Calcutta High Court
East Bengal Club vs Quess Corp Limited And Ors on 27 July, 2026
Author: Aniruddha Roy
Bench: Aniruddha Roy
In the High Court at Calcutta
Commercial Division
Original Side
Judgment (2)
PRESENT :
THE HON'BLE JUSTICE ANIRUDDHA ROY
IA NO. GA/2/2021
[OLD NO CS/151/2021]
In CS-COM/290/2024
EAST BENGAL CLUB
VS
QUESS CORP LIMITED AND ORS
For the plaintiff/
respondent : Mr. Shatadru Chakraborty, Sr. Adv.
Mr. Pritam Basu, Adv.
Ms. Apoorva Choudhary, Adv.
For the defendant no.1/
applicant : Mr. Ratnanko Banerji, Sr. Adv.
Mr. Saurodip Banerjee, Adv.
Mr. Aviral Dhirendra, Adv.
Ms. Pooja Tripathi, Adv.
Mr. Indradeb Saha, Adv.
Heard on : July 27, 2026
Judgment on : July 27, 2026
[In Court]
ANIRUDDHA ROY, J :
FACTS:
1. This is an application filed by the defendant no. 1 under Section
8 of the Arbitration and Conciliation Act, 1996 praying for
2referring the dispute between defendant nos. 1 and 2 and the
plaintiff to arbitration in terms of Clause 11.4 of the termination
agreement which is dated July 16, 2020 at page 81, Annexure-
“B” to the application (hereinafter, termination agreement).
2. The plaintiff has filed the instant civil suit with the following
reliefs:
“The plaintiff prays for leave to dispense with the provisions
of Section 12A of the Commercial Courts Act, 2015, leave
under Clause 12 of the Letters Patent, 1865 and leave under
Order II, Rule 2 of the Code of Civil Procedure, 1908 and
claims.
a) a decree of declaration that the plaintiff is not liable for the
claims of defendant nos. 5 to 14 as morefully stated in
paragraph 35 above;
b) a decree of declaration that Clause 4.4 (b) of the
termination agreement dated July 16, 2020 does not
extend to the claims of defendant nos. 5 to 14;
c) a decree of declaration that the defendant nos. 1 and 2 are
liable to indemnify the plaintiff for the claims of the
defendant nos. 5 to 14 morefully stated in paragraph 35
above as well as the claims which any other person has
made or may make against the plaintiff respect of Club
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Sporting Activities and/or contracts entered into by such
person with the defendant nos. 1 and/or 2, including all
costs and expenses incidental thereto;
d) a decree of declaration that the plaintiff is to
reimbursement from the defendant nos. 1 and 2 for all
payments made and/or costs incurred towards the claims
of defendant nos. 5 to 14;
e) a decree of mandatory injunction directing the defendant
nos. 1 and 2 to indemnify the plaintiff for the claims of
defendant nos. 5 to 14 morefully stated in paragraph 35
above as well as the claims which any other person has
made or may make against the plaintiff in respect of Club
Sporting Activities and/or contracts entered into by such
person with the defendant nos. 1 and/or 2, including all
costs and expenses incidental thereto;
f) a decree of mandatory injunction directing the defendant
nos. 1 and 2 to reimburse the plaintiff for all payments
made and/or costs incurred towards claims of defendant
nos. 5 to 14;
g) a of decree mandatory injunction directing the defendant
nos. 3 and 4 to proceed against the defendant nos. 1 and
2 in respect of the claims of defendant nos. 5 to 14 as well
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as the claims which any other person has made or may
make against the plaintiff in respect of Club Sporting
Activities and/or contracts entered into by such person
with the defendant nos. 1 and/or 2;
h) a decree of permanent injunction restraining the defendant
nos. 3 and 4 from acting upon or in furtherance to or
taking any action against the plaintiff in respect of the
claims of defendant nos. 5 to 14 as well as the claims
which any other person has made or may make against
the plaintiff in respect of Club Sporting Activities and/or
contracts entered into by such person with the defendant
nos. 1 and/or 2;
i) a decree of delivery up and cancellation of the orders
passed by the defendant nos. 3 and 4, being part of
Annexure “S” hereto and the same be adjudged null and
void;
j) a decree of delivery up and cancellation of the email dated
August 5, 2021 sent by the defendant no. 3 to the plaintiff,
being Annexure “Z” hereto and the same be adjudged null
and void,
k) Injunction;
1) Attachment;
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m) Receiver;
n) Costs; and
o) such further or other order(s) as to this Hon’ble Court may
deem fit and proper.”
