Calcutta High Court
Pam Developments Pvt. Ltd. & Ors vs Hdfc Bank Ltd on 22 December, 2022
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ODC-2
IN THE HIGH COURT AT CALCUTTA
(Ordinary Original Civil Jurisdiction)
COMMERCIAL DIVISION
IA No. GA/5/2022
In CS/170/2020
PAM DEVELOPMENTS PVT. LTD. & ORS.
Vs.
HDFC BANK LTD.
BEFORE :
The Hon'ble JUSTICE KRISHNA RAO
Heard On : 20.12.2022
Order On : 22.12.2022
Appearance:
Mr. Suman Dutt, Adv.
Mr. Siddhartha Banerjee, Adv.
Mr. Joydeep Roy, Adv.
Mrs. Soni Ojha, Adv.
Mr. Soumajit Majumder, Adv.
...For the petitioner/defendant.
Mr. Priyankar Saha, Adv.
Mr. Amritam Mandal, Adv.
...For the respondents/plaintiffs.
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ORDER
The defendant HDFC Bank has filed the instant application under
Section 8 of the Arbitration and Conciliation Act, 1996 praying for referring the
parties of the suit to the Arbitration.
The plaintiff has filed suit against the defendant praying for following
reliefs:
"a) A decree for specific performance of the agreement dated 28th July
2020 as pleaded in paragraph 39 above.
b) A decree for a sum of Rs. 225,68,19,237/- as pleaded in paragraph
35 hereinabove;
c) A decree for interest on the aforesaid sum of Rs. 225,68,19,237/- at
the rate of 18% per annum from 22/12/2020 till realization.
d) Interim interest and interest on judgment at the rate of 18% per
annum on the said sum as may be due and payable;
e) A decree be passed towards loss and damages suffered by the
plaintiff account of the wrongful act and conduct of the defendant as
aforesaid and a decree be passed on such sum as may be due and
payable; and other reliefs."
The plaintiff no. 1 had availed credit facilities from the defendant bank
for the purpose of cash credit and construction equipment loan and the
plaintiff nos. 2, 3 and 4 have stood as guarantors. The plaintiffs have defaulted
in making repayment of the loans since 2015 and accordingly the defendant
bank had initiated proceeding under Section 19 of the Recovery of Debts and
Bankruptcy Act, 1993 against the plaintiffs. During the pendency of the said
proceeding, a settlement was arrived between the parties on 28th July, 2020
wherein the plaintiffs have agreed to pay the amount of Rs. 6.11 crore on or
before 31st August, 2020 for closure of loan account.
The relevant clause of the settlement are as follows :
"Further, notwithstanding the provisions of this Acceptance Letter to the
arrangement envisaged, the terms and conditions of the Sanction Letters
issued to yourselves from time to time by the Bank, and all its related
documents, shall remain in full force and effect. All the guarantees issued
by yourselves in favour of the Bank shall continue to remain in full force
and effect."
As per the settlement, the plaintiff has paid the total amount of Rs. 6.11
crore to the bank but the plaintiff alleged that the defendant has not returned
the documents/ papers of the equipment's due to which the plaintiff is not able
to utilize the equipment's because of which the plaintiff had suffered damages
and accordingly the plaintiff has filed the instant suit against the defendant.
The defendant alleges that the defendant has released/ returns the
documents to the plaintiff. In the settlement both the parties have agreed that
all its related documents, shall remain in full force and effect.
At the time of availing cash credit loan the plaintiff has executed two
agreements with the defendant and in both the agreements there are
arbitration clauses which reads as follows:
"ARBITRATION
All disputes, differences claim arising out of or touching upon this
agreement whether during its subsistence or thereafter shall be settled by
arbitration in accordance with the provisions of the Arbitration and
Conciliation Act, 1996, or any authority amendments shall be final and
binding on the Borrower and Guarantor to this agreement."
