IN THE HIGH COURT AT CALCUTTA
COMMERCIAL Division
ORIGINAL SIDE
BEFORE :-
THE HON'BLE JUSTICE SHAMPA SARKAR
A.P(COM)No.- 359 of 2024
[Old case No. AP/542/2023]
Namita Bhattacharjee and Ors.
Vs.
ATK Manor Developers LLP and Anr.
A.P(COM)No.- 607 of 2024
Namita Bhattacharjee and Ors.
Vs.
ATK Manor Developers LLP and Anr.
For the Petitioners : Mr. Sakya Sen, Sr. Adv.
Mr. Rohit Banerjee, Adv.
Mr. Arindam Paul,Adv.
For the Respondent No.1 : Mr. Abhrajit Mitra, Sr. Adv.
Mr. Suddhasatva Banerjee, Adv.
Ms. Rituparna Chatterjee, Adv.
Mr. Shashwat Nayak, Adv.
Ms. Khushboo Chowdhury, Adv.
For the Respondent No.2 : Mr. Shounak Mukhopadhyay, Adv
Mr. Sayantan Bose, Adv.
Ms. Manisha Das, Adv.
Judgment Reserved on : 23.12.2025
Judgment Delivered on : 10.02.2026
Judgment Uploaded on : 10.02.2026
Shampa Sarkar, J.
In Re: AP(COM) 359 of 2024
1. This is application under Section 11(6) of the Arbitration and
Conciliation Act, 1996, (hereinafter referred to as the said Act ). The
petitioners seeks appointment of an arbitrator to adjudicate the dispute
between the parties arising out of a development agreement dated
September 14, 2018. The agreement had been entered into between the
predecessor in interest of the petitioners late Biswanath Bhattacharjee and
the respondent No. 1, for development and construction of building units at
LR Dag No. 2708 pertaining to LR Khatian No. 1296 of Mouza- Ghuni, JL
No. 23, under Jyangra Hatiara Gram Panchayat No. 2, District North 24,
Parganas. Biswanath Bhattacharjee died on June 22, 2020. The petitioner
No. 1 is the widow, the petitioner No. 2 is daughter and the petitioner No. 3
is the son of deceased Biswanath Bhattacharjee.
2. The case run by the petitioners in this application was that, upon the
death of Biswanath Bhattacharjee, they came to learn that the respondent
No. 2, the elder son of the deceased, had filed an application being PLA 128
of 2020, for grant of probate of a Will executed by the deceased on April 12,
2018. The petitioners had reason to believe that the Will was a product of
fraud and undue influence practiced by the respondent No. 2 upon
Biswanath Bhattacharjee, who was severely ill and unfit to execute the Will.
That, Biswanath Bhattacharjee was also visually impaired and incapable of
comprehending the purport and meaning of the document. He was unable to
read and write on his own. Thus, the petitioners contested the probate
proceeding. Upon receipt of an application being GA No. 4 of 2021, filed in
the testamentary proceedings, the petitioners came to learn that the
deceased had executed the subject development agreement on September
14, 2018. On the basis thereof, the respondent No. 1 was permitted to
develop and construct building units on the concerned premises. A power of
attorney was also executed on September 25, 2018.
3. According to the petitioner, the respondent No. 2 had full control over
the deceased and by taking advantage of the physical and mental
incapacitation, Biswanath Bhattacharjee created the development
agreement by practicing fraud, undue influence and misrepresentation,
collusively with the respondent no. 1. The fraudulent nature of the
development agreement was apparent on a plain reading of the said
agreement. Under no circumstances could the owner agree to the allocation
of only 20,000 sq. ft. of the total super built-up area, thereby allowing the
developer to retain major part of the construction.
4. From the perusal of the sanction plan, the petitioners came to know
that around 189 units/flats encompassing an area of 1,93,000 sq. ft. had
been sanctioned and the value of the land and car parking spaces
aggregated to more than Rs. 90 crores. Whereas, the ratio of the developed
area between the allocation of the owner and the developer was 20:189,
which was grossly disproportionate. No reasonable man with minimum
business prudence would have agreed to such a ratio. Thus, the petitioners
believed that the respondent No. 2 had fraudulently entered into the
development agreement in collusion with the developer, by taking advantage
of the fading health of the deceased. The respondent No. 2 filed an
application under Section 9 of the said Act, before the Commercial Court at
Rajarhat, impleading the developer as a party, alleging delay in handing over
the owner's allocation and praying for enforcement of the development
agreement.
5. On July 19, 2021, the learned Court passed an order of injunction,
restraining the developer from making any further construction in the
property. Aggrieved by the aforementioned order, the developer preferred an
appeal being FMAT No. 458 of 2021 before the High Court. The petitioners
intervened in the matter. However, the respondent Nos. 1 and 2 came to a
collusive agreement, with regard to the allocation of flats in the building
before the Hon'ble Division Bench and the respondent No. 2 agreed to abide
by the ratio of allocation mentioned in the development agreement. The
appeal was accordingly disposed of. Thereafter, the petitioners filed an
application for review of the said order, which was dismissed. The
petitioners filed a Special Leave Petition which was disposed of, inter alia, in
favour of the petitioners on February 1, 2023. Prior to the decision of the
Hon'ble Apex Court, the respondent No. 1 issued a notice under Section 21
of the said Act upon the respondent No. 2 invoking the arbitration clause in
the development agreement. The respondent No. 2 filed an application under
Section 11 of the said Act and by an order dated September 9, 2022, a
learned Senior Advocate was appointed as an arbitrator.
