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

- **Citation:** 2023 INSC 423
- **Court:** Supreme Court of India
- **Decided:** 2023-04-25
- **Case number:** Civil Appeal Nos. 3802-3803 of 2020
- **Bench:** K. M. Joseph, Ajay Rastogi, Aniruddha Bose, Hrishikesh Roy, C. T. Ravikumar
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-n-n-global-mercantile-private-limited-v-m-s-indo-unique-flame-ltd-ors-37860
- **Pages:** 208

## Headnote

Arbitration and Conciliation Act, 1996 - ss. 11(6A), 7, 8, 9,
11 and 16 - Indian Stamp Act, 1899 - ss. 3, 33 & 35 - Contract Act,
1872 - ss. 2(h), 10 - Appointment of Arbitrators by The Chief Justice
of India Scheme, 1996 - Arbitration Agreement in an unregistered
instrument, which is not duly stamped, if valid and enforceable -
Whether the statutory bar contained in s.35 of the Stamp Act, 1899
applicable to instruments chargeable to stamp duty under s.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 - Held [per K. M. Joseph, J. (for himself and for
Aniruddha Bose, J.)] : 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 s.2(h) of the Contract Act and is not enforceable
under s.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 - The true intention behind
the insertion of s.11(6A) in the Act was to confine the Court, acting
under s.11, to examine and ascertain about the existence of an
Arbitration Agreement - The Scheme permits the Court, under s.11
of the Act, acting on the basis of the original agreement or on a
certified copy -The certified copy must, however, clearly indicate
the stamp duty paid - If it does not do so, the Court should not act
on such a certified copy - If the original of the instrument is
produced and it is unstamped, the Court, acting under s.11, is dutybound to act under s.33 of the Stamp Act - When it does so, the
other provisions, which, in the case of the payment of the duty and
penalty would culminate in the certificate under s.42(2) of the Stamp
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Act, would also apply - When such a stage arises, the Court will be
free to process the Application as per law - An Arbitration
Agreement, within the meaning of s.7 of the Act, which attracts stamp
duty and which is not stamped or insufficiently stamped, cannot be
acted upon, in view of s.35 of the Stamp Act, unless following
impounding and payment of the requisite duty, necessary certificate
is provided under s.42 of the Stamp Act - The provisions of s.33
and the bar under s.35 of the Stamp Act, applicable to instruments
chargeable to stamp duty under s.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 - Held (per C. T. Ravikumar, J.)
(concurring): 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' - 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 s.11 is duty bound
to act u/s.33 of the Indian Stamp Act - Held (per Ajay Rastogi, J.)
(dissenting): The existence of a copy/certified copy of an arbitration
agreement whether unstamped/insufficiently stamped at the prereferral stage is an enforceable document for purposes of
appointment of an Arbitrator under s.11(6A) of the Act, 1996 where
the judicial intervention shall be minimal confined only to the prima
facie examination of "existence of an arbitration agreement" alone
keeping in view the object of 2015 amendment and the courts must
strictly adhere to the time schedule for appointment of Arbitrator
prescribed under s.11(13) of the Act, 1996 - All the preliminary /
debatable issues including insuf

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[2023] 9 S.C.R. 285 : 2023 INSC 423
285
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED
v.
M/s INDO UNIQUE FLAME LTD. & ORS.
(Civil Appeal Nos. 3802-3803 of 2020)
APRIL 25, 2023
[K. M. JOSEPH, AJAY RASTOGI, ANIRUDDHA BOSE,
HRISHIKESH ROY AND C. T. RAVIKUMAR, JJ.]
Arbitration and Conciliation Act, 1996 - ss. 11(6A), 7, 8, 9,
11 and 16 - Indian Stamp Act, 1899 - ss. 3, 33 & 35 - Contract Act,
1872 - ss. 2(h), 10 - Appointment of Arbitrators by The Chief Justice
of India Scheme, 1996 - Arbitration Agreement in an unregistered
instrument, which is not duly stamped, if valid and enforceable -
Whether the statutory bar contained in s.35 of the Stamp Act, 1899
applicable to instruments chargeable to stamp duty under s.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 - Held [per K. M. Joseph, J. (for himself and for
Aniruddha Bose, J.)] : 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 s.2(h) of the Contract Act and is not enforceable
under s.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 - The true intention behind
the insertion of s.11(6A) in the Act was to confine the Court, acting
under s.11, to examine and ascertain about the existence of an
Arbitration Agreement - The Scheme permits the Court, under s.11
of the Act, acting on the basis of the original agreement or on a
certified copy -The certified copy must, however, clearly indicate
the stamp duty paid - If it does not do so, the Court should not act
on such a certified copy - If the original of the instrument is
produced and it is unstamped, the Court, acting under s.11, is dutybound to act under s.33 of the Stamp Act - When it does so, the
other provisions, which, in the case of the payment of the duty and
penalty would culminate in the certificate under s.42(2) of the Stamp
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Act, would also apply - When such a stage arises, the Court will be
free to process the Application as per law - An Arbitration
Agreement, within the meaning of s.7 of the Act, which attracts stamp
duty and which is not stamped or insufficiently stamped, cannot be
acted upon, in view of s.35 of the Stamp Act, unless following
impounding and payment of the requisite duty, necessary certificate
is provided under s.42 of the Stamp Act - The provisions of s.33
and the bar under s.35 of the Stamp Act, applicable to instruments
chargeable to stamp duty under s.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 - Held (per C. T. Ravikumar, J.)
