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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
A.K. Menon, J.
Vivek Mehta & Anr. – Applicants
Versus
KaRRs Designs & Developments & Ors. – Respondents
Arbitration Application No.101 of 2016
Decided On : 28-02-2022
Arbitration and Conciliation Act, 1996 – Section 11(8) and 12(1) - Settlement - Seeks appointment of a Sole Arbitrator - Application filed in remains pending for numerous reasons - Initially, parties were referred to mediation since they were in negotiations and meetings have been held prior - These meetings did not yield results and onrespondents raised objections to the maintainability of the petition since MOU was not sufficiently stamped - This is found to be recorded in an order dated - Eventually mediation having failed, the matter was taken up for hearing - After noting that clause 17 of MOU contained an arbitration clause, the court noted that stamp duty in respect of MOU was payable by applicants - Court in its order dated considered nature of MOU and observed that unless stamp duty is fully paid with penalty, court could not proceed with appointing an arbitrator - Whether respondent is estopped from raising contention of unenforceability of the agreement or the issue whether agreement was insufficiently or incorrectly stamped, can be decided finally at a later stage – Held, Court of the view that ratio in Intercontinental Hotel Group (supra) would apply squarely to the facts of this case as well - Deletion of this Section 11(6A) by 2019 amendment Court told is yet to be notified- existence of agreement not being in dispute, Court do not think it necessary to consider Mr. Kadam’s alternative argument as to ascertaining of existence of arbitration agreement culled out of correspondence. In my view, it would not be appropriate to consider the arbitration agreement as having been incorporated in correspondence between parties since the correspondence in turn refers to clause 17 - In present case Court have observed that pursuant to invocation of arbitration agreement the applicants have also nominated a Sole Arbitrator on 8th January, 2016. In conclusion, Court of view that application is liable to be allowed - Arbitration Application is disposed.
JUDGMENT :
P.C. :
1. This application filed under Section 11 of the Arbitration and Conciliation Act, 1996, seeks appointment of a Sole Arbitrator to adjudicate upon disputes that have arisen under a Memorandum of Understanding (MOU) dated 29th August, 2009. The application filed in 2016 remains pending for numerous reasons. Initially, the parties were referred to mediation since they were in negotiations and meetings have been held prior to 2017. These meetings did not yield results and on 18th April, 2019 the respondents raised objections to the maintainability of the petition since the MOU was not sufficiently stamped. This is found to be recorded in an order dated 18th April, 2019. Eventually mediation having failed, the matter was taken up for hearing on 26th November, 2019. After noting that clause 17 of the MOU contained an arbitration clause, the court noted that stamp duty in respect of the MOU was payable by the applicants.
2. In view of the objections to stamping, the court in its order dated 26th November, 2019 considered the nature of the MOU and observed that unless stamp duty is fully paid with penalty, the court could not proceed with appointing an arbitrator, in view of the decisions of the Supreme Court in Garware Wall Ropes Limited v/s. Coastal Marine Constructions & Engineering Ltd., (2019) 9 SCC 209 and SMS Tea Estates Private Limited v/s. Chandmari Tea Company Private Limited(P)., (2011) 14 SCC 66 The court did not venture to consider the nature of the document and recorded a statement on behalf of the applicants Advocates that they would submit the document of the Collector of Stamps along with a copy of the order so as to enable the Collector to adjudicate the correct duty payable. The matter was thereafter adjourned with a request to the Collector to decide the matter at his earliest convenience preferably before 24th January, 2019. The matter has remained pending since then. On 25th February, 2020 time was taken for parties to attempt a settlement.
3. On 3rd January, 2022 when the matter was listed before this court, a statement was made that no settlement had been arrived at. The matter therefore came to be listed for dismissal on 10th January, 2022, counsel informed the court that pursuant to the order of 26th November, 2019 the Collector had heard the applicants. The original instrument had been presented to the Collector and it was only now awaiting adjudication on the quantum of duty payable. The Collector was directed then to do so within one week.
4. On 17th January, 2022 the court was informed that the Collector had scheduled the matter on 20th January, 2022. Accordingly, the matter was listed on 20th January, 2022. No progress having been made, the matter was taken up for hearing and has been since heard. The learned Government Pleader who was present in court on the last occasion has appeared on notice and he informed the court that the Collector was expected to pass orders on 21st February, 2022.
5. Mr. Kadam submits that notwithstanding the fact that the Collector of Stamps is yet to pass an order on the adjudication application, the appointment of the arbitrator need not be delayed. He relies upon the verdict of the Supreme Court in Intercontinental Hotels Group (India) Pvt. Ltd. and Anr. v/s. Waterline Hotels Pvt. Ltd., 2022 SCC Online SC 83 holding that insufficiency of stamps is not a reason for refusing to appoint an arbitrator. Mr. Kadam submits that unlike an unstamped document which was the subject matter of numerous decisions of the Supreme Court including that of Vidya Drolia and Ors. vs. Durga Trading Corporation, (2021) 2 SCC 1, on a fair reading of the decision of the Supreme Court in N.N. Global Mercantile Private Limited v/s. Indo Unique Flame Limited and Ors., (2021) 4 SCC 379 and Intercontinental Hotels (supra), it is now clear that an arbitrator can be appointed in these circumstances. In this respect he draws support from S. N. Prasad, Hitek Industries (Bihar) Limited v/s. Mon
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