Laxmi Pat Surana vs Future Enterprises Limited & Anr
2021 Latest Caselaw 358 Cal/2

                                   1


                            A.P. 318 of 2020
                   IN THE HIGH COURT AT CALCUTTA
                    Ordinary Original Civil Jurisdiction
                         COMMERCIAL DIVISION
                            Laxmi Pat Surana
                                    v.
                    Future Enterprises Limited & Anr.

     For the petitioner       : Mr. Sakya Sen, Adv.
                                Mr. Sunil Kr. Gupta, Adv.
                                Ms. Arindam Paul, Adv.


     For the Respondent Nos. : Mr. Mr. S. K. Kapur, Sr. Adv.

     1                         Mr. Ranjan Bachawat, Sr. Adv.
                               Mr. Arindam Guha, Adv.
                               Mr. Debnath Ghosh, Adv.
                               Mr. S. Sengupta, Adv.

     For the Respondent Nos. : Mr. S. N. Mookherjee, Sr. Adv.
     2                         Mr. Rishad Medora, Sr. Adv.
                               Ms. Pooja Chakraborti, Adv.
                               Ms. Radhika Mishra, Adv.
                               Mr. D. Saha, Adv.


     Hearing concluded on      : March 22, 2021

     Judgment on               : April 07, 2021


DEBANGSU BASAK, J. :-

1. The petitioner has applied under section 11(6) of the

Arbitration and Conciliation Act, 1996 for appointment of an

arbitrator.

2. Learned Advocate appearing for the petitioner has submitted

that, the petitioner is a licensee under South-Eastern Railways, in

respect of an immovable property by virtue of an agreement dated

April 16, 2004. The petitioner has constructed a shopping mall on a

portion of such land and sub-licensed a portion of the constructed

area to Pantaloon Retail (India) Limited. The petitioner and

Pantaloon Retail India Limited had entered into the sub-licensee

agreement dated January 30, 2007. Pantaloon Retail (India) Limited

had then been put into possession on October 1, 2007. Pursuant to

an order of the Hon'ble High Court of Bombay dated August 24,

2010, Pantaloon Retail (India) Limited had been demerged. By the

letter dated September 15, 2010, Pantaloon Retail (India) Limited

had informed the petitioner that by virtue of the order of the

demerger, Future Merchandise Limited should be subrogated in its

place. The various legal entities and undertakings of Pantaloon

Retail (India) Limited underwent demergers and ultimately, the

respondent Nos. 1 and 2 had emerged as the successor in interest

of Pantaloon Retail (India) Limited.

3. Learned Advocate appearing for the petitioner has submitted

that, Pantaloon Retail (India) Limited had defaulted in payment of

the license fees. Disputes and differences arose between the parties

to the agreement for sub-licensee. An application under Section 9 of

the Arbitration and Conciliation Act, 1996 had been filed being AP

No. 1095 of 2011. In such application, an order dated March 21,

2012 had been passed requiring the respondents to deposit a sum

of Rs. 6.50 crores with its advocate on record. The petitioner had

invoked Section 21 of the Act of 1996 and referred the disputes to

arbitration. By an order dated March 30, 2012, the disputes had

been referred to arbitration. The learned Arbitrator had entered into

reference The petitioner had filed an application for interim award

and an award for delivery of khas, vacant and peaceful possession.

The learned arbitrator had passed an interim award on April 8,

2013 directing khas, peaceful and vacant possession of the

premises to the petitioner. The interim award has not been

challenged by the respondents. Despite such interim award the

respondents has not made over possession of the premises to the

petitioner. The respondents are in occupation and deducting tax as

source in respect of the license fees payable under the Sub-licensee

Agreement.

4. Learned Advocate appearing for the petitioner has submitted

that, the Arbitral Tribunal had passed an award on May 19, 2016.

The parties had challenged such award. In the award, the Learned

Arbitrator had held that the respondents are obliged to pay rent for

the lock in period of sixty months being August 2008 to July 2013.

5. Learned Advocate appearing for the petitioner has submitted

that the respondents had unauthorisedly sub-licenced the demised

premises and are not in actual physical occupation or possession of

the demised premises. The respondents have been commercially

exploiting the same. The respondents have not been paying the

monthly occupation charges or license fees from 6 June, 2010.

