Srei Equipment Finance Limited vs. The Karur Vysya Bank
Original PDF →Facts
The petitioner, Srei Equipment Finance Limited, filed an application under Section 11 of the Arbitration and Conciliation Act, 1996, before the Calcutta High Court. The disputes arose from an Assignment Agreement dated January 17, 2019, and a Designated Account Agreement dated August 30, 2019. These agreements involved the petitioner opening a separate escrow account with the respondent bank, The Karur Vysya Bank, for designated customers. Disputes subsequently emerged between the parties concerning payments towards Goods and Service Tax (GST) amounts related to these designated accounts. The petitioner sought arbitration to resolve these disputes.
Held
The Court held that the disputes between the parties concerning amounts lying in the designated accounts, including those relating to GST payments, are live arbitral disputes. This finding is based on Clause 8.3 of the Assignment Agreement dated January 17, 2019, which broadly covers all disputes and differences arising out of or in connection with the agreement. The Court reasoned that the arbitration clause is comprehensive and intended to encompass all such disagreements. By the consent of both parties, the Court appointed Hon'ble Mr. Justice Sanjib Banerjee, a former Chief Justice of the Madras and Meghalaya High Courts, as the Sole Arbitrator. The appointment is subject to the Learned Arbitrator communicating his consent to the Registrar, Original Side of the Court within three weeks. The petitioner's Advocate on Record is directed to communicate this order to the Learned Arbitrator within 10 days.
Key Issues
1. Whether the disputes pertaining to GST amounts arising from the designated accounts are live arbitral disputes covered under the arbitration clause of the Assignment Agreement dated January 17, 2019? Petitioner's Argument: The petitioner contended that the disputes concerning GST payments, which originated from the contractual relationship established by the Assignment Agreement and the Designated Account Agreement, fall squarely within the scope of the arbitration clause. They argued that Clause 8.3 of the Assignment Agreement clearly stipulates that any disputes or differences arising out of or in connection with the agreement, including those relating to interpretation, shall be settled by arbitration. Respondent's Argument: The respondent bank did not record any specific arguments against the arbitration clause or its applicability in the judgment. The court noted that the disputes were live arbitral disputes covered under the arbitration clause.
Sections Cited
Section 11
AI-generated summary — verify with the full judgment below
ODC-3 IN THE HIGH COURT AT CALCUTTA ORDINARY ORIGINAL CIVIL JURI ICTION ORIGINAL SIDE
AP-COM/453/2024 BEFORE: The Hon'ble JUSTICE RAVI KRISHAN KAPUR Date : 9th May, 2024. Appearance: Mr. Swatarup Banerjee, Adv.
Ms. Sweta Gandhi, Adv. …for respondent.
The Court: This is an application under Section 11 of the Arbitration and Conciliation Act, 1996. The disputes between the parties arise out of a Assignment Agreement dated 17 January 2019 read with the Designated Account Agreement dated 30 August 2019. It is alleged that in view of the above arrangement between the parties, a separate escrow account was to be opened by the petitioner for designated customers with the respondent bank. Thereafter, in respect of such designated account, disputes in respect of payments towards the Goods and Service Tax (GST) amount have arisen by and between the parties. Clause 8.3 of the agreement dated 17 January 2019 provide as follows; “Any disputes of differences arising out of or in connection with the agreement during its subsistence or thereafter between the parties including any disputes and differences relating to the interpretation of the agreement or any clause thereof shall be settled by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) and Rules framed there under and any amendment, modification, statutory
2 enactment thereto from time to time. Arbitration shall be by a Sole arbitrator if Parties can agree upon one and failing that each Party shall appoint 1 (one) arbitrator and the 2 (two) arbitrators so appointed shall together select and appoint the third arbitrator, provided, however, that if the 2 (two) arbitrators so appointed are unable to appoint the third arbitrator by mutual consent within a period of 30 (thirty) days from the date of their appointment, the third arbitrator shall be appointed in accordance with the Arbitration Act. It is made clear that the venue of Arbitration proceedings will be at Kolkata and no objection shall be entertained from any parties in this regard. The cost of the Arbitration proceedings shall be borne by the parties to this Agreement. The award of the arbitrator shall be final, conclusive and binding on all the parties.”
The disputes between the parties are live arbitral disputes covered under the arbitration clause arising out of the above agreement pertaining to amounts lying in the designated accounts. By consent of the parties, Hon’ble Mr. Justice Sanjib Banerjee, (Former Chief Justice of the Madras and Meghalaya High Courts) is appointed as Sole Arbitrator subject to the Learned Arbitrator communicating his consent to the Registrar, Original Side of this Court within three weeks from date. The Advocate on Record of the petitioner shall forthwith communicate this order to the Learned Arbitrator within 10 days from the date of this order. With the aforesaid directions, AP-COM/453/2024 stands disposed of.
(RAVI KRISHAN KAPUR, J.)
SK.
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.