SUBMISSIONS:
3. Mr. Ratnanko Banerji, learned Senior Advocate appearing for the
defendant no. 1 (hereinafter, applicant) being ably assisted by
Mr. Saurodip Banerjee, learned advocate submits that the
termination agreement was executed by and between the plaintiff
on the one hand and the defendant nos. 1 and 2 on the other
hand on July 16, 2020. The rights and liabilities of the plaintiff
and the applicant have been fructified under the said termination
agreement. The arbitration Clause being Clause 11.4 at page 96
to the petition is very vast and wide and the same, inter alia,
provides that in the event of any dispute, claim or controversy
arising under, or in relation to, the terms of the said agreement,
the parties shall use all reasonable endeavour to take steps
thereunder. The said Clause, on reading, would show that it is a
very specified arbitration clause within the meaning of the
Arbitration and Conciliation Act, 1996 (hereinafter, the
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4. Learned Senior Advocate Mr. Ratnanko Banerji appearing for the
applicant has then placed the plaint in its entirety. He submits
that the plaint case would reveal that the reliefs in the plaint can
only be decided after the rights and liabilities of the plaintiff and
the applicant having been ascertained and adjudicated under the
said termination agreement.
5. Mr. Banerji submits that it is true that only the plaintiff and the
defendant Nos. 1 and 2 are the parties to the arbitration
agreement and the rest of the defendants are not, but nonetheless
if the claims made against the rest of the defendants, are
considered in the light of the statements made in the plaint, it
would be evident that the subject matter of the present suit is
covered under the arbitration agreement and depends upon the
construction and interpretation of the said arbitration agreement.
Hence, Mr. Banerji prays for reference of the subject matter in the
suit before the arbitral tribunal.
6. Per contra, Mr. Shatadru Chakraborty, learned Senior Advocate
for the plaintiff has also drawn attention of this Court to the
averments made in the plaint and the reliefs claimed therein. He
submits that on a plain and meaningful reading of the plaint, it
would be evident that the claims made in the plaint are so
intertwined and the case pleaded in the plaint is so intertwined
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amongst the parties to the suit, which cannot be tried in a
segregated and fragmented manner.
7. The plaintiff has claimed an indemnity, inter alia, against
defendant Nos. 1 and 2 and as against some of the defendants,
namely the players, defendant Nos. 5 to 14, on the basis of
specific plaint case that the plaintiff is not liable to make any
payment to the players, as the termination agreement provides an
indemnity in favour of the plaintiff, at the behest of defendant
Nos. 1 and 2. This is an independent claim and not arising out of
the arbitration agreement.
8. After placing the plaint, in its entirety, Mr. Shatadru
Chakraborty, learned Senior Advocate appearing for the plaintiff
submits that primarily, against the party who is not a party to the
arbitration agreement, a suit is independently maintainable,
without referring the disputes to arbitration. In support, he has
referred to the following judgments:
(i) In the matter of: Sukanya Hodlings (P) Ltd. vs.
Jayesh H. Pandya and Another, reported at
(2003) 5 Supreme Court Cases 531;
(ii) In the matter of: Sundaram Finance Limited
and Another Vs. T. Thankam, reported at
(2015) 14 Supreme Court Cases 444;
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(iii) An unreported decision of the Hon’ble Supreme
Court In the matter of: Twilight Properties Pvt.
Ltd. and Another Vs. Romola Bhattacharjee
and Others, dated January 23, 2017, rendered
in Civil Appeal No. 879 of 2017 and
(iv) In the matter of: Smt. Manjushree Karnani Vs.
Raj Kumar Daga & Ors. dated September 20,
2016, rendered in GA No. 2534 of 2016 in CS
No. 152 of 2016.