6. Learned Advocate appearing for the petitioner has submitted

that, by a letter dated September 24, 2016 the petitioner had

claimed mense profits from the respondents on and from November

1, 2011. The petitioner had issued a notice under Section 21 of the

Arbitration and Conciliation Act, 1996 on October 6, 2016. The

respondents had replied thereto by letters dated October 28, 2016

and October 31, 2016 denying the liability to pay mense profits and

have questioned the right to invoke the arbitration clause.

7. Learned Advocate appearing for the petitioner has submitted

that, the petitioner had filed an application under Section 9 of the

Act of 1996 being AP No. 380 of 2017 which is pending. The

petitioner had filed an application under Section 11 of the Act of

1996 being AP No. 993 of 2017 which was dismissed as withdrawn

with a liberty to file afresh on January 16, 2019.

8. Learned Advocate appearing for the petitioner has relied upon

2008 Volume 7 Supreme Court Cases 169 (Consolidated

Engineering Enterprises v. Principal Secretary, Irrigation

Department & Ors.) and 2020 Volume 2 Supreme Court Cases

455 (Uttarakhand Purv Sainik Kalyan Nigam Ltd. v. Northern

Coal Field Ltd.), in support of his contentions that, the petitioner

is entitled to the benefits of Section 14 of the Limitation Act, 1963.

9. Learned Senior Advocate appearing for the respondent No. 2

has submitted that, the claim made by the petitioner is hopelessly

barred by limitation. He has submitted that, the notice under

Section 21 of the Act of 1996 had been issued on October 6, 2016.

The thirty day period had expired on November 6, 2016. The

petitioner had applied under Section 11 of the Act of 1996 on

November 11, 2017. The petitioner had withdrawn the application

under Section 11 of the Act of 1996 on January 16, 2019 with the

liberty to file afresh on the self-same cause of action. According to

him, the petitioner had time till November 6, 2019 to file the

application under Section 11 of the Act of 1996. However, the

petitioner had filed the same on October 15, 2020. Therefore, a

period in excess of three years had elapsed from the date of the

notice under Section 21 of the Act of 1996 being October 6, 2016 till

date the date of filing of the application under Section 11 of the Act

of 1996, afresh, on October 15, 2020. The claim for arbitration is

barred by law. He has relied upon 2021 SCC Online SC 207

(Bharat Sanchar Nigam Ltd. & Anr. V. Nortel Networks India

Pvt. Ltd.). In support of his contention.

10. Learned Senior Advocate appearing for the respondent No. 2

has submitted that, the leave that was obtained by the petitioner on

January 16, 2019 is governed by the provisions of Order XXIII Rule

2 of the Code of Civil Procedure, 1908 and not Section 14 of the

Limitation Act, 1963.

11. Learned Senior Advocate appearing for the respondent No. 2

has referred to the award and claimed that the possession of the

demised premises was handed over on April 14, 2012. According to

him all occupants of the demised premises are paying occupation

charges to the petitioner who is accepting the same without demur.

He has referred to the award of the arbitrator and submitted that,

the new arrangement between the petitioner and the occupants

have been noted by the arbitrator. Therefore, according to him the

claim of the petitioner does not survive.

12. Learned Senior Advocate appearing for the respondent No. 1

has adopted the contentions of the respondent No. 2. He has

submitted that, the petition under Section 11 of the Act of 1996

does not contain any pleading under Section 14 of the Limitation

Act, 1963. It is only in the supplementary affidavit that, grounds

under Section 14 of the Act of 1963 have been sought to be made

out. He has relied upon 2003 Volume 4 Company Law Journal

333 (Cal) (Bharat Bhari Udyog Nigam Ltd. & Ors. v. Jessop and

Co. Ltd. Staff Association & Ors.) and submitted that, the

supplementary affidavit cannot be treated as a substitute of an

averment made in the petition.

13. The petitioner and Pantaloon Retain (India) Limited had

entered into a sub-license agreement on January 30, 2007. The

petitioner had put Pantaloon Retail (India) Limited in physical

possession on October 1, 2007. The respondent Nos. 1 and 2 are

the demerged entities and have succeeded Pantaloon Retail (India)

Limited in respect of the demised premises. Initially, disputes and

differences had arisen between the parties which had been referred

to arbitration. In such arbitration proceedings, an interim award

dated April 8, 2013 had been passed, awarding eviction of the

respondents from the demised premises and delivery of vacant and

physical possession to the petitioner. The parties have rival

contentions with regard to the making over of possession by the

respondents to the petitioner. According to the respondents, the

petitioner had entered into arrangement with the persons in

occupation and therefore, it has to be construed that, the

respondents had made over possession of the demised premises to

the petitioner. The petitioner has contended that the respondents

are yet to make over possession of the demised premises.

