M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD & Ors.

) (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 has the power to do so – Held (per Hrishikesh Roy, J.) (dissenting): The examination of stamping and impounding need not be done at the threshold by a Court, at the pre-reference stage under s.11 of the Arbitration Act, 1996 – Non-stamping /insufficient stamping of the substantive contract/instrument would not render the arbitration agreement non- existent in law and unenforceable /void, for the purpose of referring A B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 287 a matter for arbitration – An arbitration agreement should not be rendered void if it is suffering stamp deficiency which is a curable defect. Answering the reference, the Court HELD: per K. M. JOSEPH, J. (for himself and ANIRUDDHA BOSE, J.)

1.

An agreement, which is unenforceable on account of a substantive law, which would include the Stamp Act, would not be a contract, applying Section 2(h) of the Contract Act. It is only if an agreement is enforceable, that it would become a contract. It is only a ‘contract’, which would be the ‘Arbitration Agreement’, which is contemplated in Section 11(6A) of the Act. It may not be apposite to merely describe an unstamped Arbitration Agreement as a ‘curable defect’. As long it remains an unstamped instrument, it cannot be taken notice of for any purpose, as contemplated in Section 35 of the Stamp Act. It remains unenforceable. Section 17 declares the time at which an instrument, executed in India, must be stamped. The said provision contemplates that stamping of such an instrument must take place before or at the time of the execution of document. No Public Officer, nor Court nor Arbitrator, can permit any person to ask them to act upon it or receive it as evidence. In law, it is bereft of life. It is ‘not enforceable in law’. In the said sense, it also cannot exist in law. It would be void. The voidness is conflated to unenforceability receives fortification from Section 2(j) of the Contract Act which renders a contract which ceases to be enforceable void. What Section 11(6A) contemplates is a contract and it is not an agreement which cannot be treated as a contract. This is despite the use of the words ‘arbitration agreement’ in Section 11(6A). In other words, contract must conform to Section 7 of the Act. It must also, needless to say, fulfil the requirements of the Contract Act. [Paras 70 & 71][351-B-F]

1.

An agreement which is unstamped or insufficiently stamped is not enforceable, as long as it remains in the said condition. Such an instrument would be void as being not enforceable [See Section 2(g) of the Contract Act]. It would not A B C D E F G H 288 SUPREME COURT REPORTS [2023] 9 S.C.R. in the said sense exist in law. It can be “validated” by only the process contemplated in Section 33 and other provisions of the Stamp Act. This necessarily means that the court would not view it as enforceable, and therefore, existing in law. In the sense explained, it would not be found as ‘not void’ and therefore ‘not invalid’. Thus, in the context of the Act, the Stamp Act and the Contract Act, the opinion of this Court in SMS Tea Estates, in this regard as reiterated in Garware and approved in Vidya Drolia is correct. [Para 74][353-E-G]

2. 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 Section 2(h) of the Contract Act and is not enforceable under Section 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. Therefore, paragraphs-22 and 29 of Garware are approved. To this extent, this Court also approves of Vidya Drolia, insofar as the reasoning in paragraphs-22 and 29 of Garware is approved. [Para 110][374- E-F]

The Scheme permits the Court, under Section 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 as held in SMS Tea Estates. If it does not do so, the Court should not act on such a certified copy. [Para 112][375-A]

The provisions of Sections 33 and the bar under Section 35 of the Stamp Act, applicable to instruments chargeable to stamp duty under Section 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. [Para 115][375-D-E] N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited and others (2021) 4 SCC 379 – overruled. A B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 289 SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66 : [2011] 9 SCR 382; Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited (2019) 9 SCC 209 : [2019] 5 SCR 579; Vidya Drolia and others v. Durga 1; Trading Corporation Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram v.