9. Learned Senior Advocate Mr. Chakraborty then submits in the
facts and circumstances pleaded in the plaint, the bundle of facts
giving rise to the cause of action in favour of the plaintiff, would
show that the facts are so intertwined along with the claims in
the plaint, cannot be segregated and hence, reference for
arbitration is not permitted under the law. In support, he has
relied upon a decision of this Court In the matter of: Tirupati
Vancom Private Limited vs. James Glendye and Co. Private
Limited and Ors., dated March 6, 2026 rendered in IA No.
GA-COM/2/2025 in CS-COM/70/2025, reported at (2026) SCC
OnLine (Cal) 1598.
10. In the light of the above, learned Senior Advocate Mr.
Chakraborty prays for dismissal of the instant application.
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11. In reply, Mr. Ratnanko Banerji, learned Senior Advocate submits
that after the law having been laid down In the matter of:
Sukanya Hodlings (P) Ltd. (supra) and In the matter of:
Sundaram Finance Limited and Another (supra), Arbitration
Act was amended and the relevant law has been laid down by the
Hon’ble Supreme Court In the matter of: Emaar MGF Land
Limited Vs. Aftab Singh, reported at (2019) 12 Supreme
Court Cases 751.
DECISION:
12. After considering the rival contentions of the parties and on
perusal of the materials on record, at the outset, the relevant
provision from the Arbitration Act is quoted below:
“8. Power to refer parties to arbitration where there is
an arbitration agreement.
– [(1) A judicial authority, before which an action is
brought in a matter which is the subject of an
arbitration agreement shall, if a party to the
arbitration agreement or any person claiming
through or under him, so applies not later than
the date of submitting his first statement on the
substance of the dispute, then, notwithstanding
any judgment, decree or order of the Supreme
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Court or any Court, refer the parties to arbitration
unless it finds that prima facie no valid
arbitration agreement exists.] [Substituted by
Act No. 3 of 2016 dated 31.12.2015.]
(2) The application referred to in sub-section (1) shall
not be entertained unless it is accompanied by the
original arbitration agreement or a duly certified
copy thereof.[Provided that where the original
arbitration agreement or a certified copy thereof
is not available with the party applying for
reference to arbitration under sub-section (1), and
the said agreement or certified copy is retained by
the other party to that agreement, then, the party
so applying shall file such application along with
a copy of the arbitration agreement and a petition
praying the Court to call upon the other party to
produce the original arbitration agreement or its
duly certified copy before that Court.] [Inserted by
Act No. 3 of 2016 dated 31.12.2015.]
(3) Notwithstanding that an application has been made
under sub-section (1) and that the issue is pending
before the judicial authority, an arbitration may
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be commenced or continued and an arbitral award
made.”
13. Then, for the purpose of convenience, the arbitration clause is
quoted below:
“11.4. Dispute Resolution: In the event of any
dispute, claim or controversy arising under, or
in relation to, the terms of this Agreement
(“Dispute”), the Parties shall use all reasonable
endeavours to negotiate with a view towards
resolving such Dispute amicably. If a party
gives the other Parties notice that a dispute has
arisen (a “Dispute Notice”) and the Parties are
unable to resolve such Dispute amicably within
15 (Fifteen) days from the date of service of the
Dispute Notice (or such longer period as the
Parties may mutually agree prior thereto), then
the Dispute shall be referred to and finally
resolved by a sole arbitrator to be mutually
appointed by the parties to the Dispute. If the
sole arbitrator is not appointed within a period
of 30 (Thirty) days from the expiry of the
aforesaid 15 (Fifteen) day period, the
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arbitration shall be conducted by an arbitration
panel that shall consist of 3 (Three) arbitrators,
comprising of 1 (One) arbitrator appointed by
the Investor and 1 (One) arbitrator appointed by
the Club. The 2 arbitrators so appointed will
appoint a third arbitrator, who shall also serve
as the Chairperson of the arbitration panel. The
seat of arbitration shall be Kolkata, India and
the arbitration proceedings shall be governed by
the provisions of the Arbitration and
Conciliation Act, 1996 as amended from time to
time. All arbitration proceedings shall be
conducted in English. The arbitration award
shall be final and binding on the Parties and
shall be enforceable in any competent court of
law, and the Parties agree to be bound thereby
and to act accordingly.”
