Agri Horticultural Society of India Vs Enkon Private Limited (Calcutta High Court)
Summary: The Calcutta High Court allowed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator, holding that the pendency of a civil suit and an application under Section 8 of the Act does not prevent the High Court from exercising jurisdiction under Section 11. The Court relied on the express language of Section 8(3) and the Supreme Court decision in Vijay Kumar Sharma @ Manju v. Raghunandan Sharma @ Baburam & Ors., (2010) 2 SCC 486.
The dispute arose from commercial arrangements between Agri Horticultural Society of India and Enkon Private Limited relating to advertisement hoardings. The parties had initially entered into an agreement dated 8th October, 2014, under which the respondent was permitted to erect an advertisement hoarding and display commercial advertisements on a structure measuring approximately 6000 sq. ft. along the boundary walls of Belvedere Road and Alipore Road on the petitioner’s property. That agreement was for three years and expired in 2017. Subsequently, the parties entered into a fresh agreement dated 1st November, 2021 concerning a separate commercial arrangement for display of hoardings, which also encompassed the subject matter of the earlier agreement.
Clause 9 of the agreement dated 1st November, 2021 contained the arbitration agreement. It provided that disputes or differences arising out of the agreement, including disputes regarding interpretation, non-compliance or non-payment, would first be attempted to be resolved mutually and amicably. If an amicable settlement was not possible, the dispute was to be referred to arbitration under the Arbitration and Conciliation Act, 1996 or any statutory modification thereof. Arbitration was to be held at Kolkata and conducted in English, while courts at Kolkata alone were given jurisdiction over disputes arising under the agreement, including arbitration proceedings. Significantly, the respondent did not dispute the existence of the arbitration agreement.
The respondent nevertheless objected to maintainability of the Section 11 petition on the ground that it had already instituted Title Suit No. 1282 of 2025 before the learned 1st Civil Judge (Senior Division) at Alipore, where an ad interim temporary injunction had been granted. An application under Section 8 of the Arbitration and Conciliation Act, 1996 was also pending before that Court. On this basis, the respondent contended that the petition seeking appointment of an arbitrator under Section 11 was not maintainable.
The High Court rejected the objection. It observed that the question whether pendency of a civil suit or a Section 8 application bars exercise of jurisdiction under Section 11 was no longer res integra. Section 8(3) expressly provides that notwithstanding the pendency of an application under Section 8(1), arbitration may be commenced or continued.
The Court relied upon the Supreme Court ruling in Vijay Kumar Sharma @ Manju v. Raghunandan Sharma @ Baburam & Ors., (2010) 2 SCC 486. The Supreme Court had held that, in view of the specific provision in Section 8(3), pendency of an application under Section 8(1) does not prevent an arbitration from being commenced or continued. Consequently, an application under Section 11 or Section 15(2) seeking appointment of an arbitrator is not barred merely because a Section 8 application is pending in a suit. The Supreme Court had further held that once an arbitrator is appointed under Section 11, there is nothing preventing the arbitrator from proceeding with the arbitration. Even pendency of an appeal arising from an order dismissing a suit on the ground that the dispute was required to be resolved through arbitration would not, by itself, prevent appointment of an arbitrator under Section 11 read with Section 15(2).
Applying the statutory provision and the Supreme Court ruling, the Calcutta High Court held that the respondent’s objection regarding maintainability could not be sustained. Since the agreement admittedly contained a valid arbitration clause and disputes had arisen between the parties, the Court was satisfied that the requirements for appointment of an arbitrator under Section 11(6) were fulfilled.
The High Court accordingly appointed Mr. Arnab Chakraborty, Advocate, as the sole arbitrator to adjudicate the disputes between the parties. The Arbitrator was directed to communicate his consent to the Registrar, Original Side, within two weeks from receipt of the order. His appointment was made subject to compliance with Section 12 of the Arbitration and Conciliation Act, 1996. The Arbitrator was permitted to fix his remuneration in accordance with the Fourth Schedule to the Act unless otherwise agreed between the parties. The petitioner was directed to communicate a copy of the order to the Arbitrator forthwith, and with these directions the petition was disposed of.
Cases Discussed
- Vijay Kumar Sharma @ Manju v. Raghunandan Sharma @ Baburam & Ors., (2010) 2 SCC 486 (Supreme Court) — Relied upon for the proposition that pendency of an application under Section 8 of the Arbitration and Conciliation Act, 1996 in a civil suit does not bar consideration and disposal of an application under Section 11 for appointment of an arbitrator, and an arbitrator appointed under Section 11 may proceed with the arbitration notwithstanding such pending proceedings.
FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT
The Court:- The present petition has been filed under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an Arbitrator.
Learned counsel for the petitioner submits that the parties had initially entered into an agreement dated 8th October, 2014, whereby the respondent was permitted to erect an advertisement hoarding and display commercial advertisements on a structure measuring approximately 6000 sq. ft. situated along the boundary walls of Belvedere Road and Alipore Road, being property belonging to the petitioner. The said agreement was for a period of three years and expired in the year 2017.
It is further submitted that the parties thereafter entered into a fresh agreement dated 1st November, 2021, in respect of a separate commercial arrangement for display of hoardings, which also encompassed the subject matter of the earlier agreement.
Learned counsel for the petitioner draws the attention of this Court to Clause 9 of the agreement dated 1st November, 2021, which contains an arbitration clause,which is reproduced herein:-
“i) Any dispute or difference arising out of and under these presence including as to the interpretation of the terms and conditions, or non-compliance or nonpayment, the same shall be resolved mutually and Amicably by both the parties.
ii. If it cannot be so resolved amicably the same shall be referred to the Arbitration under the provisions of the Arbitration and Conciliation Act, 1996, оr any statutory modification thereof in force. The Arbitration shall be held at Kolkata and it shall be conducted in English language only.
iii. The Courts at Kolkata alone shall have jurisdiction to try and entertain disputes between the parties arising under these presents including arising from the Arbitration proceedings.”
The existence of the said arbitration agreement is not disputed by the learned counsel for the respondent.
However, learned counsel for the respondent submits that the respondent has already instituted Title Suit No. 1282 of 2025 before the learned 1st Civil Judge (Senior Division) at Alipore, wherein an ad interim order of temporary injunction has been granted. It is further submitted that an application under Section 8 of the Arbitration and Conciliation Act, 1996 is pending adjudication before the said Court, and, therefore, the present petition under Section 11 is not maintainable.
This Court has considered the submissions advanced by the learned counsel for the parties and perused the materials placed on record. The issue as to whether the pendency of a civil suit or an application under Section 8 of the Act bars the exercise of jurisdiction under Section 11 is no longer res integra.
Section 8(3) of the Arbitration and Conciliation Act, 1996 expressly provides that notwithstanding the pendency of an application under Section 8(1), an arbitration may be commenced or continued. The Hon’ble Supreme Court, in Vijay Kumar Sharma @ Manju v. Raghunandan Sharma @ Baburam & Ors., reported in (2010) 2 SCC 486, has held that the pendency of proceedings before a civil court does not preclude the appointment of an arbitrator under Section 11 of the Act. The relevant portion of the said Judgment reads, inter alia, as follows:
“12. Having regard to the specific provision in Section 8(3) providing that the pendency of an application under Section 8(1) will not come in the way of an arbitration being commenced or continued, we are of the view that an application under Section 11 or Section 15(2) of the Act, for appointment of an arbitrator, will not be barred by pendency of an application under Section 8 of the Act in any suit, nor will the designate of the Chief Justice be precluded from considering and disposing of an application under Section 11 or 15(2) of the Act.
13. It follows that if an arbitrator is appointed by the designate of the Chief Justice under Section 11 of the Act, nothing prevents the arbitrator from proceeding with the arbitration. It also therefore follows that the mere fact that an appeal from an order dismissing the suit under Order 7 Rule 11 CPC (on the ground that the disputes were required to be settled by arbitration) is pending before the High Court, will not come in the way of the appointment of an arbitrator under Section 11 read with Section 15(2) of the Act, if the authority under Section 11 finds it necessary to appoint an arbitrator. Therefore, the first contention of the appellant is liable to be rejected.”
In view of the aforesaid statutory provision and the law laid down by the Hon’ble Apex Court, the objection raised by the respondent with regard to maintainability cannot be sustained.
Since the agreement between the parties admittedly contains a valid arbitration clause and disputes have arisen between the parties, this Court is satisfied that a case has been made out for appointment of an arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996.
Accordingly, this Court appoints Mr. Arnab Chakraborty, Advocate (Mob. No. 9830676096), as the sole arbitrator to adjudicate the disputes between the parties. The learned Arbitrator shall communicate his consent to the Registrar, Original Side, within a period of two week from the date of receipt of this order.
The appointment of the learned Arbitrator shall be subject to compliance with Section 12 of the Arbitration and Conciliation Act, 1996.
The learned Arbitrator shall be entitled to fix his remuneration in accordance with the Fourth Schedule to the Act, unless otherwise agreed between the parties.
The petitioner is directed to communicate a copy of this order to the learned Arbitrator forthwith for necessary compliance.
With the aforesaid directions, the present petition stands disposed of.
