S. KILOR

    For the Petitioner: S.P. Bhandarkar, Amit Khare, Advocates. For the Respondents: R1, Shyam Dewani, R2, M. Anil Kumar, Advocates.



Judgment Text

1. Rule. Rule made returnable forthwith. Heard finally with the consent of learned counsel for the respective parties.2. In a dispute filed by the respondent no.1 in relation to a Bank Guarantee given by the respondent no.1 to the petitioner in pursuance to the work order dated 28th September, 2015, the petitioner’s application Exh.33 for referring the said dispute to the Arbitral Tribunal, under Section 8 of the Arbitration and Conciliation Act, 1996 (the Act, 1996), came to be rejected, vide order dated 18th January, 2018 by the Commercial Court, Nagpur, the same is the subject matter of challenge in the present petition.3. I have heard Shri S. P Bhandarkar learned counsel with Shri Amit Khare, learned counsels for the petitioner/defendant No. 1, Shri Shyam Dewani with Shri S.S. Dewani, learned counsels for the respondent No. 1/ plaintiff and Shri Anil Kumar, learned counsel for the respondent No. 2, State bank of India. None appeared for respondent No. 3, Union Bank of India.4. The facts in short, leading to the present petition are as follows:4.1. The plaintiff/respondent no.1 filed a commercial suit before the learned Commercial Court, for declaration and permanent injunction, against the petitioner/defendant no.1 and respondent Nos. 2 and 3, banks.4.2. It is the case of the plaintiff that the defendant no1 was needed specialized services for transportation of the coal from its washeries to the stockyard, siding and for coal handing.4.3. The plaintiff being experts in the said work, after negotiations, a work order dated 28th September, 2015, was issued by the defendant No. 1, to the plaintiff for the above referred work.4.4. The plaintiff in pursuance to the terms and conditions of the work order, issued Bank Guarantee, dated 30th September, 2015, in favour of respondent no.2, State Bank of India for an amount of Rs. 3,36,00,000/- (Three Crores Thirty Six Lacs).4.5. Plaintiff pleads further that the agreement dated 28th September, 2015 was never acted upon as no work was allotted by the defendant no.1 to the plaintiff, as per the agreement.4.6. Plaintiff further states that the defendant no.2, State Bank of India on 7th December, 2017, issued a letter to the defendant no.3, Union Bank of India, for invoking the Bank Guarantee.4.7. This gave the cause of action to the petitioner to file a suit for declaration and permanent injunction against the petitioner and respondent nos. 2 to 3.4.8. The learned Commercial Court on 15th December, 2017, after hearing the plaintiff, passed ad-interim order below Exh-5, which reads thus:ORDER(i) Defendants are hereby, till the next date, restrained from invoking and crediting amount under Bank Guarantee bearing No. 44240IGL0011515, dated 30/09/2015, executed by defendant no.3 in favour of defendant no.2.(ii) Issue show cause notice to the defendants as to why adinterim order should not be confirmed. Notice returnable on 19/12/2017.(iii) Plaintiff is at liberty to intimate this order to defendants by e-mail.(iv) Hamdast allowed.”4.9. The defendant no.1/petitioner on the first date of appearance in the said suit, filed an application Exh.33 under Section 9A, Order VII Rule 11(D) of the Code of Civil Procedure read with Section 8 of the Act, 1996, inter alia stating that clause 10 of the work order, which relates to arbitration is binding on the plaintiff, therefore, refer the matter to the Arbitral Tribunal, by declaring that the Commercial Court does not have jurisdiction.4.10. The plaintiff strongly opposed the said application by filling its reply to the same.4.11. The learned trial Court after considering the contentions raised by the respective parties, rejected the said application Exh.33, vide order dated 18th January, 2018.4.12. The petitioner prior to filling of this petition made an unsuccessful attempt, questioning the validity of the said order dated 18th January, 2018 in a Civil Revision Application No. 8/2018, before this Court, which was withdrawn with liberty to file present writ petition, on preliminary objection raised by the plaintiff as regards maintainability.4.13. Hence, this petition.5. Shri Dewani, learned counsel for plaintiff/respondent no.1 at the outset, raises objection to the maintainability of this petition, filed under Article 226 and 227 of the Constitution of India, on the ground that statutory alternate remedy by way of appeal is available to the petitioner.6. It is a well settled principles of law that there is no absolute bar to exercise jurisdiction under Article 226 or 227 of Constitution of India even if alternate remedy is available. In view of the principles deduced by the Hon’ble the Supreme Court of India in that regard it is imperative to first examine that whether those principles are applicable to the facts of the present case or not, which is possible only after considering the case on merit. As such, I will revert back on this issue of maintainability later at appropriate stage.7. Shri Bhandarkar, learned counsel for the petitioner submits that the respondent no.1 is not disputing arbitration agreement, thus, he submits that in absence of any specific provision excluding any category of disputes terming them to be non-arbitrable under the provisions of the Act, 1996, the learned Commercial Court ought to have referred the matter to the Arbitral Tribunal. It is submitted that as the Section 8 of the Act, 1996 contains a mandate that where an action is brought before a Judicial Authority in a manner which is the subject of an arbitration agreement, party shall be referred by it to Arbitration, if a party to or a person claiming through a party to the arbitration agreement applies not later than the date of submitting the first statement on the substance of dispute. In support of his contention he relied upon the judgments of the Hon’ble the Supreme Court of India in the case of Ananthesh Bhakta Represented by Mother Usha A. Bhakta and others Vrs. Nayana S. Bhakta and others reported in 2017(5) SCC 185 and in a case of Sundaram Finance Limited Vrs. T.Thankam reported in 2015(14) SCC 444.7.1. He draws attention of this Court to the Bank Guarantee to point out that there is a specific mention of the ‘work order’ dated 28th September, 2015, which contains clause relating to Bank Guarantee as well as Arbitration Agreement. It is submitted that in view of the said fact the Bank Guarantee cannot be considered as a separate contract between the plaintiff and the banks and therefore commercial dispute as filed by the plaintiff on the ground that the defendant no.2 and 3, banks were not party to the arbitration agreement, is not tenable. In support of his contention, he relied upon the judgment of the Hon’ble the Supreme Court of India in the case of Himadri Chemicals Industries Ltd., Vrs. Coal Tar Refining Co. reported in 2007(8) SCC 110.7.2. He further points out that the plaintiff has made allegations of fraud in the dispute with an intention to take out the dispute from the category of arbitrable dispute. It is submitted that even if in the case where the fraud is alleged and the allegation of fraud are simple and allegations are not so complicated that it becomes absolutely essential that such complex issue can be decided only by Civil Court, such dispute is arbitrable. In support of his contention, he relied upon the judgments of the Hon’ble the Supreme Court of India in the case of U.P. Co-operative Federation Ltd., Vrs. Singh Consultants and Engineers (P) Ltd. reported in 1988 (1) SCC 174 and in a case of Reliance Salt Ltd., Vrs. Cosmos Enterprises and another reported in 2006(13) SCC 599.7.3. Shri Bhandarkar, learned counsel for the petitioner draws attention of this Court to the findings recorded by the learned Commercial Court while rejecting the application Exh.33, that neither the plaintiff nor the defendant no.1 has performed any part of the contract as such bank guarantee cannot be invoked. He points out that contrary to the said findings in a letter issued to respondent no.3, the plaintiff has admitted in clear terms that the work of transportation under the above work order dated 28th September, 2015 has been successfully executed without any demur or objection from the petitioner or KPCL. Thus, in the light of said admissions he submits that the said findings given by the learned Commercial Court are contrary to record.7.4. He submits that the learned Commercial Court in the impugned order below Exh.33, has observed that the dispute raised in the suit does not fall under