The High Court of Calcutta held that the settlement process undertaken by the Chairman and Managing Director of the company doesn't involve adjudication and further the termination of a settlement attempt does not always result in a “final and binding” decision.
Brief Facts:
The present application was filed by the Bihar Rural Livelihoods Promotion Society to set aside the ex parte orders dated 18th August 2023, 6th September 2023 and 12th September 2023.
Contentions of the Petitioner:
The learned counsel appearing on behalf of the applicant argued that the matter could not be referred to the learned court below, because there was no valid arbitration agreement between the parties.
Observations of the court:
The court after considering the argument of the petitioner stated that the said view cannot be accepted due to the presentation of at least three judgments of the Supreme Court, which were in direct contradiction to her position. The High Court referred to the case of Mallikarjun vs. Gulbarga University, where a similar clause was interpreted as an arbitration clause. Additionally, it highlighted Punjab State and Others vs. Dina Nath and Vishnu (dead) by LRs. vs. State of Maharashtra and Others, where similar clauses were deemed arbitration clauses.
Further, the court stated that the clause in the last decision, in our opinion, is quite different from the other clauses. It refers to a settlement process being undertaken by the Chairman and Managing Director. A settlement effort does not involve any adjudication. The termination of a settlement attempt does not always result in a “final and binding” decision. Suppose, the settlement endeavour fails. If this is taken as a “final and binding decision”, it would have the effect of depriving a party of his legal remedy which is clearly violative of section 28 of the Indian Contract Act, 1872 and also the rights of individuals under our Constitution.
The decision of the Court:
The court concluded that at least prima facie there is a valid and binding arbitration clause between the parties and directed that the orders be continued till an order is made by the arbitral tribunal to be constituted or by a competent court.
Case Title: M/s. Mainak Engineering Private Limited vs. Bihar Rural Livelihoods Promotion Society
Coram: Hon’ble Mr. Justice I.P. Mukerji and Hon’ble Mr. Justice Biswaroop Chowdhury
Case No.: CAN No.3 of 2023
Advocate for the Petitioner: Ms. Amrita Pandey and Ms. Vaishnari Sonkar
Advocate for the Respondent: Mr. Debnath Ghosh, Mr. Sarosij Dasgupta, Mr. Pourush Bandyopadhyay, Mr. Samrat Mukherji, Mr. Dakshayani Basu, Mr. Rik Mukherji
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