Lakshman Prasad Agarwal vs Neogrowth Credit Private Limited on 25 June, 2025

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Calcutta High Court

Lakshman Prasad Agarwal vs Neogrowth Credit Private Limited on 25 June, 2025

Author: Shampa Sarkar

Bench: Shampa Sarkar

OCD 71


                              ORDER SHEET
                              APOT/15/2025
                          IA NO:GA-COM/1/2025
                     IN THE HIGH COURT AT CALCUTTA
                     COMMERCIAL APPELLATE DIVISION


                      LAKSHMAN PRASAD AGARWAL
                                 VS
                   NEOGROWTH CREDIT PRIVATE LIMITED




 BEFORE:
 The Hon'ble JUSTICE SHAMPA SARKAR
 Date: 25th June, 2025.


                                                                        Appearance:
                                                 Mr. Aniruddha Chatterjee, Sr. Adv.
                                                           Mr. Chayan Gupta, Adv.
                                                          Mr. Anujit Mookherji, Adv.
                                                       Mr. Rittick Chowdhury, Adv.
                                                 Mr. Pourush Bandopadhyay, Adv.
                                                          Mr. Pritish Chandra, Adv.
                                                                  ...for the Appellant



    The Court:

    1. Despite several opportunities and service, the respondent has failed to

appear before the Court.

2. APOT/15/2025 is an appeal under Section 37(2) of the Arbitration and

Conciliation Act, 1996 (hereinafter referred to as the said Act). The

appellant is aggrieved by an interim order passed under Section 17 of

the said Act by a learned Arbitrator sitting at Delhi on 18th November,

2024. The order is quoted below:-

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” ORDER

a) It is hereby directed to retrain the respondents from

withdrawing any amount from Bank Account

No.3102135000009601 in KARUR VYSYA BANK having its

IFSC Code KVBL0003102, office Branch at:-KOLKATA

SHAKESPEARE SARANI, NO 20 SHAKESPEARE SERRANI,

PARK STREET, KOLKATA – 700005;

b) In case the Respondents fails to clear the outstanding

amount of the Claimant as above under the Loan Agreement,

it is hereby ordered that the claimants are allowed to take

possession of the movable/immovable properties/assets

specified in Schedule-I of the application by removing same

from the possession and custody of the Respondents.

c) Reliefs in terms of prayer (b) to the effect Mr. Bhaskar

Barik/Titas Manna Authorized person of the claimant

company is appointed as Receiver with the directions to seize

the movable/immovable properties/assets specified in

Schedule-I of the application by removing same from the

possession of the Respondents & prepare the inventory

accordingly;

d) The receiver Mr. Bhaskar Barik/Titas Manna is hereby

authorized to take necessary police aid for taking possession

of the goods mentioned in Schedule 1 and accordingly, the
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SHO/Officer’s in charge in whose jurisdiction the

movable/immovable properties/assets are found, is directed

to provided necessary police aid to the receiver for execution

of this order;

e) Till the possession of the said movable/immovable

properties/assets are handed over or taken by the claimant,

the respondents, their servants and/or agents are hereby

restrained from selling, transferring, and/or creating any

third party rights or interest, or parting with possession of

the said movable/immovable properties/assets in any

manner whatsoever.

f) The Receiver shall file his report alongwith inventory

prepared (if any) within 10 days from the date of execution of

the present order.”

3. The said order has been challenged on the ground of lack of jurisdiction

of the learned Arbitrator and the unilateral appointment. An arbitral

proceeding is already pending before a learned Arbitrator at Mumbai.

The appellant was never informed about the change of venue from

Mumbai to Delhi as also the change of an Arbitrator. Initially, the

respondent had unilaterally appointed one Mr. Rajendra Brijmohan

Agarwal as an Arbitrator. The Delhi High Court terminated the

mandate of Mr. Agarwal and appointed Ms. Neeta Jain as a substitute

Arbitrator.

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4. The appellant had already filed a suit before the City Civil Court at

Calcutta and an ad interim injunction was passed. In view of the order

passed by the learned City Civil Court on August 24, 2022, the

Arbitrator deferred the proceeding. The appellant was surprised to find

out that the respondent had initiated a proceeding before the learned

Arbitrator at Delhi, without any further reference to the earlier

proceeding and without any intimation to the appellant. By a letter

dated November 13, 2024, the petitioner raised an objection with regard

to the jurisdiction of the learned Arbitrator and brought the order

passed in the suit, to the notice of the learned Arbitrator. Without

deciding on such questions the learned Arbitrator passed the impugned

order, exparte. The order is challenged before this Court on the ground

that the learned Arbitrator could not have continued with the

proceeding on the ground of unilateral appointment and also because

the arbitral proceeding was pending before Smt. Neeta Jain, who was

appointed as the substitute Arbitrator by the Bombay High Court. The

learned Arbitrator appointed by the Bombay High Court was already in

seisin of the matter and had adjourned the proceedings in view of the

interim orders passed in the suit.

