Authority: High Court at Calcutta, Civil Appellate Jurisdiction
Order Date: 07 Oct 2026
Case Overview
- Parties: Appellant – Bharat Sanchar Nigam Ltd (BSNL); Respondents – Joysri Sengupta (legal heirs of the deceased claimant Anjan Kumar Sengupta).
- Appeal filed as FMAT No. 219 of 2021 under Section 37(1)(c) of the Arbitration and Conciliation Act, 1996, challenging the judgment dated 16 Mar 2020 of the Additional District Judge, 5th Court at Barasat (Misc. Case No. 181 of 2016) which had upheld the arbitral award dated 13 May 2016.
- Background: A lease dated 5 Sep 1997 let premises at 47 & 47/1/1 Basudebpur Road, Shyamnagar (2,662 sq ft covered, 1,150 sq ft open) to the President of India (Calcutta Telephones) for a telephone exchange, later vested in BSNL.
- West Bengal Pollution Control Board ordered cessation of exchange operations by 31 Aug 2006; BSNL shifted exchange but left a diesel generator on site.
- BSNL’s notice on 23 Feb 2007 (Clause 7.1) sought lease termination effective 23 Aug 2007, offering vacant possession on 22 Aug 2007.
- Respondent filed Title Suit No. 66 of 2006 and Section 9 proceedings; an interim status‑quo order was later vacated.
- A Division Bench on 15 May 2008 permitted BSNL to dismantle the generator wall on condition of reconstruction; BSNL’s removal attempt failed.
- The Court appointed Sole Arbitrator Justice Chittatosh Mookerjee (order dated 4 Apr 2013, A.P. No. 404 of 2012). The arbitrator framed four issues: lawfulness of lease termination, liability for rent, liability for damages, and maintainability of BSNL’s counter‑claim.
- Arbitrator awarded on 13 May 2016.
- BSNL filed a Section 34 application on 7 Sep 2016; the District Court rejected it, finding no patent illegality and deeming the delay unexplained.
- BSNL’s arguments on appeal included: (i) supervening impossibility due to pollution board order rendering lease frustrated; (ii) Clause 7.1’s six‑month notice requirement was not strictly complied, constituting a hyper‑technical view; (iii) alleged improper award quantification (Rs 8 lakh plus 10% speculative damages) and perverse award of Rs 3 lakh costs.
- Respondent’s arguments emphasized limited scope of Section 34/37, plausibility of the arbitrator’s construction of the notice period, and that no new pleas (e.g., Section 106 of the Transfer of Property Act) could be raised at this stage.
Court Reasoning
- The Court affirmed that the Section 34 application was filed within the extended period (three months plus 30‑day condonable period) irrespective of whether receipt date was 13 May or 4 July 2016.
- Citing Ssangyong Engineering & Construction Co. Ltd. v. NHAI and Delhi Airport Metro Express (P) Ltd. v. DMRC Ltd., the Court noted that post‑2015 amendment makes patent illegality a ground, but found no such illegality.
- The Court held the arbitrator’s view that the six‑month notice was not fully complied was a “possible and plausible view” and not a patent illegality; thus no substitution of the Court’s view was permissible.
- Waiver of the notice period was not pleaded; the arbitrator correctly rejected a late‑raised waiver claim.
- The pollution board’s order did not render the lease void; BSNL continued to occupy the premises under a subsisting tenancy, so no breach of the Transfer of Property Act was established.
- The award’s assessment of damages (Rs 8 lakh plus 10%) was based on evidence, albeit rough, and did not shock the conscience; re‑appraisal of evidence is barred under Sections 34 and 37.
- The counter‑claim was dismissed on evidentiary grounds; the award of Rs 3 lakh costs to the substantially successful party was within the arbitrator’s discretion.
- New pleas (Section 106) raised for the first time in the appeal were inadmissible.
Final Outcome
- FMAT No. 219 of 2021 is dismissed.
- The judgment of 16 Mar 2020 (Misc. Case No. 181 of 2016) is affirmed.
- The arbitral award dated 13 May 2016 is upheld.
- All other pending applications, if any, are disposed of.
- No order as to costs.
Topics: Legal Appeal, Arbitration Award, Lease Dispute