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IN THE HIGH COURT OF DELHI AT NEW DELHI
Sachin Datta, J.
Ms Goyala Infra Projects Pvt. Ltd. – Appellant
Versus
The Engineer In Chief, Military Engineering Service – Respondent
Arb.P. 1048 of 2022
Decided On : 03-07-2023
Arbitration - Appointment of Sole Arbitrator - Indian Stamp Act, 1899 - A & C Act - Section 11 - Section 3 of the Indian Stamp Act
Fact of the Case:
The petitioner sought the appointment of an independent sole arbitrator to adjudicate the dispute between the parties under Section 11 of the Arbitration and Conciliation Act 1996. The respondent contended that the contract agreement was un-stamped and relied on the judgment of the Constitution Bench of the Supreme Court in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd. The disputes arose in the context of a tender process initiated by the respondent for 'Provision of Deficient Married Accommodation for Coast Guard Officers At Sector-52 Noida'. The petitioner invoked the arbitration agreement for various claims.
Finding of the Court:
The court found that the contract agreement was exempted from stamp duty under proviso (1) to Section 3 of the Indian Stamp Act. The court also acknowledged the existence of the arbitration agreement and appointed an independent arbitrator to adjudicate the disputes between the parties. The objections raised by the respondent regarding the merits/maintainability of the disputes were left to be decided by the arbitrator.
Issues: Existence of arbitration agreement, applicability of stamp duty exemption, maintainability of the disputes, appointment of independent arbitrator
Ratio Decidendi: The court's decision was influenced by the interpretation of the Indian Stamp Act and the Arbitration and Conciliation Act. The court emphasized the existence of the arbitration agreement and the role of the arbitrator in deciding the merits/maintainability of the disputes.
Final Decision: The court appointed an independent arbitrator to adjudicate the disputes between the parties and left the objections raised by the respondent regarding the merits/maintainability of the disputes to be decided by the arbitrator.
JUDGMENT
Sachin Datta, J.
1. The present petition under Section 11 of the Arbitration and Conciliation Act 1996, (the "A & C Act") seeks appointment of an independent sole arbitrator to adjudicate the dispute between the parties.
2. At the outset, learned standing counsel for the respondent, relying upon of the judgment of the Constitution Bench of the Supreme Court in N.N. Global Mercantile (P) Ltd. v. Indo Unique Flame Ltd., 2023 SCC OnLine SC 495, contends that the contract agreement in the present case is liable to be impounded since the same is un-stamped. Learned counsel for the petitioner has relied on proviso (1) to Section 3 of the Indian Stamp Act, 1899 to contend that there is an exemption from stamping of the contract agreement in the present case since the same has been awarded to the petitioner "for and on behalf of the President of India".
3. The fact that the contract was awarded to the petitioner "for and on behalf of the President of India" is not disputed by the respondent.
4. The proviso (1) to Section 3 of the Indian Stamp Act reads as under:
"3. Instruments chargeable with duty--
xx xx xx
Provided that no duty shall be chargeable in respect of--
(1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the Government would be liable to pay the duty chargeable in respect of such instrument."
5. Ex-facie, the contract agreement in the present is not chargeable to the payment of stamp duty and is exempted under proviso (1) to Section 3 of the Indian Stamp Act.
6. The disputes between the parties have arisen in the context of a tender process initiated by the respondent for 'Provision of Deficient Married Accommodation for Coast Guard Officers At Sector-52 Noida; pursuant to which vide letter dated 28.05.2013 the said work was awarded in favour of the petitioner. The stipulated date for completion of the said work was 18.12.2014. The petitioner submits that the work came to be completed beyond the scheduled date of completion since there was lapse on the part of the respondent on various counts including continuous amendments and deviations in the scope of work, delay in approvals etc. Consequently, certain disputes have arisen between the parties and certain claims are raised by the petitioner.
7. The General Conditions of the Contract (GCC) applicable to the aforesaid contract agreement contains an arbitration agreement in the following terms:
"70. Arbitration - All disputes between the parties to the Contract (other than those for which the decision of the C.W.E. or any other person is by the Contract expressed to be final and binding) shall, after written notice by either party to the Contract to the other of them, be referred to the sole arbitration of an Engineer Officer to be appointed by the authority mentioned in the tender documents. Unless both parties agree in writing such reference shall not take place until after the completion or alleged completion of the Work or termination or determination of the Contract under Condition Nos. 55. 56 and 57 hereof.
Provided that in the event of abandonment of the Works or cancellation of the Contract under Condition Nos. 52, 53 or 54 hereof, such reference shall not take place until alternative arrangements have been finalized by the Government to get the Works completed by or through any other Contractor or Contractors or Agency or Agencies.
Provided always that commencement or continuance of any arbitration proceeding hereunder or otherwise shall not in any manner militate against the Government's right of recovery from the contractor as provided in Condition 67 hereof.
If the Arbitrator so appointed resigns his appointment or vacates his office or is unable or unwilling to act due to any reason whatsoever, the authority appointing him may appoint a new Arbitrator to act in his place.
The Arbitrator shall be deemed to have entered on the reference on the date he issues notice to both the parties
The main legal point established in the judgment is the interpretation and application of the Indian Stamp Act and the Arbitration and Conciliation Act in appointing an independent arbitrator and det....
The court confirmed the existence of an arbitration agreement and mandated the appointment of a sole arbitrator to adjudicate contract disputes, highlighting the necessity of complying with contractu....
The court emphasized that objections of time-bar and prematurity cannot prevent the constitution of an Arbitral Tribunal, and relied on precedents to appoint a Sole Arbitrator.
The conciliation process in the contract agreement was not mandatory, and non-compliance did not bar the petitioner from invoking arbitration.
Appointment of Sole Arbitrator – Any concerns of non-stamping or under stamping would not affect validity of arbitration agreement.
The central legal point established in the judgment is the interpretation of the steps to be taken under Sec. 11 of the Arbitration and Conciliation Act, 1996 when the question of stamp duty arises, ....
The Court's jurisdiction under Section 11(6) of the 1996 Act is limited to examining the existence and validity of an arbitration agreement, and the Court may reject claims that are manifestly non-ar....
The Court emphasized the importance of examining the existence and validity of an arbitration agreement at the referral stage and the rejection of manifestly non-arbitrable claims.
The Court's jurisdiction at the stage of Section 11 of the Act is limited, and the Arbitral Tribunal is the preferred authority to decide questions of non-arbitrability.
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