Calcutta High Court Appoints Former Chief Justice As Arbitrator In Turner Morrison–Berger Paints Tax Dispute

The Calcutta High Court has appointed Justice T.S. Sivagnanam, former Chief Justice of the Court, as the sole arbitrator to decide a tax liability holdback dispute between Turner Morrison Limited and Berger Paints India Limited.

A Single Bench of Justice Shampa Sarkar held that objections based on limitation and contractual interpretation cannot be decided at the stage of appointing an arbitrator. The Court said such issues must be left to the arbitral tribunal, which is the “master of facts”.

The dispute arises from a Share Purchase Agreement executed in October 2019, under which Berger Paints acquired a 95.53% stake in STP Limited. Turner Morrison was the promoter shareholder. At closing, Berger Paints retained about Rs 1.77 crore from the consideration as a “Tax Liability Holdback Amount” to cover exposure from a pending income tax case.

That tax litigation related to assessment year 2011–12. It ultimately concluded through a departmental order dated July 7, 2025 under the Direct Tax Vivad se Vishwas Scheme. Turner Morrison claimed that, following the settlement, the holdback amount had to be released with interest. Berger Paints declined, leading Turner Morrison to invoke arbitration in November 2025.

Before the Court, Berger Paints argued that the claim was time-barred. It said the Tax Liability Holdback Period was only two years from the closing date of October 31, 2019, and that arbitration invoked in 2025 was beyond the three-year limitation period. The claim, it argued, had become “deadwood”.

Turner Morrison disputed this. It relied on Clause 5.9 of the SPA and contended that the holdback was linked to the outcome of the tax litigation, with losses and adjustments contemplated within a seven-year identified tax liability period. According to it, the cause of action arose only after final settlement of the tax dispute in July 2025.

Justice Sarkar held that the dispute turned on the interpretation of various clauses of the SPA. Such an exercise, the Court said, could only be undertaken by the arbitrator. “Whether the claim is deadwood or not cannot be decided at this stage. Limitation in this case will require a proper interpretation of the clauses,” the Court observed.

The court reiterated that its role at the referral stage is limited to examining the existence of an arbitration clause. A deeper inquiry into disputed facts or contractual meanings would defeat the purpose of arbitration as a speedy and time-bound remedy.

Finding that attempts at amicable settlement had failed and that a valid arbitration clause existed, the court allowed the application. All objections on jurisdiction, arbitrability, and limitation were expressly left open to be raised before the arbitral tribunal.

For Turner Morrison: Advocates Debanjan Mandal, Debayan Sen, Mahima Cholera and N. Ojha

For Berger Paints: Advocate Srinjoy Bhattacharya