These applications have been filed by the applicant for temporary injunctions restraining the first respondent from encashing mobilization of the Bank Guarantee and encashing the performance of the Bank Guarantee.
2. The brief facts leading to the filing of this applications are as follows :
The suit has been filed for the following reliefs :
a) A Judgment and decree of Permanent injunction restraining the first defendant from encashing the mobilization bank guarantee vide No.0702412BG0000330 dated 14.07.2012 renewed on 28.06.2017 for a sum of Rs.1,96,37,260/- and releasing the bank guarantee amount to the second defendant;
b) A judgment and Decree of Permanent injunction restraining the first defendant from encashing the Mobilization bank guarantee vide No.0702412BG0000472 dated 05.10.2012 renewed on 28.06.2017 for a sum of Rs.1,96,37,260 and releasing the bank guarantee amount to the second defendant;
c) A judgment and Decree of Permanent injunction restraining the first defendant from encashing the Performance bank guarantee vide No.0702412BG0000285 dated 28.06.2012 renewed on 18.01.2017 for a sum of Rs.1,96,37,260 and releasing the bank guarantee amount to the second defendant
3. The plaintiff was the successful bidder in the Tender No.25/2011-2012/C.E.-JICA dated 28.11.2011 and the total contract price was fixed as Rs.39,27,45,189/-. The plaintiff was directed to prove two advance mobilization bank guarantees to the tune of Rs.1,96,37,260/- each, apart from one performance bank guarantee for the same amount. The plaintiff entered into an agreement with the second defendant for successful completion of the contract. When the matter stood thus, the second defendant terminated the contract. Further, the second defendant, in complete violation of the contract, issued a circular to block all financial resources of the plaintiff. The plaintiff has a genuine claim against the second defendant and he is likely to succeed and hence prayed for interim injunctions and also prayed for leave to sue the second defendant.
4. The learned counsel for the applicant submitted that the injunctions normally would not be granted as against enforcement of the bank guarantee, but when there is irreparable injury, there is no bar in granting injunction against the first respondent.
5. The learned counsel appearing for the second respondent submitted that no relief has been claimed against the first respondent and the first respondent has filed a statement supporting the case of the plaintiff. The entire cause of action arose within the jurisdiction of Kerala, except guarantee has been furnished at one of the Bank at Chennai and hence, it cannot be sated that this Court has jurisdiction to entertain the suit.
6. It is the further contention of the learned counsel appearing for the second respondent that the applicant entered into a contract with the second respondent, namely Kerala Water Authority and has failed in its obligations in several aspects and therefore, the contract was terminated which was also challenged before the Kerala High Court and ultimately, the same has reached its finality. Even assuming that the cause of action arose within the jurisdiction of this Court, now the plaintiff cannot re-agitate the same in a different forum by filing a suit.
7. It is the further contention of the learned counsel for the second respondent that the suit has been numbered even before granting leave. Therefore, leave cannot be granted and it is not a curable deffect and hence, prayed for rejection of the plaint.
8. In the light of the above submissions, now the point arising for consideration is whether the applicant is entitled for temporary injunctions as prayed for.
9. The suit has been filed and the interim Orders have been sought to restrain the first respondent from encashing the performance of the bank guarantee. It is well settled law that normally the Courts will not restrain the bank from encashment of bank guarantee or letters of credit except when fraud has been committed or encashment will result in irretrievable damage. Only when the plaintiff case prima facie falls within the above two categories, normally injunctions would be passed against the bank. It is not in dispute that the suit has been numbered even before this Court granting leave to the applicant to institute a suit before this Court. The averments in the plaint indicate that the main grievance of the plaintiff is with regard to the termination of the contract by the second respondent. The contract with the second respondent has been terminated on 31.07.2017.
10. The contract entered between the parties on 13.06.2012 show that the jurisdiction to settle the dispute is vested with the Court situated in the Kerala State. Except giving Bank Guarantee in Chennai bank, all other transactions took place in Kerala. The State Bank of India has also entered into an agreement with the second respondent and clause 2(a) of the said agreement reads as follows :
'If the Contractor shall in any respect fail to execute the Contract or commit any breach of his obligations thereunder, we the bank agree unconditionally and irrevocably to guarantee as primary obligator and not as surety merely, the payment to Kerala Water Authority on the first demand without whatsoever right of objection on our part (and without KWA's first claim to the Contractor) in the amount not exceeding Rs.1,96,37,260/- (Rupees one crore ninety six lakhs thirty seven thousand two hundred and sixty only).'
11. It is to be noted that though it is alleged that the termination of the contract by the second respondent is not maintainable, no relief, whatsoever was asked against them. The interim Order is sought only against the first respondent. This fact only shows that the suit has been filed for some other purpose, only to stall the payment.