1. Receiving the very ‘instrument’ which is carrying the arbitration agreement or containing an arbitration clause from the party who asserts its existence is essentially an act of receiving the evidence, in that limited sense. Therefore, how can the Court, which is having authority and competence to receive evidence, for the purpose of invoking the power under Section 11 (6), abstain from proceeding further in terms of Section 33 if it appears to it that such instrument produced before it, though required to be stamped, is unstamped or is not duly stamped. In terms of the mandate under Sub-section (2) of Section 33, for that purpose, the Section 11 Judge who received evidence shall ‘examine’ the instrument so chargeable and so produced 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. Proviso (b), would only permit a Judge of the High Court for delegation of the duty of examining and impounding any such instrument to such officer as the Court may A B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 291 appoint in that behalf. Thus, it only gives discretion to a Judge of the High Court to delegate the duty of examining and impounding any such instrument in the manner mentioned under the said proviso if he chooses not to proceed in the manner provided for impounding the instrument in accordance with the relevant provision, by himself. When that be the provision under Section 33 (1) and (2), a conjoint reading of which obviously makes it mandatory for the Court exercising the power under Section 11 (6) to proceed in terms of the mandate under Section 33 when the circumstances legally invites its invocation. A contra view, would render Sub-section (2) of Section 33 and proviso (b) redundant and would defeat the very soul of the provisions as relates their application in respect of application filed under Section 11(6) of the Act. [Para 5][379-C-H]

2. What is permissible to be produced as secondary evidence i.e., other than the original document in terms of Section 2(a) of the scheme framed under Section 11(10) of the Act, is nothing but certified copy. But such a certified copy, would not be available to be proceeded with under Section 33 of the Stamp Act if it is unstamped or insufficiently stamped. In such circumstances, such certified copy shall not be acted upon. [Para 18][384-C-D] SBP & Co. v. Patel Engineering Ltd. and another (2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688 – followed. Mt. Bittan Bibi & Anr. v. Kuntu Lal & Anr. ILR [1952] 2 All 984 – referred to. per AJAY RASTOGI, J. (dissenting)

1. The limited scope of the Court under Section 11(6A) at the pre-referral stage is to examine whether the arbitration agreement, prima facie, exists as referred to under Section 7 of the Act, 1996, which includes only the determination of the following factors : (i) Whether the arbitration agreement is in writing? (ii) Whether the core contractual ingredients qua the arbitration agreement are fulfilled? (iii) On rare occasions, on a serious note of objection, if any, it may examine whether the subject matter of dispute is arbitrable? [Para 92][420-E-F] A B C D E F G H 292 SUPREME COURT REPORTS [2023] 9 S.C.R.

2. (i) The existence of a copy/certified copy of an arbitration agreement whether unstamped/ 60 insufficiently stamped at the pre-referral stage is an enforceable document for the purposes of appointment of an Arbitrator under Section 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 the appointment of Arbitrator prescribed under Section 11(13) of the Act, 1996. (ii) 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 Section 16 of the Act, 1996 which, by virtue of the Doctrine of Kompetenz - Kompetenz has the power to do so. (iii) The decision in SMS Tea Estates Private Limited stands overruled.

Paras 22 and 29 of Garware Wall Ropes Limited which are approved in paras 146 and 147 in Vidya Drolia and Others are overruled to that extent. [Para 97][422-H; 423-A-D] N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited and others (2021) 4 SCC 379 – affirmed. Vidya Drolia and others v. Durga Trading Corporation (2021) 2 SCC 1; SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66 : [2011] 9 SCR 382 and Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited (2019) 9 SCC 209 : [2019] 5 SCR 579 – overruled. Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and others (1971) 1 SCC 545 : [1971] 3 SCR 590 and Hariom Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514 : [2007] 10 SCR 772 - relied on. Naina Thakkar v. Annapurna Builders (2013) 14 SCC 354; Government of Andhra Pradesh and Others v P. Laxmi Devi(Smt.) (2008) 4 SCC 720 : [2008] 3 SCR 330; Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb (2020) UK SC 38; Shin-Etsu Chemical Co.

