DLF INDUSTRIES LIMITED Vs. ABN AMRO BANK

JUDGEMENT

(1.) One of the questions for consideration in these four appeals is about the territorial jurisdiction of the Courts at Delhi to entertain the three petitions filed under Section 9 of the Arbitration and Conciliation Act, 1996 by M/s. DLF Industries Limited (hereinafter referred to as 'DIL').

(2.) The facts in brief are that on 14.1.1998 three separate petitions i.e. O.M.P. Nos. 20/98, 21/98 and 22/98 were filed by DIL seeking injunction against the respondent Bank from encashing the bank guarantees. Inter alia, it was alleged that the petition was being filed against the fraudulent and illegal act of M/s. Atul Limited (hereinafter referred to as "ATUL") in seeking encashment of bank guarantees issued by the Banks. The contracts between DIL and ATUL were novated in favour of State Bank of India, who has not sought invocation of bank guarantee in view of novation of contracts.

(3.) In terms of Section 62 of the Indian Contract Act, the original contract need not be performed. As the contracts were novated in favour of State Bank of India, who is substituted in place of ATUL, there is no privity of contract left between DIL and ATUL in whose favour bank guarantees were issued. ATUL as such cannot invoke bank guarantees.