Calcutta High Court
Binoy Trading Company And Anr vs Tata Capital Financial Services ... on 20 August, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
OC 128
ORDER SHEET
AO-COM/9/2025
IA NO:GA-COM/1/2025
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
BINOY TRADING COMPANY AND ANR.
VS
TATA CAPITAL FINANCIAL SERVICES LIMITED AND ANR.
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 20th August, 2025.
Appearance:
Mr. Bratin Kumar Dey, Adv.
Ms. Anjana Banerjee, Adv.
Mr. Subhankar Banerjee, Adv.
...for the petitioner
Mr. Avishek Guha, Adv.
Mr. Ankush Majumder, Adv.
Mr. Adipta Kumar Pandit, Adv.
...for the respondents
The Court:
1. The appeal arises out of an interim order dated November 22, 2025
passed by the learned arbitrator. The learned arbitrator, upon
considering the rival contentions of the parties and upon taking into
account the admitted position of extension of loan/credit facility by the
respondent to the appellant and default in repayment thereof, by an
interim order imposed a second charge on the personal property of the
petitioner being premises no.4A/1, Tangra, Second Lane, Kolkata - 700
046, P.S.- Entally, Ward No.58, Kolkata Municipal Corporation.
2. Mr. Dey, learned advocate for the petitioner submits that the IDFC
First Bank Limited had a first charge on the property and the said
bank should have been impleaded in the proceeding, before any order
attaching the property could be passed. The learned Arbitrator
considered such prayer but rejected the same with reasons. It was held
that the bank was neither a necessary nor a proper party. The bank
was not a signatory to the agreement between the parties, and the
learned Arbitrator did not have jurisdiction to decide any issue between
the appellants and the bank. The loan agreement was executed
between the respondents and the claimant. The adjudication before
the learned tribunal was restricted to the disputes arising out of the
loan agreement and as such, adding the bank would be beyond the
scope of the reference.
3. This point is taken up for consideration. Under Section 2(1)(h) of the
Arbitration and Conciliation Act, 'party' was defined as, party to an
arbitration agreement. By judicial pronouncements, the definition of
party has been expanded to include such parties, who either expressly
or by their conduct seek to be bound by the underlying contract or the
arbitration agreement, meaning thereby, parties intrinsically or
intricately connected with the contract, even if they are non-signatories
to the contract. In the instant case, the IDFC First Bank Limited has a
claim against the appellants and the bank enjoys a charge on the
property. Neither is the bank intrinsically connected with the subject
agreement nor has the petitioner been able to demonstrate that the
bank is in any way bound by the arbitration clause.
4. Thus, I do not find any reason to interfere with the order on such
finding of the learned Arbitrator that, the IDFC First Bank Limited is
neither a necessary nor a property to the proceeding. The learned
Arbitrator took into consideration the claim of the bank and protected
the same.
5. With regard to the second point raised by Mr. Dey that the order of the
learned tribunal amounts to an attachment before judgment, which
was not permissible in law, I am of the view that the rigours of Order
38 Rule 5 of the Code of Civil Procedure may not be strictly applicable
in proceedings under the Arbitration and Conciliation Act. The said Act
is a special statute, providing an alternative dispute redressal
mechanism for settlement of disputes arising out of commercial
transactions. The act has been promulgated for quick and speedy
redressal of disputes by a private tribunal chosen by the parties.
Under such circumstances, business commonsense persuaded the
learned Arbitrator to pass the interim order, in order to protect and
secure the money. In the facts of the case, neither the extension of
credit facility nor the default are in dispute. The appellants may not
agree with the quantum of the claim, but they are not in a position to
deny breach and /or violation of the repayment schedule. The learned
Arbitrator, upon balancing the convenience and inconvenience of the
parties, deemed it fit to protect the lender to the extent that there shall
be a second charge on the property, after the charge of IDFC First
Bank was liquidated. This protection was guided by the logic that the
property may be valued at a higher amount and fetch substantial
money upon sale. Even after the first charge of the IDFC First Bank
was paid off, the lender would have the means to satisfy the award
from the excess. Moreover, the learned tribunal protected IDFC First
Bank's claims by appointing the owner of the property as a receiver, to
clear off the first charge of IDFC First Bank Limited and to hold the
remaining asset arising therefrom or to hold the remaining sale
proceeds if the property was sold in execution of any decree to liquidate
the first charge, after the bank had satisfied such decree. The owner
was restrained from dealing with the portion of the property or the
assets which would remain after liquidation of the first charge.
6. The order is well reasoned, and the balance of convenience and
inconvenience have been equally weighed. The learned Arbitrator
exercised his discretion judicially. The order is neither perverse nor
patently illegal. In Arcelor Mittal India Private Limited Vs. Satish
Kumar Gupta reported in (2019) 2 SCC 1, the Hon'ble Apex Court
held that the appellate court could not re-weigh the evidence.
Intervention was justified if the arbitrator's discretion was either
arbitrary or capricious or perverse or without jurisdiction. The order
impugned does not call for any interference. The order has not created
any immediate hardship, to the appellants because they are still in
possession and are enjoying the property. The learned Arbitrator
ensured that in the event an award is passed in favour of the
claimants, the same shall not be rendered a paper decree.
7. Parties are at liberty to request the learned arbitrator to complete the
proceedings expeditiously.
8. The appeal and the connected application are disposed of.
(SHAMPA SARKAR, J.)
B.Pal
