RAJIV SAHAI ENDLAW, J.

1. Issue No.3, of the issues framed on 13th February, 2009 and ordered to be treated as a preliminary issue, as to the territorial jurisdiction of this court to entertain the suit, is for consideration.

2. The plaintiff has instituted this suit for declaration and permanent injunction vis-à-vis a bank guarantee, issued at the instance of the plaintiff by the defendant No.1 bank in favour of the Government of Assam (Defendant No.2).

3. The defendant No.2 Government of Assam had on 7th April, 2007 invited bids for supply of equipment installation, commissioning etc. all at Assam. The plaintiff company, stated to be having its registered office at Delhi was one of the bidders. The bank guarantee with respect whereto the suit has been instituted is a bank guarantee for EMD (bid security) issued by the defendant No.1 bank having its branch at New Delhi and for the benefit of the Defendant No.2 Government of Assam. The defendants No.1 bank under the said guarantee bound itself to pay to the defendant No.2 the sum of Rs.6 lacs in the event of the plaintiff withdrawing its bid during the period of bid validity and/or if the plaintiff after having been notified of the acceptance of its bid by the defendant No.2 during the period of the bid validity fails or refuses to execute contract form or fails or refuses to furnish the performance security in accordance with the clauses of tender. The defendant No.2 invoked the said bank guarantee; according to the plaintiff wrongfully. The plaintiff instituted the suit for the relief of declaration that the plaintiff is not at fault in executing/signing the proposed agreement/contract as sent by the defendant No.2 and as a consequence to the said declaration seeks permanent injunction restraining the defendant No.1 from honouring and/or encashing and/or remitting Rs.6 lacs covered by the said bank guarantee.

4. The plaintiff has in the plaint pleaded that this court has territorial jurisdiction since the cause of action had accrued at Delhi; the defendant No.1 had received the invocation letter at Delhi and since the defendant No.1 had forwarded intimation thereof to the plaintiff at Delhi; territorial jurisdiction of this court was also justified since the defendant No.1 bank works and carries on business at Delhi and the defendant No.2 Government of Assam also has its office at Delhi through its Resident Commissioner at Delhi.

5. The suit was instituted on 29th March, 2008. The suit was accompanied with an application for interim relief. The suit and the application came up before this court first on 1st April, 2008 when summons/notice thereof was issued to the defendant No.2, the counsel for the defendant No.1 having appeared before this court. The suit thereafter came up before this court on 8th April, 2008 when it was inter-alia ordered “all actions of the defendant shall be subject to order of this court”. The defendant No.1 failed to file the written statement and vide order dated 31st October, 2008 the right of the defendant No.1 bank to file the written statement was closed. The counsel for the defendant No.2 informed on that date that the bank guarantee had already been encashed and the monies thereunder received by the defendant No.2. Even though relief claimed in the suit was for declaration and injunction only but notwithstanding the encashment of the bank guarantee, the suit was held to have not become infructuous for the reason of the order dated 8th April, 2008 making the action of the defendants subject to the orders of the court.

6. The defendant No.2 in its written statement has contested the territorial jurisdiction of this court leading to an issue with respect thereto being framed. Since on the basis of the averments and the documents, it was felt that the said issue of territorial jurisdiction of this court did not require any evidence, the same was ordered to be treated as a preliminary issue.

7. The counsel for the part