The High Court
Case Details
IN THE HIGH COURT OF ORISSA AT CUTTACK W.A. No.629 of 2025 M/s. Sunflag Iron and Steel Company Ltd. …. Appellant -Versus- M/s. Tarini Prasad Mohanty, Keonjhar …. Respondent Advocates appeared in this case: For Appellant: For Respondent: 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 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 ------------------------------------------------------------------------------------- J U D G M E N T 12th August, 2025 -------------------------------------------------------------------------------------- W.A No.629 of 2025 Page 1 of 24 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
Facts
approached the High Court under Section 11(6) of the said Act for W.A No.629 of 2025 Page 2 of 24 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, W.A No.629 of 2025 Page 3 of 24 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 W.A No.629 of 2025 Page 4 of 24 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 W.A No.629 of 2025 Page 5 of 24 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 W.A No.629 of 2025 Page 6 of 24 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 W.A No.629 of 2025 Page 7 of 24 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.” W.A No.629 of 2025 Page 8 of 24 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 W.A No.629 of 2025 Page 9 of 24 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 W.A No.629 of 2025 Page 10 of 24 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 W.A No.629 of 2025 Page 11 of 24 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 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 learned arbitrator the W.A No.629 of 2025 Page 12 of 24 to impose a 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 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.” W.A No.629 of 2025 Page 13 of 24 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:
Legal Reasoning
“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 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.” IndustriesLtd. [Deep 15. Another three Judge Bench of the Supreme Court in Bhaven Construction through authorized signatory vs. Executive Engineer, Sardar Sarovar Narmada Nigam Limited and W.A No.629 of 2025 Page 14 of 24 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 W.A No.629 of 2025 Page 15 of 24 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.” the under 21. Therefore, Article 227 of remedy 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. W.A No.629 of 2025 Page 16 of 24 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 the judicial recognition alternative to constitutional remedies. Hence the application under Article 227 of the Constitution of India is not maintainable.” the parties should avail remedies before resorting that 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: W.A No.629 of 2025 Page 17 of 24 “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 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: Corporation (supra) “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: the have considered respective “11. We 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.” W.A No.629 of 2025 Page 18 of 24 (emphasis supplied) judicial interference beyond It is therefore, prudent for a Judge to not exercise discretion to allow 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.” 18. What can be reasonably deciphered from the judgments as (emphasis supplied) 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. W.A No.629 of 2025 Page 19 of 24 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 W.A No.629 of 2025 Page 20 of 24 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 W.A No.629 of 2025 Page 21 of 24 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 W.A No.629 of 2025 Page 22 of 24 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 W.A No.629 of 2025 Page 23 of 24 in the catena of decisions rendered by the apex Court in this regard. 26. The judgment impugned is, thus, set aside. The appeal is
Decision
accordingly allowed, but there shall be no order as to costs. I agree (M.S. Raman) Judge (Harish Tandon) Chief Justice SK Jena/Secy. Signature Not Verified Digitally Signed Signed by: SANJAY KUMAR JENA Designation: SECRETARY Reason: Authentication Location: High Court of Orissa, Cuttack. Date: 12-Aug-2025 17:36:36 W.A No.629 of 2025 Page 24 of 24