Calcutta High Court
Tata Capital Limited vs Bhubaneshwari Seafood Private Limited ... on 7 July, 2025
Author: Shampa Sarkar
Bench: Shampa Sarkar
ORDER OC-22
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/512/2025
TATA CAPITAL LIMITED
VS
BHUBANESHWARI SEAFOOD PRIVATE LIMITED & ORS.
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 7th July, 2025.
Appearance:
Mr. AvishekGuha, Adv.
Mr. AnkushMajumdar, Adv.
Mr. Adipta Kr. Pandit, Adv.
...for the petitioner
Mr. Abhik Das Sarma, Adv.
Mr. AnirudhaSingha, Adv.
...for the respondents
1. This is an application for appointment of an arbitrator on the strength of
clause 13 of the loan cum guarantee agreement for Term Loan dated
27.08.2022. The petitioner submits that it is a non-banking finance
company.In terms of the order of the National Company Law Tribunal,
Mumbai, Tata Capital Financial Services Limited and Tata Cleantech
Capital Limited merged with Tata Capital Limited.Thus, all properties,
assets, rights, benefits, interest, duties, obligations, liabilities, contracts,
agreements securities etc. of those two companies were transferred to the
petitioner with effect from January 1, 2024. Tata Capital Finance Services
Limited sanctioned a loan in favour of the respondents. The Term loan
agreement stood transferred by virtue of the order of the National
Company Law Tribunal, Mumbai. The respondent defaulted in payment of
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the loan.A loan recall notice for final dues in respect of loan disbursed to
the respondent, was issued on 11.04.2025.
2. In the recital of the agreement for business loan, the expression "lender"
included its heirs, successors and assigns. Despite the issuance of the
loan recall notice, no payment was made. The dispute resolution clause
provided that the dispute would be resolved by arbitration and the place of
the arbitration would be Kolkata. It appears that the petitioner had issued
a notice commencing arbitration on 30.04.2025, which was duly received
by the respondent. Even if the petitioner is a non-signatory to the
agreement, the petitioner had acquired all rights, liabilities, agreements,
business assets etc. of Tata Capital Financial Services Ltd. with effect from
January 1, 2024, by virtue of the order of an appropriate forum.
3. The petitioner also submits that appointment of an arbitrator, by the
petitioner company, is no longer permissible under the law. Hence, the
petitioner has approached this court.
4. The borrower did not respond to the notice invoking arbitration. Upon
merger of the two companies, the petitioner has been vested with all
rights, liabilities, assets etc. of the erstwhile lender. Thus, the application
for reference to arbitration in my, prima facie view, is maintainable at the
instance of the petitioner. Even if, the petitioner is a non-signatory, but in
view of the merger, the petitioner can invoke arbitration as the successor
of the erstwhile lender.
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5. In the matter of Ajay Madhusudan Patel v. Jyotrindra S. Patel,
reported in (2025) 2 SCC 147, the Hon'ble Apex Court held as follows:-
"82. An important factor to be considered by the courts and tribunals is
the participation of the non-signatory in the performance of the
underlying contract. In this regard, it was observed in Cox & Kings [Cox
& Kings Ltd. v. SAP India (P) Ltd., (2024) 4 SCC 1 : (2024) 2 SCC (Civ) 1 :
(2024) 251 Comp Case 680] as follows : (SCC pp. 75-77, paras 123 &
126-27)
"123. ... The intention of the parties to be bound by an arbitration
agreement can be gauged from the circumstances that surround the
participation of the non-signatory party in the negotiation,
performance, and termination of the underlying contract containing
such agreement. The Unidroit Principle of International Commercial
Contract, 2016 [Unidroit Principles of International Commercial
Contracts, 2016, Article 4.3.] provides that the subjective intention
of the parties could be ascertained by having regard to the following
circumstances:
(a) preliminary negotiations between the parties;
(b) practices which the parties have established between themselves;
(c) the conduct of the parties subsequent to the conclusion of the
contract;
(d) the nature and purpose of the contract;
(e) the meaning commonly given to terms and expressions in the
trade concerned; and
(f) usages.
***
126. Evaluating the involvement of the non-signatory party in the negotiation, performance, or termination of a contract is an important factor for a number of reasons. First, by being actively involved in the performance of a contract, a non-signatory may create an appearance that it is a veritable party to the contract containing the arbitration agreement; second, the conduct of the non-signatory may be in harmony with the conduct of the other members of the group, leading the other party to legitimately believe that the non-signatory was a veritable party to the contract; and third, the other party has legitimate reasons to rely on the appearance created by the non-signatory party so as to bind it to the arbitration agreement.
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127. ... The nature or standard of involvement of the non-signatory in the performance of the contract should be such that the non- signatory has actively assumed obligations or performance upon itself under the contract. In other words, the test is to determine whether the non-signatory has a positive, direct, and substantial involvement in the negotiation, performance, or termination of the contract. Mere incidental involvement in the negotiation or performance of the contract is not sufficient to infer the consent of the non-signatory to be bound by the underlying contract or its arbitration agreement. The burden is on the party seeking joinder of the non-signatory to the arbitration agreement to prove a conscious and deliberate conduct of involvement of the non-signatory based on objective evidence."