arbitration agreement more particularly clause 10 of the work order and therefore the jurisdiction of the Commercial court is not excluded. He points out that it is well settled that under Section 16 of the Act, 1996, the Arbitral Tribunal may rule on its own jurisdiction, thus the impugned order is illegal. He has placed reliance for this purpose, on the judgment of the Hon’ble the Supreme Court of India in a case of Hindustan Petroleum Corporation Ltd., Vrs. Pinkcity Midway Petroleums reported in 2003(6) SCC 503.7.5. In the light of his submissions made herein above, the learned counsel for the petitioner Shri Bhandarkar submits that the error committed by the learned lower Court as regards assuming jurisdiction in the present matter, the said error is manifest and apparent on the face of proceedings as it is based on clear ignorance or uttered disregard of the provisions of law which would lead to a great injustice. Therefore, he submits that this Court has a jurisdiction under Article 226 or 227 of Constitution of India to exercise its supervisory jurisdiction.7.6. Moreover, he submits that the application Exh.33 was filed by the defendant no.1 under Section 9A, Order VII Rule 11(D) of Code of Civil Procedure as well as under Section 8 of the Act, 1996 and therefore rejection of said application cannot be challenged in multiple appeals or proceedings by bifurcating the reliefs sought in the said application. Thus, he submits that on this count also this Court may not throw out the petitioner on the ground of maintainability of present petition.8. Per contra, Shri Dewani, learned counsel for the respondent no.1/plaintiff submits that appeal against an order passed in an application under Section 8 of the Act, 1996, is provided under Section 37 of the Act, 1996. Thus, he submits that a remedy by way of appeal under Section 37 of the Act, 1996, is available to the petitioner and therefore, the present petition is not maintainable. In support of his contention he has placed reliance on the judgment of Hon’ble the Supreme Court of India in a case of M/s Deep Industries Limited Vrs Oil and Natural Gas Corporation Limited and another reported in 2019(17) Scale 85 and Full Bench judgment of this Court in the case of Conros Steel Pvt. Ltd., Vrs. Lu Qin (Hong Kong) Company Ltd. And Others reported in 2015(1) J.L.J. 434.8.1. He further submits that another remedy by way of appeal is also available to the petitioner under the Commercial Courts Act, 2015 (The Act, 2015). Thus, he submits that on this count also the present petition is not maintainable. In support of this contention, he relies on the judgment of Hon’ble the Supreme Court of India in a case of BGS SGS Soma JV vs. NHPC Ltd., reported in AIRONLINE 2019 SC 1720.8.2. Shri Dewani, learned counsel for the respondent no.1/ plaintiff further submits that the impugned order has an effect of Order VII Rule 10, which is appeable under Order 43(1)(a) of Code of Civil Procedure. Thus, he submits that the petitioner is having remedies under the Code of Civil Procedure, the Act, 1996 or under the Act, 2015 to challenge the impugned order and therefore, the present petition needs to be dismissed on the ground that it is not maintainable. In support of this contention, he has placed reliance on the judgment of the Hon’ble the Supreme Court of India in the case of Kuldeep Singh Pathania Vrs. Bikram Singh Jaryal reported in 2017(5) SCC 345.8.3. On merits Shri Dewani, learned counsel for the respondent no.1/plaintiff submits that validity of agreement itself challenged in the suit on the ground that the agreement was never acted upon by both the parties and therefore the prayers made in the suit are not covered by clause 10 i.e arbitration agreement. As such, according to him Section 8 of Act, 1996 will not apply. In support of his contention, he has placed reliance on the judgment of the Hon’ble the Supreme Court of India in the case of Vaverly Jute Mills Co. Ltd., Vrs. Raymon and Company reported in AIR, 1963 SC 90, judgment in the case of Jai Kisan Das Nool Vrs. Luchhiminarayan Kanoria and Company reported in 1974 SC 521 and in the case of State of Orissa Vrs. Klockner and Company and others reported in 1996(8) SCC 377.8.4. He further submits that the Bank Guarantee is an independent contract between the issuing bank and the beneficiaries to whom the guarantees are issued. Such a contract is independent of the underlining contract between the beneficiaries and the third party at whose behest the bank guarantee is issued. It is submitted that therefore a bank guarantee must be construed on its own terms it is to be considered as a separate transaction. He submits that, therefore, the suit was rightly filed by the plaintiff against defendant nos. 2 and 3 who were not party to the arbitration agreement.8.5. He further submits that the dispute which relates to the work contract agreed upon by the parties is a subject matter of separate proceeding, and in any case the subject matter of the suit is to declare that the action of invocation of Bank Guarantee, is in contravention to the terms of contract of guarantee, as also to ensure that the bank does not encash the bank guarantee. In the said backdrop he submits that the jurisdiction of the Commercial Court cannot therefore be ousted on the ground of arbitration clause. He has placed reliance for this purpose on the judgments of the Hon’ble the Supreme Court of India in the case of Andhra Pradesh Pollution Control Board Vrs. CCL Products (India) Limited reported in 2019 SCC Online SC 985 and in the case of Simplex Infrastructure Ltd. Vrs. Siemens Ltd., and another reported in 2015(5) Mh.L.J, and also on the judgment of Karnataka High Court in NCC Limited Vrs. ABB India Limited and others reported in 2018(3) AIR Kar R 612 and judgment of this Court in Murablock India Limited Vrs. UBS Ag reported in 2001(1) BCR 371.8.6. He submits that objection under Section 9A and Order VII Rule 11 of Code Civil Procedure, is baseless. It is submitted that no case was made out by the defendant no.1 for filing of application Exh.33 and therefore the learned lower Court has rightly rejected the application Exh.33.8.7. He further argues that unstamped agreement is unforceable and therefore clause 10 of the work order will not oust the jurisdiction of the Commercial Court. In support of his contention, he placed reliance of the Hon’ble the Supreme Court of India in the case of Garware Wall Ropes Limited Vrs. Coastal Marine Constructions and Engineering Limited reported in 2019(9) SCC 209 and the judgment of this Court in the case of S.Satyanarayana and Co. Vrs. West Quay Multiport Private Limited reported in 2020(1) AIR Bom.R 490.8.8. He draws attention of this Court to the letter dated 11th December, 2017, cited by the learned counsel for the petitioner and submits that the said letter was mistakenly issued, mentioning therein that the work order dated 28th September, 2015 has been successfully executed without any demur or objection. He further points out on the same date, by issuing another letter said mistake was corrected and thereby it was communicated to the respondent no.3 that the work of transportation under the work order dated 28th September, 2015 has never been executed. Thus, according to him the first letter wherein it was mentioned that the work has been executed as per the work order dated 28th September, 2015, needs to be ignored in view of the subsequent letter. By arguing so Shri Dewani, learned counsel for the respondent no.1/plaintiff prays for dismissal of the present petition.9. To consider rival contentions of the parties, I have carefully gone through the record and perused the relevant documents, provisions of law and the judgments cited by both the parties.10. In this matter the undisputable facts are as under:i. The defendant no.1 on 28th September, 2015 issued a work order for transportation of washed coal from washery of the defendant no.1 to plaintiff’s stock yard, coal handling, siding transportation and loading of washed coal into railway wagons from Pandarpauni siding to KPCL as per the terms and conditions of the work order.ii. The said work order contains clauses in respect of Bank Guarantee and arbitration.iii. The plaintiff signed at the bottom of the said work order, endorsing its agreement to the terms and conditions of the work order.iv. The plaintiff has furnished Bank Guarantee dated 30th September, 2015, in pursuance to clause 9 of the work order dated 28th September, 2015.v. The said Bank Guarantee was extended time to time and till date it is in force.11. In the light of above referred admitted facts, and