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

A arise. This for the reason that unless there is misrepresentation or a fraud played, it is incomprehensible as to how, when the contract is produced, it will not be dealt with under Section 33 of the Stamp Act among other provisions. B ii. The learned Amicus, in fact, points out that invariably the Arbitration Agreement is contained as a clause in a larger agreement. The contract would consist of the document containing the Arbitration Agreement. This brings us to the question as to whether the Arbitration Agreement can be treated as a separate contract, and even if the main contract C is not stamped, it suffices if the Arbitration Agreement alone is stamped. iii. In N.N. Global(supra), in fact, the Court proceeded to impound the main contract which was the Work Order. The Doctrine of the Arbitration Agreement being a distinct and D a separate agreement, is well-established. The Doctrine of Kompetenz-Kompetenz has been enshrined in Section 16 of the Act. Section 16, undoubtedly, articulates the principle that the Arbitral Tribunal may rule on its jurisdiction including objections relating to the validity of the Arbitration Agreement and its very existence and, for that purpose, an Arbitration Clause forming part of the contract, is to be treated as an agreement independent from the other terms of the contract. Equally, Section 16(1)(b) declares that despite the Tribunal finding that the contract was null and void, it would not invalidate the Arbitration Clause. The evolution of the principle that an Arbitration Agreement is a separate and distinct agreement from the contract, would indicate that it would have no play in the context of the duty of a Court, within the meaning of Sections 33 and 35 of the Stamp Act, to act in consonance therewith. The efficacy of the Arbitration Clause in a contract is preserved so that the extinguishing of the contractual obligations by termination or non-performance or alleged performance, does not deprive the parties of their rights and the power of the Arbitrator to adjudicate on H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 373 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

disputes, which, otherwise fall within the ambit of the A Arbitration Clause. The underlying principle behind treating the Arbitration Agreement as a separate agreement is to create a mechanism, which survives the contract so that disputes, falling within the Arbitration Agreement, are resolved. Thus, B the rescission of the main contract would not result in the death of the Arbitration Clause. We agree that the Arbitration Clause may be a collateral term [See Heyman v. Darwins Limited35]. The Arbitration Agreement, it is found in N.N. Global (supra), ‘exists and can be acted upon, irrespective of whether the main substantive contract is valid or not’ [See paragraph-4.10 of N.N. Global (supra)]. It may be true that, ordinarily, the invalidity of the main agreement may not affect the Arbitration Clause [See paragraph-4.12 of N.N. Global (supra)]. However, proceeding on the basis that an Arbitration Agreement contained as a clause in the main contract, is a separate agreement and it can exist independently, the fallacy behind such a line of argument in the context of Sections 33 and 35 of the Stamp Act, can be demonstrated as follows: The learned Amicus would urge that in N.N. Global E (supra) the Court erred in finding that the Arbitration Agreement is not required to be stamped. If so, the Arbitration Clause, being the Arbitration Agreement, would require to be stamped. Is it conceivable that a contract, containing an Arbitration Clause, would be stamped only to cover the liability in regard to the Arbitration Agreement F and leave the main agreement unstamped, when it is required to be stamped? Will not acceptance of such a view require the Court to adopt an interpretation that will plainly encourage parties to contravene the mandate of the Stamp Act. We are afraid that, therefore, even proceeding on the G basis that an Arbitration Agreement is a separate agreement, would be of no avail in a case where the Arbitration Clause and the main Agreement are both exigible to stamp duty.

35 (1942) AC 356 HL H

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108Copy pinpoint108. As found in SMS Tea Estates (supra), in view of the fact that there is a bar to the use of an instrument, which is not stamped or insufficiently stamped for any purpose (unlike Section 49 of the Registration Act, which allows an unregistered document to be used to prove a collateral transaction), an unstamped instrument, in which, an Arbitration Clause is part of, cannot be allowed to be used, as it would B be allowing the instrument to be used to establish a collateral transaction. This is proceeding on the basis that an Arbitration Agreement is a collateral term and may have a distinct existence, separate from the main agreement. Q. CONCLUSIONS C

109Copy pinpoint109. The view taken in SMS Tea Estates (supra) as followed in Garware (supra) and by the Bench in Dharmaratnakara Rai Bahadur Arcot Narainswamy Mudaliar Chattram and other Charities v. Bhaskar Raju and Brothers and others 36 as to the effect of an unstamped contract containing an Arbitration Agreement and the steps to be taken by the Court, represent the correct position in law as explained by us hereinbefore. N.N. Global (supra) was wrongly decided, when it held to the contrary and overruled SMS Tea Estates (supra) and Garware (supra).

110Copy pinpoint110. An instrument, which is exigible to stamp duty, may contain an Arbitration Clause and which is not stamped, cannot be said to be a contract, which is enforceable in law within the meaning of Section 2(h) of the Contract Act and is not enforceable under Section 2(g) of the Contract Act. An unstamped instrument, when it is required to be stamped, being not a contract and not enforceable in law, cannot, therefore, exist in law. Therefore, we approve of paragraphs-22 and 29of Garware (supra). To this extent, we also approve of Vidya Drolia (supra), insofar as the reasoning in paragraphs-22 and 29 of Garware (supra) is approved.

111Copy pinpoint111. The true intention behind the insertion of Section 11(6A) in the Act was to confine the Court, acting under Section 11, to examine and ascertain about the existence of an Arbitration Agreement.

112Copy pinpoint112. The Scheme permits the Court, under Section 11 of the Act, acting on the basis of the original agreement or on a certified copy. The

36 H (2020) 4 SCC 612

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 375 INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

certified copy must, however, clearly indicate the stamp duty paid as A held in SMS Tea Estates (supra). If it does not do so, the Court should not act on such a certified copy.

113Copy pinpoint113. If the original of the instrument is produced and it is unstamped, the Court, acting under Section 11, is duty-bound to act under Section 33 B of the Stamp Act as explained hereinbefore. When it does so, needless to say, the other provisions, which, in the case of the payment of the duty and penalty would culminate in the certificate under Section 42(2) of the Stamp Act, would also apply. When such a stage arises, the Court will be free to process the Application as per law. C

114Copy pinpoint114. An Arbitration Agreement, within the meaning of Section 7 of the Act, which attracts stamp duty and which is not stamped or insufficiently stamped, cannot be acted upon, in view of Section 35 of the Stamp Act, unless following impounding and payment of the requisite duty, necessary certificate is provided under Section 42 of the Stamp D Act.

115Copy pinpoint115. We further hold that the provisions of Sections 33 and the bar under Section 35 of the Stamp Act, applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Stamp Act, would render the Arbitration Agreement contained in such instrument as being non-existent in law unless the instrument is validated under the Stamp Act.

116Copy pinpoint116. In a given case, the Court has power under paragraph-5 of the Scheme, to seek information from a party, even in regard to stamp duty.

117Copy pinpoint117. We make it clear that we have not pronounced on the matter with reference to Section 9 of the Act. The reference to the Constitution Bench shall stand answered accordingly. G

118Copy pinpoint118. We record our deep sense of appreciation for the efforts put in by Shri Gourab Banerji, learned senior counsel who has ably assisted this Court as Amicus.

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A C. T. RAVIKUMAR, J.

1. I have had the advantage of reading the erudite opinion of my learned brother Justice K. M. Joseph, for himself and learned brother Justice Aniruddha Bose, and the separate opinion of learned brother Justice Hrishikesh Roy, concurring with the opinion of learned brother Justice Ajay Rastogi, but disagreeing with the opinion of learned brother B Justice K.M. Joseph. Regretfully, I record my inability to agree with the opinion of learned brother Justice Ajay Rastogi as also with the concurrent opinion of learned brother Justice Hrishikesh Roy. While fully endorsing the opinion of learned brother Justice K. M. Joseph, to which my learned brother Justice Aniruddha Bose has concurred, I wish to add a concise addendum as under, in respect of some of the issues, of course, only in support of findings returned thereon.

