M/S. Sunflag Iron And Steel Company vs M/S. Tarini Prasad Mohanty
2025 Latest Caselaw 3359 Ori

Orissa High Court

M/S. Sunflag Iron And Steel Company vs M/S. Tarini Prasad Mohanty on 12 August, 2025

Author: Murahari Sri Raman

Bench: Murahari Sri Raman

           IN THE HIGH COURT OF ORISSA AT CUTTACK
                             W.A. No.629 of 2025


M/s. Sunflag Iron and Steel Company                    ....                 Appellant
Ltd.

                                      -Versus-

M/s. Tarini Prasad Mohanty, Keonjhar                   ....               Respondent


Advocates appeared in this case:

For Appellant:                Mr. Debal Kumar Banerji, Senior Advocate
                              Mr. S.K. Padhi, Senior Advocate
                              Mr. Vasant Rajasekaran, Advocate
                              Mr. Dhananjaya Mishra, Advocate
                              Mr. Tarun Patnaik, Advocate
                              Mr. Harshavardhan Korada, Advocate
                              Ms. Aishwarya Ray, Advocate

For Respondent:               Mr. Gopal Krishna Jain, Senior Advocate
                              Mr. Soumik Spandan Tripathy, Advocate
                              Ms. S. Priyadarshini, Advocate
                              Mr. P. Pradhan, Advocate
                              Mr. P.P. Das, Advocate

CORAM:
              HON'BLE THE CHIEF JUSTICE
                          AND
        HON'BLE MR. JUSTICE MURAHARI SRI RAMAN
 -------------------------------------------------------------------------------------
                                JUDGMENT

12th August, 2025

--------------------------------------------------------------------------------------

HARISH TANDON, CJ.

1. A piquant situation has arisen in the instant appeal on the scope of

a judicial review exercised by the High Court under Article 226 of

the Constitution of India in relation to an arbitral proceeding. The

order passed by the arbitral tribunal under Section 16 of the

Arbitration and Conciliation Act, 1996 (in short, „the Act‟) is

assailed by the respondent herein under Article 226/227 of the

Constitution of India and the Single Bench interfered with the

said order from which the present appeal arises. The matter is still

pending before the arbitral tribunal who is yet to adjudicate the

disputes raised by the respective parties and, therefore, it is

suffice to say that the Court should refrain from making any

observation which would impact the decision to be taken by the

arbitral tribunal at the time of passing the award.

2. The undisputed facts discerned from the record, which in our

opinion, would suffice for the purpose of adjudicating and/or

determining the points urged in the instant appeal by the

respective parties, are adumbrated hereinafter. Pursuant to the

arbitration agreement, one of the parties to the instant appeal

approached the High Court under Section 11(6) of the said Act for

appointment of an arbitrator as the parties could not arrive at the

consensus on the name of the arbitrator. The application under

Section 11(6) of the Act was allowed naming the arbitrator to

adjudicate the disputes raised in relation to a transaction. In other

words, the parties were relegated to arbitral tribunal for

determination of the disputes so raised and it would not be

incorrect to record that parties submitted to the jurisdiction of

arbitral tribunal. The statement of claim was filed by the appellant

and the arbitral tribunal permitted the respondent to file his

pleading which was filed in the nature of a counter claim. The

defence to the counter claim was also filed by the respective

parties.

3. At this stage, an application under Section 16 of the said Act is

taken by the respondent raising an issue that the agreement, which

is insufficiently stamped, cannot be received in evidence or acted

upon by the appellant unless the said document is duly

impounded. According to the respondent, the nature of the

agreement as it would appear from the terms and conditions

embodied therein would lead to inescapable conclusion that it is,

in effect, a sale agreement and not an agreement for sale. Having

contended so, the reference to Article 23 of the Indian Stamp Act,

1899 was pressed in action which requires the stamping on the

said document having a character of a conveyance. It is further

contended that the tenet and the purport of the said document

cannot be construed as an agreement or memorandum of an

agreement under Article 5 of the Indian Stamp Act, 1899.

4. On the other hand, the appellant took a plea that at the time of

execution of the said agreement, no title to the goods was passed

as the respondent did not have the subsisting title over the same

which renders the said agreement distinct from the sale

agreement. Undeniably, the agreement was executed on

12.02.2004 between the parties wherein the appellant was granted

an exclusive right to purchase the excavated iron ore on the

commencement of a mining operation.

