Holding

An arbitration agreement contained in an instrument chargeable to stamp duty but not duly stamped is non-existent in law and cannot be acted upon until validated under the Indian Stamp Act, 1899.

Summary

The case concerns a sub-contract (Work Order) containing an arbitration clause, which was unstamped. The appellant argued that the arbitration agreement was unenforceable due to non-payment of stamp duty under the Indian Stamp Act, 1899. The Supreme Court, by a 3:2 majority, held that an arbitration agreement contained in an instrument chargeable to stamp duty but not duly stamped is non-existent in law and cannot be acted upon until validated under the Stamp Act. The majority reasoned that an unstamped instrument is not a contract under the Contract Act, 1872, and the bar under Section 35 of the Stamp Act prevents courts from acting upon it. The minority dissented, arguing that stamping issues should be left to the arbitrator and that the arbitration agreement exists for the purpose of Section 11(6A) of the Arbitration and Conciliation Act, 1996. The Court overruled its earlier decision in N.N. Global Mercantile Private Limited v. Indo Unique Flame Limited (2021) and affirmed the decisions in SMS Tea Estates, Garware Wall Ropes, and Vidya Drolia. The reference was answered accordingly, with the majority holding that the statutory bar under Section 35 of the Stamp Act renders the arbitration agreement non-existent in law pending payment of stamp duty.

Issues considered

Whether the statutory bar contained in Section 35 of the Indian Stamp Act, 1899, applicable to instruments chargeable to stamp duty under Section 3 read with the Schedule to the Act, would also render the arbitration agreement contained in such an instrument as being non-existent, unenforceable, or invalid, pending payment of stamp duty on the substantive contract/instrument?

Legislation cited

Appointment of Arbitrators by the Chief Justice of India Scheme, 1996s. 2(a), s. 5
Arbitration and Conciliation Act, 1996s. 11, s. 11(6A), s. 16, s. 45, s. 5, s. 7, s. 8, s. 9
Indian Contract Act, 1872s. 10, s. 19, s. 20, s. 23, s. 2(g), s. 2(h), s. 2(j), s. 64, s. 65
Indian Stamp Act, 1899s. 17, s. 2(14), s. 3, s. 33, s. 35, s. 36, s. 38, s. 42, s. 62

Subjects

ArbitrationStamp ActSection 35non-existentunenforceablearbitration agreementappointment of arbitratorSection 11(6A)Kompetenz-Kompetenzseparabilityimpoundingcurable defectIndian Contract Actfiscal statute

Judgment

[2023] 9 S.C.R. 285 : 2023 INSC 423 285

M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED A
v.
M/s INDO UNIQUE FLAME LTD. & ORS.
(Civil Appeal Nos. 3802-3803 of 2020)
APRIL 25, 2023 B
[K. M. JOSEPH, AJAY RASTOGI, ANIRUDDHA BOSE,
HRISHIKESH ROY AND C. T. RAVIKUMAR, JJ.]
Arbitration and Conciliation Act, 1996 – ss. 11(6A), 7, 8, 9,
11 and 16 – Indian Stamp Act, 1899 – ss. 3, 33 & 35 – Contract Act,
C
1872 – ss. 2(h), 10 – Appointment of Arbitrators by The Chief Justice
of India Scheme, 1996 – Arbitration Agreement in an unregistered
instrument, which is not duly stamped, if valid and enforceable –
Whether the statutory bar contained in s.35 of the Stamp Act, 1899
applicable to instruments chargeable to stamp duty under s.3 read
with the Schedule to the Act, would also render the arbitration D
agreement contained in such an instrument, which is not chargeable
to payment of stamp duty, as being non-existent, unenforceable, or
invalid, pending payment of stamp duty on the substantive contract/
instrument – Held [per K. M. Joseph, J. (for himself and for
Aniruddha Bose, J.)] : An instrument, which is exigible to stamp
E
duty, may contain an Arbitration Clause and which is not stamped,
cannot be said to be a contract, which is enforceable in law within
the meaning of s.2(h) of the Contract Act and is not enforceable
under s.2(g) of the Contract Act – An unstamped instrument, when
it is required to be stamped, being not a contract and not enforceable
in law, cannot, therefore, exist in law – The true intention behind F
the insertion of s.11(6A) in the Act was to confine the Court, acting
under s.11, to examine and ascertain about the existence of an
Arbitration Agreement – The Scheme permits the Court, under s.11
of the Act, acting on the basis of the original agreement or on a
certified copy –The certified copy must, however, clearly indicate
G
the stamp duty paid – If it does not do so, the Court should not act
on such a certified copy – If the original of the instrument is
produced and it is unstamped, the Court, acting under s.11, is duty-
bound to act under s.33 of the Stamp Act – When it does so, the
other provisions, which, in the case of the payment of the duty and
penalty would culminate in the certificate under s.42(2) of the Stamp H
285
286 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Act, would also apply – When such a stage arises, the Court will be
free to process the Application as per law – An Arbitration
Agreement, within the meaning of s.7 of the Act, which attracts stamp
duty and which is not stamped or insufficiently stamped, cannot be
acted upon, in view of s.35 of the Stamp Act, unless following
impounding and payment of the requisite duty, necessary certificate
B
is provided under s.42 of the Stamp Act – The provisions of s.33
and the bar under s.35 of the Stamp Act, applicable to instruments
chargeable to stamp duty under s.3 read with the Schedule to the
Stamp Act, would render the Arbitration Agreement contained in
such instrument as being non-existent in law unless the instrument
C is validated under the Stamp Act – Held (per C. T. Ravikumar, J.)
(concurring): Being unstamped or insufficiently stamped, the
agreement would not be available to be ‘admitted in evidence’ and
‘to be acted upon’, till it is validated following the procedures
prescribed under the provisions of the Stamp Act and till then, it
would not exist ‘in law’ – When the original document carrying the
D
arbitration clause is produced and if it is found that it is unstamped
or insufficiently stamped, the Court acting under s.11 is duty bound
to act u/s.33 of the Indian Stamp Act – Held (per Ajay Rastogi, J.)
(dissenting): The existence of a copy/certified copy of an arbitration
agreement whether unstamped/insufficiently stamped at the pre-
E referral stage is an enforceable document for purposes of
appointment of an Arbitrator under s.11(6A) of the Act, 1996 where
the judicial intervention shall be minimal confined only to the prima
facie examination of “existence of an arbitration agreement” alone
keeping in view the object of 2015 amendment and the courts must
strictly adhere to the time schedule for appointment of Arbitrator
F
prescribed under s.11(13) of the Act, 1996 – All the preliminary /
debatable issues including insufficiently stamped/unduly stamped
or validity of the arbitration agreement etc. are referrable to the
Arbitrator/Arbitral Tribunal under s.16 of the Act, 1996 which, by
virtue of the Doctrine of Kompetenz - Kompetenz has the power to
G do so – Held (per Hrishikesh Roy, J.) (dissenting): The examination
of stamping and impounding need not be done at the threshold by a
Court, at the pre-reference stage under s.11 of the Arbitration Act,
1996 – Non-stamping /insufficient stamping of the substantive
contract/instrument would not render the arbitration agreement non-
existent in law and unenforceable /void, for the purpose of referring
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 287
INDO UNIQUE FLAME LTD. & ORS.

a matter for arbitration – An arbitration agreement should not be A
rendered void if it is suffering stamp deficiency which is a curable
defect.
Answering the reference, the Court
HELD:
B
per K. M. JOSEPH, J. (for himself and ANIRUDDHA BOSE, J.)
1.1. An agreement, which is unenforceable on account of a
substantive law, which would include the Stamp Act, would not be
a contract, applying Section 2(h) of the Contract Act. It is only if
an agreement is enforceable, that it would become a contract. It C
is only a ‘contract’, which would be the ‘Arbitration Agreement’,
which is contemplated in Section 11(6A) of the Act. It may not be
apposite to merely describe an unstamped Arbitration Agreement
as a ‘curable defect’. As long it remains an unstamped instrument,
it cannot be taken notice of for any purpose, as contemplated in
Section 35 of the Stamp Act. It remains unenforceable. Section D
17 declares the time at which an instrument, executed in India,
must be stamped. The said provision contemplates that stamping
of such an instrument must take place before or at the time of
the execution of document. No Public Officer, nor Court nor
Arbitrator, can permit any person to ask them to act upon it or E
receive it as evidence. In law, it is bereft of life. It is ‘not
enforceable in law’. In the said sense, it also cannot exist in law.
It would be void. The voidness is conflated to unenforceability
receives fortification from Section 2(j) of the Contract Act which
renders a contract which ceases to be enforceable void. What
Section 11(6A) contemplates is a contract and it is not an F
agreement which cannot be treated as a contract. This is despite
the use of the words ‘arbitration agreement’ in Section 11(6A).
In other words, contract must conform to Section 7 of the Act. It
must also, needless to say, fulfil the requirements of the Contract
Act. [Paras 70 & 71][351-B-F] G
1.2. An agreement which is unstamped or insufficiently
stamped is not enforceable, as long as it remains in the said
condition. Such an instrument would be void as being not
enforceable [See Section 2(g) of the Contract Act]. It would not
H
288 SUPREME COURT REPORTS [2023] 9 S.C.R.

A in the said sense exist in law. It can be “validated” by only the
process contemplated in Section 33 and other provisions of the
Stamp Act. This necessarily means that the court would not view
it as enforceable, and therefore, existing in law. In the sense
explained, it would not be found as ‘not void’ and therefore ‘not
invalid’. Thus, in the context of the Act, the Stamp Act and the
B
Contract Act, the opinion of this Court in SMS Tea Estates, in this
regard as reiterated in Garware and approved in Vidya Drolia is
correct. [Para 74][353-E-G]
2. An instrument, which is exigible to stamp duty, may
C contain an Arbitration Clause and which is not stamped, cannot
be said to be a contract, which is enforceable in law within the
meaning of Section 2(h) of the Contract Act and is not enforceable
under Section 2(g) of the Contract Act. An unstamped instrument,
when it is required to be stamped, being not a contract and not
enforceable in law, cannot, therefore, exist in law. Therefore,
D paragraphs-22 and 29 of Garware are approved. To this extent,
this Court also approves of Vidya Drolia, insofar as the reasoning
in paragraphs-22 and 29 of Garware is approved. [Para 110][374-
E-F]
3. The Scheme permits the Court, under Section 11 of the
E Act, acting on the basis of the original agreement or on a certified
copy. The certified copy must, however, clearly indicate the stamp
duty paid as held in SMS Tea Estates. If it does not do so, the
Court should not act on such a certified copy. [Para 112][375-A]
4. The provisions of Sections 33 and the bar under Section
F
35 of the Stamp Act, applicable to instruments chargeable to stamp
duty under Section 3 read with the Schedule to the Stamp Act,
would render the Arbitration Agreement contained in such
instrument as being non-existent in law unless the instrument is
validated under the Stamp Act. [Para 115][375-D-E]
G
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 –
overruled.

H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 289
INDO UNIQUE FLAME LTD. & ORS.

SMS Tea Estates Private Limited v. Chandmari Tea A
Company Private Limited (2011) 14 SCC 66 : [2011] 9
SCR 382; Garware Wall Ropes Limited v. Coastal Marine
Constructions & Engineering Limited (2019) 9 SCC 209
: [2019] 5 SCR 579; Vidya Drolia and others v. Durga
Trading Corporation (2021) 2 SCC 1;
B
Dharmaratnakara Rai Bahadur Arcot Narainswamy
Mudaliar Chattram v. Bhaskar Raju & Bros. (2020) 4
SCC 612 : [2020] 3 SCR 798; - affirmed.
SBP & Co. v. Patel Engineering Ltd. and another (2005)
8 SCC 618 : [2005] 4 Suppl. SCR 688 – followed.
C
Hindustan Steel Ltd. v. Dilip Construction Company
(1969) 1 SCC 597 : [1969] 3 SCR 736; United India
Insurance Company Limited v. Hyundai Engineering
and Construction Company Limited (2018) 17 SCC 607
: [2018] 12 SCR 1085 and Govind Rubber Limited Louids
Dreyfus Commodities Asia Private Limited (2015) 13 D
SCC 477 : [2014] 12 SCR 488 – relied on.
Duro Felguera, S.A. v. Gangavaram Port Limited (2017)
9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading
Private Limited v. Pradyuat Deb Burman (2019) 8 SCC
714 : [2019] 1 SCR 123; Lachmi Narayan Agarwalla E
and Others v. Braja Mohan Singh (SINCE DECEASED)
51 Indian Appeals 332; Joyman Bewa v. Easin Sarkar
AIR 1926 Calcutta 877; Great Offshore Ltd. v. Iranian
Offshore Engg. & Construction Co. (2008) 14 SCC 240
: [2008] 12 SCR 515; Commissioner of Income Tax v. F
Hindustan Bulk Carriers (2003) 3 SCC 57 : [2002] 5
Suppl. SCR 387; Shin-Etsu Chemical Co. Ltd. v. Aksh
Optifibre Ltd. and another (2005) 7 SCC 234 : [2005]
2 Suppl. SCR 699; National Insurance Company Limited
v. Boghara Polyfab Private Limited (2009) 1 SCC 267
: [2008] 13 SCR 638; Ganga Retreat & Towers Ltd. v. G
State of Rajasthan (2003) 12 SCC 91 : [2003] 6 Suppl.
SCR 1134; Oriental Insurance Company v. Narbheram
Power and Steel Private Limited (2018) 6 SCC 534 :
[2018] 4 SCR 826; Dr. Chiranji Lal (D) by Lrs. v. Hari
Das (D) by Lrs. (2005) 10 SCC 746 : [2005] 1 Suppl. H
290 SUPREME COURT REPORTS [2023] 9 S.C.R.

A SCR 359; Hariom Agrawal v. Prakash Chand Malviya
(2007) 8 SCC 514 : [2007] 10 SCR 772; M.R.
Engineers & Contractors Private Limited v. Som Datt
Builders Limited (2009) 7 SCC 696 : [2009] 10 SCR
373 and Jupudi Kesava Rao v. Pulavarthi Venkata
Subbarao and others (1971) 1 SCC 545 : [1971] 3 SCR
B
590 – referred to.
Dip Narain Singh v. Nageshar Prasad and another AIR
1930 ALL 1 (FB) / 1929 SCC OnLine ALL 1; Imambi
v. Khaja Hussain alias Khajasab AIR 1988 Karnataka
51; Gulzari Lal Marwari v. Ram Gopal ILR 1937 1
C Calcutta 257; Purna Chandra Chakrabarty and others
v. Kalipada Roy and another AIR 1942 Calcutta 386;
United Insurance Company of Pakistan Limited v. Hafiz
Muhammad Siddique PLD 1978 SC 279 and Gautam
Landscapes Pvt. Limited v. Shailesh S. Shah (2019) SCC
D OnLine Bom 563 – referred to.
Heyman v. Darwins Limited (1942) AC 356 HL –
referred to.
per C. T. RAVIKUMAR, J. (concurring)

E 1. Receiving the very ‘instrument’ which is carrying the
arbitration agreement or containing an arbitration clause from
the party who asserts its existence is essentially an act of receiving
the evidence, in that limited sense. Therefore, how can the Court,
which is having authority and competence to receive evidence,
for the purpose of invoking the power under Section 11 (6), abstain
F from proceeding further in terms of Section 33 if it appears to it
that such instrument produced before it, though required to be
stamped, is unstamped or is not duly stamped. In terms of the
mandate under Sub-section (2) of Section 33, for that purpose,
the Section 11 Judge who received evidence shall ‘examine’ the
G instrument so chargeable and so produced in order to ascertain
whether it is stamped with a stamp of the value and description
required by the law in force in India, when such instrument was
executed or first executed. Proviso (b), would only permit a Judge
of the High Court for delegation of the duty of examining and
impounding any such instrument to such officer as the Court may
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 291
INDO UNIQUE FLAME LTD. & ORS.

appoint in that behalf. Thus, it only gives discretion to a Judge of A
the High Court to delegate the duty of examining and impounding
any such instrument in the manner mentioned under the said
proviso if he chooses not to proceed in the manner provided for
impounding the instrument in accordance with the relevant
provision, by himself. When that be the provision under Section
B
33 (1) and (2), a conjoint reading of which obviously makes it
mandatory for the Court exercising the power under Section 11
(6) to proceed in terms of the mandate under Section 33 when
the circumstances legally invites its invocation. A contra view,
would render Sub-section (2) of Section 33 and proviso (b)
redundant and would defeat the very soul of the provisions as C
relates their application in respect of application filed under
Section 11(6) of the Act. [Para 5][379-C-H]
2. What is permissible to be produced as secondary
evidence i.e., other than the original document in terms of Section
2(a) of the scheme framed under Section 11(10) of the Act, is D
nothing but certified copy. But such a certified copy, would not
be available to be proceeded with under Section 33 of the Stamp
Act if it is unstamped or insufficiently stamped. In such
circumstances, such certified copy shall not be acted upon. [Para
18][384-C-D]
E
SBP & Co. v. Patel Engineering Ltd. and another (2005)
8 SCC 618 : [2005] 4 Suppl. SCR 688 – followed.
Mt. Bittan Bibi & Anr. v. Kuntu Lal & Anr. ILR [1952] 2
All 984 – referred to.
per AJAY RASTOGI, J. (dissenting) F
1. The limited scope of the Court under Section 11(6A) at
the pre-referral stage is to examine whether the arbitration
agreement, prima facie, exists as referred to under Section 7 of
the Act, 1996, which includes only the determination of the
following factors : (i) Whether the arbitration agreement is in G
writing? (ii) Whether the core contractual ingredients qua the
arbitration agreement are fulfilled? (iii) On rare occasions, on a
serious note of objection, if any, it may examine whether the
subject matter of dispute is arbitrable? [Para 92][420-E-F]
H
292 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 2. (i) The existence of a copy/certified copy of an arbitration
agreement whether unstamped/ 60 insufficiently stamped at the
pre-referral stage is an enforceable document for the purposes
of appointment of an Arbitrator under Section 11(6A) of the Act,
1996 where the judicial intervention shall be minimal confined
only to the prima facie examination of “existence of an arbitration
B
agreement” alone keeping in view the object of 2015 amendment
and the courts must strictly adhere to the time schedule for the
appointment of Arbitrator prescribed under Section 11(13) of the
Act, 1996. (ii) All the preliminary/debatable issues including
insufficiently stamped/unduly stamped or validity of the arbitration
C agreement etc. are referrable to the Arbitrator/Arbitral Tribunal
under Section 16 of the Act, 1996 which, by virtue of the Doctrine
of Kompetenz - Kompetenz has the power to do so. (iii) The
decision in SMS Tea Estates Private Limited stands overruled.
Paras 22 and 29 of Garware Wall Ropes Limited which are approved
in paras 146 and 147 in Vidya Drolia and Others are overruled to
D
that extent. [Para 97][422-H; 423-A-D]
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 – affirmed.
Vidya Drolia and others v. Durga Trading Corporation
E (2021) 2 SCC 1; SMS Tea Estates Private Limited v.
Chandmari Tea Company Private Limited (2011) 14
SCC 66 : [2011] 9 SCR 382 and Garware Wall Ropes
Limited v. Coastal Marine Constructions & Engineering
Limited (2019) 9 SCC 209 : [2019] 5 SCR 579 –
overruled.
F
Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and
others (1971) 1 SCC 545 : [1971] 3 SCR 590 and
Hariom Agrawal v. Prakash Chand Malviya (2007) 8
SCC 514 : [2007] 10 SCR 772 - relied on.

G Naina Thakkar v. Annapurna Builders (2013) 14 SCC
354; Government of Andhra Pradesh and Others v P.
Laxmi Devi(Smt.) (2008) 4 SCC 720 : [2008] 3 SCR
330; Enka Insaat Ve Sanayi AS v OOO Insurance
Company Chubb (2020) UK SC 38; Shin-Etsu Chemical
Co. Ltd. v. Aksh Optifibre Ltd. and another (2005) 7
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 293
INDO UNIQUE FLAME LTD. & ORS.

SCC 234 : [2005] 2 Suppl. SCR 699; Hindustan Steel A
Ltd. v. Dilip Construction Company (1969) 1 SCC 597
: [1969] 3 SCR 736; Vytla Sitanna v. Marivada Viranna
AIR 1934 PC 105; Guru Nanak Foundation v. Rattan
Singh and Sons (1981) 4 SCC 634 : [1982] 1 SCR
842; Food Corporation of India v. Joginderpal
B
Mohinderpal and Another (1989) 2 SCC 347 : [1989]
1 SCR 880; SBP & Co. v. Patel Engineering Ltd. and
another (2005) 8 SCC 618 : [2005] 4 Suppl. SCR 688;
Duro Felguera, S.A. v. Gangavaram Port Limited (2017)
9 SCC 729 : [2017] 10 SCR 285; Mayavati Trading
Private Limited v. Pradyuat Deb Burman (2019) 8 SCC C
714 : [2019] 1 SCR 123; Uttarakhand Purv Sainik
Kalyan Nigam Limited v. Northern Coal Field Limited
(2020) 2 SCC 455; World Sport Group (Mauritius)
Limited v. MSM Satellite (Singapore) Pte. Limited (2014)
11 SCC 639 : [2014] 1 SCR 796; Pravin Electricals
D
Private Limited v. Galaxy Infra and Engineering Private
Limited (2021) 5 SCC 671; United India Insurance
Company Limited v. Hyundai Engineering and
Construction Company Limited (2018) 17 SCC 607 :
[2018] 12 SCR 1085 – referred to.
per HRISHIKESH ROY, J. (dissenting) E

1. On a harmonious reading of the inconsistencies in the
provisions of the three different Acts, it is found that the general
law must yield to the special law in the sense, that an arbitration
agreement cannot be rendered void on insufficient stamping by a
general law, especially when none of the provisions of the F
Arbitration Act, 1996 which is a special Act provide for stamping.
The requirement for the “formal” validity of an arbitration
agreement under Section 7 of the Arbitration Act, 1996 would
take precedence, considering the special nature of the Act and
the principle of minimal judicial intervention. Applying the rule G
of construction that in cases of conflict between a specific law
and a general law, the specific law prevails and the general law
like the Contract Act, 1872 applies only to such cases which are
not covered by the special law; therefore, Section2(e), 2(g) , 2(h)
of the Contract Act, 1872 cannot override Section 7 contained in
H
294 SUPREME COURT REPORTS [2023] 9 S.C.R.

A the special law i.e. the Arbitration Act, 1996 when it comes to
formal validity. Moreover, when the words of the statute in Section
11 of the Arbitration Act, 1996 do not mention “validity” or even
“inoperable and incapable of being performed” as mentioned in
Section 45 of the Arbitration Act, 1996 or “prima facie no valid
B arbitration agreement” in Section 8 of the Arbitration Act, 1996,
it must be understood that the general words in a different statute
such as the Contract Act, 1872 cannot override the specific words
used in the special law. That is to say, that an arbitration agreement
cannot be rendered “void” on insufficient stamping by a Section
11 judge when the scope of examination is only limited to the
C “existence” of the arbitration agreement and not “validity”. [Paras
79.1 & 79.2][473-B-F]
2. It is essential to interpret the special law in a way that
gives effect to its specific provisions, while also ensuring that it
is consistent with the general law to the extent possible.
D Impounding at the stage of Section 11 would stall arbitral
proceedings right at the outset because of the statutory bar
under Section 35 of the Stamp Act, 1899. One way to harmonise
Section 35 of Stamp Act, 1899 and Section 11 of the Arbitration
Act, 1996 is for the Section 11 judge to defer necessary stamping
E and impounding to the arbitrator/collector, as applicable. A plain
reading of Section 35 of the Stamp Act, 1899 makes it clear that it
does not preclude an Arbitrator or Collector to impound the
unstamped/insufficiently stamped document. [Para 79.4][474-E-F]
3. The Arbitrator under Section 16 has the jurisdiction to
F decide on “existence” and “validity”. A plain reading of Section
11(6A) would show that the examination by Court is confined
only to “existence” and not even “validity”. Moreover, the
present reference only concerns with the formal requirement of
stamping and not arbitrability. Applying contextual interpretation
to render an arbitration agreement void on the formal
G
requirement of stamping would defeat the very purpose of the
Arbitration Act, 1996. A document cannot be rendered invalid or
unenforceable especially if the defect is curable under the Stamp
Act, 1899. Moreover, none of the provisions in the Stamp Act,
1899 have the effect of rendering a document invalid. Thus, the
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 295
INDO UNIQUE FLAME LTD. & ORS.

position in Vidya Drolia to the extent that it relies on Garware is A
incorrect. [Para 86.2][489-B-D]
N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others (2021) 4 SCC 379 – affirmed.
Vidya Drolia and others v. Durga Trading Corporation
(2021) 2 SCC 1; Garware Wall Ropes Limited v. Coastal B
Marine Constructions & Engineering Limited (2019) 9
SCC 209 : [2019] 5 SCR 579; SMS Tea Estates Private
Limited v. Chandmari Tea Company Private Limited
(2011) 14 SCC 66 : [2011] 9 SCR 382; United India
Insurance Company Limited v. Hyundai Engineering C
and Construction Company Limited (2018) 17 SCC 607
: [2018] 12 SCR 1085; - overruled.
SBP & Co v Patel Engg. Ltd. (2005) 8 SCC 618 : [2005]
4 Suppl. SCR 688 – followed.
Jupudi Kesava Rao v. Pulavarthi Venkata Subbarao and D
others (1971) 1 SCC 545 : [1971] 3 SCR 590; Hariom
Agrawal v. Prakash Chand Malviya (2007) 8 SCC 514
: [2007] 10 SCR 772 – relied on.
National Insurance Company Limited v. Boghara
Polyfab Private Limited (2009) 1 SCC 267 : [2008] 13 E
SCR 638; Govt. of AP. v P. Laxmi Devi (2008) 4 SCC
720 : [2008] 3 SCR 330; Bengal Immunity Co v. State
of Bihar (1955) 2 SCR 603; Govt. of India v. Vedanta
(2020) 10 SCC 1; Amazon v. Future Retail (2022) 1
SCC 209; Chloro Controls v Severn Trent Water F
Purification Inc (2013) 1 SCC 641 : [2012] 13 SCR
402; Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd.
and another (2005) 7 SCC 234 : [2005] 2 Suppl. SCR
699; Fuerst Day Lawson Ltd. v. Jindal Exports Ltd.
(2011) 8 SCC 333 : [2011] 11 SCR 1; Hindustan Steel
Ltd. v. Dilip Construction Company (1969) 1 SCC 597 G
: [1969] 3 SCR 736; Chiranji Lal (Dr.) v. Hari Das
(2005) 10 SCC 746 : [2005] 1 Suppl. SCR 359; Jagdish
Narain v. Chief Controlling Revenue Authority, AIR
1994 All 371; RIO Glass Solar SA v. Shriram EPC Limited
H
296 SUPREME COURT REPORTS [2023] 9 S.C.R.

A and Ors. (2018) 18 SCC 313; Commissioner of IT v.
Chandanben Maganlal (2000) 245 ITR 182; Hameed
Joharan v. Abdul Salam (2001) 7 SCC 573 : [2001] 1
Suppl. SCR 469; Chiranji Lal (Dr.) v. Hari Das (2005)
10 SCC 746 : [2005] 1 Suppl. SCR 359; Burjore and
B Bhawani Prasad v Bhagana ILR 10 Cal 557; Sainik
Motors v State of Rajasthan 1962 (1) SCR 517; State
of UP v Babu Ram AIR 1961 SC 751 : [1961] SCR
679; ICICI Ltd. v. East Coast Boat Builders & Engineers
Ltd (1998) 9 SCC 728; KR Raveendranathan v. State
of Kerala (1996) 10 SCC 35; Sundaram Finance Ltd.
C v. NEPC India Ltd (1999) 2 SCC 479 : [1999] 1 SCR
89; Ador Samia Pvt Ltd. v. Peekay Holdings Ltd (1999)
8 SCC 572 : [1999] 1 Suppl. SCR 658; Konkan
Railways Corpn v. Mehul Construction Co (2000) 7 SCC
201 : [2000] 2 Suppl. SCR 563; Konkan Railways
D Corpn v. Mehul Construction Co (2002) 2 SCC 388 :
[2002] 1 SCR 728; A. Ayyasamy vs A. Paramasivam &
Ors (2016) 10 SCC 386 : [2016] 11 SCR 521; Black
Pearl Hotels v Planet M. Retail Ltd. (2017) 4 SCC 498
: [2017] 2 SCR 50; Duro Felguera, S.A. v. Gangavaram
Port Limited (2017) 9 SCC 729 : [2017] 10 SCR 285;
E
Mayavati Trading Private Limited v. Pradyuat Deb
Burman (2019) 8 SCC 714 : [2019] 1 SCR 123; Pravin
Electricals Private Limited v. Galaxy Infra and
Engineering Private Limited (2021) 5 SCC 671; Fisser
v. International Bank, 282 F.2d 231, 233 (2d Cir 1960);
F Travancore Devaswom Board v. Panchamy Pack, 2004
13 SCC 510; Union of India v Popular Construction
Co 2001 (8) SCC 470 : [2001] 3 Suppl. SCR 619; St.
Stephen’s College v. University of Delhi (1992) 1 SCC
558 : [1991] 3 Suppl. SCR 121; Great Offshore Ltd. v.
G Iranian Offshore Engg. & Construction Co. (2008) 14
SCC 240 : [2008] 12 SCR 515; Trimex International
FZE vs Vedanta Aluminum Limited, India 2010 (1)
SCALE 574; Union of India v Kishorilal Gupta & Bros
(1959) 1 SCR 493; National Agricultural Co-operative
Marketing federation India Ltd. v Gains Trading Limited
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 297
INDO UNIQUE FLAME LTD. & ORS.

(2007) 5 SCC 692; Naihati Jute Mills Ltd. v Khayaliram A
Jagannath AIR 1968 SC 522 : [1968] SCR 821; P
Manohar Reddy & Bros. v. Maharashtra Krishna Valley
Development Corporation & Ors (2009) 2 SCC 494 :
[2008] 17 SCR 1217; Oriental Insurance Company v.
Narbheram Power and Steel Private Limited (2018) 6 B
SCC 534 : [2018] 4 SCR 826; Guru Nanak Foundation
v. Rattan Singh and Sons (1981) 4 SCC 634 : [1982] 1
SCR 842; M/s Shree Vishnu Constructions v. The
Engineer in Chief Military Engineering Service and
others SLP(C) No. 5306/2022 dated 1.4.2022;
Intercontinental Hotels Group (India) Private Ltd. v. C
Waterline Hotels Pvt. Ltd 2022 SCC OnLine SC 83 –
referred to.
J.M.A. Raju v Krishnamurthy Bhatt, AIR 1976 Guj 72;
Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765;
Mattegunta Dhanalakshmi v Kantam Raju Saradamba, D
AIR 1977 AP 348; Puranchandra v Kallipada Roy, AIR
1942 Cal 386; Boottam Pitchiah v Boyapati Koteswara
Rao AIR 1964 AP 519; Board of Revenue v N.
Narasimhan AIR 1961 Mad 504; A. Bapiraju v District
Registrar AIR 1968 AP 142; Gulzari Lal Malwari v Ram E
Gopal AIR 1937 Cal 765; Chennai Container Terminal
Pvt Ltd v. Union of India, 2007 3 Arb LR 218 (Mad);
United India Insurance Co. Ltd. V Kumar Texturisers
AIR 1999 Bom 118 - referred to.
Enka Insaat Ve Sanayi AS v OOO Insurance Company F
Chubb (2020) UKSC 38; United Insurance Company
of Pakistan Limited v. Hafiz Muhammad Siddique 1978
PLD SC 279; House of Lords in Fiona Trust and
Holding Corporation v. Privalov (2007) 1 All
ER(Comm) 891; Buckeye Check Cashing Inc. v.
G
Cardegna, 2006 SCC OnLine US SC 14; Henry Schein,
Inc. v Archer and White Sales, Inc 2019 SCC Online
US SC 1; Weatherford Oiltool Middle East Limited vs
Baker Hughes Singapore PTE 2022 SCC OnLine 1464;
Badgerow v. Walters, 596 U.S. 2022 – referred to.
H
298 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Case Law Reference
In the judgement of K. M. JOSEPH
(2021) 4 SCC 379 overruled Para 2
[2011] 9 SCR 382 affirmed Para 4
B [2005] 4 Suppl. SCR 688 followed Para 5
[2017] 10 SCR 285 referred to Para 5
[2019] 1 SCR 123 referred to Para 5
[2019] 5 SCR 579 affirmed Para 5
C
(2021) 2 SCC 1 affirmed Para 8
[1969] 3 SCR 736 relied on Para 13
[2008] 12 SCR 515 referred to Para 18
[2002] 5 Suppl. SCR 387 referred to Para 19
D
[2020] 3 SCR 798 affirmed Para 27
[2005] 2 Suppl. SCR 699 referred to Para 28
[2008] 13 SCR 638 referred to Para 30
[2003] 6 Suppl. SCR 1134 referred to Para 57
E
[2018] 12 SCR 1085 relied on Para 62(iii)
[2018] 4 SCR 826 referred to Para 63
[2005] 1 Suppl. SCR 359 referred to Para 66

F [2007] 10 SCR 772 referred to Para 74
[2009] 10 SCR 373 referred to Para 77
[2014] 12 SCR 488 relied on Para 81
[1971] 3 SCR 590 referred to Para 93
G In the Judgment of C. T. RAVIKUMAR, J.
[2005] 4 Suppl. SCR 688 followed Para 2
In the Judgment of AJAY RASTOGI, J.
(2021) 4 SCC 379 affirmed Para 2
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 299
INDO UNIQUE FLAME LTD. & ORS.

(2021) 2 SCC 1 overruled Para 2 A
[2011] 9 SCR 382 overruled Para 5
(2013) 14 SCC 354 referred to Para 6
[2019] 5 SCR 579 overruled Para 8
[1971] 3 SCR 590 relied on Para 17 B
[2007] 10 SCR 772 relied on Para 17
[2008] 3 SCR 330 referred to Para 20
[2005] 2 Suppl. SCR 699 referred to Para 26
C
[1969] 3 SCR 736 referred to Para 47
[1982] 1 SCR 842 referred to Para 59
[1989] 1 SCR 880 referred to Para 60
[2005] 4 Suppl. SCR 688 referred to Para 63
D
[2017] 10 SCR 285 referred to Para 67
[2019] 1 SCR 123 referred to Para 68
(2020) 2 SCC 455 referred to Para 83
[2014] 1 SCR 796 referred to Para 87
E
(2021) 5 SCC 671 referred to Para 89
[2018] 12 SCR 1085 referred to Para 89
In the Judgment of HRISHIKESH ROY, J.
(2021) 4 SCC 379 affirmed Para 6 F
(2021) 2 SCC 1 overruled Para 6
[2019] 5 SCR 579 overruled Para 6
[2011] 9 SCR 382 overruled Para 7
[2005] 4 Suppl. SCR 688 followed Para 16.1 G
[2008] 13 SCR 638 referred to Para 16.1
[1971] 3 SCR 590 relied on Para 16.7
[2007] 10 SCR 772 relied on Para 16.7
[2008] 3 SCR 330 referred to Para 17.1 H
300 SUPREME COURT REPORTS [2023] 9 S.C.R.

A (1955) 2 SCR 603 referred to Para 17.3
(2020) 10 SCC 1 referred to Para 17.3
(2022) 1 SCC 209 referred to Para 17.3
[2012] 13 SCR 402 referred to Para 20.1
B [2005] 2 Suppl. SCR 699 referred to Para 20.1
[2011] 11 SCR 1 referred to Para 20.2
[1969] 3 SCR 736 referred to Para 23
[2005] 1 Suppl. SCR 359 referred to Para 25
C
(2018) 18 SCC 313 referred to Para 26
[2001] 1 Suppl. SCR 469 referred to Para 31.2
1962 (1) SCR 517 referred to Para 32
[1961] SCR 679 referred to Para 32
D
(1998) 9 SCC 728 referred to Para 40
(1996) 10 SCC 35 referred to Para 40
[1999] 1 SCR 89 referred to Para 41
[1999] 1 Suppl. SCR 658 referred to Para 42
E
[2000] 2 Suppl. SCR 563 referred to Para 42
[2002] 1 SCR 728 referred to Para 43
[2016] 11 SCR 521 referred to Para 62

F [2017] 2 SCR 50 referred to Para 67
[2017] 10 SCR 285 referred to Para 72
[2019] 1 SCR 123 referred to Para 72
(2021) 5 SCC 671 referred to Para 73
G 2004 13 SCC 510 referred to Para 78.1 (iii)
[2001] 3 Suppl. SCR 619 referred to Para 78.3
[1991] 3 Suppl. SCR 121 referred to Para 79
[2008] 12 SCR 515 referred to Para 80.7
H 2010 (1) SCALE 574 referred to Para 80.8
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 301
INDO UNIQUE FLAME LTD. & ORS.

(1959) 1 SCR 493 referred to Para 81.1 A
(2007) 5 SCC 692 referred to Para 81.2
[1968] SCR 821 referred to Para 81.2
[2008] 17 SCR 1217 referred to Para 81.2
[2018] 12 SCR 1085 overruled Para 84 B
[2018] 4 SCR 826 referred to Para 84.1
[1982] 1 SCR 842 referred to Para 85.6
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 3802-
3803 of 2020. C
From the Judgment and Order dated 30.09.2020 in WP No.1801
of 2020 and dated 28.10.2020 in RAST No. 9819 of 2020 of the High
Court of Judicature at Bombay at Nagpur.
Gourab Banerjee, Sr. Adv. (Amicus Curiae)
D
Gagan Sanghi, Rameshwar Prasad Goyal, Advs. for the Appellant.
K. Ramakanth Reddy, Ms. Malvika Trivedi, Sr. Advs., Rajul
Shrivastav, Mohit D. Ram, Monish Handa, Ms. Charu Ambwani, Raghu
Gurram, Ms. Kavya Vijay, Ms. Komal Agarwal, Sanjay Kapur, Ms.
Megha Karnwal, Surya Prakash, Arjun Bhatia, Ms. Akshata Joshi, Ms. E
Astha Gumber, Debesh Panda, Naman Maheshwari, Garv Malhotra,
Neil Chatterjee, Udbhav Gady, Ms. Snehal Maheshwari, Rahul Totala,
Eshan Aprameya Chaturvedi, Premlal Krishnan, Rahul Arya, Madhav
Bhatia, Ms. Bani Dixit, Yogesh Sharma, Shailendra Slaria, Arun Pandian,
Shreshth Arya, Aditya Pandey, Himanshu Kapoor, Alok Tripathi, Ms.
Sujal Gupta, Puneet Singh Bindra, Ms. Anshika Mishra, Ms. Simran F
Jeet, Rishabh Gupta, Advs. for the Respondents.
The Judgments of the Court were delivered by
K. M. JOSEPH, J.
Index* G
A. THE REFERENCE ........................................................ 2
B. A BIRD’S OVERVIEW OF THE FACTS IN N.N.
GLOBAL ........................................................................ 3
*Ed. Note: Pagination in the Index is as per the original judgment. H
302 SUPREME COURT REPORTS [2023] 9 S.C.R.

A C. THE FINDINGS IN N.N. GLOBAL IN REGARD TO THE
QUESTION UNDER THE CAPTION ‘VALIDITY OF
AN ARBITRATION AGREEMENT IN AN UNSTAMPED
AGREEMENT’ .............................................................. 5
D. SUBMISSION OF THE PARTIES.............................. 15
B
E. ANALYSIS ................................................................... 29
F. THE ACT ...................................................................... 30
G. WHAT LED TO THE INSERTION OF SECTION
11(6A)?.......................................................................... 32
C
H. THE SCHEME OF THE STAMP ACT ....................... 53
I. HINDUSTAN STEEL LIMITED ANALYSED .......... 59
J. THE INDIAN CONTRACT ACT, 1872 - A SURVEY;
DISSECTION OF GARWARE, VIDYA DROLIA AND
D
N.N. GLOBAL ............................................................. 64
K. THE STAMP ACT – WHETHER A PROCEDURAL
LAW? ............................................................................ 88
L. SECTION 7 OF THE ACT – ITS IMPACT ............... 97
E
M. THE ALTERNATIVE PERSPECTIVE .................... 105
N. THE AMICUS CURIE SPRINGS A SURPRISE ...... 111
O. SECTIONS 33 AND 35 OF THE STAMP ACT; THE
F COURT OR THE ARBITRATOR TO ACT? ........... 124
P. ARBITRATION AGREEMENT, A DISTINCT
AGREEMENT AND ITS IMPACT?......................... 132
Q. CONCLUSIONS ........................................................ 137
G
1. We have perused the draft judgments prepared by our esteemed
brothers Ajay Rastogi, J. and Hrishikesh Roy, J. With profound respect
to our learned Brothers, we are unable to, however, concur with them in
their reasoning and conclusions save as will be made clear. Hence, the
H following judgment.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 303
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

A. THE REFERENCE A
2. A Bench of three learned Judges disposed of Civil Appeal Nos.
3802-3803 of 2020 by Judgment dated 11.01.2021. The Judgment is
reported in N.N. Global Mercantile Private Limited v. Indo Unique
Flame Limited and others1. What is of relevance for the purpose of the
Reference is the following: B
“56. We are of the considered view that the finding in SMS Tea
Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P)
Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] and Garware
[Garware Wall Ropes Ltd. v. Coastal Marine Constructions
& Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] that
C
the non-payment of stamp duty on the commercial contract would
invalidate even the arbitration agreement, and render it non-existent
in law, and unenforceable, is not the correct position in law.
57. In view of the finding in paras 146 and 147 of the judgment in
Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021)
2 SCC 1 : (2021) 1 SCC (Civ) 549] by a coordinate Bench, which D
has affirmed the judgment in Garware [Garware Wall Ropes Ltd.
v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC
209 : (2019) 4 SCC (Civ) 324], the aforesaid issue is required to
be authoritatively settled by a Constitution Bench of this Court.
58. We consider it appropriate to refer the following issue, to be E
authoritatively settled by a Constitution Bench of five Judges of
this Court:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
Section 3 read with the Schedule to the Act, would also render F
the arbitration agreement contained in such an instrument, which
is not chargeable to payment of stamp duty, as being non-existent,
unenforceable, or invalid, pending payment of stamp duty on the
substantive contract/instrument?”
B. A BIRD’S OVERVIEW OF THE FACTS IN N.N. G
GLOBAL
3. The first respondent, who was awarded the Work Order, entered
into a sub-contract with the appellant. Clause 10 of the Work Order,
constituting the sub-contract, provided for an Arbitration Clause. The
1
(2021) 4 SCC 379 H
304 SUPREME COURT REPORTS [2023] 9 S.C.R.

A appellant had furnished a bank guarantee in terms of Clause 9. The
invocation of the said guarantee led to a Suit by the appellant against the
encashment of the bank guarantee. The first respondent applied under
Section 8 of the Arbitration and Conciliation Act, 1996 (hereinafter
referred to as, ‘the Act’, for short) seeking Reference. A Writ Petition
was filed by the first respondent challenging the Order of the Commercial
B
Court rejecting the Application under Section 8 of the Act. One of the
contentions raised was that the Arbitration Agreement became
unenforceable as the Work Order was unstamped. The High Court,
however, allowed the Writ Petition filed by the first respondent. The
issue relevant to this Bench was, whether the Arbitration Agreement
C would be enforceable and acted upon, even if the Work Order is
unstamped and unenforceable under the Indian Stamp Act, 1899
(hereinafter referred to as, ‘the Stamp Act’, for short).
C. THE FINDINGS IN N.N. GLOBAL IN REGARD TO
THE QUESTION UNDER THE CAPTION ‘VALIDITY OF AN
D ARBITRATION AGREEMENT IN AN UNSTAMPED
AGREEMENT’
4. The Court found that an Arbitration Agreement is a distinct and
separate agreement, which is independent from the substantive
commercial contract in which it is embedded. Under the Doctrine of
E Kompetenz–Kompetenz, the Arbitral Tribunal had competence to rule
on its own jurisdiction, including objections with regard to the existence,
validity and scope of the Arbitration Agreement. Section 16(1) of the
Act was relied upon. The Court made a copious reference to case law
in support of the Doctrine of Kompetenz-Kompetenz. Section 5 of the
Act contemplated minimal judicial interference. The Court referred to
F the Maharashtra Stamp Act, 1958. Section 34 of the said Act, essentially,
is pari material with Section 35 of the Stamp Act, 1899 hereinafter
referred to as the Stamp Act. There are other provisions, which essentially
follow the same pattern as is contained in the latter Act. The Court,
thereafter, went on to refer to Item 63 of Schedule I of the Maharashtra
G Stamp Act, 1958, which dealt with ‘Works Contract’. It was found that
the Stamp Act is a fiscal measure. Thereafter, the Court went on to
discuss the Judgment of this Court reported in SMS Tea Estates Private
Limited v. Chandmari Tea Company Private Limited2. The Court
referred to the following part of the Judgment in SMS Tea Estates (supra):

H 2
(2011) 14 SCC 66
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 305
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

“19. Having regard to Section 35 of the Stamp Act, unless the A
stamp duty and penalty due in respect of the instrument is paid,
the court cannot act upon the instrument, which means that it
cannot act upon the arbitration agreement also which is part of
the instrument. Section 35 of the Stamp Act is distinct and different
from Section 49 of the Registration Act in regard to an unregistered
B
document. Section 35 of the Stamp Act, does not contain a proviso
like Section 49 of the Registration Act enabling the instrument to
be used to establish a collateral transaction.
xxx xxx xxx
21. Therefore, when a lease deed or any other instrument is relied C
upon as contending the arbitration agreement, the court should
consider at the outset, whether an objection in that behalf is raised
or not, whether the document is properly stamped. If it comes to
the conclusion that it is not properly stamped, it should be
impounded and dealt with in the manner specified in Section 38 of
the Stamp Act. The court cannot act upon such a document or D
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.”
5. The Court further went on to find that, at the time SMS Tea E
Estates (supra) was decided, the law relating to reference to Arbitration
under Section 11 of the Act, was expounded in the Constitution Bench
decision reported in SBP & Co. v. Patel Engineering Ltd. and another3,
among other cases. It was further found that the law laid down was that
in an Application under Section 11(6) of the Act, the Court may determine F
certain threshold issues, such as, whether the claim was time-barred, or
a stale claim; whether there was accord and satisfaction, which would
preclude the need for reference to arbitration. Thereafter, the Court
refers to the amendment to Section 11 by the insertion of Sub-Section
(6A) in Section 11. The Court referred to the Judgment in Duro Felguera,
S.A. v. Gangavaram Port Limited4, to conclude that what was to be G
gone into was only whether an Arbitration Agreement existed or not.
The Court noted that the said position was affirmed by a Bench of three

3
(2005) 8 SCC 618
4
(2017) 9 SCC 729 H
306 SUPREME COURT REPORTS [2023] 9 S.C.R.

