Arbitration and Conciliation Act, 1996, Sections 11, 11(6A), 11(7), Section 11(13)

Arbitration and Conciliation Act, 1996—Sections 11, 11(6A), 11(7), Section 11(13)—Indian Stamp Act, 1899, Sections 33 and 35—What is the effect of an arbitration clause contained in a contract which requires to be stamped?—Held, when the Supreme Court or the High Court considers an application under Section 11(4) to 11(6), and comes across an arbitration clause in an agreement or conveyance which is unstamped, it is enjoined by the provisions of the Indian Stamp Act to first impound the agreement or conveyance and see that stamp duty and penalty (if any) is paid before the agreement, as a whole, can be acted upon—It is important to remember that the Indian 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—JMD Ltd. v. Celebrity Fitness India Pvt. Ltd., (2019) SCC OnLine Del 6483, B.D. Sharma v. Swastik Infra Estate Pvt. Ltd. & Ors., (2018) SCC OnLine Del 13279, 37 Sandeep Soni v. Sanjay Roy, (2018) SCC OnLine Del 11169, and N.D. Developers Pvt. Ltd. v. Bharathi & Ors., (2018) SCC OnLine Kar 2938 overruled—Question No.2 framed and answered in negative by Full Bench of the Bombay High Court in Gautam Landscapes Pvt. Ltd. v. Shailesh Shah and Ors., Arb. Pet. No. 466 of 2017 [decided on 04.04.2019], held, is incorrectly decided—Judgment in SMS Tea Estates (P) Ltd. v. Chandmari Tea 2 Co. (P) Ltd., (2011) 14 SCC 66, held, continues to apply even after the introduction of Section 11(6A) to the 1996 Act.

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