5. Three subsequent agreements were entered into by and between

the parties following the said parent agreement and last of such

agreement saw the light of the day on 09.01.2011. The mining

lease deed was executed in favour of the respondent on

17.11.2009 for a period of 20 years but the dispute arose between

the parties in relation to their respective obligations and the

approach was made to this Court for appointment of an arbitrator.

6. Although it is a specific stand of the appellant that at the time of

entering into the agreement on 12.02.2004 the respondent did not

have the mining right and, therefore, the goods which were

unavailable/unascertained and not quantified, cannot be construed

to have passed to constitute a sale, but from the stand of the

parties, it can be reasonably inferred that the application under

Section 16 of the said Act was filed after the decision of the

Supreme Court rendered in N.N. Global Mercantile Pvt. Ltd. Vs.

Indo Unique Flame Ltd. reported in (2023) 7 SCC 1.

7. It would further be evident from the record that before taking up

an application under Section 16 of the said Act, the permission

was sought from the arbitral tribunal in this regard which was

eventually granted. After the pleadings were filed by the

respective parties, the arbitral tribunal proceeded to decide the

said application and passed an order with a categorical finding

that the agreement dated 12.02.2004 is merely an agreement for

sale and not the sale agreement, which does not attract the stamp

duty as of conveyance. The order of the arbitral tribunal is

assailed before the Single Bench under Article 226/227 of the

Constitution of India and by the impugned order the Single Bench

set aside the said order of the arbitral tribunal and directed the

impounding of the said agreement under Sections 33 and 35 of the

Indian Stamp Act.

8. Learned counsels appearing for the respective parties made

extensive arguments not only on the nature of an agreement for

the purpose of stamp duty leviable thereupon but also on the

scope and jurisdiction of the High Court conferred under Article

226/227 of the Constitution of India.

9. From the meaningful reading of the judgment impugned in the

instant appeal, we find that the aforesaid points were agitated

before the learned Single Bench and it would not be wrong to say

that the Single Bench recapitulated and restated the proposition of

law relating to the exercise of jurisdiction by the High Court

under Article 226/227 of the Constitution of India against the

order of the arbitral tribunal. The exposition of law in this regard

reflected in the impugned judgment does not appear to be

incongruous, contrary to the law laid down in a catena of

decisions nor departed therefrom.

10. Prior to the Constitution Bench decision rendered in the case of

SBP & CO v. Patel Engineering Ltd. and Another, reported in

(2005) 8 SCC 618, a consistent stand was taken by the apex court

that the power exercised by the Chief Justice of the High Court or

a Chief Justice of India of the Supreme Court under Section 11 of

the said Act is administrative in nature. In other words, the order

appointing the arbitrator is an administrative order as opposed to a

judicial order. However, the Constitution Bench in SBP & CO

(supra), in unequivocal terms held that the exercise of power by

the Chief Justice of the High Court or the Chief Justice of the

Supreme Court of India cannot be perceived as an exercise of

powers in the administrative capacity as the Chief Justice of the

High Court or the Chief Justice of the Supreme Court of India

does not act as persona designata. The majority view in the said

Constitution Bench overruled the earlier judgments of the

Supreme Court wherein it is held that the order appointing the

arbitrator is an administrative order and not in exercise of the

judicial functions in the following:

"36. Going by the above test it is seen that at least in the matter of deciding his own jurisdiction and in the matter of deciding on the existence of an arbitration agreement, the Chief Justice when confronted with two points of view presented by the rival parties, is called upon to decide between them and the decision vitally affects the rights of the parties in that, either the claim for appointing an Arbitral Tribunal leading to an award is denied to a party or the claim to have an arbitration proceeding set in motion for entertaining a claim is facilitated by the Chief Justice. In this context, it is not possible to say that the Chief Justice is merely exercising an administrative function when called upon to appoint an arbitrator and that he need not even issue notice to the opposite side before appointing an arbitrator.

