Stamp-duty compliance governs arbitration referrals: an unstamped instrument cannot be acted upon until validated under the Stamp Act.

An arbitration clause contained in an instrument chargeable to stamp duty cannot be acted upon until the instrument is duly stamped and validated under the Stamp Act; the Court rejected the view that separability or Kompetenz-Kompetenz removes this consequence at the referral stage. At the Section 11 stage, where the original unstamped or insufficiently stamped instrument is produced, the Court must apply the mandatory impounding and stamping procedure under Sections 33 and 35, and a certified copy that does not disclose payment of stamp duty cannot be acted upon. The ruling preserves the revenue-protective operation of the Stamp Act in referral proceedings.

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Issues: (i) Whether an arbitration agreement contained in an instrument chargeable to stamp duty but not duly stamped is non-existent, unenforceable, or invalid until the instrument is validated under the Stamp Act; (ii) whether, at the Section 11 stage, the Court must impound the unstamped instrument or leave stamping and impounding to the arbitral tribunal.

Issue (i): Whether an arbitration agreement contained in an instrument chargeable to stamp duty but not duly stamped is non-existent, unenforceable, or invalid until the instrument is validated under the Stamp Act.

Analysis: An arbitration agreement may be embedded in a commercial instrument and may attract stamp duty under the Stamp Act. The statutory scheme of the Stamp Act bars an unstamped instrument from being acted upon until duty and penalty, if any, are paid and the instrument is endorsed as duly stamped. The Contract Act draws a distinction between agreements enforceable by law and agreements not enforceable by law, and an unstamped instrument, while capable of being cured, cannot be treated as enforceable in the meantime. The Court rejected the view that separability and Kompetenz-Kompetenz displace the stamp law consequence at the referral stage.

Conclusion: The arbitration agreement in an unstamped instrument is non-existent in law for the purpose of acting upon it until the instrument is validated under the Stamp Act.

Issue (ii): Whether, at the Section 11 stage, the Court must impound the unstamped instrument or leave stamping and impounding to the arbitral tribunal.

Analysis: Section 11(6A) confines the Court to the existence of an arbitration agreement, but that limited inquiry does not authorise disregard of the mandatory duty under Sections 33 and 35 of the Stamp Act where the original instrument is produced and is found unstamped or insufficiently stamped. The Court held that the statutory mandate to impound and follow the stamp procedure applies at the referral stage, while a certified copy must disclose that the stamp duty on the original has been paid. The contrary view would weaken the revenue-protective object of the Stamp Act and permit the Court to act upon an unstamped instrument.

Conclusion: The Court must act under Sections 33 and 35 of the Stamp Act at the referral stage where the original unstamped instrument is before it, and a non-disclosing certified copy cannot be acted upon.

Final Conclusion: The reference was answered by holding that an unstamped instrument containing an arbitration clause cannot be acted upon until cured under the Stamp Act, and that the referral court cannot bypass the stamp-duty mandate while considering a request for appointment of arbitrator.

Ratio Decidendi: Where an arbitration agreement is contained in an instrument that is chargeable to stamp duty, the agreement cannot be acted upon at the referral stage unless the instrument is duly stamped and validated in the manner prescribed by the Stamp Act; the Court must give effect to the mandatory impounding and stamping regime notwithstanding Section 11(6A) of the Arbitration and Conciliation Act, 1996.

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