Section 8 of Arbitration and Conciliation Act reads as follows :
"8. Power to refer parties to arbitration where there is an
arbitration agreement.-- (1) A judicial authority, before which an action
is brought in a matter which is the subject of an arbitration agreement
shall, if a party to the arbitration agreement or any person claiming
through or under him, so applies not later than when submitting his first
statement on the substance of the dispute, then, notwithstanding any
judgment, decree or order of the Supreme Court or any court, refer the
parties to arbitration unless it finds that prima facie no valid arbitration
agreement exists.
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration agreement
or a duly certified copy thereof.
[Provided that where the original arbitration agreement or a certified
copy thereof is not available with the party applying for reference to
arbitration under sub-section (1), and the said agreement or certified copy
is retained by the other party to that agreement, then, the party so
applying shall file such application along with a copy of the arbitration
agreement and a petition praying the court to call upon the other party to
produce the original arbitration agreement or its duly certified copy before
that court.]
(3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial authority, an
arbitration may be commenced or continued and an arbitral award made."
Mr. Priyankar Saha, Learned Counsel representing the plaintiff submits
that there is no clause of Arbitration in the settlement agreement entered
between the parties and thus Section 8 of the Act of 1996 is not applicable. He
further referred several order passed by this Court in the instant proceeding
wherein the defendant had participated and has not taken the plea of
arbitration and thus at this later stage the application filed by the defendant is
not maintainable.
Mr. Suman Dutt, Learned Senior Advocate submits that the defendant
had participated in the interlocutory applications and not in the main suit as
the plaintiff has not filed written statement in the main suit and this court has
fixed the suit as undefended and the defendant has till date not disclose the
defense. Mr. Dutt relied upon the judgment reported in (2006) 7 SCC 275
(Rashtriya Ispat Nigam Ltd. and Another -vs- Verma Transport Co.) and
submits that the expression "first statement on the substance of the dispute"
contained in Section 8 (1) of the 1996 Act must be contra distinguished with
the expression "written statement".
Mr. Dutt further relied upon the judgment reported in (2011) 5 SCC 532
(Booz Allen and Hamilton INC. -vs- SBI Home Finance Limited & Others)
and submits that there is no impediment for the parties to mortgage suits
being referred to arbitration under section 8 of the Act.
Admittedly, the plaintiff had availed credit facilities form the defendant
bank and the plaintiffs failed for repayment of loan amount and the defendant
bank initiated proceeding against the plaintiffs and in the said proceeding, a
settlement was arrived between the parties and the plaintiff has acted upon. At
the time of obtaining cash credit facilities, the plaintiffs have entered into two
agreements with the defendant bank and in both the agreements there is a
clause of Arbitration. In the settlement agreement entered between the parties it
is specifically agreed by both the parties that "notwithstanding the provisions of
this Acceptance Letter to the arrangement envisaged, the terms and conditions of
the Sanction Letters issued to yourselves from time to time by the Bank, and all
its related documents, shall remain in full force and effect".
Though the defendant had participated in the interlocutory proceeding
initiated by the plaintiff in the suit but the plaintiff has not filed written
statement in the suit by disclosing his defense and thus it cannot be said that
the defendant has waived his right to invoke arbitration clause.
As regard the jurisdiction of the Arbitrator, the plaintiff can raise the said
issue before the learned arbitrator and the same can be determined by the
arbitrator himself under Section 16 of the Act of 1996.
In view of the above, the parties of the instant suit are referred to the
arbitration by appointing Shri Jishnu Saha, Learned Senior Advocate as an
Arbitrator.
Learned Arbitrator is requested to complete the Arbitration proceeding in
accordance with law. The Counsel for the petitioner is directed to communicate
the order to the Learned Arbitrator for information.
(KRISHNA RAO, J.)
p.d/
Later :
Counsel for the respondents/plaintiffs has prayed for stay of the order.
Counsel for the petitioner/defendant has raised objection. Considering the
submissions of the parties, prayer for stay is refused.
(KRISHNA RAO, J.)
p.d/
