TaxTMI 
TaxTMI 
TaxTMI 
2018 (3) TMI 1750
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....g arbitration to be held in Pune. The Arbitration Clause further provides that the disputes shall be referred to a Sole Arbitrator to be appointed by the Petitioner and the Respondent jointly. This matter was argued before me on 5th February, 2018 and the parties asked for time till 20th February, 2018 to file written submissions. Accordingly, both parties have also filed written submissions before me. Before I deal with the rival contentions it would be appropriate to refer to a few facts, which are really undisputed. They are as follows:- (a) The Petitioner is a company registered under the provisions of the Companies Act, 1956 and is inter alia engaged in the business of marine engineering, geophysical and geotechnical survey etc. The Respondent is also a company registered under the provisions of Companies Act, 1956. (b) The Executive Engineer, Aul Embankment Division, Aul, District-Kendrapara floated a tender inviting bids inter alia for the "installation of geo-textile tubes embankment with toe mound' at village Pentha in Odisha for protection against coastal erosion. The said tender was awarded to the Respondent, who in turn, further sub-contracted the work to the P....
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....rcumstances that the provisions of Section 11 of the Arbitration and Conciliation Act, 1996 have been invoked for appointment of a Sole Arbitrator to decide the disputes and differences that have arisen between the Petitioner and the Respondent under the sub-contract dated 14th June, 2013 and which admittedly contains an arbitration clause. It is also not in dispute before me that the arbitration clause has been invoked by the Petitioner. Since the Respondent has failed to agree to a Sole Arbitrator as suggested by the Petitioner, and neither has the Respondent proposed the name of any other arbitrator, the present Petition has been filed. 2. In this factual backdrop, Ms. Nyati, the learned counsel appearing on behalf of the Petitioner, submitted that there was no reason why this Court ought not to appoint an arbitrator as contemplated under Section 11 of the Arbitration and Conciliation Act, 1996. She submitted that in the facts of the present case, admittedly there was an arbitration clause that was contained in the sub-contract dated 14th June, 2013. Pursuant to this clause, the Petitioner had invoked arbitration and had called upon the Respondent to agree to the appointment o....
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....n 25th June, 2013. 5. As far as the second issue is concerned, namely that the arbitration was premature and therefore the pre-arbitral procedure of amicably settling the matter was not resorted to, Mr. Kamat relied upon the decision of the Supreme Court in the case of Iron and Steel Co Ltd v/s Tiwari Road Lines reported in (2007) 5 SCC 703. 6. In rejoinder, Ms. Nyati, the learned counsel for the Petitioner, submitted that the reliance placed by the Respondent on the aforesaid decisions and more particularly in the case of SMS Tea Estates Pvt Ltd (supra), was wholly misplaced. Ms. Nyati was at pains to point that after all these decisions were passed, the Arbitration and Conciliation Act, 1996 has been amended and Section 11(6-A) has been inserted which categorically contemplates that this Court, whilst appointing an arbitrator, must confine itself to the examination of the existence of an arbitration agreement. In the facts of the present case, she submitted that the Respondent had not denied the existence of the arbitration agreement and even assuming for the sake of argument that the document required stamping, the same did not affect the existence of the arbitration agreemen....
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....bare perusal of the letters dated 7th October, 2015 (Exhibit-D) and 24th October, 2015 (Exhibit-E) to the application. Over and above this, she submitted that notwithstanding the above, after the dispute had arisen and the contract was terminated, Mr. Vivek Bansal (the Petitioner's Group CEO) addressed numerous requests between 24th March, 2015 to 11th May, 2015 to Mr. Tiru Kulkarni, (Respondent's Vice President) to schedule a meeting for negotiation. Despite this, there was no response forthcoming. In these circumstances, Ms. Nyati submitted that in any event the said requests are in sufficient compliance with the Arbitration Clause and therefore it was incorrect to contend that invocation of the arbitration was premature. In support of this submission, Ms. Nyati relied upon a decision of the Supreme Court in the case of Visa International Limited v/s Continental Resources (USA) Ltd. reported in AIR 2009 SC 1366. 9. I have heard the learned counsel for the parties at length and have perused the papers and proceedings in the present matter. I shall first deal with the argument of the Respondent that the invocation of the arbitration was premature. In this regard, I find co....
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....are the amendments that are carried out to Section 11 by Act 3 of 2016 w.r.e.f. 23rd October, 2015 (amendment of 2015). By virtue of the amendment of 2015, sub-section 6-A was inserted in Section 11 which reads thus:- "(6-A) The Supreme Court or, as the case may be, the High Court, while considering any application under sub-section (4) or subsection (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." 11. What can be seen from a plain reading of this subsection is that 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) of Section 11 shall, notwithstanding any judgment, decree or order of any Court, confine itself to the examination of the existence of an arbitration agreement. The purpose for bringing this provision into force can be seen from the 246th Report of the Commission on 'Amendment to the Arbitration and Conciliation Act, 1996'. Paragraphs 28 to 33 deal with 'scope and nature of pre-arbitral judicial intervention.' After referring to certain decisions of the S....