xxx xxx xxx

44. Once we arrive at the conclusion that the proceeding before the Chief Justice while entertaining an application under Section 11(6) of the Act is adjudicatory, then obviously, the outcome of that adjudication is a judicial order. Once it is a judicial order, the same, as far as the High Court is concerned would be final and the only avenue open to a party feeling aggrieved by the order of the Chief Justice would be to approach the Supreme Court under Article 136 of the Constitution. If it were an order by the Chief Justice of India, the party will not have any further remedy in respect of the matters covered by the order of the Chief Justice of India or the Judge of the Supreme Court designated by him and he will have to participate in the arbitration before the Tribunal only on the merits of the claim. Obviously, the dispensation in our country, does not contemplate any further appeal from the decision of the Supreme Court and there appears to be nothing objectionable in taking the view that the order of the Chief Justice of India would be final on the matters which are within his purview, while called upon to exercise his jurisdiction under Section 11 of the Act. It is also necessary to notice in this context that this conclusion of ours would really be in aid of quick disposal of arbitration claims and would avoid considerable delay in the process, an object that is sought to be achieved by the Act."

11. The majority view in the said Constitution Bench decision having

held so, another point that fell for consideration as to whether

each and every order passed by the arbitral tribunal is amenable to

be challenged by an aggrieved person under Article 226 or 227 of

the Constitution of India. The majority decisions put a note of

caution that in the event each and every order of the arbitral

tribunal is permitted to be challenged under Article 226 or 227 of

the Constitution of India, it will be opposed to the very fabric of

the enactment and observed that the person aggrieved by any

order passed by the arbitral tribunal for which no remedy of

appeal under Section 37 of the Act is provided, should wait till the

award is published and it is open to the said party while

challenging the award under Section 34 of the said Act to

challenge the said order before the Court as defined under Section

2(e) of the Act in the following:

"45. It is seen that some High Courts have proceeded on the basis that any order passed by an Arbitral Tribunal during arbitration, would be capable of being challenged under Article 226 or 227 of the Constitution. We see no warrant for such an approach. Section 37 makes certain orders of the Arbitral Tribunal appealable. Under Section 34, the aggrieved party has an avenue for ventilating its grievances against the award including any in-between orders that might have been passed by

the Arbitral Tribunal acting under Section 16 of the Act. The party aggrieved by any order of the Arbitral Tribunal, unless has a right of appeal under Section 37 of the Act, has to wait until the award is passed by the Tribunal. This appears to be the scheme of the Act. The Arbitral Tribunal is, after all, a creature of a contract between the parties, the arbitration agreement, even though, if the occasion arises, the Chief Justice may constitute it based on the contract between the parties. But that would not alter the status of the Arbitral Tribunal. It will still be a forum chosen by the parties by agreement. We, therefore, disapprove of the stand adopted by some of the High Courts that any order passed by the Arbitral Tribunal is capable of being corrected by the High Court under Article 226 or 227 of the Constitution. Such an intervention by the High Courts is not permissible.

46. The object of minimising judicial intervention while the matter is in the process of being arbitrated upon, will certainly be defeated if the High Court could be approached under Article 227 or under Article 226 of the Constitution against every order made by the Arbitral Tribunal. Therefore, it is necessary to indicate that once the arbitration has commenced in the Arbitral Tribunal, parties have to wait until the award is pronounced unless, of course, a right of appeal is available to them under Section 37 of the Act even at an earlier stage."

12. In Fuerst Day Lawson Limited Vs. Jindal Exports Limited,

reported in (2011) 8 SCC 333 as relied upon by the appellant did

not deal with the points involved in the instant appeal but can be

gainfully taken into consideration for a proposition that the Act

contains the exhaustive provisions relating to an arbitration

together with the remedies of the parties and in this regard can be

termed as a self-contained code. Though the question posed in the

above report was whether a letters patent appeal would lie when

the Act does not provide remedy by way of an appeal under the

aforesaid Act, but in pursuit of deciding the said point, it is held:

"89. It is, thus, to be seen that Arbitration Act, 1940, from its inception and right through to 2004 (in P.S. Sathappan [(2004) 11 SCC 672] ) was held to be a self-contained code. Now, if the Arbitration Act, 1940 was held to be a self-contained code, on matters pertaining to arbitration, the Arbitration and Conciliation Act, 1996, which consolidates, amends and designs the law relating to arbitration to bring it, as much as possible, in harmony with the UNCITRAL Model must be held only to be more so. Once it is held that the Arbitration Act is a self-contained code and exhaustive, then it must also be held, using the lucid expression of Tulzapurkar, J., that it carries with it "a negative import that only such acts as are mentioned in the Act are permissible to be done and acts or things not mentioned therein are not permissible to be done". In other words, a letters patent appeal would be excluded by the application of one of the general principles that where the special Act sets out a self-contained code the applicability of the general law procedure would be impliedly excluded."

