TaxTMI 
TaxTMI 
2021 (1) TMI 1121
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....e. 1.1. The Respondent No. 1-Indo Unique Flame Ltd. ("Indo Unique") applied for grant of work of beneficiation/washing of coal to the Karnataka Power Corporation Ltd. ("KPCL") in an open tender. KPCL awarded the Work Order vide letter of Award No. A1M1B3/Washed Coal/1052 dated 18.09.2015 to Indo Unique. In pursuance of the Work Order dated 18.09.2015, the Respondent No. 1 Company furnished Bank Guarantees for Rs. 29.29 crores in favour of KPCL through its bankers, State Bank of India ("SBI"), the Respondent No. 2 herein. 1.2. Indo Unique, the Respondent No. 1 herein, subsequently entered into a sub-contract termed as a Work Order dated 28.09.2015 with the Appellant Company-M/s. N.N. Global Mercantile Pvt. Ltd. ("Global Mercantile"), for the transportation of coal from its washery at Village Punwat, District Yavatmal to the stockyard, siding, coal handling and loading into the wagons at Pandharpaoni siding, District Chanderpur, Maharashtra. Clause 9 of the Work Order provided for furnishing a security deposit which reads as: 9. Security Deposit: You will submit the Bank Guarantee for Rs. 5.00 crores for the average stock of washed coal lying at your stocky....
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....tion Under Section 8 as being not maintainable since the Bank Guarantee was a separate and independent contract, and did not contain any arbitration clause. 1.8. The Commercial Court vide Order dated 18.01.2018 rejected the application Under Section 8, and held that the arbitration Clause in the Work Order dated 28.09.2015 was not a general arbitration clause, which would cover the Bank Guarantee. The Bank Guarantee was an independent contract between SBI and Union Bank of India for due performance of the contract. The Court noted the contention of Global Mercantile that neither of the parties had performed any part of the Work Order dated 28.09.2015, and consequently held that the jurisdiction of the Commercial Court was not ousted by the arbitration agreement. 1.9. Indo Unique then filed Civil Revision Petition No. 9 of 2018 before the Bombay High Court challenging the Order passed by the Commercial Court. On an objection being raised on the maintainability of the Civil Revision Petition, the High Court vide Order dated 09.07.2020 permitted the withdrawal of the Civil Revision Petition, with liberty to file a petition Under Articles 226 and 227 of the Constitution of Ind....
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....itrable dispute? iii. Whether a Writ Petition Under Articles 226 and 227 of the Constitution would be maintainable to challenge an Order rejecting an application for reference to arbitration Under Section 8 of the Arbitration Act? We will now deal with each of these issues. 3. Validity of an arbitration agreement in an unstamped agreement 3.1. It is well settled in arbitration jurisprudence that an arbitration agreement is a distinct and separate agreement, which is independent from the substantive commercial contract in which it is embedded. This is based on the premise that when parties enter into a commercial contract containing an arbitration clause, they are entering into two separate agreements viz. (i) the substantive contract which contains the rights and obligations of the parties arising from the commercial transaction; and, (ii) the arbitration agreement which contains the binding obligation of the parties to resolve their disputes through the mode of arbitration. 3.2. The autonomy of the arbitration agreement is based on the twin concepts of separability and kompetenz-kompetenz. The doctrines of separability and kompetenz-kompetenz though inte....
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....India Shipping Corporation [1981] AC 909 in which Lord Diplock cited Heyman as an authority for the assertion that: The arbitration Clause constitutes a self-contained contract collateral or ancillary to the shipbuilding agreement itself. 3.7. In Harbour Assurance v. Kansa General International Insurance [1993] 1 Lloyd's Rep. 455 (CA), the Court of Appeal held that if the arbitration Clause is not directly impeached, an arbitration agreement is capable of surviving the invalidity of the contract, so that the arbitrator has the jurisdiction to determine the initial validity of the contract. It was opined that: Once it became accepted that the arbitration Clause is a separate agreement, ancillary to the contract, the logical impediment to referring an issue of the invalidity of the contract to arbitration disappears. Provided that the arbitration Clause itself is not directly impeached (e.g. by a non-est factum plea), the arbitration agreement is as a matter of principled legal theory capable of surviving the invalidity of the contract. 3.8. In Lesotho Highlands Development Authority v. Impregilo SpA and Ors. [2005] UKHL 43 : [2006] 1 A.C. 221 ....
