Mere Use Of The Word ‘Arbitration’ Or ‘Arbitrator’ In A Heading Or Clause Would Not Aggregate To An Arbitration Agreement: Calcutta HC
While holding non-existence of an arbitration agreement between the parties, the Calcutta High Court recently held that an arbitration agreement may be couched in various modes and forms, however, mere mentioning of the terms ‘arbitration’ or ‘arbitrator’ in a heading or existence of these terms in a scattered manner in clauses of agreements between parties do not aggregate to being an arbitration agreement.
There must exist a clear intention of the parties and a meeting of their minds to mandatorily submit any future dispute, that may arise, to arbitration. Such an intention should illuminate itself in the form of an explicit obligation that is binding between the parties and not merely a possibility that may materialise if the parties so decide after a fresh application of mind, post-facto occurrence of disputes.
The Respondents case was that there was no valid arbitration agreement entered into by and between the parties and there had to be a clear and unambiguous intention of the parties to refer a dispute to arbitration for the Court to appoint an arbitrator under section 11(6) of the Act.
The matter was heard at length by the Calcutta High Court and Justice Shekhar B Saraf, held that inference to an express arbitration agreement entered into by the parties cannot be taken just from mere use of words such as "Arbitrator" or "Arbitration" or merely a possibility that the parties "may" refer disputes to Arbitration at a future time. The arbitration agreement must be unambiguous and unequivocal regarding the intention of the parties to mandatorily refer disputes between themselves to arbitration. Accordingly, 3 applications preferred by the petitioner, Blue Star limited being AP No. 852 of 2022 (Blue Star Limited vs Rahul Saraf), AP No. 853 of 2022 (Blue Star Limited vs Multiplex Equipments and Services Private Limited) and AP No. 854 of 2022 (Blue Star Limited vs Forum Project Holdings Private Limited) were rejected.
Case Title: Blue Star Limited Versus Rahul Saraf (AP No. 852 of 2022)
Counsel for Petitioner: Mr. Avishek Guha, Adv; Mr. Sourajit Dasgupta, Adv; Ms. Akansha Chopra, Adv; Mrs. Debarati Das, Adv.
Counsel for Respondent: The litigation team was led by Managing Partner Mr. S. K. Singhi and assisted by Ms. Riti Basu, Principal Associate, Ms. Piyali Pan, Associate, Mr. Sayan Banerjee, Associate, Counsel Mr. Pranit Bag, Mr. Ishan Saha and Mr. Saunak Sengupta. (S.K. Singhi & Partners)