Probable Defence Of Defendant Cannot Be Examined While Considering Application U/S 8 Arbitration Act: Calcutta High Court

​The Bench of Justice Aniruddha Roy observed, “The plaint ultimately may succeed, may fail at the trial. At this stage while adjudicating a Section 8 application, this Court is not at all required to consider the merit of the case and counter case of the parties in the light of averments made in the plaint. This court shall also not consider the probable defence of the defendant at Section 8 stage. Since the plaintiff has claimed specific performance by way of execution of a lease agreement for a period of ten years with effect from April 1, 2023 on the basis of the said three correspondences already referred to above, this Court is of the considered and firm view that, such claim of the plaintiff is not in connection with the said expired lease which contains the arbitration clause.”

Senior Advocate Sabyasachi Choudhury appeared on behalf of the Plaintiff, whereas Advocate Sayantan Bose appeared for the Defendant.

Facts of the case

An application under Section 8 of the Arbitration and Conciliation Act, 1996 (“Arbitration Act”) was filed by the Defendant/Landlord in the instant suit filed by the plaintiff/lessee.

The dispute centres on premises originally owned by Williamson Magor, later transferred to HDFC Limited, and currently held by the Defendant following a corporate merger in March 2023. The Plaintiff occupied the premises under a nine-year "parent lease" executed in 2014, which officially expired in 2023. Despite the expiry, the Plaintiff remains in continuous possession and claims that the Defendant's continued acceptance of rent implies consent to their stay.

The Plaintiff further asserted that correspondence exchanged in May 2022—prior to the lease expiry—constitutes a concluded contract for a 10-year renewal. Conversely, the defendant served an eviction notice in September 2023, citing the Banking Regulation Act as the reason they must take possession. Consequently, the Plaintiff has filed suit seeking specific performance to force the execution of a new lease, alongside an injunction to prevent eviction and protect their possession of the property.

Contentions of the parties

It was submitted by the Defendant/Landlord that on expiry of the said parent lease, both parties might enter into a fresh lease on such terms as might be mutually agreed. Such a lease, if any, should have been arrived at and executed at least two months before expiry. Since the parties had not been able to execute the said lease within the aforesaid period of time, the lessee, being the Plaintiff, should have vacated the demised premises on expiry.

The Plaintiff submitted that the plaint case was very limited to the extent that by virtue of the said three correspondences, as referred to in prayer (a) to the plaint, having being exchanged by and between the parties much prior to the expiry of the parent lease, the parties had entered into a concluded contract under which the plaintiff has been allowed to be in possession and the defendant has been accepting rent and allied charges from the plaintiff. Therefore, the Plaintiff claimed specific performance of the said concluded contract by executing and registering a renewal deed of lease in relation to the said premises.

Observations of the Court

The Court said, “On a meaningful and plain reading of the plaint in the instant case, it appears to this Court that the parent lease had expired on March 31, 2023 and much prior thereto the three correspondences, referred to by the plaintiff, were exchanged by and between the parties. The substance of the said correspondences are that the plaintiff wanted a renewal of the lease for another ten years and the landlord, then being the predecessor in interest of the defendant, agreed in principle for renewal of the lease in favour of the plaintiff. The terms and conditions of renewal mentioned in the correspondences are not relevant at this stage, to discuss.”

“As the lease has admittedly expired on March 31, 2023 and since the lease was not renewed before the expiry, subsequently there was no scope for renewal of the lease. The parties would have to enter into a fresh lease, if were willing to do so. The moment the parent lease stands expired, question of renewal does not arise. The submission made on behalf of the defendant that the plaintiff claims renewal of the lease, is therefore, without any substance and basis of law. Prayer (a) to the plaint shows that the plaintiff claims for decree for specific performance of contract for execution of lease in relation to the said premises with effect from April 1, 2023 on the basis of the said three correspondences, which clearly shows that the plaintiff claims for execution of a lease. The subsequent prayers are consequential.”, the Court held.

Conclusion

It was concluded that while adjudicating a Section 8 application, the Court is not at all required to consider the merit of the case and counter-case of the parties in the light of averments made in the plaint. The court shall also not consider the probable defence of the Defendant at the Section 8 stage.

Accordingly, the Court dismissed the application.

Cause Title: The New India Assurance Company Limited vs HDFC Bank Limited [IA No. GA-COM/2/2025 In CS-COM/41/2025]

Appearances:

Plaintiff: Senior Advocate Sabyasachi Choudhury, Advocates Rajdeep Bhattacharya and Shreyaan Bhattacharya

Defendant: Advocates Sayantan Bose, Soorjya Ganguli, Pooja Chakrabarti and Prithwish Roy Chowdhury

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