(concurring): 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' - 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 s.11 is duty bound
to act u/s.33 of the Indian Stamp Act - Held (per Ajay Rastogi, J.)
(dissenting): The existence of a copy/certified copy of an arbitration
agreement whether unstamped/insufficiently stamped at the prereferral stage is an enforceable document for purposes of
appointment of an Arbitrator under s.11(6A) of the Act, 1996 where
the judicial intervention shall be minimal confined only to the prima
facie examination of "existence of an arbitration agreement" alone
keeping in view the object of 2015 amendment and the courts must
strictly adhere to the time schedule for appointment of Arbitrator
prescribed under s.11(13) of the Act, 1996 - All the preliminary /
debatable issues including insufficiently stamped/unduly stamped
or validity of the arbitration agreement etc. are referrable to the
Arbitrator/Arbitral Tribunal under s.16 of the Act, 1996 which, by
virtue of the Doctrine of Kompetenz - Kompetenz has the power to
do so - Held (per Hrishikesh Roy, J.) (dissenting): The examination
of stamping and impounding need not be done at the threshold by a
Court, at the pre-reference stage under s.11 of the Arbitration Act,
1996 - Non-stamping /insufficient stamping of the substantive
contract/instrument would not render the arbitration agreement nonexistent in law and unenforceable /void, for the purpose of referring
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a matter for arbitration - An arbitration agreement should not be
rendered void if it is suffering stamp deficiency which is a curable
defect.
Answering the reference, the Court
HELD:
per K. M. JOSEPH, J. (for himself and ANIRUDDHA BOSE, J.)
1.1. An agreement, which is unenforceable on account of a
substantive law, which would include the Stamp Act, would not be
a contract, applying Section 2(h) of the Contract Act. It is only if
an agreement is enforceable, that it would become a contract. It
is only a 'contract', which would be the 'Arbitration Agreement',
which is contemplated in Section 11(6A) of the Act. It may not be
apposite to merely describe an unstamped Arbitration Agreement
as a 'curable defect'. As long it remains an unstamped instrument,
it cannot be taken notice of for any purpose, as contemplated in
Section 35 of the Stamp Act. It remains unenforceable. Section
17 declares the time at which an instrument, executed in India,
must be stamped. The said provision contemplates that stamping
of such an instrument must take place before or at the time of
the execution of document. No Public Officer, nor Court nor
Arbitrator, can permit any person to ask them to act upon it or
receive it as evidence. In law, it is bereft of life. It is 'not
enforceable in law'. In the said sense, it also cannot exist in law.
It would be void. The voidness is conflated to unenforceability
receives fortification from Section 2(j) of the Contract Act which
renders a contract which ceases to be enforceable void. What
Section 11(6A) contemplates is a contract and it is not an
agreement which cannot be treated as a contract. This is despite
the use of the words 'arbitration agreement' in Section 11(6A).
In other words, contract must conform to Section 7 of the Act. It
must also, needless to say, fulfil the requirements of the Contract
Act. [Paras 70 & 71][351-B-F]
1.2. An agreement which is unstamped or insufficiently
stamped is not enforceable, as long as it remains in the said
condition. Such an instrument would be void as being not
enforceable [See Section 2(g) of the Contract Act]. It would not
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in the said sense exist in law. It can be "validated" by only the
process contemplated in Section 33 and other provisions of the
Stamp Act. This necessarily means that the court would not view
it as enforceable, and therefore, existing in law. In the sense
explained, it would not be found as 'not void' and therefore 'not
invalid'. Thus, in the context of the Act, the Stamp Act and the
Contract Act, the opinion of this Court in SMS Tea Estates, in this
regard as reiterated in Garware and approved in Vidya Drolia is
correct. [Para 74][353-E-G]
2. 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,
paragraphs-22 and 29 of Garware are approved. To this extent,
this Court also approves of Vidya Drolia, insofar as the reasoning
in paragraphs-22 and 29 of Garware is approved. [Para 110][374E-F]
3. 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 certified copy must, however, clearly indicate the stamp
duty paid as held in SMS Tea Estates. If it does not do so, the
Court should not act on such a certified copy. [Para 112][375-A]
4. 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. [Para 115][375-D-E]
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 -
overruled.
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SMS Tea Estates Private Limited v. Chandmari Tea
Company Private Limited (2011) 14 SCC 66 : [2011] 9
SCR 382; Garware Wall Ropes Limited v. Coastal Marine
Constructions & Engineering Limited (2019) 9 SCC 209
: [2019] 5 SCR 579; Vidya Drolia and others v. Durga
Trading
Corporation
(2021)
2
SCC
1;
Dharmaratnakara Rai Bahadur Arcot Narainswamy
Mudaliar Chattram v. Bhaskar Raju & Bros. (2020) 4
SCC 612 : [2020] 3 SCR 798; - affirmed.
