Calcutta High Court
Tata Capital Limited vs R.S. Enterprise And Ors on 24 February, 2026
Author: Shampa Sarkar
Bench: Shampa Sarkar
ORDER OCD - 19
IN THE HIGH COURT AT CALCUTTA
COMMERCIAL DIVISION
ORIGINAL SIDE
AP-COM/115/2026
TATA CAPITAL LIMITED
VS
R.S. ENTERPRISE AND ORS.
BEFORE:
The Hon'ble JUSTICE SHAMPA SARKAR
Date: 24th February 2026
Appearance:-
Mr. Avishek Guha, Advocate
Ms. Sonal Agarwal, Advocate
Ms. Arunika Dutta, Advocate
... for the petitioner.
1. The notice of motion and affidavit of service is taken on record.
2. The respondent no.1 is a proprietorship firm and the respondent no.2 is
the sole proprietor. Both the respondents have been served. Despite
service, none appears on behalf of the respondents.
3. This is an application for appointment of an arbitrator on the strength of
clause 12 of the Agreement for Channel Finance Facility. 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 respondent No. 1, the other respondents are the partners
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as well as the guarantors. The business loan agreement stood transferred
by virtue of the order of the National Company Law Tribunal, Mumbai.
The respondent defaulted in payment of the loan. A loan recall notice for
final dues in respect of loan dated April 4, 2024 disbursed to the
respondent, was issued on November 10, 2025.
4. 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 fact that the agreement was
handed over to the borrower is also on record. 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 December 13, 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.
5. 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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6. 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.”
7. In the matter of Chloro 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.
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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 .”
8. 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.
****
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.”
9. 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.
10. The petitioner submits that as on October 6, 2025, the claim was
Rs.46,09,446.04. Loan recall notices were also delivered to the
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respondents and as such, the respondents were aware of the disputes
having been raised by the petitioner and the respondent to the loan recall
notice. The intention of the petitioner to take recourse to adjudication of
the dispute under the Arbitration and Conciliation Act, 1996, is available
from the notice invoking arbitration. The notice invoking arbitration was
received by the respondents.
11. Under such circumstances, this Court refers the matter to arbitration by
appointing Mr. Shubrojyoti Mookherjee, 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 the Arbitration
and Conciliation Act, 1996.
12. All questions as to the arbitrability of the issues, admissibility of the
claims, locus of the petitioner to initiate proceedings, limitation etc. and
whether the arbitration proceeding should continue in view of the
pendency of the proceeding before the tribunal, shall be decided by the
learned arbitrator.
13. AP-COM 115 of 2026 is disposed of accordingly.
(SHAMPA SARKAR, J.)
S. Kumar
