Vineet K. Chaudhary vs Crest Logistics And Engineers ...
2022 Latest Caselaw 9752 Bom

                                                                                             10.arbap.359.2019.....doc

          Digitally
          signed by
          UTKARSH
          KAKASAHEB
                                 IN THE HIGH COURT OF JUDICATURE AT BOMBAY
UTKARSH
KAKASAHEB BHALERAO
BHALERAO Date:
          2022.09.29
          14:15:38
                                       ORDINARY ORIGINAL CIVIL JURISDICTION
          +0530



                                       ARBITRATION APPLICATION NO. 359 OF 2019

                       Vineet K. Chaudhary                                   .. Petitioner
                                 Vs.
                       Crest Logistics & Engineering Pvt Ltd.                .. Respondent


                       Adv. Tejveer Singh, Adv. Anuj Jhaveri, a/w Adv. Aashish Darne i/b PSL
                       Advocates & Solicitors for Petitioner.
                       Shrey Fatterperkar a/w Siddhi Vora for Respondent.


                                                              CORAM:- B. P. COLABAWALLA,J.

DATE :- SEPTEMBER 26, 2022.

P. C.:

1. The Section 11 Application is filed seeking the constitution

of the Arbitral Tribunal as per the Arbitration Clause contained in the

Work Order dated 7th October, 2008. The Arbitration Clause can be

found in clause 15 of the said Work Order which reads thus:

                                         "15.0.    SETTLEMENT          OF     DISPUTES         AND

                                         ARBITRATION

Any dispute or difference arising out of this Service Contract shall be discussed between the Purchaser and the Contractor and the parties shall endeavor to reach an amicable settlement within a period of seven (7) days. If a consensus could not be reached within this period then the dispute shall be referred to arbitration under the Indian Arbitration and Conciliation Act-1996, as may be

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amended from time to time. The venue of arbitration shall be Mumbai.

The award shall be a reasoned award and shall be final and binding on both the parties and shall not be subjected to appeal. Subject to arbitration the Courts at Mumbai shall have exclusive jurisdiction over all matters arising under this Purchase Order. During pendency of arbitration the parties shall continue to perform respective obligations under this Service Contract."

2. At the outset the learned advocate appearing on behalf of

the Respondent submitted that admittedly this Work Order is not

stamped as required under Article 63 of Schedule I of the Maharashtra

Stamp Act. He submitted that under Section 30 of the said Act, the

liability to pay the Stamp Duty would be on the person receiving the

contract which in the present case is the Applicant. He submitted that

this being the case, this Court cannot constitute the Arbitral Tribunal

without first impounding the said Work Order and sending it for

adjudication to the Stamping Authorities. Only once the Stamp Duty is

adjudicated and paid, then the present disputes can be referred to

arbitration.

3. In this regard the learned counsel relied upon the decision

of the Hon'ble Supreme Court in the case of Garware Wall Ropes Ltd.

VS Coastal Marine Constructions & Engg. Ltd. reported in (2019) 9 SCC

213 and a decision of another Learned Single Judge of this Court in the

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case of B4U Broadband (India) Pvt. Ltd. VS Affluence Movies Pvt. Ltd.

[Commercial Arbitration Application (L) No. 22197 of 2021 decided on

4th April, 2022].

4. On the other hand, Mr. Singh, the learned counsel

appearing on behalf of the Applicant submitted that the decision in the

Garware Wall Ropes Ltd. (supra) has been held to be not good law by a

three judge bench of the Hon'ble Supreme Court in the case of M/s. N.

N. Global Mercantile (P) Ltd. VS. M/s Indo Unique Flame Ltd., [2021

(4) SCC 379]. He further submitted that in the case of Intercontinental

Hotels Group (India) Pvt. Ltd. & Anr. VS Waterline Hotels Pvt. Ltd.,

[2022 SCC Online SC 83], the Hon'ble Supreme Court has inter alia held

that an Arbitration Agreement is distinct and separate and de'hors of

the document in which it finds place. Mr. Singh submitted that this is a

settled principle of law as recognized by the Supreme Court in the case

of Intercontinental Hotels (supra) as well as N. N. Global Mercantile

Pvt. Ltd. (supra). This being the case, the parties can be referred to

arbitration irrespective of whether the said Works Order requires

stamping or otherwise, was the submission.

