Issues Of Misjoinder Of Parties & Incorporation By Reference Fall Within Purview Of Arbitral Tribunal: Calcutta High Court

Facts

The present application was for appointment of an arbitrator. The Petitioner was the owner of a roof in respect of a premises no. 243/2M Acharya Prafulla Chandra Road, Kolkata which was earlier owned by one Smt. Duija Devi Shaw (Petitioner's Predecessor in Interest). Smt. Duija Devi Shaw had entered into an agreement on January 19, 2001 with Usha Martin Telekom Limited for installation of a mobile tower, on the roof of the premises. The agreement specifically mentioned that, the same was for a period of 20 years from January 1, 2001 and ending on December 31, 2020 for a monthly licence fee of Rs. 18,000 (“Principal Agreement”). The Principal Agreement contained an arbitration clause. Clause 16.1 thereof provided that any difference or dispute arising out of the agreement shall be referred to arbitration. The parties agreed that the Courts at Calcutta would have jurisdiction.

A supplementary agreement dated May 14, 2014, was entered into between the Petitioner and the Respondent, who were both successors in interest of the original signatories to the Principal Agreement (“Supplementary Agreement”). It was contended by the Petitioner that the supplementary agreement, although commenced from May 1, 2014, it was co-existing, co-extensive and co-terminus with the Principal Agreement. Such fact was recorded in the supplementary agreement. The Petitioner submitted that all the terms and conditions in the Principal Agreement, including the arbitration agreement were agreed to be incorporated in the supplementary agreement. Thus, the arbitration clause was incorporated in the supplementary agreement by reference.

A dispute arose when the Respondent did not pay the rent from April, 2018. The agreement dated January 19, 2002, came to an end on December 31, 2020, due to efflux of time. The Petitioner alleged that the Respondent continued to be in illegal possession of the roof. The Petitioner invoked arbitration, by a letter dated February 10, 2021 which was later withdrawn. The Petitioner once again invoked arbitration and proposed the name of a learned Advocate, who would act as an arbitrator.

The letter was received by the Respondent on March 18, 2021. The Respondent replied to the letter on April 5, 2021. It was contended that the arbitration clause did not survive as the principal agreement had already expired. As the Respondent refused the proposal for reference of the dispute to arbitration, this application was filed.

Contentions

The Counsel for the Petitioner submitted that the disputes were required to be settled by arbitration, in terms of clause 16 of the agreement dated January 19, 2001. It was further contended that, in the Principal Agreement the expression “licensor” i.e. Duija Devi Shaw deemed to include her heirs, executors, administrators and assigns. Similarly, the expression “Licensee” i.e. Usha Martin Telekom Limited included its successors, administrators, liquidators, representatives and assigns.

Thus, the said agreement was binding upon the Petitioner and the Respondent, as successors of the erstwhile signatories to the Principal Agreement. The Counsel referred to the affidavit-in-opposition filed by the Respondent where it had accepted the fact that it had continued as the licensee of the premises in place and instead of Usha Martin Telekom Limited.

The Counsel further submitted that the Supplementary Agreement was agreed to be co-existing, co-extensive and co-terminus with the Principal agreement. Under such circumstances, the arbitration clause also became binding upon the parties as the same had been incorporated by reference in the supplementary agreement.

The Counsel for the Respondent submitted that the Supplementary Agreement did not contain an arbitration clause. The Principal Agreement which contained the clause had been executed between Smt. Duija Devi Shaw and Usha Martin Telekom Limited and neither the Petitioner nor the Respondent were signatories. Thus, the Respondent was not bound by the arbitration clause.

The Counsel further submitted that an arbitration agreement was a separate agreement. Even if the same was contained in the Principal Agreement, it was not incorporated by reference in the Supplementary Agreement. The later document should have specified that the parties agreed to be specifically bound by the arbitration clause contained in the principal agreement as well. A mere reference to the document which contained the arbitration agreement, could not be taken to be incorporation of the arbitration clause by reference in terms of Section 7(5), ACA.

Observations

The Court observed that the parties to the original agreement clearly understood that the agreement would be binding upon the heirs, executors, administrators and assigns of the licensor and the successors, administrators, liquidators, representatives and assigns of the licensee.

The Court observed that the Supplementary Agreement clearly indicated that the license of the demised premises continued with the Petitioner as the licensor and the Respondent as the licensee, on the basis of the Principal Agreement. Each and every term and condition of the said licence was made applicable by the parties, in respect of the Supplementary Agreement. The parties consciously adopted the Principal Agreement. The Supplementary Agreement was deemed to have commenced from May 1, 2014 and was co-existing, co-extensive and co-terminus with the Principal Agreement. Thus, the fact that the Respondent was continuing the premises under the same terms and conditions as those contained in the Principal Agreement was not in dispute.

The Court further held that the intent of the Respondent to be bound by the Principal Agreement was prima facie available from the records. The Respondent in its Affidavit-in -Opposition had admitted to have acted in terms of the Principal Agreement entered into with Usha Martin Telekom Limited. Thus, the Respondent stepped into the shoes of Usha Martin.

The Court observed that the law permits the arbitral tribunal to rule on its own jurisdiction. The issue of jurisdiction covers all questions including validity of the arbitration agreement, joinder of parties, scope of disputes referable etc. The referral court is to satisfy itself, prima facie as to the existence of an arbitration agreement and/or whether the parties chose to be bound by the same, thereby agreeing to refer all disputes between them to an independent and impartial private Tribunal.

The Court relied upon the judgments in Ajay Madhusudan Patel v. Jyotrindra S Patel (2025) 2 SCC 147, Cox & Kings Ltd. v. SAP (India)(P) Ltd. (2025) 1 SCC 611, amongst other in support of the position of law that the issue of non-joinder or misjoinder of parties falls within the domain of the arbitral tribunal.

The Court observed that it was of the prima facie view that both the parties were intrinsically connected with the Principal Agreement and chose to abide by the terms and conditions in their entirety. They had acted in furtherance of the said agreement. However, it left the final determination on the issue whether non-signatories to the Principal Agreement were bound by the terms and conditions of the Principal Agreement to the arbitral tribunal. The Court also held that the issue whether the supplementary agreement incorporated the arbitration agreement by reference was also a matter to be decided by the arbitration tribunal in view of the facts, circumstances and evidences.

Accordingly, the Court allowed the application and appointed Mr. Debjit Mukherjee as the Petitioner's nominee, Mr. Rajarshi Datta as the Respondent's Nominee and Mr. Saptansu Basu, Senior Advocate as the Presiding Arbitrator.

Case Title – Bimla Devi Jaiswal v. M/s Indus Towers Limited

Case No. – AP- 256 of 2021

Appearance-

For Petitioner – Mr. Shaunak Ghosh, adv.; Mr. Rajib Mullick, adv.; Ms. Ayantika Saha, adv.

For Respondent – Mr. Surojit Nath Mitra, Sr. Adv.; Mr. Arindam Chnadra, Adv.; Mr. Atish Ghosh, Adv.; Ms. Susmita Das, Adv.

Date – 30.06.2025

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