Gaurav Worldwide Trading Pvt Ltd vs The West Bengal Small Industries
2024 Latest Caselaw 2715 Cal/2

Calcutta High Court

Gaurav Worldwide Trading Pvt Ltd vs The West Bengal Small Industries on 27 August, 2024

Author: Sabyasachi Bhattacharyya

Bench: Sabyasachi Bhattacharyya

OCD 29
                              ORDER SHEET
                            AP-COM/659/2024
                     IN THE HIGH COURT AT CALCUTTA
                   ORDINARY ORIGINAL CIVIL JURISDICTION
                          COMMERCIAL DIVISION


                   GAURAV WORLDWIDE TRADING PVT LTD.
                                  VS
                    THE WEST BENGAL SMALL INDUSTRIES
                     DEVELOPMENT CORPORATION LTD.



  BEFORE:
  The Hon'ble JUSTICE SABYASACHI BHATTACHARYYA
  Date: 27th August, 2024.

                                                                         Appearance:
                                                          Mr. Ritoban Sarkar, Adv.
                                                             Mr. Sagnik Basu, Adv.
                                                         Mr. Soupayan S. Roy, Adv.
                                                               . . .for the petitioner.

                                                      Mr. Debabrata Banerjee, Adv.
                                                 Mr. Mahendra Prasad Gupta, Adv.
                                                     Mr. Hemanta Kumar Das, Adv.
                                                         . . .for the respondent no.1.

The Court: Learned counsel for the petitioner argues that in terms of

Clause 17.0 of the agreement between the parties, any dispute arising in

connection with the interpretation or implementation of the terms of the

agreement shall be subject to arbitration. As per the said clause, the Managing

Director, WBSIDCL (respondent) or his nominee shall be the sole Arbitrator to

whom a request in writing shall be made by the aggrieved party within thirty

days of the dispute.

It is contended that the said clause is hit by the principles of Section 12 of

the Arbitration and Conciliation Act, 1996 and several judgments of the Apex

Court, including the case of Perkins Eastman Architects DPC & Anr., which

prohibit an employee or interested person of one of the parties being appointed or

be a part of the appointment process of the Arbitrator.

Accordingly, a notice under Section 21 of the said Act was issued by the

petitioner seeking the appointment of a different Arbitrator, which was turned

down by written reply by the respondent, prompting the petitioner to prefer the

instant application under Section 11 of the 1996 Act.

Learned counsel for the respondent submits that the provisions of Section

11(6) of the 1996 Act have not been complied with. Placing reliance on the

written communication dated March 20, 2024 made by the respondent, it is

argued that in consonance with the provisions of the arbitration clause, an

Arbitrator was already named by the Managing Director of the respondent. As

such, the present application should be rejected.

It is well settled that the employee of a party and/or any interested person

of one of the parties is incapacitated from becoming an Arbitrator or appointing

an Arbitrator. Also, Section 12 of the 1996 Act prohibits any interested party

from taking up the assignment or, by necessary implication, appointing an

Arbitrator as well.

Thus, the stand taken by the respondent is contrary to law. Since the

petitioner has already invoked the Arbitration Clause by issuance of notice under

Section 21 of the 1996 Act, the receipt of which has been admitted by issuing a

reply thereto in writing by the respondent, there cannot be any impediment in

appointing an Arbitrator due to lack of concurrence between the parties on such

appointment.

Also, the disputes sought to be raised come within the ambit of the

Arbitration Clause and the issue in dispute is also arbitrable in principal.

Accordingly, AP-COM 659 of 2024 is allowed on contest, thereby

appointing Justice Prasenjit Mandal (retired) as the sole Arbitrator to resolve the

dispute between the parties, subject to a declaration under Section 12 of the

1996 Act being obtained from the said Arbitrator. The learned Arbitrator shall fix

his own remuneration in consultation with the parties and within the purview of

the 1996 Act as well as the Fourth Schedule thereof.

(SABYASACHI BHATTACHARYYA, J.)

SP/