considering the rival contentions raised by the respective parties, following questions in addition to question of maintainability of present petition, fall for considerations of this Court.I. Whether in the facts and circumstances of the present case, the plaintiff can avoid the Arbitral Tribunal and maintain a suit even with the allegation of fraud and by raising challenge to the validity of the arbitration agreement?II. Whether the plaintiff in the facts and circumstances of this case can maintain a suit on the ground that the defendant nos. 2 and 3 were not party to the arbitration agreement?III. Whether the learned lower Court is right in rejecting the application Exh.33 preferred by the defendant no.1?12. In the present matter admittedly the work order dated 28th September, 2015, contains clauses relating to security deposits under which the plaintiff agreed to submit the Bank Guarantee and an ‘arbitration’ clause which mandates appointment of arbitrator in case of any dispute specified in the said clause. At this stage, therefore, it is necessary to refer to both the clauses i.e ‘security deposit clause’ and ‘arbitration clause’, which are as follows:-9. Security Deposit : You will submit the Bank Guarantee for Rs.5.00 crores for the average stock of washed coal lying at your stockyard. This Bank Guarantee can be issued from any nationalized Bank/first class bank, initially valid for a period of 18 (eighteen) months.10. Arbitration : In case of any dispute arising due to difference of opinion in interpretation of any clause or terms and conditions or meaning of the work or language the decision of the arbitrator appointed with mutual consent shall be treated as final and binding on both the parties.13. The Hon’ble the Supreme Court of India in the case of A. Ayyasamy V. A. Paramasivam and others reported in 2016(10) SCC 386 has considered a question namely, what the Court should do when in case a suit is filed by the plaintiff and in the said suit the defendant files an application under Section 8 of the Act, 1996 questioning the maintainability of the suit on the ground that parties had agreed to settle the disputes through the means of arbitration having regard to the existence of an arbitration agreement between them? And the Hon’ble the Supreme Court of India in answer to same held that, the Court is to pronounce upon arbitrability or non-arbitrability of the dispute.14. The Hon’ble the Supreme Court of India in the said case thus observed as under:-14. In the instant case, there is no dispute about the arbitration agreement inasmuch as there is a specific arbitration clause in the partnership deed. However, the question is as to whether the dispute raised by the respondent in the suit is incapable of settlement through arbitration. As pointed out above, the Act does not make any provision excluding any category of disputes treating them as non-arbitrable. Notwithstanding the above, the Courts have held that certain kinds of disputes may not be capable of adjudication through the means of arbitration. The Courts have held that certain disputes like criminal offences of a public nature, disputes arising out of illegal agreements and disputes relating to status, such as divorce, cannot be referred to arbitration. Following categories of disputes are generally treated as non-arbitrable(i) patent, trademarks and copyright;(ii) anti-trust/competition laws;(iii) insolvency/winding up;(iv) bribery/corruption;(v) fraud;(vi) criminal matters.32. The Arbitration and Conciliation Act, 1996 does not in specific terms exclude any category of disputes civil or commercial from arbitrability. Intrinsic legislative material is in fact to the contrary. Section 8 contains a mandate that where an action is brought before a judicial authority in a matter which is the subject of an arbitration agreement, parties shall be referred by it to arbitration, if a party to or a person claiming through a party to the arbitration agreement applies not later than the date of submitting the first statement on the substance of the dispute. The only exception is where the authority finds prima facie that there is no valid arbitration agreement. Section 8 contains a positive mandate and obligates the judicial authority to refer parties to arbitration in terms of the arbitration agreement. While dispensing with the element of judicial discretion, the statute imposes an affirmative obligation on every judicial authority to hold down parties to the terms of the agreement entered into between them to refer disputes to arbitration. Article 8 of the UNCITRAL Model Law enabled a court to decline to refer parties to arbitration if it is found that the arbitration agreement is null and void, inoperative or incapable of being performed. Section 8 of the Act of 1996 has made a departure which is indicative of the wide reach and ambit of the statutory mandate. Section 8 uses the expansive expression judicial authority rather than court and the words unless it finds that the agreement is null and void, inoperative and incapable of being performed do not find place in Section 8.15. The Hon’ble the Supreme Court of India in the above referred judgment in the case of A. Ayyasamy V. A. Paramasivam and others (supra) has categorically held that Section 8 contains a positive mandates and obligates the judicial authority to refer parties to arbitration in terms of the arbitration agreement. While dispensing with the element of judicial discretion, the statute imposes an affirmative obligation on every judicial authority to hold down parties to the term of the agreement entered into between them to refer disputes to arbitration.16. Having considered the well settled law relating to Section 8 of the Act, 1996, it can safely be held that in view of admitted fact that there is an arbitration agreement between the plaintiff and the defendant no.1, the defendant no.1 has rightly preferred application under Section 8 of the Act, 1996.17. Now, therefore let us examine whether this case falls in a category of a dispute non-arbitrable, because of allegation of fraud.18. The Hon’ble the Supreme Court of India in the case of A. Ayyasamy V. A. Paramasivam and others (supra), while dealing with the exceptions to the disputes falling in the category of arbitral disputes, has considered one of such exceptions as non-arbitrable dispute in case of fraud. However, the Hon’ble the Supreme Court of India has gone further and carved out two categories therein namely (1) cases where the allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by Civil Court and (2) cases where simple allegation of fraud are made which can be decided by the Arbitral Tribunal.19. The Hon’ble the Supreme Court of India in the case of A. Ayyasamy V. A. Paramasivam and others (supra) in this regard has observed thus:15. 'Fraud' is a knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his detriment. Fraud can be of diffeent forms and hues. Its ingredients are an intention to deceive, use of unfair means, deliberate concealment of material facts, or abuse of position of confidence. The Black's Law Dictionary defines 'fraud' as a concealment or false representation through a statement or conduct that injures another who relies on it. However, the moot question here which has to be addressed would be as to whether mere allegation of fraud by one party against the other would be sufficient to exclude the subject matter of dispute from arbitration and decision thereof necessary by the civil court.16. In Abdul Kadir Shamsuddin Bubere v. Madhav Prabhakar Oak[6], serious allegations of fraud were held by the Court to be a sufficient ground for not making a reference to arbitration. Reliance in that regard was placed by the Court on a decision of the Chancery Division in Russell v. Russell. That was a case where a notice for the dissolution of a partnership was issued by one of the partners, upon which the other partner brought an action alleging various charges of fraud, and sought a declaration that the notice of dissolution was void. The partner who was charged with fraud sought reference of the disputes to arbitration. The Court held that in a case where fraud is charged, the Court will in general refuse to send the dispute to arbitration. But where the objection to arbitration is by a party charging the fraud, the Court will not necessarily accede to it and would never do so unless a prima facie case of fraud is proved.17. The aforesaid judgment was followed by this Court in N. Radhakrishnan while considering the matter under the present Act. In that case, the respondent had instituted a suit against the