The Calcutta High Court has allowed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, and appointed a sole arbitrator to adjudicate disputes arising from a 2007 agreement for sale of a flat at Shakespeare Sarani, Kolkata. Justice Gaurang Kanth held that at the stage of appointment of an arbitrator, the referral court cannot conduct an intricate enquiry into whether the underlying claims are barred by limitation, as that issue falls within the domain of the arbitral tribunal.
The Court appointed Sounak Bhattacharya as the sole arbitrator to adjudicate all disputes and differences between Bina Daga and another, and Chitrita Dey and others, arising out of and in relation to the Agreement for Sale dated March 27, 2007. The petition was accordingly allowed.
Background
The petitioners approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an arbitrator for disputes said to have arisen out of an Agreement for Sale dated March 27, 2007. The agreement related to purchase of Flat Unit No. 3D, measuring about 2832 sq. ft. super built-up area on the third floor of premises No. 12, Shakespeare Sarani, Kolkata, along with two car parking spaces. The agreed sale consideration was ₹55,10,000.
According to the petitioners, the entire sale consideration had been paid and possession of the flat was handed over to them in 2007. They contended that under Clause 2.3 of the Agreement for Sale, the respondents were required to complete the sale and execute the conveyance deed simultaneously with delivery of possession. However, the execution and registration of the conveyance deed were allegedly deferred from time to time.
The petitioners stated that Respondent No. 2 had forwarded a draft conveyance deed, but certain clauses were objected to by them. This led to meetings and exchanges between the parties, but the issues remained unresolved. The petitioners also alleged that conveyance deeds in respect of several other flats in the same premises had not been executed, preventing flat owners from forming an association or accessing maintenance-related records.
The petitioners later issued letters calling upon the respondents to execute the conveyance deed. Respondent No. 2, by a reply dated February 6, 2024, denied liability to execute the conveyance deed and stated that the obligation, if any, vested upon Respondent No. 1. The petitioners then invoked the arbitration clause through a notice dated September 10, 2025 under Section 21 of the Act and proposed the name of an advocate as sole arbitrator.
The arbitration clause in the agreement named Mr. Pankaj Shroff, Advocate, as arbitrator, or such person as may be nominated by him. The petitioners, however, contended that he had acted on behalf of the respondents and was therefore ineligible to act as arbitrator in the dispute.
Petitioners’ Submissions
The petitioners argued that all requirements under Section 11(6) of the Arbitration and Conciliation Act stood satisfied. They submitted that Clause 11.1 of the Agreement for Sale contained a valid and binding arbitration agreement and that the disputes arose directly out of the agreement.
They further submitted that the arbitration agreement had been duly invoked by issuing a Section 21 notice dated September 10, 2025, but the parties failed to reach consensus on appointment of an arbitrator. The petitioners also argued that the named arbitrator, Mr. Pankaj Shroff, Advocate, was ineligible under Section 12(5) of the Act as he had acted on behalf of the respondents.
On limitation, the petitioners contended that the disputes were not time-barred. They argued that though the Agreement for Sale was executed in 2007 and possession was handed over after payment of the entire consideration, the respondents continued to assure them that the conveyance deed would be executed and registered.
The petitioners relied on the Supreme Court’s decision in Ahmadsahab Abdul Mulla (2) v. Bibijan & Ors., reported as 2009 (5) SCC 462, to submit that for specific performance, limitation commences from the date on which the plaintiff has notice that performance has been refused. They argued that the clear refusal came only through Respondent No. 2’s communication dated February 6, 2024.
Respondent No. 2’s Submissions
Respondent No. 2 opposed the petition and argued that the disputes sought to be referred to arbitration were ex facie barred by limitation. It was contended that the Agreement for Sale was executed in 2007, possession was admittedly taken in the same year, and the conveyance deed was required to be executed simultaneously with delivery of possession.
Respondent No. 2 argued that the cause of action, if any, arose in 2007 and the claims raised after almost 18 years were barred under Article 54 of the Limitation Act, 1963. It further submitted that a court exercising jurisdiction under Section 11(6) can examine whether the claims sought to be referred are clearly time-barred.
Reliance was placed on Arif Azim Co. Ltd. v. Aptech Ltd., reported as 2024 (5) SCC 313, and Visa International Ltd. v. Continental Resources (USA) Ltd., reported as 2009 (2) SCC 55, to contend that the court may refuse reference where claims are demonstrably barred by limitation or where no live dispute exists.
No separate arguments were addressed on behalf of Respondent No. 1, who was described as the owner of the premises.
