Calcutta High Court Refers Reliance Entities' Telecom Tower Lease Dispute To Arbitration, Leaves Objections Open

The Calcutta High Court has referred a telecom tower lease dispute to arbitration. It declined to decide, at the referral stage, whether non-signatory Reliance group entities were bound by the arbitration clause or whether past dues stood extinguished under the Insolvency and Bankruptcy Code (IBC).

Justice Shampa Sarkar held that such objections raise triable jurisdictional issues. These must be decided by the arbitral tribunal. The court reiterated that its role under Section 11 of the Arbitration and Conciliation Act, 1996, is limited to a prima facie examination of the existence of an arbitration agreement.

“The scope of the referral court is limited to the, prima facie, satisfaction as to the existence of an arbitration agreement or an arbitration clause. No deeper probe or mini trial is permissible at this stage,” the court said.

The dispute arises from a lease deed dated July 17, 2003. It was executed by Indrani Sarangi in favour of Reliance Infocomm Limited for the installation of a telecom tower. The lease contained an arbitration clause. It defined the “lessee” to include successors and assignees.

The lease was amended on November 10, 2014. Reliance Infratel Limited was incorporated as the lessee in place of Reliance Infocomm Limited.

Reliance Infratel later entered the Corporate Insolvency Resolution Process. Reliance Projects and Property Management Service Limited emerged as the successful resolution applicant. It took over the company with effect from December 22, 2022.In May 2023, it transferred the passive telecom infrastructure business to another Reliance group entity.

The lease expired on July 31, 2023. Sarangi thereafter claimed arrears of rent, enhanced rent under the escalation clause, and occupation charges. She alleged that the respondents continued to occupy the property and operate the telecom tower even after the lease had expired.

Reliance Projects disputed the claims. It argued that it had acquired the assets on a “clean slate” basis under the approved resolution plan. It contended that all past liabilities stood extinguished. It also claimed that a later settlement novated the original lease and arbitration clause. The respondents asserted that they were non-signatories to the 2003 deed.

The court rejected the contention that the 2014 amendment deed was a separate, non-arbitrable agreement. It held that the amendment was not “distinct and severable from the lease agreement of 2003”.

On the insolvency defence, the court noted that the respondents remained in possession even after approval of the resolution plan and expiry of the lease. It held that “whether all debts were extinguished when the Respondent No. 1 came into the picture or not, is a triable issue ”.

The court also declined to rule, at the Section 11 stage, on whether the arbitration clause could bind non-signatory entities. It held that the issue must be decided by the arbitral tribunal under Section 16 of the Act.

Finding that a valid arbitration agreement prima facie existed, the High Court allowed the Section 11 petition. It appointed Advocate Chayan Gupta and Advocate Anuj Singh as nominee arbitrators, with Advocate Anirban Ray as the presiding arbitrator. All jurisdictional objections were left open.

For Petitioner: Advocates Diptomoy Talukder and Siddharth Shroff

For Respondents: Advocate Aniruddha Chatterjee, V.V.V. Sastry and Khushi Gupta