A learned Judges in Mayavati Trading Private Limited v. Pradyuat Deb
Burman5. Still further, the Court went on to notice the Judgment rendered
by the Bench of two learned Judges in Garware Wall Ropes Limited v.
Coastal Marine Constructions & Engineering Limited6 and referred
to para 22 of the said decision where this Court relied on Section 2 (h) of
the Indian Contract Act, 1872 (hereinafter referred to as, ‘the Contract
B
Act’, for short) and found that an unstamped agreement to be
unenforceable.
6. In Garware (supra), the Bench of two learned Judges took the
view that the Arbitration Clause contained in the sub-contract would not
exist as a matter of law until the sub-contract was duly stamped. It was
C further found that Section 11(6A) deals with existence as opposed to
Section 8, and Section 45 of the Act [See paragraph 29 of Garware
(supra)]. The Bench of three learned Judges in its judgment in N.N.
Global (supra), containing the Order of Reference to the Constitution
Bench, found that an Arbitration Agreement is not included in the
D Schedule as an instrument chargeable to stamp duty. The Court referred
to Item 12 of Schedule I of the Maharashtra Stamp Act, 1958, in this
regard. Thereafter, the Court went on to find that the Work Order was
chargeable to payment of stamp duty. The Court, however, found that
the non-payment or the deficiency on the Work Order did not invalidate
the main contract. Section 34 of the Maharashtra Act corresponding to
E Section 35 of the Stamp Act did not make the unstamped instrument,
invalid, non-existent or unenforceable in law. The Court found that the
Arbitration Agreement was a distinct and an independent contract. On
the Doctrine of Separability, it would not be rendered invalid,
unenforceable or non-existing, even if the substantive contract, in which
F it is contained, was inadmissible in evidence or could not be acted upon,
in view of it not being stamped. The Bench in N.N. Global (supra) went
on to hold as follows:
“26. In our view, there is no legal impediment to the enforceability
of the arbitration agreement, pending payment of stamp duty on
G 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.

5
(2019) 8 SCC 714
H 6
(2019) 9 SCC 209
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 307
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

27. The Stamp Act is a fiscal enactment for payment of stamp A
duty to the State on certain classes of instruments specified in the
Stamp Act. Section 40 of the Stamp Act, 1899 provides the
procedure for instruments which have been impounded, and sub-
section (1) of Section 42 requires the instrument to be endorsed
after it is duly stamped by the Collector concerned. Section 42(2) B
provides that after the document is duly stamped, it shall be
admissible in evidence, and may be acted upon.
28. In our view, the decision in SMS Tea Estates [SMS Tea
Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC
66 : (2012) 4 SCC (Civ) 777] does not lay down the correct position C
in law on two issues i.e. : (i) that an arbitration agreement in an
unstamped commercial contract cannot be acted upon, or is
rendered unenforceable in law; and (ii) that an arbitration
agreement would be invalid where the contract or instrument is
voidable at the option of a party, such as under Section 19 of the
Contract Act, 1872. D

29. We hold that since the arbitration agreement is an independent
agreement between the parties, and is not chargeable to payment
of stamp duty, the non-payment of stamp duty on the commercial
contract, would not invalidate the arbitration clause, or render it
unenforceable, since it has an independent existence of its own. E
The view taken by the Court on the issue of separability of the
arbitration clause on the registration of the substantive contract,
ought to have been followed even with respect to the Stamp Act.
The non-payment of stamp duty on the substantive contract would
not invalidate even the main contract. It is a deficiency which is F
curable on the payment of the requisite stamp duty.
30. The second issue in SMS Tea Estates [SMS Tea Estates (P)
Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012)
4 SCC (Civ) 777] that a voidable contract would not be arbitrable
as it affects the validity of the arbitration agreement, is in our G
view not the correct position in law. The allegations made by a
party that the substantive contract has been obtained by coercion,
fraud, or misrepresentation has to be proved by leading evidence
on the issue. These issues can certainly be adjudicated through
arbitration.
H
308 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 31. We overrule the judgment in SMS Tea Estates [SMS Tea
Estates (P) Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC
66 : (2012) 4 SCC (Civ) 777] with respect to the aforesaid two
issues as not laying down the correct position in law.”
7. We may also notice paragraph-32 in N.N. Global (supra):
B “32.Garware [Garware Wall Ropes Ltd. v. Coastal Marine
Constructions & Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC
(Civ) 324] judgment has followed the judgment in SMS Tea
Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P)
Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] . The counsel
C for the appellant has placed reliance on para 22 of the judgment
to contend that the arbitration clause would be non-existent in
law, and unenforceable, till stamp duty is adjudicated and paid on
the substantive contract. We hold that this finding is erroneous,
and does not lay down the correct position in law. We have already
held that an arbitration agreement is distinct and independent from
D the underlying 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.”
8. Thereafter, the Bench of three learned Judges in N.N. Global
E (supra) noted that the Judgment in Garware (supra) was cited with
approval by a Bench of three learned Judges in Vidya Drolia and others
v. Durga Trading Corporation7. The Court set out paragraphs 146
and 147 of Vidya Drolia (supra) and doubted the correctness of the
said view and found it appropriate to refer the findings in paragraphs-22
F and 29 of Garware (supra) as affirmed in paragraphs 146 & 147 of
Vidya Drolia (supra) to the Constitution Bench. We deem it appropriate
to now refer to the following paragraphs in N.N. Global (supra):
“35. The next issue which arises is as to which authority would
exercise the power of impounding the instrument under Section
G 33 read with Section 34 of the Maharashtra Stamp Act, in a case
where the substantive contract contains an arbitration agreement.
36. In an arbitration agreement, the disputes may be referred to
arbitration by three modes.

7
H (2021) 2 SCC 1
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 309
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

36.1. The first mode is where the appointment of the arbitrator A
takes place by the parties consensually in accordance with the
terms of the arbitration agreement, or by a designated arbitral
institution, without the intervention of the court. In such a case,
the arbitrator/tribunal is obligated by Section 33 of the Stamp Act,
1899 (or the applicable State Act) to impound the instrument, and
B
direct the parties to pay the requisite stamp duty (and penalty, if
any), and obtain an endorsement from the Collector concerned.
This would be evident from the provisions of Section 34 of the
Stamp Act which provides that “any person having by law or
consent of parties authority to receive evidence” is mandated
by law to impound the instrument, and direct the parties to pay the C
requisite stamp duty.
36.2. The second mode of appointment is where the parties fail to
make the appointment in accordance with the arbitration agreement,
and an application is filed under Section 11 before the Court to
invoke the default power for making the appointment. In such a D
case, the High Court, or the Supreme Court, as the case may be,
while exercising jurisdiction under Section 11, would impound the
substantive contract which is either unstamped or inadequately
stamped, and direct the parties to cure the defect before the
arbitrator/tribunal can adjudicate upon the contract. E
36.3. The third mode is when an application is filed under Section
8 before a judicial authority for reference of disputes to arbitration,
since the subject-matter of the contract is covered by an arbitration
agreement. In such a case, the judicial authority will make the
reference to arbitration. However, in the meanwhile, the parties F
would be directed to have the substantive contract stamped in
accordance with the provisions of the relevant Stamp Act, so that
the rights and obligations emanating from the substantive contract
can be adjudicated upon.”
D. SUBMISSION OF THE PARTIES G
9. Shri Gagan Sanghi, learned Counsel, appeared on behalf of
the appellant (M/s N.N. Global Mercantile Private Limited). Initially,
since there was no appearance for the first respondent, we appointed
Shri Gourab Banerji, learned Senior Counsel as Amicus Curiae. We
also heard Ms. Malavika Trivedi, learned Senior Counsel, appearing H
310 SUPREME COURT REPORTS [2023] 9 S.C.R.

A by way of intervention. Shri K Ramakanth Reddy, learned Senior
Counsel appeared thereafter for the first respondent and made his
submissions.
10. Shri Gagan Sanghi would take us through the provisions of
the Stamp Act and the Act and contended that Section 35 of the Stamp
B Act barred admission of a not duly stamped instrument in evidence for
any purpose in Court. Furthermore, a Court could not act upon such an
instrument. Not even for a collateral purpose, ran the argument. There
is an absolute bar. An Arbitration Agreement, even if contained in a
Clause, in a Work Order or in other commercial contract, cannot have a
separate existence as found in N.N. Global (supra). The Doctrine of
C the Arbitration Agreement being distinct and having a separate existence,
has been erroneously understood in the context of Sections 33 and 35 of
the Stamp Act. The Judgment in SMS Tea Estates (supra) ought not to
have been overruled. The Principle of Stare Decisis could not have
been overlooked. The learned Counsel drew our attention to the fact
D that several foreign countries have laws, which contain provisions similar
to Sections 33 and 35 of the Stamp Act. In fact, he would contend that
there was no occasion to make the reference as the main case stood
disposed of. He would submit that even in an Application under Section
11 of the Act, the Court was bound to observe the mandate of the law
contained in Sections 33 and 35 of the Stamp Act. The law has been
E correctly laid down in SMS Tea Estates (supra) and Garware (supra)
and it was also correctly upheld in Vidya Drolia (supra). The amendment
to Section 11 by the insertion of sub-Section (6A), could not authorise a
Court to overlook the dictate of Sections 33 and 35 of the Stamp Act.
11. Smt. Malvika Trivedi, learned Senior Counsel, projected the
F same complaint against the view taken in N.N. Global (supra). She, in
fact, drew our attention to the impact of the view taken in N.N. Global
(supra) to the proceedings under Section 9 of the Act. It is her case that
the requirement to comply with Sections 33 and 35 of the Stamp Act,
would not stand displaced, even in an Application under Section 9 of the
G Act.
12. Shri Gourab Banerji, learned Amicus, contended that actually,
there were parts of Garware (supra), Vidya Drolia (supra) and N.N.
Global (supra), which didlay down the law correctly. He began by
pointing out that the Bench in N.N. Global (supra) was not correct in
H proceeding on the basis that, an Arbitration Agreement, was not required
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 311
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

to be stamped. He drew our attention to Article 5 of Schedule I of the A
Maharashtra Stamp Act, 1958 in this regard. It is his submission that the
existence and/or validity of an Arbitration Agreement is not affected by
the provisions of the Stamp Act. Non-payment of the stamp duty will not
invalidate the instrument. It is a curable defect. A true reading of Section
11(6A) would establish that the impounding of an unstamped or deficiently
B
stamped instrument, is not to be done by the Judge under Section 11 but
by the Arbitrator appointed under Section 11. Section 11(6A) compels
the Court to confine its examination to the question of the existence of
the Arbitration Agreement. In view of the fact that, neither Garware
(supra) nor N.N. Global (supra) laid down the law correctly, he requested
that the reference be reformulated as indicated later. C
13. Relying upon the Judgment of this Court in Hindustan Steel
Ltd. v. Dilip Construction Company8, it is contended that an unstamped
document can be acted upon, after payment of duty and penalty. Being
a curable defect, it could not be found that an unstamped instrument did
not exist in the eye of law. He drew our attention to the Judgment of the D
Privy Council in Lachmi Narayan Agarwalla and Others v. Braja
Mohan Singh (S INCE D ECEASED )9, to contend that an unstamped
instrument, with penalty paid, became effective in law. He further drew
support from the following Judgments:
i. Joyman Bewa v. Easin Sarkar10; E
ii. Gulzari Lal Marwari v. Ram Gopal11
iii. Purna Chandra Chakrabarty and others v. Kalipada
Roy and another 12.
14. The aforesaid case law, unerringly points to the conclusion F
that failure to stamp a document, did not affect the validity of the
document. It merely rendered the document inadmissible in evidence.
From the Judgment of the Pakistan Supreme Court in United Insurance
Company of Pakistan Limited v. Hafiz Muhammad Siddique13, the
following words of Dorab Patel, J., are enlisted before us:
G
8
(1969) 1 SCC 597
9
51 Indian Appeals 332
10
AIR 1926 Calcutta 877
11
ILR 1937 1 Calcutta 257
12
AIR 1942 Calcutta 386
13
PLD 1978 SC 279 H
312 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “It would be against all cannons of construction to enlarge the
meaning of the words in Section 35 so as to render invalid
instruments which fall within mischief of the section.”
15. The learned Amicus would point out that stamp duty is levied
with reference to the instrument and not the transaction. The Stamp Act
B is a consolidating Act. It is a fiscal law. Securing revenue was the aim.
It cannot be used to clothe a litigant with an arm of technicality. He
drew our attention to Section 5 of the Act interdicting judicial intervention.
He pointed out Section 8 of the Act, which, after the amendment in the
year 2015, permits disallowing of making a reference to arbitration, only
if the Court found prima facie that no valid Arbitration Agreement
C existed. Section 8, he pointed out, did refer to ‘validity’. He took us
through the decision in SMS Tea Estates (supra), in the context of the
law laid down in SBP (supra), by the Constitution Bench, the Report of
the Law Commission of India and emphasised the need for minimal
interference and to give full meaning to Section 11(6A), by ensuring
D minimal interference. He drew our attention to the discussion by the
high-level Committee, which preceded the amendment in Section 11.
He commended for the Court’s acceptance, the view taken by this Court
in Duro Felguera14, wherein, Justice Kurian Joseph, speaking for the
Court inter alia, held in the post Section 11(6A) scenario, as follows:
E “59. The scope of the power under Section 11(6) of the 1996 Act
was considerably wide in view of the decisions in SBP and
Co. [SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and
Boghara Polyfab [National Insurance Co. Ltd. v. Boghara
Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117] .
This position continued till the amendment brought about in 2015.
F After the amendment, all that the courts need to see is whether
an arbitration agreement exists—nothing more, nothing less. The
legislative policy and purpose is essentially to minimise the Court’s
intervention at the stage of appointing the arbitrator and this intention
as incorporated in Section 11(6-A) ought to be respected.”
G 16. The learned Amicus would point out that non-stamping did not
render the agreement null and void. In law and in point of fact, an
unstamped instrument bears life. He would point out that Duro Felguera
(supra) was approved by a Bench of three learned Judges in Mayavati

14
H (2017) 9 SCC 729
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 313
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Trading (supra). He would attack the finding in Garware (supra) that A
an unstamped instrument was void as being incorrect. He would submit
that what is required in law, after the insertion of sub-Section (6A) is
clear as daylight. The existence of an Arbitration Agreement, is all that
should detain the Judge in an application under Section 11. No doubt, he
would point out that there may be cases where the actual situation, which
B
occasioned the Judgment in Vidya Drolia (supra), may exist. This means
that since Section 5 of the Act makes certain disputes non-arbitrable, it
may detain a Judge, who is approached under Section 11, to dissuade
him from making a reference. There may arise occasions, which may
leave the Judge with little choice but to decline the reference. An instance
may be an agreement demonstrated to be made by a minor or a person C
of unsound mind. Such exceptional cases apart, the learned Amicus would
request the Court to draw comfort from the thought that the Arbitrator is
fully competent by virtue of the Doctrine of Kompetenz-Kompetenz,
which stands enshrined in Section 16 of the Act, to deal with all sorts of
objections. Having regard to the clear legislative intent, discernible from
D
the Report of the Law Commission and the amendment to Section 11 of
the Act, which finds its echo in the change brought about in Section 8 of
the Act, by the same amendment, the effort must be to facilitate an
unhindered and smooth passage for an Application seeking reference to
arbitration. The learned Amicus with reference to paragraph-18 of SBP
(supra), submits that the Court in Garware (supra) erred in holding that E
only if the Arbitrator was appointed, without intervention of the Court,
Section 16 would have full play. It is pointed out that the Judgment in
SBP (supra) will not have life, after the amendment in 2015. He would
also point out that the Court in Garware (supra) erred in paragraph-19,
when it suggested that the Court was only giving effect to a mandatory
F
enactment, which purported to protect the public revenue. While it is
correct, it is pointed out that an agreement enforceable by law is a contract
and Section 2(g) of the Contract Act, provides that an agreement not
enforceable by law, is said to be void, non-stamping or inadequate
stamping would not make an instrument void. It is pointed out that the
suggestion that, an unstamped document did not become a contract, and G
that it was, therefore, unenforceable in law was incorrect. He also would
find fault with the Court in Garware (supra), when it found that an
unstamped document would not ‘exist’ as a matter of law. The solution
suggested by the learned Amicus is that an Arbitrator may be appointed
and, to allow the Arbitral Tribunal to fulfil its duties under the Stamp Act.
H
314 SUPREME COURT REPORTS [2023] 9 S.C.R.

A In other words, it is pointed out, in keeping with the purpose of Section
11(6A) and the need for minimal interference, as contemplated in Section
5 of the Act, on a prima facie examination as to existence of an Arbitration
Agreement, a reference must be made. He further also would point out
that the Judgment of Justice Sanjiv Khanna in Vidya Drolia (supra)
B may require a revisit. With reference to paragraph-31, wherein Sanjiv
Khanna, J., felt bound by the Constitution Bench Judgment in SBP (supra),
it is pointed out that the learned Judge ignored the amendments to Sections
8 and 11 brought about by the amendment in 2015. He would further
point out that in paragraphs-81 to 154, under the caption ‘Who decides
non-arbitrability’, he calls for clarity to be brought. In paragraph-98, it is
C pointed out that an error was occasioned in coming to the conclusion
that Sections 8 and 11 were complementary in nature and in exercising
power under the two provisions, the jurisdiction was complementary. It
is pointed out that the views of Justice Sanjiv Khanna appear to be
inconsistent with that of the three-Judge Bench in Mayavati (supra). It
D is submitted by the learned Amicus that the observations of Justice Sanjiv
Khanna, in paragraphs-146, 147.1, 147.9 and paragraph-147.10 may
require recalibration. Paragraphs-146 to 154, it is the stand of the Amicus
Curiae, may have to be fine-tuned. Learned Amicus would point out
that the conclusion of N.V. Ramana, J. in Paragraphs-237 and 244 may
E be endorsed to the extent of inconsistency with that of Justice Sanjiv
Khanna. Coming to N.N. Global (supra), the learned Amicus, apart
from pointing out that contrary to what was held, viz., that an Arbitration
Agreement was not exigible to stamp duty, it was, indeed, liable. It is
pointed out that the ratio in paragraphs-22 and 26, would have to be
supported. It is the contention of the learned Amicus that Sections 8 and
F 11 of the Act could not be equated. The standard to be applied may be
the same, i.e., a prima facie satisfaction of the existence of the Arbitration
Agreement. In Section 11, the Court operates as a substitute of an
Appointing Authority. There is only a narrow scope. It is his case, that in
an Application under Section 8, the scope may be wider as one has to
G see whether there was a valid Arbitration Agreement. It is his submission
that unless it is patently void, ‘subject matter arbitrability’ should be left
to the Arbitrator. In a Section 8 Application, the Court should not undertake
the exercise of examining of the issue relating to the stamp duty, which
goes to admissibility and not jurisdiction. The word ‘existence’ in Section
11(6A) meant legally enforceable existence and not mere presence in
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 315
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

the contract. The scope of the Court must be circumscribed to narrow A
the prima facie examination of:
i. Formal validity of the Arbitration Agreement at the stage
of contract formation, including as to whether it is in writing;
ii. Whether the core contractual ingredients were fulfilled?;
B
iii. On rare occasions, whether the dispute was arbitrable;
17. The adjudication of stamp duty is a time-consuming affair and
it would not align with the goal of the Act, which is to ensure the
expeditious appointment of Arbitrators and the conclusion of the
proceedings with the least judicial interference. If the Court refrained C
from interfering on the score of disputes as to stamp duty and allow the
Arbitrator to deal with the matter, which, he is, in law, fully competent to
deal with, it would promote the very cause of speedy dispute resolution,
which is the very goal of the institution of arbitration.
18. At the time of hearing Shri K. Ramakanth Reddy, learned D
senior counsel appeared for the first respondent. He would contend that
the court must adopt a harmonious construction as between the Stamp
Act and the Act. He emphasises the importance of conforming to Section
5 of the Act. He drew our attention to the judgment of this Court in
Great Offshore Ltd. v. Iranian Offshore Engg. & Construction Co. 15
In the said judgment which is authored by a learned Single Judge, while E
dealing with a petition under Section 11 of the Act, inter alia, held:
55. Second, the plain language of Section 7 once again governs
my conclusion. Section 7 does not require that the parties stamp
the agreement. It would be incorrect to disturb Parliament’s
intention when it is so clearly stated and when it in no way conflicts F
with the Constitution.
60. Technicalities like stamps, seals and even signatures are red
tape that have to be removed before the parties can get what
they really want—an efficient, effective and potentially cheap
resolution of their dispute. The autonomie de la volonté doctrine G
is enshrined in the policy objectives of the United Nations
Commission on International Trade Law (UNCITRAL) Model Law
on International Commercial Arbitration, 1985, on which our

15
(2008) 14 SCC 240 H
316 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Arbitration Act is based. (See Preamble to the Act.) The courts
must implement legislative intention. It would be improper and
undesirable for the courts to add a number of extra formalities not
envisaged by the legislation. The courts’ directions should be to
achieve the legislative intention.
B 19. He drew our attention to the judgment of this Court in
Commissioner of Income Tax v. Hindustan Bulk Carriers16, inter
alia, that a Court should, faced with two interpretations avoid the
construction which reduces the legislation to futility but accept a bolder
construction which will produce an effective result qua the purpose sought
to be achieved.
C
20. Shri Debesh Panda, learned counsel appearing for the Applicant
(Intervention) in I.A.No.199969 of 2022 submitted that the Act constitutes
a complete Code. Since Section 5 of the Act contains a non-obstante
clause which declares that “notwithstanding anything contained in any
other law for the time being in force” despite the Stamp Act on the
D principle of minimum interference except as provided in Part-I of the
Act, the Court should not be detained by Sections 33 and 35 of the
Stamp Act. HHe also reiterates that what is required under Section 11 is
a prima facie satisfaction. Parliament did not require the consideration
of validity when it enacted Section 11 (6A). There is a conscious
E distinction between Sections 8 and 11. In other words, there is a distinction
between the expressions ‘existence’ and ‘validity’. The width of powers
under Section 16 is untrammelled, it is contended.
E. ANALYSIS
21. In view of the submission made by the learned Amicus that
F the Court in N.N. Global (supra) was in error in proceeding on the basis
that the Arbitration Agreement would not be exigible to stamp duty, the
very premise of the Order of Reference would stand removed. The
reformulated question sans the words, ‘which is not chargeable to
payment of stamp duty’, and words, ‘unenforceable or invalid’, would,
therefore, be as follows:
G
“Whether the statutory bar contained in Section 35 of the Stamp
Act applicable to instruments chargeable to stamp duty under
Section 3 read with the Schedule to the Act, would also render
the arbitration agreement contained in such an instrument, as being

H 16
(2003) 3 SCC 57
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 317
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

non-existent, pending payment of stamp duty on the substantive A
contract/instrument?”
F. THE ACT
22. Section 2(b) of the Act defines an Arbitration Agreement to
be ‘an agreement referred to in Section 7’.
B
23. Section 5 of the Act declares as follows: -
“5. Extent of judicial intervention. -Notwithstanding anything
contained in any other law for the time being in force, in matters
governed by this Part, no judicial authority shall intervene except
where so provided in this Part.” C
24. Section 7 of the Act reads as follows:
“7 Arbitration agreement. —
(1) In this Part, “arbitration agreement” means an agreement by
the parties to submit to arbitration all or certain disputes which D
have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing. E

(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of
telecommunication which provide a record of the agreement; or F
(c) an exchange of statements of claim and defence in which the
existence of the agreement is alleged by one party and not denied
by the other.
(5) The reference in a contract to a document containing an
G
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.”
25. Section 11 deals with Appointment of Arbitrators. Since we
are concerned with the impact of Section 11(6A), which was inserted
H
318 SUPREME COURT REPORTS [2023] 9 S.C.R.

A by Act 3 of 2016 w.e.f. 23.10.2015, we deem it appropriate to refer to
the same:
“6A. The Supreme Court or, as the case may be, the High Court,
while considering any application under sub-section (4) or sub-
section (5), shall, notwithstanding any judgment, decree or order
B of any Court, confine to the examination of the existence of an
arbitration agreement.”
It must be noticed that the aforesaid provision stands omitted by
Act 33 of 2019. But Act 33 of 2019 has not been brought into force.
G. WHAT LED TO THE INSERTION OF SECTION
C 11(6A)?
26. It is important to delve into the past and enquire as to what led
to the insertion of sub-Section (6A) in Section 11 of the Act. The Act
was passed in the year 1996. The Act is, undoubtedly, based on the
UNCITRAL MODEL Law. The Hundred and Seventy-Sixth Report of
D the Law Commission of India made its recommendations for enacting
amendments to the Act. This is followed by the Justice B.P. Saraf
Committee Report, which was submitted on 29.01.2005. The nature of
the power exercised by the courts under Section 11 of the Act, was the
subject matter of considerable case law. Suffice it to notice, a Bench of
E seven learned Judges, with a lone dissent, in SBP (supra), proceeded to
hold that the power exercised under Section 11(6) was a judicial power
and not an administrative power. In the Majority Judgment, the Court
had occasion to consider the impact of Section 16 of the Act, which
incorporates the Principle of Kompetenz-Kompetenz. The Court held,
inter alia, as follows:
F
“12. … When the Tribunal decides these two questions, namely,
the question of jurisdiction and the question of exceeding the scope
of authority or either of them, the same is open to immediate
challenge in an appeal, when the objection is upheld and only in an
appeal against the final award, when the objection is overruled.
G Sub-section (5) enjoins that if the Arbitral Tribunal overrules the
objections under sub-section (2) or (3), it should continue with the
arbitral proceedings and make an arbitral award. Sub-section (6)
provides that a party aggrieved by such an arbitral award overruling
the plea on lack of jurisdiction and the exceeding of the scope of
authority, may make an application on these grounds for setting
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 319
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

aside the award in accordance with Section 34 of the Act. The A
question, in the context of sub-section (7) of Section 11 is, what is
the scope of the right conferred on the Arbitral Tribunal to rule
upon its own jurisdiction and the existence of the arbitration clause,
envisaged by Section 16(1), once the Chief Justice or the person
designated by him had appointed an arbitrator after satisfying
B
himself that the conditions for the exercise of power to appoint an
arbitrator are present in the case. Prima facie, it would be difficult
to say that in spite of the finality conferred by sub-section (7) of
Section 11 of the Act, to such a decision of the Chief Justice, the
Arbitral Tribunal can still go behind that decision and rule on its
own jurisdiction or on the existence of an arbitration clause. It C
also appears to us to be incongruous to say that after the Chief
Justice had appointed an Arbitral Tribunal, the Arbitral Tribunal
can turn round and say that the Chief Justice had no jurisdiction
or authority to appoint the Tribunal, the very creature brought into
existence by the exercise of power by its creator, the Chief Justice.
D
The argument of the learned Senior Counsel, Mr K.K. Venugopal
that Section 16 has full play only when an Arbitral Tribunal is
constituted without intervention under Section 11(6) of the Act, is
one way of reconciling that provision with Section 11 of the Act,
especially in the context of sub-section (7) thereof. We are inclined
to the view that the decision of the Chief Justice on the issue of E
jurisdiction and the existence of a valid arbitration agreement would
be binding on the parties when the matter goes to the Arbitral
Tribunal and at subsequent stages of the proceeding except in an
appeal in the Supreme Court in the case of the decision being by
the Chief Justice of the High Court or by a Judge of the High
F
Court designated by him.”
(Emphasis supplied)
27. We may next notice the Judgment rendered by a Bench of
two learned Judges in SMS Tea Estates (supra). They dealt with three
questions. What is of relevance, is the second question, which was, G
‘whether an Arbitration Agreement in an unregistered instrument, which
is not duly stamped, is valid and enforceable’. The Court, inter alia, held
as follows:
“20. The Scheme for Appointment of Arbitrators by the Chief
Justice of Gauhati High Court, 1996 requires an application under H
320 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Section 11 of the Act to be accompanied by the original
arbitration agreement or a duly certified copy thereof. In fact,
such a requirement is found in the scheme/rules of almost all the
High Courts. If what is produced is a certified copy of the
agreement/contract/instrument containing the arbitration clause,
it should disclose the stamp duty that has been paid on the original.
B
Section 33 casts a duty upon every court, that is, a person having
by law authority to receive evidence (as also every arbitrator
who is a person having by consent of parties, authority to receive
evidence) before whom an unregistered instrument chargeable
with duty is produced, to examine the instrument in order to
C ascertain whether it is duly stamped. If the court comes to the
conclusion that the instrument is not duly stamped, it has to
impound the document and deal with it as per Section 38 of the
Stamp Act.
xxx xxx xxx
D 22. We may therefore sum up the procedure to be adopted where
the arbitration clause is contained in a document which is not
registered (but compulsorily registerable) and which is not duly
stamped:
22.1. The court should, before admitting any document into
E evidence or acting upon such document, examine whether the
instrument/document is duly stamped and whether it is an
instrument which is compulsorily registerable.
22.2. If the document is found to be not duly stamped, Section 35
of the Stamp Act bars the said document being acted upon.
F Consequently, even the arbitration clause therein cannot be acted
upon. The court should then proceed to impound the document
under Section 33 of the Stamp Act and follow the procedure under
Sections 35 and 38 of the Stamp Act.
22.3. If the document is found to be duly stamped, or if the deficit
G stamp duty and penalty is paid, either before the court or before
the Collector (as contemplated in Section 35 or 40 Section of the
Stamp Act), and the defect with reference to deficit stamp is
cured, the court may treat the document as duly stamped.”
(Emphasis supplied)
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 321
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

This view has been followed subsequently in Garware (supra) A
and also in Dharmaratnakara Rai Bahadur Arcot Narainswamy
Mudaliar Chattram v. Bhaskar Raju & Bros. 17 We have omitted
repetition of paragraphs-19 and 21, which have been referred to earlier.
28. Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre Ltd. and
another18 was a case of international arbitration arising under Section B
45 of the Act. With a Bench of three learned Judges deciding the case,
the majority with Justice Y.K. Sabharwal dissenting, took the view that
in deciding the question as to whether a reference must be made to
arbitration under Section 45, the approach must be to find out whether a
prima facie case is made out and whether it was ‘plainly arguable’ that
an Arbitration Agreement was in existence. The Court, in other words, C
took the view that there must be a prima facie satisfaction that there
was an Arbitration Agreement, which is not null and void, inoperative
or incapable of being performed. Section 45, it must be noticed, at the
time when the case was decided, read as follows:
“45. Power of judicial authority to refer parties to arbitration.- D
Notwithstanding anything contained in Part I or in the Code of
Civil Procedure , 1908 (5 of 1908), a judicial authority, when seized
of an action in a matter in respect of which the parties have made
an agreement referred to in section 44, shall, at the request of one
of the parties or any person claiming through or under him, refer E
the parties to arbitration, unless it finds that the said agreement is
null and void, inoperative or incapable of being performed.”
(Emphasis supplied)
29. It was on the aforesaid statutory text that Justice B.N.
Srikrishna took the view that the finding as to the existence of the F
Arbitration Agreement, was to be a prima facie finding. Justice D.M.
Dharmadhikari agreed with Justice B.N. Srikrishna with certain additions.
30. In National Insurance Company Limited v. Boghara
Polyfab Private Limited19, the question, which fell for consideration
before the Bench of two learned Judges, was as to in what circumstances, G
a Court would refuse to refer a dispute relating to quantum to arbitration
even though the contract contemplated a reference of such a dispute to
17
(2020) 4 SCC 612
18
(2005) 7 SCC 234
19
(2009) 1 SCC 267 H
322 SUPREME COURT REPORTS [2023] 9 S.C.R.

A arbitration. It also fell for consideration, as to whether the resistance to
the reference on the ground that the applicant under Section 11 of the
Act, received the amount and issued a full and final discharge voucher,
which he contented was issued under undue influence, coercion and
economic compulsion, justified the reference. Justice R.V. Raveendran,
speaking for the Court, inter alia, purported to follow the Judgment in
B
SBP (supra) and held as follows:
“22. Where the intervention of the court is sought for appointment
of an Arbitral Tribunal under Section 11, the duty of the Chief
Justice or his designate is defined in SBP & Co. [(2005) 8 SCC
618] This Court identified and segregated the preliminary issues
C that may arise for consideration in an application under Section 11
of the Act into three categories, that is, (i) issues which the Chief
Justice or his designate is bound to decide; (ii) issues which he
can also decide, that is, issues which he may choose to decide;
and (iii) issues which should be left to the Arbitral Tribunal to
D decide.
22.1. The issues (first category) which the Chief Justice/his
designate will have to decide are:
(a) Whether the party making the application has
approached the appropriate High Court.
E
(b) Whether there is an arbitration agreement and whether
the party who has applied under Section 11 of the Act, is a
party to such an agreement.
22.2. The issues (second category) which the Chief Justice/his
designate may choose to decide (or leave them to the decision of
F
the Arbitral Tribunal) are:
(a) Whether the claim is a dead (long-barred) claim or a
live claim.
(b) Whether the parties have concluded the contract/
G transaction by recording satisfaction of their mutual rights and
obligation or by receiving the final payment without objection.
22.3. The issues (third category) which the Chief Justice/his
designate should leave exclusively to the Arbitral Tribunal are:
(i) Whether a claim made falls within the arbitration clause
H (as for example, a matter which is reserved for final decision
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 323
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

of a departmental authority and excepted or excluded from A
arbitration).
(ii) Merits or any claim involved in the arbitration.
23. It is clear from the scheme of the Act as explained by this
Court in SBP & Co. [(2005) 8 SCC 618] , that in regard to issues
B
falling under the second category, if raised in any application
under Section 11 of the Act, the Chief Justice/his designate may
decide them, if necessary, by taking evidence. Alternatively, he
may leave those issues open with a direction to the Arbitral
Tribunal to decide the same. If the Chief Justice or his designate
chooses to examine the issue and decides it, the Arbitral Tribunal C
cannot re-examine the same issue. The Chief Justice/his
designate will, in choosing whether he will decide such issue or
leave it to the Arbitral Tribunal, be guided by the object of the
Act (that is expediting the arbitration process with minimum
judicial intervention). Where allegations of forgery/fabrication
D
are made in regard to the document recording discharge of
contract by full and final settlement, it would be appropriate if
the Chief Justice/his designate decides the issue.
24. What is however clear is when a respondent contends that
the dispute is not arbitrable on account of discharge of the contract
E
under a settlement agreement or discharge voucher or no-claim
certificate, and the claimant contends that it was obtained by fraud,
coercion or undue influence, the issue will have to be decided
either by the Chief Justice/his designate in the proceedings under
Section 11 of the Act or by the Arbitral Tribunal as directed by the
order under Section 11 of the Act. A claim for arbitration cannot F
be rejected merely or solely on the ground that a settlement
agreement or discharge voucher had been executed by the
claimant, if its validity is disputed by the claimant.”
31. It is to be noticed that, at the time when the Court rendered
SBP (supra) and SMS Tea Estates (supra), Section 11(6) contemplated G
appointment being made of an Arbitrator, essentially on the failure of
parties to agree on the appointment or to make the appointment. It is in
the context of the views expressed by the Courts, as aforesaid, that the
Law Commission of India submitted the Two Hundred and Forty-Sixth
Report in August, 2014. In the said Report, after referring to the Judgment H
324 SUPREME COURT REPORTS [2023] 9 S.C.R.

A in SBP (supra) and the views expressed in National Insurance (supra),
the Law Commission, inter alia, submitted the following
recommendations:
“31. The Commission is of the view that, in this context, the same
test regarding scope and nature of judicial intervention, as
B applicable in the context of Section 11, should also apply to Sections
8 and 45 of the Act - since the scope and nature of judicial
intervention should not change upon whether a party (intending to
defeat the arbitration agreement) refuses to appoint an arbitrator
in terms of the arbitration agreement, or moves a proceeding before
a judicial authority in the face of such an arbitration agreement.
C
32. In relation to the nature of intervention, the exposition of the
law is to be found in the decision of the Supreme Court in Shin
Etsu Chemicals Co. Ltd. v. Aksh Optifibre,(2005) 7 SCC 234, (in
the context of Section 45 of the Act), where the Supreme Court
has ruled in favour of looking at the issues/controversy only prima
D facie.
33. It is in this context, the Commission has recommended
amendments to Sections 8 and 11 of the Arbitration and Conciliation
Act, 1996. The scope of the judicial intervention is only restricted
to situations where the Court/Judicial Authority finds that the
E arbitration agreement does not exist or is null and void. In so far
as the nature of intervention is concerned, it is recommended that
in the event the Court/Judicial Authority is prima facie satisfied
against the argument challenging the arbitration agreement, it shall
appoint the arbitrator and/or refer the parties to arbitration, as the
F case may be. The amendment envisages that the judicial authority
shall not refer the parties to arbitration only if it finds that there
does not exist an arbitration agreement or that it is null and void.
If the judicial authority is of the opinion that prima facie the
arbitration agreement exists, then it shall refer the dispute to
arbitration, and leave the existence of the arbitration agreement
G to be finally determined by the arbitral tribunal. However, if the
judicial authority concludes that the agreement does not exist, then
the conclusion will be final and not prima facie. The amendment
also envisages that there shall be a conclusive determination as to
whether the arbitration agreement is null and void. In the event
H that the judicial authority refers the dispute to arbitration and/or
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 325
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

appoints an arbitrator, Under Sections 8 and 11 respectively, such A
a decision will be final and non-appealable. An appeal can be
maintained Under Section 37 only in the event of refusal to refer
parties to arbitration, or refusal to appoint an arbitrator.”
(Emphasis supplied)
32. It is, accordingly, accepting the Report that Section 11(6A) B
came to be inserted. After having set out the events, which led to the
insertion of Section 11(6A), we may take the narrative forward. In Duro
Felguera (supra), we have noticed the view taken in paragraph 59 in an
earlier part of this judgment, in essence, the duty to find out whether an
arbitration agreement exists or not. The learned Judge also made C
observations in paragraph 48 wherein after quoting Section 11(6A) he
held as follows:
“…From a reading of Section 11(6-A), the intention of the
legislature is crystal clear i.e. the court should and need only look
into one aspect—the existence of an arbitration agreement. What D
are the factors for deciding as to whether there is an arbitration
agreement is the next question. The resolution to that is simple—
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.”
E
33. In Garware(supra)a Bench of two learned Judges dealt with
a case under Section 11(6A) itself and that too in the context of the
Maharashtra Stamp Act, 1958. The contention raised by the appellant
was that the Judgment in SMS Tea Estates(supra) continues to apply
even after the introduction of Section 11(6A). In other words,
notwithstanding the insertion of Section 11(6A), the procedure F
contemplated in SMS Tea Estates (supra) would have to be followed.
The Court went on to hold, inter alia, as noticed by us already and which
has been referred to in N.N. Global (supra):
22. When an arbitration Clause is contained “in a contract”, it is
significant that the agreement only becomes a contract if it is G
enforceable by law. We have seen how, under the Indian Stamp
Act, an agreement does not become a contract, namely, that it is
not enforceable in law, unless it is duly stamped. Therefore, even
a plain reading of Section 11(6A), when read with Section 7(2) of
the 1996 Act and Section 2(h) of the Contract Act, would make it
H
326 SUPREME COURT REPORTS [2023] 9 S.C.R.

A clear that an arbitration Clause in an agreement would not exist
when it is not enforceable by law. This is also an indicator that
SMS Tea Estates has, in no manner, been touched by the
amendment of Section 11(6A).
XXX XXX XXX
B 29. This judgment in Hyundai Engg. case is important in that what
was specifically under consideration was an arbitration Clause
which would get activated only if an insurer admits or accepts
liability. Since on facts it was found that the insurer repudiated the
claim, though an arbitration Clause did “exist”, so to speak, in the
C policy, it would not exist in law, as was held in that judgment,
when one important fact is introduced, namely, that the insurer
has not admitted or accepted liability. Likewise, in the facts of the
present case, it is clear that the arbitration Clause that is contained
in the sub-contract would not “exist” as a matter of law until the
sub-contract is duly stamped, as has been held by us above. The
D 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.”
E 34. We may notice that in Section 45 of the Act, for the words
‘unless it finds’, by Act 33 of 2019, the words ‘unless it prima facie
finds’, were substituted. This amounted to a legislative recognition of
the position taken by this Court through the Judgment rendered by Justice
B. N. Srikrishna in SMS Tea Estates (supra).
F 35. In Mayavati Trading (P) Ltd. v. Pradyuat Deb Burman20, a
Bench of three learned Judges of this Court inter alia held as follows:
10. This being the position, it is clear that the law prior to the
2015 Amendment that has been laid down by this Court, which
would have included going into whether accord and satisfaction
G has taken place, has now been legislatively overruled. This being
the position, it is difficult to agree with the reasoning contained
in the aforesaid judgment [United India Insurance Co.
Ltd. v. Antique Art Exports (P) Ltd., (2019) 5 SCC 362 : (2019)

20
H (2019) 8 SCC 714
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 327
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

2 SCC (Civ) 785], as Section 11(6-A) is confined to the A
examination of the existence of an arbitration agreement and is
to be understood in the narrow sense as has been laid down in
the judgment in Duro Felguera, SA [Duro Felguera,
SA v. Gangavaram Port Ltd., (2017) 9 SCC 729 : (2017) 4 SCC
(Civ) 764] — see paras 48 & 59 [Ed. : The said paras 48 & 59
B
of Duro Felguera, SA v. Gangavaram Port Ltd., (2017) 9 SCC
729 : (2017) 4 SCC (Civ) 764, for ready reference, read as
follows:”48. Section 11(6-A) added by the 2015 Amendment,
reads as follows:”11. (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), C
shall, notwithstanding any judgment, decree or order of any
court, confine to the examination of the existence of an
arbitration agreement.”(emphasis supplied)From a reading of
Section 11(6-A), the intention of the legislature is crystal clear
i.e. the court should and need only look into one aspect—the
D
existence of an arbitration agreement. What are the factors for
deciding as to whether there is an arbitration agreement is the
next question. The resolution to that is simple—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.***59. The scope of the power E
under Section 11(6) of the 1996 Act was considerably wide in
view of the decisions in SBP & Co. v. Patel Engg. Ltd., (2005)
8 SCC 618 and National Insurance Co. Ltd. v. Boghara
Polyfab (P) Ltd., (2009) 1 SCC 267 : (2009) 1 SCC (Civ) 117.
This position continued till the amendment brought about in 2015.
F
After the amendment, all that the courts need to see is whether
an arbitration agreement exists—nothing more, nothing less. The
legislative policy and purpose is essentially to minimise the Court’s
intervention at the stage of appointing the arbitrator and this
intention as incorporated in Section 11(6-A) ought to be
respected.”] . G
36. The view taken in Garware (supra) [paragraphs-22 and 29
(supra)], came to be specifically approved by a Bench of three learned
Judges in the Judgment reported in Vidya Drolia (supra). Therein,
Justice Sanjiv Khanna wrote for the Court and Justice N.V. Ramana
supplemented with his own Judgment. The Judgment was rendered on a H
328 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Reference dated 28.02.2009 and the question was, whether landlord-
tenant disputes, governed by provisions of the Transfer of Property Act
were arbitrable or not. Apart from the said issue, the other conundrum
was as to who would decide, viz., the Court at the reference stage, or
the Arbitral Tribunal in the arbitration proceedings. The Court also found
it fit to go into the question as to the scope and ambit of the jurisdiction at
B
the reference stage. It is in the course of his Judgement that he made
the following observations in pargraphs-146 and 147, 147.1 of Vidya
Drolia (supra):
“146. We now proceed to examine the question, whether the word
“existence” in Section 11 merely refers to contract formation
C
(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
D 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 binding.
Existence of an arbitration agreement presupposes a valid
agreement which would be enforced by the court by relegating
E
the parties to arbitration. Legalistic and plain meaning interpretation
would be contrary to the contextual background including the
definition clause and would result in unpalatable consequences. A
reasonable and just interpretation of “existence” requires
understanding the context, the purpose and the relevant legal norms
F applicable for a binding and enforceable arbitration agreement.
An agreement evidenced in writing has no meaning unless the
parties can be compelled to adhere and abide by the terms. A
party cannot sue and claim rights based on an unenforceable
document. Thus, there are good reasons to hold that an arbitration
G agreement exists only when it is valid and legal. A void and
unenforceable understanding is no agreement to do anything.
Existence of an arbitration agreement means an arbitration
agreement that meets and satisfies the statutory requirements of
both the Arbitration Act and the Contract Act and when it is
enforceable in law.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 329
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

147. We would proceed to elaborate and give further reasons: A
147.1. In Garware Wall Ropes Ltd. [Garware Wall Ropes
Ltd. v. Coastal Marine Constructions & Engg. Ltd., (2019) 9
SCC 209 : (2019) 4 SCC (Civ) 324] , this Court had examined the
question of stamp duty in an underlying contract with an arbitration
clause and in the context had drawn a distinction between the B
first and second part of Section 7(2) of the Arbitration Act, albeit
the observations made and quoted above with reference to
“existence” and “validity” of the arbitration agreement being
apposite and extremely important, we would repeat the same by
reproducing para 29 thereof : (SCC p. 238)
C
“29. This judgment in Hyundai Engg. case [United India
Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd.,
(2018) 17 SCC 607 : (2019) 2 SCC (Civ) 530] is important in that
what was specifically under consideration was an arbitration clause
which would get activated only if an insurer admits or accepts
D
liability. Since on facts it was found that the insurer repudiated the
claim, though an arbitration clause did “exist”, so to speak, in the
policy, it would not exist in law, as was held in that judgment,
when one important fact is introduced, namely, that the insurer
has not admitted or accepted liability. Likewise, in the facts of the
present case, it is clear that the arbitration clause that is contained E
in the sub-contract would not “exist” as a matter of law until the
sub-contract is duly stamped, as has been held by us above. The
argument that Section 11(6-A) 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
F
understanding of the expression “existence” in Hyundai Engg.
case [United India Insurance Co. Ltd. v. Hyundai Engg.
&Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC
(Civ) 530] , as followed by us.”
Existence and validity are intertwined, and arbitration agreement
G
does not exist if it is illegal or does not satisfy mandatory legal
requirements. Invalid agreement is no agreement.”
37. It is thereafter that in N.N. Global (supra), the Court doubted
the correctness of the view taken in the aforesaid paragraphs and referred
to the findings in paragraph-22 and 29 in Garware(supra), which stood
H
330 SUPREME COURT REPORTS [2023] 9 S.C.R.

