TATA PROJECTS LIMITED Vs. ESSGEE ASSOCIATES

JUDGEMENT

(1.) The present appeal is against the order dtd. 21/6/2017 passed by the learned District Judge, Jagdalpur in Civil Suit No. 9-B/2016 whereby the application under Order 7 Rule 11 of CPC read with Ss. 5 and 8 of the Arbitration and Conciliation Act, 1996 was allowed and the appellant/plaintiff was non-suited.

(2.) (a). According to the plaintiff/appellant, respondents 1 to 3 entered into contract for carrying-out certain work for erection and commission of blast furnace plant at Nagarnar near Jagdalpur. Pursuant thereto, a Letter of Intent (LOI) was issued and in order to secure performance of job, two bank guarantees were furnished, one was for advance performance security amounting to Rs.27,51,333.75 and the other was for contract performance security amounting to Rs.27,51,334.00. Both the bank guarantees were issued by the ICICI Bank, which was arrayed as defendant in the plaint and respondent no. 4 herein this appeal. According to the appellant-plaintiffs, the bank affirmed the issuance of such bank guarantee in the name of appellant Company. The work order No. SBU-M&M/NMDC-Nagarnar/4581 was issued on 21/4/2014 and an agreement was entered in between the parties. The plaintiff/appellant contended that respondents/defendants failed to perform the part of their obligation to carry out the job and eventually, two bank guarantees were invoked, which were given for advance security and contract performance on 16/6/2015 and 4/12/2015 respectively.

(3.) Learned counsel for the appellant would submit that in order to refer a dispute to an arbitrator, as required under sec. 7 of Arbitration and Conciliation Act, 1996 necessarily there has to be an agreement between the parties and in the instant case serious allegation of fraud ascribing criminal liability was clamped that the so called bank guarantee was fraud, therefore, the matter could not have been referred to Arbitrator. He placed reliance in A. Ayyasamy v. A. Paramasivam 2016 10 SCC 386 and would submit that the dispute of like nature involving fraud would be considered as non-arbitrable. He would further submit that the dispute was not with respect to any performance of arbitration agreement but at the very inception, when respondents 1 to 3 failed to perform their job within a stipulated time, the bank guarantees were invoked. Under these circumstances, it came to the notice that the bank guarantees were never issued by the bank. Therefore, the issue cannot be regulated by sec. 8 of the Arbitration and Conciliation Act, 1986. He placed reliance in Hindustan Paper Corporation Ltd. v. Kanelihouse Angami; Suresh Arjundas Bakhtiani v. Union of India and NCC limited, Hyderabad v. ABB India Limited, Bengaluru 2018 (3) AKR 612.