M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s INDO UNIQUE FLAME LTD. & ORS.

A affirmed in paragraphs-146 and 147 of Vidya Drolia (supra). We may notice that paragraph-147 of Vidya Drolia(supra) purported to give reasons in regard to what was stated in paragraph-146. Paragraph-147 is followed by paragraphs- 147.1 to 147.11. However, what, apparently, the Court in N.N. Global (supra) doubted, appears to be paragraphs- 146 and 147, which we understand in the context of this case, is to be B confined to paragraph-147.1.

38Copy pinpoint38. We may resume survey of the Act to the extent it is relevant. Section 16 enshrines the Principle of Kompetenz-Kompetenz. It reads as follows: C “16. Competence of arbitral tribunal to rule on its jurisdiction.— (1) The arbitral tribunal may rule on its own jurisdiction, including ruling on any objections with respect to the existence or validity of the arbitration agreement, and for that purpose,— (a) an arbitration clause which forms part of a contract shall D be treated as an agreement independent of the other terms of the contract; and (b) a decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. E (2) A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence; however, a party shall not be precluded from raising such a plea merely because that he has appointed, or participated in the appointment of, an arbitrator. F (3) A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceedings. (4) The arbitral tribunal may, in either of the cases referred to in sub-section (2) or sub-section (3), admit a later plea if it considers the delay justified. (5) The arbitral tribunal shall decide on a plea referred to in sub-section (2) or sub-section (3) and, where the arbitral tribunal takes a decision rejecting the plea, continue with the arbitral proceedings and make an arbitral award.

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 331 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(6) A party aggrieved by such an arbitral award may make an application for setting aside such an arbitral award in accordance with section 34.” H. THE SCHEME OF THE STAMP ACT

39Copy pinpoint39. Section 2(6) defines the word ‘chargeable’ as follows: B “2(6) “Chargeable”. — ¯chargeable means, as applied to an instrument executed or first executed after the commencement of this Act, chargeable under this Act, and, as applied to any other instrument, chargeable under the law in force in India when such instrument was executed or, where several persons executed the instrument at different times, first executed:” C

40Copy pinpoint40. Section 2(11) defines the words ‘duly stamped’ as follows: “2(11) “Duly stamped”. — duly stamped, as applied to an instrument, means that the instrument bears an adhesive or impressed stamp of not less than the proper amount and that such stamp has been affixed or used in accordance with the law for the time being in force in India:”

41Copy pinpoint41. Section 2(12) defines the word ‘executed’ with reference to instruments as meaning ‘signed’.

42Copy pinpoint42. Section 2(14) defines the word ‘instrument’ as ‘including every document, by which any right or liability is or purports to be created, transferred, limited, extended, extinguished or recorded’.

43Copy pinpoint43. Section 3 deals with the instruments indicated therein being chargeable with duty, subject to what is provided by way of exemptions contained in Schedule I. F

44Copy pinpoint44. Section 4 contemplates a situation, where there are several instruments.

45Copy pinpoint45. There are other provisions, which relate to other transactions. Section 17 deals with the time of stamping of instruments. Section 17 provides for instruments executed in India. It declares that such G instruments, chargeable with duty, shall be stamped before or at the time of execution. Section 31 deals with adjudication as to proper stamp. The adjudication is to be made by the Collector. Chapter IV contains Section 33 and the Chapter heading is ‘Instruments not duly stamped’. In the Stamp Act, Section 33 reads as follows: H

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A “33. Examination and impounding of instruments. — (1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a pubic office, except an officer of police, before whom any instrument, chargeable, in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in India when such instrument was executed or first executed: Provided that— (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898 (V of 1989); (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt, — (a) the State Government may determine what offices shall be deemed to be public offices; F (b) the State Government may determine who shall be deemed to be persons in charge of public offices.”

46Copy pinpoint46. Next, we must notice Section 35, which reads as follows: “35. Instruments not duly stamped inadmissible in evidence, G etc. — No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped : Provided that— H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 333 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(a) any such instrument shall be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of any instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion; (b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it; (c) Where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped; D

(d) nothing herein contained shall prevent the admission of any instrument in evidence in proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure 1898 (V of 1898); E (e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Government, or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act.” F

47Copy pinpoint47. Equally, we must bear in mind Section 36. It provides as follows: “36. Admission of instrument where not to be questioned. — Where an instrument has been admitted in evidence, such admission shall not, except as provided in section 61, be called in question at any stage of the same suit or proceeding on the G ground that the instrument has not been duly stamped.”

48Copy pinpoint48. Section 38 deals with, how instruments, which are impounded, must be dealt with. It reads as follows: “38. Instruments impounded how dealt with. — (1) When the person impounding an instrument under section 33 has by law H

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A or consent of parties authority to receive evidence and admits such instrument in evidence upon payment of a penalty as provided by section 35 or of duty as provided by section 37, he shall send to the Collector an authenticated copy of such instrument, together with a certificate in writing, stating the amount of duty and penalty levied in respect thereof, and shall send such amount to the Collector, or to such person as he may appoint in this behalf.”

49Copy pinpoint49. Section 42 is relevant and it reads as follows: - “42. Endorsement of instruments on which duty has been paid under sections 35, 40 or 41— (1) When the duty and penalty (if any), leviable in respect of any instrument have been paid under section 35, section 40 or section 41, the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect thereof, and the name and residence of the person paying them. (2) Every instrument so endorsed shall thereupon be admissible in evidence, and may be registered and acted upon and authenticated as if it had been duly stamped, and shall be delivered on his application in this behalf to the person from whose possession it came into the hands of the officer impounding it, or as such person may direct: Provided that—

F (a) no instrument which has been admitted in evidence upon payment of duty and a penalty under section 35, shall be so delivered before the expiration of one month from the date of such impounding, or if the Collector has certified that its further detention is necessary and has not cancelled such certificate; (b) nothing in this section shall affect clause 3.” G

50Copy pinpoint50. Section 62(1)(b) makes it punishable with fine, which may extend to Rs.500/- for a person to execute or sign otherwise than as a witness, any instrument chargeable with duty, without the same being duly stamped. The proviso, no doubt, contemplates that if any penalty has been paid under Sections 35, 40 or 61, the same shall be reduced. H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 335 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

I. HINDUSTAN STEEL LIMITED ANALYSED A

51Copy pinpoint51. This Court in Hindustan Steel Limited v. Dilip Construction Company21, was dealing with the following set of facts: An award was made by an Umpire under the Indian Arbitration Act, 1940, which was filed in the Court. The appellant applied to set aside the Award, inter alia, contending that it was unstamped. B It contended that it was on that account, invalid, illegal and liable to be set aside. The respondent thereupon applied to the District Court to have the Award impounded and validated by the levy of stamp duty and penalty. The Award was impounded and visited with duty and penalty, which was duly paid and certified. The C contention of the appellant was that, not only could an unstamped Award, be not admitted in evidence, but it could not be acted upon, as the instrument had no existence in the eye of law. It is thereupon that the Court had held, inter alia: “5. An instrument which is not duly stamped cannot be received in evidence by any person who has authority to receive evidence, and it cannot be acted upon by that person or by any public officer. Section 35 provides that the admissibility of an instrument once admitted in evidence shall not, except as provided in Section 61, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been duly stamped.

6. Relying upon the difference in the phraseology between Sections 35 and 36 it was urged that an instrument which is not duly stamped may be admitted in evidence on payment of duty and penalty, but it cannot be acted upon because F Section 35 operates as a bar to the admission in evidence of the instrument not duly stamped as well as to its being acted upon, and the Legislature has by Section 36 in the conditions set out therein removed the bar only against admission in evidence of the instrument. The argument ignores the true G import of Section 36. By that section an instrument once admitted in evidence shall not be called in question at any stage of the same suit or proceeding on the ground that it has not been duly stamped. Section 36 does not prohibit a challenge 21 (1969) 1 SCC 597 H

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A against an instrument that it shall not be acted upon because it is not duly stamped, but on that account there is no bar against an instrument not duly stamped being acted upon after payment of the stamp duty and penalty according to the procedure prescribed by the Act. The doubt, if any, is removed by the terms of Section 42(2) which enact, in terms unmistakable, B that every instrument endorsed by the Collector under Section 42(1) shall be admissible in evidence and may be acted upon as if it has been duly stamped.” We may also profitably refer to paragraph-8 as well: C “8. Our attention was invited to the statement of law by M.C. Desai, J., in Mst Bittan Bibi v. Kuntu Lal [ILR (1952) 2 All 984] : “A court is prohibited from admitting an instrument in evidence and a court and a public officer both are prohibited D from acting upon it. Thus a court is prohibited from both admitting it in evidence and acting upon it. It follows that the acting upon is not included in the admission and that a document can be admitted in evidence but not be acted upon. Of course it cannot be acted upon without its being admitted, but it can be admitted and yet be not acted upon. E If every document, upon admission, became automatically liable to be acted upon, the provision in Section 35 that an instrument chargeable with duty but not duly stamped, shall not be acted upon by the Court, would be rendered redundant by the provision that it shall not be admitted in F evidence for any purpose. To act upon an instrument is to give effect to it or to enforce it.” “In our judgment, the learned Judge attributed to Section 36 a meaning which the legislature did not intend. Attention of the learned Judge was apparently not invited to Section G 42(2) of the Act which expressly renders an instrument, when certified by endorsement that proper duty and penalty have been levied in respect thereof, capable of being acted upon as if it had been duly stamped.”

