District
: South 24 Parganas
In the Court of the Learned Commercial Court
ALIPORE
South 24 Parganas.
I.A. no. 01 of 2022
Misc. Case ( Arbitration ) no. 24
of 2022
In
the matter of :
Sri Aniruddha
Guha Roy, ______Applicant
-
Versus
–
Aditya Birla
Finance Limited, and Others ________Respondents
Written notes
of argument by the applicant
FACTS
:
1. The Loan
Agreement dated 28th day of February’ 2019, for Loan Account no.
ABFLKOLLAP0000046077, and Loan Account no. ABFLKOLLAP0000046117, has been
executed between the Respondents and the applicant at Kolkata, the Non-Judicial
Stamp Papers has been purchased and agreement engraved by the Respondents in
Kolkata.
2. The applicant
all along abode in the City of Kolkata, carrying his business activities in
Kolkata. The applicant persists his all activities of his livelihood in the
City of Kolkata. The Loan Account and the Bank account are all in the Branches
of the Respondents in the City of Kolkata.
3. The said Loan
has been granted against the Residential properties, which are in the City of
Kolkata, under the jurisdiction of the South 24 Parganas District. The
immovable property of the applicant situated and lying in the City of Kolkata.
4. All the
activities on the part of the Respondents and on the part of the applicant has
been duly performed in Kolkata in respect of granting and repayment of the said
loan account, between the parties herein.
5. The applicant
placed his application under Section 9 of the Arbitration and Conciliation Act
1996, before the Hon’ble District South 24 Parganas and placed his application
for adinterim protection on the immovable property, which are lying and situate
in the City of Kolkata under District South 24 Parganas, on 22nd day
of February’ 2022. The Hon’ble Court was pleased to grant ad-interim injunction
on the immovable property of the applicant. The same has been duly communicated
to the Respondents in terms of the direction of the Hon’ble District Judge,
South 24 Parganas.
6. The Respondent
preferred an appeal before the Hon’ble High Court Calcutta, vide F.M.A.T. 75 of
2022 { Aditya Birla Finance Limited – Versus – Aniruddha Guha Roy },
challenging the Order dated 22nd February’ 2022, passed in the
present proceeding. The Hon’ble High Court Calcutta upon necessary hearing
passed the Order dated 17-03-2022. The operative portion of the said Order
dated 17-03-2022, passed in F.M.A.T. 75 of 2022, by the Hon’ble High Court
Calcutta is reproduced herein as follows :
“We set aside
the order dated 22nd February, 2022 and direct the learned court
below to consider the interim application afresh at the “Motion” stage upon
notice to the appellant / respondent and dispose of the same by a reasoned
order after considering the contention of the parties.
We enumerate three of the contentions
raised by Mr. Debnath Ghosh, learned advocate appearing for the appellant /
petitioner.
The first is that the learned court
below had no jurisdiction by virtue of the forum selection clause contained in
the agreement between the parties.
Secondly, the subject matter of
dispute was commercial in nature and that for this reason the learned court
below had no jurisdiction.
Thirdly, the respondent had initiated
steps under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002, in respect of the property which is
the subject matter of the Section 9 application under the Arbitration and
Conciliation Act, 1996; as a result of which the learned court below had
inherent lack of jurisdiction to entertain and try the dispute.”
7. By the said
Order dated 17/03/2022, the Hon’ble High Court Calcutta directed for the
hearing a fresh on jurisdiction issues raise by the respondents herein by the
Learned Court.
8. Pursuant to
the said Order of the Hon’ble High Court, the Hon’ble District Judge, discussed
rival contentions on the above three questions on maintainability raised by the
respondents and found satisfied that the alleged disputes are “commercial disputes”
within the meaning of Section 2( c) of the Commercial Court Act 2015, and
therefore accordingly directed for transfer of the said Arbitration Case before
this Hon’ble Commercial Court for adjudication vide Order dated 22-04-2022.
ARGUMENT
I)
In
answering the first is that “the learned court below had no jurisdiction by
virtue of the forum selection clause contained in the agreement between the
parties” –
a)
when there is a conflict between the
forum selected by the parties and the seat of arbitration, in the case of a
domestic arbitration, then, the forum selection clause will prevail. The
applicant has relied upon Section 2(2) and Section 9 of the Act of 1996. The
seat of arbitration and the venue of the arbitration are concepts borrowed from
International Arbitration Law. The applicant relied upon 2013 Volume 9 Supreme
Court Cases 32 (M/s. Swastik Gases P. Ltd. v. Indian Oil Corp. Ltd.), 2017
Volume 7 Supreme Court Cases 678 (Indus Mobile Distribution Private Limited v.
