Arbitration Clause In Expired Lease Cannot Be Invoked To Execute Fresh Lease: Calcutta High Court

The Calcutta High Court has recently held that an arbitration agreement in an expired lease deed cannot be automatically extended to govern disputes relating to the execution of a fresh lease, even if the proposed lease is claimed to arise from prior correspondence between the parties. Justice Aniruddha Roy in an order dated 23 December, 2025, dismissed an application filed by HDFC Bank Ltd under Section 8 of the Arbitration and Conciliation Act, seeking reference of the dispute to arbitration in a commercial suit filed by the New India Assurance Company Ltd. The court clarified that once a lease has expired by passage of time, disputes relating to execution of a new lease fall outside the scope of the arbitration agreement contained in the earlier lease. The dispute traces back to a commercial premises originally owned by Williamson Magor, who had transferred it to HDFC Bank Ltd. After an amalgamation took place on March 20, 2023, HDFC Ltd merged into HDFC Bank, which then became the successor in interest and landlord of the property. A parent lease deed was executed on September 24, 2014 in favour of New India Assurance for a fixed term of 9 years, which then expired on March 31, 2023. Prior to expire of the deed, the companies exchanged various correspondences. Relying on these, New India Assurance argued that a concluded contract had come into force for execution of a fresh lease for a period of ten years. The applicant claimed that it continued to stay in uninterrupted possession of the premises and that rent and allied charges were accepted by the landlord. It then filed a civil suit for specific performance of the alleged contract for execution and registration of a new lease, along with relief against eviction. HDFC Bank relied on the arbitration clause of the 2014 lease deed, arguing that the dispute was “otherwise howsoever in relation to the demised premises”. It said the applicant's claim flowed from the parent deed and was arbitrable. The court however rejected the bank's arguments. It said once the lease had expired on the mentioned date, there was no scope for renewal under the expired deed. Any subsequent arrangement between the parties would amount to a fresh lease, independent of the old one. The court held that merely agreeing to similar commercial terms does not result in automatic inclusion of the arbitration clause, unless parties had agreed to it. “As the lease has admittedly expired on March 31, 2023 and since the lease was not renewed before the expiry, subsequently there was no scope for renewal of the lease. The parties would have to enter into a fresh lease, if were willing to do so. The moment the parent lease stands expired, question of renewal does not arise.”, the court observed. The court concluded that the subject matter of the suit was not covered by the arbitration agreement in the expired lease and dismissed the application. It allowed the suit to proceed on merits before the court's commercial division. Case Title: The New India Assurance Company Ltd vs HDFC Bank Ltd Case Number: IA No. GA-COM/2/2025 in CS-COM/41/2025 For Plaintiff: Sr. Advocate Sabyasachi Choudhury with Advocates Rajdeep Bhattacharya, Shreyaan Bhattacharya For Defendant: Advocates Sayantan Bose, Soorjya Ganguli, Pooja Chakrabarti, Prithwish Roy Chowdhury Click Here To Read/Download Order

Arbitration Clause In Expired Lease Cannot Be Invoked To Execute Fresh Lease: Calcutta High Court

Kirit Singhania

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