52Copy pinpoint52. We draw the following conclusions, as to what has been laid down by a Bench of three learned Judges in Hindustan Steel (supra): H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 337 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

i. The Stamp Act is a fiscal measure intended to raise revenue; ii. The stringent provisions of the Act are meant to protect the interest of the Revenue; iii. It is not intended to be used as a weapon by a litigant to defeat the cause of the opponent; iv. Upon the endorsement being made under Section 42(2) of the Stamp Act, the document would be admissible in evidence and can be acted upon. We may only observe that the Court did not take into consideration Section 17 of the Stamp Act, which provides for the precise time, at which, the instrument is to be stamped. Equally, the Court did not bear in mind that Section 62 of the Stamp Act, penalises transgression of Section 17, inter alia. Still further, the Court was dealing with an instrument after it was impounded, and the payments made which were certified under Section 42(2). D It is true that an unstamped instrument is compulsorily impoundable under Section 33 of the Stamp Act. The procedure to be followed thereafter is also provided in the Act. After the procedure is followed and the duty and the penalty is paid, the instrument would come to be visited with the endorsement under Section 42(2). Thereafter, it becomes enforceable and it can be acted upon, as held in Hindustan Steel (supra). E J. THE INDIAN CONTRACT ACT, 1872 - A SURVEY; DISSECTION OF GARWARE, VIDYA DROLIA AND N.N. GLOBAL

53Copy pinpoint53. Section 2(g) of the Contract Act provides that an agreement, not enforceable by law, is said to be void, whereas, Section 2(h) declares that an agreement enforceable by law, is a contract. Section 2(j) of the same Act provides that a contract, which ceases to be enforceable by law, becomes void, when it ceases to be enforceable. We may, at once, notice the distinction between an agreement and a contract. Not every agreement is a contract. Only those agreements, which are enforceable, are treated as contracts. The result of a contract, ceasing to be enforceable, is that, the contract becomes void. Next, we may notice Section 10. It reads as follows: “What agreements are contracts. - All agreements are contracts, if they are made by the free consent of parties, competent to H

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A contract, for a lawful consideration and with a lawful object and are not hereby expressly declared to be void. Nothing herein contained shall affect any law in force in India, and not hereby expressly repealed, by which any contract is required to be made in writing or in the presence of witnesses, or B any law relating to the registration of documents.” Section 10, in the first part, when broken down into parts, consists of the following: ‘Agreement must be made by free consent of parties’.

54Copy pinpoint54. Section 14 defines ‘free consent’ and it reads:

C “14. ‘Free consent’ defined. -Consent is said to be free when it is not caused by- (1) Coercion, as defined in section 15, or (2) Undue influence, as defined in section 16, or (3) Fraud, as defined in section 17, or D (4) Misrepresentation as defined in section 18, or (5) Mistake, subject to the provisions of sections 20, 21 and 22. Consent is said to be so caused when it would not have been given but for the existence of such coercion, undue influence, fraud, misrepresentation or mistake.”

55Copy pinpoint55. The next part of Section 10 to be noticed is the expression ‘parties competent to contract’. Section 11 of the Contract Act declares that every person is competent to contract, according to the law, to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. Since Section 11 requires soundness of mind for the person to be competent to contract, Section 12 articulates as to what is sound mind for the purpose of the Contract Act. The next part in Section 10 is that there must be ‘a lawful consideration and a lawful object’. The said aspect is dealt with in Section

23. It reads as follows: G “23. What consideration and objects are lawful, and what not. - The consideration or object of an agreement is lawful, unless- It is forbidden by law; or Is of such a nature that, if permitted, it would defeat the provisions H of any law, or is fraudulent; or

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 339 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Involves or implies, injury to the person or property of another; or A The Court regards it as immoral, or opposed to public policy. In each of these cases, the consideration or object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful is void.” B

56Copy pinpoint56. The last part of the first limb of Section 10 provides that all agreements are contracts ‘which are not hereby declared to be void’. Sections 24 to 30 are the remaining provisions in Chapter II, which deal with agreements, which are declared to be void within the meaning of Section 10. This is apart from Section 20 as we shall notice later. Also, the second part of Section 10 provides that peremptory requirements may still have to be met to constitute a contract a law.

57Copy pinpoint57. Further, we have already noticed that free consent is indispensable for making an agreement, a contract, under Section 10. Free consent has been defined in Section 14 and it must be read in conjunction with Sections 15 to 18 as Sections 15 to 18 define coercion, undue influence, fraud and misrepresentation, respectively. Now, the result of there being coercion, fraud or misrepresentation in securing the consent of a party, is provided for in Section 19 of the Contract Act. The presence of the three elements results in what is described as a contract voidable at the option of the party, whose consent was so caused. The E effect of misrepresentation has been dealt with by this Court in the judgment reported in Ganga Retreat & Towers Ltd. v. State of Rajasthan22, as follows: “28. According to Section 19 of the Contract Act when consent to an agreement is caused by misrepresentation, the agreement is F a contract voidable at the option of the party whose consent was so caused. The latter may, if he thinks fit, insist that the contract shall be performed and that he shall be put in the position in which he would have been if the representations made had been true. According to Section 2 clause (i), an agreement which is enforceable by law at the option of one or more of the parties G thereto, but not at the option of the other or others, is a voidable contract. It is not necessary for us to record a clear finding whether there was a misrepresentation on the part of the respondents or

22 (2003) 12 SCC 91 H

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A not. Suffice it to observe that a voidable contract confers the right of election on the party affected to exercise its option to avoid the legal relations created by the contract or to stand by the contract and insist on its performance. However, his election to stand by the contract once exercised would have the effect of ratification of the contract with the knowledge of misrepresentation on the part of the other party and that would extinguish its power of avoidance. In the very nature of the right conferred on the party affected, the law expects it to exercise its option promptly and communicate the same to the opposite party; for until the right of avoidance is exercised, the contract is valid, and things done thereunder may not thereafter be undone.

29. A right to rescind for misrepresentation can be lost in a variety of ways, some depending on the right of election. A representee on discovering the truth loses his right to rescind if once he has elected not to rescind. But he may lose even before he has made any election where by reason of his conduct or other circumstances it would be unjust or inequitable that he retains the right. For instance, where third parties have acquired rights under the contract; again where it would be unjust to the representor because it is impossible to restore him to his original position. Restitutio in integrum is not only a consequence of rescission, its possibility is indispensable to the right to rescind. Again, delay in election may make it unjust that the right to elect should continue. For this reason the right to rescission for misrepresentation in general must be promptly exercised. (See Indian Contract and Specific Relief Acts, Pollock and Mulla, 11th Edn., Vol. I, pp. 269-70.)” F Section 19A deals with there being no free consent on account of the consent of a party being obtained by undue influence. The said vitiating factor also, does not result in a void agreement but a voidable contract. Section 14, defining ‘free consent’, provides that consent is said to be free, when it is not caused by mistake, subject to the provisions of Sections 20, 21 and 22, after referring to the other four aspects, which detract G from free consent. We notice what Section 20 provides. Section 20 declares that where both the parties to an agreement are under a mistake as to a matter of fact essential to the agreement, the agreement is void. We may observe that this again is a case of an agreement, which is declared void within the meaning of Section 10, apart from Sections 24 H to 30. Section 21 provides that a mistake as to any law in force in India,

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 341 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

would not make the contract voidable. Thus, while Section 10 sets out the core element for an agreement to become a contract, the effect of non-conformity varies. Therefore, the lack of competency and absence of sound mind completely detract from the formation of a ‘contract’. The absence of free consent arising from coercion, undue influence, misrepresentation and even fraud will, however, result in an agreement which is a ‘contract’ though voidable (see Sections 19 and 19A of the Contract Act). The effect of mistake, is again spelt out in Section 22, insofar as it provides that a contract is not voidable merely because one of the parties consented to the contract, labouring under a mistake as to a matter of fact. Section 37 comes under Chapter IV which deals with performance of contracts and of contracts which must be performed. C Section 37 reads: “37. Obligation of parties to contract. -The parties to a contract must either perform, or offer to perform, their respective promises, unless such performance is dispensed with or excused under the provisions of this Act, or of any other law. D Promises bind the representatives of the promisors in case of the death of such promisors before performance, unless a contrary intention appears from the contract.”