2. The issue(s) under reference, the modification of the referred question and the allied questions cropped up for consideration have been elaborately dealt with and answered in the erudite draft judgment of my learned brother Justice K.M. Joseph and hence, it is absolutely unessential to refer them. While considering the power of the Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 it is to be noted that the position of Section 11(6) before and after the amendment and Section 11(6A), inserted by Act 2 of 2016 with effect from 23.10.2015 have been referred to in all the three opinions. Hence, I do not think it necessary to extract those provisions to avoid the risk of repetition. Certainly, the powers conferred under Section 16 of the Act often referred to as ‘Kompetenz-Kompetenz’ make it clear that the Arbitral Tribunal is empowered and thus got competence to rule on its own jurisdiction, including on all jurisdictional issues and existence or validity of the arbitration agreement. This provision would have its full-play when appointment of the arbitrator takes place, on consensus, by the parties, in accordance with the terms of the arbitration agreement or by designated arbitration institution, without the intervention of the Court. But then, the provision under Section 11 (6) of the Act applies when the procedures envisaged under the arbitration agreement have not worked and an application is filed for invocation of the power thereunder before the G Court for making appointment of the Arbitrator(s). The controversy in regard to the nature of the function to be performed under Section 11 (6) has been set at rest by the Seven-Judge Bench decision in SBP & Co. v. Patel Engg. Ltd.1 by holding that it is ‘judicial’. It continues to be ‘judicial’ despite the amendment brought to the said section and even after the insertion of Section 11 (6A) in the Act. An application for ‘Appointment H 1 (2005) 8 SCC 618

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 377 INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

of Arbitrators’ is filed, by one party asserting the existence of an arbitration A agreement or arbitration clause in an ‘instrument’ executed between the parties concerned. Therefore, invariably what is to be decided, in invocation of the said powers, is the asserted factum of existence of arbitration agreement or arbitration clause in the said instrument and invariably, in this regard the party who invoked the said power under B Section 11(6), has to produce that very relied on instrument for inspection. The question is whether while passing an order the Court exercising the power under Section 11 (6) receives any evidence, for the limited purpose of ascertaining the truth of the assertion that the document thus produced is an arbitration agreement or an instrument containing arbitration clause. In this regard it is only apposite to refer to the meaning ascribable to the term ‘evidence’. As per Peter Murphy in ‘A Practical Approach to Evidence (Second Edition), 1985, ‘evidence’ may be defined as any ‘material’ which tends to persuade the Court of the truth or probity of same fact asserted before it. As noted hereinbefore, in such an application under Section 11 (6), invariably the fact to be asserted would be the existence of ‘arbitration agreement’ and in proof thereof the material viz., the document would be produced. I will refer to the relevant provision in the statutory scheme viz., the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996, later. Now, when that is received, it is nothing but receiving evidence to that limited purpose for deciding the question whether the ‘instrument’ produced is one executed between the parties is an arbitration agreement or whether the instrument contained an arbitration clause. Necessarily, if the answer is in the affirmative, an order appointing Arbitrator(s) would be passed and an answer in the negative would be the end of such proceedings. In that view of the matter, it can safely be said that what is to be decided while performing the function under Section 11 (6) is relating a ‘jurisdictional aspect’ as only on returning a finding that there exists an arbitration agreement or arbitration clause, in the material so produced, that arbitrator(s) would be appointed. The answering of that question, on receiving the ‘instrument’, is the performance of the function describable as “acting upon” the document thus produced. In other words, as discernible from the statement of law by M.C. Desai, J. in Mt. Bittan Bibi & Anr. v. Kuntu Lal & Anr..2, (the relevant paragraph 8 extracted in the opinion of learned brother Justice K.M. Joseph), ‘acting upon’ is not included in

2 ILR [1952] 2 All 984 H

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A the act of admitting an instrument, though it can be acted upon, later, subject to permissibility in law therefor.

3. The cleavage in opinion occurs on the issue as to whether the Court called upon to invoke the power under Section 11 (6) should or could exercise the power coupled with duty under Section 33 of the B Indian Stamp Act, 1899, when the document carrying the arbitration agreement or arbitration clause is found unstamped or insufficiently stamped or without going into such matter, should it confine its exercise of power in the matter of appointment of Arbitrator(s) only and refrain itself from proceeding further in view of the mandate under Section 33 of the Indian Stamp Act, 1899.I have already recorded my agreement with the opinion of my learned brother K.M. Joseph that exercise of power coupled with duty under Section 33 of the Stamp Act cannot be accused of judicial interference in contravention to Section 5 of the Act and further that it shall not be confused with examination whether an arbitration agreement or arbitration clause in the said instrument, exists so as to appoint arbitrator in invocation of the power under Section 11(6) of the Act. In that view of the matter, the provisions under Section 11(6A) or 16 of the Act cannot act as a rider for the exercise of the said power under Section 33 of the Stamp Act.

4. In the aforesaid context, it is relevant to refer to Sub-sections E (1), (2) and clause (b) of Sub-section 2, of Section 33 of the Indian Stamp Act, 1899. They read thus:- “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 public F 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. G (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 2 [India] when such instrument was executed or first executed: Provided that— H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 379 INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

(a) nothing herein contained shall be deemed to require any A 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 1898); B (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.

5. I have already found that receiving the very ‘instrument’ which is carrying the arbitration agreement or containing an arbitration clause from the party who asserts its existence is essentially an act of receiving the evidence, in that limited sense. Therefore, how can the Court, which is having authority and competence to receive evidence, for the purpose of invoking the power under Section 11 (6), abstain from proceeding further in terms of Section 33 if it appears to it that such instrument produced before it, though required to be stamped, is unstamped or is not duly stamped. According to me, in terms of the mandate under Sub- section (2) of Section 33, for that purpose, the Section 11 Judge who received evidence shall ‘examine’ the instrument so chargeable and so produced 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. Proviso (b) which is extracted hereinbefore, would only permit a Judge of the High Court for delegation of the duty of examining and impounding any such instrument to such officer as the Court may appoint in that behalf. Thus, it only gives discretion to a Judge of the High Court to delegate the duty of examining and impounding any such instrument in the manner mentioned under the said proviso if he chooses not to proceed in the manner provided for impounding the instrument in accordance with the relevant provision, by himself. When that be the provision under Section 33 (1) and (2), a conjoint reading of which obviously makes it mandatory for the Court G exercising the power under Section 11 (6) to proceed in terms of the mandate under Section 33 when the circumstances legally invites its invocation. A contra view, according to me, would render Sub-section (2) of Section 33 and proviso (b) redundant and would defeat the very soul of the provisions as relates their application in respect of application filed under Section 11(6) of the Act. H

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A 6. The Bar under Section 35 of the Stamp Act on admission of instruments not duly stamped in evidence, as is evident from proviso (a) to it, is not permanent and is curable by following procedures provided thereunder and making an endorsement as provided under Section 42(1) of the Stamp Act. Sub-section (2) of Section 42 makes it clear that every such instrument so endorsed shall thereupon be admissible in evidence and be acted upon and authenticated as it had been duly stamped. The upshot of the discussion is that being unstamped or insufficiently stamped, the agreement would not be available to be ‘admitted in evidence’ and ‘to be acted upon’, till it is validated following the procedures prescribed under the provisions of the Stamp Act and till then, it would not exist ‘in law’.

7. Another point which I intend to make in addition to the opinion of my learned brother Justice K. M. Joseph, is with respect to the meaning ascribable to the expression ‘certified copy’ which is permissible to be produced along with the application for appointment of Arbitrator(s) in terms of paragraph 2 (a) of the scheme framed by the Hon’ble the Chief Justice of India, in exercise of power under Section 11(10) of the Act, namely, the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996. Paragraph 2 and sub-paragraph (a) thereof read thus:-

2. Submission of Request:- The request to the Chief Justice E 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.

8. In the opinion of my learned brother Justice K. M. Joseph this issue has been elaborately considered from paragraphs 77 to 89. While concurring with the conclusions and findings thereof, I would like to give my own reasons as to why the expression ‘certified copy’ should be understood with reference to Section 74 and 76 of the Indian Evidence Act, 1872, (hereinafter referred to as ‘Evidence Act’) and why the said form of secondary evidence is available to be ‘acted upon’ without formal proof of existence and execution of the original document.

9. Section 62 defines ‘primary evidence’ thus:-

62. Primary evidence. –– Primary evidence means the document itself produced for the inspection of the Court. H Explanation 1. ––Where a document is executed in several

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 381 INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

parts, each part is primary evidence of the document. Where A a document is executed in counterpart, each counterpart being executed by one or some of the parties only, each counterpart is primary evidence as against the parties executing it. Explanation 2. –– Where a number of documents are all made by one uniform process, as in the case of printing, lithography or photography, each is primary evidence of the contents of the rest; but, where they are all copies of a common original, they are not primary evidence of the contents of the original. A person is shown to have been in possession of a number of placards, all printed at one time from one original. Any one of the placards is primary evidence of the contents of any other, but no one of them is primary evidence of the contents of the original.

10. Section 63 of the Indian Evidence Act defines secondary evidence which reads thus: - D “63. Secondary evidence. –– Secondary evidence means and includes –– (1) certified copies given under the provisions hereinafter contained; (2) copies made from the original by mechanical processes which in themselves ensure the accuracy of the copy, and copies compared with such copies; (3) copies made from or compared with the original; (4) counterparts of documents as against the parties who did not execute them; (5) oral accounts of the contents of a document given by some person who has himself seen it.”

11. Thus, the definition ‘secondary evidence’ means and includes what are mentioned in clauses ‘1 to 5’.Though, the inclusive definition speaks of different kinds of secondary evidence, such as, mentioned under clauses ‘1 to 5’, a careful scanning of the Evidence Act would reveal that copies which fall under clause (1) of Section 63 alone carry the presumption of genuineness and correctness, by virtue of the provision under Section 79 of the Evidence Act. Section 79 reads thus:- H

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A “79. Presumption as to genuineness of certified copies. –– The Court shall presume [to be genuine] every document purporting to be a certificate, certified copy or other document, which is by Law declared to be admissible as evidence of any particular fact, and which purports to be duly certified by any officer [of the Central Government or of a State Government, or by any officer [in the State of Jammu and Kashmir] who is duly authorized thereto by the Central Government]: Provided that such document is substantially in the form and purports to be executed in the manner directed by law in that behalf. The Court shall also presume that any officer by whom any such document purports to be signed or certified, held, when he signed it, the official character which he claims in such paper.”

