Calcutta High Court
Services Private Limited vs Department Of Information Technology on 5 January, 2024
Author: Moushumi Bhattacharya
Bench: Moushumi Bhattacharya
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
(Commercial Division)
Present :
Hon'ble Justice Moushumi Bhattacharya
AP 827 of 2023
Rolta Infrastructure and Technology
Services Private Limited
vs
Department of Information Technology
And Electronics, Government of West Bengal
For the petitioner : Mr. Siddhartha Mitra, Sr. Adv.
Mr. Siddhartha Datta, Adv.
Mr. Deepanjan Dutta Roy, Adv.
Mr. Chetan Kr. Kabra, Adv.
Ms. Sanjana Jha, Adv.
For the respondent : Mr. Suman Dutt, Adv.
Mr. Shaunak Mukhopadhyay, Adv.
Mr. Paritosh Sinha, Adv.
Ms. Shrayashee Das, Adv.
Mr. Himanshu Bhawsinghka, Adv.
Mr. Rohan Kr. Thakur, Adv.
Last heard on : 22.12.2023
Delivered on : 05.01.2024
2
Moushumi Bhattacharya, J.
1. The petitioner seeks stay of a notice dated 20th September, 2023 by way
of the present application filed under section 9 of The Arbitration and
Conciliation Act, 1996. The impugned notice was sent by the respondent
revoking a Deed of Sub-Lease dated 4th July, 2008 by which the respondent
granted 5 acres of land to the petitioner for 99 years.
2. The admitted facts brought to the notice of the Court are as follows.
3. The respondent granted the sub-lease of the land to the petitioner for
construction of an IT/ITeS Project. The petitioner alleges that the respondent
failed to provide power, water and sewage outlet by reason of which the
petitioner was unable to complete the construction within the agreed time
frame. The respondent, on the other hand, alleges that the petitioner failed to
perform its contractual obligations. The respondent terminated the sub-lease
on 20th September, 2023. The petitioner objected to the notice of termination
by a letter dated 16th October, 2023. The respondent filed an application under
the provisions of The West Bengal Public Land (Eviction of Unauthorised
Occupants) Act, 1962 for evicting the petitioner from the leasehold land and
the Collector also issued a show-cause notice to the petitioner. The petitioner
appeared before the First Land Acquisition Collector, Kolkata, objecting to the
jurisdiction by filing the response in the proceedings. The petitioner issued a
notice on 8th November, 2023 invoking the arbitration clause contained in
clause 5 of the sub-lease agreement.
4. Learned counsel appearing for the petitioner places clause 5 of the sub-
lease agreement to urge that the dispute between the parties culminating in the
impugned termination notice of 20th September, 2023 is covered by the
arbitration clause in the agreement. Counsel submits that the termination is
invalid and contrary to the sub-lease agreement and that the arbitrator should
decide on the validity of the termination. Counsel submits that unless the letter
of termination is stayed, the rights of the petitioner will irrefutably be
prejudiced.
5. Learned counsel appearing for the respondent submits that the
application should be rejected for want of territorial jurisdiction and that the
application is akin to a suit for land. It is also submitted that the subject-
matter of the present application is non-arbitrable since the West Bengal Public
Land (Eviction of Unauthorised Occupants) Act, 1962 is a special statute for
providing a speedy route to the Government for eviction of unauthorized
occupants and also has overriding effect over The Arbitration and Conciliation
Act, 1996. Counsel relies on sections 20A and 41(ha) of the Specific Relief Act,
1963 to urge that injunction cannot be granted in respect of infrastructure
projects. Counsel submits on the factual aspect that the petitioner illegally
mortgaged the lease-hold interest in the land consequent to which the
concerned Bank invoked the SARFAESI Act. It is submitted that relief in the
nature of injunction cannot be sought for where there has been a breach of
contractual obligations.
6. The objection to jurisdiction should be decided first.
7. The present dispute is not a suit for land since the petitioner is not
seeking injunction in respect of an immovable property or inviting the Court to
decide any question of title or possession of the land. The petitioner merely
seeks interim protection over the subject-matter of the arbitration agreement in
view of clause 5 of the said agreement which covers disputes and differences
between the parties in respect of the sub-lease agreement dated 4th July, 2008.