SBP & Co. v. Patel Engineering Ltd. and another (2005)
8 SCC 618 : [2005] 4 Suppl. SCR 688 - followed.
Hindustan Steel Ltd. v. Dilip Construction Company
(1969) 1 SCC 597 : [1969] 3 SCR 736; United India
Insurance Company Limited v. Hyundai Engineering
and Construction Company Limited (2018) 17 SCC 607
: [2018] 12 SCR 1085 and Govind Rubber Limited Louids
Dreyfus Commodities Asia Private Limited (2015) 13
SCC 477 : [2014] 12 SCR 488 - relied on.
Duro Felguera, S.A. v. Gangavaram Port Limited (2017)
9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading
Private Limited v. Pradyuat Deb Burman (2019) 8 SCC
714 : [2019] 1 SCR 123; Lachmi Narayan Agarwalla
and Others v. Braja Mohan Singh (SINCE DECEASED)
51 Indian Appeals 332; Joyman Bewa v. Easin Sarkar
AIR 1926 Calcutta 877; Great Offshore Ltd. v. Iranian
Offshore Engg. & Construction Co. (2008) 14 SCC 240
: [2008] 12 SCR 515; Commissioner of Income Tax v.
Hindustan Bulk Carriers (2003) 3 SCC 57 : [2002] 5
Suppl. SCR 387; Shin-Etsu Chemical Co. Ltd. v. Aksh
Optifibre Ltd. and another (2005) 7 SCC 234 : [2005]
2 Suppl. SCR 699; National Insurance Company Limited
v. Boghara Polyfab Private Limited (2009) 1 SCC 267
: [2008] 13 SCR 638; Ganga Retreat & Towers Ltd. v.
State of Rajasthan (2003) 12 SCC 91 : [2003] 6 Suppl.
SCR 1134; Oriental Insurance Company v. Narbheram
Power and Steel Private Limited (2018) 6 SCC 534 :
[2018] 4 SCR 826; Dr. Chiranji Lal (D) by Lrs. v. Hari
Das (D) by Lrs. (2005) 10 SCC 746 : [2005] 1 Suppl.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
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SCR 359; Hariom Agrawal v. Prakash Chand Malviya
(2007) 8 SCC 514 : [2007] 10 SCR 772; M.R.
Engineers & Contractors Private Limited v. Som Datt
Builders Limited (2009) 7 SCC 696 : [2009] 10 SCR
373 and Jupudi Kesava Rao v. Pulavarthi Venkata
Subbarao and others (1971) 1 SCC 545 : [1971] 3 SCR
590 - referred to.
Dip Narain Singh v. Nageshar Prasad and another AIR
1930 ALL 1 (FB) / 1929 SCC OnLine ALL 1; Imambi
v. Khaja Hussain alias Khajasab AIR 1988 Karnataka
51; Gulzari Lal Marwari v. Ram Gopal ILR 1937 1
Calcutta 257; Purna Chandra Chakrabarty and others
v. Kalipada Roy and another AIR 1942 Calcutta 386;
United Insurance Company of Pakistan Limited v. Hafiz
Muhammad Siddique PLD 1978 SC 279 and Gautam
Landscapes Pvt. Limited v. Shailesh S. Shah (2019) SCC
OnLine Bom 563 - referred to.
Heyman v. Darwins Limited (1942) AC 356 HL -
referred to.
per C. T. RAVIKUMAR, J. (concurring)
1. 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. 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), 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
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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 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,
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. [Para 5][379-C-H]
2. 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. 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. [Para
18][384-C-D]
SBP & Co. v. Patel Engineering Ltd. and another (2005)
8 SCC 618 : [2005] 4 Suppl. SCR 688 - followed.
Mt. Bittan Bibi & Anr. v. Kuntu Lal & Anr. ILR [1952] 2
All 984 - referred to.
per AJAY RASTOGI, J. (dissenting)
1. The limited scope of the Court under Section 11(6A) at
the pre-referral stage is to examine whether the arbitration
agreement, prima facie, exists as referred to under Section 7 of
the Act, 1996, which includes only the determination of the
following factors : (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 arbitrable? [Para 92][420-E-F]
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
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2. (i) The existence of a copy/certified copy of an arbitration
agreement whether unstamped/ 60 insufficiently stamped at the
pre-referral stage is an enforceable document for the purposes
of appointment of an Arbitrator under Section 11(6A) of the Act,
1996 where the judicial intervention shall be minimal confined
only to the prima facie examination of "existence of an arbitration
agreement" alone keeping in view the object of 2015 amendment
and the courts must strictly adhere to the time schedule for the
appointment of Arbitrator prescribed under Section 11(13) of the
Act, 1996. (ii) All the preliminary/debatable issues including
insufficiently stamped/unduly stamped or validity of the arbitration
agreement etc. are referrable to the Arbitrator/Arbitral Tribunal
under Section 16 of the Act, 1996 which, by virtue of the Doctrine
of Kompetenz - Kompetenz has the power to do so. (iii) The
decision in SMS Tea Estates Private Limited stands overruled.
Paras 22 and 29 of Garware Wall Ropes Limited which are approved
in paras 146 and 147 in Vidya Drolia and Others are overruled to
that extent. [Para 97][422-H; 423-A-D]
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 - affirmed.
Vidya Drolia and others v. Durga Trading Corporation
(2021) 2 SCC 1; SMS Tea Estates Private Limited v.
