2015 Supreme(Chh) 316
IN THE HIGH COURT OF CHHATTISGARH AT BILASPUR
Goutam Bhaduri, J.
SAV Steels Private Limited, Kolkata – Appellant
Vs.
Ekta Ispat and Power Limited, Raipur – Respondent
Arbitration Appeal No. 10 of 2015
Decided On : 14-08-2015
For the Appellants :Mr. B.P. Sharma with Mr. Raza Ali, Advocates.
For the Respondents:Mr. Nalin Tripathi with Mr. Ankit Singhal, Advocates.
Headnote:
Arbitration & Conciliation Act, 1996 - Section 37 - Indian Stamp Act, 1899 - Section 33 - Companies Act, 1956 - Section 108 - Indian Evidence Act, 1872 - Code of Civil Procedure, 1908 - Share purchase agreement - Power to determine admissibility - Oppression and mismanagement - Brief facts of case are that an award was passed by Arbitral Tribunal consisting of Hobble Justice and two others - After passing of said award an application was filed under Section 34 of Arbitration & Conciliation Act, 1996 to set-aside said award raising various grounds - While said application for setting-aside award was pending another preliminary objection to maintainability of award was made by I.A - It was contended in said application that share purchase agreement containing arbitration clause was not executed on requisite non-judicial stamp as applicable in State of Chhattisgarh and since necessary stamp duty was not paid said agreement cannot be acted upon - Objection was further to effect that appointment of arbitrator was not according to mandatory provisions of Section 11 (3) of Act of 1996 as arbitrator was appointed by counsel and not by parties therefore constitution of Arbitral Tribunal itself was bad and proceedings drawn thereafter has no sanctity in eyes of law – Held, Stamp Act is a fiscal measure enacted to secure revenue for State on certain classes of instruments - it is not enacted to arm a litigant with a weapon of technicality to meet case of his opponent - Stringent provisions of Act are conceived in interest of revenue - Once that object is secured according to law party staking his claim on instrument will not be defeated on ground of initial defect in the instrument - Counsel for appellant has also placed his reliance in case law reported in SMS Tea Estates Private Limited v. Tea Company Private Limited - Reading of case law would show in that case at initial stage issue that arbitration agreement is compulsory required to be stamped which is unregistered cannot be enforced was in question in that case - Document was not admitted for evidence so as to come within purview of Section 36 of Indian Stamp Act - In instant case since document share purchase agreement was admitted and acted upon by parties it was admitted by arbitrator in evidence therefore admissibility of such document cannot be questioned – Consequently reliance placed by appellant do not come to rescue – Therefore order which is under challenge do not come within purview as main application under Section 34 of Act of 1996 is still to be adjudicated by Court – Consequently appeal in instant case also do not lie in facts of case – Appeal dismissed
1. Challenge in this appeal under Section 37 of the Arbitration & Conciliation Act, 1996 is to the order dated 23.02.2015, passed in M.J.C. No. 121/2013, passed by the District Judge, Bilaspur, whereby an interim application (I.A. No. 2/15), filed by the appellant to set-aside the arbitral award dated 15.07.2013 was dismissed.
2. Brief facts of the case are that an award was passed by the Arbitral Tribunal consisting of Hon'ble Shri Justice S.K. Tiwari (Retd.) and two others. After passing of the said award, an application was filed under Section 34 of the Arbitration & Conciliation Act, 1996 (herein after referred to as 'the Act of 1996') to set-aside the said award raising various grounds. While the said application for setting-aside the award was pending, another preliminary objection to the maintainability of the award was made by I.A. No. 2/15 on 16.01.2015. It was contended in the said application that share purchase agreement containing arbitration clause was not executed on the requisite non-judicial stamp as applicable in the State of Chhattisgarh and since the necessary stamp duty was not paid, the said agreement can not be acted upon. The objection was further to the effect that the appointment of arbitrator was not according to the mandatory provisions of Section 11 (3) of the Act of 1996 as the arbitrator was appointed by the counsel and not by the parties, therefore, the constitution of Arbitral Tribunal itself was bad and the proceedings drawn thereafter has no sanctity in the eyes of law.
3. The learned District Judge on such preliminary objections, while adjudicating the same by the impugned order dated 23.02.2015 held that the appointment of arbitrator was not objected during arbitral proceeding, therefore, it would amount to waiver of the right. It was further held that the case law relied on by the appellant/applicant reported in (2011) 14 SCC 66, SMS Tea Estates Pvt. Ltd. v. Chandmari Tea Company Pvt. Ltd. that the question of stamp duty would be in between the State and the persons, who executed it and further held that it will not prejudice the parties. Further the Court held that under Section 19 of the Act of 1996, the Arbitral Tribunal has power to determine the admissibility of the documents. The Court further held that since no objection was raised during arbitral proceeding, therefore, the appointment of arbitrator can not be called in question subsequently. Eventually the I.A. No. 2 was rejected. As against such dismissal, the instant appeal under Section 37 of the Arbitration & Conciliation Act, 1996 has been filed.
4. Mr. B.P. Sharma, learned counsel appearing on behalf of the appellant would submit that the learned District Judge has wrongly observed the fact that Hon'ble Justice Shri S.K. Tiwari (Retd) was appointed by the Hon'ble High Court as in this case, arbitrator was not by the court but was appointed by the counsel and not by any of the parties. Therefore a wrong finding of fact is recorded. It is contended that the error is apparent on the face of record, therefore, it can not be sustained. He would further submit that as per scheme for appointment of presiding arbitrator, consent of the other appointed arbitrator namely Mr. Prashant Jaiswal, Sr. Advocate was not taken, therefore, the very appointment of the arbitrator was bad. It is further contended that as per Article-5 of Schedule I-A of the Indian Stamp Act, as is applicable in the State of Chhattisgarh, the agreement of sale of share, it attracts a requisite stamp duty, which was not paid and therefore, the said agreement which has been acted upon by the arbitrator was not admissible in view of Section 33 of the Indian Stamp Act, 1899. It is further contended that as per Section 33 (2), when such issue was raised, the District Judge was under bounden duty to examine the instrument i.e. the agreement and was under statutory obligation to ascertain that whether document was stamped with a stamp of the value and description requ