High Court Arbitration Judgment September 2024 on Arbitrability of Fraud under Section 11
Table of Contents
Key Takeaways from the Latest High Court Arbitration Judgment on Appointment of Arbitrator
1.P. State Road Transport Corporation and Ors. Vs. Brijesh Kumar & Anr.
Citation: U.P. State Road Transport Corporation and Ors. Vs. Brijesh Kumar & Anr., Petitions for Special Leave to Appeal C No. 10546/2019, Supreme Court of India, decided by Hon’ble Justice Pankaj Mithal, dated 20.08.2024.
The court emphasized the responsibility of the state transport authorities to ensure safety and adhere to regulatory standards. It highlighted the necessity for fair compensation to victims of accidents, reinforcing the principle of accountability in public service. The ruling underscored the judiciary’s role in protecting the rights of individuals affected by such incidents while promoting a culture of safety and responsibility in public transportation.
2. Shaileshbhai Ranchhodbhai Patel & Anr. Vs. State of Gujarat and Ors.
Citation: Shaileshbhai Ranchhodbhai Patel & Anr. Vs. State of Gujarat and Ors., Criminal Appeal No. 1884/2013 in Criminal Appeal No. 1885/2013, Supreme Court of India, decided by Hon’ble Justice Dipankar Datta and Hon’ble Justice Ujjal Bhuyan, dated 28.08.2024.
The Supreme Court quashed the FIR and criminal proceedings under Section 498-A IPC against the appellants (husband and in-laws), exercising its powers under Article 142 of the Constitution. The Court held that the High Court retains the power under Section 482 CrPC to quash FIRs and criminal proceedings even after the filing of a charge sheet, especially where the continuation of proceedings would amount to an abuse of process. In this case, the complainant had remarried in 2004 and showed no interest in pursuing the case, and the allegations were found to be vague and lacking in substance. The Court held that continuing the proceedings would serve no purpose and would only result in futile litigation and therefore quashed the FIR and all consequential proceedings.
This judgment is significant as it reaffirms the power of the High Courts to quash criminal proceedings at any stage to prevent abuse of the judicial process, particularly in matrimonial disputes where the parties have moved on and the allegations are not substantiated.
3. Tapas Ahmed Vs. The State of West Bengal
Citation: Tapas Ahmed Vs. The State of West Bengal, CRM (NDPS) 1052 of 2024, High Court of Callcuta, decided by Hon’ble Justice Arijit Banerjee and Hon’ble Justice Apurba Sinha Ray, JJ., dated 08.10.2024.
The court emphasized the seriousness of drug-related offenses & need for stringent adherence to legal procedures during arrests and investigations. The ruling highlighted the balance between upholding the law and protecting individual rights within the framework of the NDPS, reaffirming the judiciary’s role in ensuring justice
The Calcutta High Court heard the bail application of Tapas Ahmed, who was arrested on 3 April 2019 in connection with Park Street Police Station Case No. 50 of 2019 for alleged offences under NDPS Act. The petitioner sought bail on the ground of prolonged incarceration and argued that there was no recovery of contraband from his possession. The State opposed the bail, citing the seriousness of the offence and the stage of the investigation. The Court considered the length of custody, the nature of the allegations, and the absence of direct recovery from the petitioner. After hearing both parties, the Court granted bail to Tapas Ahmed, imposing stringent conditions to ensure his presence during trial and to prevent tampering with evidence or influencing witnesses.
4. Debabrata Ray Choudhuri Vs. The State Trading Corporation of India Limited
Citation: Debabrata Ray Choudhuri Vs. The State Trading Corporation of India Limited, Company Petition No. (IB) 242(PB)2020, NCLT Delhi bench, decided by Hon’ble Justice Manni Sankariah Shanmuga Sundaram, Member (Judicial) and Hon’ble Justice Dr. Sanjeev Ranjan, Member (Tehcnical), dated 26.07.2024.