Chandmari Tea Company Private Limited (2011) 14
SCC 66 : [2011] 9 SCR 382 and Garware Wall Ropes
Limited v. Coastal Marine Constructions & Engineering
Limited (2019) 9 SCC 209 : [2019] 5 SCR 579 -
overruled.
Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and
others (1971) 1 SCC 545 : [1971] 3 SCR 590 and
Hariom Agrawal v. Prakash Chand Malviya (2007) 8
SCC 514 : [2007] 10 SCR 772 - relied on.
Naina Thakkar v. Annapurna Builders (2013) 14 SCC
354; Government of Andhra Pradesh and Others v P.
Laxmi Devi(Smt.) (2008) 4 SCC 720 : [2008] 3 SCR
330; Enka Insaat Ve Sanayi AS v OOO Insurance
Company Chubb (2020) UK SC 38; Shin-Etsu Chemical
Co. Ltd. v. Aksh Optifibre Ltd. and another (2005) 7
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SCC 234 : [2005] 2 Suppl. SCR 699; Hindustan Steel
Ltd. v. Dilip Construction Company (1969) 1 SCC 597
: [1969] 3 SCR 736; Vytla Sitanna v. Marivada Viranna
AIR 1934 PC 105; Guru Nanak Foundation v. Rattan
Singh and Sons (1981) 4 SCC 634 : [1982] 1 SCR
842; Food Corporation of India v. Joginderpal
Mohinderpal and Another (1989) 2 SCC 347 : [1989]
1 SCR 880; SBP & Co. v. Patel Engineering Ltd. and
another (2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688;
Duro Felguera, S.A. v. Gangavaram Port Limited (2017)
9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading
Private Limited v. Pradyuat Deb Burman (2019) 8 SCC
714 : [2019] 1 SCR 123; Uttarakhand Purv Sainik
Kalyan Nigam Limited v. Northern Coal Field Limited
(2020) 2 SCC 455; World Sport Group (Mauritius)
Limited v. MSM Satellite (Singapore) Pte. Limited (2014)
11 SCC 639 : [2014] 1 SCR 796; Pravin Electricals
Private Limited v. Galaxy Infra and Engineering Private
Limited (2021) 5 SCC 671; United India Insurance
Company Limited v. Hyundai Engineering and
Construction Company Limited (2018) 17 SCC 607 :
[2018] 12 SCR 1085 - referred to.
per HRISHIKESH ROY, J. (dissenting)
1. On a harmonious reading of the inconsistencies in the
provisions of the three different Acts, it is found that the general
law must yield to the special law in the sense, that an arbitration
agreement cannot be rendered void on insufficient stamping by a
general law, especially when none of the provisions of the
Arbitration Act, 1996 which is a special Act provide for stamping.
The requirement for the "formal" validity of an arbitration
agreement under Section 7 of the Arbitration Act, 1996 would
take precedence, considering the special nature of the Act and
the principle of minimal judicial intervention. Applying the rule
of construction that in cases of conflict between a specific law
and a general law, the specific law prevails and the general law
like the Contract Act, 1872 applies only to such cases which are
not covered by the special law; therefore, Section2(e), 2(g) , 2(h)
of the Contract Act, 1872 cannot override Section 7 contained in
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
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the special law i.e. the Arbitration Act, 1996 when it comes to
formal validity. Moreover, when the words of the statute in Section
11 of the Arbitration Act, 1996 do not mention "validity" or even
"inoperable and incapable of being performed" as mentioned in
Section 45 of the Arbitration Act, 1996 or "prima facie no valid
arbitration agreement" in Section 8 of the Arbitration Act, 1996,
it must be understood that the general words in a different statute
such as the Contract Act, 1872 cannot override the specific words
used in the special law. That is to say, that an arbitration agreement
cannot be rendered "void" on insufficient stamping by a Section
11 judge when the scope of examination is only limited to the
"existence" of the arbitration agreement and not "validity". [Paras
79.1 & 79.2][473-B-F]
2. It is essential to interpret the special law in a way that
gives effect to its specific provisions, while also ensuring that it
is consistent with the general law to the extent possible.
Impounding at the stage of Section 11 would stall arbitral
proceedings right at the outset because of the statutory bar
under Section 35 of the Stamp Act, 1899. One way to harmonise
Section 35 of Stamp Act, 1899 and Section 11 of the Arbitration
Act, 1996 is for the Section 11 judge to defer necessary stamping
and impounding to the arbitrator/collector, as applicable. A plain
reading of Section 35 of the Stamp Act, 1899 makes it clear that it
does not preclude an Arbitrator or Collector to impound the
unstamped/insufficiently stamped document. [Para 79.4][474-E-F]
3. The Arbitrator under Section 16 has the jurisdiction to
decide on "existence" and "validity". A plain reading of Section
11(6A) would show that the examination by Court is confined
only to "existence" and not even "validity". Moreover, the
present reference only concerns with the formal requirement of
stamping and not arbitrability. Applying contextual interpretation
to render an arbitration agreement void on the formal
requirement of stamping would defeat the very purpose of the
Arbitration Act, 1996. A document cannot be rendered invalid or
unenforceable especially if the defect is curable under the Stamp
Act, 1899. Moreover, none of the provisions in the Stamp Act,
1899 have the effect of rendering a document invalid. Thus, the
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position in Vidya Drolia to the extent that it relies on Garware is
incorrect. [Para 86.2][489-B-D]
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 - affirmed.