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....d that it had been procured through bribery by the owner's agent, and was invalid from its inception. It was held that only if the arbitration agreement is itself directly impeached, and rendered void or unenforceable on grounds which relate to the arbitration agreement itself, and not merely as a consequence of the invalidity of the underlying contract, that the courts may refuse reference to arbitration. To discourage parasitical challenges and dilatory tactics in resisting reference to arbitration, the Court of Appeal held in paragraph 38 that: 38. ... As we have sought to explain, once the separability of the arbitration agreement is accepted, there cannot be any question but that there is a valid agreement. ... If there is a contest about whether an arbitration agreement had come into existence at all, the court would have a discretion as to whether to determine that issue itself, but that will not be the case where there is an overall contract which is said for some reason to be invalid e.g. for illegality, misrepresentation or bribery and the arbitration agreement is merely part of the contract. ... 3.12. In the Appeal file....
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.... of the main agreement should result in the invalidity of the arbitration agreement. The one should fall with the other because they would never have been separately concluded and the arbitration agreement can be invalidated only on a ground which relates to the arbitration agreement and is not merely a consequence of the invalidity of the main agreement [2007] 4 ALL ER 951 at 960, at paragraph 19. 3.14. On the issue of whether a claim of fraud in the inducement of the entire contract is to be decided by the court, or the arbitrator, was considered by the U.S. Supreme Court in Prima Paint Corporation v. Flood & Conklin MFG. CO., 388 US 395 (1967). The Court held that: If the claim is fraud in the inducement of the arbitration Clause itself an issue which goes to the 'making' of the agreement to arbitrate--the federal court may proceed to adjudicate it. But the statutory language does not permit the federal court to consider claims of fraud in the inducement of the contract generally....... In so concluding, we not only honor the plain meaning of the statute but also the unmistakably clear congressional purpose that the arbitration procedu....
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....ision of the contract, or to the contract as a whole, does not prevent a court from enforcing a specific agreement to arbitrate. "[A]s a matter of substantive federal arbitration law, an arbitration provision is severable from the remainder of the contract." Buckeye, 546 U.S., at 445; see also id., at 447 (the severability Rule is based on Section 2). ...... The Court asserts that its holding flows logically from Prima Paint Corporation v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967), in which the Court held that consideration of a contract revocation defense is generally a matter for the arbitrator, unless the defense is specifically directed at the arbitration clause, id., at 404. We have treated this holding as a severability rule: When a party challenges a contract, "but not specifically its arbitration provisions, those provisions are enforceable apart from the remainder of the contract." Buckeye Check Cashing, Inc. v. Cardegna, 546 US 440, 446 (2006). ...... The second line of cases bearing on who decides the validity of an arbitration agreement, as the Court explains, involves the Prima Paint rule. See ante, at 71.....
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....the effect of all previous judgments rendered on the scope of power by a non obstante clause, and to reinforce the kompetenz-kompetenz principle enshrined in Section 16 of the 1996 Act. The 2015 Amendment Act inserted Sub-section (6-A) to Section 11 which provides that: (6-A) 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), shall, notwithstanding any judgment, decree or order of any court, confine to the examination of the existence of an arbitration agreement. (emphasis supplied) 7.8. By virtue of the non obstante Clause incorporated in Section 11(6-A), previous judgments rendered in Patel Engg. and Boghara Polyfab, were legislatively overruled. The scope of examination is now confined only to the existence of the arbitration agreement at the Section 11 stage, and nothing more. 7.9. Reliance is placed on the judgment in Duro Felguera S.A. v. Gangavaram Port Ltd. [Duro Felguera S.A. v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC (Civ) 764. Refer to TRF Ltd. v. Energo Engg. Projects Ltd., (2017) 8 SCC 377 : (2017) 4 S....
