Madras High Court
M/S.Ag Melco Techno Services Private ... vs Mr. A. Mohammad Abdul Aziz on 26 March, 2025
Author: Sathi Kumar Sukumara Kurup
Bench: Sathi Kumar Sukumara Kurup
CRP No. 1517 of 2020
IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dated : 26-03-2025
CORAM :
THE HON'BLE MR.JUSTICE SATHI KUMAR SUKUMARA KURUP
Civil Revision Petition No. 1517 of 2020
----
M/s.AG Melco Techno Services Private Limited
Formerly known as
M/s.ETA Melco Techno Services Private Limited
7th Floor, Khivaraj Complex II,
480, Anna Salai, Nandanam,
Chennai - 600 035.
Represented by its Director
R.Kannan .. Petitioner
Versus
1. Mr. A. Mohammad Abdul Aziz
S/o.T.M.K.A.Ahmed Meeran
2. Mr.A.Mohammad Ashik
S/o. T.M.K.A.Ahmed Meeran ..
Respondents
Civil Revision Petition filed under Article 227 of the Constitution of
India to set aside the judgment and Order dated 29.11.2019 in I.A. No. 5747 of
2018 in O.S. No. 5056 of 2017 on the file of the learned XIII Assistant Judge,
City Civil Court, Chennai.
For Petitioner : Mr. C. Manohar Gupta, Senior Advocate
for M/s.Gupta and Ravi
For Respondents : Mr. K.M. Aasim Shahzad
for BFS Legal
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1/18
CRP No. 1517 of 2020
ORDER
This Civil Revision Petition is filed seeking to set aside the order dated
29.11.2019 passed by the learned XIII Assistant Judge, City Civil Court,
Chennai in I.A. No. 5747 of 2018 in O.S. No. 5056 of 2017.
2. The Revision Petitioner is the Plaintiff, who has instituted the suit
in O.S. No. 5056 of 2017 before the XIII Assistant Judge, City Civil Court,
Chennai. The suit was filed for recovery of Rs.9,30,800/- together with interest
at the rate of 18% per annum from the date of filing the plaint till realisation.
3. The Respondents are the owners of the flat bearing Door No.49,
Old Door No.26, Mount Road, Saidapet measuring 3105 square feet.
According to the Revision Petitioner-Plaintiff, a portion of the said property
was given to the Revision Petitioner for lease on a monthly rent of
Rs.1,84,000/- per month from 01.12.2015. At the time of being inducted as a
tenant, the Revision Petitioner also paid Rs.14 lakhs towards advance. After
taking possession of the premises, due to business re-structuring, the Plaintiff
sent a letter dated 08.10.2016 expressing their intention to vacate the premises
by 31.12.2016. However, the Respondents, by reply dated 19.12.2016 refused
to permit the Revision Petitioner from vacating the property. Notwithstanding
such refusal, the Revision( Uploaded
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Petitioner vacated the premises and handed over the
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key to the Respondents on 04.01.2017. When the Revision Petitioner sought
for refund of the advance amount of Rs.9,30,800/- after adjusting the monthly
rent for October, November and December 2016 apart from service tax and
Tax Deducted at Source (TDS), the Respondents refused to pay. The Revision
Petitioner therefore issued a notice dated 14.02.2017 calling upon the
Respondents to pay Rs.9,30,800/-. On receipt of the notice, a reply dated
25.04.2017 was sent by the Respondents calling upon the Revision Petitioner
to pay Rs.4,18,811/- as the Revision Petitioner had vacated the premises before
the expiry of 36 months from the date of lease.
4. On notice, the Respondents filed the instant I.A. No. 5747 of 2018
in O.S. No. 5056 of 2017 mainly contending that the suit is not maintainable.
The agreement dated 30.11.2015 entered into between the parties categorically
states that in the event of any dispute, the parties shall approach an Arbitrator
as per Section 8 of the Arbitration and Conciliation Act, 1996. Instead of
approaching an Arbitrator for resolution of the dispute, the Revision Petitioner
has filed the instant suit and it is not maintainable. Accordingly, the
Respondents prayed for dismissal of the suit.