14. The fundamental principle to adjudicate an application filed
under Section 8 of the Arbitration Act, the statements made in
the plaint and the reliefs claimed, are to be looked into, as it
stands and by taking the same to be true and correct.
15. The specific plaint case is that there was a working arrangement,
agreed by and between the plaintiff and the defendant Nos. 1 and
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2, for the purpose of running East Bengal Club engaging and
employing the players for conducting various tournaments.
Ultimately, the understanding failed, when the plaintiff and the
defendant Nos. 1 and 2 finally executed the termination
agreement dated July 16, 2020. The first few paragraphs in the
plaint are recital of facts as to why and how the termination
agreement was brought into existence and the reasons for
execution of the same.
16. The specific averment in paragraph 28 of the plaint, that to
further signifying that there was no natural continuity of
contracts entered into by the defendant No. 2, the termination
agreement in Schedule I Part A, clause 3 (c) contained a condition
that players who had entered into contracts with the defendant
No. 2, would have to execute fresh agreement with the plaintiff, in
the event, the plaintiff wished to retain their services and such
players would also have to obtain a No Objection from the
defendant No. 2 besides executing a mutual termination
agreement with the defendant No. 2.
17. The specific case in paragraph 29 of the plaint shows that it was
thus understood and agreed by and between the plaintiff and the
defendant Nos. 1 and 2 that any prior proceedings instituted
while the defendant No. 2 was running the operation of the club
stood resolved and/or the plaintiff was sufficiently protected
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and/or indemnified by the defendant Nos. 1 and 2 against the
possibility of any claims arising therefrom. The plaint further
pleads it was thus, expressly and/or impliedly agreed between the
plaintiff and the defendant Nos. 1 and 2 that if any proceedings
were to arise subsequent to the aforesaid date of termination
and/or if any liability were to accrue subsequent to the aforesaid
date of termination in respect of any contracts entered into by the
defendant Nos. 1 and/or 2 or in respect of any action taken by
the defendant Nos. 1 and/or 2 in respect of the club sporting
activities, the plaintiff would not be liable for the same and the
defendant Nos. 1 and/or 2 would be liable for the same and the
plaintiff stood indemnified to such extent by the defendant Nos. 1
and 2.
18. Further specific averments in paragraph 30 of the plaint that
notwithstanding the aforesaid representations and/or assurances
that there were no outstanding dispute between the defendant no.
1 and/or 2 and the East Bengal Club players and/or coaches
and/or staff members and/or erstwhile players and/or coaches
and/or staff members, since the last one year, the plaintiff has
been shocked and surprised to receive diverse monetary claims
from former players and/or coaches, including the defendant nos.
5 to 14. Such claims have been sent by the players and coaches,
including the defendant nos. 5 to 14 for which the plaintiff is not
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liable to make payment, to any of the aforesaid defendants.
Inasmuch as, inter alia, there is no privity of contract between the
plaintiff and such defendants and further, the defendant nos.1
and 2 had agreed to accept such liabilities, if any, and had
indemnified the plaintiff to such extent. The defendant nos.1 and
2 are bound by law to make such payment to the defendants.
19. In the light of the statements made in the plaint, if the reliefs
already quoted above from the plaint, are read meaningfully and
harmoniously, it appears to this Court that the specific case of
the plaintiff made out in the plaint, is that the plaintiff is entitled
to be indemnified by the defendant Nos. 1 and 2 and there is no
other agreement under which such claim is made other than the
said termination agreement, which contains arbitration clause.
