Coastal Marine Construction And ... vs Garware-Wall Ropes Limited on 9 March, 2018
Bench: B.P. Colabawalla
JUDGMENT :- [ Per B. P. COLABAWALLA J ]
1. This Arbitration Petition has been filed under Section
Respondent under the sub-contract dated 14th June, 2013. There
binding arbitration to be held in Pune. The Arbitration Clause
jointly. This matter was argued before me on 5th February, 2018
written submissions. Accordingly, both parties have also filed
written submissions before me. Before I deal with the rival
are really undisputed. They are as follows:-
the aforementioned bank guarantees. In response
the Respondent as a repudiatory breach. Thereafter,
be settled by arbitration. The said clauses reads as
Each Party irrevocably submits to the non exclusive Jurisdiction
of the Court at Pune, Maharashtra State, India.
Arbitration
Any and all claims, disputes, questions or controversies involving
the parties and arising in connection with this Agreement or
execution, interpretation, validity, performance, termination
hereof which cannot be finally resolved by such parties
negotiation shall be resolved by final and binding arbitration held
in Pune. The disputes shall be referred to a sole arbitrator to be
appointed by GWRL and COMACOE Jointly in agreement".
proceed to commence arbitration. Thereafter, vide
alia proposed the name of one Mr. Mihir Naniwadekar
appointment of said Mr. Naniwadekar as the Sole
Arbitrator. It is in these circumstances that the
Conciliation Act, 1996 have been invoked for
and differences that have arisen between the
an arbitration clause. It is also not in dispute before
Petitioner. Since the Respondent has failed to agree to
other arbitrator, the present Petition has been filed.
2. In this factual backdrop, Ms. Nyati, the learned
Act, 1996. She submitted that in the facts of the present case,
the sub-contract dated 14th June, 2013. Pursuant to this clause,
suggested by the Petitioner. As the Respondent had failed to do so,
the present application was filed. She therefore submitted that
3. On the other hand, Mr. Kamat, the learned counsel
be granted on two grounds. They are:-
4. On the first issue (of stamping), Mr. Kamat submitted
arbitration. In support of this proposition, Mr. Kamat relied upon
(i) SMS Tea Estates Pvt Ltd v/s Chandmari Tea
Company Pvt Ltd reported in (2011) 14 SCC.
(ii) Chenbasapa and Another v/s Lakshman
Ramchandra reported in 18 Bom LR 370.
(iii) Yasodammal and Another v/s Janaki Ammal
reported in 1967 (81) LW 2 (Madras High
Court)
(iv) Sohan Lal Nihal Chand v Raghu Nath Singh
and Others reported in AIR 1934 Lahor 606.
(v) Maung Po Chein v/s CRVVV Chettyar Firm
reported in AIR 1935 Rangoon 282.
(vi) Deepak Corporation, Bombay v/s Puspha
Prahlad Nanderjog reported in (1995) 1
Mh.L.J. 489.
(vii) Lakdawala Developers Pvt Ltd v/s Badal
Mittal and Others; Appeal (L) No.272 of 2013
in Arbitration Petition No.221 of 2013
decided on 25th June, 2013.
5. As far as the second issue is concerned, namely that
the arbitration was premature and therefore the pre-arbitral
procedure of amicably settling the matter was not resorted to, Mr.
Kamat relied upon the decision of the Supreme Court in the case of
Iron and Steel Co Ltd v/s Tiwari Road Lines reported in
(2007) 5 SCC 703.
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6. In rejoinder, Ms. Nyati, the learned counsel for the
Petitioner, submitted that the reliance placed by the Respondent
on the aforesaid decisions and more particularly in the case of
SMS Tea Estates Pvt Ltd (supra), was wholly misplaced. Ms.