58Copy pinpoint58. We have noticed that in the case of fraud, misrepresentation or coercion, the person whose consent is procured on the said basis, may insist that the contract be performed and that he be put in the position, in which he could have been, if the representation had not been made. In this context, we may notice, Section 64 of the Contract Act: “64. Consequences of rescission of a voidable contract. -When a person at whose option a contract is voidable rescinds it, the other party thereto need not perform any promise therein contained in which he is the promisor. The party rescinding a voidable contract shall, if he had received any benefit thereunder from another party to such contract, restore such benefit, so far as may be, to the person from whom it was received.” G

59Copy pinpoint59. As to what would happen, if an agreement is discovered to be void or becomes void, is provided in Section 65. It declares that when such an eventuality takes place, any person, who has, under such agreement or contract, received any advantage, is bound to restore it to the person from whom he has received it or make compensation for the H

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A same. In the context of Section 65, we may notice the nexus with Section 2(j) of the Contract Act. Section 2(j), as we have noticed, provides that, when the contract ceases to be enforceable, it becomes void. Thus, what may be an agreement and which fulfils the requirement that it is enforceable and, therefore, becomes a contract, can upon it ceasing to be enforceable, become void. However, here we must notice the view expressed by the Privy Council in the Judgement reported in Mahanth Singh v. U Ba Yi23. Therein the Court, inter alia, held as follows: “A still more startling result, however, is brought about on this construction if s.2(j) is read with s.65 of the Indian Contract Act, since in such a case not only would every unenforceable contract become void but each party would be under the obligation of restoring or making compensation for any benefit received, no matter how much had been done towards the performance by either party. But it is not necessary to adopt a construction leading to such surprising results. The solution is, in their Lordships’ view, to be found in the wording of s.2(j) itself. Not every unenforceable contract is declared void, but only those unenforceable by law, and those words mean not unenforceable by reason of some procedural regulation, but unenforceable by the substantive law. For example, a contract which was from its inception illegal, such as a contract with an alien enemy, would be avoided by s.2(g), and one which became illegal in the course of its performance, such as a contract with one who had been an alien friend but later became an alien enemy, would be avoided by s.2(j). A mere failure to sue within the time specified by the statute of limitations or an inability to sue by reason of the provisions of one of the Orders under the Civil Procedure Code would not cause a contract to become void.”

60Copy pinpoint60. A Full Bench of the Allahabad High Court, while dealing with the effect of inclusion of non-transferable occupancy rights, along with other properties, which were transferable in a registered mortgage deed and, after referring to Section 23 of the Contract Act, held, in Dip Narain Singh v. Nageshar Prasad and another24, inter alia, as follows:

23 AIR 1939 PC 110 H 24 AIR 1930 ALL 1 (FB) / 1929 SCC OnLine ALL 1

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 343 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

“There is a clear distinction between an agreement which may be forbidden by law and one which is merely declared to be void. In the former case the legislature penalises it or prohibits it. In the latter case, it merely refuses to give effect to it. If a void contract has been carried out and consideration has passed, the promisor may not in equity be allowed to go back upon it without restoring the benefit which he has received. But if the promise comes to court to enforce it he would receive no help from a court of law. As pointed out above, the transfer of an occupancy tenancy is not actually forbidden by law but is declared to be void.” (Emphasis supplied) C

61Copy pinpoint61. To the extent that N.N. Global (supra) proceeds on the basis that the Stamp Act is a fiscal enactment and the object is to raise revenue, there may not be any serious room for objection. As far as the finding in paragraph-28 of N.N. Global(supra) that the decision in SMS Tea Estates (supra) does not lay down the correct law, when it holds that an Arbitration Agreement, in an unstamped commercial contract, cannot be acted upon or is rendered unenforceable, we are of the view that the finding in N.N. Global (supra) does not appear to be correct. A perusal of paragraph-29 would show that the Court in N.N. Global (supra) proceeded on the basis that the Arbitration Agreement, being an independent contract is not chargeable to payment of stamp duty and it would not invalidate the Arbitration Clause or render it unenforceable, since it had an independent existence of its own, cannot hold good in view of the admitted position before us that an Arbitration Agreement, in its own right, is exigible to stamp duty. The whole premise of the Court in N.N. Global (supra) being that the Arbitration Agreement, F not being exigible to duty and it having a separate existence, the commercial contract in which the Arbitration Agreement is contained, being unstamped, would not impact the Arbitration Agreement, cannot hold good. The reasoning in N.N. Global (supra) in paragraph-32, for disapproving of Garware (supra) in paragraph-22 thereof, that the Arbitration Clause would be non-existent in law and unenforceable till G the stamp duty in adjudicated and paid on the substantive contract, is again on the premise that the Arbitration Agreement is a separate agreement under the Stamp Act, which is not exigible to stamp duty, which we have found is not the case in law. In this regard, we may refer to Article 5 of the Stamp Act: H

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(Emphasis supplied)

62Copy pinpoint62. While the Stamp Act is a fiscal enactment intended to raise revenue, it is a law, which is meant to have teeth. The point of time, at E which the stamp duty is to be paid is expressly provided for in Section 17 of the Stamp Act. There cannot be any gainsaying, that call it a fiscal enactment, it is intended that it is to be implemented with full vigour. The duty of a Court must be to adopt an interpretation which results in the enforcement of the law, rather than allowing the law to be flouted with impunity. Once this principle is borne in mind, the task of the Court F becomes less difficult. The law, as contained in Section 33 read with Section 35 of the Stamp Act, would result in the following conclusions: i. Every person having, by law or consent of parties, the authority to receive evidence, before whom, an instrument is produced, is duty-bound to immediately impound the same. G This is upon his forming the opinion that the instrument is not duly stamped. In a case, where the instrument does not bear any stamp at all, when it is exigible to stamp duty, there can be little difficulty in the person forming the opinion that it is not duly stamped. No doubt, under Section 33(2), in cases of ambiguity, the person shall examine the H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 345 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

instrument to arrive at the liability. Apart from a person having authority to receive evidence, which, no doubt, would include a court and an Arbitrator, every person In-charge of a Public Office, before whom, such instrument is produced or comes in the performance of his functions, has the duty to impound the unstamped or insufficiently stamped document, arises. This is no doubt after ‘examining’ the instrument and ascertaining as to whether the instrument was stamped as required when the document was executed or first executed [See Section 33(2)]. One exception in Section 33 is an Officer of the Police. In other words, the Officer of the Police has no authority to impound an unstamped or insufficiently stamped document produced before him. No doubt, a Criminal Court is not under compulsion vide the proviso. Section 33, no doubt, authorises delegation of power. ii. Under Section 35, the Law-Giver has disabled the admission in evidence of an instrument not stamped or insufficiently stamped, for any purpose. This would include even a collateral purpose. This is in stark contrast with a document, which is compulsorily registerable but which is not registered. Under Section 49 of the Registration Act, 1908, an unregistered document may be used for proving a collateral transaction. Even this is impermissible, if the document is not stamped or insufficiently stamped. Section 35 further proceeds to declare that such an unstamped or insufficiently stamped document shall not be acted upon. It is important to juxtapose the embargo cast on an unstamped document as aforesaid with Section 2(h) of the Contract Act. Section 2(h) of the Contract Act provides that an agreement, which is enforceable in law is a contract whereas Section 2(g), an agreement not enforceable is void. The words ‘enforceable in law’ or ‘not enforceable in law’, understood in the context of Sections 33 and 35 of the Stamp Act, would mean that upon there being an occasion, which necessitates one of the parties to the agreement having to enforce the same through recourse to sanctions available in law, the same should be vouchsafed to him. Ordinarily, agreements are enforced through actions in Civil Courts. Remedies may be H

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A sought before Public Authorities. Both the Civil Courts and the Public Authorities are tabooed from giving effect to an unstamped instrument. Section 33 does not give a choice to the person, who has authority by law, or with consent, to take evidence, or to any Public Officer, but to impound the agreement. The unstamped or insufficiently stamped document cannot be used as evidence for any purpose. It would be inconceivable, as to how, it could be in the same breath, be found that an unstamped document is yet enforceable in law or that it is not enforceable in law. It is another matter that the parties may act upon it. Goods or services may change hands, for instance, under a document, which may be otherwise exigible to stamp duty. What is, however, relevant is that the State will not extend its protection, by appropriate sanctions. The rights, which would otherwise have been available, had the agreement been stamped, would remain frozen or rather they would not exist. D We are further reinforced in our view, therefore, that the views expressed by this Court in Garware (supra) in paragraph-22, following SMS Tea Estates (supra), represent the correct position in law. iii. Next, we must pass on to the correctness of the views E expressed in paragraph-29 of Garware (supra). The Court drew upon the Judgment in United India Insurance Company Limited and another v. Hyundai Engineering & Construction Company Limited and others25.

63Copy pinpoint63. Justice Hrishikesh Roy in paragraph-84 of his draft Judgement F finds that in paragraph-29 in Garware (supra), this Court relied onUnited India Insurance Company Limited v. Hyundai Engineering and Construction Company Limited26. Our learned Brother further notes in paragraph-84.1 that in Hyundai(supra), the issue of stamping was not in consideration and the question was whether the matter fell within G excepted matter as the Arbitration Clause was dependant on whether the insurer accepted liability. Justice Hrishikesh Roy further finds that the approach in Garware (supra) in relying upon Hyundai (supra) was incorrect. This is as Hyundai (supra) has nothing to do with stamping

25 (2018) 17 SCC 607 H 26 (2018) 17 SCC 607

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 347 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

and should have been distinguished. Our learned Brother notices the contention of the learned Amicus that Hyundai (supra) relied on Oriental Insurance Company v. Narbheram Power and Steel Private Limited27, in which case, the Court did not have occasion to interpret Section 11(6)(a) of the Act.