The NCLT, dismissed the application under Section 9 of the IBC, 2016, seeking initiation of CIRP against the State Trading Corporation of India Limited for alleged non-payment of professional fees amounting to ₹6.26 crores. The Tribunal held that there was a pre-existing dispute between the parties regarding the amount claimed, as the Corporate Debtor had contested the calculation of fees and payments were made as per an approved fee schedule.
The NCLT relied on the Supreme Court’s decision in Mobilox Innovations Private Limited v. Kirusa Software Pvt Ltd., emphasizing that CIRP cannot be initiated where there is a genuine dispute prior to the demand notice. The Tribunal also noted that the operational creditor had withdrawn an earlier demand notice due to calculation errors, further casting doubt on the legitimacy of the claim.
5. BRS Ventures Investments Ltd. vs. SREI Infrastructure Finance Ltd. and Ors.
Citation: BRS Ventures Investments Ltd. vs. SREI Infrastructure Finance Ltd. and Ors., Civil Appeal No. 4565 of 2021, Supreme court of India, decided by Hon’ble Justice Abhay Shreeniwas Oka and Hon’ble Justice Pankaj Mithal, JJ., dated 23.07.2024.
The Supreme Court held that the liability of a corporate guarantor and the principal borrower is co-extensive under Section 128 of the Indian Contract Act, 1872, and that a financial creditor can initiate insolvency proceedings under the IBC against both the guarantor and the principal borrower, either simultaneously or separately.
In this case, the RP for Assam Company India Limited (ACIL), the corporate guarantor, was approved and provided for a payment of ₹38.87 crores to the financial creditor, SREI Infrastructure Finance Ltd., while the outstanding debt was ₹1428 crores. The Court held that the approval of the resolution plan and payment by the guarantor did not extinguish the liability of the principal borrower for the remaining debt. The creditor retained the right to recover the balance from the principal borrower. The Court further clarified that subrogation rights under Section 140 of the Contract Act do not arise unless the guarantor has discharged the entire debt, which was not the case here. Additionally, the Court held that a holding company cannot claim ownership over the assets of its subsidiary, and such assets cannot be included in the resolution plan of the holding company.
6. Gulsan Bibi and Ors. Vs. Swapan Kumar Ghos and Ors.
Citation: Gulsan Bibi and Ors. Vs. Swapan Kumar Ghos and Ors., W.P. (C) No. 15034 of 2024, High court of Orrisa Cuttack, decided by Hon’ble Justice Sanjay Kumar Mishra, dated 28.08.2024.
The Orissa High Court held that the inter-district transfer of motor accident claims cases under the Motor Vehicles Act, 1988, must be sought under Article 227 of the Constitution of India and not under Section 24 of CPC.
In this case, the petitioners, who were legal heirs of a deceased accident victim, sought the transfer of a claim case filed by the deceased’s children from another marriage (pending before the 5th MACT, Khordha) to the 1st MACT, Cuttack, where their own claim was pending. The Court observed that Rule 12 of the Odisha Motor Vehicles (Accident Claims Tribunal) Rules, 2019, empowers the District Judge to order intra-district transfers, but inter-district transfers can only be made by the High Court under Article 227. The Court clarified that MACTs are statutory tribunals and not subordinate courts under the CPC, making Section 24 CPC inapplicable. Accordingly, the Court directed the 5th MACT, Khordha, to transfer the case to the 1st MACT, Cuttack, for analogous hearing with the petitioners’ claim.
7. Arti Kanoongo & Ors V. Shrinathji Business Ventures Pvt Ltd
Citation: Arti Kanoongo & Ors V. Shrinathji Business Ventures Pvt Ltd, IA (IBC) No. 165/JPR/2023, NCLT Jaipur Bench, decided by Hon’ble Justice Shree Deep Chandra Joshi and Hon’ble Justice Shri Rajeev Mehrotra(T), dated 06.10.2023.