appellant, upon which the appellant filed an application under Section 8 of the Act. The applicant made serious allegations against the respondents of having committed malpractices in the account books, and manipulation of the finances of the partnership firm. This Court held that such a case cannot be properly dealt with by the arbitrator, and ought to be settled by the Court, through detailed evidence led by both parties.18. When the case involves serious allegations of fraud, the dicta contained in the aforesaid judgments would be understandable. However, at the same time, mere allegation of fraud in the pleadings by one party against the other cannot be a ground to hold that the matter is incapable of settlement by arbitration and should be decided by the civil court. The allegations of fraud should be such that not only these allegations are serious that in normal course these may even constitute criminal offence, they are also complex in nature and the decision on these issues demand extensive evidence for which civil court should appear to be more appropriate forum than the Arbitral Tribunal. Otherwise, it may become a convenient mode of avoiding the process of arbitration by simply using the device of making allegations of fraud and pleading that issue of fraud needs to be decided by the civil court. The judgment in N. Radhakrishnan does not touch upon this aspect and said decision is rendered after finding that allegations of fraud were of serious nature.25. In view of our aforesaid discussions, we are of the opinion that mere allegation of fraud simplicitor may not be a ground to nullify the effect of arbitration agreement between the parties. It is only in those cases where the Court, while dealing with Section 8 of the Act, finds that there are very serious allegations of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by civil court on the appreciation of the voluminous evidence that needs to be produced, the Court can sidetrack the agreement by dismissing application under Section 8 and proceed with the suit on merits. It can be so done also in those cases where there are serious allegations of forgery/fabrication of documents in support of the plea of fraud or where fraud is alleged against the arbitration provision itself or is of such a nature that permeates the entire contract, including the agreement to arbitrate, meaning thereby in those cases where fraud goes to the validity of the contract itself of the entire contract which contains the arbitration clause or the validity of the arbitration clause itself. Reverse position thereof would be that where there are simple allegations of fraud touching upon the internal affairs of the party inter se and it has no implication in the public domain, the arbitration clause need not be avoided and the parties can be relegated to arbitration. While dealing with such an issue in an application under Section 8 of the Act, the focus of the Court has to be on the question as to whether jurisdiction of the Court has been ousted instead of focusing on the issue as to whether the Court has jurisdiction or not. It has to be kept in mind that insofar as the statutory scheme of the Act is concerned, it does not specifically exclude any category of cases as non-arbitrable. Such categories of non-arbitrable subjects are carved out by the Courts, keeping in mind the principle of common law that certain disputes which are of public nature, etc. are not capable of adjudication and settlement by arbitration and for resolution of such disputes, Courts, i.e. public for a, are better suited than a private forum of arbitration. Therefore, the inquiry of the Court, while dealing with an application under Section 8 of the Act, should be on the aforesaid aspect, viz. whether the nature of dispute is such that it cannot be referred to arbitration, even if there is an arbitration agreement between the parties. When the case of fraud is set up by one of the parties and on that basis that party wants to wriggle out of that arbitration agreement, a strict and meticulous inquiry into the allegations of fraud is needed and only when the Court is satisfied that the allegations are of serious and complicated nature that it would be more appropriate for the Court to deal with the subject matter rather than relegating the parties to arbitration, then alone such an application under Section 8 should be rejected.20. As per the above dictum of the Hon’ble the Supreme Court of India in the case of A. Ayyasamy V. A. Paramasivam and others (supra), to fall a dispute wherein allegations of fraud are made, in a category of non-arbitrable dispute, it is necessary that the allegation of fraud should be such that not only such allegations are serious that in normal course these may even constitute criminal offence, they are also complex in nature and the decision on these issues demand extensive evidence for which civil Court should appear to be more appropriate forum than the Arbitral Tribunal.21. The Hon’ble the Supreme Court of India in the said matter has also observed that, otherwise, it may become a convenient mode of avoiding the process of arbitration by simply using the device of making allegations of fraud and pleading that issue of fraud needs to be decided by the Civil Court.22. In the light of said observations of the Hon’ble the Supreme Court of India, it is pertinent to refer to the allegations of fraud made by the plaintiff in the suit, which are as follows:-10. It is needless to mention, that contract of a bank guarantee is an independent contract and the same can be invoked only as per the terms of the bank guarantee and if the invocation is not as per the terms of the bank guarantee, such an invocation cannot be honored and the bank guarantee cannot be permitted to be encashed and any action on that basis would be bad and illegal. The plaintiff further submits that any action which is not in accordance with agreement of guarantee would be fraudulent act and cannot be sustained in the eyes of law. The defendants cannot, in the absence of any legality in the entitlement or any legal liability of the plaintiff in the matter, embark upon to enforce and honor the Bank Guarantee, as doing so will clearly amount to a Fraud, upon the plaintiff.12. The plaintiff further submits that it has to be looked from the terms of each bank guarantee whether it is conditional or unconditional and if the Guarantee is conditional the same will become enforceable only upon fulfillment of conditions stipulated and in such a case the beneficiary must demonstrate the fulfillment of such conditions for invocation and if the conditions are not fulfilled then the same will be violation of terms of the bank guarantee and such violation can be said to be a fraudulent one and beneficiary cannot invoke and enforce the bank guarantee.(Emphasis supplied)23. Having considered the pleadings made by the plaintiff in the present matter, more particularly in paras 10 and 12, herein above referred to, it would be crystal clear that the said allegations are only in respect of violation of condition of Bank Guarantee, which are according to the plaintiff amount to a fraud.24. As observed above, by the Hon’ble the Supreme Court of India in the case of A. Ayyasamy V. A. Paramasivam and others (supra), ‘fraud’ is knowing misrepresentation of the truth or concealment of a material fact to induce another to act to his detriment. In fraud intention to deceive, use of unfair means, deliberate concealment of material facts, or abuse of position of confidence, are the necessary ingredients.25. If the pleadings relating to fraud made in paragraphs 10 and 12 of the suit are considered, there are no ingredients as referred above, present or no such allegations are made. Thus, at the outset though the allegation of fraud is made, however, it does not come within the definition of ‘fraud’ and therefore such allegations appear to have been made to avoid the process of arbitration.26. Moreover, even if for a moment it is accepted that the allegations of fraud have necessary ingredients in the present matter to cover the case of the plaintiff within the ambit of definition of ‘fraud’, however, still the allegations of fraud are simple which do not in normal course constitute any criminal offence and the allegations are not so complex in nature that the decision on the said issue demand extensive evidence for which Civil Court appears to be more appropriate forum than the Arbitral Forum.27. It is undisputable that the allegations of fraud are only in respect of violation of condition of bank guarantee which are not of complex in nature and need