12. Thus, it can be said that the genuineness and correctness of copies falling under clause 1 of Section 63 shall be presumed under Section 79 of the Evidence Act. The definition of ‘shall presume’ is defined under Section 4 of the Evidence Act, thus:- “Shall presume”.––Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such fact as proved, unless and until it is disproved.

13. Section 79 proceeds upon the maxim ‘omnia praesumuntur rite esse acta, i.e., all acts are presumed to be done rightly and regularly. When the acts of official nature went through the process, the presumption arises in favour of the regular performance. F

14. Section 65 of the Evidence Act, in so far as, it is relevant reads thus:-

65. Cases in which secondary evidence relating to documents may be given.––Secondary evidence may be given of the existence, condition, or contents of a document in the following G cases: –– …… (e) when the original is a public document within the meaning of section 74; H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 383 INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

(f) when the original is a document of which a certified copy is permitted by this Act, or by any other law in force in [India] to be given in evidence;

15. In terms of the provisions under Section 79 of the Evidence Act a certified copy of a document allegedly carrying an arbitration clause is produced and that document can be received in evidence for the purpose of Section 11 (6) of the Act and by virtue of Section 79 of the Evidence Act, the Court shall presume the genuineness of the document which could be accepted as evidence and shall presume the genuineness of the contents of the document unless the presumption is not rebutted by other evidence. Thus, it can be seen that besides permitting to produce the original document which is primary evidence in terms of Section 62 of the Evidence Act, despite the existence of different kinds of secondary evidence, under paragraph 2 (a) of Scheme framed by the Hon’ble the Chief Justice of India, only certified copy alone is permitted to be adduced, purposefully, as by virtue of Section 79 of Evidence Act presumption of genuineness and correctness of the certified copies of the documents mentioned under Section 63 (1) of the Evidence Act shall have to be presumed. In other words, the other modes of production of secondary evidence would not permit the Court to draw the presumption of genuineness and correctness and that is why in paragraph 2(a) of the scheme framed in terms of the provisions under E Section 11 (10) provides only for production of certified copy of the primary evidence to act upon for the purpose of applying for appointment of Arbitrator under Section 11 (6) of the Act, in the alternative of production of the original instrument.

16. As already found the nature of exercise of power under Section F 11 (6) is ‘judicial’ and therefore, it was thought only fit to permit to exercise such power only on the original instrument or else, on its certified copy, to be understood with reference to Section 63 (1) read with Section 74 and 76 of the Evidence Act. When once the intention behind paragraph 2(a) of the scheme is understood in that manner with reference to the G provisions under Section 63 (1), 74, 76 and 79 of the Evidence Act, the expression ‘certified copy’ employed in paragraph 2(a) of the scheme framed under Section 11(10) of the Act cannot be interpreted to mean any other kind of copies provided under Section 63 of the Evidence Act other than under Section 63 (1) of the Evidence Act. H

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A 17. Learned brother Justice K. M. Joseph, after explaining as to how the expression ‘certified copy’ must be understood, held that the Court exercising the power under Section 11 (6) has to exercise the power under Section 33 of the Indian Stamp Act when the original is produced before the Court. In other words, according to me, it is rightfully held that when the original document carrying the arbitration clause is produced and if it is found that it is unstamped or insufficiently stamped, the Court acting under Section 11 is duty bound to act under Section 33 of the Indian Stamp Act as held in the draft judgment.

18. I am also concurring with the view that what is permissible to be produced as secondary evidence i.e., other than the original document in terms of Section 2(a) of the scheme framed under Section 11(10) of the Act, is nothing but certified copy as mentioned earlier. But such a certified copy, would not be available to be proceeded with under Section 33 of the Stamp Act if it is unstamped or insufficiently stamped. In such circumstances, such certified copy shall not be acted upon. D

19. In the contextual situation, to understand the difference between ‘certified copy’ and ‘a copy certified to be true copy’, it is only appropriate to refer to Rule 1 of Order VIII of the Supreme Court Rules, 2013, framed invoking the power conferred by Article 145 of the Constitution of India. Rule 1 of Order VIII reads thus: - E “1. The officers of the Court shall not receive any pleading, petition, affidavit or other document, except original exhibits and certified copies of public documents, unless it is fairly and legibly written, type-written or lithographed in double- F line spacing, on one side of standard petition paper, demy- foolscap size, or of the size of 29.7 cm x 21 cm, or paper which is ordinarily used in the High Courts for the purpose. Copies filed for the use of the Courts shall be neat and legible, and shall be certified to be true copies by the advocate-on- record, or by the party in person, as the case may be.” G (Emphasis added)

20. It cannot be presumed that despite the conspicuous difference in the said expressions, under paragraph 2 (a) ‘certified copy’ alone was permitted to be appended along with the application under Section 11 of H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 385 INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

the Act, unintentionally. I am of the considered view that it was so prescribed, fully understanding the nature of exercise of power under Section 11 (6) of the Act and also the presumption of genuineness and correctness of ‘certified copy’ available by virtue of Section 79 of the Evidence Act. With this addendum, I fully endorse all the conclusions and findings in the judgment of my learned brother Justice K. M. Joseph.

RASTOGI, J. INDEX* C

*Ed. Note: Pagination in the Index is as per the original judgment. H

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A I. Reference

1. This case deals with the larger question regarding the scope and ambit to which there should be an intervention of courts at the pre- referral stage in the working of arbitration contracts.

2. A three-Judge Bench of this Court in M/s. N.N. Global B Mercantile PrivateLimited v. M/s. Indo Unique Flame Limited and Others1 has doubted the correctness of the view expressed in paras 146 and 147.1 of the coordinate three-Judge Bench of this Court in Vidya Drolia and Others v. Durga Trading Corporation2 and referred the matter to be settled authoritatively by the Constitution Bench of this C Court.

3. The reference which has been made to settle authoritatively by the Constitution Bench is referred as under: “Whether the statutory bar contained in Section 35 of the Stamp Act, 1899 applicable to instruments chargeable to stamp duty under D Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument,which is not chargeable to payment of stamp duty, as being non-existent, unenforceable, or invalid, pending payment of stamp duty on the substantive contract/instrument?” E (emphasis added)

4. It is necessary to give background facts for better appreciation of the reference made for our consideration. II. Conflicting Judgments

5. In the case of SMS Tea Estates Private Limited v. Chandmari F Tea Company Private Limited,3 a two-Judge Bench of this Court was considering the issue in a pre-2015 amendment regime of whether an arbitration agreement in an unregistered and unstamped lease deed, which required compulsory registration under the Registration Act, 1908 (hereinafter being referred to as the “Act 1908”) was valid and G enforceable. It was held as follows: “19. Having regard to Section 35 of the Stamp Act, unless the stamp duty and penalty due in respect of the instrument is paid, 1 (2021) 4 SCC 379 2 (2021) 2 SCC 1 H 3 (2011) 14 SCC 66

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 387 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

the court cannot act upon the instrument, which means that it cannot act upon the arbitration agreement also which is part of the instrument. Section 35 of the Stamp Act is distinct and different from Section 49 of the Registration Act in regard to an unregistered document. Section 35 of the Stamp Act, does not contain a proviso like Section 49 of the Registration Act enabling the instrument to be used to establish a collateral transaction.

21. Therefore, when a lease deed or any other instrument is relied upon as contending the arbitration agreement, the court should consider at the outset, whether an objection in that behalf is raised or not, whether the document is properly stamped. If it comes to the conclusion that it is not properly stamped, it should be impounded and dealt with in the manner specified in Section 38 of the Stamp Act. The court cannot act upon such a document or the arbitration clause therein. But if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, the document can be acted upon or admitted in evidence.” D

6. The above decision was followed in the case of Naina Thakkar v. Annapurna Builders,4 wherein it was held as follows: “7. It is true that the consequences provided in the Stamp Act, 1899 must follow where sufficient stamp duty has not been paid on an instrument irrespective of the willingness of a party to the E instrument to pay deficit stamp duty but the procedure where the arbitration clause is contained in a document which is not registered although compulsorily registrable and which is not duly stamped as summed up by this Court in SMS Tea Estates (P) Ltd. case shall not be applicable to the proceedings under Section 8 of the F [Arbitration and Conciliation] Act where the party making such application does not express his/her readiness and willingness to pay the deficit stamp duty and the penalty. It is not the duty of the Court to adjourn the suit indefinitely until the defect with reference to deficit stamp duty concerning the arbitration agreement is cured. Accordingly, we are of the opinion that no fault can be found in the G order of the trial court in rejecting the application made under Section 8 of the Act as the document on which the petitioner relied upon was admittedly unregistered and insufficiently stamped.”

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A 7. An amendment was brought in the Arbitration and Conciliation Act, 1996 (hereinafter being referred to as the “Act, 1996”), and Section 11(6A) was inserted in 2016.

