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HIGH COURT OF CALCUTTA
Padma Khastgir, J.
Enterprise for Waterways Ivan Milutinovic Pim
Versus
Board of Trustees for the Port of Mourmugao & other
Suit No. 849 of 1978
Decided On: April 5, 1979
CONTRACT - JURISDICTION - LEAVE TO SUE - REVOCATION - BALANCE OF CONVENIENCE - FORUM CONVENIENCE - ARBITRATION CLAUSE - BANK GUARANTEE - INJUNCTION - SPECIFIC PERFORMANCE - CONTRACTUAL OBLIGATIONS - INTERPRETATION OF CONTRACT - MUTUALITY - CONTRACTUAL JURISDICTION - STAY OF SUIT.
Fact of the Case:
The plaintiff, a company, filed a suit against the defendant, a Port Trust, and the United Commercial Bank, seeking a declaration that a deed of guarantee executed by the bank in favor of the Port Trust had ceased to have effect and was not binding on the plaintiff, and an injunction restraining the Port Trust from making any claim under the guarantee. The plaintiff obtained leave to sue under Clause 12 of the Letters Patent, which allowed it to file the suit in the Calcutta High Court, even though the cause of action arose outside the court's jurisdiction.
Finding of the Court:
The court found that the plaintiff had suppressed material facts in obtaining leave to sue, namely, that the contract between the parties contained a clause (Clause 71) which provided that any dispute arising out of the contract would be subject to the jurisdiction of the court in Goa, where the contract was executed and was to be performed. The court also found that the balance of convenience favored the defendant, as the Port Trust had no office in Calcutta, while the plaintiff had an office in Goa and the bank had a branch office in Goa.
Issues: 1. Whether the plaintiff had suppressed material facts in obtaining leave to sue under Clause 12 of the Letters Patent. 2. Whether the balance of convenience favored the defendant. 3. Whether the arbitration clause in the contract was valid and binding on the parties. 4. Whether the bank was entitled to honor the guarantee despite the plaintiff's claims.
Ratio Decidendi: 1. The court held that the plaintiff had suppressed material facts in obtaining leave to sue, as it had failed to disclose the existence of Clause 71 in the contract, which provided for the exclusive jurisdiction of the court in Goa. 2. The court held that the balance of convenience favored the defendant, as the Port Trust had no office in Calcutta, while the plaintiff had an office in Goa and the bank had a branch office in Goa. 3. The court held that the arbitration clause in the contract was valid and binding on the parties, as it was not contrary to public policy and did not contravene Section 28 of the Contract Act. 4. The court held that the bank was entitled to honor the guarantee despite the plaintiff's claims, as the guarantee was irrevocable and the bank was not concerned with any dispute between the plaintiff and the Port Trust.
Final Decision: The court allowed the defendant's application and revoked the leave granted to the plaintiff to sue in the Calcutta High Court. The court also granted an injunction restraining the plaintiff from taking any further steps in the suit and ordered a stay of operation of the order for 3 weeks from the date of the order.
1. This application has been taken out by the Board or Trustees for the Port of Mourmugao, the defendant no. 1 herein for an order for revocation of leave granted under clause 12 of the Letters Patent in this suit, the suit and any proceedings thereunder be permanently stayed, injunction restraining the plaintiff and/or its agents or servants or assigns from taking any further steps in the said suit and for other consequential reliefs.
2. The facts of this application shortly are that the plaintiff M/s. Enterprise for Waterways Ivan Milutinovic Pim instituted this suit against the petitioner, the defendant no. 2, United Commercial Bank, and defendant no. 3 on 20th of November, 1978, inter alia, for a declaration that the deed of guarantee dated 14th of September, 1974 executed by the defendant no. 2 in favour of the defendant no. 1 ceased to have effect from 1st of December, 1976 and the same is not binding and/or enforceable against the plaintiff from that date. As such the said deed of guarantee be declared null and void on and from 1st of December, 1978, and an order for delivery up of the deed of guarantee and also for a declaration that the Ports Trusts are not entitled to claim for damages or other reliefs against the plaintiff under deed of guarantee; as such any claim to enforce the said guarantee is wrongful and illegal, injunction restraining the defendant no. 1 from making any claim in respect of the Bank guarantee or to ask for any extension of time, an injunction restraining the defendant no. 1 from filing any suit or claim in respect of the said Bank guarantee, Receiver etc.
3. In this suit the Respondent No.1 obtained leave under Clause 12 of the Letters Patent. According to the petitioner, from the perusal of the plaint including the prayers asked for it would appear that there is no specific allegation against the defendant no.2 or defendant no.3 and there is no cause of action in favour of the plaintiff against tile said defendants. In fact no relief has been claimed against the defendant no.3. There is no allegation in the plaint against the defendant no.2 with regard to its conduct in respect of Bank guarantee. Leave under Clause 12 of the Letters Patent was obtained by the plaintiff in this suit by making certain allegations in paragraphs 3, 5, 6 and 7. In paragraph 3, it has been stated by the plaintiff that the Bank guarantee was in favour of Port Trust which was executed and issued by the defendant no.2 at Calcutta within jurisdiction of this Court. In paragraph 5 it has been pleaded that in terms of Clause 10 of further supplemental agreement the plaintiff made arrangements with the defendant no.2 at Calcutta within jurisdiction of this Court for issue of Bank guarantee and the defendant no.2 duly executed and granted Bank guarantee at Calcutta in favour of the Pan Trust. The paragraph 6 sets out various terms and conditions of the said Bank guarantee In paragraph 7 it has been pleaded that on 7th of October, 1974 certain amendments were made by mutual consent of the parties and these amendments are recorded in a letter written and sent by the defendant no.2 from Calcutta within the jurisdiction of this Court to the Chairman, Port Trust which amendment provided that in case the date of completion of the work under agreement is extended the guarantee will automatically be extended upto a date for six month after the said extended date for completion.
4. According to the petitioner, from the perusal of the said paragraphs in the plaint it would appear that the execution of the Bank guarantee is the only cause of action alleged by the plaintiff to have arisen within the jurisdiction of this Court. Any arrangement made for execution of or giving Bank Guarantee at Calcutta, according to the petitioner, does not give the plaintiff a cause of action. Even assuming the said Bank guarantee was given to the plaintiff at Calcutta within jurisdiction but even this that does not and cannot constitute a part or
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