not be required any appreciation of voluminous evidence that needs to be produced. On the face of allegations of fraud made in the suit, it is apparent that the allegations are simple and as per the law laid down by the Hon’ble the Supreme Court of India, such issue can be determined by the Arbitral Tribunal.28. In the light of the above observations and having considered the law laid down by the Hon’ble the Supreme Court of India, referred herein above, I am of the firm view that the allegations of fraud in the present matter are of simple nature and appear to have been made to nullify the effect of arbitration agreement.29. Having said so I am of the considered view that the allegation of fraud made in the present matter, will not make this case as non-arbitrable to exclude the jurisdiction of the Arbitral Tribunal.30. I take next contention of the learned counsel for the plaintiff for consideration, that validity of agreement itself was challenged in the suit, therefore the suit is maintainable.31. The Hon’ble the Supreme Court of India in the case of Hindustan Petroleum Corporation Ltd., Vrs. Pinkcity Midway Petroleums reported in 2003(6) SCC 503, has held that the Arbitral Tribunal may rule on its own jurisdiction. The relevant observations made by the Hon’ble the Supreme Court of India in the said case are as follows:15. The question then would arise: what would be the role of the Civil Court when an argument is raised that such an arbitration clause does not apply to the facts of the case in hand ? Learned counsel for the appellant contends that it is a matter which should be raised before the arbitrator who is competent to adjudicate upon the same and the Civil Court should not embark upon an inquiry in regard to the applicability of the arbitration clause to the facts of the case. While learned counsel appearing for the respondent contends that since the applicability of the arbitration clause to the facts of the case goes to the very root of the jurisdiction of the reference to arbitration, this question will have to be decided by the Civil Court before referring the matter to arbitration even in cases where there is admittedly an arbitration clause. The answer to this argument, in our opinion, is found in Section 16 of the Act itself. It has empowered the Arbitral Tribunal to rule on its own jurisdiction including rule on any objection with respect to the existence or validity of the arbitration agreement. That apart, a Constitution Bench of this Court in Konkan Railway (supra) with reference to the power of the arbitrator under Section 16 has laid down thus :"It might also be that in a given case the Chief Justice or his designate may have nominated an arbitrator although the period of thirty days had not expired. If so, the Arbitral Tribunal would have been improperly constituted and be without jurisdiction. It would then be open to the aggrieved party to require the Arbitral Tribunal to rule on its jurisdiction. Section 16 provides for this. It states that the Arbitral Tribunal may rule on its own jurisdiction. That the Arbitral Tribunal may rule "on any objections with respect to the existence or validity of the arbitration agreement" shows that the Arbitral Tribunal's authority under Section 16 is not confined to the width of its jurisdiction, as was submitted by learned counsel for the appellants, but goes to the very root of its jurisdiction. There would, therefore, be no impediment in contending before the Arbitral Tribunal that it had been wrongly constituted by reason of the fact that the Chief Justice or his designate had nominated an arbitrator although the period of thirty days had not expired and that, therefore, it had no jurisdiction."(emphasis supplied)32. The Hon’ble the Supreme Court of India in A. Ayyasamy V. A. Paramasivam and others (supra) has considered the position of law when Arbitral Tribunal is constituted at the instance of one of the parties and other parties takes up the position that such proceedings are not valid in law. The Hon’ble the Supreme Court of India has held thus -12. In this behalf, we have to begin our discussion with the pertinent observation that insofar as the Arbitration and Conciliation Act, 1996 is concerned, it does not make any specific provision excluding any category of disputes terming them to be non-arbitrable.12.1. A number of pronouncements have been rendered laying down the scope of judicial intervention, in cases where there is an arbitration clause, with clear and unambiguous message that in such an event judicial intervention would be very limited and minimal. However, the Act contains provisions for challenging the arbitral awards. These provisions are Section 34 and Section 48 of the Act. Section 34(2)(b) and Section 48(2) of the Act, inter alia, provide that an arbitral award may be set aside if the Court finds that the 'subject matter of the dispute is not capable of settlement by arbitration under the law for the time being in force.' Even when such a provision is interpreted, what is to be shown is that there is a law which makes subject matter of a dispute incapable of settlement by arbitration. The aforesaid position in law has been culled out from the combined readings of Sections 5, 16 and 34 of the Act.12.2 When arbitration proceedings are triggered by one of the parties because of the existence of an arbitration agreement between them, Section 5 of the Act, by a nonobstante clause, provides a clear message that there should not be any judicial intervention at that stage scuttling the arbitration proceedings. Even if the other party has objection to initiation of such arbitration proceedings on the ground that there is no arbitration agreement or validity of the arbitration clause or the competence of the Arbitral Tribunal is challenged, Section 16, in clear terms, stipulates that such objections are to be raised before the Arbitral Tribunal itself which is to decide, in the first instance, whether there is any substance in questioning the validity of the arbitration proceedings on any of the aforesaid grounds. It follows that the party is not allowed to rush to the Court for an adjudication. Even after the Arbitral Tribunal rules on its jurisdiction and decides that arbitration clause is valid or the Arbitral Tribunal is legally constituted, the aggrieved party has to wait till the final award is pronounced and only at that stage the aggrieved party is allowed to raise such objection before the Court in proceedings under Section 34 of the Act while challenging the arbitral award.12.3 The aforesaid scheme of the Act is succinctly brought out in the following discussion by this Court in Kvaerner Cementation India Ltd. v. Bajranglal Agarwal & Anr.[SCC p.214, paras 3-5]:3. There cannot be any dispute that in the absence of any arbitration clause in the agreement, no dispute could be referred for arbitration to an Arbitral Tribunal. But, bearing in mind the very object with which the Arbitration and Conciliation Act, 1996 has been enacted and the provisions thereof contained in Section 16 conferring the power on the Arbitral Tribunal to rule on its own jurisdiction, including ruling on any objection with respect to existence or validity of the arbitration agreement, we have no doubt in our mind that the civil court cannot have jurisdiction to go into that question.4. A bare reading of Section 16 makes it explicitly clear that the Arbitral Tribunal has the power to rule on its own jurisdiction even when any objection with respect to existence or validity of the arbitration agreement is raised, and a conjoint reading of sub-sections (2), (4) and (6) of Section 16 would make it clear that such a decision would be amenable to be assailed within the ambit of Section 34 of the Act.12.4 Aforesaid is the position when Arbitral Tribunal is constituted at the instance of one of the parties and other party takes up the position that such proceedings are not valid in law.33. Thus, it is clear that the Arbitral Tribunal may rule on any objection with respect the existence or validity of the arbitration agreement. The Arbitral Tribunal’s authority under Section 16 of the Act, 1996, is not confined to the width of its jurisdiction but goes to the very root of its jurisdiction. There is no impediment in contending before the Arbitral Tribunal as regards existence or validity of arbitration agreement.34. In the present matter, the learned lower Court has observed that “the dispute as raised in present suit does not fall under clause 10 of the agreement. I, accordingly, hold that jurisdiction of this Court is not excluded”, while passing the impugned order