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2019 Supreme(Bom) 1569

IN THE HIGH COURT OF BOMBAY
G.S. Patel, J.
S. Satyanarayana & Co, Vishakhapatnam - Appellant
Vs.
West Quay Multiport Private Limited, Mumbai - Respondent
Arbitration Application No. 261 of 2018
Decided On : 22-11-2019

Advocates Appeared:
Ketan Chotani, Adv., Pinky Bhansali, Adv., Ankita Singhania, Adv., Ranjit Shetty, Adv., Jonathan Jose, Adv., Avina Karnad, Adv.

Headnote:

Maharashtra Stamp Act 1958 - Section 3 - Arbitration Act - Section 11 - Matter for Collector of Stamps To Adjudicate - Arbitration Clause - Jurisdiction Clause - Contract for Development of Berth - Agreement Liable to Stamp - A contract is executed outside this State - It pertains to work to be done outside State - It contains an arbitration clause - That clause, and the jurisdiction clause, reference Mumbai. The arbitration is to be in Mumbai. Nothing else is to be done in Mumbai or Maharashtra - Disputes arise - Arbitration is invoked - Agreement is brought into this State - on agreement, an application under Section 11 of Arbitration Act is fled - Is the agreement liable to stamp in this state, where only thing to be done is arbitration - Applicant & Co, is a partnership firm based in Vishakhapatnam. Respondent West Quay is based in Mumbai - Weest Qeuay develops berths at various ports in India - Vishakhapatnam Port Trust, constituted under Major Port Trust Act, awarded respondent a works contract for development of a berth at their WeQe-6 Jetty at Vishakhapatnam - Respondent appointed applicant as a subcontractor under two agreements/work orders - These were for material supply and labor for construction of a compound wall for a stack yard at this WeQe-6 Jetty berth - Held, applicants argument overlooks a cardinal principle of arbitration and arbitration law. Arbitration is founded in contract and Garware Wall Ropes now tells us that such a contract is one and indivisible at least to the extent of its arbitration agreement - There is party autonomy in what they may decide between themselves and this must be respected by the Court - Arbitrator himself is a creature of contract. Arbitration is impossible without agreement - Courts view therefore it is not possible to accept submission by the applicant that this document, only because in-State part of it is limited to arbitration, falls outside the purview of the Maharashtra Stamp Act - I note that the original of the agreement is with the respondent on instructions makes a statement that they have no objection to the applicant proceeding for adjudication on the basis of certified or authenticated copy - Order accordingly.

JUDGMENT :

G.S. Patel, J.

A contract is executed outside this State. It pertains to work to be done outside the State. It contains an arbitration clause. That clause, and the jurisdiction clause, reference Mumbai. The arbitration is to be in Mumbai. Nothing else is to be done in Mumbai or Maharashtra. Disputes arise. Arbitration is invoked. The agreement is 'brought into' this State - on the agreement, an application under Section 11 of the Arbitration Act is fled. Is the agreement liable to stamp in this state, where the only thing to be done is arbitration? Is arbitration a 'thing done or to be done' in this state? That is the short, yet interesting, question of interpretation of one portion of Section 3 of the Maharashtra Stamp Act 1958 that arises in this application.

2. The applicant, S Satyanarayana & Co, is a partnership firm based in Vishakhapatnam. The respondent, Weest Qeuay Multiport Private Limited ("West Quay") is based in Mumbai. Weest Qeuay develops berths at various ports in India. The Vishakhapatnam Port Trust, constituted under the Major Port Trust Act, awarded the respondent a works contract for the development of a berth at their WeQe-6 Jetty at Vishakhapatnam. The respondent appointed the applicant as a subcontractor under two agreements/work orders both dated 5th December 2012. These were for material supply and labour for construction of a compound wall for a stack yard at this WeQe-6 Jetty berth at the West of Essar Pallet Plant in Vishakhapatnam port.

3. The two work orders are themselves not in dispute. The first of these is at Exhibit "A1" from page 20. The total consideration is Rs. 1.85 crores. There are contractual provisions and the relevant clause for our purposes is 55.2 at page 79 which read thus:

    "55.2 All disputes of differences of any kind whatsoever which shall any time arise between the parties hereto touching or concerning the works or the execution of this Contract or effect thereof or to the rights of liabilities of the parties or arising out of or in relation thereto whether during or after termination forced closure or breach of the Contract (other than those in respect of which the decision of any person is expressed to be final and binding by the Contract) shall, after written notice by either of the Parties to the Contract to the other Party, be referred to arbitration as per the provision of the Arbitration and Conciliation Act 1996. The Arbitral Tribunal shall comprise of 3 (three) Arbitrators. The Award of the Arbitral Tribunal shall be final and binding upon the Parties hereto. The Arbitral Tribunal shall have summary powers and shall be entitled to give interim directions and awards from time to time. The Arbitration shall be held in Mumbai. The language of the Arbitration shall be English."

4. The second contract at Exhibit "A2" from page 115 was for a contract value of Rs. 3.4 crores. It has an identical arbitration clause 55.2 at page 175.

5. There is no dispute that the contract were signed by the applicant in Vishakhapatnam and by the respondent in Mumbai. The later signature was that of the applicant. There is also no dispute that all the contract works were to be done in Vishakhapatnam outside Maharashtra. The only thing contemplated within Maharashtra was arbitration under the clause 55.2 of each agreement, reproduced above. There is also no dispute about whether or not the documents was stamped in accordance with the local statute in Vishakhapatnam.

6. The petition recites that disputes and differences having arisen, the applicant invoked arbitration by its letters dated 2nd and 3rd November 2015 (Exhibit "C1" and "C2) and made a nomination. The respondent opposed this saying inter alia in its letter of 24th November 2015 that the applicants had not clarified which agreement they were raising disputes under. There was some controversy about the nomination and acceptance of arbitration by a former retired Judge of the High Court, but I need not dwell on that as nothing turns

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