The NCLT dismissed the application filed by Arti Kanoongo & Ors. under Section 9 of the Insolvency and Bankruptcy Code, 2016, seeking initiation of the CIRP against Shrinathji Business Ventures Pvt Ltd. The Tribunal found that there was a pre-existing dispute between the parties regarding the operational debt, as the Corporate Debtor had contested the amount claimed and pointed out discrepancies in the invoices.
The Tribunal relied on the Supreme Court’s decision in Mobilox Innovations Private Limited v. Kirusa Software Pvt Ltd., holding that CIRP cannot be initiated when there is a genuine dispute about the debt prior to the demand notice. The Operational Creditors also failed to provide conclusive evidence of the debt or demonstrate a clear default under the IBC.
8. Tusharbhai Rajnikantbhai Shah Vs. State of Gujarat
Citation: Tusharbhai Rajnikantbhai Shah Vs. State of Gujarat, Petitions for Special Leave to Appeal Crl. No. 14489/2023, Supreme court of India, decided by Hon’ble Justice B.R. Gavai and Hon’ble Justice Mr. Justice Sandeep Mehta, dated 07.08.2024.
https://www.barandbench.com/news/supreme-court-gujarat-police-25000-arresting-accused-after-bail
The Supreme Court held Police Inspector R.Y. Raval and Additional Chief Judicial Magistrate Deepaben Sanjaykumar Thakar guilty of contempt for violating the Court’s interim anticipatory bail order granted to the petitioner, Tusharbhai Rajnikantbhai Shah, in a cheating case. Despite the Supreme Court’s order dated 08.12.2023 granting interim anticipatory bail, the petitioner was arrested on 11.12.2023 and remanded to police custody by the Magistrate, who failed to consider the bail order. The Court found that the police officer arrested the petitioner without seeking prior permission from the Court and that the Magistrate granted police custody in disregard of the Supreme Court’s order. The petitioner also alleged custodial torture, which was not properly inquired into by the Magistrate. The Supreme Court imposed a fine of ₹25,000 on the Police Inspector and accepted the Magistrate’s unconditional apology, noting her otherwise unblemished judicial record.
The court emphasized the importance of following due process and the need for a fair trial in criminal cases. It reinforced the principle that evidence must be evaluated within the framework of established legal standards to ensure justice. The ruling highlighted the judiciary’s role in safeguarding the rights of the accused while ensuring that the prosecution can present its case effectively, thereby upholding the integrity of the criminal justice system.
9. Choudappa and Ors. Vs. Choudappa Since Deceased by L.Rs. and Ors.
Citation: Choudappa and Ors. Vs. Choudappa Since Deceased by L.Rs. and Ors., Special Leave Petition (Civil) No. 3056 of 2023, Supreme court of India, decided by Hon’ble Justice Pankaj Mithal and Hon’ble Justice R. Mahadevan, dated 03.09.2024.
The Supreme Court held that an application for the determination of mesne profits pursuant to a decree is not barred by limitation and is a continuation of the original suit, not a fresh proceeding or execution. In this case, a decree for recovery of possession and correction of mutation entries was passed in 1973 with a direction for an inquiry into future mesne profits. The decree-holder filed an application in 2014-over 40 years later-seeking determination of mesne profits. The petitioners objected, arguing that the application was barred by limitation under Order VII Rule 11(d) CPC. The Supreme Court rejected this contention, holding that such an inquiry is in the nature of preparation of the final decree and cannot be dismissed on the ground of limitation, delay, or laches.
The Court relied on its earlier decision in Kattukandi Edathil Krishnan & Anr. v. Kattukandi Edathil Valsan & Ors. (2022), which held that proceedings for a final decree can be initiated at any time after a preliminary decree without limitation. The Court dismissed the appeal and allowed the petitioners to participate in the inquiry before the trial court regarding the determination of mesne profits.
10.K. Golam Lalchand v. Nandu Lal Shaw @ Nand Lal Keshri @ Nandu Lal Bayes & Ors.