dated 18th January, 2018.35. Having considered the law on the jurisdiction of the Arbitral Tribunal which may rule on its own jurisdiction, I am of the firm opinion that in this case the learned lower Court ought not to have proceeded to examine the applicability and validity of arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal.36. Up till this juncture, having considered the facts of the case and the judgments, I have recorded my findings as under:i) In view of the admitted fact that there is an arbitration agreement between the plaintiff and defendant no.1, the defendant has rightly preferred an application under Section 8 of the Act, 1996 (Para 16).ii) The allegation of fraud made in the present matter, will not make this case as non-arbitral to exclude the jurisdiction of the Arbitral Tribunal (Para 29).iii) In this case the learned lower Court ought not to have proceeded to examine the applicability and validity of arbitration clause to the facts of the case in hand but ought to have left that issue to be determined by the Arbitral Tribunal (Para 35).37. Having held as above, the said findings lead me to answer the first question in negative and hold that in the facts and circumstances of the present case, the plaintiff cannot avoid the Arbitral Tribunal and maintain a suit even with the allegation of fraud and by raising a challenge to the validity of arbitral agreement.38. Moving to the next issue whether the plaintiff can maintain a suit relating to a bank guarantee which has been furnished by the plaintiff in pursuance to work order dated 28th September, 2015, on the ground that defendant nos. 2 and 3 were not party to the arbitration agreement.39. Admittedly, the bank guarantee which is the subject matter of a suit filed by the plaintiff, was furnished by the plaintiff in pursuance to the work order dated 28th September, 2015. This can be found from the Bank Guarantee wherein specific reference has been made to the work order dated 28th September, 2015. The relevant portion of the bank guarantee as follows :Bank Guarantee1. In Consideration of the Indo Unique Flame Limited (hereinafter called “the Company”) having agreed to exempt M/s N.N.Global Merchantile Private Limited (hereinafter called “The Contractor”) having its office office at Pasricha Building, Opp. Janta College, Civil Line, Nagpur Road, Chandrapur (M.S.) (hereinafter called “the said Contractor”) from the demand, under the terms and conditions of work order No. IUFL/NNG/01 dated 28/09/2015 issued by Indo Unique Flame Limited, 301, Kothari Building, WHC Road, Dharampeth, Nagpur being a part of letter of Award No. A1M1/D3/Washed Coal/1052 dated 18.09.2015 issued by the Superintending Engineer (Fuels), Karnataka Power Corporation Ltd. (Hereinafter called “The Corporation”), Shakthi Bhavan, 82 Race Course Road, Bangalore-560 001 to the company (hereinafter called “said Agreement”), of security deposit for due fulfillment by the said contractor of the terms and conditions contained in the said letter of award, to be followed by and agreement, on production of a Bank Guarantee for Rs.3,36,00,000/- (Rupees Three Crore Thirty Six Lacs only)……...2. We, Union Bank of India, do hereby undertake to pay the amounts due and payable under this guarantee without any demur, merely on a demand from the SBI-IFB, Bharat Nagar Nagpur stating that the amount claimed is due by way of loss or damage caused to or would be caused to or suffered by the Company by reason of any breach by the said Contractor of any of the terms and conditions contained in the said Agreement or by reason of the Contractor’s failure to perform the said Agreement……….3. ……………………..”(Emphasis supplied)40. The Hon’ble the Supreme Court of India in the case of U.P. Co-operative Federation Ltd., Vrs. Singh Consultants and Engineers (P) Ltd. (supra) has observed thus: 24. I may notice that in India, the trend of law is on the same line In the case of Texmaco Ltd. v. State Bank of India and others, A.I.R. 1979 Calcutta 44, one of us (Sabyasachi Mukharji) held that in the absence of special equities arising from a particular situation which might entitle the party on whose behalf guarantee is given to an injunction restraining the bank in performance of bank guarantee and in the absence of any clear fraud, the Bank must pay to the party in whose favour guarantee is given on demand, if so stipulated, and whether the terms are such have to be found out from the performance guarantee as such. There the Court held that where though the guarantee was given for the performance by the party on whose behalf guarantee was given, in an orderly manner its contractual obligation, the obligation was undertaken by the bank to repay the amount on "first demand" and 'without contestation, demur or protest and without reference to such party and without questioning the legal relationship subsisting between the party in whose favour guarantee was given and the party on whose behalf guarantee was given," and the guarantee also stipulated that the bank should forthwith pay the amount due notwithstanding any dispute between the parties," it must be deemed that the moment a demand was made without protest and contestation, the bank had obliged itself to pay irrespective of any dispute as to whether there had been performance in an orderly manner of the contractual obligation by the party. Consequently, in such a case, the party on whose behalf guarantee was given was not entitled to an injunction restraining the bank in performance of its guarantee. It appears that special equities mentioned therein may be a situation where the injunction was sought for to prevent injustice which was irretrievable in the words of Lord Justice Danckwerts in Elian and Rabbath (Trading as Elian & Rabbath) v. Matsas and Matsas & Ors. 1996 2 Lloyd’s List Law Reports 49534. On the basis of these principles I reiterate that commitments of banks must be honoured free from interference by the courts. Otherwise, trust in commerce internal and international would be irreparably damaged. It is only in exceptional cases that is to say in case of fraud or in case of irretrievable injustice be done, the Court should interfere.41. The Hon’ble the Supreme Court of India in the case of Ansal Engineering Projects Ltd., Vrs. Tehri Hydro Development Corporation Ltd., and another (supra) has observed thus:4. It is settled law that bank guarantee is an independent and distinct contract between the bank and the beneficiary and is not qualified by the underlying transaction and the validity of the primary contract between the person at whose instance the bank guarantee was given and the beneficiary. Unless fraud or special equity exists, is pleaded and prime facie established by strong evidence as a triable issue, the beneficiary cannot be restrained from encashing the bank guarantee even if dispute between the beneficiary and the person at whose instance the bank guarantee was given by the Bank, had arisen in performance of the contract or execution of the works undertaken in furtherance thereof. The Bank unconditionally and irrevocably promised to pay, on demand, the amount of liability undertaken in the guarantee without any demur or dispute in terms of the bank guarantee. The object behind is to inculcate respect for free flow of commerce and trade and faith in the commercial banking transactions unhedged by pending disputes between the beneficiary and the contractor.5. It is equally settled law that in terms of the bank guarantee the beneficiary is entitled to invoke the bank guarantee and seek encashment of the amount specified in the bank guarantee. It does not depend upon the result of the decision in the dispute between the parties, in case of the breach. The underlying object is that an irrevocable commitment either in the form of bank guarantee or letters of credit solemnly given by the bank must be honoured. The Court exercising its power cannot interfere with enforcement of bank guarantee/letters of credit except only in cases where fraud or special equity is prime facie made out in the case as triable issue by strong evidence so as to prevent irretrievable injustice to the parties. The trading operation would not be jettisoned and faith of the people in the efficacy of banking transactions would not be eroded or brought to disbelief.42. The Hon’ble the Supreme Court of India in the case of Reliance Salt Ltd., Vrs. Cosmos Enterprises and another (supra) has observed thus:18. "Contract of guarantee" is defined under Section 126 of the Indian Contract Act in the following terms : "126. 