There is a vital difference between an application for interim protection under
section 9 of The Arbitration and Conciliation Act, 1996 and a suit for land
where the essential question is to determine the title and possession of the land
in question: Ref: P. Ranganathan v. Sai Jagannathan; 1995 (II) CTC 181.
Moreover, the sub-lease agreement was signed by both parties at Kolkata and
the address of the respondent at the time of execution of the agreement was
14, Camac Street, Kolkata-16 which falls within the jurisdiction of this Court.
As held in A.B.C. Laminart Pvt. Ltd. v. A.P. Agencies, Salem; (1989) 2 SCC 163,
the making of the contract forms an integral part of the cause of action and
would confer jurisdiction on the concerned Court to entertain the suit.
8. There is no infirmity in the jurisdiction aspect of the matter.
9. An application under section 9 of The Arbitration and Conciliation Act,
1996, must be decided on the troika of a prima facie case, irreparable injury
and balance of convenience. The Court proceeds to test the facts on each of
these three planks for considering grant or refusal of interim relief. The
foundational requirement of an application filed under section 9 of the Act is
preservation of the subject-matter of dispute in arbitration [section 9(1)(ii)(a)]).
Clause 5 of the sub-lease agreement provides for resolution of disputes through
arbitration in case the endeavour to settle the disputes between the parties
fails. The clause is wide enough to cover all disputes in relation to the sub-
lease agreement including termination thereof. The subject-matter of the
present application is the termination of the sub-lease agreement and is hence
a matter which is directly relatable to the arbitration clause.
10. Section 9 confers the Court with plenary powers to intervene where the
subject matter of the arbitration agreement is put at risk by any of the parties
to the arbitration agreement. There are hence several reasons for the petitioner
to approach the Court seeking intervention for preservation of the subject
matter of the arbitration. Section 9 allows such intervention prior to initiation
of arbitration so that none of the parties can obliterate the subject matter of
the arbitration agreement in the meantime. There is little doubt that the
impugned notice of termination has put an end to the sub-lease agreement
including the arbitration agreement contained therein. The petitioner is hence
justified in asking for interim protection in order to protect and preserve the
subject-matter of the arbitration agreement until arbitration commences
between the parties.
11. The question which arises as a consequence is whether the petitioner
has been able to make out a prima facie case for the Court's intervention.
12. Even if the allegations and counter-allegations made by the parties in
respect of the non-performance of the contractual obligations are accepted, the
fact remains that the impugned letter of termination issued by the respondent
is under challenge. It is also undisputed that the petitioner made substantial
investments in the project since 2008 but has been unable to construct on the
land due to the failure to perform reciprocal obligations both by the petitioner
as well as the respondent in relation to supply of essential services such as
power, water and sewage facilities. The question, hence, is whether faced with
these facts, the Court should remain an inert spectator and refuse to intervene
notwithstanding the fact that the notice of termination would remove the
foundation of the arbitration agreement once and for all.
13. The answer to that question must undoubtedly be in the negative.
14. Apart from the power conferred on a Court in proceedings under section
9 of the Act, there is no conflict between the 1996 Act and the provisions of The
West Bengal Public Land (Eviction of Unauthorised Occupants) Act, 1962. Both
the statutes operate in independent fields and the 1996 Act certainly does not
contemplate obliteration of the provisions of the 1962 Act even where
proceedings may have been instituted under the former. Indeed, a non-obstante
clause of a State Act cannot override a later Central Act operating in a different
field altogether. Therefore, the Court is not inclined to accept the respondent's
argument that initiation of proceedings under the 1962 Act before the Collector
would constitute a bar to the present proceeding.
15. Although, counsel appearing for the respondent argues that the exclusive
domain of the judicial authority under the 1962 Act pertaining to matters of
eviction should be preserved, this Court disagrees with the contention since
there is no statutory embargo on parties in either of the two Acts from invoking
the arbitration clause in the agreement and proceeding to arbitration
thereafter. The argument that any view expressed by this Court would have a
bearing on the ongoing proceedings before the First Land Acquisition Collector
under the 1962 Act is speculative and based on hierarchical considerations.
16. The supposed embargo under sections 20A and 41(h)(a) of the Specific
Relief Act, 1963 is fallacious since those provisions would only be applicable
where the impugned action would result in delay in the completion of an
infrastructural project. The present case involves precisely the reverse; that is
the notice of termination issued by the respondent may lead to delay in
completion of the construction project. An injunction on the other hand would
protect the subject-matter of the dispute and advance the parties to the stage
of arbitration.