13. In Deep Industries Limited Vs. Oil and Natural Gas Corporation

Limited and Another, reported in (2020) 15 SCC 706, the three

Judge Bench of the Supreme Court was considering the identical

question as to whether the High Court can exercise the

jurisdiction under Article 227 of the Constitution of India when a

challenge is made to an order passed under Section 16 of the said

Act. It was noticed that Section 37 of the Act, which is

exhaustively provided the remedy against the specified categories

of the orders passed by the tribunal to be assailed by filing an

appeal but does not contain the right of appeal against a rejection

of an application under Section 16(2) or (3) of the said Act. The

remedy by way of an appeal is provided if the arbitral tribunal

accepts the plea referred under Sub-section (2) or (3) of Section

16 of the said Act and, therefore, the converse does not appear to

be true. The Bench took into consideration the observations of the

Constitution Bench decision rendered in SBP & CO (supra) and

held that though each and every order passed by the arbitral

tribunal is not susceptible to be assailed before the High Court

under Article 226/227 of the Constitution, if the said order meets

the test of perversity, such power can be exercised. It is held that

the Court should refrain from entering into a general thicket of

disputes between the parties but if the arbitral tribunal committed

a serious error which comes within the ambit of inherent lack of

jurisdiction, there is a possibility of interference. The enlightening

observations made in paragraph 22 of the said judgment is

reproduced as under:

"22. One other feature of this case is of some importance. As stated hereinabove, on 9-5-2018, a Section 16 application had been dismissed by the learned arbitrator in which substantially the same contention which found favour with the High Court was taken up. The drill of Section 16 of the Act is that where a Section 16 application is dismissed, no

appeal is provided and the challenge to the Section 16 application being dismissed must await the passing of a final award at which stage it may be raised under Section 34. What the High Court has done in the present case is to invert this statutory scheme by going into exactly the same matter as was gone into by the arbitrator in the Section 16 application, and then decided that the two-year ban/blacklisting was no part of the notice for arbitration issued on 2-11-2017, a finding which is directly contrary to the finding of the learned arbitrator dismissing the Section 16 application. For this reason alone, the judgment under appeal needs to be set aside. Even otherwise, as has been correctly pointed out by Mr Rohatgi, the judgment under appeal goes into the merits of the case and states that the action of putting the Contractor and his Directors "on holiday" is not a consequence of the termination of the agreement. This is wholly incorrect as it is only because of the termination that the show-cause notice dated 18-10-2017 proposing to impose a two-year ban/blacklisting was sent. Even otherwise, entering into the general thicket of disputes between the parties does not behove a court exercising jurisdiction under Article 227, where only jurisdictional errors can be corrected. Therefore to state that the ban order was passed under a General Contract Manual and not Clause 18 of the agreement, besides being incorrect, would also be incorrect for the reason that the General Contract Manual does not mean that such order was issued as an administrative order invoking the executive power, but was only as an order which emanated from the contract itself. Further to state that "serious disputes" as to jurisdiction seem to have cropped up is not the same thing as saying that the Arbitral Tribunal lacked inherent jurisdiction in going into and deciding the Section 17 application. In point of fact, the Arbitral Tribunal was well within its jurisdiction in referring to the contract and the ban order and then applying the law and finally issuing the stay order. Even if it be accepted that the principle laid down by Section 41(e) of the Specific Relief Act was infracted, in that damages could have been granted, as a result of which an injunction ought not to have been issued, is a mere error of law and not an error of jurisdiction, much less an error of inherent jurisdiction going to the root of the matter. Therefore, even otherwise, the High Court judgment cannot be sustained and is set aside."