64Copy pinpoint64. It is true that in Hyundai (supra), this Court was not dealing with the impact of the Stamp Act. The Court was dealing rather with the issue as to the effect of the Clause, in which it was agreed that there would be no arbitration, if the insurer disputed or did not accept liability under or irrespective of the policy. In the context of the said Clause, this Court, in Hyundai (supra), went on to hold, inter alia, that the denial of the plea about its liability by the insurer, rendered the ‘making of the Arbitration Clause ineffective and incapable of being enforced, if not non-existent’. No doubt, in paragraph-29 of Garware(supra),this Court found that ‘likewise in the facts of the present case, it is clear that the Arbitration Clause, i.e., contained in the sub-contract, would not exist as a ‘matter of law’ until the sub-contract is duly stamped as has been held by us above’. Therefore, the rationale for finding that an Arbitration Agreement in an unstamped sub-contract would not exist, was already furnished in paragraph-22. This Court was only drawing support from Hyundai (supra) for the proposition about non-existence of the instrument ‘in law’. While, Hyundai (supra) did not relate to the Stamp Act, and even, removing the reference to Hyundai(supra), the finding about the non-existence of an unstamped agreement, would be supportable on the reasoning that what is contemplated in Section 11(6)(a) is no mere facial existence or existence in fact but also existence in law.

65Copy pinpoint65. This Court in Garware (supra) took the view that unless the sub contract was stamped, the arbitration clause contained therein would not exist as a matter of law. This finding has been rendered apparently on the basis of the impact of the amendment leading to the insertion of Section 11(6A). The Court in Garware (supra) had infact after setting out the law prior to the amendment based on the Two Hundred and Forty-Sixth Report of the Law Commission of India found in paragraph- G 19 that the Law Commission Report did not mention about SMS Tea Estates (supra). It is further found that it is for the very good reason that the court does not while deciding an application under Section 11 decide

27 (2018) 6 SCC 534 H

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A any preliminary issue. The Court further found that it was giving effect to the provisions of a mandatory enactment, which enjoins upon the Court, under the provisions of the Stamp Act, to first impound the agreement, and if only the penalty and the duty is paid thereafter, to act upon it. The Court had also found that it was not possible to bifurcate the arbitration clause. We would find that as found by us, being unstamped B or insufficiently stamped, the agreement would not be enforceable till it is ‘validated’ which is permissible only in the manner provided in the Stamp Act and till then it would not exist ‘in law’.

66Copy pinpoint66. In the context of Article 136 of the Limitation Act, 1963, a Bench of three learned Judges in Dr. Chiranji Lal (D) by Lrs. v. Hari C Das (D) by Lrs.28 had to deal with the argument that a Final Decree for partition passed on 07.08.1981 became enforceable only on 25.05.1982, on which day the Decree came to be engrossed with stamp papers. Under Article 136, the period of twelve years begins to run when the ‘Decree or Order’ becomes ‘enforceable’, inter alia. The Court, inter alia, held as follows: “23. Such an interpretation is not permissible having regard to the object and scheme of the Indian Stamp Act, 1899. The Stamp Act is a fiscal measure enacted with an object to secure revenue for the State on certain classes of instruments. It is not enacted to arm a litigant with a weapon of technicality to meet the case of his opponent. The stringent provisions of the Act are conceived in the interest of the Revenue. Once that object is secured according to law, the party staking his claim on the instrument will not be defeated on the ground of initial defect in the instrument (Hindustan Steel Ltd. v. Dilip Construction Co. [(1969) 1 SCC F 597]). …” xxx xxx xxx

25. The engrossment of the final decree in a suit for partition would relate back to the date of the decree. The beginning of the period of limitation for executing such a decree cannot be made G to depend upon date of the engrossment of such a decree on the stamp paper. The date of furnishing of stamp paper is an uncertain act, within the domain, purview and control of a party. No date or period is fixed for furnishing stamp papers. No rule has been shown 28 H (2005) 10 SCC 746

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 349 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

to us requiring the Court to call upon or give any time for furnishing of stamp paper. A party by his own act of not furnishing stamp paper cannot stop the running of period of limitation. None can take advantage of his own wrong. The proposition that period of limitation would remain suspended till stamp paper is furnished and decree engrossed thereupon and only thereafter the period of twelve years will begin to run would lead to absurdity. In Yeswant Deorao Deshmukh v. Walchand Ramchand Kothari [1950 SCC 766 : 1950 SCR 852 : AIR 1951 SC 16] it was said that the payment of court fee on the amount found due was entirely in the power of the decree-holder and there was nothing to prevent him from paying it then and there; it was a decree capable of execution from the very date it was passed.

26. Rules of limitation are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. As abovenoted, there is no statutory provision prescribing a time-limit for furnishing of the stamp paper for engrossing the decree or time-limit for engrossment of the decree on stamp paper and there is no statutory obligation on the court passing the decree to direct the parties to furnish the stamp paper for engrossing the decree. In the present case the Court has not passed an order directing the parties to furnish the stamp papers for the purpose of engrossing the decree. Merely because there is no direction by the Court to furnish the stamp papers for engrossing of the decree or there is no time- limit fixed by law, does not mean that the party can furnish stamp papers at its sweet will and claim that the period of limitation provided under Article 136 of the Act would start only thereafter as and when the decree is engrossed thereupon. The starting of period of limitation for execution of a partition decree cannot be made contingent upon the engrossment of the decree on the stamp paper. …” (Emphasis supplied)

67Copy pinpoint67. However, the said view must be understood in the context of the Law of Limitation standing in the peril of being wholly defeated by ‘enforceability’ of a Decree or Order within the meaning of Article 136, being made dependant on an act of volition of a party to pay the requisite stamp duty. Here, in the case before us, we are concerned with the duty of a Court, inter alia, under Sections 33 and 35 of the Stamp Act and its impact on an unstamped or insufficiently stamped agreement containing H

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A an Arbitration Clause. This is apart from the meaning to be attributed to the words ‘existence of an Arbitration Agreement’ in Section 11(6A) of the Act. We have explained the concept of ‘enforceability’ in the context of the Contract Act. What is closer to the facts is the concept of enforceability or rather the lack of enforceability resulting in the voidness of the contract in the sense explained by us. B K. THE STAMP ACT – WHETHER A PROCEDURAL LAW?

68Copy pinpoint68. In this context, it will be profitable to notice the following discussion from the work Salmond on Jurisprudence, Twelfth Edition. C Dealing with Law of Procedure, it is stated: “What, then, is the true nature of the distinction? The law of procedure may be defined as that branch of the law which governs the process of litigation. It is the law of actions- jus quod ad actiones pertinent-using the term action in a wide sense to include all legal proceedings, civil or criminal. All the residue is substantive law, and relates, not to the process of litigation, but to its purposes and subject-matter. Substantive law is concerned with tPhe ends which the administration of justice seeks; procedural law deals with the means and instruments by which those ends are to be attained. The latter regulates the conduct and relations of courts and litigants in respect of the litigation itself; the former determines their conduct and relations in respect of the matters litigated.” (Emphasis supplied)

69Copy pinpoint69. The Stamp Act, while it may be a fiscal measure, it may not fall within the fold of procedural law. The mere fact that Sections 33 and 35 may apply at a stage, when the person approaches a Court, inter alia, would not mean that the Stamp Act, providing for a duty on the executants to stamp the instrument at the point of time, as declared in Section 17, and what is more, penalising a deviation under Section 62, falls within the domain of procedural law. Pertinently, we may, in the Fourteenth G Edition of The Indian Contract and Specific Relief Acts by Pollock and Mulla, note as follows: “Unenforceable Contracts Unenforceable contracts are valid in all respects, but may not be sued upon by the parties. Such disability may arise for want of H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 351 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

registration; or because the time prescribed for filing the suit has A expired; or because the plaintiff firm has not been registered; or the document or instrument does not bear the requisite stamp duty; or because the lender of money does not possess a licence under money-lending laws.” (Emphasis supplied) B

70Copy pinpoint70. We would find that an agreement, which is unenforceable on account of a substantive law, which would include the Stamp Act, would not be a contract, applying Section 2(h) of the Contract Act. It is only if an agreement is enforceable, that it would become a contract. It is only a ‘contract’, which would be the ‘Arbitration Agreement’, which is contemplated in Section 11(6A) of the Act. It may not be apposite to merely describe an unstamped Arbitration Agreement as a ‘curable defect’. As long it remains an unstamped instrument, it cannot be taken notice of for any purpose, as contemplated in Section 35 of the Stamp Act. It remains unenforceable. Section 17 declares the time at which an instrument, executed in India, must be stamped. The said provision contemplates that stamping of such an instrument must take place before or at the time of the execution of document. No Public Officer, nor Court nor Arbitrator, can permit any person to ask them to act upon it or receive it as evidence. In law, it is bereft of life. It is ‘not enforceable in law’. In the said sense, it also cannot exist in law.It would be void. Our E view in this regard that voidness is conflated to unenforceability receives fortification from Section 2(j) of the Contract Act which renders a contract which ceases to be enforceable void.

71Copy pinpoint71. What Section 11(6A) contemplates is a contract and it is not an agreement which cannot be treated as a contract. This is despite the F use of the words ‘arbitration agreement’ in Section 11(6A). In other words, contract must conform to Section 7 of the Act. It must also, needless to say, fulfil the requirements of the Contract Act.