5. A reply statement was filed by the Revision Petitioner contending
that they are not liable to pay any amount to the Respondents, as claimed. It is
also submitted that the lease agreement is unregistered and unstamped and
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therefore, the contents contained thereof will not bind the Revision Petitioner
in any manner.
6. The learned XIII Assistant Judge, City Civil Court, by the order
dated 29.11.2019, allowed the application filed by the Respondents herein by
holding that the suit filed by the Revision Petitioner is not maintainable in view
of the fact that in the lease agreement between the parties, there is a clause for
referring the dispute, if any, to an Arbitrator. Therefore, the Revision
Petitioner has to only approach the Arbitrator for resolution of the dispute and
the suit as filed is not maintainable. Accordingly, the learned XIII Assistant
Judge, City Civil Court, allowed the application filed under Section 8 of the
Arbitration Act and dismissed the suit by referring the parties to the arbitration
in accordance with the provisions of the lease agreement dated 30.11.2015.
7. The learned Senior Counsel for the Revision Petitioner-Plaintiff
would vehemently contend that the lease agreement dated 30.11.2015 is legally
not enforceable inasmuch as the lease agreement in an unstamped and
unregistered instrument under the provisions of the Indian Stamp Act, 1899
and the Registration Act, 1908 respectively. The lease agreement is an
instrument which has to be mandatorily stamped as per Section 3 r/w. Article
35 Schedule I of the Indian Stamps Act, 1899. It is also an instrument which is
to be compulsorily registered as per Section 17 of the Registration Act, 1908.
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When the lease agreement is unregistered and not in accordance with Section
17 of the Registration Act, 1908, the contents contained therein are not
enforceable. The learned Senior Counsel further stated that the Respondents
have not paid the prescribed registration charges as per the Indian Registration
Act 1908. Therefore, the lease agreement does not have legal validity in the
eyes of law or it can be admitted in evidence before any Court as per Section
35 of the Indian Stamps Act,1899 and Section 49 of the Registration Act which
entail the legal consequences of instrument that are not stamped and registered
as per the provisions of Indian Stamps Act, 1899 and the Registration Act,
1908.
8. The learned Senior Counsel for the Revision Petitioner also
submitted that the order passed by the learned XIII Assistant Judge, City Civil
Court is against the reported decision of the Hon'ble Supreme Court in the
case of SMS Tea Estates (P) Ltd -vs- Chandmari Tea Co.(P) Ltd reported in
(2011) 14 SCC 66, wherein it is held as follows:
“17. What if an arbitration agreement is contained in an
unregistered (but compulsorily registerable) instrument which is not duly
stamped? To find an answer, it may be necessary to refer to the provisions
of the Stamp Act. 1899 ('the Stamp Act, for short). Section 33 of the Stamp
Act relates to examiation and impounding of instruments. The relevant
portion thereaf is extracted below:
"33.Examination and impounding of instruments.-(1) Every
person having by law or consent of parties authority to receive evidence,
and every person in charge of a public office except an officer of police,
before whom any instrument, chargeable, in his opinion, with duty. is
produced or comes in
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the performance of his functions, shall, if it
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appears to him that such instrument is not duly stamped, impound the
sarne.
(2) For that purpose every such person shall examine every
instrument so chargeable and so produced or coming before him, in
order to ascertain whether it is stamped with a stamp of the value and
description required by the law in force in India when such instrument
was executed or first executed:".
18. Section 35 of the Stamp Act provides that instruments not duly
stamped are inadmissible in evidence and cannot be acted upon. The
relevant portion of the said section is extracted below:
35.Instruments, not cruly stamped inadmissible, in evidence,
etc- No instrument chargeable with duty shall be admitted in
evidence for any purpose by any person having by low or consent of
parties authority to receive evidence, or shall be acted upon,
registered or authenticated by any such person or by any public
officer, unless such instrument is duly stamped:
Provided that-
(a) any such instrument shall be admitted in evidence on payment of
the duty with which the same is chargeable or, in the case of an
instrument insufficiently stamped, of the amount required to make up
such duty, together with a penalty of five rupees, or, when ten times
the amount of the proper duty or deficient portion thereof exceeds five
rupees, of a sum equal to ten times such duty or portion;"
19. 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. Section 35 of
the Stamp Act is distinct and different from Section 49 of the Registration
Act in regard to an unregistered document. Section 35 of the Stamp Act,
does not contain a proviso like Section 49 of the Registration Act
enabling the instrument to be used to establish a collateral transaction.