Ltd. v. Aksh Optifibre Ltd. and another (2005) 7 A B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 293 SCC 234 : [2005] 2 Suppl. SCR 699; Hindustan Steel Ltd. v. Dilip Construction Company (1969) 1 SCC 597 : [1969] 3 SCR 736; Vytla Sitanna v. Marivada Viranna AIR 1934 PC 105; Guru Nanak Foundation v. Rattan Singh and Sons (1981) 4 SCC 634 : [1982] 1 SCR 842; Food Corporation of India v. Joginderpal Mohinderpal and Another (1989) 2 SCC 347 : [1989] 1 SCR 880; SBP & Co. v. Patel Engineering Ltd. and another (2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688; Duro Felguera, S.A. v. Gangavaram Port Limited (2017) 9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading Private Limited v. Pradyuat Deb Burman (2019) 8 SCC 714 : [2019] 1 SCR 123; Uttarakhand Purv Sainik Kalyan Nigam Limited v. Northern Coal Field Limited (2020) 2 SCC 455; World Sport Group (Mauritius) Limited v.

MSM Satellite (Singapore) Pte. Limited (2014) 11 SCC 639 : [2014] 1 SCR 796; Pravin Electricals Private Limited v. Galaxy Infra and Engineering Private Limited (2021) 5 SCC 671; United India Insurance Company Limited v. Hyundai Engineering and Construction Company Limited (2018) 17 SCC 607 : [2018] 12 SCR 1085 – referred to. per HRISHIKESH ROY, J. (dissenting)

1. On a harmonious reading of the inconsistencies in the provisions of the three different Acts, it is found that the general law must yield to the special law in the sense, that an arbitration agreement cannot be rendered void on insufficient stamping by a general law, especially when none of the provisions of the Arbitration Act, 1996 which is a special Act provide for stamping. The requirement for the “formal” validity of an arbitration agreement under Section 7 of the Arbitration Act, 1996 would take precedence, considering the special nature of the Act and the principle of minimal judicial intervention. Applying the rule of construction that in cases of conflict between a specific law and a general law, the specific law prevails and the general law like the Contract Act, 1872 applies only to such cases which are not covered by the special law; therefore, Section2(e), 2(g) , 2(h) of the Contract Act, 1872 cannot override Section 7 contained in A B C D E F G H 294 SUPREME COURT REPORTS [2023] 9 S.C.R. the special law i.e. the Arbitration Act, 1996 when it comes to formal validity. Moreover, when the words of the statute in Section 11 of the Arbitration Act, 1996 do not mention “validity” or even “inoperable and incapable of being performed” as mentioned in Section 45 of the Arbitration Act, 1996 or “prima facie no valid arbitration agreement” in Section 8 of the Arbitration Act, 1996, it must be understood that the general words in a different statute such as the Contract Act, 1872 cannot override the specific words used in the special law. That is to say, that an arbitration agreement cannot be rendered “void” on insufficient stamping by a Section 11 judge when the scope of examination is only limited to the “existence” of the arbitration agreement and not “validity”. [Paras 79.1 & 79.2][473-B-F]

2. It is essential to interpret the special law in a way that gives effect to its specific provisions, while also ensuring that it is consistent with the general law to the extent possible. Impounding at the stage of Section 11 would stall arbitral proceedings right at the outset because of the statutory bar under Section 35 of the Stamp Act, 1899. One way to harmonise Section 35 of Stamp Act, 1899 and Section 11 of the Arbitration Act, 1996 is for the Section 11 judge to defer necessary stamping and impounding to the arbitrator/collector, as applicable. A plain reading of Section 35 of the Stamp Act, 1899 makes it clear that it does not preclude an Arbitrator or Collector to impound the unstamped/insufficiently stamped document. [Para 79.4][474-E-F]

3. The Arbitrator under Section 16 has the jurisdiction to decide on “existence” and “validity”. A plain reading of Section 11(6A) would show that the examination by Court is confined only to “existence” and not even “validity”. Moreover, the present reference only concerns with the formal requirement of stamping and not arbitrability. Applying contextual interpretation to render an arbitration agreement void on the formal requirement of stamping would defeat the very purpose of the Arbitration Act, 1996. A document cannot be rendered invalid or unenforceable especially if the defect is curable under the Stamp Act, 1899. Moreover, none of the provisions in the Stamp Act, 1899 have the effect of rendering a document invalid. Thus, the A B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 295 position in Vidya Drolia to the extent that it relies on Garware is incorrect. [Para 86.2][489-B-D] A N.N. Global Mercantile Private Limited v.