72Copy pinpoint72. A voidable contract within the meaning of Section 19 and 19A, undoubtedly stands in stark contrast to void contracts. However, G even in the categories of void contracts as for instance, Section 20 of the Contract Act provides that if on a material point, the parties were mistaken, the contract would be void. If in a given case where this is the contention raised by a party in a proceeding under Section 11 when the agreement otherwise satisfies the requirement of a contract to make it exist as an Arbitration Agreement, then, the Court would be justified in H

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A treating the agreement as one which exists and leave it open to the Arbitrator to go into the question, which can be done after the pleadings are laid and evidence is unfolded before him. When an Arbitration Agreement is sought to be brought under the cloud on the basis that it is a voidable contract which has been avoided, again it may be a matter where the principle of Kompetenz-Kompetenz may be apposite and again the court under Section 11 would be justified in proceeding on the basis that an arbitration agreement exists. The question must undoubtedly be approached from the standpoint of advancing the sublime cause of speedy commencement, progress and conclusion of arbitration. When Parliament intervened by amending the Act, while in Section 8, it has employed the words prima facie, it has used the word ‘examine’ to ascertain about the existence of an arbitration agreement in Section 11 (6A). Likewise, in Section 8 the law giver has used the word ‘valid’ which is missing in Section 11(6A). Can it be said that an invalid agreement can be said to exist in law for the purpose of Section 11(6A)?

73Copy pinpoint73. What is an invalid document or agreement? It is an expression which is associated and often conflated with the word void. We have already noticed Section 20 as an instance where a common mistake of the parties on a material subject renders the agreement void. We have also noticed that in view of the very nature of the voidness, a court under Section 11,may allow the application under Section 11 when shelter is taken under Section 20 of the Contract Act by the respondent. It would turn upon the facts. Coming to invalidity, a contract would be invalid as for instance if it is executed by a person of unsound mind. This would equally be the case where it is found that one of the parties was a minor. As far as the word ‘invalid’ is concerned, it has different shades of meaning. In the context of a contract, we notice the following statement in a judgment of the High Court of Karnataka reported in Imambi v. Khaja Hussain alias Khajasab29: “In the context that the words are used the meaning is to be as laid down in Jones v. Bank of Gumming as follows: - G “The word “invalid” as applied to a contract does not always mean an absolute nullity, for a contract may be so imperfect as not to be enforceable, but not such an absolute nullity that it cannot be perfected.”

29 H AIR 1988 Karnataka 51

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 353 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(Vide Words & Phrases – Permanent Edition – West Publishing A Co. Volume 22A)”

74Copy pinpoint74. The aforesaid statement appears apposite in the context of an instrument which is unstamped or insufficiently stamped. This is for the reason that on the one hand as long as it is not stamped or is insufficiently stamped, it is both liable to be impounded under Section 33 of the Stamp B Act and it cannot be used as evidence or registered. This is apart from the unambiguous bar against ‘acting upon’ such an instrument. On the other hand, if after such an instrument is impounded and duty and penalty is paid and a certificate is endorsed upon it within the meaning of Section 42(2) signals that the instrument regains life, the bar in Section 35 of the Stamp Act is removed permanently. Equally, under Section 36 in the case of an instrument (not secondary evidence of the instrument) which is allowed to be let in evidence without objection, then it would qualify as evidence founding a right. But this is an exception to the rule which is found in Section 35 of the Stamp Act. Thus, an unstamped or insufficiently stamped instrument represents a case of an agreement which not being enforceable, in the sense that the sanctions in law through a civil action is impermissible, is in the said sense, invalid. It is not invalid or void in the sense of it being still born or null and void in the sense that life cannot be poured into it. We may sum up. An agreement which is unstamped or insufficiently stamped is not enforceable, as long as it remains in the said condition. Such an instrument would be void as being not enforceable [See Section 2(g) of the Contract Act]. It would not in the said sense exist in law. It can be “validated” by only the process contemplated in Section 33 and other provisions of the Stamp Act. We find the expression ‘validation’ used in the decision of this Court in Hariom Agrawal v. Prakash Chand Malviya30 which we shall refer to in greater detail later. This necessarily means that the court would not view it as enforceable, and therefore, existing in law. In the sense explained, it would not be found as ‘not void’ and therefore ‘not invalid’. Thus, in the context of the Act, the Stamp Act and the Contract Act, we are of the view that the opinion of this Court in SMS Tea Estates (supra), in this regard as reiterated in Garware (supra) and approved in Vidya Drolia G (supra) is correct.

75Copy pinpoint75. Section 11(6A) cannot be understood as merely predicating for an Arbitration Agreement existing literally. This means that the mere 30 (2007) 8 SCC 514 H

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A existence of the arbitration agreement for all intents and purposes on the exterior purporting to project a contract duly executed, may in certain situations, be insufficient under Section 11. If for reasons such as it being unstamped when it is clearly required to be stamped, then it cannot be said to be a case where the agreement exists for it would be no existence in law. While we agree, the Court must be careful in selecting B contracts where an arbitration agreement which is produced is not to be acted upon for the reason that it does not exist in law, all we hold is that an Arbitration Agreement, which is unstamped, does not exist and an unstamped contract, containing an Arbitration Agreement, would not exist as it has no existence in law. C L. SECTION 7 OF THE ACT – ITS IMPACT

76Copy pinpoint76. Our learned Brother, Justice Hrishikesh Roy, is right in noticing that Section 7 of the Act provides for what an Arbitration Agreement means for the purpose of Part I. However, with great respect, we express our inability to agree that a plain reading of Section 7 of the Act, would make it clear that an Arbitration Agreement can be even non-contractual. For the purpose of clarity, we may reproduce Section 7(1) of the Act at this juncture: “7(1) Arbitration agreement.(1) In this Part, “arbitration agreement” means an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.” (Emphasis supplied)

77Copy pinpoint77. We are inclined to hold that what Section 7(1) contemplates is an Arbitration Agreement. We are also inclined to think that what the Law-Giver has intended to convey is that under the Arbitration Agreement, the parties must submit disputes, which have arisen or which may arise between them. The disputes may have arisen or may arise in respect of a defined legal relationship. The defined legal relationship, in G turn, can be either contractual or otherwise. Therefore, what can give rise to disputes can be a legal relationship, which is non-contractual. The legal relationship may arise from out of a Statute. It may arise in relation to a tort but an Arbitration Agreement must always mean an agreement. It is really a contract which is intended as an agreement enforceable by law is a contract. An Arbitration Agreement may be a Clause in an H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 355 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

agreement providing for Arbitration. It may be a separate or a standalone A agreement [Section 7(2) of the Act]. An Arbitration Agreement must be in writing [See Section 7(3) of the Act]. As to what all are comprehended within the requirement that the Arbitration Agreement must be in writing, is set out in Sections 7(4)(a) to 7(4)(c). It includes a document which is signed by the parties [See Section 7(4)(a)]. An Arbitration Agreement B would be treated as contained in writing, if there is an exchange of letters, telex, telegrams or other means of telecommunications, including, communications through electronic means which provide a record of the agreement [See Section 7(4)(b)]. Next, we may notice that an Arbitration Agreement will be treated as contained in writing, if there is an exchange of statements of claims and defence, in which, the existence of the agreement is alleged by a party and not denied by the other [See Section 7(4)(c)]. Finally, Section 7(5) contemplates an Arbitration Agreement by incorporation, viz., a reference in a contract to a document containing an Arbitration Clause, would constitute an Arbitration Agreement, if the contract is in writing and the reference is such as to make that Arbitration Clause part of the contract. The true scope of Section 7(5) of the Act has been elaborately considered inM.R. Engineers & Contractors Private Limited v. Som Datt Builders Limited31.

78Copy pinpoint78. Section 3(a) of the Stamp Act, no doubt, contemplates that every instrument mentioned in the Schedule, which, not having been previously executed by any person, is executed in India on or after the first day of July, 1899, is chargeable with duty. Clause (c) of Section 3 also contemplates ‘execution’ of a document out of India, being chargeable with duty. Section 17 of the Stamp Act also contemplates that in respect of documents executed in India, they shall be stamped before or at the time of execution. Justice Hrishikesh Roy would reason that an Arbitration Agreement, as defined in Section 7 of the Act, need not be an instrument chargeable to stamp duty as stamp duty is payable under the Stamp Act only on instruments, which are executed. The word ‘executed’ has been defined in the Stamp Act as meaning ‘signed’. G

79Copy pinpoint79. Section 7(3)(b) of the Act contemplates that an exchange of letters, telex, telegrams or other means of telecommunication, including communication through electronic means, which provide a record of the agreement, would constitute an Arbitration Agreement in writing within 31 (2009) 7 SCC 696 H

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A the meaning of Section 7(3) of the Act. We may notice that the proviso (c) to Section 35 of the Stamp Act reads as follows: “(c) Where a contract or agreement of any kind is effected by correspondence consisting of two or more letters and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped;”

80Copy pinpoint80. Thus, the Stamp Act does contemplate a contract or agreement being formed through correspondence through two or more letters. It then suffices that any one of the letters bears the proper stamp. Even proceeding on the basis that an Arbitration Agreement is contained in letters and it is signed and, therefore, executed within the meaning of the Stamp Act, then, it would fall within the four corners of Sections 33 and 35 of the Stamp Act.

81Copy pinpoint81. We do notice that a Bench of two learned Judges have, in the Judgment reported in Govind Rubber Limited v. Louids Dreyfus D Commodities Asia Private Limited32, had this to say about the need for an Arbitration Agreement being signed: “15. A perusal of the aforesaid provisions would show that in order to constitute an arbitration agreement, it need not be signed by all the parties. Section 7(3) of the Act provides that the arbitration agreement shall be in writing, which is a mandatory requirement. Section 7(4) states that the arbitration agreement shall be in writing, if it is a document signed by all the parties. But a perusal of clauses (b) and (c) of Section 7(4) would show that a written document which may not be signed by the parties even then it can be arbitration agreement. Section 7(4)(b) provides that an arbitration agreement can be culled out from an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement.