17. The initiation of SARFAESI proceedings in respect of the sub-leased land
is not relevant for the purpose of an application under section 9 of the 1996
Act as the mortgage was created only after obtaining the NOC from the
respondent and the SARFAESI proceedings is also not a subject matter of the
arbitration under the sub-lease agreement dated 4th July, 2008. It is also
relevant that SARFAESI proceedings can only be agitated before a statutory
forum which is different to that of a Court hearing an application under section
9 of the 1996 Act.
18. The other two aspects of irreparable injury and balance of convenience
both tilt in favour of the petitioner. If the impugned notice of termination is
allowed to remain at large, there is every possibility that the respondent would
take steps in aid of the notice to cause further irrevocable prejudice to the
petitioner. The prima facie case established by the petitioner, as stated above,
warrants the Court's intervention to preserve the subject matter of arbitration
and allow the parties to file their respective claims and defence for adjudication
of the dispute in the arbitration. The comparative prejudice which the
respondent will suffer upon stay of the impugned notice of termination will be
far less than the prejudice suffered by the petitioner if the respondent proceeds
to give finality to that notice. It is equally true that unless an order of stay of
the notice of termination is passed at this stage, the very substratum of the
dispute will be removed and the arbitration agreement rendered infructuous.
19. There is good reason therefore for this Court to stay the impugned notice
of termination for a limited period of time until the parties take steps to
constitute the arbitral tribunal.
20. The respondent's argument of eviction from public land being a matter
which is non-arbitrable is not germane to the applications of the present
nature. The issue of non-arbitrability is a relevant consideration in applications
filed under section 11 of the 1996 Act.
21. In A. Ayyasamy v. A. Paramasivam; (2016) 10 SCC 386, the Supreme
Court held that existence of an arbitration clause will not be a bar to the
entertainment of a complaint by a forum under the Consumer Protection Act,
1986. The decision cannot be used as a proposition for urging that the
proceedings under The West Bengal Public Land (Eviction of Uanuthorised
Occupants) Act, 1962 will have precedence over section 9 of The Arbitration
and Conciliation Act, 1996. In any event, A. Ayyasamy was a decision on rent
control and is factually distinguishable from the present matter. Army Welfare
Housing Organisation v. Col. R. Ganesan; 2021 SCC OnLine Mad 16554 relied
on Booz Allen and Hamilton Inc. v. SBI Home Finance Limited; (2011) 5 SCC 532
and on A. Ayyasamy to hold that eviction or tenancy matters are governed by
special statutes and can only be decided by specific Courts with special
jurisdiction. The Single Bench of the Madras High Court also relied on Vidya
Drolia v. Durga Trading Corporation; (2021) 2 SCC 1 to hold that eviction or
tenancy matters are disputes which are non-arbitrable. It is relevant to state in
this context that Vidya Drolia and A. Ayyasamy were proceedings under
sections 11 and 8 of the 1996 Act respectively where the entire question was
whether the parties (and the dispute) should be referred to arbitration. In the
present case however, the application under section 9 of the 1996 Act
emanates from the arbitration agreement between the parties where the
referral Court has been conferred with plenary powers to grant interim
measures of protection for preservation of the subject matter of arbitration. The
parties shall, in any event, be at liberty to question the jurisdiction of the
arbitrator with appropriate proceedings under the 1996 Act and demand an
adjudication in that respect. The referral Court under section 9 should not pre-
judge that issue by holding that the dispute is non-arbitrable without being
convinced of that argument.
22. The above reasons are good grounds, in the view of this Court, to allow
the prayer for stay of the impugned notice of termination dated 20th September,
2023. The interim order of stay shall continue for a period of 6 weeks from the
date of this judgment or until appropriate orders are passed by the arbitral
tribunal upon constitution thereof, whichever is earlier. Since counsel
appearing for the parties have extensively argued the matter on all points,
nothing further remains to be decided in the application.
23. AP 827 of 2023 is accordingly allowed and disposed of in terms of this
judgment.
Urgent photostat certified copies of this judgment, if applied for, be
supplied to the parties upon fulfillment of requisite formalities.
(Moushumi Bhattacharya, J.)