A affirmed in paragraphs-146 and 147 of Vidya Drolia (supra). We may
notice that paragraph-147 of Vidya Drolia(supra) purported to give
reasons in regard to what was stated in paragraph-146. Paragraph-147
is followed by paragraphs- 147.1 to 147.11. However, what, apparently,
the Court in N.N. Global (supra) doubted, appears to be paragraphs-
146 and 147, which we understand in the context of this case, is to be
B
confined to paragraph-147.1.
38. We may resume survey of the Act to the extent it is relevant.
Section 16 enshrines the Principle of Kompetenz-Kompetenz. It reads
as follows:
C “16. Competence of arbitral tribunal to rule on its jurisdiction.—
(1) The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the existence
or validity of the arbitration agreement, and for that purpose,—
(a) an arbitration clause which forms part of a contract shall
D be treated as an agreement independent of the other terms of
the contract; and
(b) a decision by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity of the arbitration
clause.
E (2) A plea that the arbitral tribunal does not have jurisdiction
shall be raised not later than the submission of the statement
of defence; however, a party shall not be precluded from raising
such a plea merely because that he has appointed, or
participated in the appointment of, an arbitrator.
F (3) A plea that the arbitral tribunal is exceeding the scope of
its authority shall be raised as soon as the matter alleged to be
beyond the scope of its authority is raised during the arbitral
proceedings.
(4) The arbitral tribunal may, in either of the cases referred to
G in sub-section (2) or sub-section (3), admit a later plea if it
considers the delay justified.
(5) The arbitral tribunal shall decide on a plea referred to in
sub-section (2) or sub-section (3) and, where the arbitral tribunal
takes a decision rejecting the plea, continue with the arbitral
H proceedings and make an arbitral award.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 331
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(6) A party aggrieved by such an arbitral award may make an A
application for setting aside such an arbitral award in
accordance with section 34.”
H. THE SCHEME OF THE STAMP ACT
39. Section 2(6) defines the word ‘chargeable’ as follows:
B
“2(6) “Chargeable”. — ¯chargeable means, as applied to an
instrument executed or first executed after the commencement
of this Act, chargeable under this Act, and, as applied to any
other instrument, chargeable under the law in force in India
when such instrument was executed or, where several persons
executed the instrument at different times, first executed:” C

40. Section 2(11) defines the words ‘duly stamped’ as follows:
“2(11) “Duly stamped”. — duly stamped, as applied to an
instrument, means that the instrument bears an adhesive or
impressed stamp of not less than the proper amount and that D
such stamp has been affixed or used in accordance with the
law for the time being in force in India:”
41. Section 2(12) defines the word ‘executed’ with reference to
instruments as meaning ‘signed’.
42. Section 2(14) defines the word ‘instrument’ as ‘including every E
document, by which any right or liability is or purports to be created,
transferred, limited, extended, extinguished or recorded’.
43. Section 3 deals with the instruments indicated therein being
chargeable with duty, subject to what is provided by way of exemptions
contained in Schedule I. F
44. Section 4 contemplates a situation, where there are several
instruments.
45. There are other provisions, which relate to other transactions.
Section 17 deals with the time of stamping of instruments. Section 17
provides for instruments executed in India. It declares that such G
instruments, chargeable with duty, shall be stamped before or at the time
of execution. Section 31 deals with adjudication as to proper stamp. The
adjudication is to be made by the Collector. Chapter IV contains Section
33 and the Chapter heading is ‘Instruments not duly stamped’. In the
Stamp Act, Section 33 reads as follows: H
332 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “33. Examination and impounding of instruments. —
(1) Every person having by law or consent of parties authority
to receive evidence, and every person in charge of a pubic
office, except an officer of police, before whom any instrument,
chargeable, in his opinion, with duty, is produced or comes in
B the performance of his functions, shall, if it appears to him that
such instrument is not duly stamped, impound the same.
(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
C of the value and description required by the law in force in
India when such instrument was executed or first executed:
Provided that—
(a) nothing herein contained shall be deemed to require any
Magistrate or Judge of a Criminal Court to examine or impound,
D 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 XII or Chapter XXXVI of the Code of Criminal
Procedure, 1898 (V of 1989);
(b) in the case of a Judge of a High Court, the duty of examining
E and impounding any instrument under this section may be
delegated to such officer as the Court appoints in this behalf.
(3) For the purposes of this section, in cases of doubt, —
(a) the State Government may determine what offices shall be
deemed to be public offices;
F
(b) the State Government may determine who shall be deemed
to be persons in charge of public offices.”
46. Next, we must notice Section 35, which reads as follows:
“35. Instruments not duly stamped inadmissible in evidence,
G etc. — No instrument chargeable with duty shall be admitted
in evidence for any purpose by any person having by law or
consent of parties authority to receive evidence, or shall be
acted upon, registered or authenticated by any such person or
by any public officer, unless such instrument is duly stamped :
Provided that—
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 333
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(a) any such instrument shall be admitted in evidence on A
payment of the duty with which the same is chargeable, or, in
the case of any instrument insufficiently stamped, of the amount
required to make up such duty, together with a penalty of five
rupees, or, when ten times the amount of the proper duty or
deficient portion thereof exceeds five rupees, of a sum equal
B
to ten times such duty or portion;
(b) where any person from whom a stamped receipt could
have been demanded, has given an unstamped receipt and such
receipt, if stamped, would be admissible in evidence against
him, then such receipt shall be admitted in evidence against
him on payment of a penalty of one rupee by the person C
tendering it;
(c) Where a contract or agreement of any kind is effected by
correspondence consisting of two or more letters and any one
of the letters bears the proper stamp, the contract or agreement
shall be deemed to be duly stamped; D

(d) nothing herein contained shall prevent the admission of any
instrument in evidence in proceeding in a Criminal Court, other
than a proceeding under Chapter XII or Chapter XXXVI of
the Code of Criminal Procedure 1898 (V of 1898);
E
(e) 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.”
F
47. Equally, we must bear in mind Section 36. It provides as follows:
“36. 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 61, be called
in question at any stage of the same suit or proceeding on the
G
ground that the instrument has not been duly stamped.”
48. Section 38 deals with, how instruments, which are impounded,
must be dealt with. It reads as follows:
“38. Instruments impounded how dealt with. — (1) When the
person impounding an instrument under section 33 has by law H
334 SUPREME COURT REPORTS [2023] 9 S.C.R.

A or consent of parties authority to receive evidence and admits
such instrument in evidence upon payment of a penalty as
provided by section 35 or of duty as provided by section 37, he
shall send to the Collector an authenticated copy of such
instrument, together with a certificate in writing, stating the
amount of duty and penalty levied in respect thereof, and shall
B
send such amount to the Collector, or to such person as he
may appoint in this behalf.”
49. Section 42 is relevant and it reads as follows: -
“42. Endorsement of instruments on which duty has been paid
C under sections 35, 40 or 41— (1) When the duty and penalty
(if any), leviable in respect of any instrument have been paid
under section 35, section 40 or section 41, 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
D amount of each) have been levied in respect thereof, and the
name and residence of the person paying them.
(2) Every instrument so endorsed shall thereupon be admissible
in evidence, and may be registered and acted upon and
authenticated as if it had been duly stamped, and shall be
E delivered on his application in this behalf to the person from
whose possession it came into the hands of the officer
impounding it, or as such person may direct:
Provided that—

F (a) no instrument which has been admitted in evidence upon
payment of duty and a penalty under section 35, shall be so
delivered before the expiration of one month from the date of
such impounding, or if the Collector has certified that its further
detention is necessary and has not cancelled such certificate;
(b) nothing in this section shall affect clause 3.”
G
50. Section 62(1)(b) makes it punishable with fine, which may
extend to Rs.500/- for a person to execute or sign otherwise than as a
witness, any instrument chargeable with duty, without the same being
duly stamped. The proviso, no doubt, contemplates that if any penalty
has been paid under Sections 35, 40 or 61, the same shall be reduced.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 335
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

I. HINDUSTAN STEEL LIMITED ANALYSED A
51. This Court in Hindustan Steel Limited v. Dilip Construction
Company21, was dealing with the following set of facts:
An award was made by an Umpire under the Indian Arbitration
Act, 1940, which was filed in the Court. The appellant applied to
set aside the Award, inter alia, contending that it was unstamped. B
It contended that it was on that account, invalid, illegal and liable
to be set aside. The respondent thereupon applied to the District
Court to have the Award impounded and validated by the levy of
stamp duty and penalty. The Award was impounded and visited
with duty and penalty, which was duly paid and certified. The C
contention of the appellant was that, not only could an unstamped
Award, be not admitted in evidence, but it could not be acted
upon, as the instrument had no existence in the eye of law. It is
thereupon that the Court had held, inter alia:
“5. An instrument which is not duly stamped cannot be D
received in evidence by any person who has authority to receive
evidence, and it cannot be acted upon by that person or by any
public officer. Section 35 provides that the admissibility of an
instrument once admitted in evidence shall not, except as
provided in Section 61, be called in question at any stage of the
same suit or proceeding on the ground that the instrument has E
not been duly stamped.
6. Relying upon the difference in the phraseology between
Sections 35 and 36 it was urged that an instrument which is
not duly stamped may be admitted in evidence on payment
of duty and penalty, but it cannot be acted upon because F
Section 35 operates as a bar to the admission in evidence of
the instrument not duly stamped as well as to its being acted
upon, and the Legislature has by Section 36 in the conditions
set out therein removed the bar only against admission in
evidence of the instrument. The argument ignores the true G
import of Section 36. By that section an instrument once
admitted in evidence shall not be called in question at any stage
of the same suit or proceeding on the ground that it has not
been duly stamped. Section 36 does not prohibit a challenge
21
(1969) 1 SCC 597 H
336 SUPREME COURT REPORTS [2023] 9 S.C.R.

A against an instrument that it shall not be acted upon because it
is not duly stamped, but on that account there is no bar against
an instrument not duly stamped being acted upon after payment
of the stamp duty and penalty according to the procedure
prescribed by the Act. The doubt, if any, is removed by the
terms of Section 42(2) which enact, in terms unmistakable,
B
that every instrument endorsed by the Collector under Section
42(1) shall be admissible in evidence and may be acted upon as
if it has been duly stamped.”
We may also profitably refer to paragraph-8 as well:
C “8. Our attention was invited to the statement of law by
M.C. Desai, J., in Mst Bittan Bibi v. Kuntu Lal [ILR (1952)
2 All 984] :
“A court is prohibited from admitting an instrument in
evidence and a court and a public officer both are prohibited
D from acting upon it. Thus a court is prohibited from both
admitting it in evidence and acting upon it. It follows that
the acting upon is not included in the admission and that a
document can be admitted in evidence but not be acted
upon. Of course it cannot be acted upon without its being
admitted, but it can be admitted and yet be not acted upon.
E If every document, upon admission, became automatically
liable to be acted upon, the provision in Section 35 that an
instrument chargeable with duty but not duly stamped, shall
not be acted upon by the Court, would be rendered
redundant by the provision that it shall not be admitted in
F evidence for any purpose. To act upon an instrument is to
give effect to it or to enforce it.”
“In our judgment, the learned Judge attributed to Section
36 a meaning which the legislature did not intend. Attention
of the learned Judge was apparently not invited to Section
G 42(2) of the Act which expressly renders an instrument,
when certified by endorsement that proper duty and penalty
have been levied in respect thereof, capable of being acted
upon as if it had been duly stamped.”
52. We draw the following conclusions, as to what has been laid
down by a Bench of three learned Judges in Hindustan Steel (supra):
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 337
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

i. The Stamp Act is a fiscal measure intended to raise revenue; A
ii. The stringent provisions of the Act are meant to protect the
interest of the Revenue;
iii. It is not intended to be used as a weapon by a litigant to
defeat the cause of the opponent;
B
iv. Upon the endorsement being made under Section 42(2) of
the Stamp Act, the document would be admissible in
evidence and can be acted upon.
We may only observe that the Court did not take into consideration
Section 17 of the Stamp Act, which provides for the precise time, at C
which, the instrument is to be stamped. Equally, the Court did not bear in
mind that Section 62 of the Stamp Act, penalises transgression of Section
17, inter alia. Still further, the Court was dealing with an instrument after
it was impounded, and the payments made which were certified under
Section 42(2).
D
It is true that an unstamped instrument is compulsorily impoundable
under Section 33 of the Stamp Act. The procedure to be followed
thereafter is also provided in the Act. After the procedure is followed
and the duty and the penalty is paid, the instrument would come to be
visited with the endorsement under Section 42(2). Thereafter, it becomes
enforceable and it can be acted upon, as held in Hindustan Steel (supra). E
J. THE INDIAN CONTRACT ACT, 1872 - A SURVEY;
DISSECTION OF GARWARE, VIDYA DROLIA AND N.N.
GLOBAL
53. Section 2(g) of the Contract Act provides that an agreement,
F
not enforceable by law, is said to be void, whereas, Section 2(h) declares
that an agreement enforceable by law, is a contract. Section 2(j) of the
same Act provides that a contract, which ceases to be enforceable by
law, becomes void, when it ceases to be enforceable. We may, at once,
notice the distinction between an agreement and a contract. Not every
agreement is a contract. Only those agreements, which are enforceable, G
are treated as contracts. The result of a contract, ceasing to be
enforceable, is that, the contract becomes void. Next, we may notice
Section 10. It reads as follows:
“What agreements are contracts. - All agreements are contracts,
if they are made by the free consent of parties, competent to H
338 SUPREME COURT REPORTS [2023] 9 S.C.R.

A contract, for a lawful consideration and with a lawful object and
are not hereby expressly declared to be void.
Nothing herein contained shall affect any law in force in India,
and not hereby expressly repealed, by which any contract is
required to be made in writing or in the presence of witnesses, or
B any law relating to the registration of documents.”
Section 10, in the first part, when broken down into parts, consists
of the following: ‘Agreement must be made by free consent of parties’.
54. Section 14 defines ‘free consent’ and it reads:

C “14. ‘Free consent’ defined. -Consent is said to be free when it is
not caused by-
(1) Coercion, as defined in section 15, or
(2) Undue influence, as defined in section 16, or
(3) Fraud, as defined in section 17, or
D
(4) Misrepresentation as defined in section 18, or
(5) Mistake, subject to the provisions of sections 20, 21 and 22.
Consent is said to be so caused when it would not have been
given but for the existence of such coercion, undue influence,
E fraud, misrepresentation or mistake.”
55. The next part of Section 10 to be noticed is the expression
‘parties competent to contract’. Section 11 of the Contract Act declares
that every person is competent to contract, according to the law, to which
he is subject, and who is of sound mind and is not disqualified from
F contracting by any law to which he is subject. Since Section 11 requires
soundness of mind for the person to be competent to contract, Section
12 articulates as to what is sound mind for the purpose of the Contract
Act. The next part in Section 10 is that there must be ‘a lawful
consideration and a lawful object’. The said aspect is dealt with in Section
23. It reads as follows:
G
“23. What consideration and objects are lawful, and what not. -
The consideration or object of an agreement is lawful, unless-
It is forbidden by law; or
Is of such a nature that, if permitted, it would defeat the provisions
H of any law, or is fraudulent; or
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 339
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Involves or implies, injury to the person or property of another; or A
The Court regards it as immoral, or opposed to public policy.
In each of these cases, the consideration or object of an
agreement is said to be unlawful. Every agreement of which the
object or consideration is unlawful is void.”
B
56. The last part of the first limb of Section 10 provides that all
agreements are contracts ‘which are not hereby declared to be void’.
Sections 24 to 30 are the remaining provisions in Chapter II, which deal
with agreements, which are declared to be void within the meaning of
Section 10. This is apart from Section 20 as we shall notice later. Also,
the second part of Section 10 provides that peremptory requirements C
may still have to be met to constitute a contract a law.
57. Further, we have already noticed that free consent is
indispensable for making an agreement, a contract, under Section 10.
Free consent has been defined in Section 14 and it must be read in
conjunction with Sections 15 to 18 as Sections 15 to 18 define coercion, D
undue influence, fraud and misrepresentation, respectively. Now, the
result of there being coercion, fraud or misrepresentation in securing the
consent of a party, is provided for in Section 19 of the Contract Act. The
presence of the three elements results in what is described as a contract
voidable at the option of the party, whose consent was so caused. The E
effect of misrepresentation has been dealt with by this Court in the
judgment reported in Ganga Retreat & Towers Ltd. v. State of
Rajasthan22, as follows:
“28. According to Section 19 of the Contract Act when consent
to an agreement is caused by misrepresentation, the agreement is F
a contract voidable at the option of the party whose consent was
so caused. The latter may, if he thinks fit, insist that the contract
shall be performed and that he shall be put in the position in which
he would have been if the representations made had been true.
According to Section 2 clause (i), an agreement which is
enforceable by law at the option of one or more of the parties G
thereto, but not at the option of the other or others, is a voidable
contract. It is not necessary for us to record a clear finding whether
there was a misrepresentation on the part of the respondents or

22
(2003) 12 SCC 91 H
340 SUPREME COURT REPORTS [2023] 9 S.C.R.

A not. Suffice it to observe that a voidable contract confers the right
of election on the party affected to exercise its option to avoid the
legal relations created by the contract or to stand by the contract
and insist on its performance. However, his election to stand by
the contract once exercised would have the effect of ratification
of the contract with the knowledge of misrepresentation on the
B
part of the other party and that would extinguish its power of
avoidance. In the very nature of the right conferred on the party
affected, the law expects it to exercise its option promptly and
communicate the same to the opposite party; for until the right of
avoidance is exercised, the contract is valid, and things done
C thereunder may not thereafter be undone.
29. A right to rescind for misrepresentation can be lost in a variety
of ways, some depending on the right of election. A representee
on discovering the truth loses his right to rescind if once he has
elected not to rescind. But he may lose even before he has made
D any election where by reason of his conduct or other circumstances
it would be unjust or inequitable that he retains the right. For
instance, where third parties have acquired rights under the
contract; again where it would be unjust to the representor because
it is impossible to restore him to his original position. Restitutio in
integrum is not only a consequence of rescission, its possibility is
E indispensable to the right to rescind. Again, delay in election may
make it unjust that the right to elect should continue. For this reason
the right to rescission for misrepresentation in general must be
promptly exercised. (See Indian Contract and Specific Relief Acts,
Pollock and Mulla, 11th Edn., Vol. I, pp. 269-70.)”
F Section 19A deals with there being no free consent on account of
the consent of a party being obtained by undue influence. The said vitiating
factor also, does not result in a void agreement but a voidable contract.
Section 14, defining ‘free consent’, provides that consent is said to be
free, when it is not caused by mistake, subject to the provisions of Sections
20, 21 and 22, after referring to the other four aspects, which detract
G
from free consent. We notice what Section 20 provides. Section 20
declares that where both the parties to an agreement are under a mistake
as to a matter of fact essential to the agreement, the agreement is void.
We may observe that this again is a case of an agreement, which is
declared void within the meaning of Section 10, apart from Sections 24
H to 30. Section 21 provides that a mistake as to any law in force in India,
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 341
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

would not make the contract voidable. Thus, while Section 10 sets out A
the core element for an agreement to become a contract, the effect of
non-conformity varies. Therefore, the lack of competency and absence
of sound mind completely detract from the formation of a ‘contract’.
The absence of free consent arising from coercion, undue influence,
misrepresentation and even fraud will, however, result in an agreement
B
which is a ‘contract’ though voidable (see Sections 19 and 19A of the
Contract Act). The effect of mistake, is again spelt out in Section 22,
insofar as it provides that a contract is not voidable merely because one
of the parties consented to the contract, labouring under a mistake as to
a matter of fact. Section 37 comes under Chapter IV which deals with
performance of contracts and of contracts which must be performed. C
Section 37 reads:
“37. Obligation of parties to contract. -The parties to a contract
must either perform, or offer to perform, their respective promises,
unless such performance is dispensed with or excused under the
provisions of this Act, or of any other law. D
Promises bind the representatives of the promisors in case of
the death of such promisors before performance, unless a contrary
intention appears from the contract.”
58. We have noticed that in the case of fraud, misrepresentation
or coercion, the person whose consent is procured on the said basis, E
may insist that the contract be performed and that he be put in the position,
in which he could have been, if the representation had not been made. In
this context, we may notice, Section 64 of the Contract Act:
“64. Consequences of rescission of a voidable contract. -When
a person at whose option a contract is voidable rescinds it, the F
other party thereto need not perform any promise therein contained
in which he is the promisor. The party rescinding a voidable contract
shall, if he had received any benefit thereunder from another party
to such contract, restore such benefit, so far as may be, to the
person from whom it was received.” G
59. As to what would happen, if an agreement is discovered to be
void or becomes void, is provided in Section 65. It declares that when
such an eventuality takes place, any person, who has, under such
agreement or contract, received any advantage, is bound to restore it to
the person from whom he has received it or make compensation for the H
342 SUPREME COURT REPORTS [2023] 9 S.C.R.

A same. In the context of Section 65, we may notice the nexus with Section
2(j) of the Contract Act. Section 2(j), as we have noticed, provides that,
when the contract ceases to be enforceable, it becomes void. Thus,
what may be an agreement and which fulfils the requirement that it is
enforceable and, therefore, becomes a contract, can upon it ceasing to
be enforceable, become void. However, here we must notice the view
B
expressed by the Privy Council in the Judgement reported in Mahanth
Singh v. U Ba Yi23. Therein the Court, inter alia, held as follows:
“A still more startling result, however, is brought about on this
construction if s.2(j) is read with s.65 of the Indian Contract Act,
since in such a case not only would every unenforceable contract
C become void but each party would be under the obligation of
restoring or making compensation for any benefit received, no
matter how much had been done towards the performance by
either party.
But it is not necessary to adopt a construction leading to such
D surprising results.
The solution is, in their Lordships’ view, to be found in the
wording of s.2(j) itself. Not every unenforceable contract is
declared void, but only those unenforceable by law, and those
words mean not unenforceable by reason of some procedural
E regulation, but unenforceable by the substantive law. For example,
a contract which was from its inception illegal, such as a contract
with an alien enemy, would be avoided by s.2(g), and one which
became illegal in the course of its performance, such as a contract
with one who had been an alien friend but later became an alien
F enemy, would be avoided by s.2(j). A mere failure to sue within
the time specified by the statute of limitations or an inability to sue
by reason of the provisions of one of the Orders under the Civil
Procedure Code would not cause a contract to become void.”
60. A Full Bench of the Allahabad High Court, while dealing with
G the effect of inclusion of non-transferable occupancy rights, along with
other properties, which were transferable in a registered mortgage deed
and, after referring to Section 23 of the Contract Act, held, in Dip Narain
Singh v. Nageshar Prasad and another24, inter alia, as follows:

23
AIR 1939 PC 110
H 24
AIR 1930 ALL 1 (FB) / 1929 SCC OnLine ALL 1
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 343
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

“There is a clear distinction between an agreement which may be A
forbidden by law and one which is merely declared to be void. In
the former case the legislature penalises it or prohibits it. In the
latter case, it merely refuses to give effect to it. If a void contract
has been carried out and consideration has passed, the promisor
may not in equity be allowed to go back upon it without restoring
B
the benefit which he has received. But if the promise comes to
court to enforce it he would receive no help from a court of law.
As pointed out above, the transfer of an occupancy tenancy is not
actually forbidden by law but is declared to be void.”
(Emphasis supplied)
C
61. To the extent that N.N. Global (supra) proceeds on the basis
that the Stamp Act is a fiscal enactment and the object is to raise revenue,
there may not be any serious room for objection.
As far as the finding in paragraph-28 of N.N. Global(supra) that
the decision in SMS Tea Estates (supra) does not lay down the correct D
law, when it holds that an Arbitration Agreement, in an unstamped
commercial contract, cannot be acted upon or is rendered unenforceable,
we are of the view that the finding in N.N. Global (supra) does not
appear to be correct. A perusal of paragraph-29 would show that the
Court in N.N. Global (supra) proceeded on the basis that the Arbitration
Agreement, being an independent contract is not chargeable to payment E
of stamp duty and it would not invalidate the Arbitration Clause or render
it unenforceable, since it had an independent existence of its own, cannot
hold good in view of the admitted position before us that an Arbitration
Agreement, in its own right, is exigible to stamp duty. The whole premise
of the Court in N.N. Global (supra) being that the Arbitration Agreement, F
not being exigible to duty and it having a separate existence, the
commercial contract in which the Arbitration Agreement is contained,
being unstamped, would not impact the Arbitration Agreement, cannot
hold good. The reasoning in N.N. Global (supra) in paragraph-32, for
disapproving of Garware (supra) in paragraph-22 thereof, that the
Arbitration Clause would be non-existent in law and unenforceable till G
the stamp duty in adjudicated and paid on the substantive contract, is
again on the premise that the Arbitration Agreement is a separate
agreement under the Stamp Act, which is not exigible to stamp duty,
which we have found is not the case in law. In this regard, we may refer
to Article 5 of the Stamp Act: H
344 SUPREME COURT REPORTS [2023] 9 S.C.R.

A

B

C

D

(Emphasis supplied)
62. While the Stamp Act is a fiscal enactment intended to raise
revenue, it is a law, which is meant to have teeth. The point of time, at
E which the stamp duty is to be paid is expressly provided for in Section 17
of the Stamp Act. There cannot be any gainsaying, that call it a fiscal
enactment, it is intended that it is to be implemented with full vigour. The
duty of a Court must be to adopt an interpretation which results in the
enforcement of the law, rather than allowing the law to be flouted with
impunity. Once this principle is borne in mind, the task of the Court
F becomes less difficult. The law, as contained in Section 33 read with
Section 35 of the Stamp Act, would result in the following conclusions:
i. Every person having, by law or consent of parties, the
authority to receive evidence, before whom, an instrument
is produced, is duty-bound to immediately impound the same.
G This is upon his forming the opinion that the instrument is
not duly stamped. In a case, where the instrument does not
bear any stamp at all, when it is exigible to stamp duty,
there can be little difficulty in the person forming the opinion
that it is not duly stamped. No doubt, under Section 33(2),
in cases of ambiguity, the person shall examine the
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 345
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

instrument to arrive at the liability. Apart from a person A
having authority to receive evidence, which, no doubt, would
include a court and an Arbitrator, every person In-charge
of a Public Office, before whom, such instrument is
produced or comes in the performance of his functions,
has the duty to impound the unstamped or insufficiently
B
stamped document, arises. This is no doubt after ‘examining’
the instrument and ascertaining as to whether the instrument
was stamped as required when the document was executed
or first executed [See Section 33(2)]. One exception in
Section 33 is an Officer of the Police. In other words, the
Officer of the Police has no authority to impound an C
unstamped or insufficiently stamped document produced
before him. No doubt, a Criminal Court is not under
compulsion vide the proviso. Section 33, no doubt, authorises
delegation of power.
ii. Under Section 35, the Law-Giver has disabled the admission D
in evidence of an instrument not stamped or insufficiently
stamped, for any purpose. This would include even a
collateral purpose. This is in stark contrast with a document,
which is compulsorily registerable but which is not registered.
Under Section 49 of the Registration Act, 1908, an
unregistered document may be used for proving a collateral E
transaction. Even this is impermissible, if the document is
not stamped or insufficiently stamped. Section 35 further
proceeds to declare that such an unstamped or insufficiently
stamped document shall not be acted upon. It is important
to juxtapose the embargo cast on an unstamped document F
as aforesaid with Section 2(h) of the Contract Act. Section
2(h) of the Contract Act provides that an agreement, which
is enforceable in law is a contract whereas Section 2(g), an
agreement not enforceable is void. The words ‘enforceable
in law’ or ‘not enforceable in law’, understood in the context
of Sections 33 and 35 of the Stamp Act, would mean that G
upon there being an occasion, which necessitates one of
the parties to the agreement having to enforce the same
through recourse to sanctions available in law, the same
should be vouchsafed to him. Ordinarily, agreements are
enforced through actions in Civil Courts. Remedies may be H
346 SUPREME COURT REPORTS [2023] 9 S.C.R.

A sought before Public Authorities. Both the Civil Courts and
the Public Authorities are tabooed from giving effect to an
unstamped instrument. Section 33 does not give a choice to
the person, who has authority by law, or with consent, to
take evidence, or to any Public Officer, but to impound the
agreement. The unstamped or insufficiently stamped
B
document cannot be used as evidence for any purpose. It
would be inconceivable, as to how, it could be in the same
breath, be found that an unstamped document is yet
enforceable in law or that it is not enforceable in law. It is
another matter that the parties may act upon it. Goods or
C services may change hands, for instance, under a document,
which may be otherwise exigible to stamp duty. What is,
however, relevant is that the State will not extend its
protection, by appropriate sanctions. The rights, which would
otherwise have been available, had the agreement been
stamped, would remain frozen or rather they would not exist.
D
We are further reinforced in our view, therefore, that the
views expressed by this Court in Garware (supra) in
paragraph-22, following SMS Tea Estates (supra), represent
the correct position in law.
iii. Next, we must pass on to the correctness of the views
E expressed in paragraph-29 of Garware (supra). The Court
drew upon the Judgment in United India Insurance
Company Limited and another v. Hyundai Engineering
& Construction Company Limited and others25.
63. Justice Hrishikesh Roy in paragraph-84 of his draft Judgement
F finds that in paragraph-29 in Garware (supra), this Court relied onUnited
India Insurance Company Limited v. Hyundai Engineering and
Construction Company Limited26. Our learned Brother further notes
in paragraph-84.1 that in Hyundai(supra), the issue of stamping was
not in consideration and the question was whether the matter fell within
G excepted matter as the Arbitration Clause was dependant on whether
the insurer accepted liability. Justice Hrishikesh Roy further finds that
the approach in Garware (supra) in relying upon Hyundai (supra) was
incorrect. This is as Hyundai (supra) has nothing to do with stamping

25
(2018) 17 SCC 607
H 26
(2018) 17 SCC 607
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 347
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

and should have been distinguished. Our learned Brother notices the A
contention of the learned Amicus that Hyundai (supra) relied on
Oriental Insurance Company v. Narbheram Power and Steel Private
Limited27, in which case, the Court did not have occasion to interpret
Section 11(6)(a) of the Act.
64. It is true that in Hyundai (supra), this Court was not dealing B
with the impact of the Stamp Act. The Court was dealing rather with the
issue as to the effect of the Clause, in which it was agreed that there
would be no arbitration, if the insurer disputed or did not accept liability
under or irrespective of the policy. In the context of the said Clause, this
Court, in Hyundai (supra), went on to hold, inter alia, that the denial of C
the plea about its liability by the insurer, rendered the ‘making of the
Arbitration Clause ineffective and incapable of being enforced, if not
non-existent’. No doubt, in paragraph-29 of Garware(supra),this Court
found that ‘likewise in the facts of the present case, it is clear that the
Arbitration Clause, i.e., contained in the sub-contract, would not exist as
a ‘matter of law’ until the sub-contract is duly stamped as has been held D
by us above’. Therefore, the rationale for finding that an Arbitration
Agreement in an unstamped sub-contract would not exist, was already
furnished in paragraph-22. This Court was only drawing support from
Hyundai (supra) for the proposition about non-existence of the instrument
‘in law’. While, Hyundai (supra) did not relate to the Stamp Act, and E
even, removing the reference to Hyundai(supra), the finding about the
non-existence of an unstamped agreement, would be supportable on the
reasoning that what is contemplated in Section 11(6)(a) is no mere facial
existence or existence in fact but also existence in law.
65. This Court in Garware (supra) took the view that unless the F
sub contract was stamped, the arbitration clause contained therein would
not exist as a matter of law. This finding has been rendered apparently
on the basis of the impact of the amendment leading to the insertion of
Section 11(6A). The Court in Garware (supra) had infact after setting
out the law prior to the amendment based on the Two Hundred and
Forty-Sixth Report of the Law Commission of India found in paragraph- G
19 that the Law Commission Report did not mention about SMS Tea
Estates (supra). It is further found that it is for the very good reason that
the court does not while deciding an application under Section 11 decide

27
(2018) 6 SCC 534 H
348 SUPREME COURT REPORTS [2023] 9 S.C.R.

A any preliminary issue. The Court further found that it was giving effect
to the provisions of a mandatory enactment, which enjoins upon the
Court, under the provisions of the Stamp Act, to first impound the
agreement, and if only the penalty and the duty is paid thereafter, to act
upon it. The Court had also found that it was not possible to bifurcate the
arbitration clause. We would find that as found by us, being unstamped
B
or insufficiently stamped, the agreement would not be enforceable till it
is ‘validated’ which is permissible only in the manner provided in the
Stamp Act and till then it would not exist ‘in law’.
66. In the context of Article 136 of the Limitation Act, 1963, a
Bench of three learned Judges in Dr. Chiranji Lal (D) by Lrs. v. Hari
C Das (D) by Lrs.28 had to deal with the argument that a Final Decree for
partition passed on 07.08.1981 became enforceable only on 25.05.1982,
on which day the Decree came to be engrossed with stamp papers.
Under Article 136, the period of twelve years begins to run when the
‘Decree or Order’ becomes ‘enforceable’, inter alia. The Court, inter
D alia, held as follows:
“23. Such an interpretation is not permissible having regard to the
object and scheme of the Indian Stamp Act, 1899. The Stamp Act
is a fiscal measure enacted with an object to secure revenue for
the State on certain classes of instruments. It is not enacted to
E arm a litigant with a weapon of technicality to meet the case of
his opponent. The stringent provisions of the Act are conceived in
the interest of the Revenue. Once that object is secured according
to law, the party staking his claim on the instrument will not be
defeated on the ground of initial defect in the instrument
(Hindustan Steel Ltd. v. Dilip Construction Co. [(1969) 1 SCC
F 597]). …”
xxx xxx xxx
25. The engrossment of the final decree in a suit for partition
would relate back to the date of the decree. The beginning of the
period of limitation for executing such a decree cannot be made
G
to depend upon date of the engrossment of such a decree on the
stamp paper. The date of furnishing of stamp paper is an uncertain
act, within the domain, purview and control of a party. No date or
period is fixed for furnishing stamp papers. No rule has been shown
28
H (2005) 10 SCC 746
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 349
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

to us requiring the Court to call upon or give any time for furnishing A
of stamp paper. A party by his own act of not furnishing stamp
paper cannot stop the running of period of limitation. None can
take advantage of his own wrong. The proposition that period of
limitation would remain suspended till stamp paper is furnished
and decree engrossed thereupon and only thereafter the period of
B
twelve years will begin to run would lead to absurdity. In Yeswant
Deorao Deshmukh v. Walchand Ramchand Kothari [1950 SCC
766 : 1950 SCR 852 : AIR 1951 SC 16] it was said that the payment
of court fee on the amount found due was entirely in the power of
the decree-holder and there was nothing to prevent him from
paying it then and there; it was a decree capable of execution C
from the very date it was passed.
26. Rules of limitation are meant to see that parties do not resort
to dilatory tactics, but seek their remedy promptly. As abovenoted,
there is no statutory provision prescribing a time-limit for furnishing
of the stamp paper for engrossing the decree or time-limit for D
engrossment of the decree on stamp paper and there is no statutory
obligation on the court passing the decree to direct the parties to
furnish the stamp paper for engrossing the decree. In the present
case the Court has not passed an order directing the parties to
furnish the stamp papers for the purpose of engrossing the decree.
Merely because there is no direction by the Court to furnish the E
stamp papers for engrossing of the decree or there is no time-
limit fixed by law, does not mean that the party can furnish stamp
papers at its sweet will and claim that the period of limitation
provided under Article 136 of the Act would start only thereafter
as and when the decree is engrossed thereupon. The starting of F
period of limitation for execution of a partition decree cannot be
made contingent upon the engrossment of the decree on the stamp
paper. …”
(Emphasis supplied)
67. However, the said view must be understood in the context of
G
the Law of Limitation standing in the peril of being wholly defeated by
‘enforceability’ of a Decree or Order within the meaning of Article 136,
being made dependant on an act of volition of a party to pay the requisite
stamp duty. Here, in the case before us, we are concerned with the duty
of a Court, inter alia, under Sections 33 and 35 of the Stamp Act and its
impact on an unstamped or insufficiently stamped agreement containing H
350 SUPREME COURT REPORTS [2023] 9 S.C.R.

A an Arbitration Clause. This is apart from the meaning to be attributed to
the words ‘existence of an Arbitration Agreement’ in Section 11(6A) of
the Act. We have explained the concept of ‘enforceability’ in the context
of the Contract Act. What is closer to the facts is the concept of
enforceability or rather the lack of enforceability resulting in the voidness
of the contract in the sense explained by us.
B
K. THE STAMP ACT – WHETHER A PROCEDURAL
LAW?
68. In this context, it will be profitable to notice the following
discussion from the work Salmond on Jurisprudence, Twelfth Edition.
C Dealing with Law of Procedure, it is stated:
“What, then, is the true nature of the distinction? The law of
procedure may be defined as that branch of the law which governs
the process of litigation. It is the law of actions- jus quod ad
actiones pertinent-using the term action in a wide sense to include
D all legal proceedings, civil or criminal. All the residue is substantive
law, and relates, not to the process of litigation, but to its purposes
and subject-matter. Substantive law is concerned with tPhe ends
which the administration of justice seeks; procedural law deals
with the means and instruments by which those ends are to be
attained. The latter regulates the conduct and relations of courts
E and litigants in respect of the litigation itself; the former determines
their conduct and relations in respect of the matters litigated.”
(Emphasis supplied)
69. The Stamp Act, while it may be a fiscal measure, it may not
F fall within the fold of procedural law. The mere fact that Sections 33 and
35 may apply at a stage, when the person approaches a Court, inter alia,
would not mean that the Stamp Act, providing for a duty on the executants
to stamp the instrument at the point of time, as declared in Section 17,
and what is more, penalising a deviation under Section 62, falls within
the domain of procedural law. Pertinently, we may, in the Fourteenth
G Edition of The Indian Contract and Specific Relief Acts by Pollock and
Mulla, note as follows:
“Unenforceable Contracts
Unenforceable contracts are valid in all respects, but may not
be sued upon by the parties. Such disability may arise for want of
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 351
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

registration; or because the time prescribed for filing the suit has A
expired; or because the plaintiff firm has not been registered; or
the document or instrument does not bear the requisite stamp
duty; or because the lender of money does not possess a licence
under money-lending laws.”
(Emphasis supplied) B
70. We would find that an agreement, which is unenforceable on
account of a substantive law, which would include the Stamp Act, would
not be a contract, applying Section 2(h) of the Contract Act. It is only if
an agreement is enforceable, that it would become a contract. It is only
a ‘contract’, which would be the ‘Arbitration Agreement’, which is C
contemplated in Section 11(6A) of the Act. It may not be apposite to
merely describe an unstamped Arbitration Agreement as a ‘curable
defect’. As long it remains an unstamped instrument, it cannot be taken
notice of for any purpose, as contemplated in Section 35 of the Stamp
Act. It remains unenforceable. Section 17 declares the time at which an
instrument, executed in India, must be stamped. The said provision D
contemplates that stamping of such an instrument must take place before
or at the time of the execution of document. No Public Officer, nor
Court nor Arbitrator, can permit any person to ask them to act upon it or
receive it as evidence. In law, it is bereft of life. It is ‘not enforceable in
law’. In the said sense, it also cannot exist in law.It would be void. Our E
view in this regard that voidness is conflated to unenforceability receives
fortification from Section 2(j) of the Contract Act which renders a contract
which ceases to be enforceable void.
71. What Section 11(6A) contemplates is a contract and it is not
an agreement which cannot be treated as a contract. This is despite the F
use of the words ‘arbitration agreement’ in Section 11(6A). In other
words, contract must conform to Section 7 of the Act. It must also,
needless to say, fulfil the requirements of the Contract Act.
72. A voidable contract within the meaning of Section 19 and
19A, undoubtedly stands in stark contrast to void contracts. However, G
even in the categories of void contracts as for instance, Section 20 of
the Contract Act provides that if on a material point, the parties were
mistaken, the contract would be void. If in a given case where this is the
contention raised by a party in a proceeding under Section 11 when the
agreement otherwise satisfies the requirement of a contract to make it
exist as an Arbitration Agreement, then, the Court would be justified in H
352 SUPREME COURT REPORTS [2023] 9 S.C.R.

A treating the agreement as one which exists and leave it open to the
Arbitrator to go into the question, which can be done after the pleadings
are laid and evidence is unfolded before him. When an Arbitration
Agreement is sought to be brought under the cloud on the basis that it is
a voidable contract which has been avoided, again it may be a matter
where the principle of Kompetenz-Kompetenz may be apposite and again
B
the court under Section 11 would be justified in proceeding on the basis
that an arbitration agreement exists. The question must undoubtedly be
approached from the standpoint of advancing the sublime cause of speedy
commencement, progress and conclusion of arbitration. When Parliament
intervened by amending the Act, while in Section 8, it has employed the
C words prima facie, it has used the word ‘examine’ to ascertain about
the existence of an arbitration agreement in Section 11 (6A). Likewise,
in Section 8 the law giver has used the word ‘valid’ which is missing in
Section 11(6A). Can it be said that an invalid agreement can be said to
exist in law for the purpose of Section 11(6A)?
D 73. What is an invalid document or agreement? It is an expression
which is associated and often conflated with the word void. We have
already noticed Section 20 as an instance where a common mistake of
the parties on a material subject renders the agreement void. We have
also noticed that in view of the very nature of the voidness, a court
under Section 11,may allow the application under Section 11 when shelter
E is taken under Section 20 of the Contract Act by the respondent. It
would turn upon the facts. Coming to invalidity, a contract would be
invalid as for instance if it is executed by a person of unsound mind. This
would equally be the case where it is found that one of the parties was
a minor. As far as the word ‘invalid’ is concerned, it has different shades
F of meaning. In the context of a contract, we notice the following statement
in a judgment of the High Court of Karnataka reported in Imambi v.
Khaja Hussain alias Khajasab29:
“In the context that the words are used the meaning is to be as
laid down in Jones v. Bank of Gumming as follows: -
G “The word “invalid” as applied to a contract does not always
mean an absolute nullity, for a contract may be so imperfect as
not to be enforceable, but not such an absolute nullity that it cannot
be perfected.”