6. In the matter ofChloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., reported in(2013) 1 SCC 641, the Hon'ble Apex Court held as follows:-
"70. Normally, arbitration takes place between the persons who have, from the outset, been parties to both the arbitration agreement as well as the substantive contract underlining (sic underlying) that agreement. But, it does occasionally happen that the claim is made against or by someone who is not originally named as a party. These may create some difficult situations, but certainly, they are not absolute obstructions to law/the arbitration agreement. Arbitration, thus, could be possible between a signatory to an arbitration agreement and a third party. Of course, heavy onus lies on that party to show that, in fact and in law, it is claiming "through" or "under" the signatory party as contemplated under Section 45 of the 1996 Act. Just to deal with such situations illustratively, reference can be made to the following examples in Law and Practice of Commercial Arbitration in England (2ndEdn.) by Sir Michael J. Mustill:
'1. The claimant was in reality always a party to the contract, although not named in it.
2. The claimant has succeeded by operation of law to the rights of the named party.
3. The claimant has become a party to the contract in substitution for the named party by virtue of a statutory or consensual novation.
4. The original party has assigned to the claimant either the underlying contract, together with the agreement to arbitrate which it incorporates, or the benefit of a claim which has already come into existence ."5
7. In the matter of Cox & Kings Ltd. v. SAP (India) (P) Ltd.,reported in (2025) 1 SCC 611, the Hon'ble Apex Court held as follows:-
"31.
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169. In case of joinder of non-signatory parties to an arbitration agreement, the following two scenarios will prominently emerge : first, where a signatory party to an arbitration agreement seeks joinder of a non-signatory party to the arbitration agreement; and second, where a non-signatory party itself seeks invocation of an arbitration agreement. In both the scenarios, the referral court will be required to prima facie rule on the existence of the arbitration agreement and whether the non- signatory is a veritable party to the arbitration agreement. In view of the complexity of such a determination, the referral court should leave it for the Arbitral Tribunal to decide whether the non-signatory party is indeed a party to the arbitration agreement on the basis of the factual evidence and application of legal doctrine. The Tribunal can delve into the factual, circumstantial, and legal aspects of the matter to decide whether its jurisdiction extends to the non-signatory party. In the process, the Tribunal should comply with the requirements of principles of natural justice such as giving opportunity to the non-signatory to raise objections with regard to the jurisdiction of the Arbitral Tribunal. This interpretation also gives true effect to the doctrine of competence- competence by leaving the issue of determination of true parties to an arbitration agreement to be decided by the Arbitral Tribunal under Section 16."
8. Merger is a transaction that combines companies or assets. All assets and liabilities of the merging companies are transferred to the surviving entity, meaning that, the new combined company assumes all the rights and legal obligations of both the original companies. Further adjudication is left to the learned Arbitrator.
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9. Mr. Guha submits that under Clause 13 of the agreement for term loan, dispute and differences arose between the obligors and the lender in connection with the said loan agreement. The same must be settled by a sole arbitrator to be appointed as per the procedure prescribed under serial no. 18 of annexure 1 of the agreement, which provides that the place of arbitration shall be Kolkata and the Courts at Kolkata will have jurisdiction. Thus prayer is made for appointment of a sole arbitrator.
10. Mr. Abhik Das Sarma, learned advocate for the respondents submits that the application is not maintainable in its present form. The Master Terms and Conditions registered on December 31, 2018, which is referred to in the loan agreement was not entered into between the parties. The respondents did not consent to the registration of the same. The terms and conditions of the Master Terms and Conditions would not be binding on the respondents. It is further submitted that the petitioner issued a notice under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) and physical possession of the mortgaged properties have been taken. Nothing remains to be decided in the proceeding before the learned arbitrator. The petitioner had availed of an alternative remedy. The court should discourage multiplicity of proceedings and reject this application.
11. Considered the rival contentions of the parties, the issue of locus of the petitioner to seek arbitration as already discussed hereinabove, is kept 7 open for being decided by the learned arbitrator. The issue with regard to pendency of the proceeding under SARFAESI Act should debar the filing of this application, is answered in favour of the petitioner. The prayer for appointment of an arbitrator is not barred only because steps were taken under the SARFAESI Act. The scope of determination of dispute under the 1996 Act and adjudication under the SARFAESI Act are distinct and separate. The last issue raised by Mr. Sarma that the Master Terms and Conditions referred to in the agreement was not entered into between the parties and the contents of the same will not be applicable, is again a matter which can be decided by the Arbitrator.
12. However it, prima facie, appears to the Court that the Master Terms and Conditions was referred to in the loan agreement to define "Obligor" which term indicates the borrower, the security provider and the guarantor. These three categories of persons/individuals/entities were together known as obligors. The agreement refers to the predecessor in interest of the petitioner as a lender and the respondents as a obligors. The arbitration agreement is invoked under Clause 13 of the loan agreement and that clause was inserted with the knowledge and acceptance of the parties. The respondents have also signed the document/agreement, as borrower and guarantor. This, prima facie, observation persuades the Court to allow the application. The other issues raised by Mr. Das Sarma including the jurisdiction of the learned arbitrator to entertain the 8 disputes are left open for being decided at the appropriate stage, by the arbitrator.
13. Under such circumstances, this Court refers the matter to arbitration by appointing Ms. Noelle Banerjee learned Advocate, Bar Library Club,as the sole arbitrator, to arbitrate upon the disputes between the parties. The learned Arbitrator shall comply with the provisions of Section 12 of the Arbitration and Conciliation Act, 1996. The learned Arbitrator shall be at liberty to fix his/her remuneration as per the schedule of Arbitration and Conciliation Act, 1996.
14. This Court has not gone into the merits and has only passed this order on the, prima facie, satisfaction of existence of an arbitration clause.
15. AP-COM 512 of 2025 is disposed of accordingly.
(SHAMPA SARKAR, J.) TR/