Nyati was at pains to point that after all these decisions were
passed, the Arbitration and Conciliation Act, 1996 has been
amended and Section 11(6-A) has been inserted which
categorically contemplates that this Court, whilst appointing an
arbitrator, must confine itself to the examination of the existence
of an arbitration agreement. In the facts of the present case, she
submitted that the Respondent had not denied the existence of the
arbitration agreement and even assuming for the sake of
argument that the document required stamping, the same did not
affect the existence of the arbitration agreement or even the
agreement as a whole. She was at pains to point out that this
Court must not go into the issue of enforceability or validity of the
agreement after the amendment to Section 11 in 2015. She
submitted that the Legislature has consciously restricted judicial
intervention under Section 11 in the clearest words possible to
only the examination of the existence of the arbitration agreement
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and nothing more. She submitted that no case was made out to
expand the scope of judicial intervention under Section 11 (6-A)
to include the issue of validity, enforceability etc. According to
Ms. Nyati, this was further emphasized by virtue of Section 11
(13) which was inserted again by the 2015 amendment. In this
regard, she also placed reliance on the report of the Law
Commission of India (Report No. 246) which was for the
amendment to the Arbitration and Conciliation Act, 1996. She
laid great stress on paragraphs 28 to 33 of this report which deals
with the Scope and Nature of Pre-Arbitral Judicial Intervention to
point out all that the Court has to look at is whether there exists
an arbitration agreement between the parties and nothing more or
nothing less. All other issues are to be left to be decided by the
arbitrator, once appointed under Section 11. She therefore
submitted that the reliance placed by Mr. Kamat on the judgment
of the Supreme Court in the case of SMS Tea Estates Pvt Ltd
(supra), was wholly misplaced.
7. Without prejudice to the aforesaid argument, Ms.
Niyati submitted that in the facts of the present case the clause
titled as " Royalties, Licenses, Mining Permits and other statutory
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requirements etc" clearly envisages that it was the Respondent
who had to pay all the necessary levies / fees / taxes / duties /
royalties and hence the Respondent could not defeat the
arbitration agreement by taking a dishonest defence that the
document was insufficiently stamped, when the liability to pay the
stamp duty, if any, was clearly on the Respondent.
8. As far as invocation of the arbitration being premature
is concerned, Ms. Nyati submitted that the facts of the present
case would clearly establish that there was no scope for any
amicable settlement. According to her, both parties had taken a
rigid stand by making allegations and counter allegations as well
as raising counter claims against each other. This, according to
Ms. Nyati, was clear from a bare perusal of the letters dated 7th
October, 2015 (Exhibit-D) and 24th October, 2015 (Exhibit-E) to
the application. Over and above this, she submitted that
notwithstanding the above, after the dispute had arisen and the
contract was terminated, Mr. Vivek Bansal (the Petitioner's Group
CEO) addressed numerous requests between 24th March, 2015 to
11th May, 2015 to Mr. Tiru Kulkarni, (Respondent's Vice
President) to schedule a meeting for negotiation. Despite this,
there was no response forthcoming. In these circumstances, Ms.
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Nyati submitted that in any event the said requests are in
sufficient compliance with the Arbitration Clause and therefore it
was incorrect to contend that invocation of the arbitration was
premature. In support of this submission, Ms. Nyati relied upon a
decision of the Supreme Court in the case of Visa International
Limited v/s Continental Resources (USA) Ltd. reported in AIR
2009 SC 1366.
9. I have heard the learned counsel for the parties at
length and have perused the papers and proceedings in the
present matter. I shall first deal with the argument of the
Respondent that the invocation of the arbitration was premature.
In this regard, I find considerable force in the argument canvassed
by Ms. Nyati. The Arbitration Clause which has been invoked in
the facts of the present case (and which has been reproduced
above) states that any and all claims, disputes etc which cannot be
finally resolved by such parties through negotiation, shall be
resolved by a final and binding arbitration to be held in Pune. In
the affidavit in rejoinder filed on behalf of the Petitioner, in
paragraph 4, it is categorically denied that the Petitioner never
initiated any settlement, negotiation and/or resolution process. It
has been further stated that the Petitioner acting through Mr.
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Vivek Bansal, the Group-CEO, addressed numerous requests to Mr.
Tiru Kulkarni, Vice President of the Respondent to schedule a
meeting for negotiation. Despite these requests, the Respondent
was not forthcoming. To substantiate this contention, the
Petitioner has annexed at Exhibit A to the said affidavit, text
messages exchanged between the Petitioner and the Respondent
between 24th March, 2015 to 11th May, 2015. These messages
were sent on Whatsapp. On going through Exhibit-A and which
has not been denied by the Respondent, I find that the Petitioner
had made several requests for a meeting to resolve the matter
without any success. This being the case, I do not find any
substance in the argument on behalf of the Respondent that since
there was no negotiation between the parties before invoking the
arbitration, the same was premature. From these text messages
(sent on Whatsapp), it is quite clear that on several occasions, a
request was made for a meeting to which there was no positive
response. This being the case, I find that the Petitioner was fully
justified in invoking the arbitration clause as contained in
Annexure-III to the sub-contract dated 14th June, 2013 (the
commercial terms and conditions).
