2018 (3) TMI 1750 - HC - Indian Laws

Court appoints arbitrator for unstamped sub-contract dispute, upholds arbitration clause validity

Coastal Marine Construction and Engineering Limited Versus Garware-Wall Ropes Limited

Coastal Marine Construction and Engineering Limited Versus Garware-Wall Ropes Limited - TMI Issues Involved:1. Appointment of a Sole Arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996.2. Validity of the unstamped sub-contract under the Maharashtra Stamp Act, 1958.3. Premature invocation of arbitration.Detailed Analysis:Issue 1: Appointment of a Sole ArbitratorThe petitioner sought the appointment of a sole arbitrator to adjudicate disputes arising from a sub-contract dated 14th June 2013, which included an arbitration clause. The respondent objected, leading to the invocation of Section 11 of the Arbitration and Conciliation Act, 1996. The court noted that the arbitration clause was undisputed and invoked by the petitioner after failed negotiations. The court appointed Mr. Mihir Naniwadekar as the Sole Arbitrator to resolve the disputes.Issue 2: Validity of the Unstamped Sub-ContractThe respondent argued that the sub-contract was unstamped, thus invalid under Sections 33 and 34 of the Maharashtra Stamp Act, 1958. The court examined whether an unstamped document could be acted upon for arbitration purposes. The court referred to Section 11(6-A) of the Arbitration and Conciliation Act, 1996, which restricts judicial intervention to the examination of the existence of an arbitration agreement. The court concluded that the existence of the arbitration agreement was not in dispute and that the arbitrator could address the issue of stamping. The court cited the Supreme Court's decision in Duro Felguera, S.A. v. Gangavaram Port Limited, emphasizing that the court's role is limited to confirming the existence of an arbitration agreement.Issue 3: Premature Invocation of ArbitrationThe respondent contended that the arbitration was prematurely invoked as the petitioner did not follow the mandatory pre-arbitral negotiation process. The court found evidence of multiple requests for negotiation by the petitioner, which were ignored by the respondent. The court referred to the Supreme Court's decision in Visa International Limited v. Continental Resources (USA) Ltd., which supported the petitioner's position. The court concluded that the petitioner was justified in invoking arbitration due to the respondent's non-cooperation in negotiations.Conclusion:The court allowed the arbitration petition, appointing Mr. Mihir Naniwadekar as the Sole Arbitrator. The petitioner was directed to file the necessary disclosures, and the arbitrator was tasked with giving further directions regarding fees and procedural matters. The court emphasized that the issue of stamping could be addressed by the arbitrator, ensuring compliance with the Maharashtra Stamp Act, 1958, without allowing the respondent to use it as a technical defense to delay arbitration. The arbitration petition was disposed of with no order as to costs.