I will argue that these findings when read in context, are clearly restricted to a Section 11 application, in which the term existence has a peculiar and specific meaning that does not include whether the agreement is null and void. Following the 2015 amendment, a full judge bench of the Bombay High Court in the case of Gautam Landscapes Pvt Ltd v Shailesh S Shah and Vijay Sharma v Vivek Makhija (Gautam Landscapes),(7) considered the following issues microscopically: The Bombay High Court, while considering the first question, opined that the finding in SMS Tea Estates was limited only to applications under section 11 of the A&C Act and therefore carried no precedential value with respect to applications under section 9 of the A&C Act. The Court's holding in Garware Judgement that the arbitration agreement in an unstamped document cannot be acted upon was vis--vis a Section 11 (Arbitration Act) application, i.e., the ultimate consequence of the judgement was only that an arbitrator could not be appointed until the unstamped agreement in question was impounded. The High Court definitely held further that the Village Officer, Nattika Village erred in directing the petitioner to produce the (sufficiently stamped) original power of attorney before the Revenue Divisional Officer for adjudication under sections 31 and 32 of the Kerala Stamp Act, 1959. The Court noticed that section 3 of the Maharashtra Stamp Act 1958 did not mandate that arbitration agreements have to be stamped. In keeping with the purpose of Section 11(6A) and the need for minimal interference, as contemplated in Section 5 of the Act, on a. In this case. The Court under Section 11 purporting to give effect to Sections 33 and 35 cannot be accused of judicial interference contrary to Section 5. However, the non-stamping of any document is a curable defect, which can be rectified by following the procedure laid down by law. SMS Tea Estates and Garware Wall Ropes decisions. Pay Duty With Penalty to Admit Unstamped Deed for Collateral Purpose. 121936 SCC OnLine Cal 275 : AIR 1937 Cal 765. (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. Coram: 1 .P. Thejurisdiction of the Court flows from Sec. 1. He would like to thank Ms Gulnar Mistry for her comments on earlier drafts of this paper. What followed was a period of uncertainty concerning the fate of arbitration clauses contained in unstamped or insufficiently stamped agreements during the period of the referral of this issue to a constitution bench of five judges of the SCI. Section 8 is applicable in case of domestic arbitrations, whereas Section 45 shall be applicable to foreign seated arbitrations. The Supreme Court observed in Sri Venkoba Rao Pawar v. Sri S. Chandrashekar, AIR 2008 SCW 4829, that the collateral purpose/transaction must be independent of, or divisible from the transaction which requires registration. Once the Court, rightly or wrongly, decides to admit the document in evidence, From aplain reading of the aforesaid provision (S. 35 of the Stamp Act),it is evident that an authority to receive evidenceshall not admit any instrument unless it is duly stamped. After the procedure for stamping of the instrument is followed and the duty and the penalty are paid, the instrument would come to be visited with the endorsement under Section 42(2). throughout their Academic career. The Supreme Court of India has dealt with this issue in its recent judgment of M/s N. N. Global Mercantile Pvt. The paradigm shift in the judicial pronouncements If the person does not pay the Court, then the document is to be impounded and sent to the Collector for taking action under the law., (1)When any instrument, whether executed or not and whether previously stamped or not, is brought to the Collector, and the, (b)every person by whom any such evidence is furnished, shall, on payment of the full duty with which the instrument to which it relates, is chargeable, be. Following are clear from the Section 31 of The Indian Stamp Act, 1899 (Similar provisions are there in the State Stamp Acts also). One way to settle commercial disputes globally and in India is by using arbitration. This is also in line with the doctrine of kompetenz kompetenz, and judicial authorities in case of arbitrable disputes, cannot declare deficiently stamped agreements as non-arbitrable. . If you would like to learn how Lexology can drive your content marketing strategy forward, please email [emailprotected]. Find out more about Lexology or get in touch by visiting our About page. A collateral transaction must be independent of, or divisible from, the transaction to effect which the law required registration. vs Durga Trading Corporation ((2021) 2 SCC 1) (Vidya Drolia). In light of the conflicting views taken by the SCI in NN Global and Vidya Drolia, the Court in NN Global decided to make a referral of this issue to a five-judge constitutional bench to finally decide the controversy. Applying a harmonious construction between the provisions of the Indian Stamp Act 1899 and the A&C Act, the Court noted that the view in Garware Wall Ropes was erroneous and the fate of the reference to arbitration cannot be tied to the substantive contract. Till the time the unstamped instrument is stamped, the arbitration agreement contained therein will be non- existent in law. Sub-sec. Karnataka High Court (N. Kumar, J. 2: A Handbook on Constitutional Issues, Book No. Understand your clients strategies and the most pressing issues they are facing. The existence and validity of an arbitration agreement is not affected by the provisions of the Stamp Act. A) Definition of Promissory Note is given in section 8 of the Negotiable Instrument Act B) Containing an unconditional undertaking C) To pay a certain sum of money only to a specific person or the bearer D) The seller is bound to accept the promissory note E) A document was written and signed by the payer/maker Further, section 11(13) of the A&C Act calls for an expeditious disposal of such applications within 60 days. 7SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66. but not guaranteed, to be correct, complete, or up to date. Section 36 tells us that . & Construction Co. Ltd., (2018) 17 SCC 607. The Khaitan & Co website can be accessed at www.khaitanco.com. The Supreme Court considered the provisions of the Arbitration Act, the Stamp Act, and the Contract Act to conclude that an unstamped arbitration agreement is unenforceable, for the following reasons: b) Provisions of Stamp Act and Contract Act: The present judgment has finally put to rest the long-standing issue of enforceability of an unstamped agreement and the arbitration clause contained therein. 