SEPPLE RALLY OY Vs. UNION BANK OF INDIA

JUDGEMENT

(1.) Briefly the facts are that the Dany Dairy and Food Engineers Ltd. , respondent No.3 entered into an agreement with the complainant wherein the respondent No.3 agreed to supply two evaporator systems valued at Rs.25,98,473/- to them within a period of four months from the date of the order. Respondent No.3 asked for 100% advance which was paid by them in pound sterling on the condition that they would furnish bank guarantee for refund of the amount incase the contract remained un-executed. Respondent No.3 obtained bank guarantee dated 19.12.88 from Union Bank of India, Saharanpur, Respondent No.2 and furnished that to the complainant. Respondent No.3 supplied a part of the plant on account of which bank guarantee stood reduced to Rs.10,53,735/-. The complainant asked respondent No.2 on 20.12.89 to pay to them pound 39,000/- equivalent to Rs.10,53,735/-as respondent No.3 had failed to perform his part of the contract in full but they did not pay the same. It is alleged that the respondent Bank informed the complainant that the Reserve Bank of India, Kanpur, vide letter dated 11.10.90 had considered the matter favourably and regularised the illegal action of the Saharanpur Branch in issuing the guarantee dated 19.12.88. The Bank then gave a draft dated 4.3.91 for pound 29,062 to the complainant. Thus they suffered a loss equivalent to about 9,938 (39,000 (-) 29,062 = 9,938 ). Consequently they have prayed that respondent Nos.1 and 2 be directed to pay the amount of pound 9,938 along with interest @ 18% p. a. from the date of invocation of bank guarantee till the date of actual payment.

(2.) The complaint has been contested by the respondent Bank. They have raised a preliminary objection that no part of cause of action arose at Delhi and therefore the Commission at Delhi had no jurisdiction to entertain the complaint. On merits, they admitted that they had executed a guarantee in favour of the complainant and that the guarantee amount stood reduced to Rs.10,53,735/-. However, they denied that the complainant was entitled to that amount in pound sterling. They have pleaded that they were liable to pay the amount in Indian currency. However, in order to remit the amount to the complainant, the permission of Reserve Bank of India had to be obtained and formalities were to be complied with. The amount was converted to sterling pound at the prevailing rate when the amount was given to the complainant. It is further pleaded that the complainant accepted the amount in full and final settlement of their claim and consequently they are estopped from filing the complaint.

(3.) The first question that arises for determination is, whether the Commission has got the territorial jurisdiction to entertain the complaint. The bank guarantee was furnished by respondent No.3 who is a necessary part to the present proceedings, to the complainant at Delhi. The contract between respondent No.3 and the complainant in pursuance of which bank guarantee was given, took place at Delhi where respondent No.3 has its office. Thus a part of cause of action arose at Delhi. It is true that the bank guarantee was furnished by the Saharanpur Branch of the Bank, but that will not make any difference, as a part of the cause of action arose at Delhi. Consequently, we are of the opinion that the Commission has got the jurisdiction to entertain the complaint.