29
H AIR 1988 Karnataka 51
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 353
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

(Vide Words & Phrases – Permanent Edition – West Publishing A
Co. Volume 22A)”
74. The aforesaid statement appears apposite in the context of an
instrument which is unstamped or insufficiently stamped. This is for the
reason that on the one hand as long as it is not stamped or is insufficiently
stamped, it is both liable to be impounded under Section 33 of the Stamp B
Act and it cannot be used as evidence or registered. This is apart from
the unambiguous bar against ‘acting upon’ such an instrument. On the
other hand, if after such an instrument is impounded and duty and penalty
is paid and a certificate is endorsed upon it within the meaning of Section
42(2) signals that the instrument regains life, the bar in Section 35 of the
Stamp Act is removed permanently. Equally, under Section 36 in the C
case of an instrument (not secondary evidence of the instrument) which
is allowed to be let in evidence without objection, then it would qualify as
evidence founding a right. But this is an exception to the rule which is
found in Section 35 of the Stamp Act. Thus, an unstamped or
insufficiently stamped instrument represents a case of an agreement D
which not being enforceable, in the sense that the sanctions in law through
a civil action is impermissible, is in the said sense, invalid. It is not invalid
or void in the sense of it being still born or null and void in the sense that
life cannot be poured into it. We may sum up. An agreement which is
unstamped or insufficiently stamped is not enforceable, as long as it
remains in the said condition. Such an instrument would be void as being E
not enforceable [See Section 2(g) of the Contract Act]. It would not in
the said sense exist in law. It can be “validated” by only the process
contemplated in Section 33 and other provisions of the Stamp Act. We
find the expression ‘validation’ used in the decision of this Court in Hariom
Agrawal v. Prakash Chand Malviya30 which we shall refer to in greater F
detail later. This necessarily means that the court would not view it as
enforceable, and therefore, existing in law. In the sense explained, it
would not be found as ‘not void’ and therefore ‘not invalid’. Thus, in the
context of the Act, the Stamp Act and the Contract Act, we are of the
view that the opinion of this Court in SMS Tea Estates (supra), in this
regard as reiterated in Garware (supra) and approved in Vidya Drolia G
(supra) is correct.
75. Section 11(6A) cannot be understood as merely predicating
for an Arbitration Agreement existing literally. This means that the mere
30
(2007) 8 SCC 514 H
354 SUPREME COURT REPORTS [2023] 9 S.C.R.

A existence of the arbitration agreement for all intents and purposes on the
exterior purporting to project a contract duly executed, may in certain
situations, be insufficient under Section 11. If for reasons such as it
being unstamped when it is clearly required to be stamped, then it cannot
be said to be a case where the agreement exists for it would be no
existence in law. While we agree, the Court must be careful in selecting
B
contracts where an arbitration agreement which is produced is not to be
acted upon for the reason that it does not exist in law, all we hold is that
an Arbitration Agreement, which is unstamped, does not exist and an
unstamped contract, containing an Arbitration Agreement, would not exist
as it has no existence in law.
C L. SECTION 7 OF THE ACT – ITS IMPACT
76. Our learned Brother, Justice Hrishikesh Roy, is right in noticing
that Section 7 of the Act provides for what an Arbitration Agreement
means for the purpose of Part I. However, with great respect, we express
our inability to agree that a plain reading of Section 7 of the Act, would
D make it clear that an Arbitration Agreement can be even non-contractual.
For the purpose of clarity, we may reproduce Section 7(1) of the Act at
this juncture:
“7(1) Arbitration agreement.(1) In this Part, “arbitration
agreement” means an agreement by the parties to submit to
E arbitration all or certain disputes which have arisen or which may
arise between them in respect of a defined legal relationship,
whether contractual or not.”
(Emphasis supplied)

F 77. We are inclined to hold that what Section 7(1) contemplates is
an Arbitration Agreement. We are also inclined to think that what the
Law-Giver has intended to convey is that under the Arbitration
Agreement, the parties must submit disputes, which have arisen or which
may arise between them. The disputes may have arisen or may arise in
respect of a defined legal relationship. The defined legal relationship, in
G turn, can be either contractual or otherwise. Therefore, what can give
rise to disputes can be a legal relationship, which is non-contractual. The
legal relationship may arise from out of a Statute. It may arise in relation
to a tort but an Arbitration Agreement must always mean an agreement.
It is really a contract which is intended as an agreement enforceable by
law is a contract. An Arbitration Agreement may be a Clause in an
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 355
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

agreement providing for Arbitration. It may be a separate or a standalone A
agreement [Section 7(2) of the Act]. An Arbitration Agreement must be
in writing [See Section 7(3) of the Act]. As to what all are comprehended
within the requirement that the Arbitration Agreement must be in writing,
is set out in Sections 7(4)(a) to 7(4)(c). It includes a document which is
signed by the parties [See Section 7(4)(a)]. An Arbitration Agreement
B
would be treated as contained in writing, if there is an exchange of
letters, telex, telegrams or other means of telecommunications, including,
communications through electronic means which provide a record of
the agreement [See Section 7(4)(b)]. Next, we may notice that an
Arbitration Agreement will be treated as contained in writing, if there is
an exchange of statements of claims and defence, in which, the existence C
of the agreement is alleged by a party and not denied by the other [See
Section 7(4)(c)]. Finally, Section 7(5) contemplates an Arbitration
Agreement by incorporation, viz., a reference in a contract to a document
containing an Arbitration Clause, would constitute an Arbitration
Agreement, if the contract is in writing and the reference is such as to
D
make that Arbitration Clause part of the contract. The true scope of
Section 7(5) of the Act has been elaborately considered inM.R.
Engineers & Contractors Private Limited v. Som Datt Builders
Limited31.
78. Section 3(a) of the Stamp Act, no doubt, contemplates that
every instrument mentioned in the Schedule, which, not having been E
previously executed by any person, is executed in India on or after the
first day of July, 1899, is chargeable with duty. Clause (c) of Section 3
also contemplates ‘execution’ of a document out of India, being
chargeable with duty. Section 17 of the Stamp Act also contemplates
that in respect of documents executed in India, they shall be stamped F
before or at the time of execution. Justice Hrishikesh Roy would reason
that an Arbitration Agreement, as defined in Section 7 of the Act, need
not be an instrument chargeable to stamp duty as stamp duty is payable
under the Stamp Act only on instruments, which are executed. The word
‘executed’ has been defined in the Stamp Act as meaning ‘signed’.
G
79. Section 7(3)(b) of the Act contemplates that an exchange of
letters, telex, telegrams or other means of telecommunication, including
communication through electronic means, which provide a record of the
agreement, would constitute an Arbitration Agreement in writing within
31
(2009) 7 SCC 696 H
356 SUPREME COURT REPORTS [2023] 9 S.C.R.

A the meaning of Section 7(3) of the Act. We may notice that the proviso
(c) to Section 35 of the Stamp Act reads as follows:
“(c) Where a contract or agreement of any kind is effected by
correspondence consisting of two or more letters and any one of
the letters bears the proper stamp, the contract or agreement shall
B be deemed to be duly stamped;”
80. Thus, the Stamp Act does contemplate a contract or agreement
being formed through correspondence through two or more letters. It
then suffices that any one of the letters bears the proper stamp. Even
proceeding on the basis that an Arbitration Agreement is contained in
C letters and it is signed and, therefore, executed within the meaning of the
Stamp Act, then, it would fall within the four corners of Sections 33 and
35 of the Stamp Act.
81. We do notice that a Bench of two learned Judges have, in the
Judgment reported in Govind Rubber Limited v. Louids Dreyfus
D Commodities Asia Private Limited32, had this to say about the need for
an Arbitration Agreement being signed:
“15. A perusal of the aforesaid provisions would show that in order
to constitute an arbitration agreement, it need not be signed by all
the parties. Section 7(3) of the Act provides that the arbitration
E agreement shall be in writing, which is a mandatory requirement.
Section 7(4) states that the arbitration agreement shall be in writing,
if it is a document signed by all the parties. But a perusal of clauses
(b) and (c) of Section 7(4) would show that a written document
which may not be signed by the parties even then it can be arbitration
agreement. Section 7(4)(b) provides that an arbitration agreement
F can be culled out from an exchange of letters, telex, telegrams or
other means of telecommunication which provide a record of the
agreement.
16. On reading the provisions it can safely be concluded that an
arbitration agreement even though in writing need not be signed
G by the parties if the record of agreement is provided by exchange
of letters, telex, telegrams or other means of telecommunication.
Section 7(4)(c) provides that there can be an arbitration agreement
in the exchange of statements of claims and defence in which the

32
H (2015) 13 SCC 477
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 357
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

existence of the agreement is alleged by one party and not denied A
by the other. If it can be prima facie shown that the parties are at
ad idem, then the mere fact of one party not signing the agreement
cannot absolve him from the liability under the agreement. In the
present day of e-commerce, in cases of internet purchases, tele
purchases, ticket booking on internet and in standard forms of
B
contract, terms and conditions are agreed upon. In such
agreements, if the identity of the parties is established, and there
is a record of agreement it becomes an arbitration agreement if
there is an arbitration clause showing ad idem between the parties.
Therefore, signature is not a formal requirement under Section
7(4)(b) or 7(4)(c) or under Section 7(5) of the Act.” C
82. When it comes to Section 7(4)(c), what is constituted as an
Arbitration Agreement as being in writing is an exchange of Statement
of Claims and Defence, wherein the existence of an agreement is alleged
by one party and not denied by another. There must however be ‘an
agreement’, the allegation of the existence of which remains unrefuted. D
Since, Section 7(1) defines an arbitration agreement to be one, under
which, parties submit ‘all’ or ‘certain disputes’, which have arisen or will
arise, such an agreement must be alleged to exist and the allegation
must remain undenied. The formation of such an agreement must
necessarily be tested with reference to the indispensable requirements,
such as, competency to contract and presence of sound mind. E

83. All that we are holding is, an Arbitration Agreement must
satisfy the requirements in Section 7(1) and, therefore, it must be an
agreement. Sans an agreement, there cannot be a reference to
arbitration. While Justice Hrishikesh Roy is right in holding that Section
10 of the Contract Act recognises oral agreements and that a written F
agreement is a sine qua non for a valid Arbitration Agreement, Section
10 of the Contract Act, it must be noticed, in the second part, provides
that nothing contained in the first part, would affect any law, which, inter
alia, requires that any contract is required to be made in writing. Section
7(3) of the Act which insists that an arbitration agreement must be in G
writing harmonises with Section 10 of the Contract Act.
84. We would think that whenever an Arbitration Agreement, as
defined in Section 7 of the Act, also attracts stamp duty under the Stamp
Act, then, the provisions of Sections 33 and 35 of the Stamp Act would
come into play. As held in SMS Tea Estates Private Limited(supra), if H
358 SUPREME COURT REPORTS [2023] 9 S.C.R.

A an Arbitration Clause constitutes the Arbitration Agreement and the
instrument, viz., the instrument or contract, in which the Arbitration Clause
is contained, is unstamped, when it is otherwise exigible to stamp duty,
then, the provisions of Section 33 as also Section 35 of the Stamp Act
would operate. The court acting under Section (11) of the Act is not free
to disregard their mandate.
B
85. An Arbitration Agreement, may be a Clause in an instrument,
which attracts stamp duty. In such a case, the Court, acting under Section
11, is bound to act under Sections 33 and 35 of the Stamp Act, if the
instrument is not stamped or insufficiently stamped. If an Arbitration
Agreement is a standalone agreement and which attracts duty under the
C Stamp Act, then also, the same position obtains.
M. THE ALTERNATIVE PERSPECTIVE
86. In Garware (supra), the Court referred to paragraph-59 of
Duro Felguera (supra) to find that, the Court in the said case, proceeded
D on the basis that the mischief that was sought to be remedied by the
insertion of Section 11(6A), was as contained in SBP (supra) and National
Insurance (supra). We must, however, notice that in paragraph-18 of
Garware (supra), the Court referred to paragraph-12 of SBP (supra),
which we have already noticed and, thereafter, the Court went on to
hold, inter alia, as follows:
E
“19. It will be seen that neither in the Statement of Objects and
Reasons nor in the Law Commission Report is there any mention
of SMS Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari
Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] .
This is for the very good reason that the Supreme Court or the
F High Court, while deciding a Section 11 application, does not, in
any manner, decide any preliminary question that arises between
the parties. The Supreme Court or the High Court is only giving
effect to the provisions of a mandatory enactment which, no doubt,
is to protect revenue. SMS Tea Estates [SMS Tea Estates (P)
G Ltd. v. Chandmari Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012)
4 SCC (Civ) 777] has taken account of the mandatory provisions
contained in the Stamp Act and held them applicable to judicial
authorities, which would include the Supreme Court and the High
Court acting under Section 11. A close look at Section 11(6-A)
would show that when the Supreme Court or the High Court
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 359
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

considers an application under Sections 11(4) to 11(6), and comes A
across an arbitration clause in an agreement or conveyance which
is unstamped, it is enjoined by the provisions of the 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 Stamp
B
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 C
and the 1996 Act has been referred to by Raveendran, J. in SMS
Tea Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co.
(P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] when it
comes to an unregistered agreement or conveyance. However,
the Stamp Act, containing no such provision as is contained in
D
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 [SMS Tea Estates (P) Ltd. v. Chandmari E
Tea Co. (P) Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] ,
which continues to apply even after the amendment of Section
11(6-A).”
(Emphasis supplied)
87. This is apart from, the Court after referring to Sections 2(g) F
and 2(h) of the Contract Act, going on to make the observations at
paragraph-22 and, finally, paragraph-29 which we have noticed. In fact,
in paragraph-30, the Court went on to disapprove various Judgments of
High Courts, which included the Full Bench of the High Court of Bombay
in Gautam Landscapes Pvt. Limited v. Shailesh S. Shah33, insofar as G
it related to the High Court holding that after the insertion of Section
11(6A) of the Act, the Court, acting under Section 11(6), need not be
detained by the aspect relating to the document not being stamped.

33
(2019) SCC OnLine Bom 563 H
360 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 88. Section 11(6A) of the Act, no doubt, contemplated constraining
the court to not stray into areas which were permissible under the earlier
regime which was set out in SBP (supra) as explained in National
Insurance (supra). It must be understood that when the law giver changes
the law it would be indeed a wise approach and fully commended in law
to ascertain the mischief which the legislature was dealing with. Equally,
B
the court would naturally enquire as to what is the relief against the
mischief which the law giver has provided. The mischief as we understand
was the perception that courts were overstepping the limits of minimal
interference in consonance with the principle enshrined in Section 5 of
the Act. In other words, if we may bear in mind paragraphs 22.2 and
C 22.3 of National Insurance Company(supra) it would appear that they
fell outside of the question relating to the existence of an arbitration
agreement. The Stamp Act is a law passed by the same law-giver. It is
a law which is meant to have life, and therefore, to be enforced. The
legislature would not have possibly contemplated, when it
incorporatedSection 11(6A), that the courts must turn a blind eye to the
D
injunction of a law and allow it to be defeated. This to our minds involves
adopting an interpretation which would ignore the principle of harmonious
construction of statutes.
89. As far as the conclusion in paragraph 55 of Great Offshore
Ltd. (supra) that since Section 7 of the Act does not stipulate for stamping,
E stamping may not be required under the Stamp Act, does not commend
itself to us as the correct position in law. We are equally unable to
subscribe to the view that stamp duty, inter alia, should be treated as a
‘technicality’. We are also of the view that the view taken by the learned
Single Judge otherwise in the said paragraph again does not represent
F the correct position.
90. Section 5 no doubt provides for a non-obstante clause. It
provides against judicial interference except as provided in the Act. The
non-obstante clause purports to proclaim so despite the presence of any
law which may provide for interference otherwise. However, this does
G not mean that the operation of the Stamp Act, in particular, Sections 33
and 35 would not have any play. We are of the clear view that the
purport of Section 5 is not to take away the effect of Sections 33 and 35
of the Stamp Act. The Court under Section 11 purporting to give effect
to Sections 33 and 35 cannot be accused of judicial interference contrary
to Section 5 of the Act.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 361
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

91. It is nobody’s case that if the contract which contains the A
arbitration clause is an instrument within the meaning of the Stamp Act
is produced before the court under Section 11 of the Act, and it is found
to be unstamped on the face of it, that Sections 33 and 35 and other
allied provisions of the Stamp Act would have no play. In fact, in N.N.
Global (supra), this Court directed the work order (the contract containing
B
the arbitration clause) to be impounded. Section 11 (6A) of the Act which
requires the court to examine whether an arbitration agreement exists,
was the need realized and articulated by Parliament to curb the court
from straying into other areas highlighted in National Insurance (supra).
In other words, proceeding on the basis that an ‘unstamped agreement’
exists, it would not deflect the court of its statutory duty to follow the C
regime under Sections 33 and 35 of the Stamp Act.
N. THE AMICUS CURIE SPRINGS A SURPRISE
92. This Court pointed out to the existence of the Scheme prepared
by the Supreme Court in exercise of the powers under Section 11(10).
Paragraph 2(a) of the Scheme, inter alia, reads as follows: D

“2. Submission of request. -The request to the Chief Justice under
sub-section (4) or sub-section (5) or sub-section (6) of section 11
shall be made in writing and shall be accompanied by-
(a) the original arbitration agreement or a duly certified copy E
thereof;”
93. Thereafter, when the curtains were about to be rung down on
the hearing, the learned Amicus brought the following aspect to notice
of the Court. He pointed out that under the Scheme, the applicant need
produce only the certified copy of the Arbitration Agreement. He would F
draw support from the Judgments of this Court inJupudi Kesava Rao
v. Pulavarthi Venkata Subbarao and others34 and Hariom Agrawal
(supra) to contend that even applying Sections 33 and 35 by the Court at
the stage of Section 11 of the Act, the certified copy cannot be impounded.
He, thus, sought to take the wind out of the sail of the appellant’s
contention, by contending that in most of the cases, since certified copies G
are alone being filed and they cannot be impounded, and as after reference
to the Arbitrator based on the certified copy, the Arbitrator is competent,
in law, under Sections 33 and 35 of the Stamp Act to do the needful, this

34
(1971) 1 SCC 545 H
362 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Court may bear this aspect in mind. Thereupon, Shri Gagan Sanghi,
would point out that even in the certified copy, the factum of payment of
the stamp duty must be entered. The said aspect, in fact, engaged the
attention of this Court in SMS Tea Estates(supra).
94. Reference has been made to Jupudi Kesava Rao (supra), to
B contend that a copy of an instrument, cannot be treated as an instrument
under the Stamp Act for the purpose of Sections 33 and 35 of the Stamp
Act. A copy cannot be impounded under Section 33, it is pointed out.
Therefore, Section 33, which mandates impounding of an unstamped
instrument, would not apply to a certified copy, which is permitted to be
produced under the Scheme. Reliance has been placed on paragraphs-
C 13 and 14 of Jupudi Kesava Rao (supra):
“13. The first limb of Section 35 clearly shuts out from evidence
any instrument chargeable with duty unless it is duly stamped.
The second limb of it which relates to acting upon the instrument
will obviously shut out any secondary evidence of such instrument,
D for allowing such evidence to be let in when the original admittedly
chargeable with duty was not stamped or insufficiently stamped,
would be tantamount to the document being acted upon by the
person having by law or authority to receive evidence. Proviso
(a) is only applicable when the original instrument is actually before
E the Court of law and the deficiency in stamp with penalty is paid
by the party seeking to rely upon the document. Clearly secondary
evidence either by way of oral evidence of the contents of the
unstamped document or the copy of it covered by Section 63 of
the Indian Evidence Act would not fulfil the requirements of the
proviso which enjoins upon the authority to receive nothing in
F evidence except the instrument itself. Section 25 is not concerned
with any copy of an instrument and a party can only be allowed to
rely on a document which is an instrument for the purpose of
Section 35. “Instrument” is defined in Section 2(14) as including
every document by which any right or liability is, or purports to be
G created, transferred, limited, extended, extinguished or recorded.
There is no scope for inclusion of a copy of a document as an
instrument for the purpose of the Stamp Act.
14. If Section 35 only deals with original instruments and not copies
Section 36 cannot be so interpreted as to allow secondary evidence
H of an instrument to have its benefit. The words “an instrument” in
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 363
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Section 36 must have the same meaning as that in Section 35. A
The legislature only relented from the strict provisions of Section
35 in cases where the original instrument was admitted in evidence
without objection at the initial stage of a suit or proceeding. In
other words, although the objection is based on the insufficiency
of the stamp affixed to the document, a party who has a right to
B
object to the reception of it must do so when the document is first
tendered. Once the time for raising objection to the admission of
the documentary evidence is passed, no objection based on the
same ground can be raised at a later stage. But this in no way
extends the applicability of Section 36 to secondary evidence
adduced or sought to be adduced in proof of the contents of a C
document which is unstamped or insufficiently stamped.”
(Emphasis supplied)
95. In Jupudi Kesava Rao (supra), the appellant relied on oral
evidence to prove the lease document which was insufficiently stamped.
The High Court held that oral evidence could not be acted upon to prove D
the lease agreement. The main question, which arose was, whether
secondary evidence of a written agreement to grant a lease, was barred
under Sections 35 and 36 of the Stamp Act. The Court went on to find,
on a survey of the Evidence Act that it did not purport to deal with
admissibility of documents in evidence, which were required to be stamped E
under the Stamp Act. It is thereafter that the Court went on to hold what
was done in paragraphs-13 and 14 of the Judgment. While dealing with
Section 35 of the Act, the Court, inter alia, held that ‘the second limb of
Section 35 of the Stamp Act, which related to acting upon the instrument,
would obviously shut out any secondary evidence of such instrument,
for allowing such evidence to be let in, when the original, admittedly F
chargeable with duty, was not stamped or insufficiently stamped, would
tantamount to the document being acted upon by the person having by
law or Authority, to receive evidence.Proviso (a) is only applicable, it
was found when the original instrument is actually before the Court of
Law and the deficiency in stamp with penalty is paid by the party seeking G
to rely upon the document. It is, thereafter, the Court observed that
‘there is no scope for inclusion of a copy of a document as an instrument
for the purpose of the Stamp Act’. The Court also, in paragraph-14,
found that Section 36 of the Stamp Act, which precludes a party, who
did not object to the admission of an unstamped or insufficiently stamped
H
364 SUPREME COURT REPORTS [2023] 9 S.C.R.

A document, in evidence, from raising the objection later, did not apply to
secondary evidence.
96. In Hariom Agrawal (supra), a Bench of three learned Judges,
was dealing with the impugned Order of the High Court, by which, it
held that a photocopy of the original agreement, could neither be
B impounded nor could it be accepted as secondary evidence. It was after
following Jupudi Kesava Rao (supra), the Court held as follows:
“10. It is clear from the decisions of this Court and a plain reading
of Sections 33, 35 and 2(14) of the Act that an instrument which
is not duly stamped can be impounded and when the required fee
C and penalty has been paid for such instrument it can be taken in
evidence under Section 35 of the Stamp Act. Sections 33 or 35
are not concerned with any copy of the instrument and party can
only be allowed to rely on the document which is an instrument
within the meaning of Section 2(14). There is no scope for the
inclusion of the copy of the document for the purposes of the
D Stamp Act. Law is now no doubt well settled that copy of the
instrument cannot be validated by impounding and this cannot be
admitted as secondary evidence under the Stamp Act, 1899.”
(Emphasis supplied)

E 97. The submission appears to be that the Scheme provides for a
certified copy of the Arbitration Agreement and if the Arbitration
Agreement is a part of the contract, which is either not stamped or
insufficiently stamped and, since, it cannot be impounded under Section
33 of the Stamp Act, cannot be validated. All that the Court has to look
into is, whether an Arbitration Agreement exists.
F
98. It is, no doubt, true that under the Scheme, an applicant can
produce, either the Original or the certified copy. What is a certified
copy? A certified copy is to be understood in the light of Section 76 of
the Indian Evidence Act, 1872 (hereinafter referred to as, ‘the Evidence
Act’, for short). It reads as follows:
G
“76. Certified copies of public documents.—Every public officer
having the custody of a public document, which any person has a
right to inspect, shall give that person on demand a copy of it on
payment of the legal fees therefor, together with a certificate
written at the foot of such copy that it is a true copy of such
H document or part thereof, as the case may be, and such certificate
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 365
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

shall be dated and subscribed by such officer with his name and A
his official title, and shall be sealed, whenever such officer is
authorized by law to make use of a seal; and such copies so
certified shall be called certified copies.—Every 3public officer
having the custody of a public document, which any person has a
right to inspect, shall give that person on demand a copy of it on
B
payment of the legal fees therefor, together with a certificate
written at the foot of such copy that it is a true copy of such
document or part thereof, as the case may be, and such certificate
shall be dated and subscribed by such officer with his name and
his official title, and shall be sealed, whenever such officer is
authorized by law to make use of a seal; and such copies so C
certified shall be called certified copies.” Explanation. —Any
officer who, by the ordinary course of official duty, is authorized
to deliver such copies, shall be deemed to have the custody of
such documents within the meaning of this section.”
99. This necessarily would take us to Section 74 of the Evidence D
Act, which defines what is a ‘public document’. Section 74 reads as
follows:
“74. Public documents. —The following documents are public
documents: —
(1) Documents forming the acts, or records of the acts— E

(i) of the sovereign authority,
(ii) of official bodies and tribunals, and
(iii) of public officers, legislative, judicial and executive, of any
part of India or of the Commonwealth, or of a foreign country; F
of any part of India or of the Commonwealth, or of a foreign
country;
(2) Public records kept in any State of private documents.”
100. We have already noticed that Section 35 of the Stamp Act
interdicts the registration of an instrument unless it is duly stamped. G

101. The interplay of the Evidence Act, the Stamp Act and the
Registration Act is to be understood as follows:
In regard to an instrument, which is executed in India and which
is liable to be stamped, then, stamping has to take place before or at the H
366 SUPREME COURT REPORTS [2023] 9 S.C.R.

A time of the execution of the instrument. It is after the instrument is
stamped that it can be presented for registration. Section 17 of the
Registration Act provides for documents, which are compulsorily
registrable. Section 18 permits registration of other documents at the
option of the persons concerned. An instrument, which is registered,
necessarily involves, it being duly stamped before it is so registered.
B
This result is inevitable, having regard to the impact of Section 35 of the
Stamp Act. In fact, an instrument, which is not duly stamped and which
is produced before the Registering Authority, would be liable to be
impounded under Section 33 of the Stamp Act. What Section 74 read
with Section 76 of the Evidence Act provides for is, the issuance of
C certified copies. Certified copies can be issued only in respect of public
documents. Section 62 inter alia of the Evidence Act defines primary
evidence as the document itself produced for the inspection of the court.
Section 63 of the Evidence Act defines ‘secondary evidence’ as meaning
and including, inter alia, ‘certified copies under the provisions hereinafter
contained’. The provisions ‘hereinafter contained’ referred to in Section
D
63 must be understood as Section 74 read with Section 76. A certified
copy can be given, no doubt, of ‘public records kept in any State of
private documents’. Thus, if a sale deed between two private parties
comes to be registered, instead of producing the original document, a
certified copy of the sale deed, may qualify as secondary evidence and
E a certified copy can be sought for and issued under Section 76 of the
Evidence Act. The expression ‘public records kept in any State of a
private document’ in Section 74 is not confined to documents, which are
registered under the Registration Act. A private document, which is kept
as a public record, may qualify as a public document. What is important
is, to bear in mind that in view of Section 33 of the Stamp Act, an
F
instrument, which is not duly stamped, if it is produced before any Public
Office, it would become liable to be impounded and dealt with as provided
in the Stamp Act. Let us assume a case where a contract, which contains
an Arbitration Clause, is registered. As we have noticed, if the contract,
in which the Arbitration Clause is contained, is exigible to stamp duty,
G then, registration cannot be done without the instrument being duly
stamped. It is keeping the same in mind that in SMS Tea Estates (supra),
this Court held that, ‘if what is produced is a certified copy of the
agreement/contract/instrument, containing the Arbitration Clause, it should
disclose that the stamp duty has been paid on the original’. This again is
for the reason that a certified copy is a true copy of the document. The
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 367
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

Officer, who certifies the document, must be the person having the A
custody of the public document. The public document in the case of
public records of private documents, in the case of a registered document,
would necessarily involve the document being stamped before
registration. The Scheme framed by the Chief Justice, permits the
production of a duly certified copy to relieve the party of the burden of
B
producing the original but what is contemplated is only the production of
the certified copy, which duly discloses the fact of payment of stamp
duty. It is worthwhile to also notice paragraph-5 of the Scheme. It reads:
“5. Seeking further information. -The Chief Justice or the person
or the institution designated by him under paragraph 3 may seek
further information or clarification from the party making the C
request under this Scheme.”
102. Therefore, it is not as if the Judge dealing with an Application
under Section 11 of the Act, is bereft of authority to seek information or
clarification so as to be satisfied that the certified copy satisfies the
requirement as laid down in SMS Tea Estates (supra) that stamp duty D
payable has been paid.
103. We have already indicated the scheme of the Evidence Act
in so far as it relates to the admission of secondary evidence. We have
also found that the Scheme contemplates, without anything more, the
production of a form of secondary evidence, viz., a certified copy of the E
Arbitration Agreement. Even if an Arbitration Agreement between the
two parties becomes a public document under Section 74(c) of the
Evidence Act on the basis that it is a public record, other than as being a
registered document and on the basis that, it was produced before any
public office and it became a public record of a private document,in F
keeping with the mandate of Section 33 of the Stamp Act and other
connected provisions, such a document again would have been impounded,
unless it was originally stamped as per law. In other words, if a certified
copy is produced, along with a request under Section 11 of the Act, to be
treated as a document, on which the Application under Section 11 could
be maintained, it must necessarily comply with the requirement that it G
declares the stamp, which has been paid in regard to the original.
104. The production of a copy of an instrument, may not lead to
the impounding of the copy as Section 33, which mandates impounding,
applies only in regard to the original, which alone is treated as an
H
368 SUPREME COURT REPORTS [2023] 9 S.C.R.

A instrument under Section 2(14) of the Stamp Act. We must understand
the context of the ruling in Jupudi Kesava Rao (supra) and Hariom
Agrawal(supra) to be that a party cannot ‘validate’ an instrument by
producing a copy and by getting it impounded and paying the duty and
penalty. In fact, as observed in paragraph-13 of Jupudi Kesava Rao
(supra), the Court cannot be invited to act upon a copy of an instrument,
B
which is insufficiently stamped. Thus, such a copy, while it cannot be
impounded under Section 33, it cannot also be acted upon under Section
35.
O. SECTIONS 33 AND 35 OF THE STAMP ACT; THE
COURT OR THE ARBITRATOR TO ACT?
C
105. There was considerable debate at the Bar as regards the
wisdom in relegating the issue relating to payment of stamp duty to the
Arbitrator. On the one hand, the learned Amicus, supported by learned
Counsel for the Respondent, would canvass that, bearing in mind the
object of the Act, and in particular, Section 5 of the Act, prohibiting
D judicial interference, except as provided, questions relating to non-
payment of stamp duty and the amount to be paid, are capable of being
dealt with by the Arbitrator. The concern of the Court, that the interest
of the Revenue is protected, is best balanced with the overwhelming
need to fastrack the arbitration proceedings and they are best harmonised
E by ensuring that the Arbitrator will look into the matter and ensure that
the interest of the Revenue is not jeopardised. On the other hand, the
appellant and the intervener would point out that the Court cannot ignore
the mandate of the law contained in Sections 33 and 35 of the Stamp
Act and a view taken by this Court, on the said lines, will only encourage
evasion of the law, whereas, if the Court follows the mandate of Sections
F 33 and 35 of the Stamp Act and adheres to what has been laid down in
Garware (supra), not only would the law be observed, but, when the
matter reaches the Arbitrator, the issue would have been given the quietus.
Such a view would also encourage persons falling in line with the Stamp
Act.
G 106. We see merit in the contention of the appellant. Apart from
the Court acting in consonance with the law, when it adheres to Sections
33 and 35 of the Stamp Act, where it applies, in our view, under the
watchful gaze of the Court, be it the High Court or the Supreme Court,
the issue relating to stamp duty, in a case where there is no stamp duty
H paid, is best resolved.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 369
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

107. The question would arise as follows: A
i. A document containing the Arbitration Clause may not bear
any stamp duty. We have already found that even an
Arbitration Agreement, on its own, may be required to be
stamped, as submitted by the learned Amicus. But then the
Court can proceed on the basis that the amount of stamp B
duty, which the Arbitration Agreement contained in an
Arbitration Clause, would be exigible to being extremely
meagre, there is very little likelihood of such an agreement
not being stamped. Therefore, what the Court is to consider
is, whether when the contract, in which the Arbitration
Clause is contained, is not duly stamped, it becomes the C
duty of the Court to act under Sections 33 and 35 of the
Stamp Act.
ii. We have already indicated the background, consisting of
the views expressed by this Court, about the nature of
review undertaken under Section 11, which led to the D
insertion of Section 11(6A). Parliament clearly intended to
deal with the Court undertaking excessive review, in
exercise of the power under Section 11(6) of the Act. It
was to curtail excessive judicial interference, which was in
keeping also with the principle enshrined in Section 5 of the E
Act that Parliament interfered and enacted the amendment
resulting in Section 11(6A) being inserted. Parliament was
aware of the view taken by this Court in SMS Tea Estates
(supra), namely that, if the Arbitration Agreement was not
duly stamped, then, it had to be impounded and dealt with
as provided therein. The mandate of the Stamp Act did not F
conflict with the legislative command contained in Section
11(6A), viz., to examine whether an Arbitration Agreement
existed. Proceeding on the basis, in fact, that a contract,
containing the Arbitration Agreement, which is not duly
stamped, could be said to exist in law, it would still not
G
dislodge the duty cast on the Court under Section 11 to
follow the mandate of Sections 33 and 35 of the Stamp
Act. In other words, on the aforesaid view, following the
command under Section 11(6A), could not detract from,
the Court also at the same time, following the equally binding
mandate contained in the Stamp Act. H
370 SUPREME COURT REPORTS [2023] 9 S.C.R.

A iii. The question further arises, as to whether, in view of the
power of the Court under Section 11, to find only prima
facie, the existence of the Arbitration Agreement, it would
enable the Court to make a Reference and appointment
and relegate the issue of impounding of the document to
the Arbitrator.
B
iv. Any shirking of the statutory duty by the Court under Section
11 to act in tune with the peremptory statutory dictate of
the Stamp Act, appears to us unjustifiable. Such abdication
of its plain duty is neither contemplated by the Law-Giver
nor would it be justifiable as causing the breach of Section
C
11(6A).
v. The view that cases under Section 11 of the Act would
consume more time and hinder the timely progress of
arbitration and that the matter must be postponed so that
the Arbitrator will more suitably deal with it, does not appeal
D
to us. While the Stamp Act is primarily intended to collect
revenue and it is not intended to arm a litigant to raise
‘technical pleas’, this would hardly furnish justification for
the Court to ignore the voice of the Legislature couched in
unambiguous terms. We find that the view expressed in
E SMS Tea Estates (supra), being reiterated, despite the
insertion of Section 11(6A), would promote the object of
the Stamp Act and yet be reconcilable with the mandate of
Section 11(6A). We may, however, qualify what we have
said with a caveat. There may be cases, where no stamp
duty is seen paid. It paves the way for the unambiguous
F
discharge of duty under Sections 33 and 35 of the Stamp
Act. There may, however, be cases, where it may be
stamped but the objection is taken by the party that it is not
duly stamped. In such cases, no doubt, it is ordinarily the
duty of the Court to examine the matter with reference to
G the duty under Section 33(2). If the claim that it is
insufficiently stamped, appears to the Court to be on the
face of it, wholly without foundation, it may make the
Reference on the basis of the existence of an Arbitration
Agreement otherwise and then leave it open to the Arbitrator
to exercise the power under Section 33, should it become
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 371
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

necessary. This approach does justice to the word ‘examine’ A
in Section 33(2) of the Stamp Act while not ignoring the
command of Section 11(6A) of the Act. It is not to be
confused with the duty to examine prima facie whether an
‘Arbitration Agreement’ exists under Section 11(6A) of the
Act, but is related to the duty to examine the matter under
B
Section 33(2) of the Stamp Act.
vi. Under the Evidence Act, production of only the original
document is permissible by way of evidence (See Section
62). However, secondary evidence is permissible under
Section 63 and certified copies are treated as secondary
evidence. Under the Scheme, in a proceeding under Section C
11, without following the procedure in the Evidence Act,
secondary evidence, in the form of certified copy, is
permitted. It may be true that since certified copies are
permitted to maintain an Application under Section 11 and,
in law, impounding cannot be done of a certified copy, as it D
is not an instrument, the duty of the Court to examine the
matter from the point of view of Section 33 of the Stamp
Act, may not exist as such. However, we have explained
what constitutes a certified copy, and that, in view of SMS
Tea Estates (supra), the stamp duty paid must be indicated
in the certified copy and, in appropriate case, the Court has E
power, under paragraph-5 of the Scheme, to call for
information. It becomes the duty of the Court, in cases,
where a certified copy is produced, to be satisfied that the
production of the certified copy, fulfils the requirement in
law. As already noticed, while the certified copy which does F
not show that the stamp duty is paid cannot be impounded
under Section 33, it cannot be acted upon under Section 35
of the Stamp Act.
P. ARBITRATION AGREEMENT, A DISTINCT
AGREEMENT AND ITS IMPACT? G
i. The last question, which remains is, whether, if the contract,
in which, the Arbitration Clause is located, is unstamped
but the Arbitration Clause is stamped, the Court can ignore
the fact that the instrument containing in the Contract is
unstamped. In the first place, such an eventuality cannot H
372 SUPREME COURT REPORTS [2023] 9 S.C.R.

A arise. This for the reason that unless there is
misrepresentation or a fraud played, it is incomprehensible
as to how, when the contract is produced, it will not be
dealt with under Section 33 of the Stamp Act among other
provisions.
B ii. The learned Amicus, in fact, points out that invariably the
Arbitration Agreement is contained as a clause in a larger
agreement. The contract would consist of the document
containing the Arbitration Agreement. This brings us to the
question as to whether the Arbitration Agreement can be
treated as a separate contract, and even if the main contract
C is not stamped, it suffices if the Arbitration Agreement alone
is stamped.
iii. In N.N. Global(supra), in fact, the Court proceeded to
impound the main contract which was the Work Order. The
Doctrine of the Arbitration Agreement being a distinct and
D a separate agreement, is well-established.
The Doctrine of Kompetenz-Kompetenz has been
enshrined in Section 16 of the Act. Section 16, undoubtedly,
articulates the principle that the Arbitral Tribunal may rule
on its jurisdiction including objections relating to the validity
E of the Arbitration Agreement and its very existence and,
for that purpose, an Arbitration Clause forming part of the
contract, is to be treated as an agreement independent from
the other terms of the contract. Equally, Section 16(1)(b)
declares that despite the Tribunal finding that the contract
F was null and void, it would not invalidate the Arbitration
Clause. The evolution of the principle that an Arbitration
Agreement is a separate and distinct agreement from the
contract, would indicate that it would have no play in the
context of the duty of a Court, within the meaning of
Sections 33 and 35 of the Stamp Act, to act in consonance
G therewith. The efficacy of the Arbitration Clause in a
contract is preserved so that the extinguishing of the
contractual obligations by termination or non-performance
or alleged performance, does not deprive the parties of their
rights and the power of the Arbitrator to adjudicate on
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 373
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

disputes, which, otherwise fall within the ambit of the A
Arbitration Clause.
The underlying principle behind treating the Arbitration
Agreement as a separate agreement is to create a
mechanism, which survives the contract so that disputes,
falling within the Arbitration Agreement, are resolved. Thus, B
the rescission of the main contract would not result in the
death of the Arbitration Clause. We agree that the
Arbitration Clause may be a collateral term [See Heyman
v. Darwins Limited35]. The Arbitration Agreement, it is
found in N.N. Global (supra), ‘exists and can be acted upon,
irrespective of whether the main substantive contract is valid C
or not’ [See paragraph-4.10 of N.N. Global (supra)]. It may
be true that, ordinarily, the invalidity of the main agreement
may not affect the Arbitration Clause [See paragraph-4.12
of N.N. Global (supra)]. However, proceeding on the basis
that an Arbitration Agreement contained as a clause in the D
main contract, is a separate agreement and it can exist
independently, the fallacy behind such a line of argument in
the context of Sections 33 and 35 of the Stamp Act, can be
demonstrated as follows:
The learned Amicus would urge that in N.N. Global E
(supra) the Court erred in finding that the Arbitration
Agreement is not required to be stamped. If so, the
Arbitration Clause, being the Arbitration Agreement, would
require to be stamped. Is it conceivable that a contract,
containing an Arbitration Clause, would be stamped only to
cover the liability in regard to the Arbitration Agreement F
and leave the main agreement unstamped, when it is required
to be stamped? Will not acceptance of such a view require
the Court to adopt an interpretation that will plainly
encourage parties to contravene the mandate of the Stamp
Act. We are afraid that, therefore, even proceeding on the G
basis that an Arbitration Agreement is a separate agreement,
would be of no avail in a case where the Arbitration Clause
and the main Agreement are both exigible to stamp duty.

35
(1942) AC 356 HL H
374 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 108. As found in SMS Tea Estates (supra), in view of the fact
that there is a bar to the use of an instrument, which is not stamped or
insufficiently stamped for any purpose (unlike Section 49 of the
Registration Act, which allows an unregistered document to be used to
prove a collateral transaction), an unstamped instrument, in which, an
Arbitration Clause is part of, cannot be allowed to be used, as it would
B
be allowing the instrument to be used to establish a collateral transaction.
This is proceeding on the basis that an Arbitration Agreement is a collateral
term and may have a distinct existence, separate from the main
agreement.
Q. CONCLUSIONS
C
109. The view taken in SMS Tea Estates (supra) as followed in
Garware (supra) and by the Bench in Dharmaratnakara Rai Bahadur
Arcot Narainswamy Mudaliar Chattram and other Charities v.
Bhaskar Raju and Brothers and others 36 as to the effect of an
unstamped contract containing an Arbitration Agreement and the steps
D to be taken by the Court, represent the correct position in law as explained
by us hereinbefore. N.N. Global (supra) was wrongly decided, when it
held to the contrary and overruled SMS Tea Estates (supra) and Garware
(supra).
110. An instrument, which is exigible to stamp duty, may contain
E an Arbitration Clause and which is not stamped, cannot be said to be a
contract, which is enforceable in law within the meaning of Section
2(h) of the Contract Act and is not enforceable under Section 2(g) of
the Contract Act. An unstamped instrument, when it is required to be
stamped, being not a contract and not enforceable in law, cannot,
F therefore, exist in law. Therefore, we approve of paragraphs-22 and
29of Garware (supra). To this extent, we also approve of Vidya Drolia
(supra), insofar as the reasoning in paragraphs-22 and 29 of Garware
(supra) is approved.
111. The true intention behind the insertion of Section 11(6A) in
G the Act was to confine the Court, acting under Section 11, to examine
and ascertain about the existence of an Arbitration Agreement.
112. The Scheme permits the Court, under Section 11 of the Act,
acting on the basis of the original agreement or on a certified copy. The

36
H (2020) 4 SCC 612
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 375
INDO UNIQUE FLAME LTD. & ORS. [K. M. JOSEPH, J.]

certified copy must, however, clearly indicate the stamp duty paid as A
held in SMS Tea Estates (supra). If it does not do so, the Court should
not act on such a certified copy.

113. If the original of the instrument is produced and it is unstamped,
the Court, acting under Section 11, is duty-bound to act under Section 33
B
of the Stamp Act as explained hereinbefore. When it does so, needless
to say, the other provisions, which, in the case of the payment of the duty
and penalty would culminate in the certificate under Section 42(2) of the
Stamp Act, would also apply. When such a stage arises, the Court will
be free to process the Application as per law.
C
114. An Arbitration Agreement, within the meaning of Section 7
of the Act, which attracts stamp duty and which is not stamped or
insufficiently stamped, cannot be acted upon, in view of Section 35 of
the Stamp Act, unless following impounding and payment of the requisite
duty, necessary certificate is provided under Section 42 of the Stamp D
Act.

115. We further hold that the provisions of Sections 33 and the
bar under Section 35 of the Stamp Act, applicable to instruments
chargeable to stamp duty under Section 3 read with the Schedule to the
Stamp Act, would render the Arbitration Agreement contained in such E
instrument as being non-existent in law unless the instrument is validated
under the Stamp Act.

116. In a given case, the Court has power under paragraph-5 of
the Scheme, to seek information from a party, even in regard to stamp
F
duty.

117. We make it clear that we have not pronounced on the matter
with reference to Section 9 of the Act. The reference to the Constitution
Bench shall stand answered accordingly.
G
118. We record our deep sense of appreciation for the efforts put
in by Shri Gourab Banerji, learned senior counsel who has ably assisted
this Court as Amicus.

H
376 SUPREME COURT REPORTS [2023] 9 S.C.R.

