1. Defendant in O.S.No.6949/1991 on the file of the Additional City Civil Judge, Bangalore, has come up in first appeal impugning the Judgment and Decree dated 18.08.2003 passed in the said case.

2. Brief facts leading to this appeal are as under: Appellant herein is defendant and respondent is plaintiff in O.S.No.6949/1991, which was filed for recovery of amount due in a sum of Rs.13,93,226/- together with interest at 18% p.a., from the date of the suit till realisation on the ground that the said amount is due from the defendant on account of construction of factory by the plaintiff for and on behalf of defendant - Society at the place of its work in Saundatti, Belgaum District.

3. The facts which are not in dispute are that the defendant - Society decided to get the building constructed within the premises of its factory and in that behalf a tender was called. Plaintiff tendered its offer to take up the construction work on 24.4.1986. Subsequently, after mutual discussion between the parties the said tender was accepted and the work was awarded to plaintiff in terms of letter dated 8.7.1986. The nominal value of the work was estimated at Rs. 1,65,40,000/-. In that behalf, an agreement was also entered between the parties on 09.07.1986, which is at Ex.P - 2. It is also not in dispute that the terms and conditions under which the contract finalised was under letter dated 27.5.1986, which was made as part of the agreement and produced at Ex.P - 5. It is seen that the building was completed on 29.2.1986 and final bill for Rs.19,65,000/- was submitted on 27.05.1986. It is stated that in spite of several request, the said amount was not paid and thereafter a joint meeting was held on 9.11.1989 between the parties, wherein it was decided that the final bill was required to be passed by the defendant. In spite of this, it is stated that a sum of Rs.7,44,649-82 remained in arrears towards the balance work which was carried out by plaintiff and out of that a sum of Rs.1,49,160/- being the tax deducted at source, the same was given deduction and after applying interest at 18% to the same, the amount due works out to Rs.13,93,226/-. A suit was filed for recovery of the same.

4. It is seen that in the said suit, after service of notice, defendant entered appearance and took up contention that the suit is not maintainable in view of the fact that notice is not issued under S.125 of the Act and also on the ground that the suit is initiated in the Court, which has no territorial jurisdiction to decide. It was also contended in the written statement that in terms of agreement dated 09.07.1986 produced at Ex.P - 2 and the letter containing terms and conditions produced at Ex.P - 5, plaintiff ought to have sought for referring the matter to arbitration, instead of filing a suit for recovery. Subsequently on appreciation of pleadings of both the parties, the Trial Court proceeded to frame six issues and out of which the relevant issues are Issue Nos. 3 and 4.

5. In the said proceedings, on behalf of plaintiff, one Sri. H. N. Varadarajan, Director of plaintiff adduced evidence as P.W.1 and in support of their case produced and marked in all 20 documents as Exs.P - 1 to P - 20. On behalf of defendant, one Sri. M. N. Raddi, First Division Clerk of defendant - Society adduced evidence as D.W.1 and in support of their case produced and marked in all 24 documents as Exs.D - 1 to D - 24. On appreciation of pleadings and evidence in the light of oral and documentary evidence available on record, the Court below decreed the suit answering issue Nos. 3 and 4 in the negative, i.e., in favour of plaintiff. Defendant being aggrieved by the Judgment and Decree, has come up in this appeal challenging the finding of Trial Court, particularly on issue No.4 with regard to territorial jurisdiction in entertaining the suit filed by plaintiff for recovery of the aforesaid amount on the ground that contract between the parties for construction of building withi