Calcutta High Court
Nja Garments Private Limited And Ors vs L & T Finance Limited on 11 September, 2025
Author: Arindam Mukherjee
Bench: Arindam Mukherjee
OD-11
ORDER SHEET
IN THE HIGH COURT AT CALCUTTA
ORDINARY ORIGINAL CIVIL JURISDICTION
ORIGINAL SIDE
APOT/225/2025
IA No. GA/1/2025
NJA GARMENTS PRIVATE LIMITED AND ORS.
VS
L & T FINANCE LIMITED
BEFORE:
The Hon'ble JUSTICE ARINDAM MUKHERJEE
Date: 11th September, 2025
Appearance:
Ms. Kruti Bhavsar, Adv.(VC)
Mr. Jnanada Prosad Roy, Adv.
Mr. Nepesh Majhi, Adv.
. . For the appellants.
Mr. Poritosh Sinha, Adv.
Ms. Shrayashee Das, Adv.
Mr. Rohan Kr. Thakur, Adv.
. . .For the respondent.
The Court :- This is an appeal under Section 37(2)(b) of the
Arbitration and Conciliation Act, 1996 (hereinafter referred to as 'the 1996
Act') arising out of an interim order dated 13 th June, 2025 passed by the
learned Arbitrator in an application filed by the respondent under the
provisions of Section 17 of the said Act. The order has been challenged inter
alia amongst other on the ground that the learned Arbitrator does not have
the jurisdiction to adjudicate the disputes between the parties on having
been unilaterally appointed by the respondent invoking the arbitration
agreement between the parties. Admittedly the parties entered into a loan
agreement described as Loan Facility Bearing Agreement
No.BL230426040100381 dated 24 th May, 2023 which contains a clause for
Dispute Resolution being the arbitration agreement between the parties.
Mr. Raj Ratna Sen, a barrister and an advocate being a member of
the Bar Library Club is appointed as the substitute Sole Arbitrator by
invoking the provisions of Section 15 of the 1996 Act in his place and stead
and to enter into reference afresh and adjudicate all disputes arising out of
the agreement dated 14th September, 2022. The arbitration proceedings
shall commence de novo and the Arbitrator shall have to comply with all
other requirement under the 1996 Act. The learned Arbitrator so appointed
shall be entitled to a lump sum remuneration Rs.2,000,00/- in view of the
ratio laid down in 2024 (4) SCC 481 [ONGC Ltd. v. Afcons Gunanusa JV.]
The remuneration shall be shared equally by the appellants and the
respondent. The Arbitrator shall be entitled to secretarial assistance which
along with all other expenses in conducting the arbitration shall be borne by
the parties in equal share. The venue of the Arbitration shall be at Kolkata.
Although, the appellants have challenged the jurisdiction of the
Learned Arbitrator but it is an undisputed fact that the learned Arbitrator
subsequent to the passing of the order impugned has withdrawn from her
office and the parties have accepted the same. This gives rise to failure or
impossibility to act on the part of the Arbitrator as provided under Section
14 of the 1996 Act, on an event as specified under Section 14(1)(b) having
occurred. A substitute arbitrator, therefore, is required to be appointed by
invoking the jurisdiction under Sections 14 and 15 of the said Act. The
challenge, though is in an appeal under Section 37(2)(b) of the 1996 Act but
due to subsequent development which the Court can always take note of, I
am inclined to appoint a substitute arbitrator being the Bench competent to
do so under the provisions of Sections 14 and 15 as also under Section 11 of
the 1996 Act due to delegation of authority by the Hon'ble the Chief Justice
of this Court particularly when the subsistence of the arbitration agreement
is admitted by the parties. Moreover, asking the parties after setting aside
the order on the ground of jurisdiction to pursue remedy under Sections
11(6) or 14 or 15 of the 1996 Act will go against the object of the early
disposal of a matter without minimum interference by Court being the spirit
of the 1996 Act.
In the aforesaid facts and circumstances, the order impugned dated
13th June, 2025 is set aside on the ground that the Arbitrator who had
passed the said order did not have the jurisdiction to arbitrate the disputes
between the parties in view of the ratio laid down in (2017) 8 SCC 377 (TRF
Ltd. v. Energo Engg. Projects Ltd.) and (2020) 20 SCC 760 (Perkins
Eastman Architects DPC & Anr. v. HSCC (India) Ltd.). The mandate of the
arbitrator, namely, Ms. Tanuja Balaji is not required to be terminated as she
has already withdrawn herself from the office which has been accepted by
the parties.
The appeal and the connected application accordingly stand
disposed of.
Urgent photostat certified copy of this judgment be supplied to the
parties, if applied for, upon compliance of all requisite formalities.
(ARINDAM MUKHERJEE, J.)
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