A C. T. RAVIKUMAR, J.
1. I have had the advantage of reading the erudite opinion of my
learned brother Justice K. M. Joseph, for himself and learned brother
Justice Aniruddha Bose, and the separate opinion of learned brother
Justice Hrishikesh Roy, concurring with the opinion of learned brother
Justice Ajay Rastogi, but disagreeing with the opinion of learned brother
B Justice K.M. Joseph. Regretfully, I record my inability to agree with the
opinion of learned brother Justice Ajay Rastogi as also with the concurrent
opinion of learned brother Justice Hrishikesh Roy. While fully endorsing
the opinion of learned brother Justice K. M. Joseph, to which my learned
brother Justice Aniruddha Bose has concurred, I wish to add a concise
C addendum as under, in respect of some of the issues, of course, only in
support of findings returned thereon.
2. The issue(s) under reference, the modification of the referred
question and the allied questions cropped up for consideration have been
elaborately dealt with and answered in the erudite draft judgment of my
learned brother Justice K.M. Joseph and hence, it is absolutely unessential
D to refer them. While considering the power of the Court under Section
11(6) of the Arbitration and Conciliation Act, 1996 it is to be noted that
the position of Section 11(6) before and after the amendment and Section
11(6A), inserted by Act 2 of 2016 with effect from 23.10.2015 have
been referred to in all the three opinions. Hence, I do not think it necessary
to extract those provisions to avoid the risk of repetition. Certainly, the
E powers conferred under Section 16 of the Act often referred to as
‘Kompetenz-Kompetenz’ make it clear that the Arbitral Tribunal is
empowered and thus got competence to rule on its own jurisdiction,
including on all jurisdictional issues and existence or validity of the
arbitration agreement. This provision would have its full-play when
F appointment of the arbitrator takes place, on consensus, by the parties,
in accordance with the terms of the arbitration agreement or by designated
arbitration institution, without the intervention of the Court. But then, the
provision under Section 11 (6) of the Act applies when the procedures
envisaged under the arbitration agreement have not worked and an
application is filed for invocation of the power thereunder before the
G Court for making appointment of the Arbitrator(s). The controversy in
regard to the nature of the function to be performed under Section 11 (6)
has been set at rest by the Seven-Judge Bench decision in SBP & Co. v.
Patel Engg. Ltd.1 by holding that it is ‘judicial’. It continues to be ‘judicial’
despite the amendment brought to the said section and even after the
insertion of Section 11 (6A) in the Act. An application for ‘Appointment
H 1
(2005) 8 SCC 618
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 377
INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

of Arbitrators’ is filed, by one party asserting the existence of an arbitration A
agreement or arbitration clause in an ‘instrument’ executed between the
parties concerned. Therefore, invariably what is to be decided, in
invocation of the said powers, is the asserted factum of existence of
arbitration agreement or arbitration clause in the said instrument and
invariably, in this regard the party who invoked the said power under
B
Section 11(6), has to produce that very relied on instrument for inspection.
The question is whether while passing an order the Court exercising the
power under Section 11 (6) receives any evidence, for the limited purpose
of ascertaining the truth of the assertion that the document thus produced
is an arbitration agreement or an instrument containing arbitration clause.
In this regard it is only apposite to refer to the meaning ascribable to the C
term ‘evidence’. As per Peter Murphy in ‘A Practical Approach to
Evidence (Second Edition), 1985, ‘evidence’ may be defined as any
‘material’ which tends to persuade the Court of the truth or probity of
same fact asserted before it. As noted hereinbefore, in such an application
under Section 11 (6), invariably the fact to be asserted would be the
D
existence of ‘arbitration agreement’ and in proof thereof the material
viz., the document would be produced. I will refer to the relevant provision
in the statutory scheme viz., the Appointment of Arbitrators by the Chief
Justice of India Scheme, 1996, later. Now, when that is received, it is
nothing but receiving evidence to that limited purpose for deciding the
question whether the ‘instrument’ produced is one executed between E
the parties is an arbitration agreement or whether the instrument contained
an arbitration clause. Necessarily, if the answer is in the affirmative, an
order appointing Arbitrator(s) would be passed and an answer in the
negative would be the end of such proceedings. In that view of the
matter, it can safely be said that what is to be decided while performing
F
the function under Section 11 (6) is relating a ‘jurisdictional aspect’ as
only on returning a finding that there exists an arbitration agreement or
arbitration clause, in the material so produced, that arbitrator(s) would
be appointed. The answering of that question, on receiving the
‘instrument’, is the performance of the function describable as “acting
upon” the document thus produced. In other words, as discernible from G
the statement of law by M.C. Desai, J. in Mt. Bittan Bibi & Anr. v.
Kuntu Lal & Anr..2, (the relevant paragraph 8 extracted in the opinion
of learned brother Justice K.M. Joseph), ‘acting upon’ is not included in

2
ILR [1952] 2 All 984 H
378 SUPREME COURT REPORTS [2023] 9 S.C.R.

A the act of admitting an instrument, though it can be acted upon, later,
subject to permissibility in law therefor.
3. The cleavage in opinion occurs on the issue as to whether the
Court called upon to invoke the power under Section 11 (6) should or
could exercise the power coupled with duty under Section 33 of the
B Indian Stamp Act, 1899, when the document carrying the arbitration
agreement or arbitration clause is found unstamped or insufficiently
stamped or without going into such matter, should it confine its exercise
of power in the matter of appointment of Arbitrator(s) only and refrain
itself from proceeding further in view of the mandate under Section 33
of the Indian Stamp Act, 1899.I have already recorded my agreement
C with the opinion of my learned brother K.M. Joseph that exercise of
power coupled with duty under Section 33 of the Stamp Act cannot be
accused of judicial interference in contravention to Section 5 of the Act
and further that it shall not be confused with examination whether an
arbitration agreement or arbitration clause in the said instrument, exists
D so as to appoint arbitrator in invocation of the power under Section 11(6)
of the Act. In that view of the matter, the provisions under Section 11(6A)
or 16 of the Act cannot act as a rider for the exercise of the said power
under Section 33 of the Stamp Act.
4. In the aforesaid context, it is relevant to refer to Sub-sections
E (1), (2) and clause (b) of Sub-section 2, of Section 33 of the Indian
Stamp Act, 1899. They read thus:-
“33. Examination and impounding of instruments. —
(1) Every person having by law or consent of parties authority
to receive evidence, and every person in charge of a public
F office, except an officer of police, before whom any
instrument, chargeable, in his opinion, with duty, is produced
or comes in the performance of his functions, shall, if it
appears to him that such instrument is not duly stamped,
impound the same.
G (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 in force in 2
[India] when such instrument was executed or first executed:
Provided that—
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 379
INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

(a) nothing herein contained shall be deemed to require any A
Magistrate or Judge of a 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 XII or Chapter XXXVI of the
Code of Criminal Procedure, 1898 (V of 1898);
B
(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.
5. I have already found that receiving the very ‘instrument’ which C
is carrying the arbitration agreement or containing an arbitration clause
from the party who asserts its existence is essentially an act of receiving
the evidence, in that limited sense. Therefore, how can the Court, which
is having authority and competence to receive evidence, for the purpose
of invoking the power under Section 11 (6), abstain from proceeding
further in terms of Section 33 if it appears to it that such instrument D
produced before it, though required to be stamped, is unstamped or is
not duly stamped. According to me, in terms of the mandate under Sub-
section (2) of Section 33, for that purpose, the Section 11 Judge who
received evidence shall ‘examine’ the instrument so chargeable and so
produced in order to ascertain whether it is stamped with a stamp of the E
value and description required by the law in force in India, when such
instrument was executed or first executed. Proviso (b) which is extracted
hereinbefore, would only permit a Judge of the High Court for delegation
of the duty of examining and impounding any such instrument to such
officer as the Court may appoint in that behalf. Thus, it only gives
discretion to a Judge of the High Court to delegate the duty of examining F
and impounding any such instrument in the manner mentioned under the
said proviso if he chooses not to proceed in the manner provided for
impounding the instrument in accordance with the relevant provision, by
himself. When that be the provision under Section 33 (1) and (2), a
conjoint reading of which obviously makes it mandatory for the Court
G
exercising the power under Section 11 (6) to proceed in terms of the
mandate under Section 33 when the circumstances legally invites its
invocation. A contra view, according to me, would render Sub-section
(2) of Section 33 and proviso (b) redundant and would defeat the very
soul of the provisions as relates their application in respect of application
filed under Section 11(6) of the Act. H
380 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 6. The Bar under Section 35 of the Stamp Act on admission of
instruments not duly stamped in evidence, as is evident from proviso (a)
to it, is not permanent and is curable by following procedures provided
thereunder and making an endorsement as provided under Section 42(1)
of the Stamp Act. Sub-section (2) of Section 42 makes it clear that
every such instrument so endorsed shall thereupon be admissible in
B
evidence and be acted upon and authenticated as it had been duly
stamped. The upshot of the discussion is that being unstamped or
insufficiently stamped, the agreement would not be available to be
‘admitted in evidence’ and ‘to be acted upon’, till it is validated following
the procedures prescribed under the provisions of the Stamp Act and till
C then, it would not exist ‘in law’.
7. Another point which I intend to make in addition to the opinion
of my learned brother Justice K. M. Joseph, is with respect to the meaning
ascribable to the expression ‘certified copy’ which is permissible to be
produced along with the application for appointment of Arbitrator(s) in
D terms of paragraph 2 (a) of the scheme framed by the Hon’ble the
Chief Justice of India, in exercise of power under Section 11(10) of the
Act, namely, the Appointment of Arbitrators by the Chief Justice of India
Scheme, 1996. Paragraph 2 and sub-paragraph (a) thereof read thus:-
2. Submission of Request:- The request to the Chief Justice
E under Sub-section (4) or Sub-section (5) or Sub-section (6) of
Section 11 shall be made in writing and shall be accompanied by –
(a) the original arbitration agreement or a duly certified copy
thereof.
8. In the opinion of my learned brother Justice K. M. Joseph this
F issue has been elaborately considered from paragraphs 77 to 89. While
concurring with the conclusions and findings thereof, I would like to give
my own reasons as to why the expression ‘certified copy’ should be
understood with reference to Section 74 and 76 of the Indian Evidence
Act, 1872, (hereinafter referred to as ‘Evidence Act’) and why the said
G form of secondary evidence is available to be ‘acted upon’ without formal
proof of existence and execution of the original document.
9. Section 62 defines ‘primary evidence’ thus:-
62. Primary evidence. –– Primary evidence means the
document itself produced for the inspection of the Court.
H Explanation 1. ––Where a document is executed in several
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 381
INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

parts, each part is primary evidence of the document. Where A
a document is executed in counterpart, each counterpart being
executed by one or some of the parties only, each counterpart
is primary evidence as against the parties executing it.
Explanation 2. –– Where a number of documents are all made
by one uniform process, as in the case of printing, lithography
B
or photography, each is primary evidence of the contents of
the rest; but, where they are all copies of a common original,
they are not primary evidence of the contents of the original.
A person is shown to have been in possession of a number of
placards, all printed at one time from one original. Any one
of the placards is primary evidence of the contents of any C
other, but no one of them is primary evidence of the contents
of the original.
10. Section 63 of the Indian Evidence Act defines secondary
evidence which reads thus: -
D
“63. Secondary evidence. –– Secondary evidence means and
includes ––
(1) certified copies given under the provisions hereinafter
contained;
(2) copies made from the original by mechanical processes E
which in themselves ensure the accuracy of the copy, and
copies compared with such copies;
(3) copies made from or compared with the original;
(4) counterparts of documents as against the parties who did
F
not execute them;
(5) oral accounts of the contents of a document given by some
person who has himself seen it.”
11. Thus, the definition ‘secondary evidence’ means and includes
what are mentioned in clauses ‘1 to 5’.Though, the inclusive definition G
speaks of different kinds of secondary evidence, such as, mentioned
under clauses ‘1 to 5’, a careful scanning of the Evidence Act would
reveal that copies which fall under clause (1) of Section 63 alone carry
the presumption of genuineness and correctness, by virtue of the provision
under Section 79 of the Evidence Act. Section 79 reads thus:-
H
382 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “79. Presumption as to genuineness of certified copies. ––
The Court shall presume [to be genuine] every document
purporting to be a certificate, certified copy or other
document, which is by Law declared to be admissible as
evidence of any particular fact, and which purports to be
duly certified by any officer [of the Central Government or
B
of a State Government, or by any officer [in the State of Jammu
and Kashmir] who is duly authorized thereto by the Central
Government]:
Provided that such document is substantially in the form and
purports to be executed in the manner directed by law in that
C behalf. The Court shall also presume that any officer by whom
any such document purports to be signed or certified, held,
when he signed it, the official character which he claims in
such paper.”
12. Thus, it can be said that the genuineness and correctness of
D copies falling under clause 1 of Section 63 shall be presumed under
Section 79 of the Evidence Act. The definition of ‘shall presume’ is
defined under Section 4 of the Evidence Act, thus:-
“Shall presume”.––Whenever it is directed by this Act that
the Court shall presume a fact, it shall regard such fact as
E proved, unless and until it is disproved.
13. Section 79 proceeds upon the maxim ‘omnia praesumuntur
rite esse acta, i.e., all acts are presumed to be done rightly and regularly.
When the acts of official nature went through the process, the presumption
arises in favour of the regular performance.
F
14. Section 65 of the Evidence Act, in so far as, it is relevant
reads thus:-
65. Cases in which secondary evidence relating to documents
may be given.––Secondary evidence may be given of the
existence, condition, or contents of a document in the following
G
cases: ––
……
(e) when the original is a public document within the meaning
of section 74;
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 383
INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

(f) when the original is a document of which a certified copy A
is permitted by this Act, or by any other law in force in [India]
to be given in evidence;
15. In terms of the provisions under Section 79 of the Evidence
Act a certified copy of a document allegedly carrying an arbitration
clause is produced and that document can be received in evidence for B
the purpose of Section 11 (6) of the Act and by virtue of Section 79 of
the Evidence Act, the Court shall presume the genuineness of the
document which could be accepted as evidence and shall presume the
genuineness of the contents of the document unless the presumption is
not rebutted by other evidence. Thus, it can be seen that besides C
permitting to produce the original document which is primary evidence
in terms of Section 62 of the Evidence Act, despite the existence of
different kinds of secondary evidence, under paragraph 2 (a) of Scheme
framed by the Hon’ble the Chief Justice of India, only certified copy
alone is permitted to be adduced, purposefully, as by virtue of Section 79
of Evidence Act presumption of genuineness and correctness of the D
certified copies of the documents mentioned under Section 63 (1) of the
Evidence Act shall have to be presumed. In other words, the other modes
of production of secondary evidence would not permit the Court to draw
the presumption of genuineness and correctness and that is why in
paragraph 2(a) of the scheme framed in terms of the provisions under E
Section 11 (10) provides only for production of certified copy of the
primary evidence to act upon for the purpose of applying for appointment
of Arbitrator under Section 11 (6) of the Act, in the alternative of
production of the original instrument.
16. As already found the nature of exercise of power under Section F
11 (6) is ‘judicial’ and therefore, it was thought only fit to permit to
exercise such power only on the original instrument or else, on its certified
copy, to be understood with reference to Section 63 (1) read with Section
74 and 76 of the Evidence Act. When once the intention behind paragraph
2(a) of the scheme is understood in that manner with reference to the G
provisions under Section 63 (1), 74, 76 and 79 of the Evidence Act, the
expression ‘certified copy’ employed in paragraph 2(a) of the scheme
framed under Section 11(10) of the Act cannot be interpreted to mean
any other kind of copies provided under Section 63 of the Evidence Act
other than under Section 63 (1) of the Evidence Act.
H
384 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 17. Learned brother Justice K. M. Joseph, after explaining as to
how the expression ‘certified copy’ must be understood, held that the
Court exercising the power under Section 11 (6) has to exercise the
power under Section 33 of the Indian Stamp Act when the original is
produced before the Court. In other words, according to me, it is rightfully
B held that when the original document carrying the arbitration clause is
produced and if it is found that it is unstamped or insufficiently stamped,
the Court acting under Section 11 is duty bound to act under Section 33
of the Indian Stamp Act as held in the draft judgment.
18. I am also concurring with the view that what is permissible to
C be produced as secondary evidence i.e., other than the original document
in terms of Section 2(a) of the scheme framed under Section 11(10) of
the Act, is nothing but certified copy as mentioned earlier. But such a
certified copy, would not be available to be proceeded with under Section
33 of the Stamp Act if it is unstamped or insufficiently stamped. In such
circumstances, such certified copy shall not be acted upon.
D
19. In the contextual situation, to understand the difference
between ‘certified copy’ and ‘a copy certified to be true copy’, it is only
appropriate to refer to Rule 1 of Order VIII of the Supreme Court Rules,
2013, framed invoking the power conferred by Article 145 of the
Constitution of India. Rule 1 of Order VIII reads thus: -
E
“1. The officers of the Court shall not receive any pleading,
petition, affidavit or other document, except original exhibits
and certified copies of public documents, unless it is fairly
and legibly written, type-written or lithographed in double-
F line spacing, on one side of standard petition paper, demy-
foolscap size, or of the size of 29.7 cm x 21 cm, or paper
which is ordinarily used in the High Courts for the purpose.
Copies filed for the use of the Courts shall be neat and legible,
and shall be certified to be true copies by the advocate-on-
record, or by the party in person, as the case may be.”
G
(Emphasis added)
20. It cannot be presumed that despite the conspicuous difference
in the said expressions, under paragraph 2 (a) ‘certified copy’ alone was
permitted to be appended along with the application under Section 11 of
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 385
INDO UNIQUE FLAME LTD. & ORS. [C. T. RAVIKUMAR, J.]

the Act, unintentionally. I am of the considered view that it was so A
prescribed, fully understanding the nature of exercise of power under
Section 11 (6) of the Act and also the presumption of genuineness and
correctness of ‘certified copy’ available by virtue of Section 79 of the
Evidence Act.
With this addendum, I fully endorse all the conclusions and findings B
in the judgment of my learned brother Justice K. M. Joseph.

RASTOGI, J.
INDEX* C

D

E

F

G

*Ed. Note: Pagination in the Index is as per the original judgment. H
386 SUPREME COURT REPORTS [2023] 9 S.C.R.

A I. Reference
1. This case deals with the larger question regarding the scope
and ambit to which there should be an intervention of courts at the pre-
referral stage in the working of arbitration contracts.
2. A three-Judge Bench of this Court in M/s. N.N. Global
B Mercantile PrivateLimited v. M/s. Indo Unique Flame Limited and
Others1 has doubted the correctness of the view expressed in paras 146
and 147.1 of the coordinate three-Judge Bench of this Court in Vidya
Drolia and Others v. Durga Trading Corporation2 and referred the
matter to be settled authoritatively by the Constitution Bench of this
C Court.
3. The reference which has been made to settle authoritatively by
the Constitution Bench is referred as under:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
D Section 3 read with the Schedule to the Act, would also render
the arbitration agreement contained in such an instrument,which
is not chargeable to payment of stamp duty, as being non-existent,
unenforceable, or invalid, pending payment of stamp duty on the
substantive contract/instrument?”
E (emphasis added)
4. It is necessary to give background facts for better appreciation
of the reference made for our consideration.
II. Conflicting Judgments
5. In the case of SMS Tea Estates Private Limited v. Chandmari
F Tea Company Private Limited,3 a two-Judge Bench of this Court was
considering the issue in a pre-2015 amendment regime of whether an
arbitration agreement in an unregistered and unstamped lease deed, which
required compulsory registration under the Registration Act, 1908
(hereinafter being referred to as the “Act 1908”) was valid and
G enforceable. It was held as follows:
“19. Having regard to Section 35 of the Stamp Act, unless the
stamp duty and penalty due in respect of the instrument is paid,
1
(2021) 4 SCC 379
2
(2021) 2 SCC 1
H 3
(2011) 14 SCC 66
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 387
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

the court cannot act upon the instrument, which means that it A
cannot act upon the arbitration agreement also which is part of
the instrument. Section 35 of the Stamp Act is distinct and different
from Section 49 of the Registration Act in regard to an unregistered
document. Section 35 of the Stamp Act, does not contain a proviso
like Section 49 of the Registration Act enabling the instrument to
B
be used to establish a collateral transaction.
21. Therefore, when a lease deed or any other instrument is relied
upon as contending the arbitration agreement, the court should
consider at the outset, whether an objection in that behalf is raised
or not, whether the document is properly stamped. If it comes to
the conclusion that it is not properly stamped, it should be impounded C
and dealt 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.” D
6. The above decision was followed in the case of Naina Thakkar
v. Annapurna Builders,4 wherein it was held as follows:
“7. It is true that the consequences provided in the Stamp Act,
1899 must follow where sufficient stamp duty has not been paid
on an instrument irrespective of the willingness of a party to the E
instrument to pay deficit stamp duty but the procedure where the
arbitration clause is contained in a document which is not registered
although compulsorily registrable and which is not duly stamped
as summed up by this Court in SMS Tea Estates (P) Ltd. case
shall not be applicable to the proceedings under Section 8 of the F
[Arbitration and Conciliation] Act where the party making such
application does not express his/her readiness and willingness to
pay the deficit stamp duty and the penalty. It is not the duty of the
Court to adjourn the suit indefinitely until the defect with reference
to deficit stamp duty concerning the arbitration agreement is cured.
Accordingly, we are of the opinion that no fault can be found in the G
order of the trial court in rejecting the application made under Section
8 of the Act as the document on which the petitioner relied upon
was admittedly unregistered and insufficiently stamped.”

4
(2013) 14 SCC 354 H
388 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 7. An amendment was brought in the Arbitration and Conciliation
Act, 1996 (hereinafter being referred to as the “Act, 1996”), and Section
11(6A) was inserted in 2016.
8. A two-Judge Bench in Garware Wall Ropes Limited v.
Coastal Marine Constructions and Engineering Limited,5 dealt with
B the issue whether an arbitration clause in an agreement which requires
compulsorily to be stamped under the relevant Indian Stamp Act,
1899(hereinafter being referred to as the “Act, 1899”), but is not duly
stamped, would be enforceable even after the insertion of clause (6A)
to Section 11 of the Act, 1996. The Bench followed the reasoning and
upholding of the decision in SMS Tea Estates Private Limited (supra),
C
and held:
“19….A close look at Section 11(6-A) would show that when the
Supreme Court or the High Court considers an application under
Sections 11(4) to 11(6), and comes across an arbitration clause in
an agreement or conveyance which is unstamped, it is enjoined
D
by the provisions of the 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 Stamp Act applies to the agreement
or conveyance as a whole. Therefore, it is not possible to bifurcate
E 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
F 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,
G 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).

5
H (2019) 9 SCC 209
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 389
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

22. When an arbitration clause is contained “in a contract”, it is A
significant that the agreement only becomes a contract if it is
enforceable by law. We have seen how, under the Stamp Act, an
agreement does not become a contract, namely, that it is not
enforceable in law, unless it is duly stamped. Therefore, even a
plain reading of Section 11(6-A), when read with Section 7(2) of
B
the 1996 Act and Section 2(h) of the Contract Act, would make it
clear that an arbitration clause in an agreement would not exist
when it is not enforceable by law. This is also an indicator that
SMS Tea Estates has, in no manner, been touched by the
amendment of Section 11(6-A).”
9. The decision in Garware Wall Ropes Limited (supra)was C
cited in approval by a three-Judge Bench in the case of Vidya Drolia
and Others (supra) wherein it was held:
“146. 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 D
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 E
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 binding.
Existence of an arbitration agreement presupposes a valid
agreement which would be enforced by the court by relegating
the parties to arbitration. Legalistic and plain meaning interpretation F
would be contrary to the contextual background including the
definition clause and would result in unpalatable consequences. A
reasonable and just interpretation of “existence” requires
understanding the context, the purpose and the relevant legal norms
applicable for a binding and enforceable arbitration agreement. G
An agreement evidenced in writing has no meaning unless the
parties can be compelled to adhere and abide by the terms. A
party cannot sue and claim rights based on an unenforceable
document. Thus, there are good reasons to hold that an arbitration
agreement exists only when it is valid and legal. A void and
H
390 SUPREME COURT REPORTS [2023] 9 S.C.R.

A unenforceable understanding is no agreement to do anything.
Existence of an arbitration agreement means an arbitration
agreement that meets and satisfies the statutory requirements of
both the Arbitration Act and the Contract Act and when it is
enforceable in law.
B 147. We would proceed to elaborate and give further reasons:
147.1 In Garware Wall Ropes Ltd., this Court had examined the
question of stamp duty in an underlying contract with an arbitration
clause and in the context had drawn a distinction between the
first and second part of Section 7(2) of the Arbitration Act, albeit
C the observations made and quoted above with reference to
‘existence’ and ‘validity’ of the arbitration agreement being apposite
and extremely important, we would repeat the same by reproducing
paragraph 29 thereof:
“29. This judgment in Hyundai Engg. case is important in that
D what was specifically under consideration was an arbitration
clause which would get activated only if an insurer admits or
accepts liability. Since on facts it was found that the insurer
repudiated the claim, though an arbitration clause did “exist”,
so to speak, in the policy, it would not exist in law, as was held
in that judgment, when one important fact is introduced, namely,
E that the insurer has not admitted or accepted liability.Likewise,
in the facts of the present case, it is clear that the arbitration
clause that is contained in the subcontract would not “exist” as
a matter of law until the sub-contract is duly stamped, as has
been held by us above.The argument that Section 11(6-A) deals
F 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.”;

G 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.”
(Emphasisadded)
10. Later, a three-Judge Bench in M/s. N.N. Global Mercantile
H Private Limited (supra) held that in arbitration jurisprudence, an
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 391
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

“arbitration agreement is a distinct and separate agreement, which is A
independent from the substantive commercial contract in which it is
embedded”. This three-Judge Bench made a reference to the Constitution
Bench, as it expressed its disagreements with the view expressed in
SMS Tea Estates Private Limited (supra), Garware Wall Ropes
Limited (supra), and Vidya Drolia and Others (supra). It held:
B
“26. 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… C

28. In our view, the decision in SMS Tea Estates does not lay
down the correct position in law on two issues i.e. (i) that an
arbitration agreement in an unstamped commercial contract cannot
be acted upon, or is rendered un-enforceable in law; and (ii) that
an arbitration agreement would be invalid where the contract or D
instrument is voidable at the option of a party, such asu/s 19 of the
Indian Contract Act, 1872.
29. We hold that since the arbitration agreement is an independent
agreement between the parties, and is not chargeable to payment
of stamp duty, the non-payment of stamp duty on the commercial E
contract, would not invalidate the arbitration clause, or render it
un-enforceable, since it has an independent existence of its own.
The view taken by the Court on the issue of separability of the
arbitration clause on the registration of the substantive contract,
ought to have been followed even with respect to the Stamp Act. F
The non-payment of stamp duty on the substantive contract would
not invalidate even the main contract. It is a deficiency which is
curable on the payment of the requisite Stamp Duty.”
11. It also doubted the correctness of the view taken in SMS Tea
Estates Private Limited (supra),which was approved in Garware Wall G
Ropes Limited (supra) and Vidya Drolia and Others (supra), and
held:
“56. We are of the considered view that the finding in SMS Tea
Estates and Garware that the non-payment of stamp duty on the
commercial contract would invalidate even the arbitration
H
392 SUPREME COURT REPORTS [2023] 9 S.C.R.

A agreement, and render it non-existent in law, and un-enforceable,
is not the correct position in law.
57. In view of the finding in paragraph 146 and 147 of the judgment
in Vidya Drolia by a co-ordinate bench, which has affirmed the
judgment in Garware, the aforesaid issue is required to be
B authoritatively settled by a Constitution bench of this Court.”
12. As the Benches in both M/S. N.N. Global Mercantile
Private Limited (supra) and Vidya Drolia and Others (supra) are of
equal strength, this Constitution Bench has been called upon to
authoritatively rule on the issue. To adjudicate the issue, this Bench at
C first needs to examine whether the requirements under the Act, 1899 at
pre-referral stage arerequired to be examined for appointment of
Arbitrator under Section 11(6A) of the Act, 1996.
13. Mr. Gourab Banerjee, learned senior counsel, who appears as
Amicus Curiae to assist this Court, submits that the intention of the Act,
D 1996 and the later amendments made from time to time were to
streamline the process and judicial intervention in arbitration proceedings
adds significantly to the delay in the arbitration process and that negates
the benefit of arbitration.The Arbitration & Conciliation (Amendment)
Act, 2015(hereinafter being referred to as the 2015 Amendment) was
introduced to emphasize the speedy disposal of cases relating to arbitration
E with minimal court interference.
14. Mr. Banerjee submits that so far as the scope and ambit of
Section 11 is concerned, it is only to fill the gap and the Court is merely
functioning as an appointing authority where the parties fail to appoint
an Arbitrator. After the insertion of Section 11(6A)(2015 Amendment),
F the legislative policy and purport are essentially to minimize the Court’s
intervention at the stage of appointing the Arbitrator and with this intention,
Section 11(6A) has been incorporated which ought to be respected.
15. Mr. Banerjee further submits that the scope of the Court should
be circumscribed to confine to the examination, prima facie, of the formal
G existence of the arbitration agreement at the stage of contract formation,
including whether the agreement is in writing and the core contractual
ingredients qua the formation of the agreement are fulfilled. On rare
occasions, if a question is being raised by the parties, to some extent, the
Court may examine the subject matter of dispute as arbitrable but that
too as an exception. At the same time, so far as theAct, 1899 is concerned,
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 393
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

it is only a fiscal measure enacted to secure revenue of the State in A
certain classes of instruments but that may not be invoked to arm a
litigant with a weapon of technicality to meet the case of his/her opponent.
Once the object of the revenue is secured according to law, the party
staking his claim in the instrument will not be defeated on the ground of
the initial defect in the instrument. B
16. Mr. Banerjee further submits that even non-payment of stamp
duty is a curable defect and this defect can be cured at any stage before
the instrument is admitted into evidence by the Arbitral Tribunal. If the
insufficiency of stamp or unduly stamped is being examined/adjudicated
at the pre-referral stage by the Court under Section 11, it would be C
nothing but to encourage parasitical challenges and dilatory tactics in
resisting reference to arbitration. The natural solution inevitable is to
appoint the Arbitrator and to allow the dispute resolution proceedings to
commence and permit the Arbitral Tribunal to fulfil its duty under the
Act, 1996. There is no reason why the Arbitral Tribunal cannot prevent
the evasion of stamp duty. D

17. It is also brought to our notice that at the time of submitting an
application under Section 11 at the pre-referral stage, the parties are not
under an obligation to file an original arbitration agreement and since the
copy of the arbitration agreement is to be annexed with the application,
E
in true sense,it is not an instrument as being contemplated under Section
2(14) of the Act, 1899, particularly at the pre-referral stage, the question
of invoking Sections 33 or 35 of the Act, 1899is not available to be invoked.
In support of submissionMr. Banerjeehas placed reliance on the judgment
of this Court reported in Jupudi Kesava Rao v. Pulavarthi Venkata
Subbarao and Others6 which has been later followed by this Court in F
Hariom Agrawal v. Prakash Chand Malviya7.
18. Taking assistance thereof, Mr. Banerjee submits thatSections
33 or 35 are not concerned with any copy of the instrument and there is
no scope for the inclusion of the copy of the document for the purpose
of the Act, 1899. The copy of the instrument within the meaning of G
Section 2(14) of the Act, 1899 cannot be validated by impounding and it
cannot be admitted as secondary evidence under the Act, 1899.

6
(1971) 1 SCC 545
7
(2007) 8 SCC 514 H
394 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 19. Mr. Banerjee further submits that the very question raised for
consideration of this Court as to whether the arbitral agreement is valid
or isin existence in law, is not open to be examined at the pre-referral
stage for the reason that original instrument is not on record (arbitral
agreement) and a conjoint reading of Sections 33 and 35 is not concerned
with any copy of the instrument and the party can only be allowed to
B
rely on the document in evidence which is an instrument withing the
meaning of Section 2(14) and the validity of the document is always
open to be examined at the post-referral stage by the Arbitrator/Arbitral
Tribunal in its jurisdiction vested in Section 16 of the Act, 1996.
20. Mr. Gagan Sanghi, learned counsel for the appellant, submits
C that Section 35 of the Act, 1899 bars admission of unduly stamped
“instrument” in evidence “for any purpose” and also “acting upon it”
and it was held by this Court in Government of Andhra Pradesh and
Others v P. Laxmi Devi(Smt.)8 that “shall” in Section 33 of the Act,
1899 is mandatory and unstamped document must be impounded.Even
D assuming that stamp duty is not payable on an arbitration agreement
under the Act, 1899, when arbitration agreement is contained as a clause
in an instrument on which stamp duty is payable, such arbitration
agreement as an instrument, attracts the bar of Section 35 of the Act,
1899.
E 21. Mr. Sanghi further submits that separation of agreement from
the substantive contract is nothing but a legal fiction created by Section
16 of the Act, 1996 and it cannot be an exception to Section 35 of the
Act, 1899.
22. Mr. Sanghi further submits that the Doctrine of Separability
F and Kompetenz-Kompetenz has no bearing on the issue of enforceability
of an arbitration agreement when proper stamp duty is not paid on the
instrument containing the arbitration agreement and relied upon the
judgment of the UK Supreme Court in Enka Insaat Ve Sanayi AS v
OOO Insurance Company Chubb9 where it was held that an “arbitration
clause is nonetheless part of bundle of rights and obligations recorded in
G the contractual document” and according to him, the issue of stamping
is to be looked into at the very threshold, even if it is in exercise of
Section 11 (6A), i.e. at the time of pre-arbitral stage with respect to

8
(2008) 4 SCC 720
H 9
(2020) UKSC 38
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 395
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

appointment of arbitrator. According to him, an instrument would exist in A
law only when it is enforceable and “existence” defined in Section 11(6A)
of the Act, 1996 in respect of an arbitration agreement, has to be a valid
enforceable agreement and it is always open to examine the issue of
non-stamping or of insufficiently stamped at the initial/pre-referral stage
itself and further highlighting three modes as provided in M/s. N.N. Global
B
Mercantile Private Limited (supra) i.e. impounding, payment of stamp
duty and appointment of arbitrator, on an application filed underSection
11 of the Act, 1996, the Court is certainly “acting upon” the arbitration
clause which is contended to be barred by the clear expression of Section
35 of the Act, 1899 and an Agreement, unless enforceable by law, cannot
be termed to be in existence under Section 11(6A) of the Act, 1996. C
23. Ms. Malvika Trivedi, learned senior counsel, who appears for
the intervenor in I.A. No.18516 of 2022, submits that the regimes of the
Act, 1899 and Act, 1908 are completely different. M/s. N.N. Global
Mercantile Private Limited (supra) wrongly applied the principles of
registration of a document to the requirement of stamping a document. D
While the former is a curable defect, the latter determines the very
existence and completion of a document/instrument. In the absence of
registration, an instrument shall remain in existence but without stamping,
the instrument is incomplete/inchoate.
24. Ms. Trivedi further submits that the Act, 1899 envisages the E
payment of stamp duty, failing which the instrument, according to her,
cannot be acted upon for any purpose and there is no ambiguity in the
language of the Statute and we have to follow the golden principles
ofinterpretation of the Statute.
25. Ms. Trivedi further submits that the powers of the Court under F
different provisions of law as well as the restrictions created in the Act,
1899 apply to the proceedings conducted in accordance with Section 9
of the Act, 1996 and submits that even if the arbitration clause stands
severed, the Court will have to reach a prima facie conclusion as to
whether the substantive contract which contained the clause of arbitration
G
is enforceable in law before granting interim measures invoking Section
9 of the Act, 1996.
26. Mr. Debesh Panda, learned counsel for the Intervenor in I.A.
No. 199969 of 2022 submits that Part I of Act, 1996 deals with Sections
8, 9 and 11, whereas Section 45 is dealt within Part II. Section 45 has
H
396 SUPREME COURT REPORTS [2023] 9 S.C.R.

A been recognized as a provision under Part II which is a complete code.
The expression “unless it finds” in Section 45 was interpreted by majority
in Shin-Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd. and Another10
as a consideration on a prima facie basis. In 2019, Parliament amended
Section 45 by substituting the expression “unless it finds” with “unless it
prima facie finds”, that brings the statute in line with the position settled
B
in Shin Etsu (supra). In this background, the Act, 1899 merely creates a
temporary infliction till the stamp duty is recovered, with or without
penalty. The affliction only attaches to the instrument and not the
transaction.
27. Mr. K. Ramakanth Reddy, learned senior counsel for
C respondent no.1 took us through the relevant Lok Sabha debates before
the enactment of the Act, 1996 and taking assistance thereof submits
that the provisions of the Act 1996, Act 1899 and the Contract Act, 1872
(hereinafter being referred to as “Act, 1872”)has to be harmonized.
Section 17 of Act, 1899 has to be read with Section 31 of the Act, 1899.
D The plain language of Section 7 of the Act, 1996 does not require that
the parties are under anobligation to stamp the agreement. The legislative
intention would be defeated, if the Court insist on non-core technical
requirements such as stamps, seals and originals for the purpose of acting
upon the arbitration agreement at a pre-arbitration stage for appointment
of an arbitrator invoking power under Section 11(6A) of the Act, 1996.
E
28. Learned counsel for the respondents, further submits that in
the instant facts of the case, an application was filed under Section 8 for
reference of disputes to arbitration and it was not maintainable under
Section 34 of the Maharashtra Stamp Act, 1958 which is almost
parimateria to the Act, 1899. The work order being an unstamped
F document could not be received in evidence for any purpose, or acted
upon, unless it is duly stamped. In consequence thereof, the arbitration
clause in the unstamped agreement also could not be acted upon or
enforced since the arbitration clause would have no existence in law,
unless the applicable stamp duty(and penalty, if any) is paid on the work
G order and placed reliance on the judgment of this Court in Garware
Wall Ropes Limited (supra).
29. Learned counsel further submits that the High Court, while
relying on the application under Section 8 had enforced a non-existent

10
H (2005) 7 SCC 234
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 397
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

arbitration clause which is in violation of Section 34 of the Maharashtra A
Stamp Act, 1958 and further contended that the respondent had not
indicated its willingness to pay the stamp duty, even though, at later
stage, an objection was raised and, therefore, no justification arises to
grant any further opportunity to now pay the stamp duty under the clause
of arbitration.
B
30. We have heard learned counsel for the parties and with their
assistance perused the material available on record and before delving
into the reference, we feel apposite to discuss the statutory provisions
related to the reference.
III. Requirements under the Indian Stamp Act, 1899 C
31. The Act, 1899 is a fiscal statute laying down the law relating
to tax levied in the form of stamps on instruments recording transactions.
The stamp duties on instruments specified in Entry 91 of List I(Union
List) of Schedule VII of the Constitution of India (viz. Bills of Exchange,
cheques, promissory notes, bills of lading, letters of credit, policies of D
insurance, transfer of shares, debentures, proxies and receipts) are levied
by the Union Government. Similarly, the stamp duties on instruments
other than those mentioned in Entry 91 of the Union List above are
levied by the States as per Entry 63 of List II(State List) of the Schedule
VII. Provisions other than those relating to rates of duty fall within the
legislative power of both the Union and the States by virtue of Entry 44 E
of the List III(Concurrent List). However, the stamp duties on all the
instruments are collected and kept by the concerned States.
32. The term ‘Instrument’ has been defined under Section 2(14)
of the Act, 1899 and the ‘Instrument chargeable to Duty’ is provided
under Section 3 whereas Section 17 provides that all instruments F
chargeable with duty and executed by any person in India has to be
stamped.
33. Sections 2(14), 3 and 17 of the Act, 1899 are extracted
hereunder: -
G
“2(14) ¯Instrument”. — instrument includes every document
by which any right or liability is, or purports to be, created,
transferred, limited, extended, extinguished or recorded:
3. Instruments chargeable with duty. —Subject to the
provisions of this Act and the exemptions contained in Schedule I,
H
398 SUPREME COURT REPORTS [2023] 9 S.C.R.

A the following instruments shall be chargeable with duty of the
amount indicated in that Schedule as the proper duty therefore
respectively, that is to say—
(a) every instrument mentioned in that Schedule which, not
having been previously executed by any person, is executed in
B [India] on or after the first day of July, 1899;
(b) every bill of exchange [payable otherwise than on demand]
or promissory note drawn or made out of [India] on or after
that day and accepted or paid, or presented for acceptance or
payment, or endorsed, transferred or otherwise negotiated, in
C [India]; and
(c) every instrument (other than a bill of exchange, or
promissory note) mentioned in that Schedule, which, not having
been previously executed by any person, is executed out of
[India] on or after that day, relates to any property situate, or
D to any matter or thing done or to be done, in [India] and is
received in [India]:
Provided that no duty shall be chargeable in respect of— (1) any
instrument executed by, or on behalf of, or in favour of, the
Government in cases where, but for this exemption, the
E Government would be liable to pay the duty chargeable in respect
of such instrument;
(2) any instrument for the sale, transfer or other disposition, either
absolutely or by way of mortgage or otherwise, of any ship or
vessel, or any part, interest, share or property of or in any ship or
F vessel registered under the Merchant Shipping Act 1894, Act No.
57 & 58 Vict. c. 60 or under Act XIX of 1838 Act No. or the
Indian Registration of Ships Act, 1841, (CX of 1841) as amended
by subsequent Acts.
17. Instruments executed in India. — All instruments
chargeable with duty and executed by any person in [India] shall
G
be stamped before or at the time of execution.
18. Instruments other than bills and notes executed out of
India.—(1) Every instrument chargeable with duty executed only
out of [India], and not being a bill of exchange or promissory note,
may be stamped within three months after it has been first received
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 399
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

in [India]. (2) Where any such instrument cannot, with reference A
to the description of stamp prescribed therefore, be duly stamped
by a private person, it may be taken within the said period of three
months to the Collector, who shall stamp the same, in such manner
as the [State Government] may by rule prescribe, with a stamp of
such value as the person so taking such instrument may require
B
and pay for.”
34. ‘Instrument’ as defined under Section 2(14) of the Act, 1899
includes every document by which any right or liability is, or purports to
be, created, transferred, limited, extended, extinguished, or recorded.
The term ‘Instrument’ as defined under Section 2(14) refers to the original
C
instrument and not a copy or a duly certified copy of the same. It is only
on production of the original instrument, the deficiencies in the stamp
duty/penalty can be paid to validate the same.
35. Chapter IV (Section 33 to Section 48) of the Act, 1899 titled
‘Instruments not duly stamped’ provides for the procedure to be followed
D
when an instrument which ought to have been stamped is not stamped.
36. Section 33 of the Act, 1899 provides for ‘Examination and
impounding of instruments’. Under sub-section (1) of Section 33, “Every
person having by law or consent of parties authority to receive evidence,
and every person in charge of a public office, except an officer of police,
before whom any instrument, chargeable, in his opinion, with duty, is E
produced or comes in the performance of his functions, shall, if it appears
to him that such instrument is not duly stamped, impound the same”.
Section 33(2) of the Act, 1899 provides that every instrument chargeable
with duty shall be examined by such person as explained in sub-section
(1), “in order to ascertain whether it is stamped with a stamp of the F
value and description required by the law in force in India when such
instrument was executed or first executed”. The definition of ‘duly
stamped’ as contained in Section 2(11) as applied to an instrument means
that the instrument bears an adhesive or impressed stamp of not less
than the proper amount and that such stamp has been affixed or used in
G
accordance with law for the time being in force in India.
37. A plain reading of Section 33 of the Act, 1899 thus explains
that when an instrument or a document is produced before the authority,
it is the duty of such authority to examine whether the instrument is duly
stamped or not, and if it is found that the instrument is not “duly stamped”
H
400 SUPREME COURT REPORTS [2023] 9 S.C.R.

A under Section 33(2), the concerned authority shall impound the said
instrument.
38. Section 34 of the Act, 1899 provides a discretion to the
concerned officer that if any receipt chargeable with a duty not exceeding
“ten naye paise” is tendered to or produced before them unstamped in
B the course of the audit of any public account, such officer may in their
discretion, “instead of impounding the instrument, require a duly stamped
receipt to be substituted therefore.”
39. A plain reading of Section 35 of the Act, 1899 suggests that an
inadmissible instrument because of being unstamped or insufficiently
C stamped may be made admissible if the relevant stamp duty and a penalty
is paid later. This shows that the requirement under Section 35 is not
rigid, and can be rectified even at a later stage. An unstamped or
insufficiently stamped instrument is not completely invalid, and it can be
made valid and admissible in evidence after fulfilling the conditions
prescribed in the proviso to Section 35.
D
40. Section 37 of the Act, 1899 deals with admission of improperly
stamped instruments. It provides that the State Government may make
rules providing that, where an instrument bears a stamp of sufficient
amount but of improper description, it may, on payment of the duty with
which the same is chargeable, be certified to be duly stamped, and any
E instrument so certified shall then be deemed to have been duly stamped
as from the date of its execution.
41. Section 38 of the Act, 1899 provides for the procedure for
how the instruments impounded are to be dealt with. Sub-Section (1) of
Section 38 provides that when the person impounding an instrument under
F Section 33 admits such instrument in evidence upon payment of a penalty
as provided by Section 35 or of duty as provided by Section 37, he shall
send to the Collector an authenticated copy of such instrument, together
with a certificate in writing, stating the amount of duty and penalty levied
in respect thereof, and shall send such amount to the Collector, or to
G such person as he may appoint in this behalf.
42. Sections 39 and 40 of the Act, 1899 provide a procedure of
exercising discretion by the Collector to either refund, certify the
instrument as duly stamped, or collect the stamp duty.
43. A plain reading of Sections 33, 35 and 2(14) of the Act, 1899
H clearly demonstrates that the instrument which is not duly stamped
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 401
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

can be impounded and when the required fee and penalty has been A
paid, the said instrument can be taken as an evidence under Section 35
of the Act, 1899. But, at the same time, Sections 33 and 35 are not
concerned with any copy of the instrument and party can be allowed
to rely on the document which is an instrument within the meaning of
Section 2(14) of the Act, 1899. This Court had an occasion to consider
B
the scope and ambit of Sections 33, 35 and 36 of the Act, 1899and
Section 63 of the Evidence Act, 1872 in Jupudi Kesava Rao (supra)
and it was held that:
“13. The first limb of Section 35 clearly shuts out from evidence
any instrument chargeable with duty unless it is duly stamped.
C
The second limb of it which relates to acting upon the instrument
will obviously shut out any secondary evidence of such instrument,
for allowing such evidence to be let in when the original admittedly
chargeable with duty was not stamped or insufficiently stamped,
would be tantamount to the document being acted upon by the
person having by law or authority to receive evidence. Proviso D
(a) is only applicable when the original instrument is actually before
the court of law and the deficiency in stamp with penalty is paid
by the party seeking to rely upon the document. Clearly secondary
evidence either by way of oral evidence of the contents of the
unstamped document or the copy of it covered by Section 63 of
E
the Indian Evidence Act would not fulfil the requirements of the
proviso which enjoins upon the authority to receive nothing in
evidence except the instrument itself. Section 25 is not concerned
with any copy of an instrument and a party can only be allowed to
rely on a document which is an instrument for the purpose of
Section 35. ‘Instrument’ is defined in Section 2(14) as including F
every document by which any right or liability is, or purports to be
created, transferred, limited, extended, extinguished or recorded.
There is no scope for inclusion of a copy of a document as an
instrument for the purpose of the Stamp Act.
14. If Section 35 only deals with original instruments and not G
copies Section 36 cannot be so interpreted as to allow secondary
evidence of an instrument to have its benefit. The words ‘an
instrument’ in Section 36 must have the same meaning as that in
Section 35. The legislature only relented from the strict provisions
of Section 35 in cases where the original instrument was admitted
H
402 SUPREME COURT REPORTS [2023] 9 S.C.R.

