Thread by @LiveLawIndia

A Constitution Bench of the #SupremeCourt will shortly pronounce judgment on the issue - whether the #arbitration clause in a contract, which is required to be registered and stamped, but is not registered and stamped, valid and enforceable

2 Separate opinions- One by J. Joseph, J. Bose, J. Ravikumar and the other by J. Rastogi and J. Roy

J. Joseph: The view taken in SMS Tea Estates as followed in Garware...is the correct position in law. NM Global was wrongly decided when it held to the contrary and overruled SMS Tea Estates and Garware

J. Joseph: An instrument which is exigible to stamp duty may contain an arbitration clause and which is not stamped cannot be said to be a contract enforceable in law within the meaning of S. 2(h) of the Contract Act and is not enforceable under S 2(g) of the Contract Act...

J. Joseph: An unstamped instrument when is required to be stamped being not a contract and not enforceable in law cannot therefore exist in law. Therefore we approve the para 22 and 29 of Garware. To this extent we also approve Vidhya Drolia.

J. Joseph:...The true intention behind the insertion of Section 11(6A) in the Act was to confine the court acting under S. 11 to examine the existence of an arbitration agreement.

J. Joseph: The scheme permits the court under S.11 to act on the basis of the agreement or certified copy. The certified copy must however clearly indicate the stamp duty paid as held in SMS Tea Estates. If it does not do so that the Court should not act on such certified copy.

J. Joseph: If the original instrument is produced and it is unstamped the Court acting under S. 11 is duly bound to act under S. 33 of the Stamp Act at this stage....

J. Joseph: An arbitration agreement within the meaning of S. 7 of the Act attracts stamp duty and which is not stamped or insufficiently stamped cannot be acted upon in. view of S. 35 of the Stamp Act unless following impounding and paying requisite duty....

J. Joseph: We further hold that the provisions of S. 33 and the bar under S. 35 of the Stamp Act...would render the arbitration agreement contained in such instrument as being non-existent in law until the instrument is validated under the Stamp Act

J. Joseph: ...We make it clear that we have not pronounced on the matter wrt S. 9 of the Act...We record our deep sense of appreciation for Mr. Gourab Banerji who has ably assisted this Court as an Amicus.

J. Ravikumar: Concurring with J. Joseph....Only certain issues consists addendum. The controversy in regard to the nature of the function to be performed under S. 11(6A)....continues to be judicial in nature.

J. Ravikumar:...with respect to secondary evidence i.e. certified copy...I have referred to S. 79 of the Evidence Act because the presumption of correctness is there. Therefore, it can be acted upon on the question whether it is stamped or not.

J. Rastogi: I have not been able to concur with the view expressed by my brother J. Joseph and also concurred by J. Ravikumar and J. Bose....

J Rastogi: my conclusion comes to be that at the stage of Section 11 the examination of the arbitration agreement should be done cautiously in a manner that it does not breach the legislative intent behind the provisions by opening the door wide open for judicial intervention.

J. Rastogi: ...the copy or certified copy of arbitration agreement whether unstamped or insufficiently stamped at the pre-reference stage is an enforceable document for the appointment of arbitrator.

J. Rastogi: under Section 11(6A) judicial interference should be minimal confining only to the prima facie examination of existence of an arbitration agreement...

J. Rastogi: All preliminary debatable issues including insufficiently stamped, unduly stamped and validity of the arbitration agreement are referable to the arbitrator under Section 16 of the Act....

J. Rastogi: The decision in SMS Tea Estate stands overruled. Para 22 and 29 of Garware... are overruled to that extent. We appreciate the contribution of Mr. Gourab Banerji as the Amicus.

J. Roy: I regret my inability to agree with the majority opinion....The objective behind the amendment of the Arbitration and Conciliation Act 1996 was to inter alia avoid procedural complexity and the delay in litigation before the Courts.

J. Roy: Impounding and stamping at the S. 11 stage will frustrate the very purpose of the amendment. As the enforcement of the arbitration agreement would be stalled on an issue which is capable of being resolved at a later stage.

J. Roy: To defer stamping to the stage of arbitrator would in my opinion achieve the object of both the acts...

J. Roy:The contours of jurisdiction of the judge referring matter for arbitration can't be permitted to suffer from confusion & ambiguity as can be seen the present 5-judges bench could not provide clarity on issue referred to us....leading to legal uncertainty

J. Roy: The constitution of a larger bench in this court is certainly not commonplace and on last occasion when 7-judges assembled was in the year 2017...Around 5 matters as I am informed are already awaiting the attention of 7-judges bench...

J. Roy:...Therefore, I would appeal to the legislative wing of the State to revisit amendments that might be necessary in the Stamp Act in its application to the Arbitration Act....

J. Roy: My opinion on the referred issues are as follows:

a. the examination of the stamping and impounding may not be done at the threshold at the pre-referal stage under Section 11 of the Arbitration Act.

b. Non stamping or insufficient stamping of the substantive contract instrument would not render the arbitration agreement non-existent in law, unenforceable, void for the purpose of referring a matter for arbitration....

An arbitration agreement should not be rendered void if it is suffering stamp deficiency which is curable defect. To this extent Garware...do not set out the correct law. The decision in SMS Tea Estate stands overruled.

J. Joseph: The reference to the Constitution Bench stands answered in terms of the judgment of J KM Joseph, concurred by J. Bose and J. Ravikumar. J. Roy and J. Rastogi have rendered separate opinion