IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD
SUJANA KALASIKAM, J.
Rolex Meters Pvt. Ltd. - Appellant
Versus
Maharastra State Electricity Distribution Co. Ltd. and Ors. – Respondents
Civil Revision Petition Nos. 424, 425 and 437 of 2023
Decided On : 04-06-2024
(A) Civil Procedure Code, 1908 - Order 39 Rule 1 and 2 - Jurisdiction - The appellate Court concluded that the Courts in Secunderabad had no jurisdiction as per the contract, which specified exclusive jurisdiction in Mumbai - The invocation of bank guarantees is subject to the terms of the contract, which must be adhered to without any dispute pending - The petitioner/plaintiff's claims regarding revenue loss were found to be within the scope of the contract. (Paras 26, 31)
(B) Bank Guarantees - Nature and Invocation - The court reiterated that bank guarantees are independent contracts and can be invoked unless there is established fraud or irretrievable injury - The terms of the bank guarantee must be unequivocal and unconditional for invocation. (Paras 8, 9)
ORDER :
(Sujana Kalasikam, J.)
1. Civil Revision Petition No. 424 of 2023 is filed by the revision petitioner aggrieved by the order, dated 18.01.2023 passed in CMA.No.5 of 2018 by the I Additional Chief Judge, City Civil Court, Secunderabad reversing the order of Injunction passed in I.A. No.222 of 2016 in O.S. No.268 of 2016 by the I Junior Civil Judge, City Civil Court, Secunderabad.
2. Civil Revision Petition No. 425 of 2023 is filed by the revision petitioner aggrieved by the order, dated 18.01.2023 passed in CMA.No.4 of 2018 by the I Additional Chief Judge, City Civil Court, Secunderabad reversing the order of Injunction passed in I.A. No.223 of 2016 in O.S. No.269 of 2016 by the I Junior Civil Judge, City Civil Court, Secunderabad.
3. Civil Revision Petition No. 437 of 2023 is filed by the revision petitioner aggrieved by the order, dated 18.01.2023 passed in CMA.No.6 of 2018 by the I Additional Chief Judge, City Civil Court, Secunderabad reversing the order of Injunction passed in I.A. No.211 of 2016 in O.S. No.265 of 2016 by the I Junior Civil Judge, City Civil Court, Secunderabad.
4. Since the parties in all the Civil Revision Petitions as well as the issue involved in all the revision petitions is one and the same, they are being heard together and being disposed of by way of this common order.
5. For the sake of convenience, the facts in C.R.P. No.424 of 2023 are hereunder discussed.
6. I.A. No.222 of 2016 is filed under Order 39 Rule 1 and 2 read with Section 151 of CPC by the petitioner/plaintiff praying the Court to grant temporary injunction restraining the respondents/defendant Nos. 1 to 3 from invoking, honouring and releasing amounts under the Bank Guarantees.
7. The contention of the petitioner/plaintiff in I.A. No.222 of 2016 in O.S. No.268 of 2016 is that petitioner/plaintiff is a manufacturer of electricity meters and respondent/defendant No. 1 issued three (03) tenders and one extension order on different dates for supply of energy meters and the petitioner/plaintiff had submitted its bids in response to all those tenders and became successful bidder. Consequently respondent/defendant No. 1 issued letters of acceptance in favour of the petitioner/plaintiff in respect of all the tenders/extension orders, thereafter, the contracts were entered into it and as per the terms and conditions of the contracts, the petitioner/plaintiff has to furnish bank guarantees @10% of the cost of the contract in favour of respondent/defendant No. 1. Accordingly, the petitioner/plaintiff furnished five bank guarantees in favour of respondent/defendant No. 1 and then the petitioner/plaintiff supplied the material as per the terms and conditions of the contracts after strictly adhering to the mandatory pre-dispatch testing and the equipment was installed at the location of customers of respondent/defendant No. 1 after mandatory post-dispatch testing. Further, the products supplied by the petitioner/plaintiff under the contracts were also tested at NABL accredited to the Government and owned independent test labs at various locations and after due certifications of the fitness of the equipment only, the equipment was supplied by the petitioner/plaintiff. After completion of the supply of the energy meters under each contract, respondent/defendant No. 1 issued separate letters acknowledging receipt of the same.
8. Further, on 18.04.2016, respondent/defendant No. 1 issued letter to the petitioner/plaintiff stating that 10 lakhs LT AC single phase 5-30 Amps static energy meters without enclosure with internal low power radio frequency for communication are showing erratic behaviour, like abrupt fall in consumption, stopping of meters at low loads, commissioning problems etc., among 6,00,000 meters which have been supplied at Kalyan and Bhandup Zones. Therefore, the petitioner/plaintiff was directed to submit unconditional undertaking on stamp paper worth Rs. 200/- that in future if the meters which were supplied against replacement are ut
The court upheld the exclusive jurisdiction clause in the contract, affirming that disputes related to bank guarantees must be adjudicated in Mumbai, not Secunderabad.
Territorial jurisdiction in arbitration agreements prevails over statutory provisions when parties explicitly state preferred jurisdiction in contracts.
The obligation of a bank guarantee is independent of underlying contractual disputes, and interference is justified only in cases of fraud or irretrievable injustice.
Bank guarantees can be invoked regardless of disputes, unless fraud or irretrievable harm is clearly established.
A bank guarantee is an independent contract, and its invocation must comply with its terms; disputes regarding underlying agreements should be resolved in civil court.
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