Arbitration And Conciliation Act Does Not Overlap West Bengal Public Land Act: Calcutta High Court

Brief Facts:

Rolta Infrastructure and Technology Services Private Limited (“Petitioner”) approached the Calcutta High Court (“High Court”) to request a stay against a notice issued by the Department of Information Technology And Electronics, Government of West Bengal (“Respondent”) and filed an application under Section 9 of The Arbitration and Conciliation Act, 1996 (“Arbitration Act”). This notice revoked a Deed of Sub-Lease, through which the Respondent granted the Petitioner 5 acres of land for a lease term of 99 years.

The Petitioner's contention revolved around the failure of the Respondent to provide essential amenities such as power, water, and sewage outlets, leading to an inability to complete the construction of an IT/ITeS Project within the agreed timeframe. Conversely, the Respondent asserted that the Petitioner failed to fulfil its contractual obligations, prompting the termination of the sub-lease. In response, the Petitioner objected to the termination through a letter and subsequently invoked the arbitration clause in clause 5 of the sub-lease agreement through a notice issued to the Respondent.

The Petitioner argued that the dispute, culminating in the termination notice, fell within the purview of the arbitration clause outlined in the agreement. It contended that the termination was invalid and contrary to the terms of the sub-lease agreement, emphasizing the need for an arbitrator to adjudicate on its validity. Moreover, it stressed that unless the termination letter is stayed, the Petitioner's rights will inevitably suffer prejudice.

In contrast, the Respondent argued that the application lacked territorial jurisdiction and resembled a suit for land. It further argued that the subject matter of the application was non-arbitrable due to the presence of The West Bengal Public Land (Eviction of Unauthorised Occupants) Act, 1962, which provides an expedited avenue for the government to evict unauthorized occupants and holds precedence over the Arbitration Act. Additionally, it referred to Sections 20A and 41(ha) of the Specific Relief Act, 1963, to contend that injunctions cannot be granted concerning infrastructure projects.

Observations by the High Court:

The High Court highlighted that the foundational requirement of an application under Section 9 of the Arbitration Act is the preservation of the subject matter of dispute in arbitration. In this case, Clause 5 of the sub-lease agreement provided for resolving disputes through arbitration, encompassing all issues related to the agreement, including termination. Therefore, the High Court held that the termination of the sub-lease agreement was directly related to the arbitration clause, justifying the Petitioner's request for interim protection to preserve the subject matter of arbitration.

Furthermore, the High Court emphasized that Section 9 confers plenary powers upon the Court to intervene when the subject matter of the arbitration agreement is jeopardized by any party. It underscored the importance of such intervention to prevent the obliteration of the arbitration agreement before arbitration proceedings commence. Given that the impugned termination notice effectively ends the sub-lease agreement, including the arbitration clause, the High Court held that the Petitioner's request for interim protection was justified to safeguard the arbitration agreement until arbitration proceedings begin.

Addressing potential conflicts with other statutes, the Court rejected arguments suggesting conflict between the Arbitration Act, and the West Bengal Public Land (Eviction of Unauthorised Occupants) Act, 1962. It asserted that both statutes operate independently, and the former does not override the latter. Moreover, the High Court disagreed with contentions regarding the exclusivity of the judicial authority under the 1962 Act, noting that there is no statutory prohibition on invoking arbitration clauses even when proceedings are initiated under the 1962 Act.

Consequently, the High Court granted the prayer for a stay of the termination notice, emphasizing the need to preserve the subject matter of arbitration until the constitution of the arbitral tribunal.

Case Title: Rolta Infrastructure and Technology Services Private Limited vs Department of Information Technology And Electronics, Government of West Bengal

Case Number: AP 827 of 2023

Advocate for the Applicant: Mr. Siddhartha Mitra, Sr. Adv. Mr. Siddhartha Datta, Adv. Mr. Deepanjan Dutta Roy, Adv. Mr. Chetan Kr. Kabra, Adv. Ms. Sanjana Jha, Adv.

Advocate for the Respondent: Mr. Suman Dutt, Adv. Mr. Shaunak Mukhopadhyay, Adv. Mr. Paritosh Sinha, Adv. Ms. Shrayashee Das, Adv. Mr. Himanshu Bhawsinghka, Adv. Mr. Rohan Kr. Thakur, Adv.

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