Citation: S.K. Golam Lalchand v. Nandu Lal Shaw @ Nand Lal Keshri @ Nandu Lal Bayes & Ors., CIVIL APPEAL NO.4177 OF 2024, IN THE SUPREME COURT OF INDIA, decided by Hon’ble Justice PANKAJ MITHAL, J., dated 10.09.2024.
The Supreme Court dismissed the appeal filed by S.K. Golam Lalchand, upholding the decisions of the High Court and the First Appellate Court regarding the validity of a sale deed for a jointly owned property in Howrah. The Court held that the property, originally purchased jointly by Sita Ram and Salik Ram, remained undivided, as there was no evidence of partition or transfer of Salik Ram’s share to Sita Ram. The sale deed executed by Brij Mohan (Sita Ram’s son) in favour of Lalchand, purporting to transfer the entire property, was declared void except to the extent of Brij Mohan’s undivided share. The Court clarified that under Section 44 of the Transfer of Property Act, 1882, a co-owner can only transfer his own share in an undivided property. It further held that Nandu Lal Shaw, as a third party, was not required to seek cancellation of the sale deed under Section 31 of the Specific Relief Act, 1963, since the deed was void ab initio for the entire property. The appellant was permitted to pursue partition or compensation for Brij Mohan’s share but could not claim the entire property.
11.The General Manager Punjab National Bank and Ors. vs. Rohit Malhotra
Citation: The General Manager Punjab National Bank and Ors. vs. Rohit Malhotra, CM Appls. 24189/2024 and 24191/2024, High court of delhi, decided by Hon’ble Justice Manoj Jain, dated 12.09.2024.
The Delhi High Court dismissed petitions challenging orders of the NCDRC, holding that the Delhi High Court is not the appropriate forum for such challenges unless the cause of action arose in Delhi. The Court held that petitions under Article 227 of the Constitution against NCDRC orders must be filed in the jurisdictional High Court where the original cause of action arose, not in Delhi merely because the NCDRC is located there. The Court relied on the Supreme Court’s decision in Siddhartha S. Mookerjee v. Madhab Chand Mitter (2024), which clarified that jurisdiction is determined by the location of the original cause of action, not the situs of the appellate tribunal.
The High Court emphasized that the “cause of action” is the bundle of facts giving rise to the dispute, and subsequent legal proceedings do not create a fresh cause of action conferring jurisdiction on the Delhi High Court.
12.Arockiasamy Vs. The State of Tamil Nadu and Ors.
Citation: Arockiasamy Vs. The State of Tamil Nadu and Ors., Criminal Appeal No. 3808 of 2024 (Arising out of SLP (Crl.) No. 5805/2023), Supreme court of India, decided by Hon’ble Justice Hrishikesh Roy and Hon’ble Justice R. Mahadevan, dated 10.09.2024.
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The Supreme Court allowed the appeal filed by Arockiasamy, setting aside the order of the High Court which had quashed criminal proceedings against the respondents for alleged forgery and fabrication of documents related to a sale agreement. The issue was whether the bar under Section 195(1)(b)(ii) of CrPC. The High Court had quashed the proceedings on the ground that the civil litigation between the parties was still pending and that the alleged forgery related to documents produced in those proceedings.
The Supreme Court, relying on the precedent in Iqbal Singh Marwah & Another v. Meenakshi Marwah & Another, held that Section 195(1)(b)(ii) CrPC is attracted only when the alleged forgery or fabrication occurs after the document has been produced or given in evidence in a court proceeding, i.e., when the document is in custodia legis. In the present case, the alleged forgery occurred prior to the document being produced in court, and the relevant civil suits between the parties had already attained finality by 2021. Therefore, the statutory bar under Section 195(1)(b)(ii) CrPC was not applicable.
13.Golam Lalchand vs Nandu Lal Shaw @ Nand Lal Keshri @ Nandu
Citation: Sk. Golam Lalchand vs Nandu Lal Shaw @ Nand Lal Keshri @ Nandu, CIVIL APPEAL NO.4177 OF 2024, IN THE SUPREME COURT OF INDIA, decided by Hon’ble Justice Pankaj Mithal, Hon’ble Justice Sudhanshu Dhulia, dated 10.09.2024.