6. Mr. Sakya Sen, learned Advocate, appeared on behalf of the
petitioners and submitted that this was a fit case for appointment of an
arbitrator to adjudicate the dispute between the petitioners on the one hand,
with the respondent Nos. 1 and 2. The petitioners were the legal heirs of late
Biswanath Bhattacharjee. Their predecessor (since deceased) had executed
the development agreement with the respondent No. 1. The arbitration
clause in the development agreement could be invoked by the heirs, under
Section 40 of the said Act and thus, the application should be allowed.
7. The petitioners alleged that the respondents had started creating third
party interest by executing instruments in respect of the residential units at
the building complex. The conduct of the said respondents were unlawful
and contrary to the interest of the estate of the deceased. The sale of the
properties were effected without any permission from the probate court in
spite of the fact that the probate proceedings were still pending. The
petitioners, as the legal heirs of the deceased, were entitled to benefits
arising out of the said agreement and entitled to 50% of the built up area,
which in terms of money would be more than Rs 45 crores. An additional
amount of Rs 86,62,500/-, being the value of the two brick-built structures
which stood on the said premises as on September 14, 2018 were also
payable to them. The petitioners relied on the observations of the Hon'ble
Apex Court in the order dated February 1, 2023, allowing the petitioners to
intervene in the arbitration proceeding which was already pending.
8. The petitioners had already invoked arbitration by issuing a notice
dated October 30, 2022, which had been duly received through e-mail. In
the said notice, the petitioners expressed the apprehension that the
premises may be wasted or portions of the building complex may be
wrongfully sold. The petitioners also raised an alternative claim of Rs 45
crores against the respondent No. 1. Thereafter, the petitioners filed an
application on October 31, 2022, under Section 9 of the said Act, before the
Commercial Court at Rajarhat, seeking interim relief. The said application
was registered as Misc. Case (A.R.B.) No. 78 of 2022. The petitioners prayed
for an order restraining the respondents and their men and agents from
making any further construction over the said premises mentioned in
Schedule A and from alienating, wasting, selling or creating third-party
rights or interests in respect of the premises mentioned in Schedule A.
Further prayer was to restrain the respondents and their men and agents
from accepting any bookings from the customers and from entering into
agreements or mortgaging the properties or encumbering the same in any
manner whatsoever. The developer filed an application challenging the
maintainability of the application before the Commercial Court at Rajarhat.
9. The petitioners sought to intervene in the arbitration proceedings, as
per the leave granted by the Hon'ble Apex Court for protection of their rights
and filed an application under Section 16 of the said Act, challenging the
jurisdiction of the arbitrator to proceed with the reference without adding
the petitioners as parties. Although such application was filed on March 15,
2023, the petitioners were unable to impress upon the learned arbitrator,
the urgency in impleading the petitioners. It was urged by Mr. Sen that the
said application was pending for an indefinite period. The respondents
contested the said application by filing their respective affidavits-in-
opposition. The manner in which the proceedings were conducted would
clearly indicate that the executor and the developer were in collusion and
they were not interested to allow the petitioner's application to be heard and
disposed of. It was alleged that the learned arbitrator was not proceeding
with the application of the petitioners, in spite of the direction of the Hon'ble
Apex Court.
10. The petitioners sought an independent reference by invoking the
arbitration clause in the development agreement vide notice dated October
30, 2022, during the pendency of the application under Section 16 of the
said Act, which had not been decided by the learned arbitrator. In the
meeting held on July 4, 2023, the respondent No. 2 filed an application
praying for termination of the mandate of the learned arbitrator on the
ground that the statement of claim (SOC) had not been filed by the
respondent No. 1, despite various opportunities. It was urged that, after the
expiry of the time contemplated under the law, the arbitrator should not
have allowed the respondent No. 1 to file the SOC. In the minutes dated 4th
July, 2023, which had not been circulated, the learned arbitrator had
recorded that the application for termination of mandate should be heard
and disposed of first, as it was in the nature of a demurer. The learned
arbitrator thus, fixed the hearing of the demurer application upon exchange
of affidavits on August 10, 2023. Thereafter, the petitioners, filed this
application with an averment that they undertook to withdraw the
application under Section 16 which was already pending before the learned
arbitrator. The petitioners prayed for reference of the disputes pending
between the petitioners and the respondents for adjudication by another
arbitrator, as the petitioners firmly believed that the proceeding between the
respondent Nos. 1 and 2 were collusive.
11. The petitioners' cause of action as enumerated in the notice under
Section 21 issued on October 30, 2022, were not in conflict with the pending
arbitration proceeding and were distinct and separate from the disputes
between the respondent No. 1 and the respondent No. 2. Therefore, the
question in controversy in the arbitration proceedings between the
respondent Nos. 1 and 2 were not directly or substantially in issue with the
claims of the petitioners against both the respondents. Under such
circumstances, it was urged by Mr. Sen that, another arbitrator should be
appointed on the basis of the development agreement executed between the
deceased and the developer. The heirs of the deceased could always invoke
the arbitration clause.
In Re: AP(COM) 607 of 2024
12. The legal heirs and representatives of late Biswanath Bhattacharjee
filed this application seeking termination of the mandate of the learned
arbitrator who was appointed by the High Court, to arbitrate upon the
dispute between the respondent Nos. 1 and 2. The petitioners further prayed
for substitution of the arbitrator by a proper person upon recording
termination of mandate. In the meantime, stay of the proceedings were
prayed for. The facts pleaded in the said application were similar to those in
the application for appointment of an another arbitrator. As the issues
involved in both the applications were similar, the applications were heard
together.
13. In order to avoid any repetition of the facts, the same are not
discussed. The question to be determined in such a situation is whether the
mandate of the learned arbitrator should be terminated and the disputes be
referred to another arbitrator.