20. The Scheme for Appointment of Arbitrators by the Chief
Justice of Gauhati High Court, 1996 requires an application under
Section 11 of the Act to be accompanied by the original arbitration
agreement or a duly certified copy thereof. In fact, such a requirement is
found in the scheme/rules of almost all the High Courts. If what is
produced is a certified copy of the agreement/contract/instrument
containing the arbitration clause, it should disclose the stamp duty that
has been paid on the original.
https://www.mhc.tn.gov.in/judis Section
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28/03/2025 casts ama )duty upon every court,
that is, a person having by law authority to receive evidence (as also
every Arbitrator who is a person having by consent of parties, authority
to receive evidence) before whom an unregistered instrument chargeable
with duty is produced, to examine the instrument in order to ascertain
whether it is duly stamped. If the court comes to the conclusion that the
instrument is not duly stamped, it has to impound the document and deal
with it as per Section 38 of the Stamp Act.
21. Therefore, when a lease deed or any other instrument is relied
upon as containing the arbitration agreement, the court should consider
at the outset, whether an objection in that behalf is raised or not, whether
the document is properly stamped. If it comes to the conclusion that it is
not properly stamped, it should be impounded and dealt with in the
manner specified in Section 38 of the Stamp Act. The court cannot act
upon such a document or the arbitration clause therein. But if the deficit
duty and penalty is paid in the manner set out in Section 35 or Section 40
of the Stamp Act, the document can be acted upon or admitted in
evidence."
9. In the light of the above decision of the Honourable Supreme
Court, the learned Senior Counsel submitted that the order passed by the
learned XIII Assistant Judge, City Civil Judge is perverse and it is to be set
aside.
10. Per contra, the learned Counsel for the Respondents/defendants
submitted that as per Section 8 of the Arbitration Act r/w. 9 of C.P.C the
position of law is absolutely clear. The Civil Courts are barred from exercising
jurisdiction over matters covered under Arbitration. The Plaintiff has filed the
suit for recovery of money based on the lease agreement dated 30.11.2015. The
learned Judge placing reliance on the lease agreement dated 30.11.2015 in the
light of the reported decision of the Hon'ble Supreme Court in the case of SMS
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Tea Estates Pvt Ltd -vs- Chandmari Tea Co Pvt Ltd reported in 2011 (4) SCC
574 rightly allowed the application filed under Section 8 of The Arbitration and
Conciliation Act, 1996. However, the said decision was overruled in the
subsequent decisions of the Honourable Supreme Court. In this context, the
learned Counsel for the Respondents placed reliance on the decision of the
Honourable Supreme Court in Curative Petition (C) No. 44 of 2023 reported in
2023 INSC 1066 wherein the Honourable Supreme Court held as follows:-
“185. The corollary of the doctrine of competence-
competence is that courts may only examine whether an arbitration
agreement exists on the basis of the prima facie standard of review.
The nature of objections to the jurisdiction of an arbitral tribunal on
the basis that stamp-duty has not been paid or is inadequate is such
as cannot be decided on a prima facie basis. Objections of this kind
will require a detailed consideration of evidence and submissions
and a finding as to the law as well as the facts. Obligating the court
to decide issues of stamping at the Section 8 or Section 11 stage will
defeat the legislative intent underlying the Arbitration Act.
217. An arbitration agreement or its certified copy is not
rendered void or unenforceable because it is unstamped or
insufficiently stamped. We accordingly clarify that the position of
law laid down in Jupudi Kesava Rao (supra) and Hariom Agarwal
(supra) cannot constrain a referral Court at Section 11 stage (as
well as Section 8 stage) from acting upon a certified copy of an
arbitration agreement and referring the parties to arbitral Tribunal.