8. A two-Judge Bench in Garware Wall Ropes Limited v. Coastal Marine Constructions and Engineering Limited,5 dealt with B the issue whether an arbitration clause in an agreement which requires compulsorily to be stamped under the relevant Indian Stamp Act, 1899(hereinafter being referred to as the “Act, 1899”), but is not duly stamped, would be enforceable even after the insertion of clause (6A) to Section 11 of the Act, 1996. The Bench followed the reasoning and upholding of the decision in SMS Tea Estates Private Limited (supra), C and held: “19….A close look at Section 11(6-A) would show that when the Supreme Court or the High Court considers an application under Sections 11(4) to 11(6), and comes across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the 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 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 and the 1996 Act has been referred to by F Raveendran, J. in SMS Tea Estates when it comes to an unregistered agreement or conveyance.However, the Stamp Act, containing no such provision as is contained in 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, G 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, which continues to apply even after the amendment of Section 11(6-A).

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 389 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

22. When an arbitration clause is contained “in a contract”, it is significant that the agreement only becomes a contract if it is enforceable by law. We have seen how, under the Stamp Act, an agreement does not become a contract, namely, that it is not enforceable in law, unless it is duly stamped. Therefore, even a plain reading of Section 11(6-A), when read with Section 7(2) of the 1996 Act and Section 2(h) of the Contract Act, would make it clear that an arbitration clause in an agreement would not exist when it is not enforceable by law. This is also an indicator that SMS Tea Estates has, in no manner, been touched by the amendment of Section 11(6-A).”

9. The decision in Garware Wall Ropes Limited (supra)was cited in approval by a three-Judge Bench in the case of Vidya Drolia and Others (supra) wherein it was held: “146. We now proceed to examine the question, whether the word “existence” in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudentially and textualism it is possible to differentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word “existence”. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not binding. Existence of an arbitration agreement presupposes a valid agreement which would be enforced by the court by relegating the parties to arbitration. Legalistic and plain meaning interpretation would be contrary to the contextual background including the definition clause and would result in unpalatable consequences. A reasonable and just interpretation of “existence” requires understanding the context, the purpose and the relevant legal norms applicable for a binding and enforceable arbitration agreement. G An agreement evidenced in writing has no meaning unless the parties can be compelled to adhere and abide by the terms. A party cannot sue and claim rights based on an unenforceable document. Thus, there are good reasons to hold that an arbitration agreement exists only when it is valid and legal. A void and H

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A unenforceable understanding is no agreement to do anything. Existence of an arbitration agreement means an arbitration agreement that meets and satisfies the statutory requirements of both the Arbitration Act and the Contract Act and when it is enforceable in law.

B 147. We would proceed to elaborate and give further reasons: 147.1 In Garware Wall Ropes Ltd., this Court had examined the question of stamp duty in an underlying contract with an arbitration clause and in the context had drawn a distinction between the first and second part of Section 7(2) of the Arbitration Act, albeit the observations made and quoted above with reference to ‘existence’ and ‘validity’ of the arbitration agreement being apposite and extremely important, we would repeat the same by reproducing paragraph 29 thereof: “29. This judgment in Hyundai Engg. case is important in that what was specifically under consideration was an arbitration clause which would get activated only if an insurer admits or accepts liability. Since on facts it was found that the insurer repudiated the claim, though an arbitration clause did “exist”, so to speak, in the policy, it would not exist in law, as was held in that judgment, when one important fact is introduced, namely, that the insurer has not admitted or accepted liability.Likewise, in the facts of the present case, it is clear that the arbitration clause that is contained in the subcontract would not “exist” as a matter of law until the sub-contract is duly stamped, as has been held by us above.The argument that Section 11(6-A) deals with “existence”, as opposed to Section 8, Section 16 and Section 45, which deal with “validity” of an arbitration agreement is answered by this Court’s understanding of the expression “existence” in Hyundai Engg. case, as followed by us.”;

G Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement.” (Emphasisadded)

10. Later, a three-Judge Bench in M/s. N.N. Global Mercantile H Private Limited (supra) held that in arbitration jurisprudence, an

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 391 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

“arbitration agreement is a distinct and separate agreement, which is A independent from the substantive commercial contract in which it is embedded”. This three-Judge Bench made a reference to the Constitution Bench, as it expressed its disagreements with the view expressed in SMS Tea Estates Private Limited (supra), Garware Wall Ropes Limited (supra), and Vidya Drolia and Others (supra). It held: B “26. In our view, there is no legal impediment to the enforceability of the arbitration agreement, pending payment of Stamp Duty on the substantive contract. The adjudication of the rights and obligations under the Work Order or the substantive commercial contract would however not proceed before complying with the mandatory provisions of the Stamp Act… C

28. In our view, the decision in SMS Tea Estates does not lay down the correct position in law on two issues i.e. (i) that an arbitration agreement in an unstamped commercial contract cannot be acted upon, or is rendered un-enforceable in law; and (ii) that an arbitration agreement would be invalid where the contract or instrument is voidable at the option of a party, such asu/s 19 of the Indian Contract Act, 1872.

29. We hold that since the arbitration agreement is an independent agreement between the parties, and is not chargeable to payment of stamp duty, the non-payment of stamp duty on the commercial contract, would not invalidate the arbitration clause, or render it un-enforceable, since it has an independent existence of its own. The view taken by the Court on the issue of separability of the arbitration clause on the registration of the substantive contract, ought to have been followed even with respect to the Stamp Act. F The non-payment of stamp duty on the substantive contract would not invalidate even the main contract. It is a deficiency which is curable on the payment of the requisite Stamp Duty.”

11. It also doubted the correctness of the view taken in SMS Tea Estates Private Limited (supra),which was approved in Garware Wall G Ropes Limited (supra) and Vidya Drolia and Others (supra), and held: “56. We are of the considered view that the finding in SMS Tea Estates and Garware that the non-payment of stamp duty on the commercial contract would invalidate even the arbitration H

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A agreement, and render it non-existent in law, and un-enforceable, is not the correct position in law.

57. In view of the finding in paragraph 146 and 147 of the judgment in Vidya Drolia by a co-ordinate bench, which has affirmed the judgment in Garware, the aforesaid issue is required to be authoritatively settled by a Constitution bench of this Court.”

12. As the Benches in both M/S. N.N. Global Mercantile Private Limited (supra) and Vidya Drolia and Others (supra) are of equal strength, this Constitution Bench has been called upon to authoritatively rule on the issue. To adjudicate the issue, this Bench at first needs to examine whether the requirements under the Act, 1899 at pre-referral stage arerequired to be examined for appointment of Arbitrator under Section 11(6A) of the Act, 1996.

13. Mr. Gourab Banerjee, learned senior counsel, who appears as Amicus Curiae to assist this Court, submits that the intention of the Act, D 1996 and the later amendments made from time to time were to streamline the process and judicial intervention in arbitration proceedings adds significantly to the delay in the arbitration process and that negates the benefit of arbitration.The Arbitration & Conciliation (Amendment) Act, 2015(hereinafter being referred to as the 2015 Amendment) was introduced to emphasize the speedy disposal of cases relating to arbitration E with minimal court interference.

14. Mr. Banerjee submits that so far as the scope and ambit of Section 11 is concerned, it is only to fill the gap and the Court is merely functioning as an appointing authority where the parties fail to appoint an Arbitrator. After the insertion of Section 11(6A)(2015 Amendment), F the legislative policy and purport are essentially to minimize the Court’s intervention at the stage of appointing the Arbitrator and with this intention, Section 11(6A) has been incorporated which ought to be respected.

15. Mr. Banerjee further submits that the scope of the Court should be circumscribed to confine to the examination, prima facie, of the formal G existence of the arbitration agreement at the stage of contract formation, including whether the agreement is in writing and the core contractual ingredients qua the formation of the agreement are fulfilled. On rare occasions, if a question is being raised by the parties, to some extent, the Court may examine the subject matter of dispute as arbitrable but that too as an exception. At the same time, so far as theAct, 1899 is concerned, H

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it is only a fiscal measure enacted to secure revenue of the State in A certain classes of instruments but that may not be invoked to arm a litigant with a weapon of technicality to meet the case of his/her opponent. Once the object of the revenue is secured according to law, the party staking his claim in the instrument will not be defeated on the ground of the initial defect in the instrument. B

16. Mr. Banerjee further submits that even non-payment of stamp duty is a curable defect and this defect can be cured at any stage before the instrument is admitted into evidence by the Arbitral Tribunal. If the insufficiency of stamp or unduly stamped is being examined/adjudicated at the pre-referral stage by the Court under Section 11, it would be C nothing but to encourage parasitical challenges and dilatory tactics in resisting reference to arbitration. The natural solution inevitable is to appoint the Arbitrator and to allow the dispute resolution proceedings to commence and permit the Arbitral Tribunal to fulfil its duty under the Act, 1996. There is no reason why the Arbitral Tribunal cannot prevent the evasion of stamp duty. D

17. It is also brought to our notice that at the time of submitting an application under Section 11 at the pre-referral stage, the parties are not under an obligation to file an original arbitration agreement and since the copy of the arbitration agreement is to be annexed with the application, E in true sense,it is not an instrument as being contemplated under Section 2(14) of the Act, 1899, particularly at the pre-referral stage, the question of invoking Sections 33 or 35 of the Act, 1899is not available to be invoked. In support of submissionMr. Banerjeehas placed reliance on the judgment of this Court reported in Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and Others6 which has been later followed by this Court in F Hariom Agrawal v. Prakash Chand Malviya7.