14. Mr. Sen, learned Senior Advocate appearing on behalf of the
petitioners submitted that, the application for termination of the mandate
had been filed, after the petitioners were impleaded in the arbitral
proceeding. The specific contention of Mr. Sen was that, this application
would not be barred under Section 42 of the said Act, inasmuch as, the
question of jurisdiction of the commercial court at Rajarhat to entertain
applications arising out of the subject agreement had not been finally and
conclusively decided in any proceeding. Although, the petitioners had filed
an application under Section 9 of the said Act, before the learned
Commercial Court at Rajarhat, the respondent No. 1 had raised an objection
with regard to the maintainability of the said application on the ground of
jurisdiction. Once such question of jurisdiction was raised before the
learned Commercial Court at Rajarhat, the respondents could not turn
around and pray for rejection of this application on the ground that the
prayer for termination of mandate should have been filed before the learned
Judge Commercial Court at Rajarhat, which was the Court under Section
2(1)(e) of the said Act.
15. It was contended that the learned Arbitrator had become de jure and
also de facto unable to perform. He had failed to act without undue delay. In
order to demonstrate how the learned Arbitrator had become de jure and de
facto unable to perform his functions, various instances of inordinate delay
and failure of the arbitrator in proceeding in a just and fair manner were
cited.
16. It was stated that, on September 22, 2022, the first sitting of
arbitration was held when directions were given for filing of the SOC within
1st December, 2022. Neither any SOC was filed within the said period nor
any prayer was made for extension of time to file Statement of Claim.
17. On December 1, 2022, the petitioners filed an application under
Section 16 before the Learned Arbitrator.
18. On January 20, 2023 the Learned Tribunal extended the time to file
SOC within 20th February, 2023 and also issued directions to file affidavits
in the said Section 16 application.
19. On February 20, 2023 the claimant/developer did not file Statement
of Claim nor any extension was sought.
20. On March 15, 2023 the hearing of the application under Section 16
continued. No SOC was filed by the claimant.
21. On March 30, 2023 the time to complete the pleadings as required
under Section 23(4) of the said Act expired. Under Section 25(a) of the
Arbitration Act, a statutory mandate has been conferred upon the Arbitral
Tribunal to terminate the Arbitration proceedings upon failure of the
claimant to either communicate the SOC or show sufficient cause as to why
the SOC could not be filed within time.
22. In the instant case, as revealed from the sequence of dates mentioned
above, the claimant has admittedly failed to file SOC even as on 30th
March, 2023 when the period of six (6) months from the date of the first
meeting of the reference expired. By such date, extension was however
granted twice by the Arbitrator for filing of the SOC, without any sufficient
cause being shown by the claimant.
23. It was urged that, although the Hon'ble Apex Court held that, the
petitioners, as heirs of the deceased Biswanath Bhattacharjee, would be at
liberty to approach the learned Arbitrator already appointed at the instance
of the developer and the learned Arbitrator should consider the objections,
claims and cross claims in accordance with law, without being influenced by
the observations or findings of the High Court in the order impugned before
the Apex Court, the learned arbitrator showed no inclination to dispose of
the said application.
24. It was contended by Mr. Sen that, the minutes were not circulated on
time. The application under Section 16 of the said Act was dragged for days
together, although the Hon'ble Apex Court had mandated the learned
Arbitrator to decide all claims, cross claims and objections of the parties
including the heirs of the petitioners. The developer did not file the SOC
within the time stipulated under Section 23(4) of the said Act. Section 25(a)
of the said Act, mandated termination of the arbitral proceeding upon failure
of the claimant to communicate the SOC. No prayer for extension upon
showing sufficient cause had been made before the learned Arbitrator, but
the arbitrator extended the time period for filing of the SOC, even after the
period of six months as stipulated under Section 23(4) of the said Act had
expired. Section 25 of the said Act did not vest any power upon the
arbitrator to suo moto grant extension of time to file and or complete the
pleadings, treating the expression 'shall' in Section 23(4) as directory.
Moreover, if the expression 'shall' in Section 23(4) was to be read as
directory, then the provisions of Section 29 A would be rendered otiose.
Under Section 29 A, the period within which the arbitrator was required to
conclude the proceedings was one year from completion of the pleadings
under Section 23(4). The legislative intent behind incorporation of Section
29 A, would be frustrated in the event the starting point of Section 29 A was
not determinable. Thus, reading 'shall' in Section 23(4) as a directory, would
frustrate the provision for mandatory conclusion of an arbitral proceeding in
a time bound manner.
25. Distinguishing the decision of this court in Yashovardhan Sinha
HUF and Anr. vs Satyatej Vyapaar Pvt. Ltd. reported in 2024 SCC
Online Cal 5386, it was submitted that the consequence of treating "shall"
as "may" would result in rendering Section 29 A, which was brought in by
the amendment, wholly nugatory. Moreover, in the instant case, sufficient
cause was not shown by the claimant/developer as to why the SOC could
not be filed within the time extended earlier by the learned arbitrator.
Without sufficient cause being shown, the learned arbitrator had wrongly
allowed the extension, thereby, asking the developer to file the Statement of
Claim within the further extended period. It was submitted that Clause 22.2
of the development agreement vested the courts within the ordinary original
civil jurisdiction of the Calcutta High Court and those having territorial
jurisdiction over the subject matter of the property, with the jurisdiction to
try and determine all disputes and proceedings arising out of the subject
agreement. Therefore, according to Mr. Sen, the High Court at Calcutta had
the jurisdiction to entertain the application seeking termination of the
mandate..
