The enforceability of an arbitration agreement is independent of the stamping of the agreement, and objections regarding stamp duty must be resolved by the Arbitral Tribunal, not the Court.

ORAL ORDER

This petition by defendant No.1 in Comm.O.S.No.1563/2022 is directed against the impugned order dated 23.05.2023, whereby the application-I.A.No.3 filed by respondent Nos.1 and 2/plaintiffs under Section 33 of the Karnataka Stamp Act was allowed while the applications- I.A.No.2 and I.A.No.6 filed by the petitioner/defendant No.1 and respondent No.3/defendant No.2 under Section 8 of the Arbitration and Conciliation Act were deferred by the trial Court till payment of deficit stamp duty and penalty on the documents by the defendants.

2. Heard learned counsel for the petitioner and learned Senior counsel appearing for the respondent No.1 and caveator respondent No.2 and perused the material on record.

3. A perusal of the material on record will indicate that respondent Nos.1 and 2/plaintiffs instituted the aforesaid suit against the petitioner/defendant No.1 and respondent No.3/defendant No.2 for ejectment/eviction of the defendants from the suit schedule immovable property and for other reliefs. In the said suit, the petitioner/defendant No.1 and respondent No.3/defendant No.2 filed identical applications under Section 8 of the Arbitration and Conciliation Act seeking reference of the dispute to arbitration. In addition thereto, the respondent Nos.1 and 2/plaintiffs filed an application under Section 33 of the Karnataka Stamp Act seeking impounding of the document filed as Leave and Licence Agreement dated 07.05.2013 on the ground that the same was in reality a lease deed, on which requisite stamp duty had not been paid and the said document deserves to be impounded and a direction to the defendants to pay stamp duty and penalty on the said document. It was further contended that since the applications- I.A.Nos.2 and 6 filed by the defendants under of the placed reliance upon the unregistered and insufficiently stamped agreement dated 07.05.2013 purporting to contain an arbitration agreement/clause, it was incumbent upon the defendants to pay deficit stamp duty and penalty before placing reliance upon the said document as well as the arbitration clause/agreement contained in the said document.

4. By the impugned order, the Commercial Court allowed I.A.No.3 filed by the plaintiff under Section 33 of the Karnataka Stamp Act by placing reliance upon the judgment of the Constitution Bench of the Apex Court in the case ofM/s N.N.Global Mercantile Pvt. Ltd. vs. M/s. Indo Unique Flame Ltd. & Ors. [(2023) 7 SCC 1] in order to hold that unless a document containing an arbitration clause/agreement was sufficiently stamped, no reliance can be placed upon the said Arbitration clause by a party. Aggrieved by the impugned order passed by the Commercial Court, the petitioner/defendant No.1 is before this Court by way of the present petition.

5. A perusal of the impugned order will indicate that the trial Court has placed reliance upon the aforesaid judgment of the Apex Court in N.N.Global (supra); However, during the pendency of the present petition, the said judgment having been referred to a larger (Seven Judge) Bench of the Apex Court), the Apex Court by its order dated 13.12.2023 in Curative Petition (Civil) No.44/2023 in Review Petition (Civil) No.704/2021 held as under:

"I respectfully agree with the view expressed by the Hon’ble the Chief Justice of India Dr. D.Y. Chandrachud in his elaborate exposition of the different contours which arise for consideration in the present reference. Complementing the same, I would like to provide additional justifications for the final conclusion, viz., unstamped or insufficiently stamped instruments inadmissible in evidence in terms of Section 35 of the Indian Stamp Act, 1899