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....tent, the Arbitral Tribunal cannot assume jurisdiction to adjudicate upon the disputes. Appointment of an arbitrator may be refused if the arbitration agreement is not in writing, or the disputes are beyond the scope of the arbitration agreement. Article V(1)(a) of the New York Convention states that recognition and enforcement of an award may be refused if the arbitration agreement "is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made". 7.13. In view of the provisions of Section 16, and the legislative policy to restrict judicial intervention at the pre-reference stage, the issue of limitation would require to be decided by the arbitrator. Sub-section (1) of Section 16 provides that the Arbitral Tribunal may Rule on its own jurisdiction, "including any objections" with respect to the existence or validity of the arbitration agreement. Section 16 is as an inclusive provision, which would comprehend all preliminary issues touching upon the jurisdiction of the Arbitral Tribunal. The issue of limitation is a jurisdictional issue, which would be required to be decided b....
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....o. 1 to pay the stamp duty, and enforce the Clause in view of the judgment of this Court in Naina Thakkar v. Annapurna Builders (2013) 14 SCC 354. 5.2. Indo Unique-the Respondent No. 1 submitted that even though the Work Order dated 28.09.2015 is an unstamped agreement, it would be enforceable after it is duly stamped, for which an opportunity must be given to the parties to make up the deficient stamp duty and penalty as may be assessed by the Collector. Non-payment of stamp duty would not render the agreement unenforceable, but was a curable defect. 5.3. Statutory scheme under the Maharashtra Stamp Act, 1958.-- (a) Section 3 of the Maharashtra Stamp Act, 1958 is the charging section, which specifies the instruments which are chargeable to stamp duty of the amount specified in Schedule I of the Act. Section 3 provides: 3. Instruments chargeable with duty.-- Subject to the provisions of this Act and the exemptions contained in Schedule I, the following instruments shall be chargeable with duty of the amount indicated in Schedule I as the proper duty therefore respectively, that is to say-- (a) every instrument men....
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.... (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him in order to ascertain whether it is stamped with a stamp of the value and description required by the law for the time being in force in the State when such instrument was executed or first executed: Provided that-- (a) nothing herein contained shall be deemed to require any Magistrate or Judge of Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter IX or Part D of Chapter X of the Code of Criminal Procedure, 1973; (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this Section may be delegated to such officer as the Court appoints in this behalf. Section 33 casts a statutory obligation on every person empowered by law, or holding a public office, or a person who by consent of parties (which would include an arbitrator) is empowered to receive evidence, to examine the instrument presented before him, and ascertain whether the ins....
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....p; the contract or agreement shall be deemed to be duly stamped; (c) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter IX or Part D of Chapter X of the Code of Criminal Procedure, 1973; (d) nothing herein contained shall prevent the admission of any instrument in any court when such instrument has been executed by or on behalf of the Government or where it bears the certificate of the Collector as provided by Section 32 or any other provision of this Act; (e) nothing herein contained shall prevent the admission of a copy of any instrument or of an oral admission of the contents of any instrument, if the stamp duty or a deficient portion of the stamp duty and penalty as specified in Clause (a) is paid. (f) Section 35 provides that: 35. Admission of instrument where not to be questioned.--Where an instrument has been admitted in evidence, such admission shall not, except as provided in Section 58, be called in question at any stage of the same suit or proceeding on the ground that the instrument has not been....
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....tained by him and on an application made in this behalf issue under his signature a certificate to the effect that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been levied in respect of that instrument, and the name and residence of the person paying such duty and penalty. Once the duty (and penalty, if any) leviable under Schedule I is paid on the instrument, and the instrument is duly endorsed by the Collector, the instrument shall be admissible in evidence, and acted upon as provided by Section 41 of the Maharashtra Stamp Act. (i) Section 41 provides: 41. Endorsement of instruments on which duty has been paid Under Section 34, 39 or 40- (1) When the duty and penalty (if any) leviable in respect of any instrument (not being any instrument referred to in Sub-section (1) of Section 32A), have been paid Under Section 34, Section 39 or Section 40, the person admitting such instrument in evidence or the Collector, as the case may be, shall certify by endorsement thereon that the proper duty or, as the case may be, the proper duty and penalty (stating the amount of each) have been l....