14. In a subsequent decision rendered in the case of Punjab State

Power Corporation Limited Vs. Emta Coal Limited and

Another, reported in (2020) 17 SCC 93, the three Judge Bench of

the Supreme Court reiterated and restated the scope and

jurisdiction of the High Court under Article 226/227 of the

Constitution of India in the following:

"4. We are of the view that a foray to the writ court from a Section 16 application being dismissed by the arbitrator can only be if the order passed is so perverse that the only possible conclusion is that there is a patent lack in inherent jurisdiction. A patent lack of inherent jurisdiction requires no argument whatsoever -- it must be the perversity of the order that must stare one in the face.

5. Unfortunately, the parties are using this expression which is in our judgment in Deep Industries Ltd. [Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706] , to go to the Article 227 Court in matters which do not suffer from a patent lack of inherent jurisdiction. This is one of them. Instead of dismissing the writ petition on the ground stated, the High Court would have done well to have referred to our judgment in Deep IndustriesLtd. [Deep Industries Ltd. v. ONGC, (2020) 15 SCC 706] and dismiss the Article 227 petition on the ground that there is no such perversity in the order which leads to a patent lack of inherent jurisdiction. The High Court ought to have discouraged similar litigation by imposing heavy costs. The High Court did not choose to do either of these two things."

15. Another three Judge Bench of the Supreme Court in Bhaven

Construction through authorized signatory vs. Executive

Engineer, Sardar Sarovar Narmada Nigam Limited and

Another, reported in (2022) 1 SCC 75 was dealing with an

identical question where the arbitrator was invited to rule its own

jurisdiction under Section 16 of the said Act and having held in

favour of its jurisdiction, the challenge was made under Article

226/227 of the Constitution of India. The subsequent Coordinate

Bench upon noticing the earlier Coordinate Bench decision

rendered in Deep Industries Limited (supra) held that if the Court

allows interference with the arbitral process beyond the ambit of

the enactment, it effaces the efficacy of the process and will

undermine the very object of bringing such legislation. Although

the subsequent Coordinate Bench in the said report did not rule

out in an absolute terms, the exclusion of the jurisdiction

exercised by the High Court under Article 226/227 of the

Constitution of India but such exercise must be in an exceptional

and extraordinary circumstances and not in a routine manner.

16. The Single Bench of Calcutta High Court in M.D. Creations and

others vs. Ashok Kumar Gupta, reported in 2023 SCC OnLine

Cal. 1419 in somewhat similar circumstances where a challenge

was made under Article 227 of the Constitution of India against

an order passed by the arbitral tribunal, held that the power

exercised by the High Court under Article 227 of the Constitution

is to keep the Court or the Tribunal within the precincts of law

and unless it is demonstrated that the tribunal lacks patent

inherent jurisdiction, the Court should not interfere with such

order. The Single Bench of Calcutta High Court proceeded further

in defining the limits of the High Court under Article 227 of the

Constitution of India, if the order of the arbitral tribunal is passed

on a "bad faith" in the following:

"20. Further in the matter of Bhaven Construction (supra) the Hon'ble Supreme Court referring to the aforesaid observation in Deep Industries (supra) held as follows:

"20. In the instant case, Respondent No. 1 has not been able to show exceptional circumstance or „bad faith‟ on the part of the Appellant, to invoke the remedy under Article 227 of the Constitution. No doubt the ambit of Article 227 is broad and pervasive, however, the High Court should not have used its inherent power to interject the arbitral process at this stage. It is brought to our notice that subsequent to the impugned order of the sole arbitrator, a final award was rendered by him on merits, which is challenged by the Respondent No. 1 in a separate Section 34 application, which is pending."

21. Therefore, the remedy under Article 227 of the Constitution of India can be invoked on the ground of exceptional circumstances or „bad faith‟ on the part of the other party. There are no materials on record of any exceptional circumstances or „bad faith‟ of the opposite party has been shown.

22. The principle which culls out from the aforesaid decisions of the Hon'ble Court is that application under Article 227 of the Constitution of India can be invoked on the ground of patent lack in inherent jurisdiction or exceptional circumstances or „bad faith‟ of the opposite party. It is already found that none of the aforesaid grounds exist so far as the present case is concerned. Since the petitioner is not left remediless and has a chance of appeal under Section 34 of the Act, I find substance in the submissions of Mr. Gaffar, learned advocate for the opposite party in this context relying on A. Venkatasubbiah Naidu (supra) that though no hurdle can be put against exercise of Constitutional powers of the High Court it is well recognised principle which gained judicial recognition that the parties should avail the alternative remedies before resorting to constitutional remedies. Hence the application under Article 227 of the Constitution of India is not maintainable."

