In the case of Chandan Chatterjee v. Gita Sundararaman The petitioners were given control of Swarna School by the respondents after the respondents and trustees, who are in charge of the second division of the educational institution Swarna School, agreed into a memorandum of understanding to transfer the partnership company and the trust to the petitioners. The petitioners will receive the ground floor lease from the respondents under clause 2.5 of the MOU, and the arbitration will be used to resolve disagreements under clause 17 of the MOU. The parties got into a dispute, and the petitioners applied under Section 9 of the Act of 1996 before later invoking the arbitration clause. The petitioners preferred to submit an application for the appointment of the arbitrators under Section 11 of the Act, 1996.
- Whether the application under Section 11 of the Arbitration Act, 1996 automatically rejected if the original copy of the arbitration agreement is not filed?
- Whether the arbitration clause deemed invalid due to purported violations in the contract?
The petitioners argued that if both parties consent to the arbitration agreement, the obligation of producing the original copy of the contract is waived. The petitioners further argued that because the transfer is permitted by the MOU and is for the benefit of the trust, no authorization is needed.
The respondents contested the application on the grounds that the certified copy of the MOU and the original arbitration agreement had not been produced and that this violated Clause 3(a) of the Chief Justice of this Court’s 1996 Scheme for Appointment of Arbitrators. The respondents argued that the MoU’s arbitration clause was not appropriately stamped or registered. The respondent further argued that Section 5(6) of the West Bengal Premises Tenancy Act, 1997, which prohibits a tenant from transferring or assigning his right in the tenancy or any part thereof without the landlord’s prior consent, applied to the MoU that led to the transfer or assignment of the tenancy rights. Furthermore, the Specific Relief Act of 1963 Section 11(2) prohibits the specific performance of contracts that exceed the trustees’ authority. The respondents further argued that the application under Section 11 of the Act, 1996, cannot be maintained because a preceding application under Section 8 of the Act, 1996, is still pending.
Analysis of Court order
The Calcutta High Court ruled that there was no basis for refusing to refer the dispute to arbitration before this Court because the MOU signed by the parties contained an arbitration clause. Justice Sabyasachi Bhattacharyya sat on a single bench.
The Court noted that because the word “may” in the 1996 Scheme allows for some discretion, it is not necessarily necessary to deny such a request in the event that the original or certified copy of the arbitration agreement is not filed. “A two-fold layer of protection has been given to an applicant who has technically failed to comply with all terms of Clause 3,” the court declared. Not only has the rejection been made voluntary, but the petitioner also has the choice to reapply after getting the Chief Justice’s approval to start a new reference even in the event of a denial.
In accordance with Section 11 of the Act, 1996, the Court granted the application to refer the dispute to arbitration and appointed an arbitrator. However, the Court made it plain that the Arbitrator will resolve on the merits any questions involving the arbitration clause, the MOU itself that contains the clause, and any other problems submitted by the parties.