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....nd ii. any person in whose possession or power such instrument then is, to produce the same, and may impound the same when produced. (3) When any declaration has been recorded Under Sub-section (2), the Court recording the same shall send a copy thereof to the Collector, and, where the instrument to which it relates has been impounded or is otherwise in the possession of such Court, shall also send him such instrument. (3A) When the duty and penalty leviable in respect of any instrument in accordance with, the declaration made Under Sub-section (3) and required to be paid thereunder are paid to the Court or to the Collector, then the Court or, as the case may be, the Collector shall certify by endorsement thereon that the proper duty and penalty, stating the amount of each, have been le-vied in respect of such instrument, and the name and residence of the person paying the same. (3B) Every instrument so endorsed shall thereupon be delivered, on an application in this behalf, to the person from whose possession the instrument came in the possession of such Court, or as such person may direct, to any other person authorised ....
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...."for any purpose" occurring in the Indian Stamp Act was interpreted by the Privy Council in Ram Rattan v. Parma Nand (1945-46) 73 IA 28 : AIR 1946 PC 51, wherein it was held: That the words 'for any purpose' in Section 35 of the Stamp Act, should be given their natural meaning and effect and would include a collateral purpose (and that) an unstamped partition deed cannot be used to corroborate the oral evidence for the purposes of determining even the factum of partition as distinct from its terms. 5.5. Section 41(1) of the Maharashtra Stamp Act, 1958 provides that after the instrument is duly stamped, it would be endorsed by the Collector. Once the object of payment of Stamp Duty is satisfied, the party making a claim on the basis of that instrument, will not be defeated, on the ground of the initial defect or irregularity. Section 41(2) of the said Act provides that upon payment of Stamp Duty and endorsement by the concerned Collector, the defect of admissibility and legality of such instrument would stand cured. 5.6. This Court in SMS Tea Estates Pvt. Ltd. v. M/s. Chandmari Tea Co. Pvt. Ltd. (2011) 14 SCC 66. Followed in Naina Thakkar v. Annapurna Bu....
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....connection with the contract. 13. Similarly, when an instrument or deed of transfer (or a document affecting immovable property) contains an arbitration agreement, it is a collateral term relating to resolution of disputes, unrelated to the transfer or transaction affecting the immovable property. It is as if two documents--one affecting the immovable property requiring registration and the other relating to resolution of disputes which is not compulsorily registrable--are rolled into a single instrument. Therefore, even if a deed of transfer of immovable property is challenged as not valid or enforceable, the arbitration agreement would remain unaffected for the purpose of resolution of disputes arising with reference to the deed of transfer. 16. An arbitration agreement does not require registration under the Registration Act. Even if it is found as one of the clauses in a contract or instrument, it is an independent agreement to refer the disputes to arbitration, which is independent of the main contract or instrument. Therefore having regard to the proviso to Section 49 of the Registration Act read with Section 16(1)(a) of the Act, an arbitration a....
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....t with in the manner specified in Section 38 of the Stamp Act. The court cannot act upon such a document or the arbitration Clause therein. But if the deficit duty and penalty is paid in the manner set out in Section 35 or Section 40 of the Stamp Act, the document can be acted upon or admitted in evidence. (emphasis supplied) 5.7. The judgment in SMS Tea Estates was passed on an application filed Under Section 11 of the Arbitration Act, for reference of disputes to arbitration prior to the 2016 Amendment being passed. At that time, the law as it prevailed, as expounded in the Constitution Bench decision in SBP & Co. v. Patel Engineering Ltd. (2005) 8 SCC 618, and other cases like National Insurance Co. v. Boghara Polyfab (2009) 1 SCC 267, Master Construction Co. v. Union of India 2011) 12 SCC 357 etc. held that at the pre-reference stage in an application Under Section 11(6), the Court may determine certain threshold issues, such as whether the claim was time-barred, a stale claim, or whether there had been accord and satisfaction, which would preclude the necessity of reference to arbitration. 5.8. Section 11 was amended by the 2016 Amendment Act, which inserted Cla....