A in evidence without objection at the initial stage of a suit or
proceeding. In other words, although the objection is based on
the insufficiency of the stamp affixed to the document, a party
who has a right to object to the reception of it must do so when
the document is first tendered. Once the time for raising objection
to the admission of the documentary evidence is passed, no
B
objection based on the same ground can be raised at a later
stage. But this in no way extends the applicability of Section 36
to secondary evidence adduced or sought to be adduced in proof
of the contents of a document which is unstamped or insufficiently
stamped.”
C
(Emphasis added)
44. This view has been affirmed by a three-Judge Bench of this
Court in Hariom Agrawal (supra) wherein it has been held as under:
“10. It is clear from the decisions of this Court and a plain reading
D of Sections 33, 35 and 2(14) of the Act that an instrument which
is not duly stamped can be impounded and when the required fee
and penalty has been paid for such instrument it can be taken in
evidence under Section 35 of the Stamp Act. Sections 33 or 35
are not concerned with any copy of the instrument and party can
only be allowed to rely on the document which is an instrument
E
within the meaning of Section 2(14). There is no scope for the
inclusion of the copy of the document for the purposes of the
Stamp Act. Law is now no doubt well settled that copy of the
instrument cannot be validated by impounding and this cannot be
admitted as secondary evidence under the Stamp Act, 1899.”
F
(Emphasis added)
45. Law on the subject is well settled that duly certified copy/
photocopy of the alleged instrument cannot be validated by impounding
and this cannot be admitted in evidence under the Act, 1899. It leads to
the conclusion that the deficiency in an instrument, whether it is unduly
G
stamped or insufficiently stamped, can be rectified through a procedure
as prescribed under the Act, 1899. It clearly indicates that the requirement
under the Actcan indeed be fulfilled even after the time when the
instrument was executed. The requirement under the Actis not rigid or
strict, so as to make the instrument invalid at the first instance.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 403
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

46. It also shows that the purpose of the Act, 1899 is not to declare A
an instrument as completely invalid if it is unstamped or insufficiently
stamped, but to collect the stamp duty on each instrument. The object of
the Act, 1899 is to secure revenue for the state.
47. This Court, in the case of Hindustan Steel Ltd. v. Messrs
Dilip Construction Company,11 dealt with the object of the Act, 1899 B
and held:
“7. The Stamp Act is a fiscal measure enacted to secure revenue
for the State on certain classes of instruments: It is not enacted to
arm a litigant with a weapon of technicality to meet the case of
his opponent. The stringent provisions of the Act are conceived in C
the interest of the revenue once that object is secured according
to law, the party staking his claim on the instrument 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 D
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.”
E
48. The Bench, after explaining that the scope of the Act, 1899 is
to secure revenue for the state and not to be used as means to harass
the litigant, concluded that unstamped instruments can be acted upon
after payment of duty and penalty. Initial defects can be cured and it is
never the intention of the legislature to treat an initially unstamped
F
instrument as non-est in law.
49. The Statute deals with the instances of failure to stamp a
document which has got to be stamped under the provisions of the
Act, 1899 but does not affect the validity of the transaction embodied
in the document. That Part IV of the Act, 1899 deals with the
G
contingencies of non-payment of stamp duties and once the object of
securing the interest of the revenue of State is secured, the claim based
on instrument can always be acted upon on payment of the requisite
stamp duty.

11
(1969) 1 SCC 597 H
404 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 50. We, therefore, hold that the deficiencies under the Act, 1899
can be fulfilled, and do not render any instrument invalid permanently.
Now, it is to be seen whether theCourt orArbitral Tribunal can order
rectification of the deficiencies under the Act 1899, if any.
IV. Historical Background of Arbitration in India
B 51. Arbitration can be understood as a procedure of dispute
resolution in which the dispute is submitted, by the agreement of the
parties, to the appointed Arbitrator or the Arbitral Tribunal who are having
the jurisdiction to resolve the dispute in accordance with the applicable
law as agreed among the parties. Alternatively, it can be understood as
C a mechanism to adjudicate disputes between the parties outside the court
in a quasi-judicial manner.
52. The process of arbitration as a preferable method of dispute
resolution is not new in India. According to the scholars of the ancient
Hindu literature, “Brhadaranayaka Upanishad” is the earliest known
D treatise that mentions a system that can be closely associated with
present-day arbitration as the same involved various arbitral bodies such
as “Puga” or the local courts, “Srenis” or the people carrying out the
same profession and “Kulas” or members concerned with the social
matters of the same part of the society. All the above-explained bodies
were called the Panchas and cumulatively formed Panchayat. The same
E has been affirmed by the Privy Council in the case of Vytla Sitanna v.
Marivada Viranna12 wherein it was observed that the parties used to
refer the dispute to the elected panchayat and these adjudicating bodies
were responsible to pass the award which was based on the principle of
fair and equitable settlement of the dispute based on the prevalent legal
F as well as moral grounds.
53. The arbitration regime in India further evolved with the
enactment of the first Bengal Regulation by the Britishers in the year of
1772. Subsequent to this enactment, all the disputes were submitted to
arbitration and the award of the same had the same value as that of any
G decree passed by the Court. Further, the Bengal Regulation of 1781 also
contained provision as reproduced herein:
“The judge do recommend and so far as he can without compulsion
prevail upon the parties to submit to the arbitration of one person,

12
H AIR 1934 PC 105.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 405
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

to be mutually agreed upon by the parties … No award of any A
arbitrator be set aside, except upon full proof, made by oath of
two creditable witnesses that the arbitrators had been guilty of
gross corruption or partially, in the course of which they had made
their award.”13
54. It is quite evident from the above-mentioned clause that the B
Bengal Regulations contained provisions to enable the parties to refer
the dispute to be settled by the process of arbitration as per the mutual
agreement of the parties, especially in disputes involving breach of the
contractual obligations and partnership deeds. Arbitration also found a
place in the earliest enacted legislation by the State i.e., Code of Civil
C
Procedure, 1859. Specifically, the provision in Schedule II of the Code
of Civil Procedure, 1908 contained the procedure relating to arbitration.
These statutory provisions primarily dealt with two types of arbitrations:
i) Arbitration initiated by the Courts in any pending civil suit.
ii) Arbitration wherein there is no involvement or intervention D
of the Court.
55. Apart from these two types of arbitration, there evolved a
third kind of arbitration known as “Statutory Arbitration” wherein the
procedure of arbitration is governed by the provisions contained in the
statute. E
56. The major development in the arbitration regime came with
the enactment of the Arbitration Act, 1899 which was quite comparable
to the English Arbitration Act, 1899. This enactment can be understood
as the first step in the direction of enforcement of arbitration in India.
The Arbitration Act, 1899 was initially applicable to all the presidency F
towns and there existed judicial intervention right from the initial reference
of the dispute to the process of arbitration.
57. With the rapidly changing times, the evolution of the arbitration
regime in India also gained momentum. The Code of Civil Procedure,
1908 was amended to insert the provision contained under Section 89 G
which exclusively dealt with the applicability and enforceability of the
arbitration. In the early 20th century, arbitration emerged as an acceptable

13
C. V. Nagarjuna Reddy, Role of Arbitration in the Wake of CPC (Amendment) Act,
1999, The Indian Council of Arbitration, https://www.icaindia.co.in/icanet/quterli/apr-
june2002/ica5.html(Last accessed on 22nd January, 2023 at 10:50 pm). H
406 SUPREME COURT REPORTS [2023] 9 S.C.R.

A mode of dispute resolution and in order to meet its growing popularity,
the Arbitration Act, 1940 (hereinafter being referred to as the “Act,
1940”) was enacted by the legislature. The Act, 1940 was enacted with
the primary motive of providing speedy and less costly method of dispute
resolution in the form of arbitration. However, there existed many
inadequacies in the practical application of the provisions contained in
B
the Act, 1940.
58. The Act, 1940 contained many provisions similar to the
provisions contained under the English Arbitration Act, 1934 but still it
did not have any provision for enforceability of the foreign award. Also,
the provisions contained in the Act, 1940 facilitated the intervention of
C the judiciary at all the three stages of the arbitral proceedings, i.e., before
the dispute was referred to the arbitration, during the pendency of the
arbitral proceedings and after passing the arbitral award.
59. The ineffective functioning of the provision contained under
the Act, 1940 was regularly criticised by the Judiciary. The following
D observation by Justice D.A. Desai in the case of Guru Nanak
Foundation v. Rattan Singh and Sons14 is quite relevant to be mentioned
here:
“1. Interminable, time consuming, complex and expensive Court
procedures impelled jurists to search for an alternative Forum,
E less formal, more effective and speedy for resolution of disputes,
avoiding procedural claptrap and this led them to Arbitration Act,
1940. However, the way in which the proceedings under the Act
are conducted and without an exception challenged in Courts, has
made Lawyers laugh and legal philosophers weep.”
F 60. ThisCourt further observed in the case of Food Corporation
of India v. Joginderpal Mohinderpal and Another15 that the law
governing arbitration is supposed to be less technical and more suitable
to practical problems by ascertaining equity and fair play in the entire
process. Despite such severe criticism by thisCourt, no amendment was
G brought in the Act, 1940 by the legislature for a long period of time.
61. It was only by the late 20th century, there came a major shift
in the development of arbitration in India. Due to the economic

14
(1981) 4 SCC 634
15
H (1989) 2 SCC 347
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 407
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

liberalization and alike policies of the government in 1991, there was a A
need felt to create a conducive environment for attracting foreign
investments. Therefore, based on the 76th Report of the Law Commission
of India as well as the Model UNCITRAL law, the Act, 1996 was enacted
by the legislature. The Act,1996 came into force from 16th August, 1996
with anobject of making the process of arbitration cost effective, less
B
technical and in accordance with the prevalent international practices
across the world.
V. Intent behind incorporation of Section 11(6A) of the
Arbitration and Conciliation Act, 1996
62. A major shift for the development of arbitration in India C
happened with the enactment of the Act, 1996. Based on the 76th Report16
of the Law Commission of India as well as the Model UNCITRAL law,
the Act, 1996 was enacted with anobject of making the process of
arbitration cost effective, less technical and in accordance with the
prevalent international practices across the world. The legislative intent
was to provide effective and speedy procedure for dispute resolution D
among the parties as well as to limit the scope of judicial intervention in
the process of arbitration.17 India is gradually moving in the direction of
minimal judicial intervention keeping abreast with the developments of
arbitration in other regimes.
63. The Constitution Bench of this Court while examining the pre E
2015 amendment regime in SBP & Co. v. Patel Engineering Ltd. and
Another18 held that all the preliminary or threshold issues pertaining to
jurisdiction of the Arbitrator/Arbitral Tribunal should be examined by the
Court under Section 11 of the Act, 1996. This position of law was sought
to be changed by the Law Commission in its 246th Report, which states F
as follows:
“In so far as the nature of intervention is concerned, it is
recommended that in the event the Court/Judicial Authority is prima
facie satisfied against the argument challenging the arbitration
agreement, it shall appoint the arbitrator and/or refer the parties G
to arbitration, as the case may be. The amendment envisages that

16
Law Commission of India, 76th Report on Arbitration Act, 1940
17
Paragraph No. 4(v), Statement of Objects and Reasons, Arbitration and Conciliation
Act, 1996.
18
(2005) 8 SCC 618 H
408 SUPREME COURT REPORTS [2023] 9 S.C.R.

A the judicial authority shall not refer the parties to arbitration only if
it finds that there does not exist an arbitration agreement or that it
is null and void. If the judicial authority is of the opinion that
prima facie the arbitration agreement exists, then it shall
refer the dispute to arbitration, and leave the existence of
the arbitration agreement to be finally determined by the
B
arbitral tribunal. However, if the judicial authority concludes
that the agreement does not exist, then the conclusion will be final
and not prima facie. The amendment also envisages that there
shall be a conclusive determination as to whether the arbitration
agreement is null and void.”19
C (Emphasis added)
64. In the said report, the Law Commission of India concluded
that the judicial intervention in arbitration proceedings adds significantly
to the delay in the arbitration process and ultimately negates the benefit
of arbitration. At paragraph 24, the Law Commission noted as follows:
D “…[I]t is observed that a lot of time is spent for appointment of
arbitrators at the very threshold of arbitration proceedings.” 20
65. The Law Commission suggested the insertion of sub-Section
(6A) to Section 11 in the Act, 1996 which was accepted by the Legislature
by way of the 2015 amendment to the Act, 1996. Section 11(6A)
E unambiguously by its intention manifests that “[the] Supreme Court or,
as the case may be, the High Court, while examining an 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
examine only to the “existence of an arbitration agreement”.

F 66. The 2015 amendment, including Section 11(6A), and the later
amendments are in line with this evolution of arbitration jurisprudence.
With the series of amendments to the principal Act,1996, it is quite evident
that the legislature is continuously engaging with the rapidly evolving
arbitration regimein India and the various challenges allied it with the
object to reduce the scope of intervention by the courts in the arbitration
G processes. It can be expected that the arbitration in India is conducted in
accordance with the following views expressed by Justice Sabyasachi
Mukharji in the case of Food Corporation of India (supra):
19
LAW COMMISSION OF INDIA Report No. 246 Amendments to the Arbitration
and Conciliation Act 1996, pg. 43
H 20
Paragraph No. 24, Report No. 246, Law Commission of India.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 409
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

“7.We should make the law of arbitration simple, less technical A
and more responsible to the actual realities of the situation, but
must be responsive to the canons of justice and fair play and
make the arbitrator adhere to such process and norms which will
create confidence, not only by doing justice between the parties,
but by creating a sense that justice appears to have been done.”
B
The above discussed approach of the legislature has been
acknowledged by this Court.
67. In the case of Duro Felguera, S.A. v. Gangavaram Port
Limited21, this Court explained the scope and effect of the changes
brought in by the 2015 amendment in the following words: C
“48….. From a reading of Section 11(6-A), the intention of the
legislature is crystal clear i.e. the court should and need only look
into one aspect—the existence of an arbitration agreement. What
are the factors for deciding as to whether there is an arbitration
agreement is the next question. The resolution to that is simple—
D
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…
59. The scope of the power under Section 11(6) of the 1996 Act
was considerably wide in view of the decisions in SBP and Co.
[SBP and Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and E
BogharaPolyfab [National Insurance Co. Ltd. v. BogharaPolyfab
(P) Ltd., (2009) 1 SCC 267. This position continued till the
amendment brought about in 2015. After the amendment, all that
the courts need to see is whether an arbitration agreement exists—
nothing more, nothing less. The legislative policy and purpose is F
essentially to minimise the Court’s intervention at the stage of
appointing the arbitrator and this intention as incorporated in Section
11(6-A) ought to be respected.”
(Emphasis added)
68. This position was affirmed by a three-judge bench in Mayavati G
Trading Private Limited v. Pradyuat Deb Burman22:
“10. This being the position, it is clear that the law prior to the
2015 Amendment that has been laid down by this Court, which
21
(2017) 9 SCC 729
22
(2019) 8 SCC 714 H
410 SUPREME COURT REPORTS [2023] 9 S.C.R.

A would have included going into whether accord and satisfaction
has taken place, has now been legislatively overruled. This being
the position, it is difficult to agree with the reasoning contained in
the aforesaid judgment [United India Insurance Co. Ltd. v. Antique
Art Exports (P) Ltd., (2019) 5 SCC 362], as Section 11(6-A) is
confined to the examination of the existence of an arbitration
B
agreement and is to be understood in the narrow sense as has
been laid down in the judgment in Duro Felguera, S.A.…,”
(Emphasis added)
69. Thus, the 2015 amendment aims to limit the intervention of
Courts to minimal examining the existence and not the validity of an
C
arbitration agreement at the pre-referral stage of the arbitration
proceedings.
VI. Scope of Section 11(6A) w.r.t. Section 8, Section 16 and
Section 45 of Arbitration and Conciliation Act, 1996

D 70. Section 11(6A) of the Act, 1996 reads as follows:
“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.”
E
71. The scope of inquiry under Section 11(6A) is restricted to
examine the “existence of an arbitration agreement”. The phrase
‘existence of an arbitration agreement’ is to be understood in a literal
sense keeping the intention of the legislature after the introduction of the
2015 amendment. The position of law that prevails after the insertion of
F 2015 amendment is that there should be minimal interference by the
Courts. The limited scope of the Court to examine at the pre-referral
stage is whether the arbitration agreement, prima facie, exists as referred
to under Section 7 of the Act, 1996 which includes determination of the
following factors:
G (i) Whether the arbitration agreement is in writing;
(ii) Whether the core contractual ingredients qua the arbitration
agreement are fulfilled?
(iii) On rare occasions, on a serious note of objection, if any, it
may examine whether the subject matter of dispute is
H arbitrable?
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 411
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

72. Section 8(1), which was replaced by the amendment of 2015, A
mandates a judicial authority to refer parties to arbitration unless there is
prima facie finding that no valid arbitration agreement exists. The
language used in the provision is as follows:
“8. Power to refer parties to arbitration where there is an
arbitration agreement.— B
(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 any person claiming through or under
him, so applies not later than the date of submitting his first
statement on the substance of the dispute, then, notwithstanding C
any judgment, decree or order of the Supreme Court or any Court,
refer the parties to arbitration unless it finds that prima facie no
valid arbitration agreement exists.
(2) The application referred to in sub-section (1) shall not be
entertained unless it is accompanied by the original arbitration D
agreement or a duly certified copy thereof:
[Provided that where the original arbitration agreement or a
certified copy thereof is not available with the party applying for
reference to arbitration under sub-section (1), and the said
agreement or certified copy is retained by the other party to that E
agreement, then, the party so applying shall file such application
along with a copy of the arbitration agreement and a petition
praying the Court to call upon the other party to produce the
original arbitration agreement or its duly certified copy before
that Court.]
F
(3) Notwithstanding that an application has been made under sub-
section (1) and that the issue is pending before the judicial authority,
an arbitration may be commenced or continued and an arbitral
award made.”
73. The Section provides that the Court can examine, whether
G
prima facie there does not exist an arbitration agreement. The scope of
this Section can be seen from the 246th Law Commission Report23, which
made the following note while suggesting amendment to Section 8:

23
LAW COMMISSION OF INDIA Report No. 246 Amendments to the Arbitration
and Conciliation Act 1996, pg. 43 H
412 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “….of the amendment contemplates a two-step process to be
adopted by a judicial authority when considering an application
seeking the reference of a pending action to arbitration. The
amendment envisages that the judicial authority shall not refer
the parties to arbitration only if it finds that there does not
exist an arbitration agreement or that it is null and void. If
B
the judicial authority is of the opinion that prima facie the arbitration
agreement exists, then it shall refer the dispute to arbitration, and
leave the existence of the arbitration agreement to be finally
determined by the arbitral tribunal. However, if the judicial authority
concludes that the agreement does not exist, then the conclusion
C will be final and not prima facie. The amendment also envisages
that there shall be a conclusive determination as to whether the
arbitration agreement is null and void.”
74. A plain reading of the Section 8 indicates that it limits the
intervention of the Court to only one aspect i.e., when it finds that prima
D facie no valid arbitration agreement exists or is null and void.
75. The scheme of the Act, 1996 manifests that Sections 8 and 11
are complementary in nature and both relate to reference to arbitration
and have the same scope and ambit with respect to judicial interference.
The Court, under Sections 8 and 11, has to refer the matter to arbitration
E or to appoint an Arbitrator, provided the party has established a prima
facie existence of an arbitration agreement, nothing more nothing less.
At the same time, the Court should refer the matter if the validity of the
arbitration agreement cannot be determined on a prima facie basis, as
laid down above i.e. “when in doubt, do refer”.
F 76. At this stage, we would like to observe that the statutory scheme
has been framed for appointment of an Arbitrator by various High Courts
and also by this Court - called the Appointment of Arbitrators by the
Chief Justice of India Scheme, 1996,the relevant portion of the same is
extracted hereunder:-
G 1. Short title.-This Scheme may be called The Appointment of
Arbitrators by the Chief Justice of India Scheme, 1996.
2. Submission of request.-The request to the Chief Justice under
sub-section (4) or sub-section (5) or sub-section (6) of section 11
shall be made in writing and shall beaccompanied by-
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 413
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

(a) the original arbitration agreement or a duly certified copy A
thereof;
(b) the names and addresses of the parties to the arbitration
agreement;
(c) the names and addresses of the arbitrators, if any, already
appointed; B

(d) the name and address of the person or institution, if any, to
whom or which any function has been entrusted by the parties to
the arbitration agreement under the appointment procedure agreed
upon by them;
C
(e) the qualifications required, if any, of the arbitrators by the
agreement of the parties;
(f) a brief written statement describing the general nature of the
dispute and the points at issue;
(g) the relief or remedy sought; and D
(h) an affidavit, supported by the relevant document, to the effect
that the condition to be satisfied under sub-section (4) or sub-
section (5) or sub-section (6) of section 11, as the case may be,
before making the request to the Chief Justice, has been satisfied.
E
77. It is clear from the scheme of which a reference has been
made that while the applicant approaches the Court for appointment of
an Arbitrator, he is not supposed to file an original arbitration agreement
and attested copy of the agreement can be annexed at the pre-referral
stage which is indeed not an instrument as referred to under Section
2(14) of the Act, 1899. F
78. So far as the reference made of submitting a certified copy of
the arbitration agreement is concerned, suffice it to say, that arbitration
agreement executed between the parties relating to the business/
commercial transactions is not required to be compulsorily registered
under the Act, 1908. The obligation to register the document is invoked G
under provisions of the substantive law, namely, Transfer of Property
Act, 1882, while Section 17 of the Act, 1908 mandates that the non-
testamentary instrument that created any right, title or interest of the
value of Rs.100/- or upwards in an immovable property must be
compulsorily registered. If document is not registered, transfer is void,
H
414 SUPREME COURT REPORTS [2023] 9 S.C.R.

A there is no valid transfer, and the property described in the instrument
does not pass on, for example, mortgage does not become complete and
enforceable until it is registered under the Act, 1908.
79. Indisputably, the arbitration agreement is not a public document
to which compulsory registration as referred to under Section 17 of the
B Act, 1908 is required and one can obtain a certified copy of the public
document under Sections 74 or 75 of the Evidence Act, 1872. The Public
Officer having the custody of a public document can make available its
certified copy as referred to under Section 76 of the Evidence Act, 1872.
In the absence of the arbitration agreement being required to be
compulsorily registered, within the scope and ambit of Section 17 of the
C
Act, 1908, such arbitration agreement/document is not accessiblein public
domain and is not a public document of which certified copy can be
obtained, as referred to under Section 74 of the Evidence Act, 1872,
failing which the question of presumption as to genuineness of document
purporting to be a certified copy as referred to under Section 79 of the
D Evidence Act, 1872 may not arise.
80. In other words, when the arbitration agreement is not required
to be compulsorily registered as referred to under Section 17 of the Act,
1908 the reference of a certified copy under the Scheme of Rules, 1996
appears to be of an authenticated copy of the arbitration agreement that
E qualifies the requirement of Section 7 of the Act, 1996 at the pre-referral
stage for the purposes of appointment of an Arbitrator under Section
11(6A) of the Act, 1996.Hence, the question of raising objection regarding
the arbitration agreement not being stamped or insufficiently stamped at
the pre-referral stage may not arise.
F 81. Section 16 of the Act, 1996 is referred to as under:-
“16. Competence of arbitral tribunal to rule on its jurisdiction.—
(1) The arbitral tribunal may rule on its own jurisdiction, including
ruling on any objections with respect to the existence or validity
of the arbitration agreement, and for that purpose,—
G (a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and
(b) a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration clause.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 415
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

(2) A plea that the arbitral tribunal does not have jurisdiction shall A
be raised not later than the submission of the statement of defence;
however, a party shall not be precluded from raising such a plea
merely because that he has appointed, or participated in the
appointment of, an arbitrator.
(3) A plea that the arbitral tribunal is exceeding the scope of its B
authority shall be raised as soon as the matter alleged to be beyond
the scope of its authority is raised during the arbitral proceedings.
(4) The arbitral tribunal may, in either of the cases referred to in
sub-section (2) or sub-section (3), admit a later plea if it considers
the delay justified. C
(5) The arbitral tribunal shall decide on a plea referred to in sub-
section (2) or sub-section (3) and, where the arbitral tribunal takes
a decision rejecting the plea, continue with the arbitral proceedings
and make an arbitral award.
(6) A party aggrieved by such an arbitral award may make an D
application for setting aside such an arbitral award in accordance
with section 34.”
82. Section 16(1) of the Act, 1996envisaged that an Arbitral Tribunal
can rule upon own jurisdiction, “including ruling on any objection with
respect to the existence or validity of the arbitration agreement”. The E
provision is based on the doctrine of Kompetenz- Kompetenz and the
doctrine of Separability. The doctrine of Kompetenz-Kompetenz means
that the Arbitral Tribunal is competent enough to rule on its own
jurisdiction. At the same time, the Doctrine of Separability severs the
arbitration clause from the commercial contract. Section 16(1)(a) F
presupposes the existence of a clause of arbitration and mandates the
same to be treated as independent to the other terms of the contract.
Under Section 16, the Arbitral Tribunal shall have the jurisdiction to
determine the validity of the arbitration agreement.
83. A division Bench of this Court in Uttarakhand Purv Sainik
G
Kalyan Nigam Limited v. Northern Coal Field Limited24 while placing
reliance on Duro Felguera (supra) held that issues related to limitation
must be raised before the Arbitral Tribunal. The Court observed the
following:
24
(2020) 2 SCC 455 H
416 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “7.8. By virtue of the non obstante clause incorporated in Section
11(6-A), previous judgments rendered in Patel Engg. [SBP &
Co. v. Patel Engg. Ltd., (2005) 8 SCC 618] and Boghara Polyfab
[National Insurance Co. Ltd. v. Boghara Polyfab (P) Ltd.,
(2009) 1 SCC 267], were legislatively overruled. The scope of
examination is now confined only to the existence of the arbitration
B
agreement at the Section 11 stage, and nothing more.”
84. What the Courts at the pre-referral stage can examine under
Section 11(6A) is only the “existence” of the arbitration agreement, while
the Arbitral Tribunal shall have the jurisdiction to examine “any objections
with respect to the existence or validity of the arbitration agreement”.
C
85. Section 45 of the Act, 1996 provides that:
“Power of judicial authority to refer parties to arbitration.—
Notwithstanding anything contained in Part I or in the Code of
Civil Procedure, 1908 (5 of 1908),a judicial authority, when seized
D of an action in a matter in respect of which the parties have made
an agreement referred to in section 44, shall, at the request of one
of the parties or any person claiming through or under him, refer
the parties to arbitration, [unless it prima facie finds] that the said
agreement is null and void, inoperative or incapable of being
performed.”
E
(Emphasis added)
86. A plain comparison between Section 11(6A) and Section 45
manifests that the scope of Section 45 is much broader. Under Section
45, a judicial authority has to examine whether the agreement is “null
F and void”, “inoperative”, or “incapable of being performed”.
87. This Court in World Sport Group (Mauritius) Limited v.
MSM Satellite (Singapore) Pte. Limited,25 in paras 33 to 35 explained
the difference between the terms ‘null and void’, ‘inoperative’ and
‘incapable of being performed’ as under:-
G “33. Mr. Gopal Subramanium’s contention, however, is also that
the arbitration agreement was inoperative or incapable of being
performed as allegations of fraud could be enquired into by the
court and not by the arbitrator. The authorities on the meaning of
the words “inoperative or incapable of being performed” do
H 25
(2014) 11 SCC 639
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 417
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

not support this contention of Mr. Subramanium. The words A
“inoperative or incapable of being performed” in Section 45
of the Act have been taken from Article II(3) of the New York
Convention as set out in para 27 of this judgment. Redfern and
Hunter on International Arbitration (5th Edn.) published by
the Oxford University Press has explained the meaning of these
B
words “inoperative or incapable of being performed” used in
the New York Convention at p. 148, thus:
“At first sight it is difficult to see a distinction between the terms
‘inoperative’ and ‘incapable of being performed’. However, an
arbitration clause is inoperative where it has ceased to have effect
as a result, for example, of a failure by the parties to comply with C
a time-limit, or where the parties have by their conduct impliedly
revoked the arbitration agreement. By contrast, the expression
‘incapable of being performed’ appears to refer to more practical
aspects of the prospective arbitration proceedings. It applies, for
example, if for some reason it is impossible to establish the arbitral D
tribunal.”
34. Albert Jan Van Den Berg in an article titled “The New York
Convention, 1958 — An Overview” published in the website of
ICCA(www.arbitrationicca.org/media/0/12125884227980/
new_york_convention_of-1958_overview.pdf), referring to Article E
II(3) of the New York Convention, states:
“The words ‘null and void’ may be interpreted as referring to
those cases where the arbitration agreement is affected by some
invalidity right from the beginning, such as lack of consent due to
misrepresentation, duress, fraud or undue influence. F
The word ‘inoperative’ can be said to cover those cases where
the arbitration agreement has ceased to have effect, such as
revocation by the parties.
The words ‘incapable of being performed’ would seem to apply
to those cases where the arbitration cannot be effectively set into G
motion. This may happen where the arbitration clause is too
vaguely worded, or other terms of the contract contradict the
parties’ intention to arbitrate, as in the case of the so-called co-
equal forum selection clauses. Even in these cases, the courts
interpret the contract provisions in favour of arbitration.”
H
418 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 35. The book Recognition and Conferment of Foreign Arbitral
Awards : A Global Commentary on the New York Convention
by Kronke, Nacimiento, et al.(ed.) (2010) at p. 82 says:
“Most authorities hold that the same schools of thought and
approaches regarding the term null and void also apply to the
B terms inoperative and incapable of being performed.
Consequently, the majority of authorities do not interpret these
terms uniformly, resulting in an unfortunate lack of uniformity.
With that caveat, we shall give an overview of typical examples
where arbitration agreements were held to be (or not to be)
inoperative or incapable of being performed.
C
The terms inoperative refers to cases where the arbitration
agreement has ceased to have effect by the time the court is
asked to refer the parties to arbitration. For example, the arbitration
agreement ceases to have effect if there has already been an
arbitral award or a court decision with res judicata effect
D concerning the same subject-matter and parties. However, the
mere existence of multiple proceedings is not sufficient to render
the arbitration agreement inoperative. Additionally, the arbitration
agreement can cease to have effect if the time-limit for initiating
the arbitration or rendering the award has expired, provided that it
E was the parties’ intent no longer to be bound by the arbitration
agreement due to the expiration of this time-limit.
Finally, several authorities have held that the arbitration agreement
ceases to have effect if the parties waive arbitration. There are
many possible ways of waiving a right to arbitrate. Most commonly,
F a party will waive the right to arbitrate if, in a court proceeding, it
fails to properly invoke the arbitration agreement or if it actively
pursues claims covered by the arbitration agreement.”
88. The aboveexplained examination does not arise in the language
of Section 11(6A). That is to say, the legislature has not borrowed the
G language of Section 45 in Section 11(6A), which is limited to the
‘existence’ of the arbitration agreement.
VII. Limited Examination by Court under Section 11(6A)
of the Arbitration and Conciliation Act, 1996
89. The limited scope of Section 11(6A) of the Act, 1996 has
H been explained by a three-judge bench of this Hon’ble Court in Pravin
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 419
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

Electricals Private Limited v. Galaxy Infra and Engineering Private A
Limited26 at para 17 placing its reliance on Vidya Drolia and Others
(supra) wherein it was held that the existence of an arbitration agreement
means an agreement which satisfies the requirements of both the Act,
1996 and the Contract Act, 1872 and when it is enforceable in law. The
judgment in United India Insurance Company Limited and Another
B
v. Hyundai Engineering& Construction Company Limited and
Others27 was also relied upon in Pravin Electricals Private Limited
(supra) to demonstrate that Section 11(6A) deals with “existence”,
juxtaposed to Section 16 and Section 45, which deal with “validity” of an
arbitration agreement. There indeed lies a distinction between the
“existence” and the”validity” of an arbitration agreement. C
90. The UNCITRAL Model Law also supports a distinction
between jurisdictional objections based on the alleged non-existence,
invalidity, or illegality of the arbitration agreement, and jurisdictional
objections based upon the scope of a concededly valid arbitration
agreement. 28All issues of jurisdiction including the existence or validity D
of the arbitration agreement can be decided by the Arbitral Tribunal,
whether or not appointed through the intervention of the court under
Section 16 of the Act, 1996.
VIII. Interpretation of “Existence of Arbitration Agreement”
E
91. In order to determine the “existence of an arbitration
agreement” under Section 11(6A), the Act, 1899 may not have a bearing
owing to the reason thatat the pre-referral stage,if the document is not
duly stamped/insufficiently stamped that does not render the arbitration
agreement non-existent as discussed and ascertained earlier. The only
consideration that the courts/judicial authority at the pre-referral stage F
needs to follow is theprima facie existence of an arbitration agreement
as referred under Section 7 of the Act, 1996 which provides:
“7. Arbitration agreement.—
(1) In this Part, “arbitration agreement” means an agreement by
G
the parties to submit to arbitration all or certain disputes which
26
(2021) 5 SCC 671
27
(2018) 17 SCC 607
28
UNCITRAL Model Law on International Commercial Arbitration (1985), with
amendments as adopted in 2006,Availableat:https://uncitral.un.org/sites/uncitral.un.org/
files/media-documents/uncitral/en/19-09955_e_ebook.pdf H
420 SUPREME COURT REPORTS [2023] 9 S.C.R.

A have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
B
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or other means of
telecommunication [including communication through electronic
C means] which provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and not
denied by the other.
(5) The reference in a contract to a document containing an
D arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.”
92. That is to say, the limited scope of the Court under Section
11(6A) at the pre-referral stage is to examine whether the arbitration
E agreement, prima facie, exists as referred to under Section 7 of the Act,
1996, which includes only the determination of the following factors:
(i) Whether the arbitration agreement is in writing?
(ii) Whether the core contractual ingredients qua the arbitration
agreement are fulfilled?
F
(iii) On rare occasions, on a serious note of objection, if any, it
may examine whether the subject matter of dispute is
arbitrable?
IX. Clarification on Stamping of Arbitration Agreement
G 93. In the reference Order and in paras 20, 24 and 58in particular,
a reference has been made that Maharashatra Stamp Act, 1958 does
not subject to arbitration agreement to payment of stamp duty. The
relevant paragraphs of the M/S. N.N. Global Mercantile Private
Limited (supra)29 are as follows:

H 29
(2021) 4 SCC 379
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 421
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

“20. We have carefully perused the provisions of the Maharashtra A
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
B
award passed by an arbitrator to be chargeable for payment
of stamp duty…..
In Shriram EPC Ltd. v. Rioglass Solar SA [Shriram EPC Ltd.
v. Rioglass Solar SA, (2018) 18 SCC 313], this Court held that
the payment of stamp duty is applicable to awards made in India,
but does not include a “foreign award” which has not been included C
in the Schedule to the Stamp Act, 1899.
24. …Section 3 of the Maharashtra Stamp Act does not subject
an arbitration agreement to payment of stamp duty, unlike various
other agreements enlisted in the Schedule to the Act. This is for
the obvious reason that an arbitration agreement is an agreement D
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 E
would not be rendered invalid, unenforceable 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.
58. We consider it appropriate to refer the following issue, to be
authoritatively settled by a Constitution Bench of five Judges of F
this Court:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
Section 3 read with the Schedule to the Act, would also render
the arbitration agreement contained in such an instrument, which G
is not chargeable to payment of stamp duty, as being non-existent,
unenforceable, or invalid, pending payment of stamp duty on the
substantive contract/instrument?”
(Emphasis added)
H
422 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 94. There appears to be an error in the view taken by the 3-Judge
Bench. The Schedule I to the Act, 1899 in its Article 5 titled “Agreement
or Memorandum of Agreement” has a residuary entry which says (c) if
not otherwise provided for- Eight annas. Article 5 has been reproduced
as:
B

C

D

E
95. The examination of the arbitration agreement at the stage of
Section 11(pre-referral stage) should be done cautiously in a way that it
does not breach the legislative intent behind the provisions by opening
the door wide open for judicial intervention.
F 96. We, however, refrain ourselves to examine the question
regarding the scope and ambit of Section 9 of the Act, 1996 of which a
reference has been made by a three-Judge Bench in M/s. N.N. Global
Mercantile Private Limited (supra) since the present reference is
not concerned to examine the scope of Section 9 of the Act, 1996 and
G leave it open to be examined in the appropriate proceedings.
X. Answer to the Reference
97. To conclude, in our view:
i) We accordingly hold that the existence of a copy/certified
copy of an arbitration agreement whether unstamped/
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 423
INDO UNIQUE FLAME LTD. & ORS. [AJAY RASTOGI, J.]

insufficiently stamped at the pre-referral stage is an A
enforceable document for the purposes of appointment of
an Arbitrator under Section 11(6A) of the Act, 1996 where
the judicial intervention shall be minimal confined only to
the prima facie examination of “existence of an arbitration
agreement” alone keeping in view the object of 2015
B
amendment and the courts must strictly adhere to the time
schedule for the appointment of Arbitrator prescribed under
Section 11(13) of the Act, 1996.
ii) All the preliminary/debatableissues including insufficiently
stamped/unduly stamped or validity of the arbitration
agreement etc.are referrable to the Arbitrator/Arbitral C
Tribunal under Section 16 of the Act, 1996 which, by virtue
of the Doctrine of Kompetenz-Kompetenz has the power
to do so.
iii) The decision in SMS Tea Estates Private Limited (supra)
stands overruled. Paras 22 and 29 of Garware Wall Ropes D
Limited (supra) which are approved in paras 146 and 147
in Vidya Drolia and Others (supra) are overruled to that
extent.
98. The reference is answered accordingly.
E
99. We appreciate the contribution made by Mr. Gourab Banerjee,
Amicus Curiae in answering the reference made to this Court.

HRISHIKESH ROY, J.
A. Introduction F

B. Reference to the Constitution Bench
C. Facts in NN Global
D. Modification of the reference question
G
E. Submissions of Counsel
F. Statutory scheme of the Stamp Act, 1899
G. Statutory scheme of the Arbitration Act, 1996
i) Evolution of law under Section 11(6) of the
Arbitration Act, 1996 H
424 SUPREME COURT REPORTS [2023] 9 S.C.R.

A ii) Post-2015 Regime: Insertion of Section 11(6A)
iii) Post-2019 Amendment and the Report of the High-
level Committee to review the Institutionalisation of
Arbitration in India
H. Discussion on SMS Tea
B
I. Discussion on Garware
J. Interplay between the Stamp Act, Arbitration Act and
Contract Act.
i) Arbitration Act is a special legislation
C
ii) Harmonious Construction
K. Advent of Technology and the changing nature of
transactions
L. Doctrine of Separability
D M. Kompetenz Kompetenz, & the issue of judicial logjam in
India
N. Discussion on Vidya Drolia
O. Conclusion
E A. Introduction
1. I had the benefit of reading the erudite opinion of my Learned
Brother, Justice K.M. Joseph (for himself and Justice Aniruddha Bose)
and the separate judgment of Learned Brother Justice C.T. Ravikumar.
However, I regret my inability to agree with the majority opinion and the
F concurring judgment. Echoing the words of Charles Evans Hughes 1 in
one of his lectures delivered at the University of Columbia, let our minority
opinion (self and Learned Brother Justice Ajay Rastogi, who has written
a separate opinion), appeal to the brooding spirit of the future as also the
powers of the legislature to examine the interplay between the Arbitration
and Conciliation Act, 1996 (for short “Arbitration Act, 1996”) and the
G
Indian Stamp Act, 1899 (for short “Stamp Act, 1899”); and to
emphatically resolve the imbroglio to avoid any confusion in the minds of
the stakeholders in the field of arbitration.

1
Charles Evans Hughes, The Supreme Court of The United States Its Foundations,
H Methods and Achievements,(Columbia University Press) 68 (1928)
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 425
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

2. The role of Courts in arbitral proceedings has been much debated A
for years. Autonomy of the disputing party is the core of the arbitral
process but if the parties fail to arrive at a consensus, the supervisory
role of Courts becomes imperative. Redfern and Hunter on
International Commercial Arbitration 2 describe the relationship
between national courts and arbitral tribunals as follows:
B
“To the extent that the relationship between national courts and
arbitral tribunals is said to be one of ‘partnership’, it is not a
partnership of equals. Arbitration may depend upon the agreement
of the parties, but it is also a system built on law, which relies upon
that law to make it effective both nationally and internationally.
National Courts could exist without arbitration, but arbitration could C
not exist without the courts. The real issue is to define the point
at which this reliance of arbitration on the national courts
begins and at which it ends.”
[Emphasis supplied]
D
3. The supervisory role of Courts under the Arbitration Act, 1996
can be broadly categorized into three parts i.e., pre-commencement of
arbitral proceedings, during the arbitral proceedings and at the post-
arbitration stage. Section 8 and Section 11 in Part I of the Arbitration
Act, 1996, and Section 45 in Part II of the Arbitration Act, 1996
specifically deal with the role of Courts before the initiation of arbitration E
proceedings. Section 8 deals with the “Power to refer parties to
arbitration” where there is an arbitration agreement; it provides for a
mandatory reference to arbitration, unless the Court is prima facie
satisfied that no valid arbitration agreement exists. Section 11(6), on
the other hand, provides for “Appointment of Arbitrators” when parties F
fail to mutually agree on the name of an arbitrator or appoint an arbitrator
in terms of the arbitration agreement. Section 45 refers to the “Power
of judicial authority to refer parties to arbitration” in Part II of the
Arbitration Act, 1996.
4. Here in this reference, the extent of judicial intervention before G
the commencement of arbitral proceedings is being tested. It raises
important issues of delays in the enforcement of arbitration agreements,
subject to payment of stamp duty and whether an arbitration agreement

2
Alan Redfern and Martin Hunter, Redfern and Hunter on International Arbitration
(6th Edition, 2015, Oxford University Press), Chapter 7, Paragraph 7.03 H
426 SUPREME COURT REPORTS [2023] 9 S.C.R.

A would be non-existent, invalid/void, or unenforceable in law, if the
underlying instrument is not stamped/insufficiently stamped, as per the
relevant Stamp Act.
5. The moot question in this reference is whether the statutory
bar under Section 35 titled “Instruments not duly stamped inadmissible
B in Evidence” of the Stamp Act, 1899 would be attracted when an
arbitration agreement is produced under Section 11(6) of the Arbitration
Act, 1996. As a corollary, this reference also tests the scopeand natureof
the Court’s intervention specifically at the stage of appointment of
arbitrator under Section 11 of the Arbitration Act, 1996. The conundrum
over the scope of judicial review and the validity/enforceability of the
C unstamped/insufficiently stamped arbitration agreement contained in an
underlying contract is expected to be resolved in this reference.
B. Reference to the Constitution Bench
6. A 3-judge bench in M/S N.N. Global Mercantile Private
D Limited v M/S Indo Unique Flame Limited and others3 (for short
“NN Global”) by doubting the reasoning in Paragraphs 146 and 147 of a
coordinate bench of this Court in Vidya Drolia and others v Durga
Trading Corporation 4 (for short “Vidya Drolia”) considered it
appropriate for the issue to be examined by a Bench of five judges. The
matter before the Court in Vidya Drolia(supra) was related to subject-
E matter arbitrability but while deciding the question, it cited with approval
Paragraphs 22 and 29 of the 2-judge Bench judgment in Garware Wall
Tropes Limited v Coastal Marine Constructions and Engineering
Limited5 (for short “Garware”).
7. Following the decision in SMS Tea Estates (P) Ltd. v.
F Chandmari Tea Co. (P) Ltd.6 (for short “SMS Tea”), it was held in
Garware(supra) that non-payment of stamp duty on the commercial
contract would invalidate even the arbitration agreement and render it
non-existent in law and unenforceable.
8. This Court in NN Global (supra) overruled the 2-judge bench
G decision in SMS Tea (supra) which was cited with approval in Garware
(supra).
3
(2021) 4 SCC 379
4
(2021) 2 SCC 1
5
(2019) 9 SCC 209
6
H (2011) 14 SCC 66
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 427
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

9. NN Global (supra) relied inter alia, on the principle of A
Kompetenz Kompetenz and the doctrine of Separability incorporated
under Section 16 of the Arbitration and Conciliation Act, 1996 to
doubt the correctness of the view taken in Vidya Drolia (supra) and
Garware (supra). The relevant paragraphs which define the scope of
this reference are extracted below:
B
“34. We doubt the correctness of the view taken in paras 146 and
147 of the three-Judge Bench in Vidya Drolia [Vidya Drolia v.
Durga Trading Corpn., (2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549]
. We consider it appropriate to refer the findings in paras 22 and
29 of Garware Wall Ropes Ltd. [Garware Wall Ropes Ltd. v.
Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209 : C
(2019) 4 SCC (Civ) 324] , which has been affirmed in paras 146
and 147 of Vidya Drolia [Vidya Drolia v. Durga Trading Corpn.,
(2021) 2 SCC 1 : (2021) 1 SCC (Civ) 549] , to a Constitution
Bench of five Judges.
56. We are of the considered view that the finding in SMS Tea D
Estates [SMS Tea Estates (P) Ltd. v. Chandmari Tea Co. (P)
Ltd., (2011) 14 SCC 66 : (2012) 4 SCC (Civ) 777] and Garware
[Garware Wall Ropes Ltd. v. Coastal Marine Constructions &
Engg. Ltd., (2019) 9 SCC 209 : (2019) 4 SCC (Civ) 324] that the
non-payment of stamp duty on the commercial contract would E
invalidate even the arbitration agreement, and render it non-existent
in law, and unenforceable, is not the correct position in law.
57. In view of the finding in paras 146 and 147 of the judgment in
Vidya Drolia [Vidya Drolia v. Durga Trading Corpn., (2021) 2
SCC 1 : (2021) 1 SCC (Civ) 549] by a coordinate Bench, which F
has affirmed the judgment in Garware [Garware Wall Ropes Ltd.
v. Coastal Marine Constructions & Engg. Ltd., (2019) 9 SCC 209
: (2019) 4 SCC (Civ) 324] , the aforesaid issue is required to be
authoritatively settled by a Constitution Bench of this Court.
58. We consider it appropriate to refer the following issue, to be G
authoritatively settled by a Constitution Bench of five Judges of
this Court:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty
under Section 3 read with the Schedule to the Act, would also
H
428 SUPREME COURT REPORTS [2023] 9 S.C.R.

