IMPORTANT POINTS
(1) Non-stamping or inadequate stamping of arbitration agreement is merely a curable defect – Arbitrator is duly empowered to decide objection as regards insufficient stamping of agreement.
(2) Jurisdiction to decide cannot mean to decide in a particular manner – While exercising such power, one may err on merits – Such error may not be one beyond jurisdiction.
(3) Interpretation of contracts should not generally be undertaken while exercising writ jurisdiction.

JUDGMENT :

ATUL S. CHANDURKAR, J

1. An objection raised under Section 16 of the Arbitration and Conciliation Act, 1996¹[For short, ‘the A and C Act’] that various agreements executed between the parties were insufficiently stamped was turned down by the learned Arbitrator. A challenge was raised to the said order by the objector through a writ petition preferred under Articles 226 and 227 of the Constitution of India²[For short, ‘the Constitution’]. A learned Single Judge of the High Court entertained the writ petition and upheld the objection raised under Section 16 of the A and C Act. Impounding of the said agreements was directed. The other party challenged this decision in a writ appeal that was allowed by the Division Bench of the High Court. The objector, being aggrieved, has approached this Court.

2. Leave granted.

3. Two issues arise for consideration in the present appeal, namely (a) whether in the exercise of jurisdiction under Articles 226 and 227 of the Constitution, a challenge to an order passed under Section 16 of the A and C Act ought to have been entertained, especially when the Arbitrator was seized of the arbitration proceedings? and (b) the learned Single Judge having upheld the challenge to an order passed under Section 16 of the A and C Act, whether the Division Bench was right in interfering with such exercise of jurisdiction and setting aside that order?

4. It is not necessary to refer to the facts in great detail. Suffice it to observe that an agreement for sale of iron ore came to be executed on 12.02.2004 between the appellant-M/s Tarini Prasad Mohanty³[For short, ‘the mine owner’] and the respondent-M/s Sunflag Iron and Steel Company Limited⁴[For short, ‘SISCO’]. Supplementary agreements were also entered into between the parties thereafter. During the course of their contractual engagement, disputes arose between the parties. In accordance with the arbitration clause contained in the agreement for sale, these disputes were referred to a Sole Arbitrator. SISCO as claimant made various claims against the mine owner, who in turn filed a counter claim against SISCO. On 05.02.2024 during the course of the arbitration proceedings, the mine owner filed an application under Section 16 of the A and C Act. It was stated therein that the agreement for sale dated 12.02.2004 alongwith various supplementary agreements had been insufficiently stamped. According to the mine owner, the contract between the parties was in the nature of ‘conveyance’ and, hence, it was necessary that the agreements had to be stamped in accordance with Article 23 of Schedule I to the Indian Stamp Act, 1899⁵[For short, ‘the Stamp Act’]. It was, thus, stated that unless the agreements were impounded and properly stamped, the arbitration proceedings could not continue.

5. The claimant filed its reply to the aforesaid objection and took the stand that the agreements between the parties had been duly stamped and there was no need to impound the same. It was further stated that such objection had not been raised when the counter claim was filed and it was not liable to be entertained as having been raised belatedly.

The learned Arbitrator after hearing both sides by his order dated 30.05.2024 turned down the said objection and held that the agreement between the parties was “an agreement to sell” and not “conveyance” or sale. Since the agreement had been properly stamped in accordance with Article 5(c) of Schedule I to the Stamp Act, the objection was rejected.

6. The mine owner being aggrieved by the aforesaid order challenged the same by filing a writ petition under Articles 226 and 227 of the Constitution of India before the High Court of Orissa⁶[For short, ‘the High Court’]. The prayers made in the writ petition read as under:

“A) Why the Impugned Order dated 30.05.2024 vide Annexure 1, passed by the Ld. Arbitral Tribunal shall not be quashed, being illegal, arbitrary and contrary to settled principles of law;

B) Why directions shall not be issued