Vidya Drolia and others v. Durga Trading Corporation
(2021) 2 SCC 1; Garware Wall Ropes Limited v. Coastal
Marine Constructions & Engineering Limited (2019) 9
SCC 209 : [2019] 5 SCR 579; SMS Tea Estates Private
Limited v. Chandmari Tea Company Private Limited
(2011) 14 SCC 66 : [2011] 9 SCR 382; United India
Insurance Company Limited v. Hyundai Engineering
and Construction Company Limited (2018) 17 SCC 607
: [2018] 12 SCR 1085; - overruled.
SBP & Co v Patel Engg. Ltd. (2005) 8 SCC 618 : [2005]
4 Suppl. SCR 688 - followed.
Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and
others (1971) 1 SCC 545 : [1971] 3 SCR 590; Hariom
Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514
: [2007] 10 SCR 772 - relied on.
National Insurance Company Limited v. Boghara
Polyfab Private Limited (2009) 1 SCC 267 : [2008] 13
SCR 638; Govt. of AP. v P. Laxmi Devi (2008) 4 SCC
720 : [2008] 3 SCR 330; Bengal Immunity Co v. State
of Bihar (1955) 2 SCR 603; Govt. of India v. Vedanta
(2020) 10 SCC 1; Amazon v. Future Retail (2022) 1
SCC 209; Chloro Controls v Severn Trent Water
Purification Inc (2013) 1 SCC 641 : [2012] 13 SCR
402; Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.
and another (2005) 7 SCC 234 : [2005] 2 Suppl. SCR
699; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.
(2011) 8 SCC 333 : [2011] 11 SCR 1; Hindustan Steel
Ltd. v. Dilip Construction Company (1969) 1 SCC 597
: [1969] 3 SCR 736; Chiranji Lal (Dr.) v. Hari Das
(2005) 10 SCC 746 : [2005] 1 Suppl. SCR 359; Jagdish
Narain v. Chief Controlling Revenue Authority, AIR
1994 All 371; RIO Glass Solar SA v. Shriram EPC Limited
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
A
B
C
D
E
F
G
H
296
SUPREME COURT REPORTS
[2023] 9 S.C.R.
and Ors. (2018) 18 SCC 313; Commissioner of IT v.
Chandanben Maganlal (2000) 245 ITR 182; Hameed
Joharan v. Abdul Salam (2001) 7 SCC 573 : [2001] 1
Suppl. SCR 469; Chiranji Lal (Dr.) v. Hari Das (2005)
10 SCC 746 : [2005] 1 Suppl. SCR 359; Burjore and
Bhawani Prasad v Bhagana ILR 10 Cal 557; Sainik
Motors v State of Rajasthan 1962 (1) SCR 517; State
of UP v Babu Ram AIR 1961 SC 751 : [1961] SCR
679; ICICI Ltd. v. East Coast Boat Builders & Engineers
Ltd (1998) 9 SCC 728; KR Raveendranathan v. State
of Kerala (1996) 10 SCC 35; Sundaram Finance Ltd.
v. NEPC India Ltd (1999) 2 SCC 479 : [1999] 1 SCR
89; Ador Samia Pvt Ltd. v. Peekay Holdings Ltd (1999)
8 SCC 572 : [1999] 1 Suppl. SCR 658; Konkan
Railways Corpn v. Mehul Construction Co (2000) 7 SCC
201 : [2000] 2 Suppl. SCR 563; Konkan Railways
Corpn v. Mehul Construction Co (2002) 2 SCC 388 :
[2002] 1 SCR 728; A. Ayyasamy vs A. Paramasivam &
Ors (2016) 10 SCC 386 : [2016] 11 SCR 521; Black
Pearl Hotels v Planet M. Retail Ltd. (2017) 4 SCC 498
: [2017] 2 SCR 50; Duro Felguera, S.A. v. Gangavaram
Port Limited (2017) 9 SCC 729 : [2017] 10 SCR 285;
Mayavati Trading Private Limited v. Pradyuat Deb
Burman (2019) 8 SCC 714 : [2019] 1 SCR 123; Pravin
Electricals Private Limited v. Galaxy Infra and
Engineering Private Limited (2021) 5 SCC 671; Fisser
v. International Bank, 282 F.2d 231, 233 (2d Cir 1960);
Travancore Devaswom Board v. Panchamy Pack, 2004
13 SCC 510; Union of India v Popular Construction
Co 2001 (8) SCC 470 : [2001] 3 Suppl. SCR 619; St.
Stephen's College v. University of Delhi (1992) 1 SCC
558 : [1991] 3 Suppl. SCR 121; Great Offshore Ltd. v.
Iranian Offshore Engg. & Construction Co. (2008) 14
SCC 240 : [2008] 12 SCR 515; Trimex International
FZE vs Vedanta Aluminum Limited, India 2010 (1)
SCALE 574; Union of India v Kishorilal Gupta & Bros
(1959) 1 SCR 493; National Agricultural Co-operative
Marketing federation India Ltd. v Gains Trading Limited
A
B
C
D
E
F
G
H
297
(2007) 5 SCC 692; Naihati Jute Mills Ltd. v Khayaliram
Jagannath AIR 1968 SC 522 : [1968] SCR 821; P
Manohar Reddy & Bros. v. Maharashtra Krishna Valley
Development Corporation & Ors (2009) 2 SCC 494 :
[2008] 17 SCR 1217; Oriental Insurance Company v.