A render the arbitration agreement contained in such an
instrument, which is not chargeable to payment of stamp duty,
as being non-existent, unenforceable, or invalid, pending
payment of stamp duty on the substantive contract/instrument?”
10. Thus, the correctness of the decisions in SMS Tea(supra),
B Garware(supra), Vidya Drolia(supra), as well as other relevant
decisions is to be evaluated during the course of the reference. It has
been brought to the notice of this Court that conflicting decisions have
created a vexed situation for arbitral proceedings and hence, this issue is
expected to be settled through this reference.
C 11. The background facts in NN Global (supra) which gave rise
to this reference are to be noted at the outset:
C. Facts in N.N. Global7
12. Indo Unique Flame Ltd. (for short “Indo Unique Flame”)
entered into a sub-contract Work Order with N.N. Global Mercantile
D Pvt. Ltd (“NN Global”) on 28.09.2015 for transportation of coal. In
terms of Clause 9 of the Work Order, NN Global furnished a Bank
Guarantee to Indo Unique. Clause 10 of the Work Order provided for
an arbitration clause. Due to certain disputes in the principal contrAct,
Indo Unique invoked the Bank Guarantee furnished by NN Global.
E Thereafter, NN Global filed a Civil Suit before the Commercial Court,
Nagpur. An application under Section 8 of the Arbitration Act, 1996
was also filed seeking reference of the disputes to arbitration. The
Commercial Court on 18.01.2018 rejected the application under Section
8 of the Arbitration Act, 1996 holding that the Bank Guarantee was an
independent contract. Thereafter, Indo Unique filed a Writ Petition
F against the order of the Commercial Court. On 30.9.2020, the Bombay
High Court allowed the application under Section 8 of the Arbitration
Act, 1996. It held that the non-stamping of Work Order can be raised at
the stage of Section 11 of the Arbitration Act, 1996 or before the
Arbitral Tribunal at the appropriate stage. It set aside the order of the
G Commercial Court on 18.01.2018. An appeal was filed in this Court
where NN Global contended that since the sub-contract was not stamped
under the Maharashtra Stamp Act, 1958, the arbitration agreement
would be rendered ‘unenforceable’. It is in this context that the Court
doubted the correctness of previous decisions in Garware (supra) which
7
H (2021) 4 SCC 379
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 429
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

was cited with approval in Vidya Drolia (supra) declaring such A
arbitration agreements to not exist in law and reconsideration of the
issue was sought from this Constitution Bench.
D. Modification of the reference question:
13. The original reference question in Para 58 of N.N. Global
B
(supra) was set out as under:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
Section 3 read with Schedule to the Act, would also render the
arbitration agreement contained in such an instrument, which is
C
not chargeable to payment of stamp duty as being non-existent,
unenforceable in law, or invalid/void, pending payment of stamp
duty on the substantive contract/instrument?”
[emphasis supplied]
Mr. Gourab Banerjee, learned Senior Counsel assisting this Court D
as Amicus Curiaehowever proposed to reframe the question of
reference, as under:
“Whether the statutory bar contained in Section 35 of the Stamp
Act, 1899 applicable to instruments chargeable to stamp duty under
Section 3 read with Schedule to the Act, would also render the E
arbitration agreement contained in such an instrument, which is
not chargeable to payment of stamp duty as being non-existent,
unenforceable in law, or invalid/void, pending payment of stamp
duty on the substantive contract/instrument?”
[Emphasis in original] F
14. It is seen that an erroneous observation pertaining to the
Maharashtra Stamp Act, 1958 not subjecting an arbitration agreement
to stamp duty was made in para 20, 24 and 58 in NN Global (supra). In
each of our four opinions, Justice KM Joseph, Justice C.T. Ravikumar,
Justice Ajay Rastogi (& self), we find that this is not the correct position G
on the applicability of the Maharashtra Stamp Act, 1958. The Indian
Stamp Act, 1899 is a fiscal enactment that levies a charge on the
execution of instruments. Section 2(14) of the Stamp Act, 1899 defines
“instrument” as “every document by which any right or liability is, or
purports to be, created, transferred, limited, extended, extinguished or H
430 SUPREME COURT REPORTS [2023] 9 S.C.R.

A recorded”. Section 3 titled “Instruments chargeable with duty” provides
inter alia that the instrument must be mentioned in the Schedule to the
Act. It is essential to note that arbitration agreements are not specifically
mentioned in Schedule I of the Stamp Act, 1899 as “instruments” which
are required to be stamped. However, under the residuary entry in Article
5(c) of Schedule I of the Stamp Act, 1899 titled as “if not otherwise
B
provided for”, stamp duty becomes payable. This residuary entry is
contained in amendments to Schedule I of the Stamp Act, 1899, as well
as various State Stamp Acts. I would therefore proceed on the basis
that an arbitral agreement falls within the definition of “instrument” as
stipulated under the Stamp Act, 1899 and would be subject to stamp
C duty.
E. Submissions of the Counsel:
15. We have heard the elaborate submissions from Mr. Gourab
Banerjee, Learned Senior Counsel assisting this Court as Amicus Curiae;
Mr. Gagan Sanghi, Learned Counsel for the appellant; Ms. Malavika
D
Trivedi, Learned Senior Counsel for the Intervenor in IA 18516 of 2022;
Mr. Ramakanth Reddy, Learned Senior Counsel for Respondent No. 1
and Mr. Debesh Panda, Learned Counsel for the Intervenor in IA 199969
of 2022. They have cited various decisions of this Court as well as of
Courts in other jurisdictions.
E
16. The learned Amicus Curiae makes the following specific
submissions:
16.1. The Determination of whether an arbitration agreement is
duly stamped or not, must be left to the arbitrator. Section 11(6A) of the
Arbitration Act, 1996 circumscribes the scope of the appointing
F
authority. It begins with a non-obstante clause and was specifically meant
to overrule the 7-judge bench in SBP & Co v Patel Engg. Ltd8. (for
short “SBP”) and National Insurance Co. Ltd. V Boghara Polyfab
(P) Ltd9 (for short “Boghara Polyfab”). Moreover, the ambit of Section
16 of Arbitration Act, 1996 which deals with the competence of an
G arbitral tribunal to rule on its jurisdiction, is wide enough, according to
Mr. Gourab Banerjee, to allow the arbitrator to make a determination
with respect to the stamping of the instrument.

8
(2005) 8 SCC 618
9
H (2009) 1 SCC 267
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 431
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

16.2. The 246th Report of the Law Commission of India10 (for A
short “246th LCI Report) recommended that the scope of authority be
limited to “existence” and “validity” of the arbitration agreement. The
legislature went one step further and limited the scope of the appointing
authority under Section 11(6A) of the Arbitration Act, 1996 to confine
to the examination of only “existence” and not even “validity” of the
B
arbitration agreement. Such approach is consistent with the objective of
expeditious resolution of arbitration disputes. A Court under Section
11(6) of Arbitration Act, 1996 is in the nature of an appointing authority,
to facilitate and assist arbitration.
16.3 The statutory bar in Section 35 of the Stamp Act, 1899
would be triggered only when there is a finding that the document is not C
duly stamped. For the same, there ought to be an inquiry into stamping.
Only on triggering of Section 33(2) of the Stamp Act, 1899 titled
“Examination and impounding of instruments”, Section 35 will
follow. The examination under Section 33(2) of the Stamp Act, 1899
should not be undertaken by a Court under Section 11(6A) of the D
Arbitration Act, 1996, but by the appointed arbitrator.
16.4. If the court finds under Section 11of the Arbitration Act,
1996 that there is no agreement, then it can take a final view. However,
if the Court feels that a deeper consideration is required then the same
can be left to the Arbitral Tribunal under Section 16 of the Arbitration E
Act, 1996. According to Mr. Gourab Banerjee, the learned Senior
Counsel, this is the appropriate way to harmonise Section 11(6A) with
Section 16 of the Arbitration Act, 1996.
16.5. The absence of stamping or instrument inadequately stamped
would at best be an issue of admissibility but not about jurisdiction. The F
Stamp Act, 1899 is a fiscal measure enacted to secure revenue for the
State for certain classes of instruments. It is, therefore, not enacted to
arm a litigant with a weapon of technicality to meet the case of the
opponent.
16.6. The learned Amicus Curiae points out that a Court exercising G
power under Section 11(6A) of the Arbitration Act, 1996 is not a

10
Law Commission of India, ‘Amendments to the Arbitration and Conciliation Act
1996’ (246th Report, August 2014) Available at (https://cdnbbsr.s3waas.gov.in/
s3ca0daec69b5adc880fb464895726dbdf/uploads/2022/08/2022081615.pdf) <Last
accessed on 19.3.2023> H
432 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Court as defined in Section 2(1)(e) of the Arbitration Act, 1996 which
has the authority to ‘receive evidence’. In some sense, under Section
11(6A), the Court is to only form a prime facie opinion.
16.7. Significantly, the parties are not under an obligation to file an
original arbitration agreement and only the copy can be annexed which
B however is not an “instrument” as provided in Section 2(14) of the
Stamp Act, 1899. The reading of Section 33 or 35 of the Stamp Act,
1899 would pointedly suggest that these provisions are not concerned
with the copy of the instrument. Validity is always open to examination
at the post-referral stage. [Jupudi Kesava Rao v Pulavarthi Venkata
C Subbarao and others 11 , Hariom Agrawal v Prakash Chand
Malviya 12]
17. Projecting the contrary view, Mr. Gagan Sanghi, learned
Counsel for the appellant makes the following submissions:
17.1. Section 35 of the Indian Stamp Act, 1899 bars admission
D of unduly stamped “instrument” in evidence “for any purpose” and also
“acting upon it”. In Govt. of AP. v P. Laxmi Devi13, it was held that
“shall” in Section 33 of Stamp Act, 1899 is mandatory and unstamped
document must be impounded.
17.2. Even assuming that stamp duty is not payable on an arbitration
E agreement under Stamp Act, 1899, when arbitration agreement is
contained as a clause in an instrument on which stamp duty is payable,
such arbitration agreement as an instrument, attracts the bar of Section
35 of the Stamp Act, 1899.
17.3. The learned counsel argues that separation of agreement
F from the substantive contract is a legal fiction created by Section 16 of
the Arbitration Act, 1996. Section 16 of Arbitration Act, 1996 cannot
be an exception to Section 35 of the Indian Stamp Act, 1899. [Bengal
Immunity Co vs State of Bihar14, Para 69, 70 of Govt. of India v
Vedanta15; Amazon V Future Retail16]
G
11
(1971)1SCC 545
12
(2007) 8 SCC 514
13
(2008) 4 SCC 720
14
(1955) 2 SCR 603
15
(2020)10 SCC 1
16
H (2022) 1 SCC 209
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 433
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

17.4. According to Mr. Sanghi, Doctrine of Separability and A
Kompetenz Kompetenz has no bearing on the issue of enforceability of
an arbitration agreement when proper stamp duty is not paid on the
instrument containing the arbitration agreement. The learned counsel
relied on the decision of UK Supreme Court in Enka Insaat v OOO
Insurance Company17 where it was held that an “arbitration clause
B
is nonetheless part of bundle of rights and obligations recorded in
the contractual document”.
17.5. The issue of stamping is to be looked into at the very threshold,
even if it is in exercise of Section 11 (6A) of the Arbitration Act,
1996, i.e. at the time, the consideration with respect to appointment of
arbitrator is undertaken. According to the learned counsel, an instrument C
would exist in law only when it is enforceable. Therefore, when the
Court under Section 11(6A) of the Arbitration Act, 1996 is considering
the “existence” of the arbitration agreement, it can examine the issue of
non-stamping or of inadequate stamping at that stage itself.
17.6. Highlighting that three modes are provided in NN Global D
(supra) i.e. impounding, payment of stamp duty and then appointment
of arbitrator, it is argued that when an arbitrator is appointed in a Section
11 application, the Court is certainly “acting upon” the arbitration clause
which is contended to be barred by the clear wordings of Section 35 of
the Stamp Act, 1899. An Agreement, unless “enforceable”, is not in E
“existence”.
18. The learned Senior Advocate, Ms. Malvika Trivedi, intervening
on behalf of the Appellant made the following submissions:
18.1. The Regimes of the Stamp Act, 1899 and Registration
Act, 1908 are completely different. NN Global (supra) wrongly applied F
the principles of registration of a document to the requirement of stamping
a document. While the former is a curable defect, the latter determines
the very existence and completion of a document/instrument. In the
absence of registration, an instrument still remains in existence but without
stamping, the instrument is incomplete/inchoate.
G
18.2. The Stamp Act, 1899 envisages the payment of stamp duty,
failing which the instrument according to Ms. Trivedi cannot be acted
upon for any purpose. There is no ambiguity in the language of the Statute
and plain reading should be opted.
17
[2020] UKSC 38 H
434 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 18.3. The powers of the Court under different provisions of law,
as well as the restrictions created in the Stamp Act, 1899 apply to the
proceedings conducted in accordance with Section 9 of the Arbitration
Act, 1996. It is, therefore, argued that even if the arbitration clause
stands severed, the Court will have to reach a prima facie conclusion
on whether the main agreement is enforceable in law before granting
B
interim measures.
19. Learned Counsel for the Respondent No. 1, Mr. Ramakanth
Reddy, took us through the relevant Lok Sabha debates before the
enactment of the Arbitration Act, 1996 and makes the following
submissions:
C
19.1 Provisions of Arbitration Act, 1996; Stamp Act, 1899 and
Contract Act, 1872 can be harmonized. Section 17 of Stamp Act,
1899 has to be read with Section 31 of Stamp Act, 1899.
19.2 Plain language of Section 7 of the Arbitration Act, 1996
D does not require that the parties stamp the agreement. The legislative
intention would be defeated, if the Court insists on non-core technical
requirements such as stamps, seals and originals.
20. In his turn, Mr. Debesh Panda, learned Counsel for the
Intervenor submits the following:
E 20.1 Part I of Arbitration Act, 1996 deals with Section 8,9
and 11 whereas Section 45 is dealt with in Part II. Section 45 has
been recognized as a provision falling under Part II which is a “complete
code”. [See Chloro Controls v Severn Trent Water Purification
Inc18] The expression “unless it finds” in Section 45 was interpreted
F per majority in Shin-Etsu Chemical Co. Ltd. v Aksh Optifibre Ltd19
(for short “Shin-Etsu) as a consideration on a “prima facie basis”
only. In 2019, Parliament amended Section 45. It substituted the
expression “unless it finds.” with “unless it prima facie finds”. It
thus brings the statute in line with the position settled in Shin Etsu
(supra). In this background, the Stamp Act, 1899 merely creates a
G temporary infliction till the stamp duty is recovered, with or without
penalty (as the case may be). The affliction only attaches to the
instrument and not the transaction.

18
(2013) 1 SCC 641
19
H (2005) 7 SCC 234
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 435
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

20.2 The Arbitration Act, 1966 has always been held to be an A
exhaustive legislation in the nature of a complete Code. [Paragraphs
83-84, 89 inFuerst Day Lawson Ltd. v. Jindal Exports Ltd. 20 ]
According to Mr. Panda, the impounding of the parent instrument that
contains the arbitration agreement by a forum that exercises power under
the complete Code, either under Section 8, 9 and 11 within Part I, or
B
under Section 45 within Part-II, is inconsistent with the character of
Arbitration Act, 1996 which is in the nature of a complete code.
21. Looking at the respective projection by the learned Amicus
Curiae and other counsels, the following questions fall for our
consideration:
C
i) Whether the non-stamping of the substantive contract/
instrument would render the arbitration agreement non-
existent in law, void and unenforceable at the stage of
Section 11 of the Arbitration Act, 1996 for the purpose of
referring a matter for arbitration?
D
ii) Whether the examination of stamping and impounding should
be done at the threshold by the Section 11 judge or should it
be left to the arbitrator?
F. The Statutory framework of the Stamp Act, 1899
22. Let us begin by examining the objective behind the enactment E
of the Stamp Act, 1899. The 67th Law Commission Report21 suggests
that the idea of a fiscal enactment for the purpose of collecting revenue
for the State first originated in Holland and thereafter, the Bengal
Regulation 6 of 1797 was enacted in India. This was initially limited to
Bengal, Bihar, Orissa and Banaras. Subsequently, various stamp F
regulations were introduced in Bombay and Madras. The Stamp duties
were primarily intended to compensate for the deficiency in public revenue
due to abolition of tax for the maintenance of police establishments,
leviable on “Indian Merchants and Traders”. However, the Regulation
paved way for later enactments relating to stamp duty. In 1860, the first
Act relating to Stamp duties was enacted in India. This was repealed by G
the Act of 1862, 1869, 1879 and subsequently, the Act of 1899 was
enacted which is the current legislation.
20
(2011) 8 SCC 333
21
Law Commission of India, ‘Indian Stamp Act’ (67th Report, February,1997) available
at https://lawcommissionofindia.nic.in/report_seventh/accessed on 11March 2023 H
436 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 23. Reflecting on the objective of the Stamp Act, 1899, a 3-judge
bench of this Court in Hindustan Steel Ltd. v. Dilip Construction Co.22
(for short “Hindustan Steel”) speaking through J.C. Shah J. made the
following pertinent observation:
“7. The Stamp Act is a ûscal measure enacted to secure revenue
B for the State on certain classes of instruments: It is not enacted to
arm a litigant with a weapon of technicality to meet the case of
his opponent.”
24. Learned Amicus Curiae, Mr. Gourab Banerjee cited the
decision of the Pakistan Supreme Court in Union Insurance Company
C of Pakistan Ltd. v Hafiz Muhammad Siddique23 which addressed this
issue as early as 1978, following the ratio in Hindustan Steel (supra).
Faced with the question of whether there would be any valid arbitral
proceedings, if the arbitration agreement is unduly stamped and hence,
inadmissible in evidence under Section 35 of the Stamp Act, 1899; the
Court attributed a purely fiscal purpose to stamping, holding that stamping
D is not meant to interfere in commercial life. Discussing the provisions of
the Stamp Act, 1899 including Section 61 which empowers appellate
Courts to revise decisions on “sufficiency” of stamps, Dorab Patel J
concluded that:
“the object of the legislature in enacting the Stamp Act was to
E protect public revenue and not to interfere with commercial life
by invalidating instruments vital to the smooth flow of trade and
commerce.”
[emphasis supplied]

F 25. Thus, the object is to see that the revenue for the State is
realised to the utmost extent24 and not to affect the validity of the
document. Its provisions must be construed narrowly to that extent. In
the same judgment, it was elaborated by the Pakistan Supreme Court as
under:
“For example, an instrument would be produced in evidence only
G
when there is a dispute about it, therefore, if the intention of the
22
(1969) 1 SCC 597
23
1978 PLD SC 279
24
J.M.A. Raju v Krishnamurthy Bhatt, AIR 1976 Guj 72; Chiranji Lal (Dr.) v. Hari Das
(2005) 10 SCC 746; Jagdish Narain v. Chief Controlling Revenue Authority, AIR 1994
H All 371.
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 437
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

Legislature had been to render invalid all instruments not properly A
stamped, it would have made express provision in this respect
and it would have also provided some machinery for enforcing its
mandate in those cases in which the parties did not have occasion
to produce unstamped instruments before the persons specified
in the section.”
B
26. This Court in RIO Glass Solar SA v. Shriram EPC Limited
and Ors.25 while holding that foreign awards need not be stamped noted
that the Stamp Act, 1899 reflects the fundamental policy of Indian law.
A 2-judge bench speaking through Nariman J. noted as under:
“ 34. ……The fundamental policy of Indian law, as has been held C
in Renusagar Power Co. Ltd. v. General Electric Co., 1994 Supp
(1) SCC 644, and followed in Associate Builders v. Delhi
Development Authority, (2015) 3 SCC 49, makes it clear that if a
statute like the Foreign Exchange Regulation Act, 1973 dealing
with the economy of the country is concerned, it would certainly
D
come within the expression “fundamental policy of Indian law”.
The Indian Stamp Act, 1899, being a fiscal statute levying
stamp duty on instruments, is also an Act which deals with the
economy of India, and would, on a parity of reasoning, be
an Act reflecting the fundamental policy of Indian law.”
E
[emphasis supplied]
27. The object of the Stamp Act can be further understood from
S. Krishnamurthy Aiyar’s Commentary26 on the Stamp Act, 1899 where
discussing the judgments in Hindustan Steel(supra) and J.M.A Raju v
Krishnamurthy Bhatt27, the object is stated as under:
F
“The object of the Stamp Act is a purely fiscal regulation. Its sole
object is to increase the revenue and all its provisions must be
construed as having in view the protection of revenue. It is not
enacted to arm a litigant with a weapon of technicality to meet
the case of his opponent. The whole object is to see that the
G
revenue of the State is realised to the utmost extent”

25
(2018) 18 SCC 313
26
S. Krishnamurthy Aiyar, The Indian Stamp Act, An Exhaustive Summary with State
Amendments; 7 th Edn, P. 22
27
AIR 1976 Guj 72 H
438 SUPREME COURT REPORTS [2023] 9 S.C.R.

A It is plain that the legislative intent and object behind the Stamp
Act, 1899, is to secure revenue for the State and it is an Act reflecting
the fundamental policy of Indian law. Thus, policy considerations and
securing revenue must also be kept in mind while interpreting the
provisions of the Stamp Act, 1899.
B 27.1. In the case of Commissioner of IT v. Chandanben
Maganlal28, it was held that any provision relating to a tax statute must
be interpreted so that the meaning of such provision must harmonise
with the legislature’s intention behind the law. Let us now consider Section
35&36 of the Stamp Act, 1899 with which we are directly concerned.
C They are extracted below:
“35. Instruments not duly stamped inadmissible in evidence, etc.—
No instrument chargeable with duty shall be admitted in evidence
for any purpose by any person having by law or consent of parties
authority to receive evidence, or shall be acted upon, registered
D or authenticated by any such person or by any public officer, unless
such instrument is duly stamped: Provided that—
(a) any such instrument [shall], be admitted in evidence
on payment of the duty with which the same is chargeable,
or, in the case of an instrument insufficiently stamped, of the
E amount required to make up such duty, together with a penalty
of five rupees, or, when ten times the amount of the proper
duty or deficient portion thereof exceeds five rupees, of a sum
equal to ten times such duty or portion;
(b) where any person from whom a stamped receipt could
F have been demanded, has given an unstamped receipt and
such receipt, if stamped, would be admissible in evidence
against him, then such receipt shall be admitted in evidence
against him, on payment of a penalty of one rupee by the person
tendering it;
G (c) where a contract or agreement of any kind is effected by
correspondence consisting of two or more letters and any one
of the letters bears the proper stamp, the contract or agreement
shall be deemed to be duly stamped;

28
H (2000) 245 ITR 182
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 439
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

(d) nothing herein contained shall prevent the admission A
of any instrument in evidence in any proceeding in a
Criminal Court, other than a proceeding under Chapter
XII or Chapter XXXVI of the Code of Criminal Procedure,
1898 (5 of 1898);
(e) nothing herein contained shall prevent the admission B
of any instrument in any Court when such instrument has
been executed by or on behalf of 66 [the 67 [Government]]
or where it bears the certificate of the Collector as provided
by section 32 or any other provision of this Act.”
“36. Admission of instrument where not to be questioned.—Where C
an instrument has been admitted in evidence, such admission shall
not, except as provided in section 61, be called in question at any
stage of the same suit or proceeding on the ground that the
instrument has not duly stamped.”
28. Section 35 proscribes authorities from considering unstamped D
documents but the exceptions to the statutory bar under Section 35 as
provided in 35(a),(b),(d) and (e) and Section 36, would clearly suggest
that non-payment of stamp duty is a curable defect and the document
would not be rendered void at the first instance, if the requisite Stamp
duty is not paid. Thus, there is no absolute bar. It is also well-settled in
law that failure to stamp a document does not affect the validity of the E
transaction embodied in the document; it merely renders a document
inadmissible in evidence29.
28.1. K. Krishnamurthy30 in the Commentary on the Indian Stamp
Act, 1899 discusses the proviso to Section 35 of Stamp Act, 1899 as
under: F
“This proviso enables Courts and Arbitrators to admit in evidence
documents unstamped or deficiently stamped on payment of the
proper duty and penalty. An instrument not duly stamped shall be
admitted in evidence on payment of the duty and penalty. An
instrument not duly stamped shall be admitted in evidence on G

29
Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765; Mattegunta Dhanalakshmi v
Kantam Raju Saradamba,AIR 1977 AP 348; See also Puranchandra v Kallipada Roy,
AIR 1942 Cal 386;Boottam Pitchiah v Boyapati Koteswara Rao AIR 1964 AP 519
30
K. Krishnamurthy, The Indian Stamp Act, An Exhaustive Summary with State
Amendments;12th Edition P. 372-373 H
440 SUPREME COURT REPORTS [2023] 9 S.C.R.

A payment of the duty with which the same is chargeable or in the
case of an instrument insufficiently stamped, of the amount
required to make up such together with penalty31. An award which
is not engrossed on stamped paper or is engrossed on an
insufficiently stamped paper may be validated with
retrospective effect by payment of the duty or deficit duty32.
B
Where an award is not stamped, the defect in the award can
be cured by impounding the document and after the defect is
removed it can be brought on record and made a rule of the
Court. 33”
[emphasis supplied]
C
29. Similarly, Section 42(2) of the Stamp Act, 1899 which deals
with the consequence of non-stamping provides as follows:
“42. Endorsement of instruments in which duty has been paid
under section 35, 40 or 41.—
D (1) When the duty and penalty (if any) leviable in respect of any
instrument have been paid under section 35, section 40 or section
41, 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
E duty and penalty (stating the amount of each) have been levied
in respect thereof, and the name and residence of the person
paying them.
(2) Every instrument so endorsed shall thereupon be
admissible in evidence, and may be registered and acted upon
F and authenticated as if it had been duly stamped, and shall
be delivered on his application in this behalf to the person
from whose possession it came into the hands of the officer
impounding it, or as such person may direct:
Provided that—
G (a) no instrument which has been admitted in evidence upon
payment of duty and a penalty under section 35, shall be so
delivered before the expiration of one month from the date of
31
Omprakash v. Laxminarayan 2014(1) SCC 618
32
Pattoolal Sharma v Rajadhiraj Umrao Singh AIR 1955 NUC 2621
33
H Wilson & Co. Pvt. Ltd. V K.S. Lokavinayagam AIR 1992 Mad 100
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 441
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

such impounding, or if the Collector has certified that its further A
detention is necessary and has not cancelled such certificate;
(b) nothing in this section shall affect the Code of Civil Procedure,
1882 (14 of 1882), section 144 clause 3.”
[emphasis supplied]
B
30. The phraseology of Sections 36, 35 and 42 of the Stamp
Act, 1899 was considered in Hindustan Steel(supra). The factual
backdrop therein was that Hindustan Steel made an application under
Section 30 and 33 of the Indian Arbitration Act, 1940 for setting
aside the award on the ground that it was unstamped and as such, void
C
ab initio. This Court, however, held that there is no bar against an
instrument not duly stamped being “acted upon”,after payment of stamp
duty and penalty according to the procedure prescribed in the Act. It
was pertinently observed as follows:
“6. Relying upon the difference in the phraseology between
D
Sections 35 and 36 it was urged that an instrument which is not
duly stamped may be admitted in evidence on payment of duty
and penalty, but it cannot be acted upon because Section 35
operates as a bar to the admission in evidence of the instrument
not duly stamped as well as to its being acted upon, and the
Legislature has by Section 36 in the conditions set out therein E
removed the bar only against admission in evidence of the
instrument. The argument ignores the true import of Section
36.
-
F
By that section an instrument once admitted in evidence shall
not be called in question at any stage of the same suit or
proceeding on the ground that it has not been duly stamped.
Section 36 does not prohibit a challenge against an instrument
that it shall not be acted upon because it is not duly stamped,
but on that account there is no bar against an instrument not G
duly stamped being acted upon after payment of the stamp
duty and penalty according to the procedure prescribed by
the Act. The doubt, if any, is removed by the terms of Section
42(2) which enAct, in terms unmistakable, that every
instrument endorsed by the Collector under Section 42(1)
H
442 SUPREME COURT REPORTS [2023] 9 S.C.R.

A shall be admissible in evidence and may be acted upon as if
it has been duly stamped.”
(emphasis supplied)
31. The above would indicate that there is no absolute bar against
the instrument being “acted upon” since at a later stage the defect is
B curable.
31.1. Arguing that the above course is not available, Ms. Malavika
Trivedi, learned Senior Counsel for the intervenor had contended that
Section 35 provides for a statutory bar, where the agreement shall not
be admitted in evidence for any purpose nor shall it be acted upon,
C registered or authenticated by any such person or by any public officer.
It is, therefore, submitted that when a Court appoints an arbitrator under
Section 11 of Arbitration Act, 1996, it is certainly “acting upon” the
arbitration clause, which is barred by the clear language of Section 35
of the Stamp Act, 1899. Let us now proceed to test the above argument.

D 31.2 In Hameed Joharan v. Abdul Salam34 in the context of an
unstamped decree for partition, 2 judges of this Court had the occasion
to interpret Section 35 of the Stamp Act, 1899 and the interplay with
Article 136 of the Limitation Act, 1963. It was contended in that case
that an instrument not duly stamped, cannot be “acted upon”. The issue
therein was whether a decree passed in a suit for partition can be acted
E upon/enforced, without engrossing on stamp paper. It was also argued
that the period of limitation begins to run from the date when the decree
becomes enforceable i.e. when the decree is engrossed on the stamp
paper. In this context, the Court opined that:
“38. …..Undoubtedly, Section 2(15) includes a decree of partition
F and Section 35 of the Act of 1899 lays down a bar in the matter of
unstamped or insufficient stamp being admitted in evidence or
being acted upon — but does that mean that the prescribed
period shall remain suspended until the stamp paper is
furnished and the partition decree is drawn thereon and
G subsequently signed by the Judge? The result would however
be an utter absurdity. As a matter of fAct, if somebody does not
wish to furnish the stamp paper within the time specified therein
and as required by the civil court to draw up the partition decree
or if someone does not at all furnish the stamp paper, does that
34
H (2001) 7 SCC 573
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 443
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

mean and imply, no period of limitation can be said to be attracted A
for execution or a limitless period of limitation is available. The
intent of the legislature in engrafting the Limitation Act shall
have to be given its proper weightage. Absurdity cannot be the
outcome of interpretation by a court order and wherever there is
even a possibility of such absurdity, it would be a plain exercise of
judicial power to repel the same rather than encouraging it. The B
whole purport of the Indian Stamp Act is to make available
certain dues and to collect revenue but it does not mean and
imply overriding the effect over another statute operating in
a completely different sphere.”
[Emphasis supplied] C
31.3. Thus, it was held that the Stamp Act, 1899 cannot override
the effect of another statute such as the Limitation Act, 1963 operating
in a completely different sphere. Further, the expression “executability”
and “enforceability” was distinguished to mean that “enforceability”
cannot be a subject matter of Section 35 of Stamp Act, 1899. It was D
conclusively held that enforceability cannot be suspended until
furnishing of stamp paper. At most, a document can be rendered non-
executable.
31.4. Thereafter, a 3-judge bench of this Court in Chiranji Lal
(Dr.) v. Hari Das35 after discussing the above judgment in Hameed
E
Joharan (supra) on the question of period of limitation beginning to run
from the date of the decree being engrossed on the stamp paper, pertinently
held as under:
“23. Such an interpretation is not permissible having regard
to the object and scheme of the Indian Stamp Act, 1899. The
Stamp Act is a fiscal measure enacted with an object to secure F
revenue for the State on certain classes of instruments. It is not
enacted to arm a litigant with a weapon of technicality to
meet the case of his opponent. The stringent provisions of the
Act are conceived in the interest of the Revenue. Once that object
is secured according to law, the party staking his claim on the G
instrument will not be defeated on the ground of initial defect in
the instrument (Hindustan Steel Ltd. v. Dilip Construction
Co. [(1969) 1 SCC 597]).”
[emphasis supplied]
35
2005) 10 SCC 746 H
444 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 31.5. It was specifically held that “the starting of period of limitation
for execution of a partition decree cannot be made contingent upon the
engrossment of the decree on the stamp paper.”
31.6. Thus, unstamped/insufficiently stamped document does not
affect the enforceability of a document nor does it render a document
B invalid36. A plain reading of the provisions would also make it clear that
a document can be “acted upon” at a later stage. It is therefore a curable
defect.
32.The learned Counsel for the Appellant, Mr. Gagan Sanghi
argued that Section 35 and 33 are mandatory provisions as it uses the
C word “shall” and an unstamped document must be impounded at the
threshold. In Principles of Statutory Interpretation by Justice G.P.
Singh37 on the use of the word “shall” and presumption of the word
being imperative, it is stated:
“ ….this prima facie inference about the provision being imperative
may be rebutted by other considerations flowing from such
D
construction. There are numerous cases where the word “shall”
has therefore been construed as merely directory. The word ‘shall’,
observes HIDAYATULLAH, J. “is ordinarily mandatory but
sometimes not so interpreted if the context or the intention otherwise
demands and points out SUBBARAO J. “when a statute uses
E the word ‘shall’, prima facie it is mandatory, but the court may
ascertain the real intention of the legislature by carefully
attending to the whole scope of the statute.”
[emphasis supplied]
32.1. P.B. Maxwell in the Commentary on Interpretation of
F Statutes38 notes that an Act is to be regarded in its entirety and discusses
the following three ways of interpretation:
“Passing from the external aspects of the Statute to its contents,
it is an elementary rule that construction is to be made of all parts
together, and not of one part only by itself”
G 36
Gulzari Lal Malwari v Ram Gopal AIR 1937 Cal 765; Mattegunta Dhanalakshmi v
Kantam Raju Saradamba, AIR 1977 AP 348; See also Puranchandra v Kallipada Roy,
AIR 1942 Cal 386;Boottam Pitchiah v Boyapati Koteswara Rao AIR 1964 AP 519
37
Justice G.P. Singh: Principles of Statutory Interpretation,(LexisNexis,2016) at P. 450-
451; Burjore and Bhawani Prasad v Bhagana ILR 10 Cal 557; Sainik Motors v State of
Rajasthan 1962 (1) SCR 517 ; State of UP v Babu Ram AIR 1961 SC 751
38
PSt J Langan, Maxwell on The Interpretation of Statutes (N M Tripathi Private Ltd,
H 1976); P. 58-64
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 445
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

i) Individual words are not considered in isolation, but A
may be have their meaning determined by other
words in the Section in which they occur.
ii) The meaning of a section may be controlled by other
individual sections in the same Act.
iii) Lastly, the meaning of a section may be B
determined, not so much by reference to other
individual provisions of the Statute, as by the
scheme of the Act regarded in general”
[emphasis supplied]
C
32.2. Justice G.P. Singh in Interpretation of Statutes further
39
notes :
“ The principle that the statute must be read as a whole is equally
applicable to different parts of the same section. The section
must be construed as a whole whether or not one of the parts is a D
saving clause or a proviso. Subbarao J calls it “an elementary rule
that construction of a section is to be made of all the parts together”
[emphasis supplied]
32.3. Thus, on a consolidated reading of Section 35,36 and the
proviso to Section 35 and 42 ; the use of the word “acted upon” in all E
these sections or even in the same section, read with the objective and
legislative intent of the Stamp Act 1899, it is clear that the bar under
Section 35 is not intended to be absolute; non-payment of stamp duty is
a curable defect as the objective is to protect revenue. Moreover, none
of the provisions of the Stamp Act, 1899 have the effect of rendering a
F
document invalid or void ab initio.
G. The Statutory Scheme of the Arbitration Act, 1996
33. It is apposite to refer to the parliamentary intent behind the
enactment of the Arbitration Act, 1996 which replaced the Arbitration
Act, 1940. The first law on the subject was the Arbitration Act, 1899 G
with limited application in the Presidency towns of Calcutta, Bombay
and Madras. Thereafter, the second schedule of the provisions of the
Civil Procedure Code, 1908 dealt with arbitration. The major
consolidated legislation was the Arbitration Act, 1940 which was based
39
Justice G.P. Singh: Principles of Statutory Interpretation,(LexisNexis,2016) at P. 46; H
446 SUPREME COURT REPORTS [2023] 9 S.C.R.

A on the (English) Arbitration Act, 1940. The Law Commission in its
246th LCI Report (supra) notes that this arbitral regime was based on
the mistrust of the arbitral process and “The 1996 Act is based on the
UNCITRAL Model Law on International Commercial Arbitration, 1985
and the UNCITRAL Conciliation Rules, 1980.” The relevant part of the
Statement of Object and Reasons is extracted below:
B
(i) to comprehensively cover international commercial arbitration
and conciliation as also domestic arbitration and conciliation;
(ii) to make provision for an arbitral procedure which is fair,
efficient and capable of meeting the needs of the specific
C arbitration;
(iii) to provide that the arbitral tribunal gives reasons for its arbitral
award;
(iv) to ensure that the arbitral tribunal remains within the limits of
its jurisdiction;
D
(v) to minimise the supervisory role of courts in the arbitral
process;
(vi) to permit an arbitral tribunal to use mediation, conciliation or
other procedures during the arbitral proceedings to encourage
E settlement of disputes;
(vii) to provide that every final arbitral award is enforced in the
same manner as if it were a decree of the court;
(viii) to provide that a settlement agreement reached by the parties
as a result of conciliation proceedings will have the same status
F and effect as an arbitral award on agreed terms on the substance
of the dispute rendered by an arbitral tribunal; and
(ix) to provide that, for purposes of enforcement of foreign
awards, every arbitral award made in a country to which one of
the two International Conventions relating to foreign arbitral
G awards to which India is a party applies, will be treated as a
foreign award.”
[emphasis supplied]
34. Further, on reading Article 5 of the Model Law and Section 5
of the Arbitration Act, 1996, which cover the provisions for judicial
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 447
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

intervention in arbitral proceedings, it is clear that the Parliament went A
beyond Article 5 of the UNCITRAL Model law and added a non-obstante
clause. To substantiate this point, it is pertinent to quote the provisions in
full.
Article 5 of the UNCITRAL Model Law, 1985 reads as under:
“ Article 5. Extent of Court intervention- In matters governed B
by this Law, no court shall intervene except where so provided
in this Law.”
Section 5 of the Arbitration Act, 1996 reads as under:
“5. Extent of judicial intervention.—Notwithstanding anything C
contained in any other law for the time being in force, in
matters governed by this Part, no judicial authority shall
intervene except where so provided in this Part.”
[emphasis supplied]
35. Additionally, reflecting on the purpose of Article 5, Dr. Peter D
Binder in UNCITRAL Model Law on International Commercial
Arbitration, 198540 notes:
“1-107 : According to the Commission Report, the purpose of
Article 5 was “to achieve a certainty as to the maximum extent of
judicial intervention, including assistance, in international E
commercial arbitration, by compelling the drafters to list in the
(model) law on international commercial arbitration all instances
of court intervention. The Analytical Commentary describes the
effect of Article 5 as being “to exclude any general or residual
powers given to the courts in a domestic system which are not F
listed in the model law”
In addition to the great advantage of providing clarity of law,
which is particularly important for foreign parties(protecting them
from unwanted legal surprises, Article 5 also functions to
accelerate the arbitral process in allowing less of a chance G
of delay caused by intentional and dilatory court
proceedings.”
[emphasis supplied]
40
P. Binder, International Commercial Arbitration And Conciliation In UNCITRAL
Model Law Jurisdictions 274 (2nd ed., Sweet & Maxwell London 2005) P. 50-51 H
448 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 36. A collective reading of the Statement of Object and Reasons
of the Arbitration Act, 1996 r/w Section 5 of the Act, and Article 5 of
the Model Law, would make it abundantly clear that the legislative intent
behind the enactment was to inter alia,minimise the intervention of the
Courts and provide for timely resolution of disputes. By adding a non-
obstante clause, the Parliament through Section 5 made a significant
B
departure from Article 5 and gave an overriding effect over the provisions
of any other law for the time being in force. It circumscribed the role of
the judicial authority, especially in context of the Courts exercising any
residual power that may accrue to them through any provision in any
law.
C
37. Let us now refer to the unamended Section 11(6)of the
Arbitration Act, 1996 which is based on the Article 11 of the
UNCITRAL Model law:
“11 Appointment of arbitrators. —
D
(6) Where, under an appointment procedure agreed upon by the
parties,—
(a) a party fails to act as required under that procedure; or
(b) the parties, or the two appointed arbitrators, fail to reach an
E
agreement expected of them under that procedure; or
(c) a person, including an institution, fails to perform any function
entrusted to him or it under that procedure, a party may request
the Chief Justice or any person or institution designated by him to
F take the necessary measure, unless the agreement on the
appointment procedure provides other means for securing the
appointment.”
38. Even though the key provisions in the Arbitration Act, 1996
are primarily based on the UNCITRAL Model Law, the legislature has
G also made significant departures, while amending Section 11 and Section
8 of the Arbitration Act, 1996.
39. Next, it would be appropriate to briefly trace the jurisprudential
history of Section 11(6) of the Arbitration Act, 1996 for the purpose
of this reference.
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 449
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

i) Evolution of law under Section 11(6) of Arbitration Act, 1996 A
40. A 2-judge Bench of this Court in ICICI Ltd. v. East Coast
Boat Builders & Engineers Ltd41 taking into consideration delays in
appointment of arbitrators under Section 11(6), referred the question of
jurisdiction of a Section 11 judge to consider arbitrability of a dispute to a
three-judge bench. It was noted that in KR Raveendranathan v. State B
of Kerala42, another two Judge Bench of this Court had already referred
to a larger Bench, a similar question.
41. Thereafter, in Sundaram Finance Ltd. v. NEPC India Ltd43,
a 2-judge bench opined that:
“12. …under the 1996 Act, appointment of arbitrator(s) is made C
as per the provisions of section 11, which does not require the
Court to pass a judicial order appointing [the] arbitrator(s).”
42. The above obiter was affirmed by a 2-judge Bench in Ador
Samia Pvt Ltd. v. Peekay Holdings Ltd 44 (for short “Ador Samia”).
Dealing with the question of appeal under Article 136 of the Constitution D
of India, from an order made by the Chief Justice of a High Court
appointing an arbitrator, this Court held that an order under Section 11
of the Arbitration Act, 1996 was an administrative order. This was
affirmed by a three- Judge Bench in Konkan Railways Corpn v. Mehul
Construction Co45 (for short “Konkan Railways(I)”) where the matter E
came up for reconsideration of the ratio in Ador Samia (supra). It was
observed as under:
“ 4. …When the matter is placed before the Chief Justice or his
nominee under Section 11 of the Act it is imperative for the said
Chief Justice or his nominee to bear in mind the legislative intent F
that the arbitral process should be set in motion without any delay
whatsoever and all contentious issues are left to be raised before
the Arbitral Tribunal itself. At that stage it would not be appropriate
for the Chief Justice or his nominee to entertain any contentious
issue between the parties and decide the same. A bare reading of
Sections 13 and 16 of the Act makes it crystal clear that questions G

41
(1998) 9 SCC 728
42
(1996) 10 SCC 35
43
(1999) 2 SCC 479
44
(1999) 8 SCC 572
45
(2000) 7 SCC 201 H
450 SUPREME COURT REPORTS [2023] 9 S.C.R.