The Supreme Court dismissed the appeal, upholding the decisions of the High Court and the First Appellate Court regarding the validity of a sale deed for a jointly owned property in Howrah. The Court held that the property, originally purchased jointly by Sita Ram and Salik Ram, remained undivided, as there was no evidence of partition or transfer of Salik Ram’s share to Sita Ram. The sale deed executed by Brij Mohan (Sita Ram’s son) in favour of Lalchand, purporting to transfer the entire property, was declared void except to the extent of Brij Mohan’s undivided share.
The Court clarified that under Section 44 of the Transfer of Property Act, 1882, a co-owner can only transfer his own share in an undivided property. It further held that the respondents, as third parties, were not required to seek cancellation of the sale deed under Section 31 of the Specific Relief Act, 1963, since the deed was void ab initio for the entire property. The appellant was permitted to pursue partition or compensation for Brij Mohan’s share but could not claim the entire property.
14.Movie Time Cinemas Private Limited Vs. Chetak Cinema
Movie Time Cinemas Private Limited Vs. Chetak Cinema, S.B. Arbitration Application No. 48/2023, High court of Rajasthan at Jodhpur, decided by Hon’ble Justice Dr. Nupur Bhati, dated 11.09.2024.
The Rajasthan High Court allowed the application under Section 11(6) of the Arbitration and Conciliation Act, 1996, for appointment of a sole arbitrator to resolve disputes arising from a registered Lease Deed between petitioner and respondent. The dispute related to alleged interference by the respondent with the petitioner’s leased premises and removal of signage. The petitioner invoked arbitration through a legal notice but did not name an arbitrator. The Court held that Clause 12.10 of the Lease Deed constituted a valid arbitration agreement and that the failure to specify an arbitrator in the notice did not invalidate the invocation of arbitration. The Court emphasizes that at Section 11 stage, the Court’s role is limited to ascertaining the existence of an arbitration agreement and not delving into the merits of the dispute.
This judgment is significant as it clarifies that the invocation of arbitration is valid even if the notice does not name an arbitrator, provided there is a valid arbitration agreement. It reinforces the principle of minimal judicial interference at the referral stage and upholds the pro-arbitration framework by facilitating efficient and flexible resolution of commercial disputes through arbitration.
15.Sanjit Singh Salwan and Ors. Vs. Sardar Inderjit Singh Salwan and Ors.
Citation: Sanjit Singh Salwan and Others Vs. Sardar Inderjit Singh Salwan and Others, Appeal Under Section 37 of Arbitration and Conciliation Act 1996 No. 356 of 2024, High court of Allahabad, decided by Hon’ble Justice Arun Bhansali, & Hon’ble Justice Vikas Budhwar, dated 30.08.2024.
The Allahabad High Court held that disputes relating to the induction, removal, or management of trustees of a public charitable trust are not arbitrable and must be adjudicated under Section 92 of CPC. The case involved the Guru Tegh Bahadur Charitable Trust, where both parties claimed trusteeship and sought to invoke arbitration under an agreement. The Court held that Section 92 CPC is a special provision that requires judicial oversight for matters involving public trusts and overrides the general provisions for alternative dispute resolution. The Court further held that issues of jurisdiction cannot be waived by consent of the parties, and that the arbitrator’s award in such matters is void ab initio for want of jurisdiction. The High Court upheld the Commercial Court’s rejection of the Section 9 application and affirmed that the disputes in question were not capable of being resolved through arbitration.
This judgment is significant as it clarifies that disputes concerning the governance and management of public trusts, particularly those covered by Section 92 CPC, are non-arbitrable. It reinforces the primacy of judicial oversight in matters of public interest and provides important guidance for parties and courts on the limits of arbitrability in trust-related disputes.
