Calcutta High Court
Arun Kumar Singh vs Salvus Realty Pvt Ltd. And Anr on 3 March, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
od 9
IN THE HIGH COURT AT CALCUTTA
Ordinary Original Civil Jurisdiction
ORIGINAL SIDE
AP/496/2021
ARUN KUMAR SINGH
VS
SALVUS REALTY PVT LTD. AND ANR
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date : March 3, 2025
Mr. Rajarshi Dutta, Adv.
Mr. Dhilon Sengupta,...for petitioner.
Mr. Nilanjan Bhattacharyya, Adv. ...for respondents.
1. Affidavit-in-reply is taken on record.
2. This is an application for appointment of an Arbitrator, in terms of
Article XVII of the development agreement enterd into by and between the
parties dated April 5, 2016. According to the petitioner, the respondent No.1
proceeded to sell flats to third parties, without discharging obligation to provide
the owners’ allocation. The allegation is that the respondent no.1 acted in
breach of the said development agreement. The petitioner and the respondent
no.2 are the owners. Despite service, the respondent no.2 is not represented. In
any event, the petitioner does not have any claim against the respondent no.2
as the said respondent is also a co-owner of the property to be developed.
3. Mr. Rajarshi Dutta, learned advocate appearing for the petitioner
submits that as disputes and differences arose, a deed of revocation of the
power of attorney granted to the respondent no.1 was executed by the
petitioner. The same was registered. The respondent no.1 challenged the said
revocation by filing a suit vide Title Suit no.367 of 2021. The suit is pending
before the learned civil judge, Senior Division, Second Court, Howrah. In the
said suit, the petitioner had filed an application under section 8 of the
Arbitration and Conciliation Act, 1996 for dismissal of the suit on the ground of
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existence of an arbitration clause. The learned civil court rejected the said
application on the ground that, although the existence of the arbitration clause
was not in conflict with the lis to be decided by the learned civil court, but the
arbitration clause contained in the development agreement did not take away
the jurisdiction of the court to determine the issue as to the legality and
validity of the impugned deed of revocation. Admittedly, the said order is under
challenge in an appeal. According to Mr. Dutta, the pendency of the appeal
should not come in the way of this court to refer the disputes to arbitration
when the learned civil court was alive to the issue that Article XVII of the
development agreement contained the arbitration clause and that the parties
had agreed to refer all disputes arising out of the said development agreement
for adjudication by an agreed sole arbitrator or in case of failure thereof, by a
tribunal of three arbitrators.
4. Mr. Nilanjan Bhattacharyya, learned senior advocate submits that the
learned civil court was of the view that the suit should proceed. The issues in
the suit, should be left to be decided by the learned civil court. The rights and
liabilities of the parties were also ancillary issues in the suit. Mr.
Bhattacharyya relies upon the decision of the Hon’ble Madras High Court in
the matter of Mr. T. Rajesh Prasad, Partner of M/s. R.K. Properties vs. Mr. K.
Saji Kumar, decided in Arb.OP. (Com Div.) No. 678 of 2023 and submits that
the application before this court is premature. The appeal court is yet to decide
on the correctness of the order passed by the learned civil judge. The appeal
will be rendered infructuous if this court refers the disputes to be settled by a
learned arbitrator. This court would then step into the domain of the learned
appeal court and pre-judge the issue pending in the appeal.
5. Heard learned advocates for the respective parties.
6. Admittedly, the parties entered into a development agreement on April
5, 2016. As disputes and differences cropped up between the parties, the
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petitioner revoked the power of attorney. Clause 19.1 under Article XVII of the
agreement provides that, any dispute or difference between the parties
touching or arising out of or concerning the development agreement, shall be
resolved amicably and even if the disputes continued and were not settled,
reference shall be made to a single arbitrator, if the parties agree. In case of
disagreement, the reference shall be made to three arbitrators, each party shall
appoint one arbitrator and those arbitrators shall appoint the presiding
Arbitrator.
7. The Second Schedule of the development agreement provides the
owners’ allocation and the third Schedule provides the developers’ allocation.
The petitioner raised dispute as the developer was parting with the flats
without complying with the obligation to hand over the owners’ allocation.
Accordingly, the petitioner executed a deed of revocation of the power of
attorney.
8. The Title suit no.367 of 2021 was filed by the respondent no.1
represented by its Director, challenging the deed of revocation of the power of
attorney dated June 25, 2021. The respondent no.1 prayed for the following
reliefs :
“a. a decree of declaration that the registered deed of revocation of Power
of Attorney dated 25.6.2021 registered at the Office of DSR-I, Howrah,
being no.050100062 for the year 2021 morefully and specifically
described in the schedule-A hereinbelow is absolutely illegal, inoperative
and not binding upon the plaintiff and the proforma defendant by any
manner whatsoever.
b. a decree of declaration that the principal defendant has no manner of
right to transfer, encumber, alienate and/or creation of third party
interest in respect of the ‘C’ schedule noted property in favour of any
third party stranger.
c. a decree of permanent injunction restraining the principal defendant
and his men and agents from not to give effect in respect of the ‘A’
schedule noted impugned deed of revocation by any manner whatsoever
4and/or to transfer, encumber, alienate and/or creation of third party
interest in respect of the ‘C’ schedule noted property in favour of any
third party stranger.
d. a decree of temporary injunction in terms of prayer [c].
e. all cost of the suit.
f. any other relief/reliefs to which the plaintiff is entitled to both in law
and in equity.
g. leave under order 2 rule 2 of the Code of Civil Procedure.”
