Bombay High Court
Vijay Sharma vs Vivek Makhija And Anr on 20 December, 2018
Author: G.S. Kulkarni
Bench: G.S. Kulkarni
1 8-arbap 300-18
psv
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
ARBITRATION APPLICATION NO.300 OF 2018
Vijay Sharma ..Applicant
Vs.
Vivek Makhija & Anr. ..Respondents
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Mr.Ankit Lohia with Mr.Dinesh Tiwari, Mr.Swapnil Ambure i/b.
M/s.Dinesh Tiwari & Associates for Applicant.
Mr.S.R. Ganbavale with Ms.Pooja Joshi for Respondent No.1.
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CORAM : G.S. KULKARNI, J.
DATE : 20th DECEMBER, 2018
P.C.:
In this application under Section 11 of the Arbitration and Conciliation Act, 1996, (for short, "the ACA"), at the outset, an issue which arises for consideration is whether the Court can proceed to adjudicate this application without touching the issue in regard to the document being not adequately stamped, which is an objection as raised on behalf of the respondents.
2. Learned Counsel for the applicant would submit that this issue fell for consideration before the learned Single Judge of this Court in Coastal Marine Construction and Engineering Limited Vs. Garware- Wall Ropes Limited1 wherein the Court has taken a view that such issue 1 Arbitration Petition No.24 of 2017 decided on 09.03.2018 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 ::: 2 8-arbap 300-18 need not detain the Court from proceeding with the adjudication of an application under Section 11 of ACA and this issue can be considered by the arbitral tribunal. It is informed at bar that this judgment and order passed by the learned Single Judge was challenged before the Supreme Court and that the order has been stayed and not the judgment.
3. On the other hand following the decision of the learned Single Judge in Jayraj Devidas & Ors. Vs. Nilesh Shantilal Tank 1 there are orders passed by the Court awaiting adjudication of stamp duties payable on the objected documents.
4. Be that as it may, the Court has repeatedly come across applications under Section 11 of the ACA wherein such preliminary issues/objections that the agreement/document is not adequately stamped are raised, requiring the Court to impound the document and forward the same to the stamp authorities for adjudication of the stamp duty payable on such documents, and then proceed to adjudicate the Section 11 application.
5. Whether the efficacy and expediency of arbitral proceedings would be adversely affected in awaiting adjudication by the stamp authorities is a matter of concern. The process of adjudication of the 1 Arbitration appeal No.45/13 dated 22.08.2014 ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 ::: 3 8-arbap 300-18 stamp duty on a document is invariably a long drawn process. Also issues such as, it would be whose liability, to pay the stamp duty, further delay the proceedings. After an order adjudicating the stamp duty is passed by the stamp authorities there is a statutory appeal available and then there are further proceedings and many times the matters reach this court in a writ petition against such orders passed by the appellate authorities, under the Stamp Act. Such issues have detained and delayed disposal of the Section 11 ACA applications.
6. Thus when the Court impounds the document with a direction that it be forwarded to the stamp authorities for adjudication of the stamp duty payable on the document by one of the parties, it consumes substantial time till the issue on payment of stamp duty is finalised. This obviously has resulted in not only delaying the adjudication of the Section 11(6) application but ultimately results in delaying the arbitral proceedings.
7. One of the arguments is that these issues can very well be agitated before the arbitral tribunal and more particularly considering 'the jurisdiction of the arbitral tribunal' under Section 16 of the Act. Another contention to support early adjudication and disposal of such application is also that an arbitration agreement even if contained in a document ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 ::: 4 8-arbap 300-18 which is not adequately stamped is to be considered as a separate contract to be severed from the principal agreement and is required to be independently acted upon in adjudicating the section 11 applications. This is being argued more particularly considering the incorporation of sub-section (6A) of section 11 by the recent amendment to the ACA (Act No.3 of 2016), under which it is contended that now the requirement of law is that the Court would confine its enquiry in a Section 11 application, only to ascertain the existence of an arbitration agreement and no other issues. There are recent judgments of the Supreme Court and this Court which are relied in support of this proposition wherein the Courts have held that the primary consideration for the Court would now be only to examine existence of an arbitration agreement between the parties.
8. The existence of an arbitration agreement in a broader sense would be required to be understood in terms of Section 7 of the ACA and not merely as contained in a document/agreement between the parties. Thus the ACA provides different categories of arbitration agreements, which the parties may invoke under a Section 11 application. It is likely that in some category of cases such issues of a document being inadequately stamped may be taken up during the arbitral proceedings and would fall for consideration before the arbitral ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 ::: 5 8-arbap 300-18 tribunal. Thus some incongruity is created amongst these classes of litigants.
9. Hence the issue is whether is it the intention of the legislature in adjudication of the Section 11 application to first conclude on the issues of adequate stamping of the document, this more particularly in view of the insertion of sub section (6A) in Section 11 of the ACA. It is significant that sub-section (13) is also incorporated by the Amending Act No.3 of 2016 (with effect from 23 October 2015) providing that an application as made under Section 11 for appointment of an arbitral tribunal, shall be disposed of, interalia by the Supreme Court or the High Court as expeditiously as possible, and an endeavour shall be made to dispose of the matter within a period of "sixty days" from the date of service of the notice on the opposite party.
10. It is a matter of common experience that several issues which arise in adjudication of the stamp duty on documents does not make it possible for the stamp authorities to decide this issue within a short time. Further as noted above, there are statutory appeals and further proceedings available to the parties. Awaiting such a long drawn course of action would clearly defeat the object of sub-section (13) of Section 11 of the ACA of speedy disposal of the said applications. ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 :::
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11. Section 11 confers a power on the court to make appointment of an arbitrator. Considering the scheme of the Arbitration and Conciliation Act and more particularly Section 16, it is quite clear that all issues on facts and law are at large to be adjudicated by the arbitral tribunal. It cannot be said that the arbitral tribunal would be handicapped in determination of the issues on admissibility of documents in evidence in that regard in making interim order or pass a final award. Even otherwise, in a situation where there is no arbitration agreement and the parties approach the civil court, such issue definitely would fall for consideration of civil court in the process of adjudication of the civil suit.
12.. For the above reasons in my humble opinion, when in adjudication of Section 11 application, an objection is raised on a document being not adequately stamped, whether it would be a proper course of action to halt and/or postpone adjudication of the said applications till the decision of the stamp authorities attain finality on the stamp duty to be paid on the document, interalia becomes a question of law of substantial importance having considerable legal consequences. This issue therefore needs consideration by a larger bench, for an authoritative pronouncement of the clear position in law. ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 :::
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13. In my respectful opinion, the following question of law would arise for consideration of the larger Bench:
"Whether it would be necessary for the Court before considering and passing final orders on an application under Section 11(6) of the Arbitration and Conciliation Act,1996, to await the adjudication by the stamp authorities, in a case where the document objected, is not adequately stamped ?"
14. In view of the above observations, Office to place this order alongwith the papers and proceedings before Hon'ble The Chief Justice, for His Lordship's appropriate consideration.
15. Mr.Aspi Chinoy, learned Senior Counsel who is present in the Court, in his usual fairness is willing to assist the Court as an amicus curaie.
[G.S. KULKARNI, J.] ::: Uploaded on - 20/12/2018 ::: Downloaded on - 25/12/2018 22:22:49 :::