10. Having said this, I shall now turn my attention to the
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main issue, namely whether I can refer the parties to arbitration
on the basis of what the Respondent alleges is an unstamped
document. Section 11 of the Arbitration and Conciliation Act,
1996 deals with appointment of arbitrators. The entire procedure
has been laid down under the said section as to how the arbitrator
/ arbitrators are to be appointed by the Court when the parties fail
to agree on the appointment of the arbitrator / arbitrators. What
is really relevant for my purpose are the amendments that are
carried out to Section 11 by Act 3 of 2016 w.r.e.f. 23rd October,
2015 (amendment of 2015). By virtue of the amendment of 2015,
sub-section 6-A was inserted in Section 11 which reads thus:-
"(6-A) The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-
section (5) or sub-section (6), shall, notwithstanding any
judgment, decree or order of any court, confine to the
examination of the existence of an arbitration agreement."
11. What can be seen from a plain reading of this sub-
section is that the Supreme Court or as the case may be the High
Court, while considering any application under sub-section (4) or
sub-section (5) or sub-section (6) of Section 11 shall,
notwithstanding any judgment, decree or order of any Court,
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confine itself to the examination of the existence of an arbitration
agreement. The purpose for bringing this provision into force can
be seen from the 246th Report of the Commission on 'Amendment
to the Arbitration and Conciliation Act, 1996'. Paragraphs 28
to 33 deal with 'scope and nature of pre-arbitral judicial
intervention.' After referring to certain decisions of the Supreme
Court and more particularly under Section 11 of the Act, the
Commission in paragraph 33 has stated thus:-
"33. It is in this context, the Commission has recommended
amendments to sections 8 and 11 of the Arbitration and Conciliation
Act, 1996. The scope of the judicial intervention is only restricted to
situations where the Court/Judicial Authority finds that the
arbitration agreement does not exist or is null and void. In so far as
the nature of intervention is concerned, it is recommended that in the
event the Court / Judicial Authority is prima facie satisfied against
the argument challenging the arbitration agreement, it shall appoint
the arbitrator and/or refer the parties to arbitration, as the case may
be. The amendment envisages that the judicial authority shall not
refer the parties to arbitration only if it finds that there does not
exist an arbitration agreement or that it is null and void. If the
judicial authority is of the opinion that prima facie the arbitration
agreement exists, then it shall refer the dispute to arbitration, and
leave the existence of the arbitration agreement to be finally
determined by the arbitral tribunal. However, if the judicial authority
concludes that the agreement does not exist, then the conclusion will
be final and nor prima facie. The amendment also envisages that
there shall be a conclusive determination as to whether the
arbitration agreement is null and void. In the event that the judicial
authority refers the dispute to arbitration and/or appoints an
arbitrator, under sections 8 and 11 respectively, such a decision will
be final and non-appealable. An appeal can be maintained under
section 37 only in the event of refusal to refer parties to arbitration,
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or refusal to appoint an arbitrator."
(emphasis supplied)
12. What can be seen from this paragraph is that the scope
of judicial intervention is only restricted to situations where the
Court/Judicial Authority finds that the arbitration agreement
does not exist or is null and void. The only reason why I refer to
paragraph 33 is to ascertain the intention of the Legislature for
the purposes of inserting sub-section 6-A to Section 11 of the
Arbitration and Conciliation Act, 1996. Another important and
telling factor can also be found in the Statement of Objects and
Reasons. This clearly states that India has been ranked at 178 out
of 189 nations in the world in contract enforcement. It is therefore
high time that urgent steps are taken to facilitate quick
enforcement of contracts, easy recovery of monetary claims and
award of just compensation for damages suffered, and reduce the
pendency of cases in courts and hasten the process of dispute
resolution through arbitration, so as to encourage investment and
economic activity. It is in these circumstances that clause 6 of
the Amendment Bill states that sub-section 6-A is inserted to
provide that the Supreme Court or the High Court, while
considering the application under sub-sections 4 to 6, shall confine
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itself to the examination of the existence of the arbitration
agreement. When one looks at the intention of the Legislature for
bringing about this amendment, I find considerable force in the
argument of Ms Nyati that what has to be looked into is only about
the existence of the arbitration agreement and nothing more or
nothing less.