14. On May 19, 2016 the sole arbitrator had passed an award.

Both the parties have assailed such award. The award has awarded

many claims in favour of the petitioner. According to the petitioner,

the award dated May 19, 2016 has allowed the petitioner to make

claims on the basis of mense profit. The respondents have

contended that the claim for mense profit are barred by the law of

limitation, since the claim is from November 1, 2011.

15. Consolidated Engineering Enterprises & Ors. (supra) has

held that, Sections 12 and 14 of the Limitation Act, 1963 are

applicable to proceedings under the Arbitration and Conciliation

Act, 1996. It has held that the policy of Section 14 of the Act of

1963 is to offer protection to a litigant against bar of limitation

when he has instituted a proceeding by reason some technical

defect which has not been decided on merit and has been

dismissed.

16. Uttarakhand Purv Sainik Kalyan Nigam Limited (supra)

has held that, the legislative intent underlining the Act of 1996 is

party autonomy and minimal judicial intervention in the arbitral

process. It has observed that, the provisions of Section 16 of the Act

of 1996 exhibits the legislative policy to restrict judicial intervention

at the pre-reference stage and that the issue of limitation should be

decided by the arbitrator. In the facts of that case, it had appointed

a arbitrator keeping the point of limitation open to be decided by

the arbitrator.

17. In Bharat Sanchar Nigam Ltd. & Anr. (supra) the Supreme

Court has held that the period for limitation of filing an application

under Section 11 of the Act of 1996 would be governed by Article

137 of the First Schedule of the Limitation Act, 1993. It has also

observed that, in rare and exceptional cases, where the claims are

ex facie time barred and it is manifest that there is no subsisting

dispute that the Court may refuse to make the reference.

18. In the facts of the present case, the parties have raised an

issue of limitation. The predecessor in interest of the respondents

had entered into the sub-licencee agreement with the petitioner on

January 30, 2007. There has been a previous arbitration

proceeding between the parties and an interim award passed

therein on April 8, 2013 awarding eviction of the respondents from

the demised premises. The parties have issues with regard to

implementation of the award for eviction. According to the

petitioner, the respondents have not made over possession of the

demised premises to the petitioner while the respondents contend

otherwise. The petitioner has claimed for mense prifit as against the

respondent from November 1, 2011

19. The entirety claim for mense profit at this stage cannot be said

with certainty to be barred by the laws of limitation. The petitioner

may not be entitled to the entirety of the claim on account of mense

profit, particularly from the date of claim but at the same time, it

cannot be said with finality that the petitioner is not entitled to

claim any mense profit at all. Whether or not the petitioner is

entitled to benefit of Section 14 of the Act of 1963 and whether

circumstances exist for the petitioner to have such benefit, are

issues which ought to be decided by the arbitrator. The issue of

limitation as has been raised by the parties cannot be decided

finally. As has been held in Bharat Sanchar Nigam Ltd. & Anr.

(supra), if there is doubt the rule is to refer the disputes to

arbitration. In the facts of the present case, it would be appropriate

to refer the disputes between the parties to arbitration.

20. Since the issue of limitation cannot be decided finally the ratio

of Jessop and Company Limited (supra) need not be applied in

the facts of the present case.

21. In such circumstances, Mr. Justice Pratap Kumar Ray (retired)

is appointed as the arbitrator in terms of the arbitration agreement

between the parties. The issue of limitation as has been raised by

the parties are kept open to be decided by the learned arbitrator.

22. The learned arbitrator is at liberty to fix his remuneration

which will be shared equally by the parties with the petitioner

bearing one part and the other part being paid by the respondents.

The costs and expenses of the arbitration shall be borne by the

parties in the same proportions.

23. The parties are at liberty to communicate this order to the

learned arbitrator.

24. AP No. 318 of 2020 is disposed of accordingly.

[DEBANGSU BASAK, J.]