16.Kunal Kamra V. Union of India
Citation: Kunal Kamra V. Union of India, Writ Petition (L) No. 9792 of 2023, High court of Bombay, decided by Hon’ble Justice G.S. Patel and Hon’ble Justice Dr. Neela Kedar Gokhale, dated 31.01.2024.
The Bombay High Court delivered a split verdict on the constitutional validity of Rule 3(1)(b)(v) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2023, which empowered a government-appointed Fact-Checking Unit (FCU) to identify and flag social media content related to government affairs as “fake, false, or misleading.” The petitioners, including comedian Kunal Kamra, challenged the rule as violative of Articles 14, 19(1)(a), and 19(1)(g) of the Constitution, contending that it incentivized intermediaries to censor content, lacked procedural safeguards, and created a chilling effect on free speech. Justice G.S. Patel held the rule unconstitutional for being vague, arbitrary, and lacking in procedural safeguards, noting that it imposed undue burdens on intermediaries and undermined democratic discourse. Justice Dr. Neela Kedar Gokhale dissented, upholding the rule as a proportionate restriction under Article 19(2) to combat misinformation. Subsequently, in a tie-breaker judgment, Justice A.S. Chandurkar concurred with Justice Patel, striking down the rule for violating Articles 14, 19(1)(a), and 19(1)(g), and emphasizing the rule’s overbreadth, lack of clarity, and absence of procedural fairness.
The court emphasized the importance of protecting individual rights to express opinions, even if controversial, while balancing them against legitimate state interests. It highlighted that any restrictions on free speech must meet stringent constitutional standards.
17.Adity A Birla Fashion and Retail Limited Vs. Mrs Saroj Tandon
Citation: Adity A Birla Fashion and Retail Limited Vs. Mrs Saroj Tandon, CM(M) 459/2023 and CM APPL. 13679/2023, High court of Delhi, decided by Hon’ble Justice Tushar Rao Gedela, dated 28.04.2023.
The High Court held that the process of pre-institution mediation under Section 12-A of the Commercial Courts Act, 2015 is mandatory not only for every commercial suit but also for any counterclaim involving a commercial dispute that does not contemplate urgent relief.
In this case, the petitioner (tenant) had issued a notice terminating the lease and demanded a refund of security deposit, which was not returned by the respondent (landlord). The petitioner-initiated pre-institution mediation, which was declared a non-starter as the respondent did not appear. After filing the suit, the respondent lodged a counterclaim for rental arrears without invoking pre-institution mediation. The petitioner sought rejection of the counterclaim under Order VII Rule 11 CPC, but the Trial Court dismissed the application, holding that pre-institution mediation was not mandatory for counterclaims. On revision, the High Court analyzed the scheme of the Commercial Courts Act and the CPC and held that a counterclaim is to be treated as a suit for all practical and procedural purposes. The Court clarified that the requirement of pre-institution mediation applies equally to counterclaims, and no distinction can be drawn merely because the parties already participated in mediation at the initial stage. However, the Court held that the requirement of rejection for non-compliance with Section 12-A is prospective from 20th August 2022. Since the counterclaim in this case was filed before that date, it was protected from rejection.
18.M/S Narana Cables and Chemicals … vs Mr Vijay Kumar M R
Citation: M/S Narana Cables and Chemicals … vs Mr Vijay Kumar M R, COMAP No. 256 of 2023, High court of Karnataka at Bengaluru, decided by Hon’ble Justice Alok Aradhe, dated 12.07.2024.
The Karnataka High Court held that a suit for recovery of money arising out of a commercial transaction fall within the definition of a “commercial dispute” under Section 2(1)(c) of the Commercial Courts Act, 2015.
In this case, M/S Narana Cables and Chemicals filed a suit for recovery of ₹1,78,79,997/- from the respondent. The trial court had questioned the maintainability of the suit under the Commercial Courts Act. On appeal, the High Court found that the dispute was indeed commercial in nature and that the Commercial Court had jurisdiction to entertain the suit. This judgment clarifies the scope of “commercial dispute” under the Commercial Courts Act, 2015 and affirms that money recovery suits arising from commercial transactions are maintainable before Commercial Courts. The ruling ensures that parties to commercial transactions have access to specialized forums for efficient adjudication of their disputes.
