Misconceived Section 9 & Section 11 Applications; Bar Should Take Necessary Steps, Spare Courts Of 'Unpleasant Duty': Calcutta High Court

Specifically, the Commercial Court was held to be not empowered to entertain applications under Section 9 of the Arbitration and Conciliation Act, 1996. Additionally, the bench held that the High Court lacked the authority to appoint an arbitrator in International Commercial Arbitration.

The bench held that:

“Court time is a valuable national resource. Our dockets are ever flowing. In a system, where the civil libertarian, pension seeker, motor vehicle accident claimant, octogenarian and undertrial are languishing before Courts, it is unfortunate how unscrupulous and dishonest litigants and their advisors manage not only to highjack the system but strangely find their matters on the top of any Roster. Both the proceedings before the Rajarhat Commercial Court and this Court are misconceived and a nullity. There is an inherent lack of jurisdiction in either of the Courts to entertain the respective applications. The mistake is so obvious that the same cannot be described as accidental or bonafide but only as deliberate, intentional and orchestrated for some sinister purpose.”

Brief Facts:

The Petitioner, a company incorporated under UAE laws, operates in Sharjah and Dubai, and primarily engaged in leasing oil drilling rigs. The Respondent, a company under the Companies Act, 2013, based in Calcutta, is also involved in the business of providing oil drilling rigs. Through a lease agreement in August 2016, the Respondent leased an oil and gas drilling rig, known as Rig No.38, from the Petitioner's predecessor, NOGSL Mauritius.

Following a Memorandum of Understanding in August 2021, the Petitioner acquired several rigs, including Rig No.38, from NOGSL. After the lease with Oil India Limited ended in February 2020, the Respondent re-hired Rig No.38. Allegedly, despite the lease termination, the Respondent neither returned the rig nor made any payments, resulting in a breach of agreement. Consequently, the Petitioner filed an application under Section 9 of the Arbitration and Conciliation Act, 1996 before the Commercial Court at Rajarhat, seeking interim relief. The Court restrained the Respondent from transferring the rig and appointed advocates from both parties as Joint Receivers.

Continuing, the Petitioner issued a notice under Section 21 of the Arbitration Act and invoked clause 29 of the agreement, requesting arbitration. The Petitioner approached the Calcutta High Court (“High Court”) and filed an application under Section 11 of the Arbitration Act.

Observations by the High Court:

The High Court referred to the Lease Agreement which included an arbitration agreement under Clause 29, which stipulates that any dispute between the parties, including those concerning the interpretation of the Agreement or any clause thereof, shall be settled through arbitration in accordance with the Indian Arbitration and Conciliation Act 1996.

Upon examination of the relevant provisions of the Indian Arbitration and Conciliation Act 1996, particularly section 2(f) defining "international commercial arbitration," the High Court noted that the Petitioner, being a company incorporated under the laws of UAE, fell within the scope of international commercial arbitration. Consequently, it held that the power to appoint an arbitrator under the Act lies with the Chief Justice of India or his delegate. Therefore, it held that any application before the High Court in this matter was misconceived and not maintainable. Additionally, an application under Section 9 of the Arbitration Act is also barred before any court other than the High Court.

During the proceedings, the Petitioner unequivocally admitted that the High Court lacked jurisdiction in this matter. Furthermore, the Petitioner's advocates signed unconditional apologies for filing the application before the High Court. Similarly, the Respondent's Senior Advocate confessed to an inadvertent error regarding jurisdiction.

The High Court acknowledged the principle that judicial pronouncements should be temperate and avoid agitation. However, there are times when plain speaking is necessary to maintain the integrity of the judicial system and instill confidence in it. While the High Court refrained from delving into whether the proceedings between the parties were collusive or not, it emphasized the importance of members of the Bar introspecting and taking necessary steps to spare the courts of unnecessary burden.

Considering the valuable national resource of court time and the influx of cases, the High Court held that both the proceedings before the Rajarhat Commercial Court and the High Court were misconceived and null.

Although punitive costs could have been imposed, the High Court exercised discretion in dismissing the case on the grounds of maintainability. However, a caution was issued to all advocates involved in the proceeding to refrain from similar actions in the future.

Case Title: Bmg Gulf Fzc Vs Quippo Oil And Gas Infrastructure Limited

Case Number: AP-COM/327/2024

Advocate for the Petitioner: Mr. Rishav Banerjee, Adv. Mr. A. K. Awasthi, Adv. Mr. S. Gole, Adv. Ms. P. Shaha, Adv. ..for the petitioner

Advocate for the Respondent: Mr. Abhrajit Mitra, Sr. Adv. Mr. Rishad Medora, Adv. Mr. A. Chakraborty, Adv. ..for the respondent

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