16. On reading the provisions it can safely be concluded that an arbitration agreement even though in writing need not be signed by the parties if the record of agreement is provided by exchange of letters, telex, telegrams or other means of telecommunication. Section 7(4)(c) provides that there can be an arbitration agreement in the exchange of statements of claims and defence in which the

32 H (2015) 13 SCC 477

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 357 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

existence of the agreement is alleged by one party and not denied by the other. If it can be prima facie shown that the parties are at ad idem, then the mere fact of one party not signing the agreement cannot absolve him from the liability under the agreement. In the present day of e-commerce, in cases of internet purchases, tele purchases, ticket booking on internet and in standard forms of contract, terms and conditions are agreed upon. In such agreements, if the identity of the parties is established, and there is a record of agreement it becomes an arbitration agreement if there is an arbitration clause showing ad idem between the parties. Therefore, signature is not a formal requirement under Section 7(4)(b) or 7(4)(c) or under Section 7(5) of the Act.” C

82Copy pinpoint82. When it comes to Section 7(4)(c), what is constituted as an Arbitration Agreement as being in writing is an exchange of Statement of Claims and Defence, wherein the existence of an agreement is alleged by one party and not denied by another. There must however be ‘an agreement’, the allegation of the existence of which remains unrefuted. D Since, Section 7(1) defines an arbitration agreement to be one, under which, parties submit ‘all’ or ‘certain disputes’, which have arisen or will arise, such an agreement must be alleged to exist and the allegation must remain undenied. The formation of such an agreement must necessarily be tested with reference to the indispensable requirements, such as, competency to contract and presence of sound mind. E

83Copy pinpoint83. All that we are holding is, an Arbitration Agreement must satisfy the requirements in Section 7(1) and, therefore, it must be an agreement. Sans an agreement, there cannot be a reference to arbitration. While Justice Hrishikesh Roy is right in holding that Section 10 of the Contract Act recognises oral agreements and that a written agreement is a sine qua non for a valid Arbitration Agreement, Section 10 of the Contract Act, it must be noticed, in the second part, provides that nothing contained in the first part, would affect any law, which, inter alia, requires that any contract is required to be made in writing. Section 7(3) of the Act which insists that an arbitration agreement must be in writing harmonises with Section 10 of the Contract Act.

84Copy pinpoint84. We would think that whenever an Arbitration Agreement, as defined in Section 7 of the Act, also attracts stamp duty under the Stamp Act, then, the provisions of Sections 33 and 35 of the Stamp Act would come into play. As held in SMS Tea Estates Private Limited(supra), if H

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A an Arbitration Clause constitutes the Arbitration Agreement and the instrument, viz., the instrument or contract, in which the Arbitration Clause is contained, is unstamped, when it is otherwise exigible to stamp duty, then, the provisions of Section 33 as also Section 35 of the Stamp Act would operate. The court acting under Section (11) of the Act is not free to disregard their mandate. B

85Copy pinpoint85. An Arbitration Agreement, may be a Clause in an instrument, which attracts stamp duty. In such a case, the Court, acting under Section 11, is bound to act under Sections 33 and 35 of the Stamp Act, if the instrument is not stamped or insufficiently stamped. If an Arbitration Agreement is a standalone agreement and which attracts duty under the C Stamp Act, then also, the same position obtains. M. THE ALTERNATIVE PERSPECTIVE

86Copy pinpoint86. In Garware (supra), the Court referred to paragraph-59 of Duro Felguera (supra) to find that, the Court in the said case, proceeded D on the basis that the mischief that was sought to be remedied by the insertion of Section 11(6A), was as contained in SBP (supra) and National Insurance (supra). We must, however, notice that in paragraph-18 of Garware (supra), the Court referred to paragraph-12 of SBP (supra), which we have already noticed and, thereafter, the Court went on to hold, inter alia, as follows: E “19. It will be seen that neither in the Statement of Objects and Reasons nor in the Law Commission Report is there any mention of SMS Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] . This is for the very good reason that the Supreme Court or the F High Court, while deciding a Section 11 application, does not, in any manner, decide any preliminary question that arises between the parties. The Supreme Court or the High Court is only giving effect to the provisions of a mandatory enactment which, no doubt, is to protect revenue. SMS Tea Estates [SMS Tea Estates (P) G Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] has taken account of the mandatory provisions contained in the Stamp Act and held them applicable to judicial authorities, which would include the Supreme Court and the High Court acting under Section 11. A close look at Section 11(6-A) would show that when the Supreme Court or the High Court H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 359 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

considers an application under Sections 11(4) to 11(6), and comes A across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the 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 Stamp B 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, as has been contended for by the respondent. The independent existence that could be given for certain limited purposes, on a harmonious reading of the Registration Act, 1908 C and the 1996 Act has been referred to by Raveendran, J. in SMS Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] when it comes to an unregistered agreement or conveyance. However, the Stamp Act, containing no such provision as is contained in D Section 49 of the Registration Act, 1908, has been held by the said judgment to apply to the agreement or conveyance as a whole, which would include the arbitration clause contained therein. It is clear, therefore, that the introduction of Section 11(6-A) does not, in any manner, deal with or get over the basis of the judgment in SMS Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari E Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] , which continues to apply even after the amendment of Section 11(6-A).” (Emphasis supplied)

87Copy pinpoint87. This is apart from, the Court after referring to Sections 2(g) F and 2(h) of the Contract Act, going on to make the observations at paragraph-22 and, finally, paragraph-29 which we have noticed. In fact, in paragraph-30, the Court went on to disapprove various Judgments of High Courts, which included the Full Bench of the High Court of Bombay in Gautam Landscapes Pvt. Limited v. Shailesh S. Shah³³, insofar as G it related to the High Court holding that after the insertion of Section 11(6A) of the Act, the Court, acting under Section 11(6), need not be detained by the aspect relating to the document not being stamped.

33 (2019) SCC OnLine Bom 563 H

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88Copy pinpoint88. Section 11(6A) of the Act, no doubt, contemplated constraining the court to not stray into areas which were permissible under the earlier regime which was set out in SBP (supra) as explained in National Insurance (supra). It must be understood that when the law giver changes the law it would be indeed a wise approach and fully commended in law to ascertain the mischief which the legislature was dealing with. Equally, B the court would naturally enquire as to what is the relief against the mischief which the law giver has provided. The mischief as we understand was the perception that courts were overstepping the limits of minimal interference in consonance with the principle enshrined in Section 5 of the Act. In other words, if we may bear in mind paragraphs 22.2 and C 22.3 of National Insurance Company(supra) it would appear that they fell outside of the question relating to the existence of an arbitration agreement. The Stamp Act is a law passed by the same law-giver. It is a law which is meant to have life, and therefore, to be enforced. The legislature would not have possibly contemplated, when it incorporatedSection 11(6A), that the courts must turn a blind eye to the injunction of a law and allow it to be defeated. This to our minds involves adopting an interpretation which would ignore the principle of harmonious construction of statutes.

89Copy pinpoint89. As far as the conclusion in paragraph 55 of Great Offshore Ltd. (supra) that since Section 7 of the Act does not stipulate for stamping, stamping may not be required under the Stamp Act, does not commend itself to us as the correct position in law. We are equally unable to subscribe to the view that stamp duty, inter alia, should be treated as a ‘technicality’. We are also of the view that the view taken by the learned Single Judge otherwise in the said paragraph again does not represent the correct position.

90Copy pinpoint90. Section 5 no doubt provides for a non-obstante clause. It provides against judicial interference except as provided in the Act. The non-obstante clause purports to proclaim so despite the presence of any law which may provide for interference otherwise. However, this does not mean that the operation of the Stamp Act, in particular, Sections 33 and 35 would not have any play. We are of the clear view that the purport of Section 5 is not to take away the effect of Sections 33 and 35 of the Stamp Act. The Court under Section 11 purporting to give effect to Sections 33 and 35 cannot be accused of judicial interference contrary to Section 5 of the Act. H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 361 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

91Copy pinpoint91. It is nobody’s case that if the contract which contains the arbitration clause is an instrument within the meaning of the Stamp Act is produced before the court under Section 11 of the Act, and it is found to be unstamped on the face of it, that Sections 33 and 35 and other allied provisions of the Stamp Act would have no play. In fact, in N.N. Global (supra), this Court directed the work order (the contract containing the arbitration clause) to be impounded. Section 11 (6A) of the Act which requires the court to examine whether an arbitration agreement exists, was the need realized and articulated by Parliament to curb the court from straying into other areas highlighted in National Insurance (supra). In other words, proceeding on the basis that an ‘unstamped agreement’ exists, it would not deflect the court of its statutory duty to follow the regime under Sections 33 and 35 of the Stamp Act. N. THE AMICUS CURIE SPRINGS A SURPRISE

92Copy pinpoint92. This Court pointed out to the existence of the Scheme prepared by the Supreme Court in exercise of the powers under Section 11(10). Paragraph 2(a) of the Scheme, inter alia, reads as follows: D

“2. Submission of request. -The request to the Chief Justice under sub-section (4) or sub-section (5) or sub-section (6) of section 11 shall be made in writing and shall be accompanied by- (a) the original arbitration agreement or a duly certified copy thereof;”

93Copy pinpoint93. Thereafter, when the curtains were about to be rung down on the hearing, the learned Amicus brought the following aspect to notice of the Court. He pointed out that under the Scheme, the applicant need produce only the certified copy of the Arbitration Agreement. He would draw support from the Judgments of this Court inJupudi Kesava Rao v. Pulavarthi Venkata Subbarao and others34 and Hariom Agrawal (supra) to contend that even applying Sections 33 and 35 by the Court at the stage of Section 11 of the Act, the certified copy cannot be impounded. He, thus, sought to take the wind out of the sail of the appellant’s contention, by contending that in most of the cases, since certified copies are alone being filed and they cannot be impounded, and as after reference to the Arbitrator based on the certified copy, the Arbitrator is competent, in law, under Sections 33 and 35 of the Stamp Act to do the needful, this

34 (1971) 1 SCC 545 H

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A Court may bear this aspect in mind. Thereupon, Shri Gagan Sanghi, would point out that even in the certified copy, the factum of payment of the stamp duty must be entered. The said aspect, in fact, engaged the attention of this Court in SMS Tea Estates(supra).