18. Taking assistance thereof, Mr. Banerjee submits thatSections 33 or 35 are not concerned with any copy of the instrument and there is no scope for the inclusion of the copy of the document for the purpose of the Act, 1899. The copy of the instrument within the meaning of G Section 2(14) of the Act, 1899 cannot be validated by impounding and it cannot be admitted as secondary evidence under the Act, 1899.

6 (1971) 1 SCC 545 7 (2007) 8 SCC 514 H

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A 19. Mr. Banerjee further submits that the very question raised for consideration of this Court as to whether the arbitral agreement is valid or isin existence in law, is not open to be examined at the pre-referral stage for the reason that original instrument is not on record (arbitral agreement) and a conjoint reading of Sections 33 and 35 is not concerned with any copy of the instrument and the party can only be allowed to rely on the document in evidence which is an instrument withing the meaning of Section 2(14) and the validity of the document is always open to be examined at the post-referral stage by the Arbitrator/Arbitral Tribunal in its jurisdiction vested in Section 16 of the Act, 1996.

20. Mr. Gagan Sanghi, learned counsel for the appellant, submits that Section 35 of the Act, 1899 bars admission of unduly stamped “instrument” in evidence “for any purpose” and also “acting upon it” and it was held by this Court in Government of Andhra Pradesh and Others v P. Laxmi Devi(Smt.)8 that “shall” in Section 33 of the Act, 1899 is mandatory and unstamped document must be impounded.Even D assuming that stamp duty is not payable on an arbitration agreement under the Act, 1899, when arbitration agreement is contained as a clause in an instrument on which stamp duty is payable, such arbitration agreement as an instrument, attracts the bar of Section 35 of the Act, 1899.

E 21. Mr. Sanghi further submits that separation of agreement from the substantive contract is nothing but a legal fiction created by Section 16 of the Act, 1996 and it cannot be an exception to Section 35 of the Act, 1899.

22. Mr. Sanghi further submits that the Doctrine of Separability F and Kompetenz-Kompetenz has no bearing on the issue of enforceability of an arbitration agreement when proper stamp duty is not paid on the instrument containing the arbitration agreement and relied upon the judgment of the UK Supreme Court in Enka Insaat Ve Sanayi AS v OOO Insurance Company Chubb9 where it was held that an “arbitration clause is nonetheless part of bundle of rights and obligations recorded in G the contractual document” and according to him, the issue of stamping is to be looked into at the very threshold, even if it is in exercise of Section 11 (6A), i.e. at the time of pre-arbitral stage with respect to

8 (2008) 4 SCC 720 H 9 (2020) UKSC 38

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 395 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

appointment of arbitrator. According to him, an instrument would exist in A law only when it is enforceable and “existence” defined in Section 11(6A) of the Act, 1996 in respect of an arbitration agreement, has to be a valid enforceable agreement and it is always open to examine the issue of non-stamping or of insufficiently stamped at the initial/pre-referral stage itself and further highlighting three modes as provided in M/s. N.N. Global B Mercantile Private Limited (supra) i.e. impounding, payment of stamp duty and appointment of arbitrator, on an application filed underSection 11 of the Act, 1996, the Court is certainly “acting upon” the arbitration clause which is contended to be barred by the clear expression of Section 35 of the Act, 1899 and an Agreement, unless enforceable by law, cannot be termed to be in existence under Section 11(6A) of the Act, 1996. C

23. Ms. Malvika Trivedi, learned senior counsel, who appears for the intervenor in I.A. No.18516 of 2022, submits that the regimes of the Act, 1899 and Act, 1908 are completely different. M/s. N.N. Global Mercantile Private Limited (supra) wrongly applied the principles of registration of a document to the requirement of stamping a document. D While the former is a curable defect, the latter determines the very existence and completion of a document/instrument. In the absence of registration, an instrument shall remain in existence but without stamping, the instrument is incomplete/inchoate.

24. Ms. Trivedi further submits that the Act, 1899 envisages the payment of stamp duty, failing which the instrument, according to her, cannot be acted upon for any purpose and there is no ambiguity in the language of the Statute and we have to follow the golden principles ofinterpretation of the Statute.

25. Ms. Trivedi further submits that the powers of the Court under different provisions of law as well as the restrictions created in the Act, 1899 apply to the proceedings conducted in accordance with Section 9 of the Act, 1996 and submits that even if the arbitration clause stands severed, the Court will have to reach a prima facie conclusion as to whether the substantive contract which contained the clause of arbitration is enforceable in law before granting interim measures invoking Section 9 of the Act, 1996.

26. Mr. Debesh Panda, learned counsel for the Intervenor in I.A. No. 199969 of 2022 submits that Part I of Act, 1996 deals with Sections 8, 9 and 11, whereas Section 45 is dealt within Part II. Section 45 has H

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A been recognized as a provision under Part II which is a complete code. The expression “unless it finds” in Section 45 was interpreted by majority in Shin-Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. and Another10 as a consideration on a prima facie basis. In 2019, Parliament amended Section 45 by substituting the expression “unless it finds” with “unless it prima facie finds”, that brings the statute in line with the position settled in Shin Etsu (supra). In this background, the Act, 1899 merely creates a temporary infliction till the stamp duty is recovered, with or without penalty. The affliction only attaches to the instrument and not the transaction.

27. Mr. K. Ramakanth Reddy, learned senior counsel for respondent no.1 took us through the relevant Lok Sabha debates before the enactment of the Act, 1996 and taking assistance thereof submits that the provisions of the Act 1996, Act 1899 and the Contract Act, 1872 (hereinafter being referred to as “Act, 1872”)has to be harmonized. Section 17 of Act, 1899 has to be read with Section 31 of the Act, 1899. D The plain language of Section 7 of the Act, 1996 does not require that the parties are under anobligation to stamp the agreement. The legislative intention would be defeated, if the Court insist on non-core technical requirements such as stamps, seals and originals for the purpose of acting upon the arbitration agreement at a pre-arbitration stage for appointment of an arbitrator invoking power under Section 11(6A) of the Act, 1996. E

28. Learned counsel for the respondents, further submits that in the instant facts of the case, an application was filed under Section 8 for reference of disputes to arbitration and it was not maintainable under Section 34 of the Maharashtra Stamp Act, 1958 which is almost parimateria to the Act, 1899. The work order being an unstamped document could not be received in evidence for any purpose, or acted upon, unless it is duly stamped. In consequence thereof, the arbitration clause in the unstamped agreement also could not be acted upon or enforced since the arbitration clause would have no existence in law, unless the applicable stamp duty(and penalty, if any) is paid on the work order and placed reliance on the judgment of this Court in Garware Wall Ropes Limited (supra).

29. Learned counsel further submits that the High Court, while relying on the application under Section 8 had enforced a non-existent

10 H (2005) 7 SCC 234

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 397 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

arbitration clause which is in violation of Section 34 of the Maharashtra A Stamp Act, 1958 and further contended that the respondent had not indicated its willingness to pay the stamp duty, even though, at later stage, an objection was raised and, therefore, no justification arises to grant any further opportunity to now pay the stamp duty under the clause of arbitration. B

30. We have heard learned counsel for the parties and with their assistance perused the material available on record and before delving into the reference, we feel apposite to discuss the statutory provisions related to the reference. III. Requirements under the Indian Stamp Act, 1899 C

31. The Act, 1899 is a fiscal statute laying down the law relating to tax levied in the form of stamps on instruments recording transactions. The stamp duties on instruments specified in Entry 91 of List I(Union List) of Schedule VII of the Constitution of India (viz. Bills of Exchange, cheques, promissory notes, bills of lading, letters of credit, policies of D insurance, transfer of shares, debentures, proxies and receipts) are levied by the Union Government. Similarly, the stamp duties on instruments other than those mentioned in Entry 91 of the Union List above are levied by the States as per Entry 63 of List II(State List) of the Schedule VII. Provisions other than those relating to rates of duty fall within the legislative power of both the Union and the States by virtue of Entry 44 E of the List III(Concurrent List). However, the stamp duties on all the instruments are collected and kept by the concerned States.

32. The term ‘Instrument’ has been defined under Section 2(14) of the Act, 1899 and the ‘Instrument chargeable to Duty’ is provided under Section 3 whereas Section 17 provides that all instruments F chargeable with duty and executed by any person in India has to be stamped.