19.Suresh Vs. K. Vijayalakshmi and Ors.
Citation: S. Suresh Vs. K. Vijayalakshmi and Ors., C.M.P. Nos. 15880, 15892 of 2022, 16395, 16146, 16392 and 16144 of 2024, High court of Madras, decided by Hon’ble Justice V. Lakshminarayanan, dated 08.08.2024.
The Madras High Court dismissed the civil revision petitions seeking to re-open the trial to examine attesting witnesses of a sale agreement in a suit for specific performance. The plaintiff had alleged partial payment of consideration under a sale agreement dated 06.06.2011, while the defendant denied execution of the agreement. The Court held that a sale agreement is not a document requiring attestation under Section 72 of the Indian Evidence Act, 1872, and therefore, proving the signatures of attesting witnesses is not necessary. The agreement must be proved as if it were unattested, and the burden remains on the plaintiff to establish execution of the agreement. The Court also noted that the plaintiff had already failed to prove the agreement through earlier evidence and rejected the applications to summon attesting witnesses as an attempt to prolong the litigation.
The court clarified that sale agreements do not require attestation, and the examination of attesting witnesses is not mandatory for such documents. It reinforces the principle that the burden of proof in specific performance suits lies on the plaintiff and discourages dilatory tactics aimed at re-opening trials for irrelevant evidence.
20.Sanat Kumar v/s Sanjay Sharma
Citation: Sanat Kumar v/s Sanjay Sharma, 2024 LiveLaw (Del) 1075, High Court of Delhi, decided by Hon’ble Justice Prathiba M. Singh, dated 21.08.2024.
In matters involving sole proprietorship, only the sole proprietor can be held liable for dishonored cheques issued by the firm for repayment of any debt.
The Delhi High Court quashed the complaint and summoning order against Sanat Kumar under Section 138 of the Negotiable Instruments Act, 1881, in a cheque dishonour case. The dispute arose after Sanjay Sharma, the complainant, alleged that both Rajeev Kumar and Sanat Kumar had sought a loan of ₹25 lakh, and two cheques issued in repayment were dishonoured. Sanat Kumar challenged the proceedings, arguing that the loan was taken by “Regal Cruiser Travels,” a sole proprietorship owned solely by Rajeev Kumar, and that only the sole proprietor can be held liable for cheques issued by the firm. The High Court, relying on GST registration documents and established legal principles, held that in the case of a sole proprietorship, only the sole proprietor is liable for cheques issued by the firm for repayment of any debt. Since Sanat Kumar was neither the sole proprietor nor the drawer of the cheques, the essential ingredients for prosecution under Section 138 NI Act were not met against him.
21.Ranjit Guha Roy & Anr. V. Sankar Kumar Halder
citation: Ranjit Guha Roy & Anr. V. Sankar Kumar Halder , AP/861/2023, High court of Calcutta, decided by Hon’ble justice Sabyasachi Bhattacharyya, dated 27.08.2024.
The Calcutta High Court allowed the application under Section 11 of the Arbitration and Conciliation Act, 1996, for appointment of an arbitrator to resolve disputes arising from a development agreement between the petitioners (developers) and the respondent (landowner). The respondent opposed the application, alleging that his signature on the agreement was obtained by fraud and misrepresentation. The Court held that allegations of fraud and misrepresentation relating to the execution of the agreement are arbitrable issues and should be decided by the arbitrator, not by court at the stage of appointment under Section 11.
The Court further clarified that the existence of parallel proceedings in other forums does not bar the appointment of an arbitrator for civil disputes arising under the agreement. Accordingly, the Court appointed Mr. Shounak Mukhopadhyay as the sole arbitrator to adjudicate the disputes between the parties.