Court’s Analysis
Justice Gaurang Kanth noted that the principal objection raised by Respondent No. 2 was that the claims were ex facie barred by limitation and that reference should be refused on that ground. The Court observed that this objection was founded on the two-pronged test articulated in Arif Azim, under which the referral court was required to satisfy itself that the Section 11(6) petition was within limitation and that the underlying claims were not dead claims barred by limitation.
The High Court held that this position no longer represented the correct law after the Supreme Court’s decision in SBI General Insurance Co. Ltd. v. Krish Spinning, reported as 2024 SCC OnLine SC 1754, which clarified the second limb of the Arif Azim test in light of the seven-judge Bench decision in In Re: Interplay Between Arbitration Agreements under the Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899, reported as (2024) 6 SCC 1.
The Court quoted the Supreme Court’s clarification in Krish Spinning, including the following passage:
“Thus, we clarify that while determining the issue of limitation in exercise of the powers under Section 11(6) of the Act, 1996, the referral court should limit its enquiry to examining whether Section 11(6) application has been filed within the period of limitation of three years or not.”
The quoted passage further stated:
“As a natural corollary, it is further clarified that the referral courts, at the stage of deciding an application for appointment of arbitrator, must not conduct an intricate evidentiary enquiry into the question whether the claims raised by the applicant are time barred and should leave that question for determination by the arbitrator.”
Applying this position, the High Court held:
“The position of law as it stands today is therefore clear and admits of no ambiguity.”
The Court further observed that the jurisdiction of a referral court under Section 11(6) is confined to satisfying itself about the prima facie existence of a valid arbitration agreement and examining whether the Section 11(6) petition itself has been filed within three years under Article 137 of the Limitation Act, 1963.
The Court held that the second limb of the Arif Azim test requiring the referral court to examine whether the underlying claims are ex facie dead and time-barred stood clarified and overruled by Krish Spinning. It held that such questions fall within the exclusive domain of the arbitral tribunal.
Rejecting Respondent No. 2’s limitation objection at the referral stage, the Court held that whether the petitioners’ claims are time-barred would require determination of disputed factual questions, including the nature and scope of obligations under the agreement, the conduct of parties over the years, alleged continuing assurances, negotiation of the draft conveyance deed, and the exact point at which an unequivocal refusal was communicated.
The Court stated that these issues could not be decided in summary proceedings under Section 11(6) and left them open for decision by the arbitrator.
Findings Under Section 11(6)
The Court found that the conditions for exercising jurisdiction under Section 11(6) stood satisfied.
First, it held that there prima facie existed a valid and binding arbitration agreement between the parties in the Agreement for Sale dated March 27, 2007, covering disputes arising out of or in relation to the flat and the agreement.
Second, the Court noted that the named arbitrator, Mr. Pankaj Shroff, Advocate, was alleged to have acted on behalf of the respondents and was therefore prima facie rendered ineligible under Section 12(5) of the Act read with the Seventh Schedule. The Court held that the appointment mechanism under the agreement had failed, attracting jurisdiction under Section 11(6).
Third, the Court found that the petitioners had duly issued a Section 21 notice on September 10, 2025, which was received and responded to by the respondents, but no consensus could be reached on appointment of an arbitrator.
Fourth, the Court held that the petition had been filed within three years from the date on which the right to apply for appointment accrued, namely the failure to comply with the Section 21 notice.
Decision
Allowing the petition, the Calcutta High Court appointed Sounak Bhattacharya as the sole arbitrator to adjudicate all disputes and differences between the parties arising out of and in relation to the Agreement for Sale dated March 27, 2007.
The appointment was made subject to compliance with the disclosure requirements under Section 12 of the Arbitration and Conciliation Act, 1996. The Court also directed that the arbitrator would be entitled to fix remuneration in accordance with the Fourth Schedule to the Act.
The Court clarified that the arbitrator would be at liberty to consider all objections raised by the parties, including limitation of individual claims and maintainability, as preliminary issues after giving full opportunity of hearing to all parties. It also expressly left all questions on merits open.
Case Details
Case Title: Bina Daga and Anr. v. Chitrita Dey and Ors.
Case No.: AP 1 of 2026
Bench: Justice Gaurang Kanth
Reserved On: May 5, 2026
Delivered On: May 14, 2026
Petitioners’ Counsel: Mr. Shuvasish Sengupta, Mr. Lalit Baid, Mr. Akash Munshi, Mr. Tamoghna Saha, Ms. Sanjana Shaw, Mr. Kuldeep Das
Respondents’ Counsel: Mr. Aniruddha Chatterjee, Senior Advocate, Mr. Kushal Chatterjee, Ms. Sayanti Nandy