'Contract of guarantee', 'surety', 'principal debtor' and 'creditor' A 'contract of guarantee' is a contract to perform the promise, or discharge the liability, of a third person in case of his default. The person who gives the guarantee is called the 'surety'; the person in respect of whose default the guarantee is given is called the 'principal debtor' and the person to whom the guarantee is given is called the 'creditor'. A guarantee may be either oral or written."19. Bank Guarantee constitutes an agreement between the Banker and the Principal, albeit, at the instance of the promisor. When a contract of guarantee is sought to be invoked, it was primarily for the bank to plead a case of fraud and not for a promisor to set up a case of breach of contract.43. The Hon’ble the Supreme Court of India in the case of Himadri Chemicals Industries Ltd., Vrs. Coal Tar Refining Co. (supra) has observed thus:14. From the discussions made hereinabove relating to the principles for grant or refusal to grant of injunction to restrain enforcement of a Bank Guarantee or a Letter of Credit, we find that the following principles should be noted in the matter of injunction to restrain the encashment of a Bank Guarantee or a Letter of Credit:-(i) While dealing with an application for injunction in the course of commercial dealings, and when an unconditional Bank Guarantee or Letter of Credit is given or accepted, the Beneficiary is entitled to realize such a Bank Guarantee or a Letter of Credit in terms thereof irrespective of any pending disputes relating to the terms of the contract.(ii) The Bank giving such guarantee is bound to honour it as per its terms irrespective of any dispute raised by its customer.(iii) The Courts should be slow in granting an order of injunction to restrain the realization of a Bank Guarantee or a Letter of Credit.(iv) Since a Bank Guarantee or a Letter of Credit is an independent and a separate contract and is absolute in nature, the existence of any dispute between the parties to the contract is not a ground for issuing an order of injunction to restrain enforcement of Bank Guarantees or Letters of Credit.(v) Fraud of an egregious nature which would vitiate the very foundation of such a Bank Guarantee or Letter of Credit and the beneficiary seeks to take advantage of the situation.(vi) Allowing encashment of an unconditional Bank Guarantee or a Letter of Credit would result in irretrievable harm or injustice to one of the parties concerned.44. It is thus clear that with the under living object that an irrevocable commitment in the form of bank guarantee given by the bank must be honoured and to inculcate respect of free from of commerce and trade and faith in commercial banking transaction unhedged by pending disputes between the beneficiary and the contractor.45. The Hon’ble the Supreme Court of India, has further held that unless fraud or special equities exists, is pleaded and prima facie established by a strong evidence as a triable issue, the beneficiaries cannot be restrained from encashing the bank guarantee even if dispute between the beneficiary and the person at whose instance the bank guarantee was given by the bank, had arisen in performance of the contract or execution of the work undertaken in furtherance thereof.46. In the present matter admittedly the learned lower Court while restraining from invoking and crediting amount under Bank Guarantee, vide order dated 15th December, 2017 or while rejecting the application Exh.33, vide impugned order dated 18th January, 2018 has not recorded any finding in respect of fraud or that the special equities exists.47. Thus, it can safely be said that in ignorance or utter disregard to the settle law, the learned lower Court interfered with the enforcement of Bank Guarantee in the present matter.48. The Hon’ble the Supreme Court of India in the case of Sundaram Finance Limited Vrs. T.Thankam reported in 2015(14) SCC 444, has observed that bifurcating the cause of action would only lead to delaying and complicating the process. The relevant paras of the said judgment are as follows:11. The attempt of the trial court and the approach made by the high court in bifurcating the cause of action, is fallacious. It would only lead to delaying and complicating the process. The said issue is also no more res integra. In Sukanya Holdings (P) Limited v. Jayesh Pandya and another at paragraphs-16 and 17, it was held as follows:"16. The next question which requires consideration is - even if there is no provision for partly referring the dispute to arbitration, whether such a course is possible under Section 8 of the Act. In our view, it would be difficult to give an interpretation to Section 8 under which bifurcation of the cause of action, that is to say, the subject-matter of the suit or in some cases bifurcation of the suit between parties who are parties to the arbitration agreement and others is possible. This would be laying down a totally new procedure not contemplated under the Act. If bifurcation of the subject-matter of a suit was contemplated, the legislature would have used appropriate language to permit such a course. Since there is no such indication in the language, it follows that bifurcation of the subject-matter of an action brought before a judicial authority is not allowed.17. Secondly, such bifurcation of suit in two parts, one to be decided by the Arbitral Tribunal and the other to be decided by the civil court would inevitably delay the proceedings. The whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure. It would also increase the cost of litigation and harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums."49. In the light of above observations made by the Hon’ble the Supreme Court of India in the case of Sundaram Finance Limited Vrs. T.Thankam (supra), it is clear that the bifurcation of the subject matter of the suit or cause of action between parties who are parties to the arbitration agreement and others, is impermissible in absence of any contemplation in that regard in the legislation and such bifurcation in two parts one to be decided by the Arbitral Tribunal and other by civil court would inevitably delay the proceeding and the whole purpose of speedy disposal of dispute and decreasing the cost of litigation would be frustrated by such procedure and at the same time it would be an harassment to the parties and on occasions there is possibility of conflicting judgments and orders by two different forums.50. The plaintiff in the present matter, in view of the well settled law referred herein above, can very well raise all these issues before the Arbitral Tribunal under Section 16 of the Act, 1996, but plaintiff cannot be allowed to bifurcate the subject matter or cause of action between the defendant no.1 who was party to the agreement and defendant no.2 and 3 who were not party to the agreement, in two parts one to be decided by the Arbitral Tribunal and other by the Civil Court.51. Thus, I answer question no.2 in negative and hold that the plaintiff in the facts and circumstances of this case, cannot maintain a suit on the ground that the defendant no.2 and 3 Banks were not party to the agreement and Bank Guarantee.52. In the light of above observations, I am of the opinion that the contentions raised by the learned counsel for the plaintiff/respondent no.1, with respect to Section 9A and Order VII Rule 11 of Code of Civil Procedure, have lost its efficacy.53. As regards the contentions raised by the plaintiff that parties have not acted upon the agreement, the said contention of the plaintiff can be raised before the Arbitral Tribunal, while challenging the validity of the agreement.54. The contention of the plaintiff that the arbitration agreement cannot be enforced because the same is unstamped, the Hon’ble the Supreme Court of India in the case of Garware Wall Ropes Limited Vrs. Coastal Marine Constructions and Engineering Limited (supra), has held that such agreement can be impounded by paying stamp duty and penalty. Thus, in the light of law laid down by the Hon’ble the Supreme Court of India in the above referred case, the plaintiff is at liberty to raise this issue under Section 11 of the Act, 1996 or before the Arbitral Tribunal at the appropriate stage.55. Now, after recording my observations and findings on merit of the matter, I take the point of jurisdiction for consideration.56. The Hon’ble the Supreme Court of India in a case of Surya Dev Rai Vrs. Ram Chander Rai and others reported in 2003(6) SCC 675, summed up principles as regards jurisdiction of this Court under Articles 226 and 227 of the Constitution Of India, which read thus:38. Such like matters frequently arise before the High Courts. We sum up our conclusions in a nutshell, even at the risk of repetition and state the same as hereunder:-(1) Amendment by Act No.46 of 1999 with effect from 01.07.2002 in Section 115 of Code of Civil Procedure cannot and does not affect in any manner the jurisdiction of the High Court under Articles 226 and 227 of the Constitution.