9. The cause of action in paragraph 13 of the plaint also indicates that
the suit was restricted to the deed of revocation of the power of attorney with
interim prayers restraining the petitioner as the principal defendant from
transferring, encumbering, alienating or creating third party interest in respect
of ‘C’ schedule property and for a permanent injunction restraining the
petitioner from acting in further to the deed of revocation of the power of
attorney. The petitioner filed an application under Section 8 of the Arbitration
and Conciliation Act, 1996 which was rejected on the ground that, although
the plaintiff/respondent no.1, did not dispute the existence of an arbitration
clause, the issue before the civil court in the suit was different from the issues
covered by the development agreement. The learned Judge relied upon a
decision of the Hon’ble Apex Court being SBP & Co. Vs. Patel Engineering Ltd.
& Anr., reported in 2005 (8) SCC 618 and held that the civil court was
empowered to ascertain whether the existence of the arbitration agreement
would cover the issue which was in dispute in the title suit. Applying the said
decision the learned court fixed the following issues ;
(i) Whether the parties to the suit were parties to the arbitration
agreement?
(ii) Whether the disputes which were the subject-matters of the suit
fell within the scope of arbitration agreement?
(iii) Whether the defendant had applied under Section 8 before
submitting its written statement?
(iv) Whether the reliefs sought for in the suit were those could be
adjudicated and granted in arbitration?
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10. The learned civil court was of the view that the challenge in the suit
was the legality and validity of the deed of revocation of the power of
attorney which was granted in favour of the plaintiff. Although Mr. Dutta
submits that the revocation of the power of attorney was also an act
following the development agreement and, as such, the civil court ought
to have allowed the application under Section 8 of the Arbitration and
Conciliation Act, 1996 but this Court is of the view that the question is
now pending adjudication before the appropriate forum. Article XX of the
agreement vests the jurisdiction on the Howrah court to adjudicate the
matters arising out of the agreement. The trial court held as follows:-
“Now, so far as the Judgment of the Hon’ble Supreme Court as
referred by the petitioner/defendant no. 1 is concerned (AIR 2015 SC
1306), this Court is of the humble view that the same is not in
conflict with the judgments of the Hon’ble Court as referred above and
nor does to say that the court has no authority to look into the real
controversy between the parties before referring them to arbitration.
This judgment says that the court must see if its jurisdiction is ousted
by the arbitration clause. To my understanding of the nature of the
case in hand I firmly find that the Arbitration Clause contained in the
Development Agreement does not take away the jurisdiction of this
Court in determining the issue as to the legality and validity of the
impugned Deed of Revocation and giving verdict on it.
Hence, in view of the discussion made hereinabove, the
application u/s. 8 of the Arbitration and Conciliation Act, 1996 is
liable to rejected.”
11. Accordingly, the application filed under Section 8 of the Arbitration
and Conciliation Act, 1996 was rejected. In the appeal which is pending from
the said order, what will fall for decision is whether the deed of revocation of
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power of attorney shall be decided in the suit or by the learned arbitrator.
Whether the validity of the deed would be covered by the arbitration clause.
Apart from the deed of revocation of the power of attorney, other disputes
which arose out of the said development agreement are outside the scope of the
suit.
12. The notice invoking arbitration was issued on July 19, 2021. Thus, the
existence of the arbitration clause and the notice invoking arbitration are
sufficient reasons to refer the dispute to arbitration.
13. To the understanding of the learned Civil Court as well, the arbitration
clause covered other issues arising out of development agreement but not
the issue with regard to unilateral execution of the deed of revocation of the
power of attorney. Even if the petitioner is unsuccessful in the appeal, the
suit will proceed on the plaint case which, according to the learned Civil
Judge was restricted to the deed of revocation of power of attorney. If the
petitioner is successful, then all issues arising out of the alleged breach and
the right of the petitioner to unilaterally revoke the power of attorney shall be
decided by the learned Arbitrator. In any event, these are all prima facie
observations, as the question with regard to the arbitrability of the issues
arising out of the arbitration agreement and the contention of Mr.
Bhattacharya that there were overlapping issues etc. can be raised before
the learned Arbitrator. The learned Arbitrator has ample authority to decide
not only to his own jurisdiction, but also the objections relating to the
arbitrability of issues. Accordingly, the application is allowed.
14. The decision relied upon by Mr. Bhattacharya does not apply, for the
following reasons:-
a) The application under Section 8 had not been disposed by the learned
Civil Court.
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b) In the Civil Suit, the very existence of the agreement which contained
the arbitration clause was the subject matter of challenge on the
ground of forgery and fabrication.
c) The reliefs overlapped.
On such counts, the Hon’ble Court was of the view that allowing the
application under Section 11 of the Arbitration and Conciliation Act, 1996
would be affirming the existence of the agreement which was challenged
before a Civil Court on the ground of the same being forged and fabricated.
15. All points raised by Mr. Bhattacharya are kept open to be decided by
Learned Arbitrator, independently.
16. Parties, however, agree before this Court that the matter be referred to
a sole Arbitrator as provided in the first part of the arbitration clause.
17. The learned District Judge before whom the appeal is pending, shall
not be influenced by this order.
18. Accordingly, this application is disposed of by appointing Mr. Sakya
Sen, learned Senior Advocate as an Arbitrator to arbitrate upon the disputes
between the parties.
19. This order is subject to compliance of Section 12 of the Arbitration
and Conciliation Act, 1996.
20. The learned Arbitrator shall fix his remuneration in terms of the
21. The application being AP/496/2021 is accordingly disposed of.
(SHAMPA SARKAR, J.)
pkd/S.Das/sb/pa.