Indo Unique Flame Limited and others (2021) 4 SCC 379 – affirmed. Vidya Drolia and others v. Durga Trading Corporation (2021) 2 SCC 1; Garware Wall Ropes Limited v. Coastal Marine Constructions & Engineering Limited (2019) 9 SCC 209 : [2019] 5 SCR 579; SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited (2011) 14 SCC 66 : [2011] 9 SCR 382; United India Insurance Company Limited v. Hyundai Engineering and Construction Company Limited (2018) 17 SCC 607 : [2018] 12 SCR 1085; - overruled. SBP & Co v Patel Engg. Ltd. (2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688 – followed. Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and others (1971) 1 SCC 545 : [1971] 3 SCR 590; Hariom Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514 : [2007] 10 SCR 772 – relied on. National Insurance Company Limited v. Boghara Polyfab Private Limited (2009) 1 SCC 267 : [2008] 13 SCR 638; Govt. of AP. v P. Laxmi Devi (2008) 4 SCC 720 : [2008] 3 SCR 330; Bengal Immunity Co v.

State of Bihar (1955) 2 SCR 603; Govt. of India v. Vedanta (2020) 10 SCC 1; Amazon v. Future Retail (2022) 1 SCC 209; Chloro Controls v Severn Trent Water Purification Inc (2013) 1 SCC 641 : [2012] 13 SCR 402; Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and another (2005) 7 SCC 234 : [2005] 2 Suppl. SCR 699; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd. (2011) 8 SCC 333 : [2011] 11 SCR 1; Hindustan Steel Ltd. v. Dilip Construction Company (1969) 1 SCC 597 : [1969] 3 SCR 736; Chiranji Lal (Dr.) v. Hari Das (2005) 10 SCC 746 : [2005] 1 Suppl. SCR 359; Jagdish Narain v. Chief Controlling Revenue Authority, AIR 1994 All 371; RIO Glass Solar SA v. Shriram EPC Limited B C D E F G H 296 SUPREME COURT REPORTS [2023] 9 S.C.R. A B C D E F G H and Ors. (2018) 18 SCC 313; Commissioner of IT v. Chandanben Maganlal (2000) 245 ITR 182; Hameed Joharan v. Abdul Salam (2001) 7 SCC 573 : [2001] 1 Suppl. SCR 469; Chiranji Lal (Dr.) v.

Hari Das (2005) 10 SCC 746 : [2005] 1 Suppl. SCR 359; Burjore and Bhawani Prasad v Bhagana ILR 10 Cal 557; Sainik Motors v State of Rajasthan 1962 (1) SCR 517; State of UP v Babu Ram AIR 1961 SC 751 : [1961] SCR 679; ICICI Ltd. v. East Coast Boat Builders & Engineers Ltd (1998) 9 SCC 728; KR Raveendranathan v. State of Kerala (1996) 10 SCC 35; Sundaram Finance Ltd. v. NEPC India Ltd (1999) 2 SCC 479 : [1999] 1 SCR 89; Ador Samia Pvt Ltd. v. Peekay Holdings Ltd (1999) 8 SCC 572 : [1999] 1 Suppl. SCR 658; Konkan Railways Corpn v. Mehul Construction Co (2000) 7 SCC 201 : [2000] 2 Suppl. SCR 563; Konkan Railways Corpn v. Mehul Construction Co (2002) 2 SCC 388 : [2002] 1 SCR 728; A. Ayyasamy vs A. Paramasivam & Ors (2016) 10 SCC 386 : [2016] 11 SCR 521; Black Pearl Hotels v Planet M. Retail Ltd. (2017) 4 SCC 498 : [2017] 2 SCR 50; Duro Felguera, S.A. v. Gangavaram Port Limited (2017) 9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading Private Limited v.

