An insufficiently stamped instrument, including an arbitration agreement, cannot be acted upon by the court, and the document must be impounded and adjudicated for stamp duty and penalty before granting interim measures under section 9 of the Arbitration and Conciliation Act, 1996.

1. This appeal is directed against the order and judgment dated 30th August, 2013 delivered by the learned Principal District Judge Thane allowing application filed by the respondents under section 9 of the Arbitration and Conciliation Act, 1996. The appellants have challenged the said orders on various grounds raised in the memorandum of appeal.

2. Mr. Madon learned senior counsel for the appellants however raises an issue of maintainability of application under section 9 of the Arbitration and Conciliation Act, 1996 itself filed by the respondents on the ground of the memorandum of understanding executed by and between the parties dated 6th August, 2008 being insufficiently stamped. Since both the learned senior counsel have addressed this court on this issue, without going into the other issues raised in the appeal memo and since decision on this issue will have bearing on the disposal of the appeal itself, I will deal with this issue raised by the appellants.

Some of the relevant facts for the purpose of deciding this issue are as under:-

3. It was case of the respondents herein (original applicants) in their application under section 9 of the Arbitration and Conciliation Act, 1996 that the appellants and the respondents entered into an agreement (MOU) in respect of the suit property by which the appellants granted the developments rights of the suit property inter alia to construct building on certain part of the said property and to obtain TDR in respect of certain area affected as road in development plan of Mira Bhayander Municipal Corporation and other rights in respect of the said property including right to sell the premises in such buildings to be constructed on the said property on the terms and conditions recorded in the said memorandum of understanding dated 6th November, 2008.

4. The appellants however disputed this contention on the part of the respondents and contended that no rights of any nature whatsoever was created by the appellants in favour of the respondents under the said MOU. The appellants however in their reply to the application under section 9 before the learned Principal District Judge opposed the said application on various grounds including the ground that the alleged memorandum of understanding dated 6th November 2008 could not be read in evidence for non payment of proper stamp duty and the same was also not registered with the office of Sub Registrar of Assurances.

5. Mr. Madon, learned Senior counsel for the appellants invited my attention to various part of pleadings filed by both parties and also the prima facie finding rendered by the learned Principal District Judge in order and judgment dated 30th August, 2013. It is submitted that the learned Principal District Judge has rendered a prima facie finding that the MOU dated 6th November, 2008 was not a bare agreement to execute another agreement or that simply it was an expression of the desire on the part of the respondents but it was a concluded contract to render services on the part of the respondents herein towards proposed development of the suit land. It is also held that the intention and purpose to execute full-fledged agreement as contemplated under clause 10 was for the purpose of earmarking the portions of the suit land and to demarcate the same for individual construction after apportionment of the FSI/TDR amongst both the parties. The Principal District Judge also gave a prima facie finding that the alleged MOU was a valid contract enforceable within the ambit of law.

6. Mr. Madon, learned senior counsel submits that though the appellants had raised a specific plea that such MOU was required to be stamped under schedule I of the Bombay Stamp Act and not having been stamped sufficiently and not having been registered, such document cannot be acted upon and thus no interim measures could be considered by the learned Principal District Judge in such application filed by the respondents herein under section 9 of the Arb