26. It was submitted that, as on March 30, 2023, no application for
extension of time at the instance of the developer to file the SOC was
pending. The arbitral proceedings stood terminated on March 30, 2023 and
the arbitrator became de jure unable to perform his functions thereafter. On
the issue that the learned arbitrator had failed to act without undue delay, it
was submitted that the hearing of the application under Section 16
commenced on January 20, 2023. The petitioners concluded their
arguments on April 4, 2023. The respondent No. 2 commenced the
arguments on May 1, 2022, and the respondent continued up to May 4,
2023. The developer commenced arguments on June 6, 2023 and thereafter
repeated adjournments were prayed for. Ultimately on February 12, 2024,
the order was passed. Thus, the application under Section 16 was kept
pending for more than a year, without valid cause. The Statement of Defense
was directed to be filed within March 26, 2024. Time was extended on June
11, 2024, 15 July, 2024 and on August 8, 2024 as a last chance. By an
email dated September 3, 2024, further extensions were sought.
27. According to Mr. Sen, repeated adjournments and extensions which
were allowed to the parties for submission of their proceedings, resulted in
undue delay in the proceeding and Section 14 of the said Act empowered
this court to record termination of the mandate of the learned arbitrator and
appoint a substitute arbitrator, on the ground that the learned arbitrator
had failed to act without undue delay. Section 14(2) permitted the
petitioners to apply before the court for a decision on the termination of the
mandate.
28. Mr. Abhrajit Mitra, learned Senior Advocate, appeared on behalf of the
Respondent No. 1 and submitted that the petitioners filed an application
under Section 9 of the said Act, before the learned Commercial Court at
Rajarhat. According to the petitioners, the said court was the principal civil
court having original jurisdiction to try all disputes arising out of the subject
property. The property was situated within its territorial jurisdiction. A
demurrer application was filed by the respondent No. 1 before the
Commercial Court at Rajarhat, on the ground that the petitioners did not
have the locus standi to prefer the application under Section 9, as the
development agreement was between late Biswanath Bhattacharjee and the
respondent No.1. The Respondent No. 2 as the executor of the Will of late
Biswanath Bhattacharjee, alone, had the locus to invoke arbitration. Only
the executor could represent the estate of the deceased. The dispute was not
a commercial dispute. As an arbitrator was already appointed on the basis
of the arbitration agreement, the application was barred under Section 9(3)
of the said Act.
29. No ground of demurrer regarding territorial jurisdiction was ever
taken in the said application. In the written objection filed by the petitioners
to the application filed by the Respondent No.1 in Misc. ARB Case No. 78 of
2022, the petitioners had specifically pleaded that the principal civil court of
original jurisdiction was empowered to receive, try and determine the
disputes between the parties, since the same arose out of disputes, relating
to infrastructural contract. The petitioners were thus precluded from taking
contrary stands before the two courts on the point of jurisdiction.
30. The Hon'ble Apex Court had disposed of the special leave petition,
granting liberty to the petitioners to approach the arbitrator already
appointed at the instance of the developer. The delay of the respondent No. 1
in filing the SOC was due to the pendency of the application under Section
16 of the said Act. The claimant waited to ascertain whether the petitioners
would be included in the application or not. The SOC would be filed on such
basis. The respondent No. 2 filed an application under Section 25(a) seeking
termination of the mandate of the arbitrator on the ground of non-filing of
the SOC within the period of 6 months. It was decided by the learned
Arbitrator that the application under Section 16 could not be heard unless
the application for termination of mandate of the learned Arbitrator was
decided first. The petitioners were present at the said sitting and during the
hearing of the said application, the petitioners objected to the prayer seeking
termination of the mandate of the learned Arbitrator. By an order dated
September 19, 2023, passed in Misc. ARB Case No. 78 of 2022, the
Commercial Court at Rajarhat had dismissed the application of the
petitioners on the ground that, an arbitrator had already been appointed
and the petitioners' remedy would be before the learned arbitrator.
31. The petitioners challenged the said order before the Division Bench of
this Court in FMAT (A.R.B.) No. 48 of 2023. The order dated September 19,
2023 passed by the Learned Commercial Court at Rajarhat, was set aside.
The parties were relegated to the said court for a hearing on merits. The
Division Bench recorded that the application for interim protection should
be heard. The Division Bench was pleased to direct the arbitrator to dispose
of the application under Section 16 of the said Act within January 15, 2024.
Such order was passed at the behest of the petitioners. The SOC was filed by
the respondent No. 1 on December 20, 2023 and by order dated January 8,
2024, the learned arbitrator dismissed the application of the respondent No.
2 filed under section 25 (a) of the said Act. On February 7, 2024, the learned
arbitrator allowed the application filed by the petitioners, thereby, adding
them as parties. On March 5, 2024, the amended SOC was filed by the
respondent No. 1, upon the petitioners being added in the proceeding.
32. Referring to various dates, it was contended by Mr. Mitra that, after
being added as a party to the proceeding, the petitioners had sought for
adjournments on various dates on account of pendency of the instant
applications before this court. A date-wise chart was prepared by Mr. Mitra
in support of such contention.
33. Mr. Mitra urged that, although this was not a case for termination of
the mandate of the learned Arbitrator in view of the factual background as
narrated herein above, the adjudication of this application should not be
taken up by this court. The application ought to have been filed before the
principal civil court or the court under Section 2(1)(e) of the said Act. The
respondent No. 2 had filed an application against the respondent No. 1
before the Commercial Court at Rajarhat being Misc. ARB Case No. 39 of
2021. An ex-parte ad interim order of injunction was passed against the
respondent No. 1, restraining the said respondent from alienating or
creating any third party interest in respect of the property which formed the
subject matter of the development agreement. The respondent No. 1
challenged the ex-parte ad interim order of injunction by filing FMAT 458 of
2021.
