The High Court of Calcutta, while allowing a petition filed under section 11 of the Arbitration and Conciliation Act, 1996, held that even if a contract between parties does not have a specific provision for arbitration, an arbitration clause contained in an independent but related document could be imported and incorporated in the contract between the parties by reference to such document in the contract if the reference is such as to make all clauses of such document including the arbitration clause in such document part of the contract.
Brief Facts:
The petitioner is an owner of a plot of land having an area measuring approximately 30,472.45 sq. ft. (the premises). By and under a lease deed dated 24 August 2018, the petitioner had leased the premises to respondent No. 2 for business purposes. Given the repeated and continuous breach of obligations under the initial lease deed, the parties herein entered into a tripartite agreement which contemplated respondent no.1 carrying the same business of event management, food court, ceremonial functions, etc. Subsequently, disputes arose between the parties which culminated in the petitioner terminating both the above agreements. The petitioner issued a notice under section 21 of the Act invoking the arbitration clause in terms of the initial lease deed and the deed of assignment. Notwithstanding receipt of the same, the respondents failed to respond to the said notice.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the Petitioner submitted that on a combined reading of the deed of assignment along with the initial lease deed, it would be evident that clause 19.3 of the initial lease deed contains an arbitration clause that is deemed to have been specifically incorporated in the deed of assignment. He argued that the mutual intention of the parties to resolve their disputes and differences by way of arbitration is clear and that there is nothing contrary in the deed of assignment to suggest otherwise.
Contentions of the Respondent:
The learned Counsel for the Respondent submitted that the deed of assignment does not contain an arbitration clause since there has been no specific incorporation of the same.
Observations of the Court:
The court noted that incorporation of an arbitration clause in a subsequent contract is statutorily recognized under section 7(5) of the Act.
The Court observed that even if a contract between parties does not have a specific provision for arbitration, an arbitration clause contained in an independent but related document could be imported and incorporated in the contract between the parties by reference to such document in the contract if the reference is such as to make all clauses of such document including the arbitration clause in such document part of the contract. The Court said that a contract referring to a document with the intent of having the same to become part and parcel of the said contract along with all terms and conditions being read as applicable to the same or having all terms and conditions intended to govern and be incorporated in the said contract shall mean that the document in its entirety shall get lifted and incorporated in the contract.
The decision of the Court:
The Calcutta High Court, allowing the petition, held that on a proper construction of the deed of assignment which is inter-connected and inter-related with the initial lease deed, the parties intended the arbitration clause to be incorporated in the deed of assignment.
Case Title: Tata Communications Limited v Rudrapriya Constructions LLP & Anr.
Coram: Hon’ble Justice Ravi Krishan Kapur
Case No.: AP/77/2024
Advocate for the Petitioner: Mr. Dhruba Ghosh
Advocate for the Respondent: Mr. Sarvapriya Mukherjee
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