LARSON AND TOUBRO Vs. MADHYA PRADESH ELECTRICITY BOARD

JUDGEMENT

(1.) THIS revision is directed against the order dated 20.9.96 passed by the District Judge, Jabalpur in M. J. C. No. 126/96, whereby the learned District Judge has rejected the application filed by the applicant under Section 41 of the Arbitration Act, 1940 read with IInd Schedule thereof.

(2.) THE applicant filed an application seeking injunction restraining the non -applicant No. 1 i. e. Madhya Pradesh Electricity Board, Rampur, Jabalpur from encashing the bank guarantee given by the non -applicant No. 2 for the amount of Rs. 20,08,158/ - (Rupees Twenty Lakhs Eight Thousand One Hundred and Fifty Eight). The applicant entered into a contract with non -applicant No. 1 for erection of 400 K. V. Double Circuit Transmission Line Itarsi / Bhopal Vide order dated 30.6.89. As per order under the contract, the applicant furnished a bank guarantee on 10.9.91. This bank guarantee was furnished for the purpose of securing payment of 10% retention money. Subsequently, this bank guarantee was modified on 28.10.91 as per demend made by the non -applicant No. 1. It appears that there was an amendment in aforesaid bank guarantee No. L and T 91/23 dated 28.10.91. The amendment was made on 31.10.91 and the value of bank guarantee was enhanced from Rs. 19, 46, 220/ - (Rupees Nineteen Lakhs Forty Six Thousand Two Hundred and Twenty) to Rs. 20,08,158/ - (Rupees Twenty Lakhs Eight Thousand One Hundred and Fifty Eight) on the same terms, It is not disputed by the parties that the applicant has completed its work on 18.6.91 and non -applicant No. 1 was handed over possession of the transmission lines fully commissioned on 26.6.91. It is also not disputed that the concerned Supreintending Engineer of the non -applicant No. 1 had certified by a certificate dated 4.5.96 that the applicant has completed erection work as per contract and transmission lines were complete in all respects and they were working satisfactorily. According to the applicant, the bank guarantee was issued by the non -applicant No. 2 at the instance of the applicant for the purpose of securing payment of 10% retention money. It is alleged by the applicant that the said amount of 10% was duly deducted by the non -applicant No. 1 from the running bills of the applicant. Therefore, the applicant requested the non -applicant No. 1 to refund the amount so deducted after completion of the work in view of the bank guarantee. Instead of refunding the amount, the non -applicant No. 1 was trying to encash the bank guarantee also. The applicant, therefore, was compelled to file Civil Suit No. 1082/93 against the non -applicant in the High Court of Bombay in original civil jurisdiction and the applicant was granted exparte stay in the year 1993. Subsequently, the non -applicant No. 1 appeared before the High Court of Bombay and raised a preliminary objection to the effect that the dispute between the parties cannot be decided by the High Court of Bombay as the jurisdiction to try all the disputes in respect of the contract could only be decided at Jabalpur. The High Court of Bombay by its order dated 20.8.96 directed that it has no territorial jurisdiction to decide the suit and, therefore, the plaint be returned for presentation to the proper Court. The High Court of Bombay however, continued the operation of stay granted by it for four weeks in order to enable the applicant to file the civil suit.

(3.) LEARNED counsel for the applicant was specifically asked by this Court during the course of the arguments why did he not prefer civil suit as directed by the High Court of Bombay in its order dated 28.8.96. Learned counsel for the applicant stated that in his opinion no suit would lie for the reason, the matter is already pending for arbitration. According to the learned counsel for the applicant, the correct remedy was to file an application under Section 41 of the Arbitration Act, 1940 read with the IInd Schedule. Learned counsel for the applicant has also produced before this Court the plaint filed before the High Court of Bombay. In paragraph 8 of the plaint, the applicant has stated frankly that the arbitration proceedings had already commenced when the plaint was filed. It is, therefore, inferred that the applicant did not suppress the fact before the High Court of Bombay that the arbitration proceedings had already commenced. It may be another matter that the counsel for the applicant at Jabalpur may disagree with the counsel for the applicant at Bombay but this fact by itself would not come in the way of applicant in prosecuting the application for injunction under Section 41 of the Arbitration Act, 1940 read with its IInd Schedule. It cannot be said that applicant has not come with clean hands before this Court. For this reason the application for temporary injunction filed by the applicant is not liable to be dismissed. Therefore, this Court proceeds to decide the case of the applicant on merits.