Lgw Industries Limited vs. Met Technologies Private Limited
Original PDF →Facts
LGW Industries Limited (the petitioner) filed an application before the High Court at Calcutta seeking the appointment of an arbitrator. The petitioner had entered into a leave and license agreement with MET Technologies Private Limited (the respondent) for a period of 11 months, which was renewed multiple times, with the last renewal on September 24, 2021. The petitioner claims unpaid license fees, amounting to over Rs. 73 lakhs plus interest at 18%, along with applicable GST, maintenance, and electricity charges. The licensed premises were subsequently attached by the Enforcement Directorate due to an investigation against the respondent. The leave and license agreement terminated, and despite notices and attempts to approach the respondent, the outstanding amount remained unpaid. The petitioner invoked arbitration on December 2, 2023, and again via email on September 30, 2024. The respondent did not appear before the court despite substituted service.
Held
The Court held that a valid leave and license agreement with an arbitration clause was not in dispute, nor was the invocation of arbitration. The primary dispute concerned unpaid license fees and other charges, with the licensed premises now attached by the Enforcement Directorate, precluding any claim for recovery of possession. The Court found that an arbitral tribunal comprising three members was required to arbitrate the dispute as per the agreement's dispute resolution clause. The clause stipulated that each party would nominate one arbitrator, and these two would jointly appoint a third arbitrator as Chairman. The Court noted that the petitioner had nominated Mr. Raj Mohan Chattaraj as their arbitrator. The Court directed that Mr. V.V.V. Shastri would act as the respondent's nominee, and both nominated arbitrators were to appoint the third, presiding arbitrator. The arbitrators were also directed to make necessary disclosures under Section 12 of the Arbitration and Conciliation Act, 1996, and fix their remuneration as per the Act's schedule. All points of dispute were left open to be raised before the arbitral tribunal. The application was disposed of accordingly.
Key Issues
1. Whether the Court should appoint an arbitrator to resolve the dispute arising from the unpaid license fees and other charges under the leave and license agreement, as per Section 11 of the Arbitration and Conciliation Act, 1996? The petitioner argued that a valid leave and license agreement with an arbitration clause existed, and a dispute regarding unpaid dues had arisen. They contended that the respondent had failed to pay the amounts due, necessitating arbitration. The petitioner relied on the arbitration clause within the agreement, which stipulated that any dispute would be referred to arbitration. The petitioner also highlighted that they had already nominated their arbitrator. The respondent did not appear before the Court, and therefore, no arguments were recorded on their behalf.
Sections Cited
Section 11, Section 12
AI-generated summary — verify with the full judgment below
OCD –3 ORDER SHEET
AP-COM/1078/2024 BEFORE: The Hon'ble JUSTICE SHAMPA SARKAR Date: 27th January, 2025. Appearance: Mr. AryakDutt,Adv.
Mr. Dipankar Das, Adv. Mr. RajashreeBhowmick, Adv.
…. for the petitioner
The Court:Affidavit of service is taken on record. The service through speed post was not satisfactory. However, the Court took note of service by e- mail. Under such circumstances, the petitioner was directed to effect substituted service by making insertions in newspapers. Insertions in the Time of India and Ei Samay have been made. Despite such substituted service, none appears on behalf of the respondent. The court has to proceed ex-parte. This is an application for appointment of an arbitrator. The petitioner entered into a leave and license agreement with the respondent for a period of 11 months. Such Leave and License agreement was 2
renewed from time to time and lastly on September 24, 2021. It is submitted that the licensedpremises was attached by the Enforcement Directorate, pursuant to an investigation against the respondent. However, the petitioner has a claim of more than Rs. 73 lakhs together with interest at the rate of 18% on account of unpaid license fees. The monthly licensefee was Rs. 9,89,350/- together with applicable GST, maintenance, electricity charges and other charges. Steps were not taken for renewal of the Leave and License. The leave and license agreement stood terminated. Notice was issued by the petitioner. The petitioner approached the respondent. The respondent did not pay the sum demanded. Accordingly, a notice invoking arbitration was sent on December 2, 2023 and again by e-mail on September 30, 2024. The fact that Leave and License agreement had been entered into between the parties, is not in dispute. The same was renewed from time to time and lastly on 24th September, 2021. The existence of an arbitration clause is not in dispute. The invocation of arbitration is not in dispute. The dispute is with regard to the claim for unpaid license fees and it is fairly submitted that the licensed premises is now attached by the Enforcement Directorate.Hence, no claim for recovery of possession has been made. It appears that an arbitral tribunal comprising of three members, is required to arbitrate upon the dispute between the parties. The dispute resolution clause states as hereunder:-
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“52:-Any dispute between the parties arising out of or connected with this Agreement of Leave and license shall be referred to and finally determined by arbitration, each party shall be entitled to nominate one arbitrator and both the arbitrators nominated by both parties shall jointly appoint a third arbitrator as Chairman. The Arbitration shall be held as per the provisions of the Arbitration and Conciliation Act, 1996 and shall be held in Kolkata. The arbitral award shall be final and binding upon the parties.”
The petitioner has already nominated its arbitrator, namely, Mr. Raj Mohan Chattaraj, learned Advocate, Calcutta High Court. Thus, Mr. Raj Mohan Chattaraj will act as the petitioner’s nominee. Mr. V.V.V. Shastri, learned advocate will act as the respondent’s nominee and both the learned arbitrators shall nominate the third arbitrator, who shall be the presiding arbitrator (Chairman as per the clause). The learned arbitrators shall make necessary disclosure as per Section 12 of the Arbitration and Conciliation Act, 1996. The learned Arbitrators shall fix their remuneration in terms of the schedule of the said Act. All points are left open. The parties shall raise all points before the arbitral tribunal. The application is accordingly disposed of.
(SHAMPA SARKAR, J.)
TR/
Reproduced from the public record of the Calcutta High Court. Verify against the court's own copy before relying on it. Income tax judgments are on bharattax.net.