Narbheram Power and Steel Private Limited (2018) 6
SCC 534 : [2018] 4 SCR 826; Guru Nanak Foundation
v. Rattan Singh and Sons (1981) 4 SCC 634 : [1982] 1
SCR 842; M/s Shree Vishnu Constructions v. The
Engineer in Chief Military Engineering Service and
others SLP(C) No. 5306/2022 dated 1.4.2022;
Intercontinental Hotels Group (India) Private Ltd. v.
Waterline Hotels Pvt. Ltd 2022 SCC OnLine SC 83 -
referred to.
J.M.A. Raju v Krishnamurthy Bhatt, AIR 1976 Guj 72;
Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765;
Mattegunta Dhanalakshmi v Kantam Raju Saradamba,
AIR 1977 AP 348; Puranchandra v Kallipada Roy, AIR
1942 Cal 386; Boottam Pitchiah v Boyapati Koteswara
Rao AIR 1964 AP 519; Board of Revenue v N.
Narasimhan AIR 1961 Mad 504; A. Bapiraju v District
Registrar AIR 1968 AP 142; Gulzari Lal Malwari v Ram
Gopal AIR 1937 Cal 765; Chennai Container Terminal
Pvt Ltd v. Union of India, 2007 3 Arb LR 218 (Mad);
United India Insurance Co. Ltd. V Kumar Texturisers
AIR 1999 Bom 118 - referred to.
Enka Insaat Ve Sanayi AS v OOO Insurance Company
Chubb (2020) UKSC 38; United Insurance Company
of Pakistan Limited v. Hafiz Muhammad Siddique 1978
PLD SC 279; House of Lords in Fiona Trust and
Holding Corporation v. Privalov (2007) 1 All
ER(Comm) 891; Buckeye Check Cashing Inc. v.
Cardegna, 2006 SCC OnLine US SC 14; Henry Schein,
Inc. v Archer and White Sales, Inc 2019 SCC Online
US SC 1; Weatherford Oiltool Middle East Limited vs
Baker Hughes Singapore PTE 2022 SCC OnLine 1464;
Badgerow v. Walters, 596 U.S. 2022 - referred to.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
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B
C
D
E
F
G
H
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SUPREME COURT REPORTS
[2023] 9 S.C.R.
Case Law Reference
In the judgement of K. M. JOSEPH
(2021) 4 SCC 379
overruled
Para 2
[2011] 9 SCR 382
affirmed
Para 4
[2005] 4 Suppl. SCR 688
followed
Para 5
[2017] 10 SCR 285
referred to
Para 5
[2019] 1 SCR 123
referred to
Para 5
[2019] 5 SCR 579
affirmed
Para 5
(2021) 2 SCC 1
affirmed
Para 8
[1969] 3 SCR 736
relied on
Para 13
[2008] 12 SCR 515
referred to
Para 18
[2002] 5 Suppl. SCR 387
referred to
Para 19
[2020] 3 SCR 798
affirmed
Para 27
[2005] 2 Suppl. SCR 699
referred to
Para 28
[2008] 13 SCR 638
referred to
Para 30
[2003] 6 Suppl. SCR 1134
referred to
Para 57
[2018] 12 SCR 1085
relied on
Para 62(iii)
[2018] 4 SCR 826
referred to
Para 63
[2005] 1 Suppl. SCR 359
referred to
Para 66
[2007] 10 SCR 772
referred to
Para 74
[2009] 10 SCR 373
referred to
Para 77
[2014] 12 SCR 488
relied on
Para 81
[1971] 3 SCR 590
referred to
Para 93
In the Judgment of C. T. RAVIKUMAR, J.
[2005] 4 Suppl. SCR 688
followed
Para 2
In the Judgment of AJAY RASTOGI, J.
(2021) 4 SCC 379
affirmed
Para 2
A
B
C
D
E
F
G
H
299
(2021) 2 SCC 1
overruled
Para 2
[2011] 9 SCR 382
overruled
Para 5
(2013) 14 SCC 354
referred to
Para 6
[2019] 5 SCR 579
overruled
Para 8
[1971] 3 SCR 590
relied on
Para 17
[2007] 10 SCR 772
relied on
Para 17
[2008] 3 SCR 330
referred to
Para 20
[2005] 2 Suppl. SCR 699
referred to
Para 26
[1969] 3 SCR 736
referred to
Para 47
[1982] 1 SCR 842
referred to
Para 59
[1989] 1 SCR 880
referred to
Para 60
[2005] 4 Suppl. SCR 688
referred to
Para 63
[2017] 10 SCR 285
referred to
Para 67
[2019] 1 SCR 123
referred to
Para 68
(2020) 2 SCC 455
referred to
Para 83
[2014] 1 SCR 796
referred to
Para 87
(2021) 5 SCC 671
referred to
Para 89
[2018] 12 SCR 1085
referred to
Para 89
In the Judgment of HRISHIKESH ROY, J.