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....d upon. It is important to remember that the Stamp Act applies to the agreement or conveyance as a whole. Therefore, it is not possible to bifurcate the arbitration Clause contained in such agreement or conveyance so as to give it an independent existence, as has been contended for by the Respondent. The independent existence that could be given for certain limited purposes, on a harmonious reading of the Registration Act, 1908 and the 1996 Act has been referred to by Raveendran, J. in SMS Tea Estates when it comes to an unregistered agreement or conveyance. However, the Stamp Act, containing no such provision as is contained in Section 49 of the Registration Act, 1908, has been held by the said judgment to apply to the agreement or conveyance as a whole, which would include the arbitration Clause contained therein. It is clear, therefore, that the introduction of Section 11(6-A) does not, in any manner, deal with or get over the basis of the judgment in SMS Tea Estates, which continues to apply even after the amendment of Section 11(6-A). ... 22. When an arbitration Clause is contained "in a contract", it is significant that the agreeme....
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.... under the Maharashtra Stamp Act, who will then decide issues qua payment of stamp duty and penalty (if any) as expeditiously as possible, and preferably within a period of 45 days from the date on which the authority receives the instrument. As soon as stamp duty and penalty (if any) are paid on the instrument, any of the parties can bring the instrument to the notice of the High Court, which will then proceed to expeditiously hear and dispose of the Section 11 application. This will also ensure that once a Section 11 application is allowed and an arbitrator is appointed, the arbitrator can then proceed to decide the dispute within the time-frame provided by Section 29-A of the 1996 Act. (emphasis supplied) 6. We have carefully perused the provisions of the Maharashtra Stamp Act, 1958 and Schedule I appended thereto, which enlists the instruments specified in Section 3, on which stamp duty is chargeable. We find that an arbitration agreement is not included in the Schedule as an instrument chargeable to Stamp Duty. Item 12 of Schedule I to the Maharashtra Stamp Act, 1958 includes an Award passed by an arbitrator to be chargeable for payment of Stamp Duty, which read....
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....his is for the obvious reason that an arbitration agreement is an agreement to resolve disputes arising out of a commercial agreement, through the mode of arbitration. On the basis of the doctrine of separability, the arbitration agreement being a separate and distinct agreement from the underlying commercial contract, would survive independent of the substantive contract. The arbitration agreement would not be rendered invalid, un-enforceable or non-existent, even if the substantive contract is not admissible in evidence, or cannot be acted upon on account of non-payment of Stamp Duty. 6.5. A three-Judge Bench of this Court in Hindustan Steel Limited v. M/s. Dilip Construction Company (1969) 1 SCC 597 held that: 4. The award, which is an "instrument" within the meaning of the Stamp Act was required to be stamped. Being unstamped, the award could not be received in evidence by the Court, nor could it be acted upon. But the Court was competent to impound it and to send it to the Collector with a certificate in writing stating the amount of duty and penalty levied thereon. On the instrument so received the Collector may adjudge whether it is duly stamped and he may ....
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....ument will not be defeated on the ground of the initial defect in the instrument. Viewed in that light the scheme is clear. Section 35 of the Stamp Act operates as a bar to an unstamped instrument being admitted in evidence or being acted upon; Section 40 provides the procedure for instruments being impounded, Sub-section (1) of Section 42 provides for certifying that an instrument is duly stamped, and Sub-section (2) of Section 42 enacts the consequences resulting from such certification. (emphasis supplied) 6.6. In our view, there is no legal impediment to the enforceability of the arbitration agreement, pending payment of Stamp Duty on the substantive contract. The adjudication of the rights and obligations under the Work Order or the substantive commercial contract would however not proceed before complying with the mandatory provisions of the Stamp Act. 6.7. The Stamp Act is a fiscal enactment for payment of stamp duty to the State on certain classes of instruments specified in the Stamp Act. Section 40 of the Indian Stamp Act, 1899 provides the procedure for instruments which have been impounded, and Sub-section (1) of Section 42 requires the instrument to be e....
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.... substantive commercial contract. Once the arbitration agreement is held to have an independent existence, it can be acted upon, irrespective of the alleged invalidity of the commercial contract. 6.11. We notice that the judgment in Garware Wall Ropes Limited has been cited with approval by a co-ordinate bench of this Court in Vidya Drolia and Ors. v. Durga Trading Corporation Delivered on 14.12.2020 in C.A. No. 2402/2019. Paragraph 92 of the judgment reads thus: 92. We now proceed to examine the question, whether the word 'existence' in Section 11 merely refers to contract formation (whether there is an arbitration agreement) and excludes the question of enforcement (validity) and therefore the latter falls outside the jurisdiction of the court at the referral stage. On jurisprudentially and textualism it is possible to differentiate between existence of an arbitration agreement and validity of an arbitration agreement. Such interpretation can draw support from the plain meaning of the word "existence'. However, it is equally possible, jurisprudentially and on contextualism, to hold that an agreement has no existence if it is not enforceable and not b....