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.... the world in contract enforcement. It is therefore high time that urgent steps are taken to facilitate quick enforcement of contracts, easy recovery of monetary claims and award of just compensation for damages suffered, and reduce the pendency of cases in courts and hasten the process of dispute resolution through arbitration, so as to encourage investment and economic activity. It is in these circumstances that clause 6 of the Amendment Bill states that sub-section 6-A is inserted to provide that the Supreme Court or the High Court, while considering the application under sub-sections 4 to 6, shall confine itself to the examination of the existence of the arbitration agreement. When one looks at the intention of the Legislature for bringing about this amendment, I find considerable force in the argument of Ms Nyati that what has to be looked into is only about the existence of the arbitration agreement and nothing more or nothing less. 13. In the facts of the present case, and as rightly submitted by Ms. Nyati, the existence of the arbitration agreement is not disputed. Even assuming for the sake of argument that the document is insufficiently stamped, that would not by itself ....
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....o be regarded as a judicial order. 4. It has been provided in sub-section (7) that the order passed under this section shall not be appealable. This change means that finality is attached to the order passed under this section and it would not be subject to further examination by an appellate court. 5. Sub-section (8) has been amended to bring it in conformity with amended Section 12 with regard to ensuring independence and impartiality of the arbitrator. Before appointing any arbitrator, a disclosure in writing has to be obtained in terms of Section 12(1) of the Act. This is to ensure that the appointed arbitrator shall be independent and impartial and also harmonizes the provisions of Sections 11 and 12 of the Act. 6. The amending Act has introduced sub-section (13) which provides that the disposal of the application under this section has to be expeditious and endeavour shall be made to dispose of the application within a period of 60 days from the date of service of notice on the opposite party. This sub-section would ensure speedy disposal of applications under this section and all contentious issues have been left to be decided by the Arbitral Tribunal. 7. For det....
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....agreement." (emphasis supplied) 15. On a plain reading of this decision, it is ex-facie clear that the Supreme Court has opined that the intention of the Legislature is crystal clear i.e. the court should and need only look into one aspect, namely the existence of an arbitration agreement. What are the factors for deciding as to whether there is an arbitration agreement, the Supreme Court has clearly stated that 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. That would suffice. 16. In the facts of the present case, there is no dispute with reference to the existence of the arbitration agreement. This being the case, I find that Mr. Kamat is not correct in submitting that the dispute cannot be referred to arbitration merely because the sub-contract dated 14th June, 2013 (and in which the arbitration clause is contained), is an unstamped document. 17. There is yet another reason for taking this view. It is now well settled that the provisions of the Stamp Act are enacted for the purposes of securing the revenue for the Government and not to arm a dishonest ....
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....this, I shall now deal with the judgments relied upon by Mr. Kamat. The first decision relied upon by Mr. Kamat was in the case of SMS Tea Estates Private Limited (supra). In this case, the facts would reveal that the Appellant before the Supreme Court requested the Respondent therein to grant a long term lease in respect of two tea estates. Accordingly, a lease deed was executed under which the respondent granted a lease to the Appellant for a term of 30 years. Clause 35 of the said lease deed provided for settlement of disputes between the parties by arbitration. As the dispute arose between the parties, as per Clause 35 of the lease deed, the Appellant issued a notice calling upon the Respondent to refer the matter to arbitration. This application was opposed by the Respondent who contended that the unregistered lease deed was invalid, unenforceable and not binding upon the parties. The further contention was that the said lease deed was not duly stamped and therefore invalid, unenforceable and not binding, having regard to Section 35 of the Stamp Act, 1899. In these facts, the matter went to the Supreme Court. Before the Supreme Court, three questions were raised, namely (i) Wh....
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....ind that this decision has lost its efficacy after the amendment to Section 11 and more particularly Section 11 (6-A). What I must note is that SMS Tea Estates Private Limited (supra) was decided on 20th July, 2011 whereas the amendments to the Arbitration and Conciliation Act, 1996 came into effect from 23rd October, 2015. Now, after the amendment and as held by the Supreme Court in the case of Duro Felguera, S. A.(supra), under sub-section 6-A of Section 11 the power of the Court has now been restricted only to examination of the existence of the agreement and nothing more and nothing less. As stated earlier, the existence of the arbitration agreement has never been disputed, and in my view correctly so. This being the case, I find that the reliance placed by Mr. Kamat on the decision of the Supreme Court in the case of SMS Tea Estates Private Limited (supra), is wholly misconceived. Whether the document is properly stamped or not is an issue that can certainly be decided by the arbitrator once the matter is referred to arbitration. It is not as if the arbitrator is powerless to impound the document if found insufficiently stamped and thereafter forward to the appropriate authori....
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....d with reference to the decision in the case of SMS Tea Estates Private Limited (supra), I find that this decision is wholly distinguishable on facts as different considerations would apply when a party applies for interim measures under section 9 and when it applies for appointment of the arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996. I, therefore, find that the reliance placed on this decision also is wholly misplaced. 23. Before parting, I must also mention that prima facie I find the argument made by Ms. Nyati that the liability to pay stamp duty was on the Respondent herein, well founded. The clause which was relied upon by Ms. Nyati reads thus:- "ROYALTIES / LICENSES/ MINING PERMITS / OTHER STATUTORY REQUIREMENTS ETC It will be GWRL responsibility to obtain all requisite statutory Licenses/Permits from various Government State/Local Bodies/Authorities (apart from MoEF, CRZ and state pollution control board permissions which are in scope of ICZMP, State Project Management Unit-Odisha being owner), and to pay necessary levies/fees/taxes/duties/royalties (if applicable to GWRL scope of work), costs thereof at their own cost. COMACOE's respon....