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 Sec. Advocate, practises at the Bombay High Court in the Chambers of Mr Navroz Seervai. Ltd. ((2011) 14 SCC 66) (SMS Tea Estates), Garware Wall Ropes Limited vs Coastal Marine Constructions and Engineering Limited ((2019) 9 SCC 209) (Garware Wall Ropes), and Vidya Drolia and Ors. As shown above, it pointed out-. Why Gujarat Judges Promotion Stayed by Supreme Court? EBC Publishing Pvt. 4634, Nanda Behera v. Akhsaya Kumar Behera, 2017AIR (CC) 1893, 6. The said provision contemplates that stamping of such an instrument must take place before or at the time of the execution of document. Sec.31 of the Act enable a person bringing to the Collector any instrument whether executed or not and whether previously stamped or not, to have his opinion as to the duty (if any) with which it is chargeable and thereupon the Collector on payment of a fee, shall determine the duty (if any) with which, in his judgment the instrument is chargeable. Reflecting on the observations of the SCI in NN Global, it can be noted that the SCI was of the opinion that an inadequately stamped or non-stamped agreement (making no distinction between the two) will not render the arbitration agreement non-existent. : The content of this [2008] EWCA Civ 785. Further, an application may also be made under Section 9 of the Act, whereby any party to an arbitration agreement may seek urgent reliefs from a judicial authority for preservation of the subject matter of a dispute before the arbitral tribunal is constituted. Know all about E-Challans -Definition, Filing, Procedure, etc. Fill in your details below or click an icon to log in: You are commenting using your WordPress.com account. Keep a step ahead of your key competitors and benchmark against them. Select the folder containing the PDF files that you wish to unstamp. The SC judgment in Garware Wall Ropes was approved by a three judge bench in the matter of Vidya Drolia. In Lothamasu Sambasiva Rao v. Thadwarthi Balakotiah, AIR 1973 AP 342, and several other decisions it was held thatSection 35was only a bar to the admissibility of an unstamped or insufficiently stamped document; and that when it had been admitted in evidence it could not have been, afterwards, withdrawn. The question of the existence of an arbitration agreement contained in an unstamped or insufficiently stamped document was dealt with in SMS Tea Estates. An application may be made under Section 8 or Section 45 of the Act, if there exists an arbitration agreement in relation to a dispute that has been referred to a judicial authority. TheCourt should not depend on objections of the other Counsel before considering whether the document is admissible in evidence or not. It must be noted that the judgment in SMS Tea Estates was rendered prior to the coming into force of the 2015 amendment to the A&C Act. This was based on the reasoning that an agreement which is compulsorily registrable or chargeable to stamp duty cannot be taken into evidence or relied upon for any purpose under the Indian Stamp Act 1899. The application came to be accepted by the.unregistered and unstamped sale deed could have been admitted in evidence. It did not however deal with Section 11(6-A) and Garware, (2019) 9 SCC 209, possibly because it considered an order passed prior to the introduction of Section 11(6-A). To decide this question, the court has to necessarily look into Secs.31 and 32 of the Act. on the requirement of stamping of an arbitration agreement. Though there is a discretion vested in the Court to exercise powers under S. 33 and 34 of the Act, no Court can hold that it would wait till the document is tendered in evidence. In Yellapu Uma Maheswari v. Buddha Jagadheeswararao, (2015) 16 SCC 787, the Apex Court held in the suit for declaration of title that an unregistered document can be relied upon for collateral purposes i.e. This doctrine goes further to establish the legislative policy of minimum judicial interference in an issue arising in relation to an arbitration agreement, especially in the pre-reference stage. Hence, if the appellant-defendant wants to mark these documents for collateral purpose it is open for them to pay the stamp duty together with penalty and get the document impounded and the trial court is at liberty to mark Exts. 1Garware Wall Ropes Ltd. v. Coastal Marine Constructions & Engg. The next generation search tool for finding the right lawyer for you. 4Shyamal Kumar Roy v. Sushil Kumar Agarwal, (2006) 11 SCC 331. The contents are intended, Under the prison mailbox rule, a prisoner may establish that he timely filed a notice of appeal by supplying a declaration under penalty of perjury that specifies two things: (1) the date he handed the document to prison officials and (2) that he pre-paid first class postage. The next generation search tool for finding the right lawyer for you. 9. whether the court should raise its eye-brows after marking it unopposed. . any right, title or interest in immovable property of the value of one hundred rupees and upwards. There is no scope for the inclusion of the copy of the document for the purposes of the Indian Stamp Act. The Apex Court held inJaver Chand v. Pukhraj Surana, AIR 1961 SC 1655, as under: Objection be raised when Document Tendered, Our Apex Court held inSirikonda Madhava Rao v. N. Hemalatha, 12 April, 2022 (referring Javer Chand v. Pukhraj Surana, (1962-2 SCR 333 and Shyamal Kumar Roy v. Sushil Kumar Agarwal, 2006-11 SCC 331) that after marking a document unopposed, it is not open to the parties, or even the court, to reexamine the order or issue.
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