Datawind Innovations Private Limited),
2020
Volume 5 Supreme Court Cases 399 (Mankastu Impex Private Limited v. Airvisual
Limited), 2020 Volume 5 Supreme Court Cases 462 (Brahmani
River Pellets Limited v. Kamachi Industries Limited) and the order dated November 17, 2020 passed by the Delhi
High Court in Arbitration Petition No. 328 of 2020 (Cars 24 Services Pvt. Ltd.
v. Cyber Approach Workspace LLP) in
support of contentions.
b)
The
applicant relied on the Judgment dated January 21, 2021, passed in AP 399 of 2020 { Bowlopedia Restaurants
India Limited – Versus – Devyani International Limited } by the Hon’ble Justice Debangsu Basak, High
Court Calcutta, wherein in the similar circumstances, the Hon’ble Justice
hold that the Court in Kolkata have inherent jurisdiction to try and grant interim
relief to the applicant.
c)
The
following are the Judicial references relied on by the applicant in answering
first queries raised by the respondents :
i)
AP 399 of 2020
{ Bowlopedia Restaurants India Limited – Versus – Devyani International Limited
} by the Hon’ble Justice Debangsu Basak, High Court Calcutta, Order dated
January 21, 2021;
ii)
2013 Volume 9 Supreme Court Cases 32 (M/s. Swastik
Gases P. Ltd. v. Indian Oil Corp. Ltd.),
iii)
2017 Volume 7 Supreme Court Cases 678 (Indus Mobile
Distribution Private Limited v. Datawind Innovations Private Limited),
iv)
2020 Volume 5 Supreme Court Cases 399 (Mankastu
Impex Private Limited v. Airvisual Limited),
v)
2020 Volume 5 Supreme Court Cases 462 (Brahmani
River Pellets Limited v. Kamachi Industries Limited)
II.
In
answering Thirdly, the respondent had initiated steps under the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002, in respect of the property which is the subject matter of the
Section 9 application under the Arbitration and Conciliation Act, 1996; as a
result of which the learned court below had inherent lack of jurisdiction to
entertain and try the dispute.”
a)
The
third issues are not bar under Section 9 of the Arbitration and Conciliation
Act 1996, in context of granting any interim relief to the applicant more
particularly giving interim protection over the immovable property of the
applicant restraining the respondent and its men, agent and representatives
from taking physical possession of the immovable property of the applicant as
described in Schedule – “A” in the application, and or restraining the
respondent from transferring and or disposing of and or encumbering and or
creating any third party interest and or parting with any part or portion of
the piece or parcel of the possession of the immovable property of the
applicant as described in Schedule – “A” in the application, till the disposal of the application, under
Section 9 of the Arbitration & Conciliation Act’ 1996.
b)
The
Arbitration and Conciliation Act 1996 cannot now resort to the SARFAESI Act for
making any recovery against the applicant as the Arbitration and Conciliation
Act is an alternate procedure prescribed by law and Section 5 of the
Arbitration and Conciliation Act provides for the Act to be complete code in
itself.
c)
In
view of the present application before the Learned Court, there is no amount
which can be recovered from the applicant as a loan under the original
agreement and therefore, Section 2(g) of the Debt Recovery Act and equally
Section 2(1)(ha) of the SARFAESI Act would not be applicable.
d)
In
view of the Full Bench Judgment in HDFC Bank Limited – Versus – Satpal Singh
Bakshi 2012 SCC Online Del 4815, which provided for arbitration agreement in
the loan agreement, the matters which come within the scope and jurisdiction of
Debt Recovery Tribunal are arbitral and therefore once having invoked
arbitration, the respondent cannot fall back on the procedure prescribed under
the SARFAESI Act or under the Debt Recovery Act for making recovery under the
original loan agreement.
e)
In
view of the Supreme Court Judgment in M.D. Frozen Foods Exports Private Limited
and Ors. – Versus – Hero Fincorp Limited AIR 2017 SC 4481, which discussed the
interplay between the SARFAESI Act and the Arbitration Act and thus the
relevant paragraphs 30 onward of that judgment where the question no. 3, framed
by the respondents in the present proceeding was answered, reproduced as
follows :
“30. The only twist in the present
case is that instead of the recovery process under the RDDB Act, we are
concerned with an arbitration proceeding. It is trite to say that arbitration
is an alternative to the civil proceedings. In fact, when a question was raised
as to whether the matters which came within the scope and jurisdiction of the
Debt Recovery Tribunal under the RDDB Act, could be referred to arbitration
when both parties have incorporated such a clause, the answer was given in the
affirmative. That being the position, the appellants can hardly be permitted to
contend that the intiation of arbitration proceedings would in any manner,
prejudice their rights to seeks relief under the SARFAESI Act”.