12. The plaintiff has not obtained leave before numbering the case. In this regard the Division Bench of this Court has held in the judgment reported in 2013 (7) Madras Law Journal 129 – Lakshmi Vs. A.Ganesan and others
'5.1. It is not in dispute that under Clause 12 of the Letters Patent, when some of the suit properties are situated out of the territorial jurisdiction of this Court, leave ought to have been obtained. The learned counsel appearing for the appellant has also fairly accepted the settled position of law. Perhaps that is the reason why the appellant has filed the applications during the pendency of the suit. In the case on hand, the appellant did not file an application seeking leave. However, for the reasons known to her, she did not represent the said application, but managed to number the suit. In such a situation, the applications filed pending the suit by the appellant are not maintainable in law. When a leave is a condition precedent, the same cannot be cured thereafter. Therefore, in such view of the matter, we do not find any error in the orders passed by the learned single Judge dismissing the applications filed by the appellant and consequently allowing the application filed by the first respondent.'
13. Similarly in another judgment of the Division Bench of this Court in which I am also one of the Judge reported in CDJ Law Journal 2017 MHC 7536 – M/s.B.G.R.Energy Systems Limited, Chennai Vs. ICICI Bank Limited, Chennai & Others it has been held as follows :
23. On the aspect of jurisdiction, BGR avers that it has obtained leave to sue, by taking recourse to appropriate proceedings. It is argued that ICICI Bank, to date, has not approached the Court for recall of the order, despite, its objection to the jurisdiction of this Court in entertaining the suit.
23.4. The record in the instant matter shows that apart from the factum of issuance of counter guarantee, no other part of the cause of action has accrued in Chennai. As correctly argued on behalf of ICICI Bank, the Supreme Court in South East Asia Shipping Company Limited V. Nav Bharat Enterprises Private Limited and others, 1996 (3) SCC 443, has categorically held that if all other ingredients which form part of the cause of action, which includes, the place, where the contract is executed and the place where it is required to be performed fall outside the jurisdiction of the Court, which entertains the suit, the suit cannot be sustained on the mere ground that the BG, which is issued, pursuant to the main contract is issued from a place, falling within the territorial jurisdiction of the Court in which the action is instituted. The relevant observations made by the Supreme Court in this behalf are set forth hereafter :
.... 3. It is settled law that cause of action consists of bundle of facts which give cause to enforce the legal injury for redress in a court of law. The cause of action means, therefore, every fact, which is traversed, it would be necessary for the plaintiff to prove in order to support his right to a judgement of the Court. In other words, it is a bundle of facts, which taken with the law applicable to them, gives the plaintiff a right to claim relief against the defendant. It must include some act done by the defendant since in the absence of such an act no cause of action would possibly accrue or would arise. In view of the admitted position that contract was executed in Bombay, i.e., within the jurisdiction of the High Court of Bombay, performance of the contract was also to be done within the jurisdiction of the Bombay High Court; merely because bank guarantee was executed at Delhi and transmitted for performance to Bombay, it does not constitute a cause of action to give rise to the respondent to lay the suit on the original side of the Delhi High Court. The contention that the Division Bench was right in its finding and that since the bank guarantee was executed and liability was enforced from the bank at Delhi, the Court got jurisdiction, cannot be sustained.
... 4. We, therefore, hold that the learned Single Judge was right in his conclusion that no part of the cause of action had arisen within the jurisdiction on the original side of the High Court of Delhi and direct to return the plaint for presentation to the proper Court. ...
14. In this case also admittedly except issuing bank guarantee by one of the Branch of the State Bank of India
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at Chennai, the entire cause of action arose in Kerala and as per the judgment of the Constitution Bench of the Supreme Court reported in CDJ Law Journal 2013 SC 573 – M/s. Swastik Gases P. Ltd. Vs. Indian Oil Corp. Ltd. the very existence of a jurisdiction clause in an agreement makes the intention of the parties to an agreement quite clear to exclude the jurisdiction of the others courts mentioned in the agreement. 15. In view of the above facts and as most of the cause of action arose within the jurisdiction of the Kerala Court and the bank has nothing to do with the termination of the contract and the banks also admitted to pay the money as per the agreement and no relief whatsoever has been claimed as against the first defendant and the suit has been numbered even before getting an Order of leave, the same cannot be cured as such the very suit cannot be maintainable, in view of the cause of action and the parties are bound by the contract, all the applications are liable to be dismissed. 16. Accordingly, all the applications are dismissed and the plaint numbered is rejected, as no leave has been granted.