The main legal point established in the judgment is the requirement to pay the deficit stamp duty and penalty for an unregistered and/or insufficiently stamped instrument containing an arbitration agreement to be acted upon.

ORDER :

Mohammad Rafiq, J.

1. This petition has been filed by Smt. Sukanti Barik, under Section 11(6) of the Arbitration and Conciliation Act, 1996 (for short, "the Act, 1996") seeking appointment of an independent Arbitrator to arbitrate the disputes between the petitioner and the opposite parties.

2. The case of the petitioner as set out in the petition in brief is that the opposite party took loan of Rs. 2,60,53,175/- (two crore sixty lakhs fifty-three thousand one hundred seventy five rupees) from the petitioner on 11.10.2014 and in this regard an agreement under Annexure-1 was executed between the parties. As per clause 6 of the said agreement, any dispute arising out of the agreement is to be referred to the sole Arbitrator within the jurisdiction of Bhubaneswar, whose decisions shall be final and binding on the parties. It is contended by the petitioner that as the opposite party fails to repay the loan amount as per the terms and conditions of the agreement, the petitioner sent number of letters through her Advocate to the opposite party. Since the opposite party did not turn up, the petitioner appointed the sole Arbitrator to adjudicate the matter. The opposite party appeared before the Arbitration Tribunal and participated in the proceeding, but when the matter was posted for recording of evidence, opposite party filed ARBA No. 2/2019 before the District Judge, Khurda, whereby the learned District Judge terminated the Arbitration Tribunal by allowing the appeal of the opposite party. Challenging the said order of the District Judge, Khurda petitioner preferred ARBA No. 18 of 2019 before this Court wherein this Court by order dated 02.08.2019 while dismissing the said appeal as not maintainable, observed that if the appellant is interested for arbitration of the dispute involved herein, she may approach the High Court under the provision contained in Section 11(5) of the Act for appointment of Arbitrator. In terms of the said order, the petitioner sent notices on 20.08.2019 and 01.10.2019 to the opposite party for appointment of Arbitrator, but the opposite party did not respond. Hence this petition.

3. Mr. B.B. Mishra, learned counsel for the opposite party opposed the prayer for appointment of Arbitrator by raising a preliminary objection that the agreement dated 11.10.2014 containing arbitration clause, relied upon by the petitioner is not sufficiently stamped and is merely engrossed on a Stamp Paper worth Rs. 100/-, which is inadmissible in evidence under Section 35 of the Stamp Act and hence it cannot be treated to be a valid agreement and confers no enforceable right. It is contended that when the agreement, which is insufficiently stamped, cannot be given effect to in law, the arbitration clause contained therein also cannot have any validity and enforceable effect. Hence the question of appointment of Arbitrator, on the basis an invalid agreement in the eye of law, does not arise.

4. Mr. Janmejaya Ray, learned counsel for the petitioner submitted that even if the agreement has not been sufficiently stamped, the arbitration clause contained therein can still be acted upon for collateral purpose to make reference to the arbitration. Since there is an arbitration clause in the agreement and certain disputes have arisen between the parties, this Court can refer the matter for Arbitration. It is further contended by the learned counsel for the petitioner that the question with regard to insufficiency of stamp duty in view of Section 16 of the Act, 1996 should be left to be decided by the Arbitrator.

5. I have given my thoughtful consideration to rival submissions and perused the materials on record.

6. In the instant case no doubt there is an arbitration clause in the agreement, but it is also the undisputed fact that the agreement containing such arbitration clause has not been sufficiently stamped as per the requirement under the Indian Stamp Act, 1899.

7. A similar question in the context of appointment of an Arbitrator