Vikram Munshi vs Stay Vista Private Limited
2021 Latest Caselaw 935 Bom

                                                                     9-ARBAPL-4695-2020.DOCX




                   Shephali



                        IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                               ORDINARY ORIGINAL CIVIL JURISDICTION
                         ARBITRATION APPLICATION (L) NO. 4695 OF 2020



                        Vikram Munshi                                            ...Applicant
                              Versus
                        Stay Vista Pvt Ltd                                     ...Respondent

Ms Neha Mehta, i/b MT Miskita & Co, for the Applicant. Ms Vidhi Barot, with Sumeet Bansod, i/b LJ Law, for the Respondent.

                                             CORAM:          G.S. PATEL, J
                                                             (Through Video Conference)
                                             DATED:          14th January 2021
                        PC:-


                   1.         Heard through video conferencing.

2. The Application is under Section 11 of the Arbitration and Conciliation Act. There is an Service Agreement dated 21st October Shephali Mormare 2019. Arbitration was invoked on 22nd June 2020 in terms of Clause Digitally signed by Shephali 10 of the Service Agreement.

Mormare Date: 2021.01.15 10:37:21 +0530

3. On the previous occasion, Ms Barot for the Respondent opposed the petition on the ground that the Agreement is insufficiently stamped. Since that date, there has been a change in law by virtue of the 11th January 2021 decision of a three Judge Bench of

14th January 2021 9-ARBAPL-4695-2020.DOCX

the Supreme Court in NN Global Mercantile Private Limited v Indo Unique flame Limited and Others.1

4. This decision expressly overrules the two-judge Bench decision of the Supreme Court in SMS Tea Estates Private Limited v Chandmari Tea Co Private Ltd.2

5. The NN Global Court noted that SMS Tea Estates was followed by the Supreme Court in Garware Wall Ropes Limited v Coastal Marin Constructions and Engineering Limited.3

6. NN Global then noted that the Garware Wall Ropes Judgment, and in particular paragraphs 27 and 29 were approved by another three-Judge Bench of the Supreme Court (i.e., one of coordinate strength to the NN Global court) in paragraph 92 of Vidya Drolia & Ors v Durga Trading Corporation.4 Consequently NN Global referred paragraph 92 of the Vidya Drolia (and resultantly paragraphs 27 and 29 of Garware Wall Ropes) to a larger five-Judge Bench.

7. NN Global holds that a question of stamp duty is a matter of a fiscal statute. It may affect the admissibility of the main Agreement or the underling contract. The arbitration agreement is an agreement within an agreement. It is severable. An arbitration agreement on its own is not liable to stamp. Consequently, following the well-

2           2011 14 SCC 66.
3           2019 9 SCC 209.
4           Civil Appeal No. 2402 of 2019 decided on 14th December 2020.



                           14th January 2021
                                                  9-ARBAPL-4695-2020.DOCX

established kompetenz-kompetenz principle, any question of stamp could also be taken in an application under Section 16 before the Arbitrator. In other words, a Section 11 Court cannot refuse the reference to arbitration merely on the ground of stamp. The impounding of the document could be done by the arbitral tribunal (where it is appointed directly by consent of parties), or by a Court under Section 11 or Section 8. In NN Global, the Supreme Court itself impounded the document and sent it for adjudication.

8. Ms Mehta submits that while this is correct, and the impounding may be done, this would not affect the question of a reference to arbitration. Therefore, she submits, the impounding of a document and having it assessed for stamp is one thing, but that on its own does not any longer forbid the reference to arbitration.

9. Ms Barot for the Respondents submits that at present, although SMS Tea Estates may have been expressly overruled by NN Global, this is not true of Garware Wall Ropes. That decision has been referred to a larger Bench and therefore prima facie it seen that the law as set out in Garware Wall Ropes continues to hold the field.

10. Ms Barot submits that she will need sometime to take advice and consider the position.

11. List the matter on 29th January 2021.

14th January 2021 9-ARBAPL-4695-2020.DOCX

12. This order will be digitally signed by the Private Secretary of this Court. All concerned will act on production of a digitally signed copy of this order.

(G. S. PATEL, J)

14th January 2021