33. Sections 2(14), 3 and 17 of the Act, 1899 are extracted hereunder: - G “2(14) ¯Instrument”. — instrument includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded:

3. Instruments chargeable with duty. —Subject to the provisions of this Act and the exemptions contained in Schedule I, H

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A the following instruments shall be chargeable with duty of the amount indicated in that Schedule as the proper duty therefore respectively, that is to say— (a) every instrument mentioned in that Schedule which, not having been previously executed by any person, is executed in B [India] on or after the first day of July, 1899; (b) every bill of exchange [payable otherwise than on demand] or promissory note drawn or made out of [India] on or after that day and accepted or paid, or presented for acceptance or payment, or endorsed, transferred or otherwise negotiated, in C [India]; and (c) every instrument (other than a bill of exchange, or promissory note) mentioned in that Schedule, which, not having been previously executed by any person, is executed out of [India] on or after that day, relates to any property situate, or D to any matter or thing done or to be done, in [India] and is received in [India]: Provided that no duty shall be chargeable in respect of— (1) any instrument executed by, or on behalf of, or in favour of, the Government in cases where, but for this exemption, the E Government would be liable to pay the duty chargeable in respect of such instrument; (2) any instrument for the sale, transfer or other disposition, either absolutely or by way of mortgage or otherwise, of any ship or vessel, or any part, interest, share or property of or in any ship or vessel registered under the Merchant Shipping Act 1894, Act No. 57 & 58 Vict. c. 60 or under Act XIX of 1838 Act No. or the Indian Registration of Ships Act, 1841, (CX of 1841) as amended by subsequent Acts.

17. Instruments executed in India. — All instruments chargeable with duty and executed by any person in [India] shall be stamped before or at the time of execution.

18. Instruments other than bills and notes executed out of India.—(1) Every instrument chargeable with duty executed only out of [India], and not being a bill of exchange or promissory note, may be stamped within three months after it has been first received H

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 399 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

in [India]. (2) Where any such instrument cannot, with reference to the description of stamp prescribed therefore, be duly stamped by a private person, it may be taken within the said period of three months to the Collector, who shall stamp the same, in such manner as the [State Government] may by rule prescribe, with a stamp of such value as the person so taking such instrument may require and pay for.”

34. ‘Instrument’ as defined under Section 2(14) of the Act, 1899 includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished, or recorded. The term ‘Instrument’ as defined under Section 2(14) refers to the original instrument and not a copy or a duly certified copy of the same. It is only on production of the original instrument, the deficiencies in the stamp duty/penalty can be paid to validate the same.

35. Chapter IV (Section 33 to Section 48) of the Act, 1899 titled ‘Instruments not duly stamped’ provides for the procedure to be followed when an instrument which ought to have been stamped is not stamped.

36. Section 33 of the Act, 1899 provides for ‘Examination and impounding of instruments’. Under sub-section (1) of Section 33, “Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public 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”. Section 33(2) of the Act, 1899 provides that every instrument chargeable with duty shall be examined by such person as explained in sub-section (1), “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”. The definition of ‘duly stamped’ as contained in Section 2(11) 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 law for the time being in force in India.

37. A plain reading of Section 33 of the Act, 1899 thus explains that when an instrument or a document is produced before the authority, it is the duty of such authority to examine whether the instrument is duly stamped or not, and if it is found that the instrument is not “duly stamped” H

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A under Section 33(2), the concerned authority shall impound the said instrument.

38. Section 34 of the Act, 1899 provides a discretion to the concerned officer that if any receipt chargeable with a duty not exceeding “ten naye paise” is tendered to or produced before them unstamped in the course of the audit of any public account, such officer may in their discretion, “instead of impounding the instrument, require a duly stamped receipt to be substituted therefore.”

39. A plain reading of Section 35 of the Act, 1899 suggests that an inadmissible instrument because of being unstamped or insufficiently stamped may be made admissible if the relevant stamp duty and a penalty is paid later. This shows that the requirement under Section 35 is not rigid, and can be rectified even at a later stage. An unstamped or insufficiently stamped instrument is not completely invalid, and it can be made valid and admissible in evidence after fulfilling the conditions prescribed in the proviso to Section 35. D

40. Section 37 of the Act, 1899 deals with admission of improperly stamped instruments. It provides that the State Government may make rules providing that, where an instrument bears a stamp of sufficient amount but of improper description, it may, on payment of the duty with which the same is chargeable, be certified to be duly stamped, and any E instrument so certified shall then be deemed to have been duly stamped as from the date of its execution.

41. Section 38 of the Act, 1899 provides for the procedure for how the instruments impounded are to be dealt with. Sub-Section (1) of Section 38 provides that when the person impounding an instrument under F Section 33 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 G such person as he may appoint in this behalf.

42. Sections 39 and 40 of the Act, 1899 provide a procedure of exercising discretion by the Collector to either refund, certify the instrument as duly stamped, or collect the stamp duty.

43. A plain reading of Sections 33, 35 and 2(14) of the Act, 1899 H clearly demonstrates that the instrument which is not duly stamped

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 401 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

can be impounded and when the required fee and penalty has been paid, the said instrument can be taken as an evidence under Section 35 of the Act, 1899. But, at the same time, Sections 33 and 35 are not concerned with any copy of the instrument and party can be allowed to rely on the document which is an instrument within the meaning of Section 2(14) of the Act, 1899. This Court had an occasion to consider the scope and ambit of Sections 33, 35 and 36 of the Act, 1899and Section 63 of the Evidence Act, 1872 in Jupudi Kesava Rao (supra) and it was held that: “13. The first limb of Section 35 clearly shuts out from evidence any instrument chargeable with duty unless it is duly stamped. C 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 D (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 Section 36 must have the same meaning as that in Section 35. The legislature only relented from the strict provisions of Section 35 in cases where the original instrument was admitted H

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A 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 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 B 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 document which is unstamped or insufficiently stamped.” C (Emphasis added)

44. This view has been affirmed by a three-Judge Bench of this Court in Hariom Agrawal (supra) wherein it has been held as under: “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 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.” F (Emphasis added)

45. Law on the subject is well settled that duly certified copy/ photocopy of the alleged instrument cannot be validated by impounding and this cannot be admitted in evidence under the Act, 1899. It leads to the conclusion that the deficiency in an instrument, whether it is unduly G stamped or insufficiently stamped, can be rectified through a procedure as prescribed under the Act, 1899. It clearly indicates that the requirement under the Actcan indeed be fulfilled even after the time when the instrument was executed. The requirement under the Actis not rigid or strict, so as to make the instrument invalid at the first instance. H

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46. It also shows that the purpose of the Act, 1899 is not to declare A an instrument as completely invalid if it is unstamped or insufficiently stamped, but to collect the stamp duty on each instrument. The object of the Act, 1899 is to secure revenue for the state.

47. This Court, in the case of Hindustan Steel Ltd. v. Messrs Dilip Construction Company,11 dealt with the object of the Act, 1899 B and held: “7. The Stamp Act is a fiscal measure enacted 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 the initial defect in the instrument. Viewed in that light the scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and sub-section (2) of Section 42 enacts the consequences resulting from such certification.” E

48. The Bench, after explaining that the scope of the Act, 1899 is to secure revenue for the state and not to be used as means to harass the litigant, concluded that unstamped instruments can be acted upon after payment of duty and penalty. Initial defects can be cured and it is never the intention of the legislature to treat an initially unstamped instrument as non-est in law.

49. The Statute deals with the instances of failure to stamp a document which has got to be stamped under the provisions of the Act, 1899 but does not affect the validity of the transaction embodied in the document. That Part IV of the Act, 1899 deals with the contingencies of non-payment of stamp duties and once the object of securing the interest of the revenue of State is secured, the claim based on instrument can always be acted upon on payment of the requisite stamp duty.

11 (1969) 1 SCC 597 H

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A 50. We, therefore, hold that the deficiencies under the Act, 1899 can be fulfilled, and do not render any instrument invalid permanently. Now, it is to be seen whether theCourt orArbitral Tribunal can order rectification of the deficiencies under the Act 1899, if any. IV. Historical Background of Arbitration in India

B 51. Arbitration can be understood as a procedure of dispute resolution in which the dispute is submitted, by the agreement of the parties, to the appointed Arbitrator or the Arbitral Tribunal who are having the jurisdiction to resolve the dispute in accordance with the applicable law as agreed among the parties. Alternatively, it can be understood as C a mechanism to adjudicate disputes between the parties outside the court in a quasi-judicial manner.

52. The process of arbitration as a preferable method of dispute resolution is not new in India. According to the scholars of the ancient Hindu literature, “Brhadaranayaka Upanishad” is the earliest known treatise that mentions a system that can be closely associated with present-day arbitration as the same involved various arbitral bodies such as “Puga” or the local courts, “Srenis” or the people carrying out the same profession and “Kulas” or members concerned with the social matters of the same part of the society. All the above-explained bodies were called the Panchas and cumulatively formed Panchayat. The same has been affirmed by the Privy Council in the case of Vytla Sitanna v. Marivada Viranna12 wherein it was observed that the parties used to refer the dispute to the elected panchayat and these adjudicating bodies were responsible to pass the award which was based on the principle of fair and equitable settlement of the dispute based on the prevalent legal as well as moral grounds.