34. On August 12, 2021, the FMAT was disposed of along with the
application under Section 9. The petitioners sought to intervene in the said
proceeding and a review application was filed which was dismissed. The
petitioners challenged the order dated August 12, 2021, passed by the
Division Bench disposing of FMAT 458 of 2021, as also the application
under Section 9 of the said Act before the Hon'ble Apex Court by filing a
Special Leave Petition. The Hon'ble Apex Court granted the petitioners
liberty to approach the learned arbitrator. Thus, when one proceeding
arising out of the self-same development agreement had already been
instituted before the learned commercial court at Rajarhat by the
respondent No. 2 and especially when the petitioners themselves had
approached the said court by filing another application under section 9 of
the said Act, considering the same to be the principal civil court having
jurisdiction to decide the subject matter of the dispute arising out of the
said arbitration agreement, the question of this court entertaining the
present application for termination of mandate did not arise. The instant
application was filed under Part 1 of the said Act and only the Commercial
Court at Rajarhat would have jurisdiction to entertain the same. Section 42
of the said Act was a mandatory provision. No other court, excluding the
Commercial Court at Rajarhat had jurisdiction to entertain any application
made under Part 1 in relation to the agreement dated September 14, 2018.
The petitioners had already submitted and admitted to the exclusive
jurisdiction of the learned Commercial Court at Rajarhat, treating the said
Court to be the principal civil court.
35. The petitioners were indulging in forum shopping by approaching
different courts on the self-same issue. Clause 22.2 of the development
agreement provided that two courts shall have jurisdiction to try, entertain
and adjudicate disputes between the parties, that is, the High Court at
Calcutta and the court within whose jurisdiction the subject matter of the
property was located. The property was located within the territorial
jurisdiction of the Commercial Court at Rajarhat. Thus, once an application
was already filed before the Commercial Court at Rajarhat, all subsequent
applications were to be filed before the said Court irrespective of the
jurisdiction clause. The statutory provision under Section 42 would override
the contract between the parties. In any event, as two courts had
jurisdiction to try the dispute arising out of the subject contract, the parties
had chosen the jurisdiction of one court to espouse their grievances, that is,
the Commercial Court at Rajarhat.
36. The claim of the petitioners indicated that the proceeding to be
instituted would be in the nature of a suit for land. The property being
situated within the jurisdiction of the commercial court at Rajarhat, the
present proceedings should have been initiated before the said court.
Irrespective of the demurrer application filed in Misc. ARB Case No. 78 of
2022, by the respondent No. 1, as the first application under Section 9 of
the said Act was filed by the respondent No. 2 being Misc. ARB Case No. 39
of 2021 before the learned Commercial Court at Rajarat, all applications
under Part 1 of the said Act had to be filed before the said court, by
application of Section 42 of the said Act. The tipping point for consideration
of the provisions of Section 42 was the arbitration agreement itself and not
any other consideration. Further contention was that no undue delay could
be attributable to the learned arbitrator. The arbitral proceedings
commenced on February 29, 2022. The petitioners filed the application
under Section 16 of the said Act on January 20, 2023. On July 4, 2023, the
respondent No. 2 filed an application under Section 25(a) of the said Act
seeking termination of the mandate. The respondents duly contested the
application under Section 16 and affidavits were exchanged. The respondent
No. 1 could not file the SOC, as the said respondent was not aware whether
or not the petitioners would be added as parties to the arbitral proceeding.
The respondent No. 2 contested the application under Section 16 on the
ground that the said respondent being the executor of the last Will of
Biswanath Bhattacharjee was alone entitled to represent the estate before
the arbitrator. During the hearing of the application under Section 16, the
respondent No. 2 filed an application seeking termination of the mandate as
the Statement of Claim was not filed within the stipulated period. The
learned tribunal rightly proceeded to decide the question of termination of
the mandate first. The application under Section 25(a) read with Section 32
was disposed of on January 8, 2024 upon completion of pleadings. The
petitioners themselves objected to the prayer seeking termination of the
mandate of the arbitrator. Such submissions were duly recorded in the 13th
sitting held on August 30, 2023. Therefore, the petitioners showed all
inclination to proceed before the learned arbitrator.
37. After the petitioners were added in the reference, by the learned
arbitrator, vide order dated February 7, 2024, this application for
termination of the mandate was filed before this court on May 17, 2024. The
petitioners did not cooperate with the learned arbitrator. It was also urged
that the provisions of Section 23(4) was not mandatory but directory. The
issue of termination of the mandate of the learned arbitrator on the ground
that, the respondent No. 1 had not filed the SOC within March 30, 2023,
was already decided by the learned arbitrator. The arbitrator was not de jure
incapacitated from performing. The arbitrator was not disqualified under
Section 12(5) of the said Act.
38. Mr. Sayantan Bose, learned advocate for the respondent No. 2
submitted that the application was hit by the provisions of Section 42 of the
said Act as the first application under Part 1 of the said Act was carried by
the respondent No. 2 before the learned Commercial Court at Rajarhat. The
jurisdiction of the learned Commercial Court at Rajarhat found approval of
the Division Bench when the injunction application filed by the petitioners
was sent back to the said court for re-adjudication.
39. Considered the submissions of the learned advocates for the
respective parties.