f)
The
provision s for the SARFAESI Act are thus, a remedy in addition to the
provisions of the Arbitration Act. In Transcore Versus Union of India &
Anr, it was clearly observed that the SARFAESI Act was enacted to regulate
securitization and reconstruction of financial assets and enforcement of
security interest and for matters connected therewith. Liquidation of secured
interest through a more expeditious procedure is what has been envisaged under
the SARFAESI Act and the two Acts are cumulative remedies to the secured
creditors.
g)
Therefore
it has been persistently held that the arbitration proceedings and SARFAESI Act
proceedings can go hand in hand. It has held that the provisions of SARFAESI
Act are remedy in addition to the provisions of the Arbitration Act. The two
Acts are cumulative remedies to the secure creditors. While SARFAESI Act proceedings
are in nature of enforcement proceeding, the arbitration proceedings would be
in form of an adjudicatory process.
h)
As
the SARFAESI Act and the Arbitration are held to be complementary in nature and
the doctrine of election has been held to be not applicable, it cannot be said
that if a party has invoked one remedy, it is debarred from invoking the other
during the pendency of the first one.
i)
The
following are the Judicial references relied on by the applicant in answering
third queries raised by the respondents :
a)
HDFC Bank
Limited Versus Satpal Singh Bakshi 2012 SCC Online Del 4815;
b)
M.D. Frozen Foods Exports Pvt. Limited and Ors.
Versus Hero Fincorp Limited AIR 2017 SC 4481;
c)
Transcore Versus Union of India & Anr. ,
III.
The
Second issues as raised as the subject matter of dispute was commercial in
nature and that for this reason the learned court below had no jurisdiction. In
answering the queries the applicant relied on a Judgment in D.M. Corporation Pvt. Limited Versus The
State of Maharashtra and Ors. (2018(4) MHLJ 457), where it has been held
that “if the Subject matter of arbitration is a “Commercial disputes” of a
“specified value”, the Commercial Court will alone have the jurisdiction to
entertain an application under Section 9 of the Arbitration Act”.
a)
That
Section 10 sub-clause 3 of the Commercial Courts Act can be reproduced for
ready reference as under:
"10. Jurisdiction in respect of
arbitration matters - Where the subject-matter of an arbitration is a
commercial dispute of a Specified Value
and-
(1)
... ... ...
(2)
... ... ...
(3) If such arbitration is other than
an international commercial arbitration, all applications or appeals arising
out of such arbitration under the provisions of the Arbitration and
Conciliation Act, 1996 (26 of 1996) that would ordinarily lie before any
principal civil court of original jurisdiction in a district (not being a High
Court) shall be filed in, and heard and disposed of by the Commercial Court
exercising territorial jurisdiction over such arbitration where such Commercial
Court has been constituted."
b)
That
Section 15 of the Commercial Courts Act further provides for transfer of
pending suits and applications, including applications under the Arbitration
and Conciliation Act, 1996, relating to Commercial disputes of a 'specified
value' to the Commercial Court. Relevant sub-clause of Section 15(2) reads as
follows:
"15.
Transfer of pending cases –
(1) ... ... ...
(2) All suits and applications,
including applications under the Arbitration and Conciliation Act, 1996 (26 of
1996), relating to a commercial dispute of a Specified Value pending in any
civil court in any district or area in respect of which a Commercial Court has
been constituted, shall be transferred to such Commercial Court: Provided that
no suit or application where the final judgment has been reserved by the Court
prior to the constitution of the Commercial Division or the Commercial Court
shall be transferred either under sub-section (1) or sub- section (2).
c)
That
the following are the Judicial references relied on by the applicant in answering
Second queries raised by the respondents :
D.M. Corporation Pvt. Limited Versus The State of
Maharashtra and Ors. (2018(4) MHLJ 457);
PRAYER :
a)
That
in the facts and in the Law, the present proceeding has sufficiently have
territorial jurisdiction and the action of the respondents under SARFAESI Act
2002 does not debar the present proceeding to adjudicate to decide the interim
application placed by the applicant, in the interest of administration of
Justice.
b)
That
unless this Learned Court passes the order / orders, as prayed for hereinafter,
the respondents shall suffer irreparable loss and injury.
c)
That
the preponderance of balance of convenience and / or inconvenience is in favour
of passing the order or orders as prayed for hereinafter.
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