53. The arbitration regime in India further evolved with the enactment of the first Bengal Regulation by the Britishers in the year of

1772. Subsequent to this enactment, all the disputes were submitted to arbitration and the award of the same had the same value as that of any decree passed by the Court. Further, the Bengal Regulation of 1781 also contained provision as reproduced herein: “The judge do recommend and so far as he can without compulsion prevail upon the parties to submit to the arbitration of one person,

12 H AIR 1934 PC 105.

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to be mutually agreed upon by the parties … No award of any A arbitrator be set aside, except upon full proof, made by oath of two creditable witnesses that the arbitrators had been guilty of gross corruption or partially, in the course of which they had made their award.”13

54. It is quite evident from the above-mentioned clause that the B Bengal Regulations contained provisions to enable the parties to refer the dispute to be settled by the process of arbitration as per the mutual agreement of the parties, especially in disputes involving breach of the contractual obligations and partnership deeds. Arbitration also found a place in the earliest enacted legislation by the State i.e., Code of Civil C Procedure, 1859. Specifically, the provision in Schedule II of the Code of Civil Procedure, 1908 contained the procedure relating to arbitration. These statutory provisions primarily dealt with two types of arbitrations: i) Arbitration initiated by the Courts in any pending civil suit. ii) Arbitration wherein there is no involvement or intervention D of the Court.

55. Apart from these two types of arbitration, there evolved a third kind of arbitration known as “Statutory Arbitration” wherein the procedure of arbitration is governed by the provisions contained in the statute. E

56. The major development in the arbitration regime came with the enactment of the Arbitration Act, 1899 which was quite comparable to the English Arbitration Act, 1899. This enactment can be understood as the first step in the direction of enforcement of arbitration in India. The Arbitration Act, 1899 was initially applicable to all the presidency F towns and there existed judicial intervention right from the initial reference of the dispute to the process of arbitration.

57. With the rapidly changing times, the evolution of the arbitration regime in India also gained momentum. The Code of Civil Procedure, 1908 was amended to insert the provision contained under Section 89 G which exclusively dealt with the applicability and enforceability of the arbitration. In the early 20th century, arbitration emerged as an acceptable

13 C. V. Nagarjuna Reddy, Role of Arbitration in the Wake of CPC (Amendment) Act, 1999, The Indian Council of Arbitration, https://www.icaindia.co.in/icanet/quterli/apr- june2002/ica5.html(Last accessed on 22nd January, 2023 at 10:50 pm). H

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A mode of dispute resolution and in order to meet its growing popularity, the Arbitration Act, 1940 (hereinafter being referred to as the “Act, 1940”) was enacted by the legislature. The Act, 1940 was enacted with the primary motive of providing speedy and less costly method of dispute resolution in the form of arbitration. However, there existed many inadequacies in the practical application of the provisions contained in the Act, 1940.

58. The Act, 1940 contained many provisions similar to the provisions contained under the English Arbitration Act, 1934 but still it did not have any provision for enforceability of the foreign award. Also, the provisions contained in the Act, 1940 facilitated the intervention of the judiciary at all the three stages of the arbitral proceedings, i.e., before the dispute was referred to the arbitration, during the pendency of the arbitral proceedings and after passing the arbitral award.

59. The ineffective functioning of the provision contained under the Act, 1940 was regularly criticised by the Judiciary. The following observation by Justice D.A. Desai in the case of Guru Nanak Foundation v. Rattan Singh and Sons14 is quite relevant to be mentioned here: “1. Interminable, time consuming, complex and expensive Court procedures impelled jurists to search for an alternative Forum, E less formal, more effective and speedy for resolution of disputes, avoiding procedural claptrap and this led them to Arbitration Act,

1940. However, the way in which the proceedings under the Act are conducted and without an exception challenged in Courts, has made Lawyers laugh and legal philosophers weep.”

F 60. ThisCourt further observed in the case of Food Corporation of India v. Joginderpal Mohinderpal and Another15 that the law governing arbitration is supposed to be less technical and more suitable to practical problems by ascertaining equity and fair play in the entire process. Despite such severe criticism by thisCourt, no amendment was G brought in the Act, 1940 by the legislature for a long period of time.

61. It was only by the late 20th century, there came a major shift in the development of arbitration in India. Due to the economic

14 (1981) 4 SCC 634 15 H (1989) 2 SCC 347

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 407 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

liberalization and alike policies of the government in 1991, there was a A need felt to create a conducive environment for attracting foreign investments. Therefore, based on the 76th Report of the Law Commission of India as well as the Model UNCITRAL law, the Act, 1996 was enacted by the legislature. The Act,1996 came into force from 16th August, 1996 with anobject of making the process of arbitration cost effective, less B technical and in accordance with the prevalent international practices across the world. V. Intent behind incorporation of Section 11(6A) of the Arbitration and Conciliation Act, 1996

62. A major shift for the development of arbitration in India C happened with the enactment of the Act, 1996. Based on the 76th Report16 of the Law Commission of India as well as the Model UNCITRAL law, the Act, 1996 was enacted with anobject of making the process of arbitration cost effective, less technical and in accordance with the prevalent international practices across the world. The legislative intent was to provide effective and speedy procedure for dispute resolution D among the parties as well as to limit the scope of judicial intervention in the process of arbitration.17 India is gradually moving in the direction of minimal judicial intervention keeping abreast with the developments of arbitration in other regimes.

63. The Constitution Bench of this Court while examining the pre E 2015 amendment regime in SBP & Co. v. Patel Engineering Ltd. and Another18 held that all the preliminary or threshold issues pertaining to jurisdiction of the Arbitrator/Arbitral Tribunal should be examined by the Court under Section 11 of the Act, 1996. This position of law was sought to be changed by the Law Commission in its 246th Report, which states as follows: “In so far as the nature of intervention is concerned, it is recommended that in the event the Court/Judicial Authority is prima facie satisfied against the argument challenging the arbitration agreement, it shall appoint the arbitrator and/or refer the parties to arbitration, as the case may be. The amendment envisages that

16 Law Commission of India, 76th Report on Arbitration Act, 1940 17 Paragraph No. 4(v), Statement of Objects and Reasons, Arbitration and Conciliation Act, 1996. 18 (2005) 8 SCC 618 H

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A the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the B arbitral tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie. The amendment also envisages that there shall be a conclusive determination as to whether the arbitration agreement is null and void.”19 C (Emphasis added)

64. In the said report, the Law Commission of India concluded that the judicial intervention in arbitration proceedings adds significantly to the delay in the arbitration process and ultimately negates the benefit of arbitration. At paragraph 24, the Law Commission noted as follows: D “…[I]t is observed that a lot of time is spent for appointment of arbitrators at the very threshold of arbitration proceedings.” 20

65. The Law Commission suggested the insertion of sub-Section (6A) to Section 11 in the Act, 1996 which was accepted by the Legislature by way of the 2015 amendment to the Act, 1996. Section 11(6A) E unambiguously by its intention manifests that “[the] Supreme Court or, as the case may be, the High Court, while examining an application under sub-section (4) or sub-section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to examine only to the “existence of an arbitration agreement”.

F 66. The 2015 amendment, including Section 11(6A), and the later amendments are in line with this evolution of arbitration jurisprudence. With the series of amendments to the principal Act,1996, it is quite evident that the legislature is continuously engaging with the rapidly evolving arbitration regimein India and the various challenges allied it with the object to reduce the scope of intervention by the courts in the arbitration G processes. It can be expected that the arbitration in India is conducted in accordance with the following views expressed by Justice Sabyasachi Mukharji in the case of Food Corporation of India (supra): 19 LAW COMMISSION OF INDIA Report No. 246 Amendments to the Arbitration and Conciliation Act 1996, pg. 43 H 20 Paragraph No. 24, Report No. 246, Law Commission of India.

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 409 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

“7.We should make the law of arbitration simple, less technical A and more responsible to the actual realities of the situation, but must be responsive to the canons of justice and fair play and make the arbitrator adhere to such process and norms which will create confidence, not only by doing justice between the parties, but by creating a sense that justice appears to have been done.” B The above discussed approach of the legislature has been acknowledged by this Court.