40. The factual background has been narrated in great detail. The
development agreement dated September 14, 2018 was executed between
late Biswanath Bhattacharjee and the respondent No. 1. On April 12, 2018,
Biswanath Bhattacharjee executed his last Will and testament and
appointed the respondent No. 2 as the executor and beneficiary in respect of
the subject property. On June 22, 2020, Biswanath Bhattacharjee died.
After the death of Biswanath Bhattacharjee, certain disputes arose between
the respondent No. 1 and No. 2 in relation to the development agreement
dated September 14, 2018. The respondent No. 2 as an executor filed a
probate application before the High Court being PLA 128 of 2020 and the
same was being contested as a testamentary suit, which was registered as
TS 8 of 2022. The respondent No. 1 is not a party to PLA 128 of 2020. On
July 15, 2021, the respondent No. 2 invoked arbitration under Section 21 of
the said Act, against the respondent No. 1. The respondent No. 2 filed an
application under Section 9 of the Arbitration under the said Act before the
learned Commercial Court at Rajarhat on July 19, 2021, being Misc. ARB
Case No. 39 of 2021. An ex parte ad interim order of injunction was passed
against the respondent No. 1 which was challenged in an appeal before the
High Court by the respondent No. 1. The appeal and the application for
injunction were disposed of by the Division Bench of the High Court, by
passing the following order:-
"Today what is before this Court on appeal is a Section 9 application
arising out of a development agreement in which the deceased
Biswanath Bhattacharjee was a party. As long as the Will is not
declared invalid, in our opinion, the executor has the ostensible
authority to represent the estate.
Furthermore, this determination, in our opinion, is not necessary, at
this point of time.
We are concerned with proper execution of the development
agreement, in the interest of the legatee or the heirs of the deceased
on intestacy even if the will fails.
This is so because the developer, the appellant has to know at this
point of time which part of the property is to be retained for the heirs
of Biswanath, as the owners' share and which part he is at liberty to
dispose of as the developers' share.
***
***
Subject to the above conditions the other part of the subject property
may be disposed of by the appellant in terms of the development
agreement.
As far as the above owners' allocation is concerned, if any of the
parties intend to exert any right with regard to the said Will, title to
the property or its possession, they have to establish the same in a
civil court.
Any observation or finding made by us in this order should not be
taken to be touching those areas of dispute between the parties.
The impugned judgement and order is set aside and substituted by
this order.
The application under section 9 of the Arbitration and Conciliation
Act, 1996 before the learned Court below is also disposed of.
The parties are to take appropriate steps in that Court to record its
disposal.
The appeal and the connected application (CAN 1 of 2021) are
disposed of."
41. The petitioners sought to intervene and file a review application which
was dismissed. In the meantime, an application was filed by the respondent
No. 1 for appointment of an arbitrator, for adjudication of the dispute
between the respondent No. 1 and No. 2 being AP No. 584 of 2022. The
Chief Justice of the Calcutta High Court disposed of the said application by
appointing a learned Advocate as the learned Arbitrator.
42. The petitioners challenged the order passed by the Division Bench
disposing of the said appeal and the application for injunction before the
Apex Court. The Special Leave Petition was disposed of by the Hon'ble Apex
Court by passing the following order.
"We have heard learned counsel for the petitioner and learned Senior
counsel for the respondent - Developer at a considerable length and
carefully perused the material available on record.
In our considered opinion, no interference with the impugned Orders
dated 06-04-2022 & 12-08-2021 passed by the High Court at Calcutta
is required, except to clarify the following:-
(i) The objections filed by the petitioner (Sanjib Bhattacharya) in
Probate Case No. TS/8/2021 shall be decided on merits and in
accordance with law, without being influenced by any observation
made in the impugned Orders of the High Court;
(ii) Similarly, other legal heirs of deceased Biswanath Bhattacharya
shall be entitled to pursue their remedies as may be available or
already availed by them under law.
(iii) The petitioner or other legal heirs of deceased Biswanath
Bhattacharya shall also be at liberty to approach the Arbitrator
already appointed at the instance of the developer. Learned Arbitrator
shall consider the objections/claims/cross-claims in accordance with
law and without being influenced by the observations/findings
returned by the High Court in the impugned Orders.
The Special Leave Petitions are disposed of in the above- terms.
All pending applications also stand disposed of."
43. The petitioners approached the learned arbitrator by filing an
application under section 16 of the said Act, inter alia, contending that the
arbitral proceeding should not continue until the petitioners were impleaded
as parties. Although, the proceeding continued for some time on account of
the application filed by the respondent No. 2 seeking termination of the
mandate of the learned Arbitrator, ultimately by an order dated February 7,
2024, the petitioners were impleaded in the arbitral proceedings. The
application for appointment of an arbitrator was filed during the pendency of
the application under Section 16 of the said Act, at a time when the
petitioners contended that the application was kept pending for a long time
and as such nothing precluded the petitioners from approaching this court
for appointment of another arbitrator to adjudicate the dispute between the
petitioners and the respondent No. 1 and 2.
44. It was contended that the application would not be a bar in view of the
fact that the subject matter of dispute between the petitioners and the
respondent No. 1 and 2 were totally different and operated in a separate
distinct field. There would be no overlapping of the issues in the two
proceedings. The pending reference before the learned arbitrator was
restricted to those between the respondent No. 1 and 2, whereas, the
petitioners as the legal heirs of the deceased had claims against both the
respondent No. 1 and 2.