(2021) 4 SCC 379
affirmed
Para 6
(2021) 2 SCC 1
overruled
Para 6
[2019] 5 SCR 579
overruled
Para 6
[2011] 9 SCR 382
overruled
Para 7
[2005] 4 Suppl. SCR 688
followed
Para 16.1
[2008] 13 SCR 638
referred to
Para 16.1
[1971] 3 SCR 590
relied on
Para 16.7
[2007] 10 SCR 772
relied on
Para 16.7
[2008] 3 SCR 330
referred to
Para 17.1
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
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B
C
D
E
F
G
H
300
SUPREME COURT REPORTS
[2023] 9 S.C.R.
(1955) 2 SCR 603
referred to
Para 17.3
(2020) 10 SCC 1
referred to
Para 17.3
(2022) 1 SCC 209
referred to
Para 17.3
[2012] 13 SCR 402
referred to
Para 20.1
[2005] 2 Suppl. SCR 699
referred to
Para 20.1
[2011] 11 SCR 1
referred to
Para 20.2
[1969] 3 SCR 736
referred to
Para 23
[2005] 1 Suppl. SCR 359
referred to
Para 25
(2018) 18 SCC 313
referred to
Para 26
[2001] 1 Suppl. SCR 469
referred to
Para 31.2
1962 (1) SCR 517
referred to
Para 32
[1961] SCR 679
referred to
Para 32
(1998) 9 SCC 728
referred to
Para 40
(1996) 10 SCC 35
referred to
Para 40
[1999] 1 SCR 89
referred to
Para 41
[1999] 1 Suppl. SCR 658
referred to
Para 42
[2000] 2 Suppl. SCR 563
referred to
Para 42
[2002] 1 SCR 728
referred to
Para 43
[2016] 11 SCR 521
referred to
Para 62
[2017] 2 SCR 50
referred to
Para 67
[2017] 10 SCR 285
referred to
Para 72
[2019] 1 SCR 123
referred to
Para 72
(2021) 5 SCC 671
referred to
Para 73
2004 13 SCC 510
referred to
Para 78.1 (iii)
[2001] 3 Suppl. SCR 619
referred to
Para 78.3
[1991] 3 Suppl. SCR 121
referred to
Para 79
[2008] 12 SCR 515
referred to
Para 80.7
2010 (1) SCALE 574
referred to
Para 80.8
A
B
C
D
E
F
G
H
301
(1959) 1 SCR 493
referred to
Para 81.1
(2007) 5 SCC 692
referred to
Para 81.2
[1968] SCR 821
referred to
Para 81.2
[2008] 17 SCR 1217
referred to
Para 81.2
[2018] 12 SCR 1085
overruled
Para 84
[2018] 4 SCR 826
referred to
Para 84.1
[1982] 1 SCR 842
referred to
Para 85.6
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 38023803 of 2020.
From the Judgment and Order dated 30.09.2020 in WP No.1801
of 2020 and dated 28.10.2020 in RAST No. 9819 of 2020 of the High
Court of Judicature at Bombay at Nagpur.
Gourab Banerjee, Sr. Adv. (Amicus Curiae)
Gagan Sanghi, Rameshwar Prasad Goyal, Advs. for the Appellant.
K. Ramakanth Reddy, Ms. Malvika Trivedi, Sr. Advs., Rajul
Shrivastav, Mohit D. Ram, Monish Handa, Ms. Charu Ambwani, Raghu
Gurram, Ms. Kavya Vijay, Ms. Komal Agarwal, Sanjay Kapur, Ms.
Megha Karnwal, Surya Prakash, Arjun Bhatia, Ms. Akshata Joshi, Ms.
Astha Gumber, Debesh Panda, Naman Maheshwari, Garv Malhotra,
Neil Chatterjee, Udbhav Gady, Ms. Snehal Maheshwari, Rahul Totala,
Eshan Aprameya Chaturvedi, Premlal Krishnan, Rahul Arya, Madhav
Bhatia, Ms. Bani Dixit, Yogesh Sharma, Shailendra Slaria, Arun Pandian,
Shreshth Arya, Aditya Pandey, Himanshu Kapoor, Alok Tripathi, Ms.
Sujal Gupta, Puneet Singh Bindra, Ms. Anshika Mishra, Ms. Simran
Jeet, Rishabh Gupta, Advs. for the Respondents.
The Judgments of the Court were delivered by
K. M. JOSEPH, J.
Index*
A.
THE REFERENCE ........................................................ 2
B.
A BIRD'S OVERVIEW OF THE FACTS IN N.N.
GLOBAL ........................................................................ 3
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS.
*Ed. Note: Pagination in the Index is as per the original judgment.
A
B
C
D
E
F
G
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SUPREME COURT REPORTS
[2023] 9 S.C.R.
C.
THE FINDINGS IN N.N. GLOBAL IN REGARD TO THE
QUESTION UNDER THE CAPTION 'VALIDITY OF
AN ARBITRATION AGREEMENT IN AN UNSTAMPED
AGREEMENT' .............................................................. 5
D.
SUBMISSION OF THE PARTIES.............................. 15
E.
ANALYSIS ................................................................... 29
F.
THE ACT ...................................................................... 30
G.
WHAT LED TO THE INSERTION OF SECTION
11(6A)?.......................................................................... 32
H.
THE SCHEME OF THE STAMP ACT ....................... 53
I.