5. I have heard the learned counsel for the parties at some

length. It is true that in N. N. Global Mercantile Pvt. Ltd. (supra) the

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Supreme Court has held that the decisions in Garware Wall Ropes Ltd.

and SMS Tea Estates Pvt Ltd. do not lay down the correct law. However,

considering that Garware Wall Ropes Ltd. was cited with approval by

the Hon'ble Supreme Court in the case of Vidya Drolia VS Durga

Trading Corporation, [(2021) 2 SCC 1] the issue was referred to the

Constitutional Bench. In the judgment of the Hon'ble Supreme Court in

the case of Intercontinental Hotels Group (India) Pvt. Ltd., the Supreme

Court inter alia held that upon reading Vidya Drolia (supra), the issue of

'existence' and/or 'validity' of the arbitration clause, would not be

needed to be looked into as payment of stamp duty, sufficient or

otherwise, has taken place. The Supreme Court inter alia held that in

order to ascertain whether adequate stamp duty has been paid, the

Court needs to examine the nature of the substantive agreement, the

nature of the arbitration agreement and whether a separate stamp fee

would be payable for the arbitration agreement at all. The Supreme

Court opined that where the stamp duty payable was insufficient or

appropriate is a question that may be answered at a later stage as the

Court cannot review or go into this aspect under Section 11(6) of the Act.

It however opined that if it was a question of complete non stamping

then the Supreme Court might have had an occasion to examine the

concern raised in N. N. Global (supra).

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6. All these decisions of the Supreme Court namely, Garware

Wall Ropes (supra), N. N. Global (supra) and Intercontinental Hotels

(supra), were thereafter considered by the learned Single Judge of this

Court (G. S. Kulkarni, J.). The learned Single Judge after examining the

law and analyzing the aforesaid decisions inter alia came to the

conclusion that if the document was wholly unstamped then as per the

decision of Garware Wall Ropes Ltd., the document had to be

impounded and sent for adjudication. Pending the decision of the

Stamping Authorities on the adjudication, the proceedings are required

to be adjourned, was the finding given by the learned Single Judge.

7. In the facts of the present case, admittedly the Works Order

was issued by the Respondent in Mumbai and was accepted by the

Applicant in Mumbai. This is clear from a plain reading of Pages 80 and

123 of the Paper Book. This is apart from the fact that the seat of the

Arbitration itself is in Mumbai. It is also not in dispute that stamp duty

as required under Schedule I of Article 63 has not been paid. This is not

a case where there is an issue of insufficient stamping as was the case

before the Hon'ble Supreme Court in the case of Intercontinental Hotels

Group (India) Pvt. Ltd. The facts of this case are very similar to the facts

before the learned Single Judge of this Court in B4U Broadband (India)

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Pvt. Ltd. VS Affluence Movies Pvt. Ltd. (supra) . In these circumstances,

the document in question, namely the Work Order dated 7 th October,

2008 would be required to be impounded. The Applicant is therefore

directed to deposit the original of the said Works Order with the

Prothonotary and Senior Master of this Court within a period of 3 weeks

from today.

8. The Prothonotary and Senior Master shall thereafter

forward the said Works Order to the concerned Sub Registrar of Stamps

to adjudicate the appropriate stamp duty payable on the Works Order

dated 7th October, 2008. The Sub Registrar shall pass an appropriate

order, and in the event stamp duty becomes payable, direct the parties

by whom the stamp duty is payable, to pay/deposit such deficit stamp

duty as per the law.

9. Awaiting the decision of the Stamping Authority, the

proceedings are adjourned in accordance with the observations of the

Supreme Court as made in paragraph 37 in Garware Wall Ropes Pvt.

Ltd.

10. Let the appropriate Stamp Authority a take decision in

accordance with law within a period of 45 days from the date the said

Works Order is received by the Stamp Authorities.

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11. The parties are at liberty to move the Court after the

document is duly stamped as per law.

12. This order will be digitally signed by the Private

Secretary/Personal Assistant of this Court. All concerned will act on

production by fax or email of a digitally signed copy of this order.

                                       ( B. P. COLABAWALLA, J. )




      Utkarsh                                                       page 7 of 7