45. In my view, as the Hon'ble Apex Court refused to interfere with the
order dated August 12, 2021 passed by the Division Bench in FMAT 458 of
2021, but granted liberty to the petitioners and all other legal heirs of the
deceased to pursue their remedies as available in law by approaching the
learned arbitrator already appointed at the instance of the developer to
ventilate their grievances, the question of appointing another arbitrator does
not arise. The Hon'ble Apex Court directed that the learned arbitrator so
appointed shall consider the objections/claims/cross-claims in accordance
with law and without being influenced by the observations of the High
Court. Thus, the Hon'ble Apex Court widened the scope of reference by
directing the learned arbitrator to consider all objections, claims and cross
claims of the petitioners. Under such circumstances, multiplicity of
proceedings cannot be permitted. The petitioners were already impleaded as
parties to the proceeding during the pendency of AP(COM) 359 of 2024 and
as such the cause of action in the application does not survive.
46. AP COM 359 of 2024 is accordingly disposed of.
47. With regard to the application for termination of mandate, this court
finds that the first application arising out of the dispute which is the subject
matter of the arbitration was filed by the respondent No. 2 against the
respondent No. 1 before the learned Commercial Court at Rajarhat Vide
Misc. ARB Case No. 39 of 2021. An order of ad interim injunction was
passed against the respondent No. 1 which was carried in appeal before to
the High Court and the High Court by an order dated August 12, 2021,
disposed of the appeal and the application for injunction. The petitioners
also filed an application under Section 9 of the said Act before the learned
Commercial Court at Rajarhat, inter alia, contending that the said court was
the principal civil court of original jurisdiction. In the objection to the
demurrer application, the petitioners contended as follows:-
"v) This principal Civil Court of Original jurisdiction is empowered to,
receive, try and determine the disputes between the parties since, the
same arises out of disputes relating to infrastructural contracts,
amongst others, contending an arbitration agreement."
48. Thus, it is abundantly clear that not only was the first application
under Part 1 of the said Act filed before the learned commercial court at
Rajarhat, the petitioners also admitted and submitted to the jurisdiction of
the said Court and filed an application under Section 9 of the said Act. The
petitioners' application was dismissed and the petitioners carried an appeal.
The ground for dismissal was that, as an arbitrator had already been
appointed, all interim prayers should be made before the learned arbitrator.
The appeal court set aside the order and remanded the parties to the
Commercial Court at Rajarhat, upon noticing that the petitioners'
application for being added as parties to the arbitration proceeding was still
pending. The Division Bench also directed the learned arbitrator to dispose
of the application under Section 16 of the said Act. Thus, the jurisdiction of
the Commercial Court at Rajarhat has been noted and the application for
injunction was remanded for a hearing on merits by the Division Bench.
Thus, the petitioners cannot turn around and challenge the jurisdiction of
the said Court to take up the application for termination of mandate.
49. The jurisdiction clause in the development agreement is quoted below,
which gives jurisdiction to both courts, that is the High Court at Calcutta
and the Commercial Court at Rajarhat to entertain disputes arising out of
the said agreement. The parties already chose to approach the Commercial
Court at Rajarhat as the principal Civil Court. The respondent no. 2 and the
petitioner, filed their respective applications for interim protections under
Section 9 of the said Act.
"Clause 22.2 JURISDICTION : Only the Courts within the Ordinary
Original Civil Jurisdiction of the Calcutta High Court and those
having territorial jurisdiction over the subject property shall have the
jurisdiction to entertain try and determine all actions and proceedings
between the parties hereto relating to or arising out of or under this
Agreement or connected therewith including the arbitration as
provided hereinabove."
Section 42 of the said Act, provides as follows:-
"42. Jurisdiction.- Notwithstanding anything contained elsewhere in
this Part or in any other law for the time being in force, where with
respect to an arbitration agreement any application under this Part
has been made in a Court, that Court alone shall have jurisdiction
over the arbitral proceedings and all subsequent applications arising
out of that agreement and the arbitral proceedings shall be made in
that Court and in no other Court."
50. With regard to the contention of the petitioners that, erroneous orders
were passed by the learned Arbitrator by granting extension of time to file
the SOC, upon holding that the provision of Section 23(4) was directory and
not mandatory, the petitioners had a remedy against such order before the
appropriate forum. The application being AP(COM) 607 of 2024 is not
maintainable before this court as the same is barred under Section 42 of the
said Act.
51. Reliance is placed to the decision of Gammon Engineers and
Contractors Pvt. Ltd vs State of West Bengal reported in 2023 SCC
Online Cal 2326, this Court held as follows:-
"14. The respondent has raised the issue of maintainability and
challenged the jurisdiction of this court to entertain the instant
application under Section 14, 15 read with Section 11 of the Act.
Therefore, before alluding to other aspects of the dispute, it is
imperative that I first decide upon the maintainability of the
application.
15. Owing to a prior Section 9 application being filed before the
learned District Judge at Jalpaiguri, the respondent contends that the
instant application must be made before the same 'court', as per the
mandate of Section 42 of the Act. The said Section is reproduced
hereinbelow:--
'42. Jurisdiction - Notwithstanding anything contained elsewhere in
this Part or in any other law for the time being in force, where with
respect to an arbitration agreement any application under this Part
has been made in a Court, that Court alone shall have jurisdiction
over the arbitral proceedings and all subsequent applications arising
out of that agreement and the arbitral proceedings shall be made in
that Court and in no other Court.'
16. In State of West Bengal v. Associated Contractors, (2015) 1 SCC
32, the Supreme Court laid down the law vis-a-vis Section 9 and 42 of
the Act. The relevant paragraph is delineated below:--
'12. Part I of the Arbitration Act, 1996, contemplates various
applications being made with respect to arbitration agreements. For
example, an application under Section 8 can be made before a
judicial authority before which an action is brought in a matter
which is the subject of an arbitration agreement. It is obvious that
applications made under Section 8 need not be to courts, and for
that reason alone, such applications would be outside the scope of
Section 42. It was held in P. Anand Gajapathi Raju v. P.V.G.