Pradyuat Deb Burman (2019) 8 SCC 714 : [2019] 1 SCR 123; Pravin Electricals Private Limited v. Galaxy Infra and Engineering Private Limited (2021) 5 SCC 671; Fisser v. International Bank, 282 F.2d 231, 233 (2d Cir 1960); Travancore Devaswom Board v. Panchamy Pack, 2004 13 SCC 510; Union of India v Popular Construction Co 2001 (8) SCC 470 : [2001] 3 Suppl. SCR 619; St. Stephen’s College v. University of Delhi (1992) 1 SCC 558 : [1991] 3 Suppl. SCR 121; Great Offshore Ltd. v. Iranian Offshore Engg. & Construction Co. (2008) 14 SCC 240 : [2008] 12 SCR 515; Trimex International FZE vs Vedanta Aluminum Limited, India 2010 (1) SCALE 574; Union of India v Kishorilal Gupta & Bros (1959) 1 SCR 493; National Agricultural Co-operative Marketing federation India Ltd. v Gains Trading Limited M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 297 (2007) 5 SCC 692; Naihati Jute Mills Ltd. v Khayaliram Jagannath AIR 1968 SC 522 : [1968] SCR 821; P Manohar Reddy & Bros. v.

Maharashtra Krishna Valley Development Corporation & Ors (2009) 2 SCC 494 : [2008] 17 SCR 1217; Oriental Insurance Company v. Narbheram Power and Steel Private Limited (2018) 6 SCC 534 : [2018] 4 SCR 826; Guru Nanak Foundation v. Rattan Singh and Sons (1981) 4 SCC 634 : [1982] 1 SCR 842; M/s Shree Vishnu Constructions v. The Engineer in Chief Military Engineering Service and others SLP(C) No. 5306/2022 dated 1.4.2022; Intercontinental Hotels Group (India) Private Ltd. v. Waterline Hotels Pvt. Ltd 2022 SCC OnLine SC 83 – referred to. J.M.A. Raju v Krishnamurthy Bhatt, AIR 1976 Guj 72; Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765; Mattegunta Dhanalakshmi v Kantam Raju Saradamba, AIR 1977 AP 348; Puranchandra v Kallipada Roy, AIR 1942 Cal 386; Boottam Pitchiah v Boyapati Koteswara Rao AIR 1964 AP 519; Board of Revenue v N. Narasimhan AIR 1961 Mad 504; A. Bapiraju v District Registrar AIR 1968 AP 142; Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765; Chennai Container Terminal Pvt Ltd v.

Union of India, 2007 3 Arb LR 218 (Mad); United India Insurance Co. Ltd. V Kumar Texturisers AIR 1999 Bom 118 - referred to. Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb (2020) UKSC 38; United Insurance Company of Pakistan Limited v. Hafiz Muhammad Siddique 1978 PLD SC 279; House of Lords in Fiona Trust and Holding Corporation v. Privalov (2007) 1 All ER(Comm) 891; Buckeye Check Cashing Inc. v. Cardegna, 2006 SCC OnLine US SC 14; Henry Schein, Inc. v Archer and White Sales, Inc 2019 SCC Online US SC 1; Weatherford Oiltool Middle East Limited vs Baker Hughes Singapore PTE 2022 SCC OnLine 1464; Badgerow v. Walters, 596 U.S. 2022 – referred to. A B C D E F G H 298 SUPREME COURT REPORTS [2023] 9 S.C.R. A B C D E F Case Law Reference In the judgement of K. M. JOSEPH (2021) 4 SCC 379 [2011] 9 SCR 382 overruled affirmed [2005] 4 Suppl. SCR 688 followed [2017] 10 SCR 285 [2019] 1 SCR 123 [2019] 5 SCR 579 (2021) 2 SCC 1 [1969] 3 SCR 736 referred to referred to affirmed affirmed relied on [2008] 12 SCR 515 referred to [2002] 5 Suppl.