13. In the facts of the present case, and as rightly
submitted by Ms. Nyati, the existence of the arbitration agreement
is not disputed. Even assuming for the sake of argument that the
document is insufficiently stamped, that would not by itself affect
the existence of the arbitration agreement that was contained in
the sub-contract awarded by the Respondent to the Petitioner
dated 14th June, 2013. In fact, Mr. Kamat, the learned counsel
appearing for the Respondent, fairly conceded before me that
there was no dispute about the existence of the arbitration
agreement. This being the case, I find that the reliance placed by
Ms. Nyati on sub-section 6-A of Section 11 is clearly well founded.
In the view that I take, I am supported by a decision of the
Supreme Court in the case of Duro Felguera, S. A. v/s
Gangavaram Port Limited reported in (2017) 9 SCC 729. The
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Supreme Court after considering Section 11 prior to its
amendment and also after its amendment, at paragraph 19
observed thus:-
"19. The effect of the Arbitration and Conciliation
(Amendment) Act, 2015 in Section 11 of the Act has been
succinctly elucidated in the textbook "Law Relating to
Arbitration and Conciliation" by Dr P.C. Markanda, which
reads as under:
"The changes made by the amending Act are as follows:
1. The words 'Chief Justice or any person or institution
designated by him' shall be substituted by the words 'the
Supreme Court or, as the case may be, the High Court or any
person or institution designated by such Court'. Thus, now it is
not only the Chief Justice who can hear applications under
Section 11, the power can be delegated to any Judge as well.
2. As per sub-section (6-A), the power of the Court has now
been restricted only to examination of the existence of an
arbitration agreement. Earlier, the Chief Justice had been given
the power to examine other aspects as well i.e. limitation,
whether the claims were referable for arbitration, etc. in terms of
the judgments of the Supreme Court in SBP and Co. v. Patel
Engg. Ltd. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618]
and National Insurance Co. Ltd. v. Boghara Polyfab (P)
Ltd. [National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.,
(2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] Now all preliminary
issues have been left for the Arbitral Tribunal to decide in terms
of Section 16 of the Act.
3. The amending Act has categorically provided in sub-
section (6-B) that designation of any person or institution by the
Supreme Court or High Court would not be construed as
delegation of judicial power. The order passed by a designated
person or institution would continue to be regarded as a judicial
order.
4. It has been provided in sub-section (7) that the order
passed under this section shall not be appealable. This change
means that finality is attached to the order passed under this
section and it would not be subject to further examination by an
appellate court.
5. Sub-section (8) has been amended to bring it in conformity
with amended Section 12 with regard to ensuring independence
and impartiality of the arbitrator. Before appointing any
arbitrator, a disclosure in writing has to be obtained in terms of
Section 12(1) of the Act. This is to ensure that the appointed
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arbitrator shall be independent and impartial and also
harmonizes the provisions of Sections 11 and 12 of the Act.
6. The amending Act has introduced sub-section (13) which
provides that the disposal of the application under this section
has to be expeditious and endeavour shall be made to dispose of
the application within a period of 60 days from the date of service
of notice on the opposite party. This sub-section would ensure
speedy disposal of applications under this section and all
contentious issues have been left to be decided by the Arbitral
Tribunal.
7. For determining the fee structure of the Arbitral Tribunal, it
has been recommended that the High Courts may frame the
necessary rules and for that purpose, a model fee structure has
been provided in the Fourth Schedule of the amending Act.
However, this sub-section would not be applicable for the fee
structure in case of international commercial arbitrations and
domestic arbitrations where the parties have agreed for
determination of fee as per rules of an arbitral institution. This
sub-section has been inserted to ensure a reasonable fee
structure since the cost of arbitration has increased manifold due
to high charges being levied on the parties by the Arbitral
Tribunal and other incidental expenses."
[Reference: Law Relating to Arbitration and Conciliation by
Dr P.C. Markanda; Lexis Nexis, 9th Edn., p. 460]"
14. Thereafter in paragraph 47, the Supreme Court has
discussed what is the effect of the change introduced by
Arbitration and Conciliation (Amendment Act), 2015 and with
particular reference to Section 11 (6) and the newly added Section
11 (6-A). In this regard at paragraphs 47 and 48 read as under:-
"47. What is the effect of the change introduced by the
Arbitration and Conciliation (Amendment) Act, 2015
(hereinafter referred to as "the 2015 Amendment") with
particular reference to Section 11(6) and the newly added
Section 11(6-A) of the Arbitration and Conciliation Act, 1996
(hereinafter referred to as "the 1996 Act") is the crucial
question arising for consideration in this case.