218. The discussion in preceding segments indicates that
the referral court at Section 11 stage should not examine or
impound an unstamped or insufficiently stamped instrument,but
rather leave it for the determination by the arbitration tribunal.
When a party produces an arbitration agreement or its certified
copy, the referral court only has to examine whether an arbitration
agreement exists in terms of Section 7 of The Arbitration Act. The
referral Court under Section 11 is not required to examine whether
a certified copy of the agreement/instrument/contract discloses the
fact of payment of stamp duty on the original. Accordingly, we hold
that the holding of this Court in SMS Tea Estate (supra), as
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reiterated in N.N. Global 2 (supra) is no longer valid in law.
...........
224. The conclusions reached in this judgment are
summarised below:-
a. Agreements which are not stamped or are
inadequately stamped are inadmissible in evidence under Section 35
of the Stamp Act. Such agreements are not rendered void or void ab
initio or unenforceable;
b. Non-stamping or inadequate stamping is a curable
defect
c. An objection as to stamping does not fall for
determination under Sections 8 or 11 of the Arbitration Act. The
concerned Court must examine whether the arbitration agreement
prima facie exists;
d. Any objection in relation to the stamping of the
agreement fall within the ambit of the arbitral tribunal; and
e. The decision in N.N. Gopal 2 (supra) and SMS Tea
Estates (supra) are overruled. Paragraphs 22 and 29 of Garware
Wall Ropes (supra) are overruled to that extent.”
11. By pointing out the above decision of the Honourable Supreme
Court, it is contended by the learned Counsel for the Respondents that even the
issue relating to insufficient or inadequate stamp can be gone into by the
Arbitral Tribunal and the suit filed by the Revision Petitioner-Plaintiff is not
maintainable. There is no perversity in the order passed by the learned XIII
Assistant Judge, City Civil Court. This Civil Revision Petition has no merits
and is to be dismissed.
12. By way of reply to the submissions of the learned Counsel for the
Respondents, the learned Senior Counsel for the Revision Petitioner submitted
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that the learned trial Judge had misdirected herself by relying upon para 15
alone of the judgment in SMS Tea Estates Pvt Ltd -vs- Chandmari Tea Co
Pvt Ltd reported in 2011 (4) SCC 574. The position of law has been made
clear by the constitutional Bench of the Hon'ble Supreme Court in the latter
paragraph. While filing the petition invoking arbitration clause, the petition
shall be accompanied by the deed entered into between the parties to the
dispute or the certified copy of the same. Here the alleged lease deed is for a
period of three years which was not duly stamped and duly registered.
Therefore, the Civil Court cannot rely on such an unregistered or not
sufficiently stamped document. Whereas the learned XIII Assistant Judge, City
Civil Court had relied on the unregistered and not sufficiently stamped lease
deed to dismiss the suit instituted by the Revision Petitioner. Therefore, it is
against the reported decision of the Hon'ble Supreme Court in the case of SMS
Tea Estates Pvt Ltd -vs- Chandmari Tea Co Pvt Ltd reported in 2011 (4)
SCC 574. The dispute is to be considered only during trial without reference to
clause available for arbitration. The Arbitration and Conciliation Act, 1986
mandates that the original or certified copies of the agreement of which
Arbitration clause is part of, is to be filed along with application under Section
8 before the Court without which it shall not be entertained. It had been made
clear in the case of Atul Singh and others vs Sunil Kumar Singh and others
reported
https://www.mhc.tn.gov.in/judis in (2008) 2 SCC 602.
( Uploaded Accordingly,
on: 28/03/2025 11:46:05 amthe
) learned Senior Counsel
prayed for allowing the Civil Revision Petition.
Point for consideration:
Whether the order dated 29.11.2019 in I.A.No.5747 of
2018 in O.S.No.5056 of 2017 passed by the learned XIII
Assistant Judge, is to be set aside as perverse?
13. Heard the learned Senior Counsel for the Revision Petitioner and
the learned Counsel for the Respondents.
