Sidhartha Jagnani And Anr vs Rb Diagnostic Pvt. Ltd
2022 Latest Caselaw 2611 Cal/2

ORDER

                               AP/201/2022

                  IN THE HIGH COURT AT CALCUTTA
                ORDINARY ORIGINAL CIVIL JURISDICTION
                           ORIGINAL SIDE

                     SIDHARTHA JAGNANI AND ANR.
                              VERSUS
                       RB DIAGNOSTIC PVT. LTD.


BEFORE:
THE HON'BLE CHIEF JUSTICE PRAKASH SHRIVASTAVA
DATE : 30/09/2022

                                                                    APPEARANCE:
                                           Mr. Deepnath Roychoudhury, Advocate
                                                      Mr. Swaraj Shaw, Advocate
                                                           . . . for the applicants.

                                                    Mr. Debnath Ghosh, Advocate
                                                    Mr. Ritoban Sarkar, Advocate
                                                   Ms. Smita Mukherjee, Advocate
                                                        Ms. Saheli Bose, Advocate
                                                                ....for respondent

The Court:- This application under Section 11 of the Arbitration

and Conciliation Act, 1996 (for short, 'the Act') has been filed by the applicant

for appointment of arbitrator to resolve the dispute between the parties.

The case of the applicants is that the lease agreement dated 1st of

October, 2018 was executed between the applicants and the respondent to

lease out the subject property for a period of 15 years on the given rent. The

lease agreement contains following Arbitration Clause:

"xi) The parties agree that in case of any dispute arising in respect of this Agreement of Lease, the matter shall be referred to arbitration of two Arbitrators, one to be appointed by the LESSOR and the other to be appointed by the LESSEE. The arbitrators so appointed shall appoint the third arbitrator to constitute an arbitral forum. This the arbitrators shall do in consonance with the provision of the Indian Arbitration and Conciliation Act, 1996, as may be amended from time to time. The decision of the Arbitrators so appointed shall be binding upon the LESSOR and the LESSEE. The arbitration proceeding shall be held at Kolkata and conducted in the English language. The courts in Kolkata shall alone have jurisdiction with regard to this Agreement to Lease. Indian law would be applicable."

Further case of the applicants is that the respondent had

committed default in making the appointment, therefore, initially, the demand

notice was issued and thereafter, the notice dated 11th of February, 2022

under Section 21 of the Act was issued by nominating the Arbitrator in terms

of the Arbitration Clause and requiring the respondents to nominate its

Arbitrator. But inspite of service of notice within the stipulated period of 30

days, respondent had not appointed the Arbitrator, therefore, present

application has been filed.

Learned counsel for the respondent has raised the preliminary

objection that the lease agreement is not adequately stamped, therefore, it is

required to be impounded. The plea of the applicants is that the impounding is

to be done before the Arbitrator.

The controversy raised by the learned counsel for the parties in

this AP in respect of stage of impounding is no longer res integra. The three

Judges Bench of the Hon'ble Supreme Court in the matter of N.N. Global

Mercantile Private Limited vs. Indo Unique Flame Limited and Others

reported in (2021) 4 SCC 397 while doubting the correctness of the earlier

judgments in the case of Vidya Drolia and Others vs. Durga Trading

Corporation reported in (2021) 2 SCC 1 and Garware Wall Ropes vs.

Coastal Marine Constructions and Engineering Limited reported in (2019)

9 SCC 209, has held that the High Court while exercising jurisdiction under

Section 11 of the Act would impound the substantive contract and direct the

parties to cure the defect of adequate stamp duty before the

arbitrator/tribunal can adjudicate upon the contract. Hon'ble Supreme Court

in the case of N.N. Global Mercantile Private Limited (supra) has held that:

"36.2. The second mode of appointment is where the parties fail to make the appointment in accordance with the arbitration agreement, and an application is filed under Section 11 before the Court to invoke the default power for making the appointment. In such a case, the High Court, or the Supreme Court, as the case may be, while exercising jurisdiction under Section 11, would impound the substantive contract which is either unstamped or inadequately stamped, and direct the parties

to cure the defect before the arbitrator/tribunal can adjudicate upon the contract."

Hence, in view of the undisputed fact that the lease agreement in

question is inadequately stamped, the applicants are directed to produce the

original lease agreement dated 1st of October, 2018 for the purpose of

impounding before the Registrar, Original Side of this Court within two

working weeks from today.

List on 18th of November, 2022.

(PRAKASH SHRIVASTAVA, C.J.)

PA (RB)