94Copy pinpoint94. Reference has been made to Jupudi Kesava Rao (supra), to B contend that a copy of an instrument, cannot be treated as an instrument under the Stamp Act for the purpose of Sections 33 and 35 of the Stamp Act. A copy cannot be impounded under Section 33, it is pointed out. Therefore, Section 33, which mandates impounding of an unstamped instrument, would not apply to a certified copy, which is permitted to be produced under the Scheme. Reliance has been placed on paragraphs- C 13 and 14 of Jupudi Kesava Rao (supra): “13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. The second limb of it which relates to acting upon the instrument will obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in when the original admittedly chargeable with duty was not stamped or insufficiently stamped, would be tantamount to the document being acted upon by the person having by law or authority to receive evidence. Proviso (a) is only applicable when the original instrument is actually before the Court of law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. Clearly secondary evidence either by way of oral evidence of the contents of the unstamped document or the copy of it covered by Section 63 of the Indian Evidence Act would not fulfil the requirements of the proviso which enjoins upon the authority to receive nothing in evidence except the instrument itself. Section 25 is not concerned with any copy of an instrument and a party can only be allowed to rely on a document which is an instrument for the purpose of Section 35. “Instrument” is defined in Section 2(14) as including every document by which any right or liability is, or purports to be created, transferred, limited, extended, extinguished or recorded. There is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act.

14. If Section 35 only deals with original instruments and not copies Section 36 cannot be so interpreted as to allow secondary evidence of an instrument to have its benefit. The words “an instrument” in

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 363 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Section 36 must have the same meaning as that in Section 35. A The legislature only relented from the strict provisions of Section 35 in cases where the original instrument was admitted in evidence without objection at the initial stage of a suit or proceeding. In other words, although the objection is based on the insufficiency of the stamp affixed to the document, a party who has a right to B object to the reception of it must do so when the document is first tendered. Once the time for raising objection to the admission of the documentary evidence is passed, no objection based on the same ground can be raised at a later stage. But this in no way extends the applicability of Section 36 to secondary evidence adduced or sought to be adduced in proof of the contents of a C document which is unstamped or insufficiently stamped.” (Emphasis supplied)

95Copy pinpoint95. In Jupudi Kesava Rao (supra), the appellant relied on oral evidence to prove the lease document which was insufficiently stamped. The High Court held that oral evidence could not be acted upon to prove the lease agreement. The main question, which arose was, whether secondary evidence of a written agreement to grant a lease, was barred under Sections 35 and 36 of the Stamp Act. The Court went on to find, on a survey of the Evidence Act that it did not purport to deal with admissibility of documents in evidence, which were required to be stamped under the Stamp Act. It is thereafter that the Court went on to hold what was done in paragraphs-13 and 14 of the Judgment. While dealing with Section 35 of the Act, the Court, inter alia, held that ‘the second limb of Section 35 of the Stamp Act, which related to acting upon the instrument, would obviously shut out any secondary evidence of such instrument, for allowing such evidence to be let in, when the original, admittedly chargeable with duty, was not stamped or insufficiently stamped, would tantamount to the document being acted upon by the person having by law or Authority, to receive evidence.Proviso (a) is only applicable, it was found when the original instrument is actually before the Court of Law and the deficiency in stamp with penalty is paid by the party seeking to rely upon the document. It is, thereafter, the Court observed that ‘there is no scope for inclusion of a copy of a document as an instrument for the purpose of the Stamp Act’. The Court also, in paragraph-14, found that Section 36 of the Stamp Act, which precludes a party, who did not object to the admission of an unstamped or insufficiently stamped H

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A document, in evidence, from raising the objection later, did not apply to secondary evidence.

96Copy pinpoint96. In Hariom Agrawal (supra), a Bench of three learned Judges, was dealing with the impugned Order of the High Court, by which, it held that a photocopy of the original agreement, could neither be impounded nor could it be accepted as secondary evidence. It was after following Jupudi Kesava Rao (supra), the Court held as follows: “10. It is clear from the decisions of this Court and a plain reading of Sections 33, 35 and 2(14) of the Act that an instrument which is not duly stamped can be impounded and when the required fee and penalty has been paid for such instrument it can be taken in evidence under Section 35 of the Stamp Act. Sections 33 or 35 are not concerned with any copy of the instrument and party can only be allowed to rely on the document which is an instrument within the meaning of Section 2(14). There is no scope for the inclusion of the copy of the document for the purposes of the D Stamp Act. Law is now no doubt well settled that copy of the instrument cannot be validated by impounding and this cannot be admitted as secondary evidence under the Stamp Act, 1899.” (Emphasis supplied)

97Copy pinpoint97. The submission appears to be that the Scheme provides for a certified copy of the Arbitration Agreement and if the Arbitration Agreement is a part of the contract, which is either not stamped or insufficiently stamped and, since, it cannot be impounded under Section 33 of the Stamp Act, cannot be validated. All that the Court has to look into is, whether an Arbitration Agreement exists. F

98Copy pinpoint98. It is, no doubt, true that under the Scheme, an applicant can produce, either the Original or the certified copy. What is a certified copy? A certified copy is to be understood in the light of Section 76 of the Indian Evidence Act, 1872 (hereinafter referred to as, ‘the Evidence Act’, for short). It reads as follows: G “76. Certified copies of public documents.—Every public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 365 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

shall be dated and subscribed by such officer with his name and his official title, and shall be sealed, whenever such officer is authorized by law to make use of a seal; and such copies so certified shall be called certified copies.—Every 3public officer having the custody of a public document, which any person has a right to inspect, shall give that person on demand a copy of it on payment of the legal fees therefor, together with a certificate written at the foot of such copy that it is a true copy of such document or part thereof, as the case may be, and such certificate shall be dated and subscribed by such officer with his name and his official title, and shall be sealed, whenever such officer is authorized by law to make use of a seal; and such copies so certified shall be called certified copies.” Explanation. —Any officer who, by the ordinary course of official duty, is authorized to deliver such copies, shall be deemed to have the custody of such documents within the meaning of this section.”

99Copy pinpoint99. This necessarily would take us to Section 74 of the Evidence D Act, which defines what is a ‘public document’. Section 74 reads as follows: “74. Public documents. —The following documents are public documents: — (1) Documents forming the acts, or records of the acts— E

(i) of the sovereign authority, (ii) of official bodies and tribunals, and (iii) of public officers, legislative, judicial and executive, of any part of India or of the Commonwealth, or of a foreign country; F of any part of India or of the Commonwealth, or of a foreign country; (2) Public records kept in any State of private documents.”

100Copy pinpoint100. We have already noticed that Section 35 of the Stamp Act interdicts the registration of an instrument unless it is duly stamped. G

101Copy pinpoint101. The interplay of the Evidence Act, the Stamp Act and the Registration Act is to be understood as follows: In regard to an instrument, which is executed in India and which is liable to be stamped, then, stamping has to take place before or at the H

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A time of the execution of the instrument. It is after the instrument is stamped that it can be presented for registration. Section 17 of the Registration Act provides for documents, which are compulsorily registrable. Section 18 permits registration of other documents at the option of the persons concerned. An instrument, which is registered, necessarily involves, it being duly stamped before it is so registered. B This result is inevitable, having regard to the impact of Section 35 of the Stamp Act. In fact, an instrument, which is not duly stamped and which is produced before the Registering Authority, would be liable to be impounded under Section 33 of the Stamp Act. What Section 74 read with Section 76 of the Evidence Act provides for is, the issuance of C certified copies. Certified copies can be issued only in respect of public documents. Section 62 inter alia of the Evidence Act defines primary evidence as the document itself produced for the inspection of the court. Section 63 of the Evidence Act defines ‘secondary evidence’ as meaning and including, inter alia, ‘certified copies under the provisions hereinafter contained’. The provisions ‘hereinafter contained’ referred to in Section D 63 must be understood as Section 74 read with Section 76. A certified copy can be given, no doubt, of ‘public records kept in any State of private documents’. Thus, if a sale deed between two private parties comes to be registered, instead of producing the original document, a certified copy of the sale deed, may qualify as secondary evidence and E a certified copy can be sought for and issued under Section 76 of the Evidence Act. The expression ‘public records kept in any State of a private document’ in Section 74 is not confined to documents, which are registered under the Registration Act. A private document, which is kept as a public record, may qualify as a public document. What is important is, to bear in mind that in view of Section 33 of the Stamp Act, an instrument, which is not duly stamped, if it is produced before any Public Office, it would become liable to be impounded and dealt with as provided in the Stamp Act. Let us assume a case where a contract, which contains an Arbitration Clause, is registered. As we have noticed, if the contract, in which the Arbitration Clause is contained, is exigible to stamp duty, then, registration cannot be done without the instrument being duly stamped. It is keeping the same in mind that in SMS Tea Estates (supra), this Court held that, ‘if what is produced is a certified copy of the agreement/contract/instrument, containing the Arbitration Clause, it should disclose that the stamp duty has been paid on the original’. This again is for the reason that a certified copy is a true copy of the document. The H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 367 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Officer, who certifies the document, must be the person having the custody of the public document. The public document in the case of public records of private documents, in the case of a registered document, would necessarily involve the document being stamped before registration. The Scheme framed by the Chief Justice, permits the production of a duly certified copy to relieve the party of the burden of producing the original but what is contemplated is only the production of the certified copy, which duly discloses the fact of payment of stamp duty. It is worthwhile to also notice paragraph-5 of the Scheme. It reads: “5. Seeking further information. -The Chief Justice or the person or the institution designated by him under paragraph 3 may seek further information or clarification from the party making the request under this Scheme.”