14. On perusal of the order passed by the learned XIII Assistant
Judge, City Civil Court, it is found that in view of the clause contained in the
agreement between the parties, to refer the dispute, if any, to an Arbitrator, the
suit is not maintainable and the parties have to be relegated to approach the
Arbitrator. Such a conclusion has been reached on the ground that the
document relied by the Respondents/Petitioners in I.A. No. 5747 of 2018 in
O.S. No. 5056 of 2017 was not duly stamped and duly registered. However, as
per the reported decision of the Hon'ble Supreme Court in SMS Tea Estates
Pvt Ltd -vs- Chandmari Tea Co Pvt Ltd reported in 2011 (4) SCC 574 it was
held that an unregistered and insufficiently stamped document cannot be relied
on to show that there is an arbitration clause available for the parties to work
out their remedy. In the said judgment of the Hon'ble Supreme Court in the
case of SMS Tea Estates Pvt Ltd -vs- Chandmari Tea Co Pvt Ltd reported in
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2011 (4) SCC 574, in para 17 it was observed as follows.
“17. What if an arbitration agreement is contained in an
unregistered (but compulsorily registerable) instrument which is not
duly stamped? To find an answer, it may be necessary to refer to the
provisions of the Stamp Act. 1899 ('the Stamp Act, for short). Section
33 of the Stamp Act relates to examiation and impounding of
instruments. The relevant portion thereaf is extracted below:
"33.Examination and impounding of instruments.-(1) Every
person having by law or consent of parties authority to receive
evidence, and every person in charge of a public office except an
officer of police, before whom any instrument, chargeable, in his
opinion, with duty. is produced or comes in the performance of his
functions, shall, if it appears to him that such instrument is not duly
stamped, impound the sarne.
(2) For that purpose every such person shall examine every
instrument so chargeable and so produced or coming before him, in
order to ascertain whether it is stamped with a stamp of the value and
description required by the law in force in India when such instrument
was executed or first executed:".
15. However, subsequently, the decision in the case of SMS Tea
Estates Pvt Ltd -vs- Chandmari Tea Co Pvt Ltd reported in 2011 (4) SCC 574
was overruled by the Honourable Supreme Court in Curative Petition (C) No.
44 of 2023. While overruling the earlier verdict in SMS Tea Estate, it was
held that even the issue relating to inadequacy or insufficiency of stamp on an
instrument can be gone into by the Arbitral Tribunal, which alone is competent
to examine such objections relating to the stamping of the agreement. Such an
issue falls only within the ambit of the Arbitral Tribunal. It was also held that
non-stamping or insufficiently stamping of a document is a curable defect and
therefore, such agreements
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cannot be rendered void or void ab initio or
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unenforceable. Therefore, in the light of the dictum laid down by the
Honourable Supreme Court in the decision cited supra, the order dated
29.11.2019 passed by the learned XIII Assistant Judge, City Civil Court,
relegating the parties to this Civil Revision Petition to go before the Arbitrator
for resolution of their dispute, cannot be found fault with. As per the decision
of the Honourable Supreme Court, it is for the Arbitral Tribunal to decide the
admissibility or inadmissibility of the arbitration agreement in question as well
as the adequacy or inadequacy of the stamp made thereof, during the course of
arbitral proceedings. In such view of the matter, the suit, as filed by the
Revision Petitioner-Plaintiff, especially when there is a clause for arbitration
mentioned thereof, is not maintainable.
16. When this Court was about to pronounce orders, the learned
Counsel appearing for the Respondent requested this Court not to pronounce
the Order as the ruling relied on by the learned Senior Counsel for the Revision
Petitioner in the case of SMS Tea Estates Private Ltd Vs. Chandmari Tea Co.
Pvt. Ltd., reported in 2011 (4) SCC 574 was overruled by the Seven Judges
Bench of the Hon'ble Supreme Court in Curative Petition (C) No.44 of 2023
in Review Petition (C) No.704 of 2021 in Civil Appeal No.1599 of 2020 In
Re: Interplay between Arbitration agreement under the Arbitration and
Conciliation Act, 1996 and the Indian Stamp Act, 1899 and with
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Arbitration Petition No.25 of 2023 in which the Hon'ble Judges of the
Supreme Court had given conclusions as follows:
“224. The conclusions reached in this judgment are summarised
below:
a. Agreements which are not stamped or are inadequately stamped are
inadmissible in evidence under Section 35 of the Stamp Act. Such
agreements are not rendered void or void ab initio or unenforceable;
b. Non-stamping or inadequate stamping is a curable defect;
c. An objection as to stamping does not fall for determination under
Sections 8 or 11 of the Arbitration Act. The concerned court must
examine whether the arbitration agreement prima facie exists;
d. Any objections in relation to the stamping of the agreement fall
within the ambit of the arbitral tribunal; and
e. The decision in NN Global 2 (supra) and SMS Tea Estates (supra)
are overruled. Paragraphs 22 and 29 of Garware Wall Ropes (supra)
are overruled to that extent.”