SCR 387 referred to [2020] 3 SCR 798 affirmed [2005] 2 Suppl. SCR 699 referred to [2008] 13 SCR 638 referred to [2003] 6 Suppl. SCR 1134 referred to [2018] 12 SCR 1085 [2018] 4 SCR 826 relied on referred to [2005] 1 Suppl. SCR 359 referred to [2007] 10 SCR 772 [2009] 10 SCR 373 [2014] 12 SCR 488 [1971] 3 SCR 590 referred to referred to relied on referred to Para 2 Para 4 Para 5 Para 5 Para 5 Para 5 Para 8 Para 13 Para 18 Para 19 Para 27 Para 28 Para 30 Para 57 Para 62(iii) Para 63 Para 66 Para 74 Para 77 Para 81 Para 93 G In the Judgment of C. T. RAVIKUMAR, J. [2005] 4 Suppl. SCR 688 followed Para 2 In the Judgment of AJAY RASTOGI, J. (2021) 4 SCC 379 affirmed Para 2 H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 299 (2021) 2 SCC 1 [2011] 9 SCR 382 (2013) 14 SCC 354 [2019] 5 SCR 579 [1971] 3 SCR 590 [2007] 10 SCR 772 overruled overruled referred to overruled relied on relied on [2008] 3 SCR 330 referred to [2005] 2 Suppl.

SCR 699 referred to [1969] 3 SCR 736 [1982] 1 SCR 842 [1989] 1 SCR 880 referred to referred to referred to [2005] 4 Suppl. SCR 688 referred to [2017] 10 SCR 285 [2019] 1 SCR 123 (2020) 2 SCC 455 [2014] 1 SCR 796 (2021) 5 SCC 671 [2018] 12 SCR 1085 referred to referred to referred to referred to referred to referred to In the Judgment of HRISHIKESH ROY, J. (2021) 4 SCC 379 (2021) 2 SCC 1 [2019] 5 SCR 579 [2011] 9 SCR 382

affirmed overruled overruled overruled [2005] 4 Suppl. SCR 688 followed [2008] 13 SCR 638 referred to [1971] 3 SCR 590 [2007] 10 SCR 772 relied on relied on [2008] 3 SCR 330 referred to Para 2 Para 5 Para 6 Para 8 Para 17 Para 17 Para 20 Para 26 Para 47 Para 59 Para 60 Para 63 Para 67 Para 68 Para 83 Para 87 Para 89 Para 89 Para 6 Para 6 Para 6 Para 7 Para 16.1 Para 16.1 Para 16.7 Para 16.7 Para 17.1 A B C D E F G H 300 SUPREME COURT REPORTS [2023] 9 S.C.R. [2001] 1 Suppl. SCR 469 referred to Para 31.2 B C D E F A (1955) 2 SCR 603 (2020) 10 SCC 1 (2022) 1 SCC 209 [2012] 13 SCR 402 referred to referred to referred to referred to [2005] 2 Suppl. SCR 699 referred to [2011] 11 SCR 1 [1969] 3 SCR 736 referred to referred to [2005] 1 Suppl. SCR 359 referred to (2018) 18 SCC 313 referred to 1962 (1) SCR 517 [1961] SCR 679 (1998) 9 SCC 728 (1996) 10 SCC 35 [1999] 1 SCR 89 referred to referred to referred to referred to referred to [1999] 1 Suppl.

SCR 658 referred to [2000] 2 Suppl. SCR 563 referred to [2002] 1 SCR 728 [2016] 11 SCR 521 [2017] 2 SCR 50 [2017] 10 SCR 285 [2019] 1 SCR 123 (2021) 5 SCC 671 referred to referred to referred to referred to referred to referred to referred to G 2004 13 SCC 510 [2001] 3 Suppl. SCR 619 referred to [1991] 3 Suppl. SCR 121 referred to [2008] 12 SCR 515 H 2010 (1) SCALE 574 referred to referred to Para 17.3 Para 17.3 Para 17.3 Para 20.1 Para 20.1 Para 20.2 Para 23 Para 25 Para 26 Para 32 Para 32 Para 40 Para 40 Para 41 Para 42 Para 42 Para 43 Para 62 Para 67 Para 72 Para 72 Para 73 Para 78.1 (iii) Para 78.3 Para 79 Para 80.7 Para 80.8 M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. 301 (1959) 1 SCR 493 (2007) 5 SCC 692 [1968] SCR 821 [2008] 17 SCR 1217 [2018] 12 SCR 1085 [2018] 4 SCR 826 [1982] 1 SCR 842 referred to referred to referred to referred to overruled referred to referred to Para 81.1 A Para 81.2 Para 81.2 Para 81.2 Para 84 Para 84.1 Para 85.6 CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.