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....ve. The argument that Section 11(6A) deals with "existence", as opposed to Section 8, Section 16 and Section 45, which deal with "validity" of an arbitration agreement is answered by this Court's understanding of the expression "existence" in Hyundai Engg. case, as followed by us. Existence and validity are intertwined, and arbitration agreement does not exist if it is illegal or does not satisfy mandatory legal requirements. Invalid agreement is no agreement. 6.12. We doubt the correctness of the view taken in paragraph 92 of the three-judge bench in Vidya Drolia. We consider it appropriate to refer the findings in paras 22 and 29 of Garware Wall Ropes Limited, which has been affirmed in paragraph 92 of Vidya Drolia, to a Constitution Bench of five judges. 7. The next issue which arises is as to which authority would exercise the power of impounding the instrument Under Section 33 read with Section 34 of the Maharashtra Stamp Act, in a case where the substantive contract contains an arbitration agreement. 7.1. In an arbitration agreement, the disputes may be referred to arbitration by three modes. a) The first mode is where the appointment of t....
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....ted to take the necessary steps for payment of the requisite stamp duty in accordance with the provisions of the relevant Stamp Act, within a time-bound period. It is made clear that the payment of Stamp Duty on the substantive contract as assessed by the Collector, would however be subject to the right of revision/appeal available under the relevant Stamp Act. 8. Whether the fraudulent invocation of the Bank Guarantee is arbitrable? 8.1. In the present case, the Appellant-Plaintiff in the Commercial Suit inter alia submitted that the Bank Guarantee was furnished to ensure due execution of the Work Order dated 28.09.2015. It was submitted on behalf of the Appellants that the invocation of the bank guarantee was fraudulent, since the agreement had never been acted upon. There was no invoice raised or payment received under the Work Order. In the absence of any legal liability for payment under the Work Order, the invocation of the bank guarantee was fraudulent. 8.2. The High Court held that the allegations of fraud made in this case are simple, which do not in the normal course constitute any criminal offence, nor are the allegations so complex in nature which would enta....
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....sequences of fraud Russel on Arbitration, Pg.72, para 2-083, and Pg.83, para 2-107. 8.5. In Bharat Rasiklal Ashra v. Gautam Rasiklal Ashra (2012) 2 SCC 144, a two-judge bench took a different view by holding that at the pre-reference stage Under Section 11, the court is not required to examine the allegations of fraud and forgery. The scope of examination is only the existence of a valid and enforceable arbitration agreement as a condition precedent for making a reference. The ground that allegations of fraud, forgery and fabrication are likely to involve recording of evidence, or involve some delay in disposal, were not relevant grounds to be considered at the pre-reference stage. 8.6. The legislature amended Sub-section (1) of Section 8 to provide that a judicial authority shall refer the parties to arbitration, 'unless it finds that prima facie no valid agreement exists'. The amended Section 8 reads: 8. Power to refer parties to arbitration where there is an arbitration agreement.-(1) A judicial authority, before which an action is brought in a matter which is the subject of an arbitration agreement shall, if a party to the arbitration agreement or a....
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....wed i.e.: (i) does the plea of fraud permeate the entire contract and above all, the agreement of arbitration, rendering it void, or (ii) whether the allegations of fraud touch upon the internal affairs of the parties inter se having no implication in the public domain.8.8. In the subsequent decision of Ameet Lalchand Shah and Ors. v. Rishabh Enterprises and Anr. (2018) 15 SCC 678, allegations of fraud arising from criminal breach of trust and misrepresentation regarding the equipment procured and leased for the setting up and operating of a Photovoltaic solar plant were made. A civil suit was filed praying for a declaration that all the agreements were vitiated by fraud and misrepresentation. An application was filed Under Section 8 seeking reference of the disputes to arbitration under all the four agreements. This Court held that only where the court is satisfied that the allegations of fraud are serious and complicated in nature, would it be more appropriate for the court to deal with the subject matter of the disputes, rather than relegate the parties to arbitration. It is the duty of the court to impart a sense of business efficacy to commercial transactions, and mere allegat....