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48. Section 11(6-A) added by the 2015 Amendment, reads as
follows:
"11. (6-A) The Supreme Court or, as the case may be, the
High Court, while considering any application under sub-
section (4) or sub-section (5) or sub-section (6),
shall, notwithstanding any judgment, decree or order of any
court, confine to the examination of the existence of an
arbitration agreement."
(emphasis supplied)
From a reading of Section 11(6-A), the intention of the
legislature is crystal clear i.e. the court should and need only
look into one aspect--the existence of an arbitration
agreement. What are the factors for deciding as to whether
there is an arbitration agreement is the next question. The
resolution to that is simple--it needs to be seen if the
agreement contains a clause which provides for arbitration
pertaining to the disputes which have arisen between the
parties to the agreement."
(emphasis supplied)
15. On a plain reading of this decision, it is ex-facie clear
that the Supreme Court has opined that the intention of the
Legislature is crystal clear i.e. the court should and need only look
into one aspect, namely the existence of an arbitration agreement.
What are the factors for deciding as to whether there is an
arbitration agreement, the Supreme Court has clearly stated that
it needs to be seen if the agreement contains a clause which
provides for arbitration pertaining to the disputes which have
arisen between the parties to the agreement. That would suffice.
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16. In the facts of the present case, there is no dispute
with reference to the existence of the arbitration agreement. This
being the case, I find that Mr. Kamat is not correct in submitting
that the dispute cannot be referred to arbitration merely because
the sub-contract dated 14th June, 2013 (and in which the
arbitration clause is contained), is an unstamped document.
17. There is yet another reason for taking this view. It is
now well settled that the provisions of the Stamp Act are enacted
for the purposes of securing the revenue for the Government and
not to arm a dishonest litigant with a technical defence. If one
needs to refer to any decision on this aspect, the observations of
the Supreme Court in the case of Hindustan Steel Ltd v/s
Messrs Dilip Construction Company reported in (1969) 1 SCC
597 are apposite. The relevant paragraph reads thus:-
"7. The Stamp Act is a fiscal measure enacted to secure
revenue for the State on certain classes of instruments: It is
not enacted to arm a litigant with a weapon of technicality to
meet the case of his opponent. The stringent provisions of the
Act are conceived in the interest of the revenue once that
object is secured according to law, the party staking his claim
on the instrument will not be defeated on the ground of the
initial defect in the instrument. Viewed in that light the
scheme is clear. Section 35 of the Stamp Act operates as a bar
to an unstamped instrument being admitted in evidence or
being acted upon; Section 40 provides the procedure for
instruments being impounded, sub-section (1) of Section 42
provides for certifying that an instrument is duly stamped,
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and sub-section (2) of Section 42 enacts the consequences
resulting from such certification."
(emphasis supplied)
18. In view of the foregoing discussion and with specific
reference to section 11(6-A) of the Act, I am unable to agree with
the submission of Mr. Kamat that this Court cannot refer the
disputes to arbitration because the arbitration clause is contained
in an unstamped document. It is not as if once the Arbitrator is
appointed, the Respondent is precluded from raising the issue of
stamping before the Arbitrator. The Arbitrator, if found that the
document is insufficiently stamped, can always impound the same
and send it to the necessary authorities under the Maharashtra
Stamp Act, 1958 for adjudication. This view of mine would also be
in line with the decision of the Supreme Court in the case of
Hindustan Steel Ltd (supra), which would ensure that the
revenue is secured for the State and at the same time would not
arm the litigant with the weapon of technicality to meet the case of
the opponent. I do not think that by accepting this technical
defence, the Respondent can be allowed to frustrate and delay the
arbitration proceedings. This would clearly be contrary to the
objects and reasons for which the amendments were brought
about to Arbitration and Conciliation Act, 1996 in 2015.
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19. Having said this, I shall now deal with the judgments
relied upon by Mr. Kamat. The first decision relied upon by Mr.