(2) Interlocutory orders, passed by the courts subordinate to the High Court, against which remedy of revision has been excluded by the CPC Amendment Act No. 46 of 1999 are nevertheless open to challenge in, and continue to be subject to, certiorari and supervisory jurisdiction of the High Court.(3) Certiorari, under Article 226 of the Constitution, is issued for correcting gross errors of jurisdiction, i.e., when a subordinate court is found to have acted (i) without jurisdiction – by assuming jurisdiction where there exists none, or (ii) in excess of its jurisdiction by overstepping or crossing the limits of jurisdiction, or (iii) acting in flagrant disregard of law or the rules of procedure or acting in violation of principles of natural justice where there is no procedure specified, and thereby occasioning failure of justice.(4) Supervisory jurisdiction under Article 227 of the Constitution is exercised for keeping the subordinate courts within the bounds of their jurisdiction. When the subordinate Court has assumed a jurisdiction which it does not have or has failed to exercise a jurisdiction which it does have or the jurisdiction though available is being exercised by the Court in a manner not permitted by law and failure

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of justice or grave injustice has occasioned thereby, the High Court may step in to exercise its supervisory jurisdiction.(5) Be it a writ of certiorari or the exercise of supervisory jurisdiction, none is available to correct mere errors of fact or of law unless the following requirements are satisfied : (i) the error is manifest and apparent on the face of the proceedings such as when it is based on clear ignorance or utter disregard of the provisions of law, and (iii) a grave injustice or gross failure of justice has occasioned thereby.(6) A patent error is an error which is self-evident, i.e., which can be perceived or demonstrated without involving into any lengthy or complicated argument or a long-drawn process of reasoning. Where two inferences are reasonably possible and the subordinate court has chosen to take one view the error cannot be called gross or patent.(7) The power to issue a writ of certiorari and the supervisory jurisdiction are to be exercised sparingly and only in appropriate cases where the judicial conscience of the High Court dictates it to act lest a gross failure of justice or grave injustice should occasion. Care, caution and circumspection need to be exercised, when any of the abovesaid two jurisdictions is sought to be invoked during the pendency of any suit or proceedings in a subordinate court and the error though calling for correction is yet capable of being corrected at the conclusion of the proceedings in an appeal or revision preferred there against and entertaining a petition invoking certiorari or supervisory jurisdiction of High Court would obstruct the smooth flow and/or early disposal of the suit or proceedings. The High Court may feel inclined to intervene where the error is such, as, if not corrected at that very moment, may become incapable of correction at a later stage and refusal to intervene would result in travesty of justice or where such refusal itself would result in prolonging of the lis.(8) The High Court in exercise of certiorari or supervisory jurisdiction will not covert itself into a Court of Appeal and indulge in re-appreciation or evaluation of evidence or correct errors in drawing inferences or correct errors of mere formal or technical character.(9) In practice, the parameters for exercising jurisdiction to issue a writ of certiorari and those calling for exercise of supervisory jurisdiction are almost similar and the width of jurisdiction exercised by the High Courts in India unlike English courts has almost obliterated the distinction between the two jurisdictions. While exercising jurisdiction to issue a writ of certiorari the High Court may annul or set aside the act, order or proceedings of the subordinate courts but cannot substitute its own decision in place thereof. In exercise of supervisory jurisdiction the High Court may not only give suitable directions so as to guide the subordinate court as to the manner in which it would act or proceed thereafter or afresh, the High Court may in appropriate cases itself make an order in supersession or substitution of the order of the subordinate court as the court should have made in the facts and circumstances of the case.57. In the backdrop of observations made herein above, it is crystal clear that in the present matter the learned Lower Court has assumed a jurisdiction which it does not have, which is an error manifest and apparent on the face of proceeding which is based on clear ignorance and utter disregard of the provisions of law and the law laid down by the Hon’ble the Supreme Court of India in that regard.58. Moreover, I am of the firm view that though in the present matter as pointed out by the learned counsel for the respondent no.1, that more than one alternate remedies are available to the plaintiff under the Act, 1996 or under Code of Civil Procedure or under the Act of 2015, the petitioner cannot be asked to file multiple proceeding by bifurcating the challenge raised to the impugned order below Exh.33.59. In view of that matter, I have no hesitation to hold that in the peculiar facts of the present case and in view of above observations, the present petition under Articles 226, 227 of the Constitution of India is maintainable. Accordingly, the objection raised by the respondent no.1 to the maintainability of the present petition, is rejected.60. In the judgments cited by the learned counsel for the respondent no.1 on the point of jurisdiction, namely M/s Deep Industries Limited Vrs Oil and Natural Gas Corporation Limited and another (supra), BGS SGS Soma JV vs. NHPC Ltd. (supra) and Conros Steel Pvt. Ltd., Vrs. Lu Qin (Hong Kong) Company Ltd. And Others (supra), in none of the said judgments it has been held that there is an absolute bar to entertain the petition under Articles 226 and 227 of the Constitution of India, if the alternate remedy is available. In the circumstances, the said judgments are of no help to the respondent no.1 in the present petition.61. The judgments cited by the learned counsel for the respondent no.1 on the point that the Bank Guarantee is an independent contract, namely, Andhra Pradesh Pollution Control Board Vrs. CCL Products (India) Limited (supra) and in the case of Simplex Infrastructure Ltd. Vrs. Siemens Ltd., and another (supra), NCC Limited Vrs. ABB India Limited and others (supra) and Murablock India Limited Vrs. UBS Ag (supra) there is no dispute about the preposition of law that Bank Guarantee is an independent contract. However, this Court does not want to burden the judgment more on the said issue. Therefore, the said judgments have not discussed.62. Having held against the plaintiff/respondent no.1 on merits, in the light of observations made herein above, I answer the third question in negative and hold that the learned lower Court has committed error in rejecting the application Exh.33.63. In the circumstances, the writ petition is allowed.64. The order below Exh.33, dated 18th January, 2018, passed by the Commercial Court, Nagpur in Commercial Dispute No. 62 of 2017 is set aside and thereby application Exh.33, is allowed.65. Accordingly, the rule is made absolute in aforesaid terms. No order as to costs.LATER ON.66. Shri Shyam Dewani, learned counsel for the plaintiff/respondent no.1, at this stage prays for staying the operation of the present judgment.67. Ms. Nidhi Dayani, learned counsel holding for Mr. Bhandarkar, opposes the prayer made by Shri Dewani.68. Mr. Anil Kumar, learned counsel for the respondent no.2, also opposes the request made by Shri Dewani.69. Order below Exh.5 dated 15th December, 2017 restraining the bank from invoking and crediting the amount under Bank Guarantee dated 30th September, 2015 is in operation. The Bank Guarantee period is also extended for another three months.70. In that view of the matter, stay to the operation of this judgment is granted for a period of one month from today, thereafter it will automatically stand vacated.
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