ARB.P.230/2021

Page 1 of 9

$~2 (original)

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IN THE HIGH COURT OF DELHI AT NEW DELHI

+

ARB.P. 230/2021

BHAGWATI DEVI GUPTA & ANR.

..... Petitioners

Through:

Mr. Shalabh Singhal, Adv.

versus

STAR INFRATECH PRIVATE LIMITED ..... Respondent

Through:

Mr. Rakesh Saini, Adv.

CORAM:

HON'BLE MR. JUSTICE C. HARI SHANKAR

1.

This is a petition under Section 11(5) of the Arbitration and

Conciliation Act, 1996 (“the 1996 Act”), for appointment of an

arbitrator to arbitrate on the dispute between the parties.

JUDGEMENT (O R A L)

%

11.08.2021

(Video-Conferencing)

2.

The substance of the dispute is set out in para 7 sub-paras (a) to

(q) of para 2 of the petition, which, for the sake of brevity are not

being reproduced here. The notice invoking arbitration was issued by

the petitioner to the respondent on 1^st

August, 2020. The parties

having failed to arrive at any agreement regarding the arbitrator to

arbitrate on the disputes, the petitioner has approached this Court

under Section 11(5) of the 1996 Act.

3.

The only objection raised by Mr. Rakesh Saini, learned Counsel

for the respondent, regarding the reference of the disputes to

arbitration is that the agreement between the parties is inadequately

Digitally Signed

By:SUNIL SINGH NEGI

Signing Date:15.08.2021

19:21:13

Signature Not Verified

ARB.P.230/2021

Page 2 of 9

stamped. He has relied on the judgment of the Supreme Court in N.N.

Global Mercantile Pvt. Ltd. v. M/s Indo Unique Flame Ltd.¹

to

contend that, till this defect is rectified, the Court cannot refer the

dispute to arbitration. Mr. Singhal, learned Counsel for the petitioner,

per contra submits that the arbitration agreement is not insufficiently

stamped and that, even if it were, this aspect could be decided by the

learned Arbitrator.

4.

In fact, the decision in N.N. Global Mercantile¹

“6.1 The issue which has arisen in the present case is

whether the arbitration agreement incorporated in the

unstamped Work Order dated 28.09.2015, would also be

legally unenforceable, till such time that the Work Order is

subjected to payment of Stamp Duty. Undisputedly, the Work

Order is chargeable to payment of Stamp Duty under Item No.

63 of the First Schedule to the Maharashtra Stamp Act, 1958.

6.2

In our view, the non-payment or deficiency of Stamp

Duty on the Work Order does not invalidate the main

contract. Section 34 provides that an unstamped instrument

would not be admissible in evidence, or be acted upon, till the

requisite stamp duty is paid. This would amount only to a

deficiency, which can be cured on the payment of the

requisite stamp duty.

6.3

The point for consideration is whether the non-

payment of Stamp Duty on the Work Order, would render the

arbitration clause invalid, nonexistent, or unenforceable in

law, till the stamp duty is paid on the substantive commercial

contract.

defeats the

submission of Mr. Saini. Paras 6.1 to 6.10 of the decision may be

reproduced thus:

6.4

The arbitration agreement contained in the Work Order

is independent and distinct from the underlying commercial

contract. The arbitration agreement is an agreement which

1 (2021) 4 SCC 379

Digitally Signed

By:SUNIL SINGH NEGI

Signing Date:15.08.2021

19:21:13

Signature Not Verified

ARB.P.230/2021

Page 3 of 9

provides the mode of dispute resolution. Section 3 of the

Maharashtra Stamp Act does not subject an arbitration

agreement to payment of Stamp Duty, unlike various other

agreements enlisted in the Schedule to the Act. This is for the

obvious reason that an arbitration agreement is an agreement

to resolve disputes arising out of a commercial agreement,

through the mode of arbitration. On the basis of the doctrine

of separability, the arbitration agreement being a separate and

distinct agreement from the underlying commercial contract,

would survive independent of the substantive contract. The

arbitration agreement would not be rendered invalid, un-

enfor