1. This Arbitration Request has been filed under section 11 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as the ‘Act’ for short), seeking the appointment of an Arbitrator to resolve the disputes between the applicant and the respondents, arising out of Annexure A agreement. When the matter was heard, counsel for the first respondent contended that the agreement was not duly stamped as required under the Kerala Stamp Act. This contention is therefore considered as a preliminary issue.

2. Annexure A is the notarised copy of the agreement for sale dated 18th March 2008 between the applicant and he 1st respondent and its original is engrossed on stamp paper of Rs.100 only. Clauses 1 and 2 of the agreement, being relevant, are extracted below for reference;

1) The Vendor shall sell to the Purchaser and/or its nominee/nominees appointed in writing and the Purchaser agrees to purchase from the Vendor the entire shareholding of Goldview Vyaapar Pvt. Ltd., on completion of the demerger a aforesaid and if for any reason the process of demerger is not competed by 30th September, 2008 the Vendor shall sell to the purchaser and/or its nominee/nominees and the Purchaser has agreed to purchase from the Vendor the aforesaid business of Hope Plantations consisting of Glenmary, Kuduakarnam and Ladrum estates and comprising the scheduled property together with all plantations, buildings, factories and other erections and fixtures and such other immovable properties thereon, with all kinds of rights, privileges, easements and all appurtenances thereto as a going concern, together with the business, goodwill, rights, benefits, privileges and all powers, licenses, liberties and export and import quotas of the Vendor and the benefits of all leases and tenancy and all other contracts entered into by the Vendor, arising or incidental thereto, together with all furniture, fixtures, vehicles and other movables properties therein.

2) The total consideration payable by the Purchaser to the Vendor for purchase of the entire shareholding in the Goldview Vyaapar Pvt. Ltd. shall be Rs.58,50,00,000/-(Rupees Fifty Eight Crores and Fifty Lakhs only). If for any reason the demerger is not completed within the agreed time frame, the aforesaid consideration shall be considered as the price for the purchase of the business of Hope Plantations as aforesaid and in which event Rs.57,00,89,000 (Rupees Fifty Seven Crores and Eighty Nine Thousand) is for the land and tea and other plantations thereon Rs.75,00,000 (Rupees Seventy Five Lakhs) is for the building and other fixtures and Rs.74,11,000/- (Rupees Seventy Four Lakhs and Eleven Thousand) is for the machinery, vehicles and other movables.”

3. Both sides are in agreement that by Annexure I order, the scheme of demerger has been confirmed by the High Court of Calcutta. Therefore, the performance of the agreement requires transfer of shares of the demerged company, the second respondent herein, to the Applicant and the question is whether such an agreement is a duly stamped one?

4. This question has to be answered with reference to the provisions of the Kerala Stamp Act. Section 3 of the Act provides that every instrument mentioned in the schedule to the Act executed after the commencement of the Act, shall be chargeable

5. The agreement is for sale of shares of the demerged Company, the 2nd respondent, and therefore, stamp duty payable is as per the above provision of the Act. From the extracted clauses of the agreement, it is evident that the consideration payable for the shares is Rs.58.50 crores. The agreement is engrossed on stamp paper of Rs.100 only. Therefore this is an agreement which is not duly stamped.

6. The manner in which an agreement produced in an arbitration request, which is not duly stamped as per the applicable stamp act is to be dealt with, was considered by the Apex Court in its judgment in M/s. SMS Tea Estates Pvt. Ltd. v. M/s. Chandmari Tea Co. Pvt. Ltd (20