IMPORTANT POINTS
(1) Indian Stamp Act applies to agreement or conveyance as a whole – It is not possible to bifurcate arbitration clause contained in such agreement or conveyance so as to give it an independent existence.
(2) Arbitration clause that is contained in the sub-contract would not exist as a matter of law until sub-contract is duly stamped.
(3) Doctrine of harmonious construction of statutes is strongly imbedded in our interpretative canon.

JUDGMENT :

R.F. Nariman. J.

Leave granted.

2. This appeal arises out of a sub-contract given by the appellant to the respondent in respect of work to be done for installation of a geo-textile tubes embankment with toe mound at village Pentha in Odisha for protection against coastal erosion. The sub-contract agreement is dated 14.06.2013, Annexure III of which contains the following arbitration clause:

“Any and all claims, disputes, questions or controversies involving the parties and arising in connection with the Agreement or execution, interpretation, validity, performance, termination hereof which cannot be finally resolved by such parties [sic through] negotiation shall be resolved by final and binding arbitration held in Pune. The disputes shall be referred to a sole arbitrator to be appointed by GWRL and COMACOE jointly in agreement.”

3. Disputes arose between the parties, and on 02.01.2015, the appellant terminated the sub-contract. As a result, on 20.07.2016, the respondent wrote to the appellant stating that as disputes and differences had arisen between the parties, notice was given of appointment of Mr. Mihir Naniwadekar, Advocate, as sole arbitrator. The appellant replied on 17.08.2016, stating that the appointment of Mr. Naniwadekar as sole arbitrator was not acceptable as invocation of arbitration in pursuance of the agreement is premature. The respondent, therefore, filed a petition under Section 11 of the Arbitration and Conciliation Act, 1996 [“1996 Act”] on 10.02.2017 before the Bombay High Court. By the impugned judgment dated 09.03.2018, the Section 11 petition was allowed and Mr. Naniwadekar was appointed as sole arbitrator to adjudicate upon disputes and differences which have arisen between the appellant and the respondent in relation to the sub-contract dated 14.06.2013.

4. The question raised in this appeal is as to what is the effect of an arbitration clause contained in a contract which requires to be stamped. This Court, in SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 [“SMS Tea Estates”], has held that where an arbitration clause is contained in an unstamped agreement, the provisions of the Indian Stamp Act, 1899 [“Indian Stamp Act”] require the Judge hearing the Section 11 application to impound the agreement and ensure that stamp duty and penalty (if any) are paid thereon before proceeding with the Section 11 application. The question is whether Section 11(6A), which has been introduced byway of the Arbitration and Conciliation (Amendment) Act, 2015 [“Amendment Act, 2015”], has removed the basis of this judgment, so that the stage at which the instrument is to be impounded is not by the Judge hearing the Section 11 application, but by an arbitrator who is appointed under Section 11, as has been held by the impugned judgment.

5. Mr. Dhruv Mehta, learned Senior Advocate appearing on behalf of the appellant, has taken us through the sub-contract as well as the arbitration clause contained therein. He relied strongly upon the Maharashtra Stamp Act, 1958 [“Maharashtra Stamp Act”], and Sections 33 and 34 thereof, in particular. According to him, these are provisions which are similar to the provisions contained in Sections 33 and 35 of the Indian Stamp Act, which, as held in SMS Tea Estates (supra), requires judicial authorities to impound such instruments, which cannot be admitted in evidence or cannot be acted upon until duly stamped. According to him, the judgment in SMS Tea Estates (supra) continues to apply even after the introduction of Section 11(6A) to the 1996 Act, by which the Court is now to confine itself to the examination of the existence of an arbitration agreement. Relying upon the 246th Law Commission Report, which led to the amendment contained in Section 11(6A), together with the Statement of Objects and Reasons appended to the Arbitration and Conciliation (Amendment) Bill, 2015, Mr. Mehta argued that it was clear that the amendment was necessitated as a result of