17. The Division Bench of this Court in the case of Mani Tirumala

Projects Pvt. Ltd. vs. All Odisha State Bank Officers Housing

Co-operative Society Limited and another, reported in 2021 SCC

OnLine Ori 1017 held that though the power conferred upon the

High Court under Article 226/227 of the Constitution being a

basic structure of the said living document cannot be curtailed by

the Parliamentary Legislation but such power is to be exercised in

exceptional rarity within the circumference of the statutory

dispensation in the following:

"34. No reasonable explanation is offered by the Appellant for not challenging the final Award till date under Section 34 of the Act, except saying that it would not be necessary for it to do so if it succeeded in demonstrating that the arbitral proceedings after 1st March 2019 were without jurisdiction. This appears to be a conscious choice made by the Appellant and not merely an oversight. This aspect is significant since the decisions of the Supreme Court in Deep Industries Limited (supra, HRD Corporation (supra) and Bhaven Construction (supra) consistently hold that it is only when the High Court is satisfied that a party is remediless that in the rarest of the rare cases it will exercise jurisdiction under Article 226 of the Constitution and interfere with the order of the Arbitrator. In the last-mentioned decision it was observed as under:

"In any case, the hierarchy in our legal framework, mandates that a legislative enactment cannot curtail a Constitutional right. In Nivedita Sharma v. Cellular Operators Association of India, (2011) 14 SCC 337, this Court referred to several judgments and held:

"11. We have considered the respective arguments/submissions. There cannot be any dispute that the power of the High Courts to issue directions, orders or writs including writs in the nature of habeas corpus, certiorari, mandamus, quo warranto and prohibition under Article 226 of the Constitution is a basic feature of the Constitution and cannot be curtailed by parliamentary legislation L. Chandra Kumar v. Union of India, (1997) 3 SCC 261. However, it is one thing to say that in exercise of the power vested in it under Article 226 of the Constitution, the High Court can entertain a writ petition against any order passed by or action taken by the State and/or its agency/instrumentality or any public authority or order passed by a quasi-judicial body/authority, and it is an altogether different thing to say that each and every petition filed under Article 226 of the Constitution must be entertained by the High Court as a matter of course ignoring the fact that the aggrieved person has an effective alternative remedy. Rather, it is settled law that when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation."

(emphasis supplied)

It is therefore, prudent for a Judge to not exercise discretion to allow judicial interference beyond the procedure established under the enactment. This power needs to be exercised in exceptional rarity, wherein one party is left remediless under the statute or a clear 'bad faith' shown by one of the parties. This high standard set by this Court is in terms of the legislative intention to make the arbitration fair and efficient."

(emphasis supplied)

18. What can be reasonably deciphered from the judgments as

mentioned hereinbefore that the power of judicial review under

Article 226 or the power of superintendence over the Courts or the

Tribunal under Article 227 of the Constitution of India are

integral parts of a basic structure which cannot be curtailed and/or

abridged even under the legislative fiat. There is no absolute fetter

put in the Constitution Bench decision rendered in SBP & CO

(supra), on exercise of the power under Article 226/227 of the

Constitution but such powers should be exercised with great

caution and circumspection when the arbitral tribunal have acted

in bad faith. The writ Court can also interfere if the order passed

by the arbitral tribunal which lacks inherent jurisdiction or a

perversity can be attached to an exercise of power while passing

an order.

19. Normally the writ Court should refrain from encouraging the

litigants to invoke the extraordinary jurisdiction conferred under

Article 226/227 of the Constitution of India against each and

every order of the arbitral tribunal unless the said order meets the

test of perversity or lack of inherent jurisdiction or bad faith. The

litigant is not remediless as the order upholding the jurisdiction by

the arbitrator is not amenable to be challenged under Section 37 of

the said Act but the said order is still capable of being challenged

at the time of challenging an award under Section 34 of the said

Act.