3802- 3803 of 2020. From the Judgment and Order dated 30.09.2020 in WP No.1801 of 2020 and dated 28.10.2020 in RAST No. 9819 of 2020 of the High Court of Judicature at Bombay at Nagpur. Gourab Banerjee, Sr. Adv. (Amicus Curiae) Gagan Sanghi, Rameshwar Prasad Goyal, Advs. for the Appellant. K. Ramakanth Reddy, Ms. Malvika Trivedi, Sr. Advs., Rajul Shrivastav, Mohit D. Ram, Monish Handa, Ms. Charu Ambwani, Raghu Gurram, Ms. Kavya Vijay, Ms. Komal Agarwal, Sanjay Kapur, Ms. Megha Karnwal, Surya Prakash, Arjun Bhatia, Ms. Akshata Joshi, Ms. Astha Gumber, Debesh Panda, Naman Maheshwari, Garv Malhotra, Neil Chatterjee, Udbhav Gady, Ms. Snehal Maheshwari, Rahul Totala, Eshan Aprameya Chaturvedi, Premlal Krishnan, Rahul Arya, Madhav Bhatia, Ms. Bani Dixit, Yogesh Sharma, Shailendra Slaria, Arun Pandian, Shreshth Arya, Aditya Pandey, Himanshu Kapoor, Alok Tripathi, Ms. Sujal Gupta, Puneet Singh Bindra, Ms. Anshika Mishra, Ms.

Simran Jeet, Rishabh Gupta, Advs. for the Respondents. The Judgments of the Court were delivered by K. M. JOSEPH, J. Index* A. B. THE REFERENCE ........................................................ 2 A BIRD’S OVERVIEW OF THE FACTS IN N.N. GLOBAL ........................................................................ 3 *Ed. Note: Pagination in the Index is as per the original judgment. B C D E F G H 302 SUPREME COURT REPORTS [2023] 9 S.C.R. A C. THE FINDINGS IN N.N. GLOBAL IN REGARD TO THE QUESTION UNDER THE CAPTION ‘VALIDITY OF AN ARBITRATION AGREEMENT IN AN UNSTAMPED AGREEMENT’ .............................................................. 5 SUBMISSION OF THE PARTIES.............................. 15 ANALYSIS ................................................................... 29 THE ACT ...................................................................... 30 D. E. F. G. WHAT LED TO THE INSERTION OF SECTION 11(6A)?.......................................................................... 32 H. THE SCHEME OF THE STAMP ACT ....................... 53 I. J. HINDUSTAN STEEL LIMITED ANALYSED .......... 59 THE INDIAN CONTRACT ACT, 1872 - A SURVEY; DISSECTION OF GARWARE, VIDYA DROLIA AND N.N. GLOBAL ............................................................. 64 K. THE STAMP ACT – WHETHER A PROCEDURAL L. M. N. O. LAW? ............................................................................ 88 SECTION 7 OF THE ACT – ITS IMPACT ............... 97 THE ALTERNATIVE PERSPECTIVE .................... 105 THE AMICUS CURIE SPRINGS A SURPRISE ...... 111 SECTIONS 33 AND 35 OF THE STAMP ACT; THE COURT OR THE ARBITRATOR TO ACT? ........... 124 P. ARBITRATION AGREEMENT, A DISTINCT AGREEMENT AND ITS IMPACT?......................... 132 Q. CONCLUSIONS ........................................................ 137

1. We have perused the draft judgments prepared by our esteemed brothers Ajay Rastogi, J. and Hrishikesh Roy, J. With profound respect to our learned Brothers, we are unable to, however, concur with them in their reasoning and conclusions save as will be made clear. Hence, the following judgment. B C D E F G H M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.] 303 A. THE REFERENCE

2. A Bench of three learned Judges disposed of Civil Appeal Nos. 3802-3803 of 2020 by Judgment dated 11.01.2021. The Judgment is reported in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited and others1. What is of relevance for the purpose of the Reference is the following: “56. We are of the considered view that the finding in SMS Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] and Garware [Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] that the non-payment of stamp duty on the commercial contract would invalidate even the arbitration agreement, and render it non-existent in law, and unenforceable, is not the correct position in law.

