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NO ARBITRATOR CAN BE APPOINTED BY THE COURT WHEN THE CONTRACT HAVING ARBITRATION CLAUSE IS INSUFFICIENTLY STAMPED: Supreme Court

Team SoOLEGAL 11 Apr 2019 10:11am

NO ARBITRATOR CAN BE APPOINTED BY THE COURT WHEN THE CONTRACT HAVING ARBITRATION CLAUSE IS INSUFFICIENTLY STAMPED: Supreme Court

According to Section 11(6A), the High Court or Supreme Court shall confine to the examination of the existence of an arbitration agreement, notwithstanding any judgment, decree or order of any court.

In Garware Well Ropes Ltd. v. Coastal Marine Constructions and Engineering Ltd. Supreme Court has observed that the Courts have to look out for the adjudication by stamp Authorities before passing the final orders on application under Section 11(6) of the Arbitration and Conciliation Act.

The question before the Supreme Court bench comprising of Justice Rohinton Fali Nariman and Justice Vineet Saran was whether Section 11(6A) has removed the basis of the judgment passed in the case of SMS Tea Estates (P) Ltd. 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.

According to Section 11(6A), the High Court or Supreme Court shall confine to the examination of the existence of an arbitration agreement, notwithstanding any judgment, decree or order of any court.

On the independent existence of the arbitration clause mentioned in an arbitration agreement, the Court held that:

"A close look at Section 11(6A) would show that when the Supreme Court or the High Court considers an application under Section 11(4) to 11(6), and comes across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the Indian Stamp Act to first impound the agreement or conveyance and see that stamp duty and penalty (if any) is paid before the agreement, as a whole, can be acted upon. It is important to remember that the Indian Stamp Act applies to the agreement or conveyance as a whole. Therefore, it is not possible to bifurcate the arbitration clause contained in such agreement or conveyance so as to give it an independent existence."
It was thus concluded by the Apex Court that the amendment of Section 11(6A) has no effect on the judgment in SMS Tea Estates (P) Ltd.

Tagged: Supreme Court   Justice Rohinton Fali Nariman   Justice Vineet Saran   Arbitration   Arbitrator   Arbitration and Conciliation Act  
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