SAMA Is Not Recognized Dispute Redressal Institution In Kolkata, Parties Should Have Approached Court Under Section 11: Calcutta High Court
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that SAMA, an Online Dispute Resolution (ODR) platform, is not an independent Dispute Redressal Institution duly recognized by the Government of India in Kolkata. Therefore, the bench held that party should approach the court for the appointment of an arbitrator in view...
The Calcutta High Court bench of Justice Sabyasachi Bhattacharyya has held that SAMA, an Online Dispute Resolution (ODR) platform, is not an independent Dispute Redressal Institution duly recognized by the Government of India in Kolkata. Therefore, the bench held that party should approach the court for the appointment of an arbitrator in view of disagreement.
Brief Facts:
Bhubaneshwari Seafood Private Limited (Petitioner) approached the High Court on an urgent basis and sought relief under Section 37 of the Arbitration and Conciliation Act, 1996 challenging an interim order issued by an arbitral tribunal that directed the attachment of all the Petitioner's bank accounts. The Petitioner, who is the respondent in the arbitral proceedings, contended that the arbitral tribunal lacked jurisdiction. The Petitioner argued that the arbitration clause in the agreement between the parties, Clause 23, mandated that disputes be resolved by arbitration before an independent Dispute Redressal Institution recognized by the Government of India. However, since the seat and venue of arbitration were confined to Kolkata, and there was no such independent institution recognized by the Arbitration Act in Kolkata, the Petitioner refused to agree to the appointment of an arbitrator by SAMA, a purported Dispute Redressal Institution. The Petitioner further argued that SAMA has no authority to conduct the arbitration and that the interim order for the attachment of the Petitioner's bank accounts exceeded the scope of the claim in the arbitral proceedings. Further, the Petitioner contended that the total amount in the bank accounts were not quantified before the attachment order was passed.
The Respondent, who initiated the arbitral proceedings, contended that SAMA is an independent Dispute Redressal Institution duly recognized by the Government of India and is reputed with a panel of approximately 500 arbitrators. The Respondent defended the jurisdiction and authority of SAMA to conduct the arbitration and supported the interim order for the attachment of the Petitioner's bank accounts.
Observations by the High Court:
The High Court noted that there is no recognized independent Dispute Redressal Institution in Kolkata under the Arbitration Act. Based on this, the High Court held that the Respondent should have approached the court under Section 11 of the Arbitration Act for the appointment of the arbitral tribunal given the disagreement between the parties.
The High Court held that it would be unreasonable to compel the Petitioner to submit to the authority of an institution that prima facie lacked statutory jurisdiction even though Section 16 of the Arbitration Act embodies the principle of kompetenz-kompetenz.
Regarding the impugned order, the High Court observed that the arbitral tribunal acted beyond its jurisdiction by attaching all the bank accounts of the Petitioner without quantifying the total amounts in those accounts or applying relevant tests to assess whether the Respondent had a strong prima facie case justifying such attachment. The High Court, however, acknowledged that the tribunal formed a prima facie opinion, and in balancing the interests of both parties, it found it appropriate to limit the scope of the attachment order.
The High Court ruled that the attachment of the Petitioner's bank accounts should be restricted to the amount of Rs. 36,29,860/- which was purportedly admitted by the Petitioner. This order was to remain in effect for four weeks or until further orders whichever was earlier. Additionally, the High Court restrained the arbitral tribunal from passing any final award within the same period.
Case Title: Bhubaneshwari Seafood Private Limited And Anr. Vs Ugro Capital Limited
Case Number: IA NO. GA-COM/1/2024 In APOT/296/2024
Mr. Jishnu Chowdhury, Adv. Mr. Abhidipto Tarafdar, Adv. Mr. S.K. Singhi, Adv. Ms. Riti Basu, Adv. Ms. Piyali Pan, Adv. . . .for the appellant/petitioner.
Mr. P. Sinha, Adv. Mr. Ritoban Sarkar, Adv. Mr. K.K. Pandey, Adv. . . .for the respondent.
Date of Judgment: 19th August, 2024