In view of the finding in paras 146 and 147 of the judgment in Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] by a coordinate Bench, which has affirmed the judgment in Garware [Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324], the aforesaid issue is required to be authoritatively settled by a Constitution Bench of this Court.

We consider it appropriate to refer the following issue, to be authoritatively settled by a Constitution Bench of five Judges of this Court:

Whether the statutory bar contained in Section 35 of the Stamp Act, 1899 applicable to instruments chargeable to stamp duty under Section 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?

B. A BIRD’S OVERVIEW OF THE FACTS IN N.N. GLOBAL

3. The first respondent, who was awarded the Work Order, entered into a sub-contract with the appellant. Clause 10 of the Work Order, constituting the sub-contract, provided for an Arbitration Clause. The 1 (2021) 4 SCC 379 A B C D E F G H 304 SUPREME COURT REPORTS [2023] 9 S.C.R. A B C D E F G appellant had furnished a bank guarantee in terms of Clause 9. The invocation of the said guarantee led to a Suit by the appellant against the encashment of the bank guarantee. The first respondent applied under Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as, ‘the Act’, for short) seeking Reference. A Writ Petition was filed by the first respondent challenging the Order of the Commercial Court rejecting the Application under Section 8 of the Act. One of the contentions raised was that the Arbitration Agreement became unenforceable as the Work Order was unstamped. The High Court, however, allowed the Writ Petition filed by the first respondent. The issue relevant to this Bench was, whether the Arbitration Agreement would be enforceable and acted upon, even if the Work Order is unstamped and unenforceable under the Indian Stamp Act, 1899 (hereinafter referred to as, ‘the Stamp Act’, for short). C. THE FINDINGS IN N.N. GLOBAL IN REGARD TO THE QUESTION UNDER THE CAPTION ‘VALIDITY OF AN ARBITRATION AGREEMENT IN AN UNSTAMPED AGREEMENT’

4. The Court found that an Arbitration Agreement is a distinct and separate agreement, which is independent from the substantive commercial contract in which it is embedded. Under the Doctrine of Kompetenz–Kompetenz, the Arbitral Tribunal had competence to rule on its own jurisdiction, including objections with regard to the existence, validity and scope of the Arbitration Agreement. Section 16(1) of the Act was relied upon. The Court made a copious reference to case law in support of the Doctrine of Kompetenz-Kompetenz. Section 5 of the Act contemplated minimal judicial interference. The Court referred to the Maharashtra Stamp Act, 1958. Section 34 of the said Act, essentially, is pari material with Section 35 of the Stamp Act, 1899 hereinafter referred to as the Stamp Act. There are other provisions, which essentially follow the same pattern as is contained in the latter Act. The Court, thereafter, went on to refer to Item 63 of Schedule I of the Maharashtra Stamp Act, 1958, which dealt with ‘Works Contract’. It was found that the Stamp Act is a fiscal measure. Thereafter, the Court went on to discuss the Judgment of this Court reported in SMS Tea Estates Private Limited v. Chandmari Tea Company Private Limited2. The Court referred to the following part of the Judgment in SMS Tea Estates (supra): H 2 (2011) 14 SCC 66 M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.] 305 “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.

Therefore, when a lease deed or any other instrument is relied upon as contending 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.”

The Court further went on to find that, at the time SMS Tea Estates (supra) was decided, the law relating to reference to Arbitration under Section 11 of the Act, was expounded in the Constitution Bench decision reported in SBP & Co. v. Patel Engineering Ltd. and another3, among other cases. It was further found that the law laid down was that in an Application under Section 11(6) of the Act, the Court may determine certain threshold issues, such as, whether the claim was time-barred, or a stale claim; whether there was accord and satisfaction, which would preclude the need for reference to arbitration. Thereafter, the Court refers to the amendment to Section 11 by the insertion of Sub-Section (6A) in Section 11. The Court referred to the Judgment in Duro Felguera, S.A. v. Gangavaram Port Limited4, to conclude that what was to be gone into was only whether an Arbitration Agreement existed or not. The Court noted that the said position was affirmed by a Bench of three