67. In the case of Duro Felguera, S.A. v. Gangavaram Port Limited21, this Court explained the scope and effect of the changes brought in by the 2015 amendment in the following words: C “48….. From a reading of Section 11(6-A), the intention of the legislature is crystal clear i.e. the court should and need only look into one aspect—the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement is the next question. The resolution to that is simple— D it needs to be seen if the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement…

59. The scope of the power under Section 11(6) of the 1996 Act was considerably wide in view of the decisions in SBP and Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and E BogharaPolyfab [National Insurance Co. Ltd. v. BogharaPolyfab (P) Ltd., (2009) 1 SCC 267. This position continued till the amendment brought about in 2015. After the amendment, all that the courts need to see is whether an arbitration agreement exists— nothing more, nothing less. The legislative policy and purpose is F essentially to minimise the Court’s intervention at the stage of appointing the arbitrator and this intention as incorporated in Section 11(6-A) ought to be respected.” (Emphasis added)

68. This position was affirmed by a three-judge bench in Mayavati G Trading Private Limited v. Pradyuat Deb Burman22: “10. This being the position, it is clear that the law prior to the 2015 Amendment that has been laid down by this Court, which 21 (2017) 9 SCC 729 22 (2019) 8 SCC 714 H

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A would have included going into whether accord and satisfaction has taken place, has now been legislatively overruled. This being the position, it is difficult to agree with the reasoning contained in the aforesaid judgment [United India Insurance Co. Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362], as Section 11(6-A) is confined to the examination of the existence of an arbitration agreement and is to be understood in the narrow sense as has been laid down in the judgment in Duro Felguera, S.A.…,” (Emphasis added)

69. Thus, the 2015 amendment aims to limit the intervention of Courts to minimal examining the existence and not the validity of an arbitration agreement at the pre-referral stage of the arbitration proceedings. VI. Scope of Section 11(6A) w.r.t. Section 8, Section 16 and Section 45 of Arbitration and Conciliation Act, 1996

D 70. Section 11(6A) of the Act, 1996 reads as follows: “The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or sub- section (5) or sub-section (6), shall, notwithstanding any judgment, decree or order of any Court, confine to the examination of the existence of an arbitration agreement.” E

71. The scope of inquiry under Section 11(6A) is restricted to examine the “existence of an arbitration agreement”. The phrase ‘existence of an arbitration agreement’ is to be understood in a literal sense keeping the intention of the legislature after the introduction of the 2015 amendment. The position of law that prevails after the insertion of F 2015 amendment is that there should be minimal interference by the Courts. The limited scope of the Court to examine at the pre-referral stage is whether the arbitration agreement, prima facie, exists as referred to under Section 7 of the Act, 1996 which includes determination of the following factors: G (i) Whether the arbitration agreement is in writing; (ii) Whether the core contractual ingredients qua the arbitration agreement are fulfilled? (iii) On rare occasions, on a serious note of objection, if any, it may examine whether the subject matter of dispute is H arbitrable?

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 411 INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

72. Section 8(1), which was replaced by the amendment of 2015, A mandates a judicial authority to refer parties to arbitration unless there is prima facie finding that no valid arbitration agreement exists. The language used in the provision is as follows: “8. Power to refer parties to arbitration where there is an arbitration agreement.— B (1)A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or any person claiming through or under him, so applies not later than the date of submitting his first statement on the substance of the dispute, then, notwithstanding any judgment, decree or order of the Supreme Court or any Court, refer the parties to arbitration unless it finds that prima facie no valid arbitration agreement exists. (2) The application referred to in sub-section (1) shall not be entertained unless it is accompanied by the original arbitration agreement or a duly certified copy thereof: [Provided that where the original arbitration agreement or a certified copy thereof is not available with the party applying for reference to arbitration under sub-section (1), and the said agreement or certified copy is retained by the other party to that agreement, then, the party so applying shall file such application along with a copy of the arbitration agreement and a petition praying the Court to call upon the other party to produce the original arbitration agreement or its duly certified copy before that Court.] F (3) Notwithstanding that an application has been made under sub- section (1) and that the issue is pending before the judicial authority, an arbitration may be commenced or continued and an arbitral award made.”

73. The Section provides that the Court can examine, whether G prima facie there does not exist an arbitration agreement. The scope of this Section can be seen from the 246th Law Commission Report23, which made the following note while suggesting amendment to Section 8:

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A “….of the amendment contemplates a two-step process to be adopted by a judicial authority when considering an application seeking the reference of a pending action to arbitration. The amendment envisages that the judicial authority shall not refer the parties to arbitration only if it finds that there does not exist an arbitration agreement or that it is null and void. If B the judicial authority is of the opinion that prima facie the arbitration agreement exists, then it shall refer the dispute to arbitration, and leave the existence of the arbitration agreement to be finally determined by the arbitral tribunal. However, if the judicial authority concludes that the agreement does not exist, then the conclusion will be final and not prima facie. The amendment also envisages that there shall be a conclusive determination as to whether the arbitration agreement is null and void.”

74. A plain reading of the Section 8 indicates that it limits the intervention of the Court to only one aspect i.e., when it finds that prima facie no valid arbitration agreement exists or is null and void.

75. The scheme of the Act, 1996 manifests that Sections 8 and 11 are complementary in nature and both relate to reference to arbitration and have the same scope and ambit with respect to judicial interference. The Court, under Sections 8 and 11, has to refer the matter to arbitration or to appoint an Arbitrator, provided the party has established a prima facie existence of an arbitration agreement, nothing more nothing less. At the same time, the Court should refer the matter if the validity of the arbitration agreement cannot be determined on a prima facie basis, as laid down above i.e. “when in doubt, do refer”.

F 76. At this stage, we would like to observe that the statutory scheme has been framed for appointment of an Arbitrator by various High Courts and also by this Court - called the Appointment of Arbitrators by the Chief Justice of India Scheme, 1996,the relevant portion of the same is extracted hereunder:-

G 1. Short title.-This Scheme may be called The Appointment of Arbitrators by the Chief Justice of India Scheme, 1996.

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 beaccompanied by- H

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(a) the original arbitration agreement or a duly certified copy A thereof; (b) the names and addresses of the parties to the arbitration agreement; (c) the names and addresses of the arbitrators, if any, already appointed; B

(d) the name and address of the person or institution, if any, to whom or which any function has been entrusted by the parties to the arbitration agreement under the appointment procedure agreed upon by them; C (e) the qualifications required, if any, of the arbitrators by the agreement of the parties; (f) a brief written statement describing the general nature of the dispute and the points at issue; (g) the relief or remedy sought; and D (h) an affidavit, supported by the relevant document, to the effect that the condition to be satisfied under sub-section (4) or sub- section (5) or sub-section (6) of section 11, as the case may be, before making the request to the Chief Justice, has been satisfied. E

77. It is clear from the scheme of which a reference has been made that while the applicant approaches the Court for appointment of an Arbitrator, he is not supposed to file an original arbitration agreement and attested copy of the agreement can be annexed at the pre-referral stage which is indeed not an instrument as referred to under Section 2(14) of the Act, 1899. F

78. So far as the reference made of submitting a certified copy of the arbitration agreement is concerned, suffice it to say, that arbitration agreement executed between the parties relating to the business/ commercial transactions is not required to be compulsorily registered under the Act, 1908. The obligation to register the document is invoked G under provisions of the substantive law, namely, Transfer of Property Act, 1882, while Section 17 of the Act, 1908 mandates that the non- testamentary instrument that created any right, title or interest of the value of Rs.100/- or upwards in an immovable property must be compulsorily registered. If document is not registered, transfer is void, H

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A there is no valid transfer, and the property described in the instrument does not pass on, for example, mortgage does not become complete and enforceable until it is registered under the Act, 1908.

79. Indisputably, the arbitration agreement is not a public document to which compulsory registration as referred to under Section 17 of the B Act, 1908 is required and one can obtain a certified copy of the public document under Sections 74 or 75 of the Evidence Act, 1872. The Public Officer having the custody of a public document can make available its certified copy as referred to under Section 76 of the Evidence Act, 1872. In the absence of the arbitration agreement being required to be compulsorily registered, within the scope and ambit of Section 17 of the C Act, 1908, such arbitration agreement/document is not accessiblein public domain and is not a public document of which certified copy can be obtained, as referred to under Section 74 of the Evidence Act, 1872, failing which the question of presumption as to genuineness of document purporting to be a certified copy as referred to under Section 79 of the D Evidence Act, 1872 may not arise.

80. In other words, when the arbitration agreement is not required to be compulsorily registered as referred to under Section 17 of the Act, 1908 the reference of a certified copy under the Scheme of Rules, 1996 appears to be of an authenticated copy of the arbitration agreement that E qualifies the requirement of Section 7 of the Act, 1996 at the pre-referral stage for the purposes of appointment of an Arbitrator under Section 11(6A) of the Act, 1996.Hence, the question of raising objection regarding the arbitration agreement not being stamped or insufficiently stamped at the pre-referral stage may not arise.

F 81. Section 16 of the Act, 1996 is referred to as under:- “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,— G (a) an arbitration clause which forms part of a contract shall 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. H

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(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. (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. C (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. (6) A party aggrieved by such an arbitral award may make an D application for setting aside such an arbitral award in accordance with section 34.”

82. Section 16(1) of the Act, 1996envisaged that an Arbitral Tribunal can rule upon own jurisdiction, “including ruling on any objection with respect to the existence or validity of the arbitration agreement”. The E provision is based on the doctrine of Kompetenz- Kompetenz and the doctrine of Separability. The doctrine of Kompetenz-Kompetenz means that the Arbitral Tribunal is competent enough to rule on its own jurisdiction. At the same time, the Doctrine of Separability severs the arbitration clause from the commercial contract. Section 16(1)(a) F presupposes the existence of a clause of arbitration and mandates the same to be treated as independent to the other terms of the contract. Under Section 16, the Arbitral Tribunal shall have the jurisdiction to determine the validity of the arbitration agreement.

83. A division Bench of this Court in Uttarakhand Purv Sainik G Kalyan Nigam Limited v. Northern Coal Field Limited24 while placing reliance on Duro Felguera (supra) held that issues related to limitation must be raised before the Arbitral Tribunal. The Court observed the following: 24 (2020) 2 SCC 455 H