20. The exposition of law as above, leads to another core point as to

whether the writ Court taking shelter under the same may

interfere with the order of the arbitral tribunal where the plea of

insufficiency of stamp was rejected. The record would reveal that

the plea of insufficiency of stamp applicable to the said agreement

was not raised at the time of filing the counter claim but was

raised after the judgment rendered by the Constitution Bench in

N.N. Global Mercantile Pvt. Ltd. (supra). The question which fell

before the arbitral tribunal was whether the agreement followed

by further agreements contains a character of sale agreement or an

agreement for sale as different stamp duties are provided in

respect of the aforesaid agreement under the Indian Stamp Act.

21. The nature of the agreement essentially depends upon the

assimilation of different clauses, the intention to be gathered

therefrom and thus, comes within the periphery of an

interpretation of a contract. The nature of the agreement is to be

deduced from its clauses and the terms and conditions recorded

therein which is ordinarily decided on the basis of evidence to be

adduced by the parties. The scheme of the Arbitration and

Conciliation Act, 1996 postulates that the arbitral tribunal is the

final authority on the interpretation of a contract and even the

challenge to an award is contrived in this regard under Section 34

of the said Act.

22. The arbitral tribunal is a final authority on ascertaining the nature

of a contract and once a decision has been taken interpreting the

same in a particular way, even if there is a possibility of the other

interpretation, it does not invite a judicial interference. The Court

more particularly the writ Court should not venture to decide the

nature of a contract nor to interpret the same as it is within the

exclusive domain of an arbitral tribunal and in this regard the

enlightening observations made in Bhaven Construction (supra)

can be gainfully applied in the following:

"25. The Gujarat Act was enacted in 1992 with the object to provide for the constitution of a tribunal to arbitrate disputes particularly arising from works contract to which the State Government or a public undertaking is a party. A works contract is defined under Section 2(k) of the Gujarat Act. The definition includes within itself a contract for supply of goods relating to the execution of any of the works specified under the section. However, a plain reading of the contract between the parties indicates that it was for both manufacturing as well as supply of bricks. Importantly, a contract for manufacture simpliciter is not a works contract under the definition provided under Section 2(k). The pertinent question therefore is whether the present contract, which is composite in nature, falls within the ambit of a works contract under Section 2(k) of the Gujarat Act. This is a question that requires contractual interpretation, and is a matter of evidence, especially when both parties have taken contradictory stands regarding this issue. It is a settled law that the interpretation of contracts in such cases shall generally not be done in the writ jurisdiction. Further, the mere fact that the Gujarat Act might apply may not be sufficient for the writ courts to entertain the plea of Respondent 1 to challenge the ruling of the arbitrator under Section 16 of the Arbitration Act."

23. It is, thus, manifest that the interpretation of a contract shall not

ordinarily be done by the writ Court rather it should be left to the

arbitral tribunal to decide the same whether the contract is a sale

agreement or an agreement for sale which depends upon various

aspects including the terms and conditions, the conduct of the

parties and the evidence to be laid thereupon, which is within the

exclusive jurisdiction of the arbitral tribunal and, therefore, the

writ Court should show restraint in invading the jurisdiction of the

arbitral tribunal.

24. The single Bench has, in fact, entered into the domain of an

arbitral tribunal in ascertaining the nature of a contract and held

that the decision of the arbitral tribunal in arriving at a decision

that it is an agreement for sale and not sale agreement is

erroneous. It admits no ambiguity that the arbitral tribunal is

conferred with the jurisdiction to interpret the contract including

the nature of the agreement for the purpose of ascertaining the

requisite stamp duty leviable thereupon and if a decision is arrived

at, it cannot be said to be perverse or the arbitral tribunal

inherently lacks jurisdiction to decide the same.

25. We, thus, could not persuade ourselves to countenance the

decision of the Single Bench as in our opinion, the writ Court has

exceeded its jurisdiction and transgressed the boundaries set forth

in the catena of decisions rendered by the apex Court in this

regard.

26. The judgment impugned is, thus, set aside. The appeal is

accordingly allowed, but there shall be no order as to costs.

                            I agree



                            (M.S. Raman)                                            (Harish Tandon)
                              Judge                                                   Chief Justice




      SK Jena/Secy.









Location: High Court of Orissa, Cuttack.