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Judgment
Rahul Bharti, J
Heard learned counsel for the petitioner and the caveator.
By virtue of CFA Agreement dated 01.07.2022, the petitioner and the respondent no. 1 came to enter into a contractual relationship to be governed by the terms and conditions of the said agreement. This agreement carries a clause 12, which is an arbitration clause, to the effect that all questions, dispute and differences arising under or in relation to the agreement to be referred to the sole arbitration of an officer of the Corporation to be nominated by the Director (Marketing) of the Corporation. In addition, Clause 13 of this Agreement provides for exclusive jurisdiction of Courts in Chandigarh to deal with any application or other proceedings in respect of anything done under the agreement. The import of Clauses 12 and 13 of the CFA Agreement is very clear that the matters falling within the domain of the agreement are to be cognizable at the respective places as mentioned herein.
The petitioner and the respondent no. 1 further engaged themselves in a contractual relationship in the form of furnishing of a bank guarantee (BG) dated 02.12.2018 involving J&K Bank landing the guarantee on behalf of the respondent no. 1 in favour of the petitioner. This bank guarantee (BG) bearing no. 0005IPBG1812003 to the extent of Rs. 2,92,50,000/- came to have extension lasting upto 07.12.2022.
It is in the context of the right by reference to and under the aforesaid bank guarantee (BG) that the petitioner came to exercise its option to invoke and encash it by addressing letter/communication no. BG/IOCL/MTS/01 dated 22.12.2022 to the J&K Bank Limited as being the issuing bank of the said bank guarantee (BG). It is this communication against which the respondent no. 1 came to invoke Section 9 of the Arbitration and Conciliation Act, 1996 by approaching the Court of Additional District Judge, Commercial Court, Jammu.
The Court of Additional District Judge, Commercial Court, Jammu came to take cognizance of the application of the respondent no. 1 by putting the petitioner no. 1 herein to the notice, inviting its objections and in the meantime, directed the operation of the communication No. BG/IOCL/MTS/01 dated 22.12.2022 to remain stayed.
It is this order which has left the petitioner feel aggrieved in exercise of its right drawn not from the CFA agreement but from the bank guarantee which not only involves the respondent no. 1 but the J&K Bank as being the issuing bank as such this is a tripartite agreement between the petitioner, the respondent no. 1 and the J&K Bank Limited. This particular bank guarantee (BG) as a contract does not contain any arbitration clause so as to become subject matter of any adjudication under the regime of Arbitration and Conciliation Act, 1996. On the basis of this submission, learned senior counsel representing the petitioner submits that the order passed by the court below is an indulgence without jurisdiction whatsoever under the provisions of the Arbitration and Conciliation Act, 1996.
Be that as it may be, this Court reckons that by virtue of impugned order herein, the petitioner has been invited to file its objections to contest the matter as such, this Court disposes of this petition with a direction to the petitioner herein to appear before the Additional District Judge, Commercial Court, Jammu on the coming date of hearing posted in the case whereupon the Additional District Judge, Commercial Court, Jammu shall upon hearing dispose of the application under section 9 of the Arbitration and Conciliation Act, 1996 within a period of fifteen days from coming date of hearing fixed in the case. The time frame is mandatory. Any extension in this regard can be sought by the Additional District Judge, Commercial Court, Jammu only upon submission of reasons to this Court.
Caveat stands discharged.
Petition is disposed of accordingly along with connected application.