TaxTMI 
TaxTMI 
2005 (3) TMI 801
X X X X Extracts X X X X
X X X X Extracts X X X X
....poration (India) Ltd. (referred to as HSCCI) was the nominated consultant of NEIGRIHMS. The agreement was executed on 17.5.2000. HSCCI has signed the agreement on behalf of NEIGRIHMS, being its consultant. Said agreement was novated by an agreement dated 31.12.2003. 3. ABL received certain advance payments from NEIGRIHMS towards mobilization and equipment, shuttering etc. These payments received by ABL from NEIGRIHMS were to be secured, as per contract, by furnishing bank guarantees in favor of NEIGRIHMS. ABL was also to furnish a performance guarantee. Numerous guarantees were issued by the bankers of ABL in favor of NEIGRIHMS. All the bank guarantees were issued by the bankers of ABL from Delhi. 4. Since the petition did not state as to how, courts in Delhi would have territorial jurisdiction, vide order dated 13.1.2005, ABL was directed to file an affidavit disclosing as to in what manner, courts in Delhi would have territorial jurisdiction to entertain the present petition. NEIGRIHMS was permitted to respond to the said affidavit. In compliance with the order dated 13.1.2005, requisite affidavits have been filed. 5. As per the affidavit filed by ABL, agreement dated 17....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e parties. How, in the past, the courts have adjudicated on the issue of territorial jurisdiction was shown to this court in reference to various authorities. 9. Let me start with the basic law. Residual section of the Code of Civil Procedure, Section 20, was the fulcrum on which arguments revolved. Not the whole section. Only Clause 'c' thereof was relied upon by the parties. Clause 'c' of Section 20 reads as under: 20. Subject to the limitations aforesaid, every suit shall be instituted in a court within the local limits of whose jurisdiction :- (a)...... (b)...... (c) The cause of action, wholly or in part, arises. 10. Since counsel for ABL referred to Article 226 of the Constitution of India, in the context of territorial jurisdiction, I may note the language of Article 226(2) of the Constitution of India. It reads as under:- 226(2). The power conferred by clause (I) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Petitioner since the fundamental inquiry is now to be directed towards determining the place where the substantial or predominant part of the cause of action has arisen. My observation in Cement Corporation of India v. M/s. S. Sultan and Anr., bearing Suit No. 2357-A/1997 is not in context for the reason that I had to consider in that case the legality and legitimacy of the ouster/restrictive clause reserving jurisdiction to Courts in New Delhi. There can be no gain saying today that parties cannot agree to have disputes adjudicated a place which does not otherwise enjoy jurisdiction. xx xx xx xx 8. Primacy has been given to the place where the cause of action has substantially arisen, as is evident from the decision of the Hon'ble Supreme Court in South East Asia Shipping Co. Ltd. v. Nav Bharat Enterprises Pvt. Ltd., [1996]3SCR405 . The admitted position was that performance of the obligations and liabilities under the contract was to be carried out in Bombay. The Court found it wholly irrelevant that the subject Bank Guarantee had been executed at Delhi and transmitted for performance to Bombay and held that Delhi Courts....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the Supreme Court in the decision reported as 2004(186)ELT3(SC) Kusum Ingots and Alloys Vs. U.O.I., in para 10, dealing with the issue of cause of action held:- 10. Keeping in view the expressions used in clause (2) of Article 226 of the Constitution of India, indisputably even if a small fraction of cause of action accrues within the jurisdiction of the court, the court will have jurisdiction in the matter. 18. The observations in the decision of the Hon'ble Supreme Court in South East Asia Shipping Company read in light of the decision of the Hon'ble Supreme Court in Kusum Ingots and Alloys judgment makes the legal position very clear, being that, even a small fraction of cause of action if accruing, within the jurisdiction of a court, vests the court with jurisdiction to entertain the suit. In this context, it may be noted that the words in part in Clause 'c' of Section 20 of the Code of Civil Procedure are not preceded by the word substantially'. In other words it cannot be read that in the context of cause of action, legislative intent is to read the word part' as 'substantial part'. 19. Learned counsel for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on ABL would be entitled to immediate judgment. Judgment being on an admission. 24. ABL has not restricted plea of cause of action based only on the issuance of the bank guarantees from Delhi. Bundle of facts pleaded as Constituting cause of action are much wider. 25. In the context of forum convenience it may be noted that in an appropriate case, a court may refuse to exercise its discretionary jurisdiction by invoking the said doctrine. While invoking the doctrine of forum convenience a court may refuse to exercise its discretionary jurisdiction notwithstanding that some part of cause of action has arisen within the territorial jurisdiction of the court. 26. In the instant case, it has to be noted that, HSCCI has acted as the consultant and most of the correspondence between the parties is between ABL and HSCCI. Registered office of HSCCI is at New Delhi. The bank guarantees have been addressed to HSCCI, though NEIGRIHMS is the beneficiary. Some of the letters invoking the bank guarantees have been issued by HSCCI. 27. Though NEIGRIHMS has asserted that the original agreement dated 17.5.2000 and the supplementary agreement dated 31.12.2003 were not executed at Delhi a....