Kamat was in the case of SMS Tea Estates Private Limited
(supra). In this case, the facts would reveal that the Appellant
before the Supreme Court requested the Respondent therein to
grant a long term lease in respect of two tea estates. Accordingly,
a lease deed was executed under which the respondent granted a
lease to the Appellant for a term of 30 years. Clause 35 of the said
lease deed provided for settlement of disputes between the parties
by arbitration. As the dispute arose between the parties, as per
Clause 35 of the lease deed, the Appellant issued a notice calling
upon the Respondent to refer the matter to arbitration. This
application was opposed by the Respondent who contended that
the unregistered lease deed was invalid, unenforceable and not
binding upon the parties. The further contention was that the said
lease deed was not duly stamped and therefore invalid,
unenforceable and not binding, having regard to Section 35 of the
Stamp Act, 1899. In these facts, the matter went to the Supreme
Court. Before the Supreme Court, three questions were raised,
namely (i) Whether an arbitration agreement contained in an
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unregistered (but compulsorily registrable) instrument is valid
and enforceable? (ii) Whether an arbitration agreement is an
unregistered instrument which is not duly stamped, is valid and
enforceable? (iii) Whether there is an arbitration agreement
between the appellant and the respondent and whether an
arbitrator should be appointed?
20. Whilst answering the first question, the Supreme Court
inter alia held that when the contract contains an arbitration
agreement, it is a collateral term relating to the resolution of
disputes, unrelated to the performance of the contract. It is as if
two contracts; one in regard to the substantive terms of the main
contract and the other relating to resolution of disputes had been
rolled into one, for the purposes of convenience. The Supreme
Court held that therefore an arbitration clause is an agreement
independent of the other terms of the contract or the instrument.
Resultantly, even if the contract or its performance is terminated
or comes to an end on account of repudiation, frustration or
breach of contract, the arbitration agreement would survive for
the purpose of resolution of disputes arising under or in
connection with the contract. Similarly, when an instrument or
deed of transfer or a document affecting immovable property
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contains an arbitration agreement, it is a collateral term relating
to resolution of disputes, unrelated to the transfer or transaction
affecting the immovable property. It is as if two documents, one
affecting the immovable property requiring registration, and the
other relating to resolution of disputes which is not compulsorily
registrable, are rolled into a single instrument. Therefore, even if a
deed of transfer of immovable property is challenged as not valid
or unenforceable, the arbitration agreement would remain
unaffected for the purpose of resolution of disputes arising with
reference to the deed of transfer. The Supreme Court further went
on to hold that having regard to Section 35 of the Stamp Act,
unless the stamp duty and penalty due in respect of the
instrument is paid, the court cannot act upon the instrument,
which means that it cannot act upon the arbitration agreement
also which is part of the instrument. As far as the stamping issue
is concerned, I find that this decision does support Mr. Kamat's
contention. However, I find that this decision has lost its efficacy
after the amendment to Section 11 and more particularly Section
11 (6-A). What I must note is that SMS Tea Estates Private
Limited (supra) was decided on 20th July, 2011 whereas the
amendments to the Arbitration and Conciliation Act, 1996 came
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into effect from 23rd October, 2015. Now, after the amendment
and as held by the Supreme Court in the case of Duro Felguera, S.
A.(supra), under sub-section 6-A of Section 11 the power of the
Court has now been restricted only to examination of the
existence of the agreement and nothing more and nothing less. As
stated earlier, the existence of the arbitration agreement has
never been disputed, and in my view correctly so. This being the
case, I find that the reliance placed by Mr. Kamat on the decision
of the Supreme Court in the case of SMS Tea Estates Private
Limited (supra), is wholly misconceived. Whether the document
is properly stamped or not is an issue that can certainly be
decided by the arbitrator once the matter is referred to
arbitration. It is not as if the arbitrator is powerless to impound
the document if found insufficiently stamped and thereafter
forward to the appropriate authority for adjudication and
recovery of stamp duty. Taking into consideration the purpose for
which the amendments were brought about and especially the
finding given in the 246th report of the Law Commission of India
that India has been ranked at 178 out of 189 nations in the world
for enforcement of contracts, I think this is exactly what the
Legislature intended. In any event, the wording of Section 11(6-
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A) are clear and unambiguous and leave no real scope for judicial
interpretation.
21. All the other decisions relied upon by Mr. Kamat with
the exception of (Lakdawala Developers Pvt Ltd's case), were
under the Stamp Act and were not with reference to any of the
provisions of the Arbitration and Conciliation Act, 1996. I,
therefore, find that the reliance placed on these decisions is wholly
misconceived.