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....of parties to the subject matter of the dispute, which are arbitrable. The broad categories of disputes which are considered to be non arbitrable are penal offences which are visited with criminal sanction; offences pertaining to bribery/corruption; matrimonial disputes relating to divorce, judicial separation, restitution of conjugal rights, child custody and guardianship matters, which pertain to the status of a person; testamentary matters which pertain to disputes relating to the validity of a Will, grant of probate, letters of administration, succession, which pertain to the status of a person, and are adjudicated by civil courts. Certain categories of disputes such as consumer disputes Emaar MGF Land Limited v. Aftab Singh, (2019) 12 SCC 751.; insolvency and bankruptcy proceedings; oppression and mismanagement, or winding up of a company; disputes relating to trusts, trustees and beneficiaries of a trust Vimal Kishor Shah and Ors. v. Jayesh Dinesh Shah and Ors. (2016) 8 SCC 788. are governed by special enactments. This Court in Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd. (2011) 5 SCC 532 has recognized some examples of disputes which are not arbitrable, and h....
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....ned.-Fraud means and includes any of the following acts committed by a party to a contract, or with his connivance, or by his agent, with intent to deceive another party thereto or his [agent], or to induce him to enter into the contract: (1) the suggestion, as a fact, of that which is not true, by one who does not believe it to be true; (2) the active concealment of a fact by one having knowledge or belief of the fact; (3) a promise made without any intention of performing it; (4) any other act fitted to deceive; (5) any such act or omission as the law specially declares to be fraudulent. 8.14. We will now consider whether voidable agreements are arbitrable. Voidable agreements are defined by Section 19 of the Contract Act as: 19. Voidability of agreements without free consent.--When consent to an agreement is caused by coercion, fraud or misrepresentation, the agreement is a contract voidable at the option of the party whose consent was so caused. A party to a contract, whose consent was caused by fraud or misrepresentation, may, if he thinks fit, insist that the contract s....
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....West Bengal v. Associated Contractors (2015) 1 SCC 32, the reasoning in Swiss Timing Ltd. has been cited with approval by this Court in Avitel Post Studioz Ltd. and Ors. v. HSBC PI Holdings (Mauritius Limited). 8.16. The ground on which fraud was held to be non arbitrable earlier was that it would entail voluminous and extensive evidence, and would be too complicated to be decided in arbitration. In contemporary arbitration practice, arbitral tribunals are required to traverse through volumes of material in various kinds of disputes such as oil, natural gas, construction industry, etc. The ground that allegations of fraud are not arbitrable is a wholly archaic view, which has become obsolete, and deserves to be discarded. However, the criminal aspect of fraud, forgery, or fabrication, which would be visited with penal consequences and criminal sanctions can be adjudicated only by a court of law, since it may result in a conviction, which is in the realm of public law. Malhotra's Commentary on the Law of Arbitration, [4th ed., Wolters Kluwer (2020)], p. 339, Volume I. 8.17. In the present case, the allegations of fraud with respect to the invocation of the Bank Guarantee a....
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.... availability of a statutory remedy, the judgment of the High Court passed Under Articles 226 and 227 of the Constitution is liable to be set aside on the ground of maintainability. 10. In the present case, since both parties have admitted the existence of the arbitration agreement between the parties, as recorded in the judgment of the High Court, and even before this Court during oral submissions, parties may either appoint a sole arbitrator consensually; failing which, an application Under Section 11 for appointment of the arbitrator may be made before the High Court. 11. In view of the discussion hereinabove, we hold that: (i) The impugned judgment and order dated 30.09.2020 in W.P. No. 1801 of 2020 passed by the Bombay High Court is set aside; (ii) We direct the Secretary General of this Court to impound the Work Order dated 28.09.2015, and forward it to the concerned Collector in Maharashtra for assessment of the Stamp Duty payable on the said instrument, to be completed within a period of 45 days from receipt of the same; (iii) On determination of the Stamp Duty payable, the Appellant/Plaintiff is directed to make the payment assessed by the ....