HINDUSTAN STEEL LIMITED ANALYSED .......... 59
J.
THE INDIAN CONTRACT ACT, 1872 - A SURVEY;
DISSECTION OF GARWARE, VIDYA DROLIA AND
N.N. GLOBAL ............................................................. 64
K.
THE STAMP ACT - WHETHER A PROCEDURAL
LAW?............................................................................ 88
L.
SECTION 7 OF THE ACT - ITS IMPACT ............... 97
M.
THE ALTERNATIVE PERSPECTIVE .................... 105
N.
THE AMICUS CURIE SPRINGS A SURPRISE ...... 111
O.
SECTIONS 33 AND 35 OF THE STAMP ACT; THE
COURT OR THE ARBITRATOR TO ACT? ........... 124
P.
ARBITRATION AGREEMENT, A DISTINCT
AGREEMENT AND ITS IMPACT?......................... 132
Q.
CONCLUSIONS ........................................................ 137
1. We have perused the draft judgments prepared by our esteemed
brothers Ajay Rastogi, J. and Hrishikesh Roy, J. With profound respect
to our learned Brothers, we are unable to, however, concur with them in
their reasoning and conclusions save as will be made clear. Hence, the
following judgment.
A
B
C
D
E
F
G
H
303
A. THE REFERENCE
2. A Bench of three learned Judges disposed of Civil Appeal Nos.
3802-3803 of 2020 by Judgment dated 11.01.2021. The Judgment is
reported in N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others1. What is of relevance for the purpose of the
Reference is the following:
"56. We are of the considered view that the finding in SMS Tea
Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P)
Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] and Garware
[Garware Wall Ropes Ltd. v. Coastal Marine Constructions
& Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] that
the non-payment of stamp duty on the commercial contract would
invalidate even the arbitration agreement, and render it non-existent
in law, and unenforceable, is not the correct position in law.
57. In view of the finding in paras 146 and 147 of the judgment in
Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021)
2 SCC 1 : (2021) 1 SCC (Civ) 549] by a coordinate Bench, which
has affirmed the judgment in Garware [Garware Wall Ropes Ltd.
v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC
209 : (2019) 4 SCC (Civ) 324], the aforesaid issue is required to
be authoritatively settled by a Constitution Bench of this Court.
58. We consider it appropriate to refer the following issue, to be
authoritatively settled by a Constitution Bench of five Judges of
this Court:
"Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
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?"
B. A BIRD'S OVERVIEW OF THE FACTS IN N.N.
GLOBAL
3. The first respondent, who was awarded the Work Order, entered
into a sub-contract with the appellant. Clause 10 of the Work Order,
constituting the sub-contract, provided for an Arbitration Clause. The
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]
1 (2021) 4 SCC 379
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SUPREME COURT REPORTS
[2023] 9 S.C.R.
appellant had furnished a bank guarantee in terms of Clause 9. The
invocation of the said guarantee led to a Suit by the appellant against the
encashment of the bank guarantee. The first respondent applied under
Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as, 'the Act', for short) seeking Reference. A Writ Petition
was filed by the first respondent challenging the Order of the Commercial
Court rejecting the Application under Section 8 of the Act. One of the
contentions raised was that the Arbitration Agreement became
unenforceable as the Work Order was unstamped. The High Court,
however, allowed the Writ Petition filed by the first respondent. The
issue relevant to this Bench was, whether the Arbitration Agreement
would be enforceable and acted upon, even if the Work Order is
unstamped and unenforceable under the Indian Stamp Act, 1899
(hereinafter referred to as, 'the Stamp Act', for short).
C. THE FINDINGS IN N.N. GLOBAL IN REGARD TO
THE QUESTION UNDER THE CAPTION 'VALIDITY OF AN
ARBITRATION AGREEMENT IN AN UNSTAMPED
AGREEMENT'
4. The Court found that an Arbitration Agreement is a distinct and
separate agreement, which is independent from the substantive
commercial contract in which it is embedded. Under the Doctrine of
Kompetenz-Kompetenz, the Arbitral Tribunal had competence to rule
on its own jurisdiction, including objections with regard to the existence,
validity and scope of the Arbitration Agreement. Section 16(1) of the
Act was relied upon. The Court made a copious reference to case law
in support of the Doctrine of Kompetenz-Kompetenz. Section 5 of the
Act contemplated minimal judicial interference. The Court referred to
the Maharashtra Stamp Act, 1958. Section 34 of the said Act, essentially,
is pari material with Section 35 of the Stamp Act, 1899 hereinafter
referred to as the Stamp Act. There are other provisions, which essentially
follow the same pattern as is contained in the latter Act. The Court,
thereafter, went on to refer to Item 63 of Schedule I of the Maharashtra
Stamp Act, 1958, which dealt with 'Works Contract'. It was found that
the Stamp Act is a fiscal measure. Thereafter, the Court went on to
discuss the Judgment of this Court reported in SMS Tea Estates Private
Limited v. Chandmari Tea Company Private Limited2. The Court
referred to the following part of the Judgment in SMS Tea Estates (supra):
2 (2011) 14 SCC 66
A
B
C
D
E
F
G
H
305
"19. Having regard to Section 35 of the Stamp Act, unless the
stamp duty and penalty due in respect of the instrument is paid,
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.
xxx
xxx
xxx
21.