22. As far as the reliance placed by Mr. Kamat on a
Division Bench Judgment in the case of Lakdawala Developers
Pvt Ltd (supra) is concerned, I find that this judgment also was
passed on 25th June, 2013 which was much prior to the
amendment of the Arbitration and Conciliation Act, 1996 in 2015.
Furthermore, this judgment follows the decision of the Supreme
Court in the case of SMS Tea Estates Private Limited (supra).
What is also important to note is that this decision was not
rendered with reference to Section 11 of the Arbitration and
Conciliation Act, 1996 but was rendered under Section 9 of the
said Act. The facts of this case would reveal that the Respondent
before the Division Bench had filed an application under Section 9
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for certain interim reliefs. In that application, the appellant before
the Division Bench took up the contention that the MOU was
insufficiently stamped and that in consequence, the document
could not be acted upon unless the stamp duty and penalty, if any,
payable thereon was adjudicated upon. The learned Single Judge
held that whether the MOU was insufficiently stamped or not,
could be decided in the arbitral proceedings before the arbitrator
and the arbitration agreement could be delinked from the other
provisions of the MOU so as to enable the Court to grant interim
measures. It is in these circumstances that the Division Bench
held that the view taken by the learned Single Judge was prima
facie contrary to the decision of the Supreme Court in the case of
SMS Tea Estates Private Limited (supra). Apart from what I
have stated with reference to the decision in the case of SMS Tea
Estates Private Limited (supra), I find that this decision is
wholly distinguishable on facts as different considerations would
apply when a party applies for interim measures under section 9
and when it applies for appointment of the arbitrator under
Section 11 of the Arbitration and Conciliation Act, 1996. I,
therefore, find that the reliance placed on this decision also is
wholly misplaced.
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23. Before parting, I must also mention that prima facie I
find the argument made by Ms. Nyati that the liability to pay
stamp duty was on the Respondent herein, well founded. The
clause which was relied upon by Ms. Nyati reads thus:-
"ROYALTIES / LICENSES/ MINING PERMITS / OTHER STATUTORY
REQUIREMENTS ETC
It will be GWRL responsibility to obtain all requisite statutory
Licenses/Permits from various Government State/Local
Bodies/Authorities (apart from MoEF, CRZ and state pollution
control board permissions which are in scope of ICZMP, State
Project Management Unit-Odisha being owner), and to pay
necessary levies/fees/taxes/duties/royalties (if applicable to GWRL
scope of work), costs thereof at their own cost. COMACOE's
responsibility will be limited to labour license and maintenance of
proper record of such payments and submit the royalty receipts
along with each invoice to GWRL."
24. On going through this clause carefully, I am prima
facie satisfied that the liability to pay stamp duty was that of the
Respondent. If the stamp duty, if any, has not been paid by the
Respondent, the Respondent cannot take advantage of its own
wrong and frustrate the arbitration agreement between the
parties. If I was to do that, it would be only adding premium to
dishonesty. Having said this, I must make it clear that these
observations are only prima facie and if the arbitrator finds that
the document is in fact insufficiently stamped, and directs further
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action on the same, it will be for the appropriate authorities to
adjudicate the stamp duty as well as who is liable to pay the same.
For all the foregoing reasons, the following order is passed:-
(a) The Arbitration Petition is allowed.
(b) Mr. Mihir Naniwadekar (Advocate) is appointed
as a Sole Arbitrator under Section 11 of the
Arbitration and Conciliation Act, 1996 to
adjudicate upon the disputes which have been
arisen between the Petitioner and the
Respondent herein under or in relation to and/or
connected with the sub-contract dated 14th June,
2013.
(c) The Petitioner herein shall file the disclosures of
by the Sole Arbitrator in the Registry as
contemplated under Section 11 (8) r/w Section
12 (1) of the Arbitration and Conciliation Act,
1996 within a period of two weeks from today.
(d) The Sole Arbitrator shall give all further
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directions with reference to the fees of the
arbitrator and how they are to be paid. All
further directions regarding the filing of the
Statement of Claim and Statement of Defence
and /or counter claim shall be given by the
arbitrator.
The Arbitration Petition is disposed of in the aforesaid terms.
However, there shall be no order as to costs.
(B. P. COLABAWALLA, J.)
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