17. Further, he would submit that as per the Seven Judges Bench
ruling, even if agreement between the parties was not duly stamped and
registered, still the Arbitrator can go into those questions. Therefore, as per the
latest ruling of the Hon'ble Supreme Court, the Seven Judges Bench, even if
the agreement between the parties/Plaintiff and Defendant was not sufficiently
stamped even such dispute can be gone into by the arbitrator. The technical
plea that the agreement entered between the parties was not registered and not
stamped cannot be gone into by the Civil Court, if there is a clause for
arbitration between the parties. Such objections and technicalities of law raised
by the Respondent shall be raised after the Constitution of the Arbitral
Tribunal. Therefore, the learned
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Counsel for the Respondent sought to dismiss
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this Civil Revision Petition as having no merits in the light of the latest ruling
of the Seven Judges Bench of the Honourable Supreme Court.
18. The learned Senior Counsel for the Revision Petitioner relied on
the Judgment of this Court dated 19.01.2023 in CRP.No.1466 of 2020.
19. As per Section 8 (iii) of the Arbitration and Conciliation Act,
1996, the Plaintiff is not willing to Arbitration as the Defendant had not
appointed Arbitrator. Till date, there is no Stay from this Court pending the
Civil Revision Petition. After a long period, the Plaintiff cannot be heard to
contend that he is not willing to appoint Arbitrator as the Defendant/the
Respondent had not furnished the Arbitration Petition in I.A along with the
original agreement between the Plaintiff and Defendant. In the light of those
circumstances, the Plaintiff in the Suit is not willing for Arbitration at this
length of time. Therefore, the learned Senior Counsel for the Revision
Petitioner seeks to set aside the Order passed by the learned XIII Judge, City
Civil Court in I.A.No.5747 of 2018 in O.S.No.5056 of 2017.
20. The submission of the learned Senior Counsel for the Revision
Petitioner that the Plaintiff is not willing for Arbitration at this length of time in
the light of the latest Judgment
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( Uploaded on: Seven 11:46:05
Judges
am )Bench cited by the learned
Counsel for the Respondent cannot be countenanced.
20. In the light of the above ruling of the Constitution Bench of 7
Hon'ble Judges of the Hon'ble Supreme Court in Curative Petition (C) No.44
of 2023 in Review Petition (C) No.704 of 2021 in Civil Appeal No.1599 of
2020 In Re: Interplay between Arbitration agreement under the
Arbitration and Conciliation Act, 1996 and the Indian Stamp Act, 1899
and with Arbitration Petition No.25 of 2023, the point for consideration is
answered in favour of the Respondents and against the Revision Petitioner.
The order dated 29.11.2019 passed in I.A. No. 5747 of 2018 in O.S. No. 5056
of 2017 on the file of the learned XIII Assistant Judge, City Civil Court,
Chennai, is found proper and the same is to be confirmed.
In the result, this Civil Revision Petition is dismissed. The order dated
29.11.2019 passed in I.A. No. 5747 of 2018 in O.S. No. 5056 of 2017 on the
file of the learned XIII Assistant Judge, City Civil Court, Chennai, is
confirmed. There shall no order as to costs.
26.03.2025
shl
Index : Yes/No
Internet : Yes/No
Speaking/Non-speaking order
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To:
1. The XIII Assistant Judge,
City Civil Court, Chennai
2. The Section Officer,
V.R. Section,
High Court of Madras.
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SATHI KUMAR SUKUMARA KURUP, J
shl
Order in
26.03.2025
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