20. The claims received by the plaintiff as quoted in the plaint, from
the players or coaches or staffs of the East Bengal Club for which
whether the plaintiff is liable to pay or not, shall depend upon the
interpretation and construction of the said termination
agreement. To come to a specific finding whether the plaintiff is
actually indemnified or not against the alleged claims lodged by
the players or others, interpretation, construction and extent of
application of the said termination agreement would be of
relevant consideration. If ultimately, it is found on an
interpretation and adjudication of the said termination agreement
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that the plaintiff is indemnified or not, then the consequence will
follow qua the claim of the players and others. For the purpose of
interpretation and construction of the said termination agreement
to arrive at a finding with regard to the rights and liabilities of the
plaintiff and the defendant Nos. 1 and 2 under the said
termination agreement, the parties must avail of the agreed
arbitration procedure under the said termination agreement.
Validity of the arbitration agreement has not been questioned by
any of the parties.
21. On a meaningful and harmonious reading of the statements made
in the plaint with reliefs claimed thereunder, this Court is of the
considered view that the cause of action pleaded by the plaintiff
in the plaint consisting of bundle of facts, which in the facts of
the case can be segregated and bifurcated. Firstly, an
adjudication shall have to take place to arrive at a finding with
regard to the rights and liabilities of the plaintiff and the
defendant Nos. 1 and 2 under the said termination agreement.
Depending upon such finding, all other rights and liabilities
between the other parties, at the second stage, the rights and
liabilities of the plaintiff can be decided qua the players or the
other claimants. Therefore, in the facts of this case, there is no
requirement to hold a composite trial, at this stage, on the basis
of the instant plaint, as it is framed.
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22. The law laid down by the Hon’ble Supreme Court In the matter
of: Sukanya Hodlings (P) Ltd. (supra) has subsequently,
undergone a sea change, on the basis whereof, Section 8 of the
Arbitration Act has been amended, with effect from October 23,
2015. The subsequent decision of the Hon’ble Supreme Court In
the matter of: Emaar MGF Land Limited (supra) would have a
reflection in this regard and the law has been clearly laid down
wherein the Hon’ble Supreme Court has observed as under:
“43. The Law Commission submitted 246th Report
“Amendments to the Arbitration and Conciliation
Act, 1996 in August, 2014. The Commission in its
Report has observed “judicial intervention in
arbitration proceedings adds significantly to the
delays in the arbitration process and ultimately
negates the benefits of arbitration”. Commission
referring to amendments, which were
recommended in Section 8 and 11 in paragraph
No. 33 stated following:
“33. It is in this context, the Commission has
recommended amendments to sections 8 and 11 of
the Arbitration and Conciliation Act, 1996. The
scope of the judicial intervention is only restricted
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to situations where the Court/Judicial Authority
finds that the arbitration agreement does not
exist or is null and void. In so far as the nature of
intervention is concerned, it is recommended that
in the event the Court/Judicial Authority is prima
facie satisfied against the argument challenging
the arbitration agreement, it shall appoint the
arbitrator and/or refer the parties to arbitration,
as the case may be. The amendment envisages
that the judicial authority shall not refer the
parties to arbitration only if it finds that there
does not exist an arbitration agreement or that it
is null and void. If the judicial authority is of the
opinion that prima facie the arbitration
agreement exists, then it shall refer the dispute to
arbitration, and leave the existence of the
arbitration agreement to be finally determined by
the arbitral tribunal. However, if the judicial
authority concludes that the agreement does not
exist, then the conclusion will be final and not
prima facie.” (emphasis supplied and in original)
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44. The Report of the Commission on amendment to
Section 8 as well as Note thereon contains a
Note, which is to the following effect:
“[NOTE: The words “such of the parties… to
the arbitration agreement” and proviso (i) of the
amendment have been proposed in the context of
the decision of the Supreme Court in Sukanya
Holdings Pvt. Ltd. v. Jayesh H. Pandya and Anr.,
(2003) 5 SCC 531, – in cases where all the parties
to the dispute are not parties to the arbitration
agreement, the reference is to be rejected only
where such parties are necessary parties to the
action – and not if they are only proper parties,
or are otherwise legal strangers to the action and
have been added only to circumvent the
arbitration agreement. Proviso (ii) of the
amendment contemplates a two-step process to be
adopted by a judicial authority when considering
an application seeking the reference of a pending
action to arbitration. The amendment envisages
that the judicial authority shall not refer the
parties to arbitration only if it finds that there
does not exist an arbitration agreement or that it
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is null and void. If the judicial authority is of the
opinion that prima facie the arbitration
agreement exists, then it shall refer the dispute
to arbitration, and leave the existence of the
arbitration agreement to be finally determined by
the arbitral tribunal. However, if the judicial
authority concludes that the agreement does not
exist, then the conclusion will be final and not
prima facie. The amendment also envisages that
there shall be a conclusive determination as to
whether the arbitration agreement is null and
void.]