102Copy pinpoint102. Therefore, it is not as if the Judge dealing with an Application under Section 11 of the Act, is bereft of authority to seek information or clarification so as to be satisfied that the certified copy satisfies the requirement as laid down in SMS Tea Estates (supra) that stamp duty payable has been paid.

103Copy pinpoint103. We have already indicated the scheme of the Evidence Act in so far as it relates to the admission of secondary evidence. We have also found that the Scheme contemplates, without anything more, the production of a form of secondary evidence, viz., a certified copy of the E Arbitration Agreement. Even if an Arbitration Agreement between the two parties becomes a public document under Section 74(c) of the Evidence Act on the basis that it is a public record, other than as being a registered document and on the basis that, it was produced before any public office and it became a public record of a private document,in keeping with the mandate of Section 33 of the Stamp Act and other connected provisions, such a document again would have been impounded, unless it was originally stamped as per law. In other words, if a certified copy is produced, along with a request under Section 11 of the Act, to be treated as a document, on which the Application under Section 11 could be maintained, it must necessarily comply with the requirement that it declares the stamp, which has been paid in regard to the original.

104Copy pinpoint104. The production of a copy of an instrument, may not lead to the impounding of the copy as Section 33, which mandates impounding, applies only in regard to the original, which alone is treated as an H

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105Copy pinpoint105. There was considerable debate at the Bar as regards the wisdom in relegating the issue relating to payment of stamp duty to the Arbitrator. On the one hand, the learned Amicus, supported by learned Counsel for the Respondent, would canvass that, bearing in mind the object of the Act, and in particular, Section 5 of the Act, prohibiting judicial interference, except as provided, questions relating to non- payment of stamp duty and the amount to be paid, are capable of being dealt with by the Arbitrator. The concern of the Court, that the interest of the Revenue is protected, is best balanced with the overwhelming need to fastrack the arbitration proceedings and they are best harmonised by ensuring that the Arbitrator will look into the matter and ensure that the interest of the Revenue is not jeopardised. On the other hand, the appellant and the intervener would point out that the Court cannot ignore the mandate of the law contained in Sections 33 and 35 of the Stamp Act and a view taken by this Court, on the said lines, will only encourage evasion of the law, whereas, if the Court follows the mandate of Sections F 33 and 35 of the Stamp Act and adheres to what has been laid down in Garware (supra), not only would the law be observed, but, when the matter reaches the Arbitrator, the issue would have been given the quietus. Such a view would also encourage persons falling in line with the Stamp Act.

106Copy pinpoint106. We see merit in the contention of the appellant. Apart from the Court acting in consonance with the law, when it adheres to Sections 33 and 35 of the Stamp Act, where it applies, in our view, under the watchful gaze of the Court, be it the High Court or the Supreme Court, the issue relating to stamp duty, in a case where there is no stamp duty H paid, is best resolved.

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 369 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

107Copy pinpoint107. The question would arise as follows: A i. A document containing the Arbitration Clause may not bear any stamp duty. We have already found that even an Arbitration Agreement, on its own, may be required to be stamped, as submitted by the learned Amicus. But then the Court can proceed on the basis that the amount of stamp duty, which the Arbitration Agreement contained in an Arbitration Clause, would be exigible to being extremely meagre, there is very little likelihood of such an agreement not being stamped. Therefore, what the Court is to consider is, whether when the contract, in which the Arbitration Clause is contained, is not duly stamped, it becomes the duty of the Court to act under Sections 33 and 35 of the Stamp Act. ii. We have already indicated the background, consisting of the views expressed by this Court, about the nature of review undertaken under Section 11, which led to the insertion of Section 11(6A). Parliament clearly intended to deal with the Court undertaking excessive review, in exercise of the power under Section 11(6) of the Act. It was to curtail excessive judicial interference, which was in keeping also with the principle enshrined in Section 5 of the E Act that Parliament interfered and enacted the amendment resulting in Section 11(6A) being inserted. Parliament was aware of the view taken by this Court in SMS Tea Estates (supra), namely that, if the Arbitration Agreement was not duly stamped, then, it had to be impounded and dealt with as provided therein. The mandate of the Stamp Act did not conflict with the legislative command contained in Section 11(6A), viz., to examine whether an Arbitration Agreement existed. Proceeding on the basis, in fact, that a contract, containing the Arbitration Agreement, which is not duly stamped, could be said to exist in law, it would still not dislodge the duty cast on the Court under Section 11 to follow the mandate of Sections 33 and 35 of the Stamp Act. In other words, on the aforesaid view, following the command under Section 11(6A), could not detract from, the Court also at the same time, following the equally binding mandate contained in the Stamp Act. H

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A iii. The question further arises, as to whether, in view of the power of the Court under Section 11, to find only prima facie, the existence of the Arbitration Agreement, it would enable the Court to make a Reference and appointment and relegate the issue of impounding of the document to the Arbitrator. B iv. Any shirking of the statutory duty by the Court under Section 11 to act in tune with the peremptory statutory dictate of the Stamp Act, appears to us unjustifiable. Such abdication of its plain duty is neither contemplated by the Law-Giver nor would it be justifiable as causing the breach of Section C 11(6A). v. The view that cases under Section 11 of the Act would consume more time and hinder the timely progress of arbitration and that the matter must be postponed so that the Arbitrator will more suitably deal with it, does not appeal D to us. While the Stamp Act is primarily intended to collect revenue and it is not intended to arm a litigant to raise ‘technical pleas’, this would hardly furnish justification for the Court to ignore the voice of the Legislature couched in unambiguous terms. We find that the view expressed in E SMS Tea Estates (supra), being reiterated, despite the insertion of Section 11(6A), would promote the object of the Stamp Act and yet be reconcilable with the mandate of Section 11(6A). We may, however, qualify what we have said with a caveat. There may be cases, where no stamp duty is seen paid. It paves the way for the unambiguous discharge of duty under Sections 33 and 35 of the Stamp Act. There may, however, be cases, where it may be stamped but the objection is taken by the party that it is not duly stamped. In such cases, no doubt, it is ordinarily the duty of the Court to examine the matter with reference to the duty under Section 33(2). If the claim that it is insufficiently stamped, appears to the Court to be on the face of it, wholly without foundation, it may make the Reference on the basis of the existence of an Arbitration Agreement otherwise and then leave it open to the Arbitrator to exercise the power under Section 33, should it become H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 371 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

necessary. This approach does justice to the word ‘examine’ A in Section 33(2) of the Stamp Act while not ignoring the command of Section 11(6A) of the Act. It is not to be confused with the duty to examine prima facie whether an ‘Arbitration Agreement’ exists under Section 11(6A) of the Act, but is related to the duty to examine the matter under B Section 33(2) of the Stamp Act. vi. Under the Evidence Act, production of only the original document is permissible by way of evidence (See Section 62). However, secondary evidence is permissible under Section 63 and certified copies are treated as secondary evidence. Under the Scheme, in a proceeding under Section C 11, without following the procedure in the Evidence Act, secondary evidence, in the form of certified copy, is permitted. It may be true that since certified copies are permitted to maintain an Application under Section 11 and, in law, impounding cannot be done of a certified copy, as it is not an instrument, the duty of the Court to examine the matter from the point of view of Section 33 of the Stamp Act, may not exist as such. However, we have explained what constitutes a certified copy, and that, in view of SMS Tea Estates (supra), the stamp duty paid must be indicated in the certified copy and, in appropriate case, the Court has power, under paragraph-5 of the Scheme, to call for information. It becomes the duty of the Court, in cases, where a certified copy is produced, to be satisfied that the production of the certified copy, fulfils the requirement in law. As already noticed, while the certified copy which does not show that the stamp duty is paid cannot be impounded under Section 33, it cannot be acted upon under Section 35 of the Stamp Act. P. ARBITRATION AGREEMENT, A DISTINCT AGREEMENT AND ITS IMPACT? G i. The last question, which remains is, whether, if the contract, in which, the Arbitration Clause is located, is unstamped but the Arbitration Clause is stamped, the Court can ignore the fact that the instrument containing in the Contract is unstamped. In the first place, such an eventuality cannot H

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