M/S N. N. GLOBAL MERCANTILE PRIVATE LIMITED versus M/S INDO UNIQUE FLAME LTD. & ORS.

Citation: [2023] 9 S.C.R. 285 · Decided: 25-04-2023 · Supreme Court of India · Bench: K.M. JOSEPH · Disposal: Reference answered

Cited by 1 judgment(s) · cites 23 · see the full citation network in Lexace

Judgment (excerpt)

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[2023] 9 S.C.R. 285 : 2023 INSC 423
285
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED
v.
M/s INDO UNIQUE FLAME LTD. & ORS.
(Civil Appeal Nos. 3802-3803 of 2020)
APRIL 25, 2023
[K. M. JOSEPH, AJAY RASTOGI, ANIRUDDHA BOSE,
HRISHIKESH ROY AND C. T. RAVIKUMAR, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 11(6A), 7, 8, 9,
11 and 16 – Indian Stamp Act, 1899 – ss. 3, 33 & 35 – Contract Act,
1872 – ss. 2(h), 10 – Appointment of Arbitrators by The Chief Justice
of India Scheme, 1996 – Arbitration Agreement in an unregistered
instrument, which is not duly stamped, if valid and enforceable –
Whether the statutory bar contained in s.35 of the Stamp Act, 1899
applicable to instruments chargeable to stamp duty under s.3 read
with the Schedule to the Act, would also render the arbitration
agreement contained in such an instrument, which is not chargeable
to payment of stamp duty, as being non-existent, unenforceable, or
invalid, pending payment of stamp duty on the substantive contract/
instrument – Held [per K. M. Joseph, J. (for himself and for
Aniruddha Bose, J.)] : 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, which is 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 – An unstamped instrument, when
it is required to be stamped, being not a contract and not enforceable
in law, cannot, therefore, exist in law – The true intention behind
the insertion of s.11(6A) in the Act was to confine the Court, acting
under s.11, to examine and ascertain about the existence of an
Arbitration Agreement – The Scheme permits the Court, under s.11
of the Act, acting on the basis of the original agreement or on a
certified copy –The certified copy must, however, clearly indicate
the stamp duty paid – If it does not do so, the Court should not act
on such a certified copy – If the original of the instrument is
produced and it is unstamped, the Court, acting under s.11, is duty-
bound to act under s.33 of the Stamp Act – When it does so, the
other provisions, which, in the case of the payment of the duty and
penalty would culminate in the certificate under s.42(2) of the Stamp
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SUPREME COURT REPORTS
[2023] 9 S.C.R.
Act, would also apply – When such a stage arises, the Court will be
free to process the Application as per law – An Arbitration
Agreement, within the meaning of s.7 of the Act, which 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 payment of the requisite duty, necessary certificate
is provided under s.42 of the Stamp Act – The provisions of s.33
and the bar under s.35 of the Stamp Act, applicable to instruments
chargeable to stamp duty under s.3 read with the Schedule to the
Stamp Act, would render the Arbitration Agreement contained in
such instrument as being non-existent in law unless the instrument
is validated under the Stamp Act – Held (per C. T. Ravikumar, J.)
(concurring): Being unstamped or insufficiently stamped, the
agreement would not be available to be ‘admitted in evidence’ and
‘to be acted upon’, till it is validated following the procedures
prescribed under the provisions of the Stamp Act and till then, it
would not exist ‘in law’ – When the original document carrying the
arbitration clause is produced and if it is found that it is unstamped
or insufficiently stamped, the Court acting under s.11 is duty bound
to act u/s.33 of the Indian Stamp Act – Held (per Ajay Rastogi, J.)
(dissenting): The existence of a copy/certified copy of an arbitration
agreement whether unstamped/insufficiently stamped at the pre-
referral stage is an enforceable document for purposes of
appointment of an Arbitrator under s.11(6A) of the Act, 1996 where
the judicial intervention shall be minimal confined only to the prima
facie examination of “existence of an arbitration agreement” alone
keeping in view the object of 2015 amendment and the courts must
strictly adhere to the time schedule for appointment of Arbitrator
prescribed under s.11(13) of the Act, 1996 – All the preliminary /
debatable issues including insufficiently stamped/unduly stamped
or validity of the arbitration agreement etc. are referrable to the
Arbitrator/Arbitral Tribunal under s.16 of the Act, 1996 which, by
virtue of the Doctrine of Kompetenz - Kompetenz h

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