JUDGMENT :

(Shekhar B. Saraf, J.) :

1. The instant application, being A.P. No. 358 of 2020, has been filed by the petitioner no. 1 under Section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as ‘the Act’) for appointment of an arbitrator to resolve the disputes that have arisen between the parties.

2. The pertinent facts are mentioned below :

Relevant Facts

a) The petitioner no. 1 is an online portal operating under the trade name and style of www.homelane.com and is carrying on the business of providing home owners with customised and efficient home designs. It has its registered office at 728, Grace Platina, 1st3rd Floor, CMH Road, Indiranagar Bengaluru-560038.

b) The petitioner no. 2 sells pre-designed modular kitchens and wardrobes online for projects in India. It has its registered office at 728, Grace Platina, 1st Floor, CMH Road, Indiranagar Bengaluru560038. The petitioner no. 2 entered into a scheme of demerger and amalgamation wherein the said company was demerged and amalgamated into the petitioner no. 1.

c) The respondent is a company providing office equipment and furniture on rental to corporates. It has its office at 103, B Wing, Satellite Gazebo, Andheri – Ghatkopar Link Road, Andheri East, Mumbai, Mumbai City, MH 400093 and 506, Inizio, Cardinal Gracious Road, Chakala, Andheri (East), Mumbai 400099.

d) The petitioner no. 2 had entered into a master rental agreement dated June 30, 2016 [hereinafter referred to as ‘the MRA’] to take office equipment and furniture on rent from the respondent. The petitioner no. 1, pursuant to the scheme of demerger and amalgamation continued to honour the Agreement. The petitioner no. 2 also issued a bank guarantee for a sum of Rs. 74,00,000 to the respondent through HDFC bank.

e) The respondent assigned the rents under the MRA to SREI and instructed the petitioner no. 2 to remit the rental amounts in part to SREI as specified in the invoices.

f) SREI requested HDFC to reduce the bank guarantee from Rs. 74,00,000 to Rs. 64,68,938, which was done by HDFC. Thereafter, the petitioner no. 1 requested the respondent and SREI to reduce the bank guarantee amount from Rs. 64,68,938 to Rs. 44,00,000. Accordingly, SREI issued a letter to HDFC, requesting them to reduce the bank guarantee amount from Rs. 64,68,938 to Rs. 44,00,000, but this was not ultimately executed.

g) The respondent invoked the bank guarantee to the tune of Rs. 64,68,938 despite requests from the petitioner to not encash the said bank guarantee and to reduce the same.

h) The petitioners sent a legal notice dated July 17, 2020 to the respondent which invoked the arbitration clause in the MRA. The respondent rebutted the petitioners’ claim and refused to refer the dispute to arbitration. The petitioner sent another notice dated September 10, 2020 re-iterating the arbitration clause. This time, the respondent did not respond. Thereafter, the petitioners have filed the instant application under Section 11 of the Act.

Rival Submissions

3. Mr. Krishnaraj Thaker, counsel appearing on behalf of the petitioners made the following submissions in seriatim :

a) Exhibit 2 of the MRA provides a mechanism for settlement of disputes through arbitration. The said clause is reproduced below –

“Arbitration : Any question disputes or differences that arises between the parties hereto in relation to/concerning the Rental Schedule no.__ of the Master Rental Agreement (MRA) dated __ and/or the assignment of any rights there under or as to the rights, duties, liabilities of parties thereto, or any of them, either during the continuance of the agreement or after termination or purported termination hereof shall be referred to arbitration of a sole arbitrator to be appointed by mutual consent of the Renter and the Assignee. The arbitration shall be conducted in accordance with the Arbitration and Conciliation Act, 1996, and the venue of such arbitration shall be in Kolkata’.

Ergo, the MRA between the parties has Kolkata