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14 The prevailing position of law prior to the Three Judge decision in N.N.Global, however, was upset in N.N. Global by holding that there is no legal impediment to the enforceabilty of the arbitration agreement pending payment of stamp duty on the substantive contract. However, the adjudication of the rights and obligations would not proceed before complying with the mandatory provisions of the Stamp Act.

Dealing with the power to be exercised under Section 11, for appointment of an Arbitrator, it was held that the Arbitration Clause/Agreement, contained in substantive Contract/Instrument, on which the stamp duty has to be compulsorily paid and when such Instrument is unstamped, it shall be impounded by the authority, so that the deficit stamp duty may be paid, in accordance with law and the adjudication of the rights and obligations underlying the substantive Contract, by the Arbitrator can be commenced. As far as interim relief under Section 9 is concerned, it is categorically held that when such Tilak 20/68 CARBP 1430 NN Global.doc Contract/Instrument is unstamped, the Court may grant ad- interim relief to safeguard the subject matter of the arbitration, and the parties concerned be directed to take necessary steps for payment of requisite stamp duty in accordance with the provisions of the Stamp Act, within a time-bound manner.

"88. As far as the finding In para 28 of N.N. Global that the decision in SMS Tea Estates does not lay down the correct law, when it holds that an arbitration agreement, in an unstamped commercial contract, cannot be ated upon or is rendered unforceable, we are of the view that the finding in N.N.Global does not appear to be correct.

89. On perusal of para 29 would show that the court in N.N.Global proceeded o the basis that the arbitration agreement, being an independent contract is nor chargeable to payment of stamp duty and it would not validate the arbitration clause or render it unforceable, since it had an independent existence on its own, cannot hold good in the view of the admitted position before us that an arbitration agreement, in its own right, is exigible to stamp duty.

90. The whole premise of the court in N.N.Global being that the arbitration agreement, not being exigible to duty and it having a seperate existence, the commercial contract in which the arbitration agreement is contained, being unstamped, would not impact the arbitration agreement, cannot hold good. The reasoning in N.N.Global in para 32, for disapproving of Garware in para 22 thereof, that the arbitration clause would be non-existent in law and unforceable till the stamp duty is adjudicated and paid on the substantive contract, is again on the premise that the arbitration agreement is a seperate agreement under the Stamp Act, which is not exigible to stamp duty, which we have found is not the case in law."

11AIR 1952 Allahabad 996.

12 1969 (1) SCC 597,

Tilak





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Mr.Rebello has invited my attention to the decision in N.N.Global, where paragraph 8 of Hindustan Steel is cited with approval in paragraphs 51 and 52.

Dealing with the determining factor, as to whether the stage of Section 9, is 'evidentiary proceeding', as per the learned counsel, the time to ascertain the adequacy of stamp duty do not arise at the stage of Section 9, but it would arise later, at the evidentiary stage. It is his submission that Section 9 is akin to proceedings under Order 39 Rule 1 or Order 38 Rule 5 of CPC, and in his view, the judgment in N.N. Global do not preclude grant of Section 9 relief, pending the determination of adequacy of stamping.