(iii) In sub-section (2), after the words “duly
certified copy thereof” add “or a copy
accompanied by an affidavit calling upon the
other party to produce the original arbitration
agreement or duly certified copy thereof in a
circumstance where the original arbitration
agreement or duly certified copy is retained only
by the other party.”
[NOTE: In many transactions involving
Government bodies and smaller market players,
the original/ duly certified copy of the arbitration
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agreement is only retained by the former. This
amendment would ensure that the latter class is
not prejudiced in any manner by virtue of the
same.]
*** ***
*** ***
49. Prior to above amendment, this Court in several
cases has interpreted Section 8. Several
conditions for exercising power under Section 8
were laid down by this Court. In P. Anand
Gajapathi Raju and Others Vs. P.V.G. Raju (Dead)
and Others, (2000) 4 SCC 539, several conditions
were noticed by this Court, which are to be
satisfied before Court can exercise its power under
Section 8. In paragraph No.5, following has been
stated:
“5. The conditions which are required to be
satisfied under sub-sections (1) and (2) of Section 8
before the court can exercise its powers are:
(1) there is an arbitration agreement;
(2) a party to the agreement brings an action
in the court against the other party;
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(3) subject-matter of the action is the same
as the subject-matter of the arbitration agreement;
(4) the other party moves the court for
referring the parties to arbitration before it
submits his first statement on the substance of
the dispute.”
In Paragraph No. 8 of the judgment, it was further
stated that the language of Section 8 is
peremptory and it is, therefore, obligatory for the
Court to refer the parties to arbitration in terms of
their arbitration agreement.”
23. The unreported judgment of the Hon’ble Supreme Court In the
matter of: Twilight Properties Pvt. Ltd. and Another (supra)
where the Hon’ble Court refused to refer the subject matter of the
suit for arbitration where fraud was involved. This is also a
judgment dated January 23, 2017. However, the law is now well
settled that even fraud unless so egregious, can be adjudicated in
arbitration.
24. The ratio laid down by the Coordinate Bench In the matter of:
Smt. Manjushree Karnani (supra) would not apply in the facts
of the instant case. It was a dispute arising out of a partnership
firm. In the facts of this case, as discussed above, the cause of
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action is so distinguishable and severable, the adjudication can
be done and shall have to be done, primarily on the basis of
arbitration agreement between the plaintiff and the defendant
Nos. 1 and 2.
25. In the matter of: Tirupati Vancom Private Limited (supra), it
was held by this Court that on reading of the plaint, the cause of
action was found to be so intertwined amongst the defendants, it
could not be separated or segregated and as such, the suit was
held to be maintainable. Inasmuch, as this judgment was upheld
by the Division Bench of this Court by its judgment dated May
13, 2026 rendered in APOT/60/2026. Therefore, the ratio of the
judgment shall not apply in the facts of the instant case.
26. In view of the foregoing reasons and discussions, this Court is of
the considered and firm view that the subject matter of the
instant suit is covered under the arbitration agreement embodied
in the said termination agreement dated July 16, 2020.
27. Accordingly, the plaintiff and the defendant nos.1 and 2 stand
referred for arbitration and the parties to the arbitration shall
take steps, in accordance with law.
28. It is however made clear that, this Court has not expressed any
opinion on the merits of the claims and rival claims of the parties
and the parties shall be at liberty to take all their points before
the arbitral tribunal, in accordance with law.
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29. Resultantly, this application IA No.GA-COM/2/2021 stands
allowed, without any order as to costs.
(ANIRUDDHA ROY, J.)
Arsad/RS
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