5. It is next submitted that by the interim order, the operation of the bank

account in Karur Vysya Bank, Kolkata, has been restrained and a

Receiver has been appointed to seize all immovable and movable assets

specified in the Schedule-I of the application.
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6. This Court finds that the entire cause of action arose within the

Ordinary Original Jurisdiction of this Court. The bank account which

has been frozen is within the Ordinary Original Jurisdiction of this

Court. Despite several opportunities and intimation to the respondent,

it failed to appear. The respondent also continues business within the

Ordinary Original Jurisdiction of this Court. It appears that the

respondent is not interested to contest this application. The subject

matter of arbitration is the loan which was availed of by the appellant

and the entire transaction, according to the appellant, as pleaded and

as supported by documents took place within the original jurisdiction of

this Court. The scope of for interference by this Court under Section

37(2) of the Arbitration and Conciliation Act.

“(2) An appeal shall also lie to a Court from an order of the

arbitral tribunal-

(a) accepting the plea referred in sub-section (2) or sub-

section (3) of section 16; or

(b) granting or refusing to grant an interim measure under

section 17.”

7. Court, under Section 2(1)(e) of the said Act, in the case of an arbitration

other than international commercial arbitration, is 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, as

if the same had been the subject-matter of a suit, but does not include
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any Civil Court of a grade inferior to such principal Civil Court, or any

Court of Small Causes. An appeal was filed in Mumbai from an interim

order passed by the arbitrator who was unilaterally appointed. The

Bombay High Court passed an order. The law is well settled that the

provision of section 42 of the said Act will not apply to an appeal under

section 37(2) of the said Act. Reference is made to the decision in

Pandey & Co. Builders (P) Ltd. vs. State of Bihar and Another

reported in (2007) 1 SCC 467. Moreover, the respondent waived the

venue clause, by approaching the learned Arbitrator at Delhi and the

proceeding continued in Delhi.

8. Under such circumstances, in exercise of power under Section 37(2)(b),

this Court sets aside the order of injunction and allows the appeal. The

reasons behind of such decision are as follows :-

(a) During the pendency of an arbitral proceeding before

an Arbitrator appointed by the Bombay High Court, another

Arbitrator, sitting at Delhi passed an exparte interim order

which directly impacts and affects not only the day-to-day

business of the appellant, but also prevents the appellant from

enjoying the assets / movable and immovable properties,

auctioned in the schedule.

(b) The learned Arbitrator sitting at Delhi was unaware of

the proceedings in Bombay and was informed on November 13,

2024 about the pending suit. Objection as to jurisdiction and

unilateral appointment were raised. The learned Arbitrator was
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requested to hold a video conference to enable the appellant to

make necessary submissions. The learned Arbitrator did not

respond to the said letter and did not decide on the objection

raised by the appellant. Such objection was in terms of section

12(3) and 13 of the said Act, which are quote below :-

Section 12(3) is quoted below:-

“12 (3) An arbitrator may be challenged only if– (a)
circumstances exist that give rise to justifiable doubts
as to his independence or impartiality, or (b) he does
not possess the qualifications agreed to by the parties.

Section 13 is quoted below:-

13. Challenge procedure.–(1) Subject to sub-section (4),
the parties are free to agree on a procedure for
challenging an arbitrator.

(2) Failing any agreement referred to in sub-section (1),
a party who intends to challenge an arbitrator shall,
within fifteen days after becoming aware of the
constitution of the arbitral tribunal or after becoming
aware of any circumstances referred to in sub-section
(3) of section 12, send a written statement of the
reasons for the challenge to the arbitral tribunal.
(3) Unless the arbitrator challenged under sub-section
(2) withdraws from his office or the other party agrees to
the challenge, the arbitral tribunal shall decide on the
challenge.

(4) If a challenge under any procedure agreed upon by
the parties or under the procedure under subsection (2)
is not successful, the arbitral tribunal shall continue
the arbitral proceedings and make an arbitral award.
(5) Where an arbitral award is made under sub-section
(4), the party challenging the arbitrator may make an
application for setting aside such an arbitral award in
accordance with section 34.

(6) Where an arbitral award is set aside on an
application made under sub-section (5), the Court may
decide as to whether the arbitrator who is challenged is
entitled to any fees”

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(c) The learned Arbitrator was required to dispose of the

said letter as the letter was in the nature of a challenge to the

procedure.

9. The learned Arbitrator shall decide on the objection raised by the

appellant first and thereafter, take a decision on the application filed

under Section 17 of the Arbitration and Conciliation Act, 1996. The

appellant may file an additional objection.

10. The appeal and the connected application are, accordingly, disposed

of.

(SHAMPA SARKAR, J.)

B.Pal



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