Raju [(2000) 4 SCC 539], SCC at pp. 542-43, para 8 that
applications under Section 8 would be outside the ken of Section 42.
We respectfully agree, but for the reason that such applications are
made before "judicial authorities" and not "courts" as defined. Also,
a party who applies under Section 8 does not apply as dominus litis,
but has to go wherever the 'action' may have been filed. Thus, an
application under Section 8 is parasitical in nature-it has to be filed
only before the judicial authority before whom a proceeding is filed
by someone else. Further, the "judicial authority" may or may not be
a court. And a court before which an action may be brought may not
be a Principal Civil Court of Original Jurisdiction or a High Court
exercising original jurisdiction. This brings us then to the definition of
"court" under Section 2(1)(e) of the Act.
****
16. Similar is the position with regard to applications made under
Section 11 of the Arbitration Act. In Rodemadan India
Ltd. v. International Trade Expo Centre Ltd. [(2006) 11 SCC 651], a
Designated Judge of this Hon'ble Court following the seven-Judge
Bench in SBP and Co. v. Patel Engg. Ltd. [(2005) 8 SCC 618], held
that instead of the court, the power to appoint arbitrators contained
in Section 11 is conferred on the Chief Justice or his delegate. In fact,
the seven-Judge Bench held: (SBP and Co. case [(2005) 8 SCC 618],
SCC pp. 644-45 & 648, paras 13 & 18)
****
It is obvious that Section 11 applications are not to be moved before
the "court" as defined but before the Chief Justice either of the High
Court or of the Supreme Court, as the case may be, or their
delegates. This is despite the fact that the Chief Justice or his
delegate have now to decide judicially and not administratively.
Again, Section 42 would not apply to applications made before the
Chief Justice or his delegate for the simple reason that the Chief
Justice or his delegate is not "court" as defined by Section 2(1)(e).
The said view was reiterated somewhat differently in Pandey & Co.
Builders (P) Ltd. v. State of Bihar [(2007) 1 SCC 467], SCC at pp.
470 & 473, Paras 9 & 23-26.
****
18. In contrast with applications moved under Section 8 and 11 of
the Act, applications moved under Section 9 are to the "court" as
defined for the passing of interim orders before or during arbitral
proceedings or at any time after the making of the arbitral award but
before its enforcement. In case an application is made, as has been
made in the present case, before a particular court, Section 42 will
apply to preclude the making of all subsequent applications under
Part I to any court except the court to which an application has been
made under Section 9 of the Act.
****
25. Our conclusions therefore on Section 2(1)(e) and Section 42 of
the Arbitration Act, 1996 are as follows:
(a) Section 2(1)(e) contains an exhaustive definition marking out
only the Principal Civil Court of Original Jurisdiction in a district
or a High Court having original civil jurisdiction in the State, and
no other court as "court" for the purpose of Part I of the Arbitration
Act, 1996.
(d) Section 9 applications being applications made to a court and
Section 34 applications to set aside arbitral awards are
applications which are within Section 42.'
17. The understanding of 'court' under Section 42 is indisputably in
terms of Section 2(1)(e) of the Act. The application under Section 9 is
also made to a 'court' as understood under Section 2(1)(e) of the Act.
Once such an application to a 'court' as understood under Section
2(1)(e) of the Act is made, all further applications under Part I to a
'court' must be to the 'court' to which the prior application has been
made. This is the mandate of Section 42 of the Act. For the purpose of
convenience, Section 2(1)(e) is replicated below:--
'2. Definitions.-(1) In this Part, unless the context otherwise requires,-
[(e) "Court" means-
(i) in the case of an arbitration other than international
commercial arbitration, the principal civil court of original
jurisdiction in a district, and includes the High Court in
exercise of its ordinary original civil jurisdiction, having
jurisdiction to decide the questions forming the subject matter
of the arbitration if the same had been the subject matter of a
suit, but does not include any civil court of a grade inferior to
such principal civil court, or any Court of Small Causes;
(ii) in the case of international commercial arbitration, the High
Court in exercise of its ordinary original civil jurisdiction,
having jurisdiction to decide the questions forming the subject
matter of the arbitration if the same had been the subject
matter of a suit, and in other cases, a High Court having
jurisdiction to hear appeals from decrees of courts subordinate
to that High Court;]"
52. In the decision of Ravi Ranjan Developers Pvt. Ltd. vs Aditya
Kumar Chaterjee reported in 2022 SCC Online SC 568, the Hon'ble Apex
Court held as follows:-
"31. There could be no doubt, as argued by Mr. Sinha, that Section 42
of the A&C Act is mandatory. The Section has obviously been enacted
to prevent the parties from being dragged into proceedings in different
Courts, when more than one Court has jurisdiction. Where with
respect to any arbitration agreement, any application under Part I of
the A&C Act has been made in a Court, that Court alone would have
jurisdiction over the arbitral proceedings and all subsequent
applications arising out of that agreement, and the arbitral
proceedings, would have to be made in that Court and in no other
Court, unless, of course, the Court in which the first application had
been instituted, inherently lacked jurisdiction to entertain that
application. The Section which starts with a non obstante clause, is
binding irrespective of any other law for the time being in force, and
irrespective of any other provision in Part I of the A&C Act."
53. The applications under consideration are accordingly disposed of.
Urgent Photostat certified copies of this judgment, if applied for, be
supplied to the parties upon fulfilment of requisite formalities.
(Shampa Sarkar, J.)