A with regard to the qualifications, independence and impartiality of
the arbitrator, and in respect of the jurisdiction of the arbitrator
could be raised before the arbitrator who would decide the same.”
43. The three-judge bench decision was subsequently affirmed
by five judges in Konkan Railways Corpn v. Mehul Construction
B Co46 (for short “Konkan Railways (II)”). This Court held therein that
the power exercised by the Chief Justice or ‘any person or institution’
designated by him under section 11 is not adjudicatory. Following a detailed
review of the precedents, it was held that the function of the Chief
Justice or his designate under Section 11 is to only “fill the gap left” and
appoint an arbitrator for expeditious constitution and commencement of
C arbitration proceedings.
44. The seven judges of this Court in SBP (supra) overturned the
decision in Konkan Railways(II) (supra). It was held therein that deciding
an application for appointment is an exercise of ‘judicial’ power, as
opposed to an ‘administrative’ power and that the Court is also authorized
D to record evidence:
“39. ….[f]or the purpose of taking a decision on these aspects,
the Chief Justice can either proceed on the basis of affidavits and
the documents produced or take such evidence or get such
evidence recorded”
E
45. However, Justice C.K. Thakker dissented from the majority
opinion and came to the conclusion that it was an administrative power
in the following passage:
“85. …There is […] no doubt in my mind that at that stage, the
F satisfaction required is merely of prima facie nature and the Chief
Justice does not decide lis nor contentious issues between the
parties. Section 11 neither contemplates detailed inquiry, nor trial
nor findings on controversial or contested matters.”
46. The four main reasons behind the dissent can be summarised
as under:
G
“111. ….Firstly, the function of the Court is to interpret the provision
as it is and not to amend, alter or substitute by interpretative
process. Secondly, it is for the legislature to make a law applicable

46
H (2002) 2 SCC 388
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 451
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

to certain situations contemplated by it and the judiciary has no A
power in entering into ‘legislative wisdom’. Thirdly, as held by
me, the ‘decision’ of the Chief Justice is merely prima facie decision
and sub-section (1) of Section 16 confers express power on the
arbitral tribunal to rule on its own jurisdiction. Fourthly, it provides
that remedy to deal with situations created by the order passed by
B
the arbitral tribunal. The sheet anchor of his dissent is that in the
guise of interpreting a statute, judicial legislation is not permissible.”
47. In the dissenting opinion in Paragraph 95 & 96, Justice Thakkar
further held as under:
“95. Now, let us consider Section 16 of the Act. This section is C
new and did not find place in the old Act of 1940. Sub-section (1)
of that section enables the Arbitral Tribunal to rule on its own
jurisdiction. It further provides that the jurisdiction of the Tribunal
includes ruling on any objections with respect to existence or validity
of the arbitration agreement. Sub-sections (2), (3) and (4) lay
down procedure of raising plea as to the jurisdiction of the Arbitral D
Tribunal and entertaining such plea. Sub-section (5) mandates that
the Arbitral Tribunal “shall decide” such plea and, “where the
Arbitral Tribunal takes a decision rejecting the plea, continue with
the arbitral proceedings and make an arbitral award”. Sub-section
(6) is equally important and expressly enacts that a party aggrieved E
by an arbitral award may invoke Section 34 of the Act for setting
aside such award. The provision appears to have been made to
prevent dilatory tactics and abuse of immediate right to approach
the court. If an aggrieved party has right to move the court, it
would not have been possible to preclude the court from granting
stay or interim relief which would bring the arbitration proceedings F
to a grinding halt. The provisions of Section 16(6) read with Section
5 now make the legal position clear, unambiguous and free from
doubt.
96. Section 16(1) incorporates the well-known doctrine
of Kompetenz-Kompetenz or competence de la competence. It G
recognises and enshrines an important principle that initially and
primarily, it is for the Arbitral Tribunal itself to determine whether
it has jurisdiction in the matter, subject of course, to ultimate court-
control. It is thus a rule of chronological priority. Kompetenz-
Kompetenz is a widely accepted feature of modern international H
452 SUPREME COURT REPORTS [2023] 9 S.C.R.

A arbitration, and allows the Arbitral Tribunal to decide its own
jurisdiction including ruling on any objections with respect to the
existence or validity of the arbitration agreement, subject to final
review by a competent court of law i.e. subject to Section 34 of
the Act.”
B 48. The above line of reasoning in Justice Thakkar’s dissent
resonates with the internationally recognized principle of Kompetenz
Komptenz and the doctrine of separability. The majority opinion in SBP
(supra) suggeststhat a Section 11 Court could conduct a mini-trial at the
pre-referral stage. The jurisprudential correctness of SBP(supra) has
been doubted and was considered as excessive judicial intervention by
C the 246th LCI Report (supra). It has been legislatively overruled by
subsequent amendments in the Arbitration Act, 1996 which will be
discussed later in this judgment.
49. Thereafter, a two-judge bench in Boghara Polyfab (supra)
which followed SBP (supra), allowed the court to examine, inter alia,
D the following issues:
“22.2. (a) Whether the claim is a dead (long barred) claim or a
live claim.
(b) Whether the parties have concluded the contract/
E transaction by recording satisfaction of their mutual rights
and obligation or by receiving the final payment without
objection.”
50. The 246th LCI report (supra), discussing both SBP (supra)
and Boghara (supra) significantly noted that the real issue is the “scope”
F and “nature” of judicial intervention:
“29. The Supreme Court has had occasion to deliberate upon the
scope and nature of permissible pre-arbitral judicial intervention,
especially in the context of section 11 of the Act. Unfortunately,
however, the question before the Supreme Court was framed in
terms of whether such a power is a “judicial” or an “administrative”
G
power – which obfuscates the real issue underlying such
nomenclature/description as to:
-the scope of such powers – i.e. the scope of arguments
which a Court (Chief Justice) will consider while deciding
whether to appoint an arbitrator or not – i.e. whether the
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 453
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

arbitration agreement exists, whether it is null and void, whether A
it is voidable etc; and which of these it should leave for decision
of the arbitral tribunal.
-the nature of such intervention – i.e. would the Court (Chief
Justice) consider the issues upon a detailed trial and whether
the same would be decided finally or be left for determination B
of the arbitral tribunal”
[emphasis supplied]
51. As regards nature, the 246th LCI Report(supra) noted that
the exposition of law on the point is to be found in Shin Etsu (supra)where
C
this Court while interpreting Section 45 of the Arbitration Act, 1996
held that the issue should be looked at on a “prima facie” basis only. On
scope, it was recommended that the Court should restrict to the
examination of whether the agreement is “null and void” and if the Court
finds that the agreement does not exist, that decision would be final. It
made the following recommendation as regards Section 8 and 11 of the D
Arbitration Act, 1996:
“33. …The scope of the judicial intervention is only restricted to
situations where the Court/Judicial Authority finds that the
arbitration agreement does not exist or is null and void. In so
far as the nature of intervention is concerned, it is recommended E
that in the event the Court/Judicial Authority is prima facie satisfied
against the argument challenging the arbitration agreement, it shall
appoint the arbitrator and/or refer the parties to arbitration, as the
case may be.”
52. The 2015-Amendment significantly restricted the scope of F
intervention even further as we will notice below.
ii) Post-2015 Regime: Insertion of Section 11(6A)
53. There has been a major shift post-2015 amendment with the
insertion of Section 11(6A) in the Arbitration Act, 1996. The legislative
G
intent is clear from the plain reading of Section 11(6A) as extracted
below:
”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,
H
454 SUPREME COURT REPORTS [2023] 9 S.C.R.

A decree or order of any Court, confine to the examination of the
existence of an arbitration agreement.”
[emphasis supplied]
54. The basis for this amendment, as explained in 246th LCI Report
(supra), was to undo the effect of SBP (supra) and Boghara (supra)
B which widened the scope of inquiry and intervention by a Court under
Section 11(6) of the Arbitration Act, 1996. Section 11(6A) uses the
phrase “notwithstanding any judgment, decree or order of any Court”
and effectively overrules judgments which widened the scope of inquiry.
Section 11(6A) does not use the word “null and void” as recommended
C by the Law Commission. Thus, the legislature went one step further and
confined the examination to the “existence” of the arbitration agreement.
55. Now let us notice the language used in Sections 8,11 and 45
of the Arbitration Act, 1996, all of which deal with the power of Courts
at the pre-arbitral stage.
D 55.1. Section 8 of the Arbitration Act, 1996 titled “Power to
refer parties to arbitration where there is an arbitration agreement” has
been amended in 2015 with the following language: “unless it finds
that prima facie no valid arbitration agreement exists”.
55.2. Section 45 in Part II titled “Power of judicial authority to
E refer parties to arbitration” has also been amended and notified in
2019. The amendment in Section 45 was made after the judgment of
three judges in Shin Etsu(supra) where in a case of international
arbitration, the question before this Court was when an application under
Section 45 is moved, is the Court required to pass a prima facie finding
F or a final-finding based on the merits of the case, which would result in
a full-fledged trial? In the majority opinion, it was held as under:
“105. …the object of the Act would be defeated if proceedings
remain pending in the court even after commencing of the
arbitration. It is precisely for this reason that I am inclined to the
view that at the pre-reference stage contemplated by Section 45,
G
the court is required to take only a prima facie view for making
the reference, leaving the parties to a full trial either before the
Arbitral Tribunal or before the court at the post-award stage”
55.3. Pursuant to Shin Etsu(Supra), the 2019 Amendment to
Section 45 states: “…unless it prima facie finds that the said
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 455
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

agreement is null and void, inoperative or incapable of being A
performed”. Thus, from the above discussion it is clear that Section 8
uses the word “validity” and Section 45 uses the phrase “null and void,
inoperative or incapable of being performed”. In that sense, Section
11(6A) is a unique provision which is confined to the “existence” of the
arbitration agreement and not its “validity”. The amended provision also
B
does not find place in the UNCITRAL Model Law. Learned Amicus
Curiae pointed to the definition of confine in P. Ramanatha Aiyar’s
Advanced Law Lexicons47 which states: “imprison; hold in custody.
To keep within circumscribing limits”.
56. On reading the language in Section 11(6A) with Section 5 of C
the Arbitration Act 1996, and an interpretation based on legislative
intent, it is apparent that the scope under Section 11(6A) is very narrow.
iii) Post- 2019 Amendment and the Report of the High-Level
Committee to Review the Institutionalisation of Arbitration Mechanism
in India. D
57. The Committee led by Justice Srikrishna48 had recommended
further changes to the Arbitration Act, 1996. It had recommended for
the deletion of Section 11(6A) with the power of appointment of
arbitrators being left entirely to the arbitral institutions. Drawing inspiration
from Singapore, Hong Kong, United Kingdom etc., the Committee E
recommended that this would prevent further delays and set the
momentum for institutional arbitration in India. Under the amended
Section 11(6), the appointment of arbitrators is to be done by the arbitral
institution:
“…the appointment shall be made, on an application of the party, F
by the arbitral institution designated by the Supreme Court, in case
of international commercial arbitration, or by the High Court, in
case of arbitrations other than international commercial arbitration,
as the case may be.”
G
47
P. Ramanatha Aiyar, The Encyclopaedic Law Dictionary with Words and Phrases,
Legal Maxims and Latin terms(5 th Edition); P. 1037
48
Government of India, ‘Report of the High Level Committee to Review
theInstitutionalisation of Arbitration Mechanism in India (HLC Report, July 2017)
Available at https://legalaffairs.gov.in/sites/default/files/Report-HLC.pdf<Last accessed
on 19.3.2023>
H
456 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 58. Insertion of Section 6(B) by Act 3 of 2016 which is yet to
notified reads as under:
“(6B) The designation of any person or institution by the Supreme
Court or, as the case may be, the High Court, for the purposes of
this section shall not be regarded as a delegation of judicial
B power by the Supreme Court or the High Court.]”
[emphasis supplied]
Even though the amendments are not notified yet and there is
limited clarity on the process, we may take a cue about the intention of
the legislature which seems to be to ensure minimal judicial intervention
C at the pre-referral stage of appointment of arbitrator.
59. It would be apposite to refer now to the prevalent position
amongst the most-preferred arbitral institutions i.e. the International
Chamber of Commerce Court (ICC Court), the London Court of
International Arbitration (LCIA), the Hong Kong International
D Arbitration Centre (HKIAC), the Singapore International Arbitration
Centre (SIAC) and the Arbitration Institute of the Stockholm
Chambers of Commerce (SCC) which were mentioned in the report of
the High-level Committee and those can be broadly noted as under:-
1. ICC Arbitration Rules, 2021:
E
“Article 6. Effect of the Arbitration Agreement.—
(4) In all cases referred to the Court under Article 6(3)…The
arbitration shall proceed if and to the extent that the Court
is prima facie satisfied that an arbitration agreement under
the Rules may exist.
F
(5) In all matters decided by the Court under Article 6(4), any
decision as to the jurisdiction of the arbitral tribunal, except as
to parties or claims with respect to which the Court decides
that the arbitration cannot proceed, shall then be taken by the
arbitral tribunal itself.”
G
2. HKIAC Arbitration Rules:
“Article 11 – HKIAC’s Prima Facie Power to Proceed
11.1 The arbitration shall proceed if and to the extent that
HKIAC is satisfied, prima facie, that an arbitration agreement
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 457
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

under these Procedures may exist. Any question as to the A
jurisdiction of the arbitral tribunal shall be decided by
the arbitral tribunal once constituted.
11.2 HKIAC’s decision pursuant to Article 11.1 is without
prejudice to the admissibility or merits of any party’s pleas.”
3. LCIA Arbitration Rules: B

“Article 23. Jurisdiction and Authority
23.1 The Arbitral Tribunal shall have the power to rule upon its
own jurisdiction and authority, including any objection to the
initial or continuing existence, validity, effectiveness or scope C
of the Arbitration Agreement.”
4. SIAC International Arbitration Centre Rules, 2016:
“Article 28. Jurisdiction of the Tribunal
28.1 If any party objects to the existence or validity of the
D
arbitration agreement or to the competence of SIAC to
administer an arbitration, before the Tribunal constituted, the
Registrar shall determine if such objection shall be referred to
the Court. If the Registrar so determines, the Court shall decide
if it is prima facie satisfied that the arbitration shall proceed.
The arbitration shall be terminated if the Court is not so satisfied. E
Any decision by the Registrar or the Court that the arbitration
shall proceed is without prejudice to the power of the Tribunal
to rule on its own jurisdiction.
28.2 The Tribunal shall have the power to rule on its own
jurisdiction, including any objections with respect to the existence, F
validity or scope of the arbitration agreement. An arbitration
agreement which forms part of a contract shall be treated as
an agreement independent of the other terms of the contract.”
5. Arbitration Institute of SCC Rules:
“Article 11. Decisions by the Board G

The Board takes decisions as provided under these Rules,
including deciding:
(i) whether the SCC manifestly lacks jurisdiction over the
dispute pursuant to Article 12 (i);
H
458 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Article 12(i). Dismissal
The Board shall dismiss a case, in whole or in part, if:
(i) the SCC manifestly lacks jurisdiction over the dispute;…”
60. Thus, the approach of the reputed arbitral institutions worldwide
B would show that there is express recognition of the principle of
Kompetenz- Kompetenz and role of Courts is limited to preliminary
prima facie examination. A reading of the above rules would also show
that arbitral institutions have recognized the prima- facie test to determine
the existence of the arbitration agreement. Discussing the rules of the
major international arbitral institutions, William Park in an article titled
C “Challenging Arbitral Jurisdiction: The Role of Institutional Rules” 49
writes:
“ On occasion, however, arbitrations have been filed without even
minimal indicia of consent to the arbitral process. No document
seems to exist saying the respondent actually agreed to arbitrate
D with the claimant. In such instances, efficiency will be served by
early consideration of a respondent’s argument that the case should
not proceed. To this end, the ICC Rules permit the ICC Court to
consider obvious jurisdictional defects, with arbitration going
forward only to the extent the ICC Court is prima facie satisfied
E that an arbitration agreement may exist.”
61. Thus, the objective behind the prima-facie test while referring
a party to arbitration, is to also ensure that a non-consenting party is not
bound to the process of arbitration and the doctrine of party autonomy is
upheld with minimal intervention of Courts.
F 62. Chandrachud J.(as he then was) in the concurring opinion in
A. Ayyasamy vs A. Paramasivam & Ors 50 (for short “Ayyasamy”)
noted, inter alia, that jurisprudence in India must strengthen institutional
efficacy of arbitration with minimal intervention of Courts:
“53. The Arbitration and Conciliation Act, 1996, should in my view
G be interpreted so as to bring in line the principles underlying its
interpretation in a manner that is consistent with prevailing
approaches in the common law world. Jurisprudence in India must
49
Park, William. “Challenging Arbitral Jurisdiction: The Role of Institutional Rules”,
Boston University School of Law, Public Law Research Paper (2015).
50
H (2016) 10 SCC 386
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 459
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

evolve towards strengthening the institutional efficacy of A
arbitration. Deference to a forum chosen by parties as a complete
remedy for resolving all their claims is but part of that evolution.
Minimising the intervention of courts is again a recognition
of the same principle.”
[emphasis supplied] B
63. It upheld the one-stop arbitration principle propounded by the
House of Lords in Fiona Trust and Holding Corporation v.
Privalov 51.
“46. In Fiona Trust and Holding Corpn. v. Privalov [Fiona
Trust and Holding Corpn. v. Privalov, (2007) 1 All ER (Comm) C
891 : 2007 Bus LR 686 (CA)] , the Court of Appeal emphasised
the need to make a fresh start in imparting business efficacy to
arbitral agreements. The Court of Appeal held that : (Bus LR pp.
695 H-696 B & F, paras 17 & 19)
“17. … For our part we consider that the time has now D
come for a line of some sort to be drawn and a fresh start
made at any rate for cases arising in an international
commercial context. Ordinary businessmen would be surprised
at the nice distinctions drawn in the cases and the time taken
up by argument in debating whether a particular case falls E
within one set of words or another very similar set of words. If
businessmen go to the trouble of agreeing that their disputes
be heard in the courts of a particular country or by a tribunal of
their choice they do not expect (at any rate when they are
making the contract in the first place) that time and expense
will be taken in lengthy argument about the nature of particular F
causes of action and whether any particular cause of action
comes within the meaning of the particular phrase they have
chosen in their arbitration clause. If any businessman did want
to exclude disputes about the validity of a contrAct, it would
be comparatively simple to say so. G
***
19. One of the reasons given in the cases for a liberal
construction of an arbitration clause is the presumption in favour

51
(2007) 1 All ER(Comm) 891(Paras 17-18) H
460 SUPREME COURT REPORTS [2023] 9 S.C.R.

A of one-stop arbitration. It is not to be expected that any
commercial man would knowingly create a system which
required that the court should first decide whether the contract
should be rectified or avoided or rescinded (as the case might
be) and then, if the contract is held to be valid, required the
arbitrator to resolve the issues that have arisen. This is indeed
B
a powerful reason for a liberal construction.”
Arbitration must provide a one-stop forum for resolution of
disputes. The Court of Appeal held that if arbitrators can
decide whether a contract is void for initial illegality, there is
no reason why they should not decide whether a contract is
C procured by bribery, just as much as they can decide whether
a contract has been vitiated by misrepresentation or non-
disclosure.
[Emphasis supplied]
64. Thus, the one-stop arbitration approach would ensure that all
D issues on initial illegality or whether a contract is void can be decided by
the arbitral institutions subject, of course, to the ultimate supervisory
jurisdiction of the Courts. An arbitral award can be set aside by Courts
as per the legislative mandate in Section 34 of the Arbitration Act,
1996. This would prevent multiplicity of proceedings in Courts and
tribunals and ensure minimal judicial intervention.
E
H. Discussion on SMS Tea:
65. Having broadly discussed the legislative scheme of the Stamp
Act, 1899 and the Arbitration Act, 1996, let us now examine the
correctness of the decisions referred to in NN Global(supra).
F 66. The judicial position on the enforceability of an arbitration
agreement contained in an unstamped or insufficiently stamped agreement
can be traced from this Court’s 2011 decision in SMS Tea (supra). The
facts of the case were that the appellant was granted lease of two tea
estates for a term of 30 years. The leases deed contained an arbitration
clause. On abrupt eviction by the respondent from the tea estates, the
G
appellant filed an application under Section 11 of the Arbitration Act,
1996 for the appointment of arbitrator. The learned Chief Justice of
Guwahati High Court dismissed the Section 11 application and held that
the lease deed was compulsorily registrable under Section 17 of the
Registration Act, 1908 and Section 106 of the Transfer of Property
H Act, 1882 ; and as the lease deed was not registered, even the arbitration
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 461
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

clause would be rendered invalid. The matter reached this Court where A
one of the questions was whether an arbitration agreement in an
unregistered instrument which is not duly stamped, is valid and
enforceable. It was observed that the arbitration agreement in an
unstamped or insufficiently stamped instrument is invalid, given that
Section 35 of the Stamp Act, 1899 expressly bars the authority before
B
which such unstamped or insufficiently stamped instrument is presented
to act on such an instrument. At this stage, it is important to keep in mind
that decision in SMS (supra)came at a time when SBP (supra) and
Boghara Polyfab (supra) continued to hold the field i.e. prior to the
insertion of Section 11(6A) to the Act. Thus, even at the Section 11
stage, under the law which existed before the 2015 Amendment, the C
Court had wide powers and could also conduct detailed adjudication.
Even though this Court in SMS Tea(supra) succinctly recognized the
doctrine of separability in the context of Registration Act, 1908, it held
that strict and mandatory provisions of the Stamp Act, 1899 on non-
payment of Stamp duty could not be read harmoniously with the relevant
D
provisions of the Arbitration Act, 1996. It was held as under:
“22.1. The court should, before admitting any document into
evidence or acting upon such document, examine whether the
instrument/document is duly stamped and whether it is an
instrument which is compulsorily registerable.
E
22.2. If the document is found to be not duly stamped, Section 35
of the Stamp Act bars the said document being acted upon.
Consequently, even the arbitration clause therein cannot be acted
upon. The court should then proceed to impound the document
under Section 33 of the Stamp Act and follow the procedure under
Sections 35 and 38 of the Stamp Act.” F

67. The judgment in SMS Tea(supra) has been upheld in Naina
Thakkar(supra) and Black Pearl Hotels v Planet M. Retail Ltd.52
(for short “Black Pearl Hotels”). It has also been cited with approval in
a recent judgement by 3 judges of this Court in Dharmaratnakara (supra).
As noted earlier, the Court in Garware (supra) also followed SMS Tea G
(supra) which has been cited with approval in Vidya Drolia (supra).
This legal proposition is doubted by this Court in NN Global (supra) and
referred to us.

52
(2017) 4 SCC 498 H
462 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 68. Section 11(6A) as we have noted above begins with a non-
obstante clause viz. “notwithstanding any judgment, decree or order of
any Court” and effectively overrules all judgments which widened the
ambit of examination.
69. The first submission before us by Mr. Gagan Sanghi, learned
B Counsel for the Appellant on this aspect was that the observations of
two different three- Judge Bench decisions in Dharmaratnakara (supra)
and Black Pearl Hotels (supra) have not been considered in NN
Global(supra) which is another three-judge bench and that this seriously
calls into question the finding of NN Global(supra).
C 70. It is significant to note here that the above two judgments did
not consider the recent 11(6A) Amendment. Black Pearl Hotels(supra)
was delivered pre-11(6A) and hence stands legislatively overruled. In
Dharmaratnakara (supra), it appears that the amendment to Section
11(6A) was not brought to the notice of the Court and the earlier judgment
in Garware(supra) was not considered. This could also be because the
D Court considered the order which was passed prior to introduction of
Section 11(6A). In Dharmaratnakara (supra), the issue before the
Court was whether a document executed between parties was a lease
deed or an “agreement to lease”, and whether arbitration could be invoked
under the said document. Even after determination by the Registrar
E (Judicial) of the Karnataka High Court that the concerned document
was a lease deed, the deficit stamp duty was not paid. The Court relied
on SMS Tea(supra), to hold that the arbitration agreement could not be
acted upon, unless stamp duty is paid.
71. From the discussion above, it is clear that Dharmaratnakara
F (supra) does not lay down the correct position in light of the post-2015
amendment regime. Through the Amending Act, SMS Tea (supra) stands
legislatively overruled.
72.The correct exposition of law after the insertion of Section
11(6A) is to be found in Duro Felguera, S.A. v. Gangavaram Port
G Ltd53 (for short “Duro Felguera”) where it was held that, ”(a)fter the
(2015) amendment, all that the courts need to see is whether an
arbitration agreement exists—nothing more, nothing less. The
legislative policy and purpose is essentially to minimise the Court’s
intervention at the stage of appointing the arbitrator and this
53
H (2017) 9 SCC 729
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 463
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

intention as incorporated in Section 11(6-A) ought to be respected.” A
This has been re-affirmed by a 3-judge bench in Mayavati Trading
Private Limited v. Pradyuat Deb Burman54 where it was held as under:
“10. This being the position, it is clear that the law prior to the
2015 Amendment that has been laid down by this Court, which
would have included going into whether accord and satisfaction B
has taken place, has now been legislatively overruled. This being
the position, it is difficult to agree with the reasoning contained in
the aforesaid judgment as Section 11(6A) is confined to the 15
examination of the existence of an arbitration agreement and is to
be understood in the narrow sense as has been laid down in the
judgment Duro Felguera, S.A. (supra) – see paras 48 & 59.” C

73. The following extract from Pravin Electricals (P) Ltd. v.
Galaxy Infra & Engg. (P) Ltd.55is equally pertinent where the Court
interpreted Section 11 (6A) to conclusively hold that a Section 11 judge
cannot conduct a mini-trial at that stage:
D
“29. The facts of this case remind one of Alice in Wonderland. In
Chapter II of Lewis Caroll’s classic, after little Alice had gone
down the Rabbit hole, she exclaims “Curiouser and curiouser!”
and Lewis Caroll states “(she was so much surprised, that for the
moment she quite forgot how to speak good English)”. This is a
case which eminently cries for the truth to come out between the E
parties through documentary evidence and cross-examination.
Large pieces of the jigsaw puzzle that forms the documentary
evidence between the parties in this case remained unfilled. The
emails dated 22nd July, 2014 and 25th July, 2014 produced here
for the first time as well as certain correspondence between F
SBPDCL and the Respondent do show that there is some dealing
between the Appellant and the Respondent qua a tender floated
by SBPDCL, but that is not sufficient to conclude that there is a
concluded contract between the parties, which contains an
arbitration clause. Given the inconclusive nature of the finding by
CFSL together with the signing of the agreement in Haryana by G
parties whose registered offices are at Bombay and Bihar qua
works to be executed in Bihar; given the fact that the Notary who

54
(2019) 8 SCC 714
55
(2021) 5 SCC 671 H
464 SUPREME COURT REPORTS [2023] 9 S.C.R.

A signed the agreement was not authorised to do so and various
other conundrums that arise on the facts of this case, it is unsafe
to conclude, one way or the other, that an arbitration agreement
exists between the parties. The prima facie review spoken of in
Vidya Drolia (supra) can lead to only one conclusion on the
facts of this case - that a deeper consideration of whether an
B
arbitration agreement exists between the parties must be left
to an Arbitrator who is to examine the documentary evidence
produced before him in detail after witnesses are cross-
examined on the same. For all these reasons, we set aside the
impugned judgment of the Delhi High Court in so far as it
C conclusively finds that there is an Arbitration Agreement between
the parties.”
[emphasis supplied]
74. At this point, it would suffice to note that the Court in SMS
Tea(supra) held that an arbitral agreement would be rendered
D inadmissible in evidence if the underlying contract is not stamped. It
did not, however, state that an unstamped arbitration agreement would
be rendered voidas held in Garware(supra) in the later decision. While
SMS Tea(supra) extended the separability presumption in the context of
the Registration Act, 1908 we will notice below that this presumption
E can also be extended in the context of Stamp Act, 1899 through
harmonious construction.
I. Discussion on Garware
75. The facts in Garware(supra) were that a sub-contrAct, for
the installation of geo-textile tubes embankment with toe mound at village
F Pentha in Odisha, was provided by the employer for prevention from
coastal erosion. Owing to disputes between parties, the sub-contract
was terminated. The Respondent filed a petition under Section 11 which
was allowed by the Bombay High Court and sole arbitrator was appointed.
On appeal, this Court primarily relied on SMS Tea(supra) to hold that
G the arbitration agreement in an unstamped document cannot be acted
upon and hence, an arbitrator could not be appointed until the unstamped
agreement in question was impounded. Despite considering the amended
Section 11(6A) and the 246th LCI Report(supra) to note that SBP(supra)
and Boghara(supra) have been overruled, the Court held that “SMS
Tea Estates ha(d), in no manner, been touched by the amendment of
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 465
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

Section 11(6-A)” since it was not excluded by either the 246th LCI A
Report(supra) or the Statement of Object and Reasons of the 2015
Amendment. It was further held that as per Section 2(h) of the Indian
Contract Act1872, an agreement becomes a contract only if it is
enforceable by law and hence, an unstamped document would be
unenforceable due to the bar under Section 35 of the Stamp Act, 1899.
B
The following paragraph has been doubted by NN Global(supra):
“22. When an arbitration clause is contained “in a contract”, it is
significant that the agreement only becomes a contract if it is
enforceable by law. We have seen how, under the Stamp Act, an
agreement does not become a contrAct, namely, that it is not
enforceable in law, unless it is duly stamped. Therefore, even a C
plain reading of Section 11(6-A), when read with Section 7(2) of
the 1996 Act and Section 2(h) of the Contract Act, would make it
clear that an arbitration clause in an agreement would not exist
when it is not enforceable by law. This is also an indicator that
SMS Tea Estates has, in no manner, been touched by the D
amendment of Section 11(6-A).”
76. The above proposition of law in Garware(supra) appears to
be incorrect. As noted earlier, the judgment in SMS Tea(supra) stands
legislatively overruled as it was delivered in the pre-2015 amendment
regime. Even though there is no express mention in the 246th LCI Report E
(supra), the non-obstante clause effectively overrules it.
77. Now let us consider Section 2(g) and 2(h) of the Indian
Contract Act, 1872 which read as under:
“(g) An agreement not enforceable by law is said to be void;
F
(h) An agreement enforceable by law is a contract;”
Incorporating the principle in Garware(supra) would mean that
as per Section 2(g) and (h) of the Contract Act, 1872, an agreement
would be rendered void-ab-initio, if it is not stamped. This would
however be contrary to the legislative scheme of the Stamp Act, 1899
G
as per which non-stamping/insufficient stamping is a curable defect as
discussed earlier. Moreover, stamp duty is levied on the instrument and
not the transaction.56

56
Board of Revenue v N. Narasimhan AIR 1961 Mad 504; A. Bapiraju v District
Registrar AIR 1968 AP 142 H
466 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 77.1. In Gulzari Lal Malwari v Ram Gopal57 Lord Williams J
while discussing Section 35 of the Stamp Act, 1899 noted that there is
no provision in the Stamp Act, 1899 which renders a document invalid:
“There is a clear distinction to be drawn between invalidity and
inadmissibility of documents. Certain statutes and sections render
B documents invalid if they are not stamped. No section of the
Indian Stamp Act has this effect but an instance of a document
being rendered invalid by the omission of stamps is contained
in the English Stamp Act, s. 93, which provides:—
A contract for sea insurance (other than such insurance as is
C referred to, in the fifty-fifth section of the Merchant Shipping
Act, Amendment Act, 1862) shall not be valid unless the same
is expressed in a policy of sea insurance”
[emphasis supplied]
77.2. Moreover, the language of Section 11(6A) confines the scope
D of enquiry to only “existence.” and not even whether a contract is null
and void, as recommended by the 246th LCI Report(supra). The question
on validity and existence can be gone into by the arbitrator under Section
16 of the Arbitration Act, 1996 and not by the Court under Section 11
of the Arbitration Act, 1996.
E J. Interplay between the Stamp Act 1899, Contract Act 1872 and
the Arbitration Act, 1996
i) Arbitration Act, 1996 is a special legislation
78. In order to understand the interplay between the three Acts,
reference to the relevant provisions is necessary.
F i) Stamp Act, 1899:
The residuary entry in Article 5(c) of Schedule I of the Indian
Stamp Act, 1899 with the title “Agreements” as noted earlier, states “if
not otherwise provided for” which, as held by us, brings under its
ambit even an Arbitration Agreement.
G
Now, Instrument is defined under Section 2(14) as under:
“(14) ”Instrument” includes every document by which any right
or liability is, or purports to be, created, transferred, limited,
extended, extinguished or record.”
H 57
AIR 1937 Cal 765
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 467
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

Section 17 provides for the timing of stamping: A
“ Instruments executed in India.—All instrument chargeable
with duty and executed by any person in [India] shall be
stamped before or at the time of execution.”
“Execution” is defined in Section 2(12):
B
“Executed” or “Execution” used with reference to instruments,
mean “signed” and “signature”
ii) Indian Contract Act, 1872:
An agreement under the Indian Contract Act, 1872 is defined
in Section 2(e) as under: C

“Every promise and every set of promises, forming the
consideration for each other, is an agreement”.
Sections 2(g), 2(h) and 2(j) and Section 10 of the Indian Contract
Act, 1872 state: D
“(g) An agreement not enforceable by law is said to be void;
(h) An agreement enforceable by law is a contract;”
(j) A contract which ceases to be enforceable by law becomes
void when it ceases to be enforceable E
(10) All agreements are contracts if they are made by the free
consent of parties competent to contrAct, for a lawful
consideration and with a lawful object, and are not hereby
expressly declared to be void.
iii) Arbitration Act, 1996: F
Section 2(b) provides as under:
“(b) arbitration agreement” means an agreement referred to
in section 7"
Let us now consider Section 7 of the Arbitration Act, 1996 G
which specifically defines Arbitration agreement:
“7 Arbitration agreement. —
(1) In this Part, “arbitration agreement” means an agreement by
the parties to submit to arbitration all or certain disputes which
H
468 SUPREME COURT REPORTS [2023] 9 S.C.R.

A have arisen or which may arise between them in respect of a
defined legal relationship, whether contractual or not.
(2) An arbitration agreement may be in the form of an arbitration
clause in a contract or in the form of a separate agreement.
(3) An arbitration agreement shall be in writing.
B
(4) An arbitration agreement is in writing if it is contained in—
(a) a document signed by the parties;
(b) an exchange of letters, telex, telegrams or [any other
electronic means] other means of telecommunication which
C provide a record of the agreement; or
(c) an exchange of statements of claim and defence in which
the existence of the agreement is alleged by one party and not
denied by the other.
(5) The reference in a contract to a document containing an
D
arbitration clause constitutes an arbitration agreement if the
contract is in writing and the reference is such as to make that
arbitration clause part of the contract.”
[emphasis supplied]
E 78.1. The following conclusions can be drawn from a consolidated
reading of the above provisions in the three enactments:
i) There are no specific requirements in Section 7 of the
Arbitration Act, 1996 or any other provision in the
Arbitration Act, 1996 as a whole, which provide for
F necessary stamping for validity of an arbitration agreement
or elaborate generally on the same.
ii) Even though Section 10 of the Indian Contract Act, 1872
recognises oral agreements, a written agreement is sine-
qua-non for a valid arbitration agreement.
G iii) “Signing” is just an example of one of the conditions that
may satisfy the form of an arbitration agreement. Thus, the
mandatory requirement of a signature is ruled out for an
arbitration agreement in Section 7 of the Arbitration Act,
1996. Since Section 7(2)(c) of the Arbitration Act, 1996
recognises even exchange of claim and defence as written
H
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 469
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

arbitration agreements, there is no signing requirement. Even A
if a written arbitration agreement is not signed, the parties
can still be bound to an arbitration agreement58. However,
Section 17 of the Stamp Act, 1899 provides for the timing
of stamping i.e. before or at the time of execution and the
term “execution” is defined in the Stamp Act, 1899 to mean
B
“signature”
iv) Even though arbitral “awards” are liable to stamp duty under
Item 12 of the Stamp Act, 1899 and are specifically
mentioned in Schedule I ; the arbitration agreement for the
purpose of stamp duty, gets covered only under the
residuary entry viz “if not otherwise provided for” in C
Article 5(c). The Stamp Act, 1899 does not specifically
refer to an arbitration agreement.
v) As per Section 7 of the Arbitration Act, 1996, Arbitration
Agreement can even be non-contractual.
D
vi) Section 7(4)(c) of Arbitration Act, 1996 envisages that
the scope of arbitration is not limited to the dispute initially
referred to arbitration, but also encompasses any disputes
that are included in the pleadings of the parties i.e. statement
of claim and defence.
E
78.2 The Appointment Of Arbitrators By The Chief Justice Of
India Scheme, 1996 provides inter alia for the original or certified
copy of the “arbitration agreement” for a Section 11(6) application. I
completely agree with the opinion of my Learned Brother, Justice K.M.
Joseph that an arbitration agreement has to comply with the indispensable
requirements under the Contract Act, 1872 such as competency to F
contract and presence of sound mind. However, when it comes to
“formal” validity which could include requirements of signature, stamps,
seals; I’m unable to concur that the evidentiary bar under Section 35 of
the Stamp Act, 1899 should be juxtaposed with Section 2(g) and (2h)
of the Contract Act, 1872 to make the agreement “void”. For example, G
as per Section 10 of the Contract Act, 1872, even oral agreements are

58
Chennai Container Terminal Pvt Ltd v. Union of India, 2007 3 Arb LR 218 (Mad),
Fisser v. International Bank, 282 F.2d 231, 233 (2d Cir 1960), Travancore Devaswom
Board v. Panchamy Pack, 2004 13 SCC 510; Also see, David St. John Sutton, Judith
Gill and Matthew Gearing, Russell on Arbitration(24 th Edition); P. 49 H
470 SUPREME COURT REPORTS [2023] 9 S.C.R.

A valid but as per the “form” of arbitration agreement provided in Section
7 of Arbitration Act, 1996, it has to necessarily be in writing. Another
point worth noting is that if an arbitration agreement can be for example,
even non-contractual and does not necessarily require signature, how
far the general provisions of Stamp Act, 1899 and the Contract Act,
1872 can apply to prove “formal” validity of an arbitration agreement
B
produced under Section 11(6) of the Arbitration Act, 1996? Section 2(h)
of the Contract Act, 1872 states that an agreement enforceable by law
is a contract but a plain reading of Section 7 of the Arbitration Act,
1996 may also prove that an “arbitration agreement” can be non-
contractual. This is not to say that the provisions of the Contract Act,
C 1872 or Stamp Act, 1899 would not apply. As rightly held in Vidya
Drolia(supra) and noted by my Learned Brother Justice K.M. Joseph,
pre-conditions to formation of contract under the Contract Act, 1872
must be met which includes free consent of the parties, absence of
fraud and misrepresentation etc. However, in my view, in this reference,
we are concerned with a formal requirement. The point being that when
D
a special law provides for the specific requirements for the “formal”
validity of an arbitration agreement, it cannot be rendered void by a
general law. An Arbitration agreement has special attributes59 and is not
a conventional agreement in that sense. Moreover, none of the provisions
of the Stamp Act, 1899 would lead us to the conclusion that an arbitration
E agreement would be invalid/void-ab-initio when it is not stamped. Thus,
the conclusion in Garware(supra) that an unstamped agreement would
be rendered void is not only inconsistent with Section 7 of the Arbitration
Act, 1996 but also the Stamp Act, 1899 as per which a document can
at most, be rendered inadmissible in evidence.
F 78.3 In the context of Arbitration Act, 1996 being a Special law,
CR Datta’s treatise titled Law Relating to Commercial & Domestic
Arbitration60 notes:
“The Act of 1996 is a special Act and a Central Act which provides
that this Act will prevail over any other law so far as the matters
G governed by this Act are concerned. The Authority of the Law

59
O.P. Malhotra and Indu Malhotra, The Law and Practice of Arbitration and
Conciliation, Lexis Nexis,2nd Edition; P. 270
60
CR Datta, Law Relating to Commercial and Domestic Arbitration(Along with ADR)
P. 98; Union of India v Popular Construction Co 2001 (8) SCC 470; United India
H Insurance Co. Ltd. V Kumar Texturisers AIR 1999 Bom 118
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 471
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

Courts has been curtailed. The Courts cannot intervene in any A
manner dealt with by Part I of this Act unless specifically
empowered to do so. A judicial authority may intervene or exercise
its powers to the extent specified in Sections 8, 9, 11, 13, 14, 16,
1727, 34, 36, 37, 42, 43, 45, 50, 54, 58, 59, 70, 74, 77, 81 and 82 of
the Act. See Union of India v Popular Construction Co. 2001 8
B
SCC 470, United India Insurance Companty v Kumar Texturisers
AIR 1999 Bom 118) Section 5 restrains the Courts from interfering
with the process of arbitration except in the manner provided in
the 1996. CDC Financial Services (Mauritius) Ltd v BPI
Communications Ltd. 2005 (Supp.) Arb LR 558(SC)”
[Emphasis supplied] C
78.4 At the cost of repetition, let us now refer to Section 5 of the
Arbitration Act, 1996 to understand the special nature of the Act. As
noted above, Arbitration Act, 1996 is a special legislation and Section
5 begins with a non-obstante clause which overrides powers of judicial
authorities acting under any other law other than the Arbitration Act, D
1996. As argued by the learned Counsel for the Intervenor, Debesh
Panda, the special nature of the Act is also established from the non-
obstante clause in Section 5 of the Arbitration Act, 1996. On the
Arbitration Act being a self-contained code, Justice Indu Malhotra61,
comments as under:
E
“The Arbitration and Conciliation Act, 1996 is a self-contained
code governing the law relating to Arbitration, including Section 5
which gives it an overriding effect over statutes. Once it is held
that the 1996 Act is a self-contained code and is exhaustive, it
carries with it the negative import that only such acts which are
permissible in the statute may be done, and none others.” F

78.5 The use of the expression “so provided” in Section 5,
disregards all forms of intervention except that, which is specified in
Part I. Such intention is apparent from the language of the non-obstante
clause. As noted earlier, this provision is yet another instance where
Parliament went a step beyond the language employed in the UNCITRAL G
Model Law of 1985.
78.6 The doctrine of generalia specialibus non derogant i.e.
general law will yield to the special law is well-established in Indian
61
Justice Indu Malhotra, Commentary on the Law of Arbitration, Vol. I, 4th Ed., P. 248
H
472 SUPREME COURT REPORTS [2023] 9 S.C.R.

A jurisprudence. In the concurring opinion of Chandrachud DY J. (as he
then was) in Ayyasamy(supra) on Section 8 of the Arbitration Act,
1996, it was noted:
“44. ….Once an application in due compliance of Section 8 of
the Arbitration Act is filed, the approach of the civil court should
B be not to see whether the court has jurisdiction. It should be to
see whether its jurisdiction has been ousted. There is a lot of
difference between the two approaches. Once it is brought to the
notice of the court that its jurisdiction has been taken away in
terms of the procedure prescribed under a special statute, the
civil court should first see whether there is ouster of jurisdiction in
C terms or compliance of the procedure under the special statute.
The general law should yield to the special law - generalia
specialibus non derogant. In such a situation, the approach shall
not be to see whether there is still jurisdiction in the civil court
under the general law. Such approaches would only delay the
D resolution of disputes and complicate the redressal of grievances
and of course unnecessarily increase the pendency in the court.”
78.7 Having noted that the Arbitration Act, 1996 is a special
legislation, and that general law should yield to special law, let us now
examine the principle of harmonious construction for the purpose of this
E reference.
ii) Harmonious Construction
79. It would be apposite to refer to the application of principle of
harmonious construction as explained by Kasliwal, J. while expressing
his partial dissent in St. Stephen’s College v. University of Delhi62 :
F “140. … The golden rule of interpretation is that words should be
read in the ordinary, natural and grammatical meaning and the
principle of harmonious construction merely applies the rule that
where there is a general provision of law dealing with a subject,
and a special provision dealing with the same subject, the special
prevails over the general. If it is not constructed in that way the
G
result would be that the special provision would be wholly defeated.
The House of Lords observed in Warburton v. Loveland [(1831)
2 Dow & Cl 480 : 6 ER 806 : (1824-34) All ER Rep 589 (HL)] as
under: (ER p. 814)

62
H (1992) 1 SCC 558
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 473
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

‘No rule of construction can require that, when the words of A
one part of a statute convey a clear meaning … it shall be
necessary to introduce another part of the statute which
speaks with less perspicuity, and of which the words may be
capable of such construction, as by possibility to diminish
the efficacy of the [first part] 63.’
B
[emphasis supplied]
79.1. On a harmonious reading of the inconsistencies in the
provisions of the three different Acts quoted earlier, we find that the
general law must yield to the special law in the sense, that an arbitration
agreement cannot be rendered void on insufficient stamping by a general C
law, especially when none of the provisions of the Arbitration Act, 1996
which is a special Act provide for stamping. The requirement for the
“formal” validity of an arbitration agreement under Section 7 of the
Arbitration Act, 1996 would take precedence, considering the special
nature of the Act and the principle of minimal judicial intervention. Applying
the rule of construction that in cases of conflict between a specific law D
and a general law, the specific law prevails and the general law like the
Contract Act, 1872 applies only to such cases which are not covered
by the special law; I therefore, hold that Section 2(e), 2(g), 2(h) of the
Contract Act, 1872 cannot override Section 7contained in the special
law i.e. the Arbitration Act, 1996 when it comes to formal validity. E
79.2. Moreover, when the words of the statute in Section 11 of
the Arbitration Act,1996 do not mention “validity” or even “inoperable
and incapable of being performed” as mentioned in Section 45 of
the Arbitration Act, 1996 or “prima facie no valid arbitration
agreement” in Section 8 of the Arbitration Act, 1996, it must be F
understood that the general words in a different statute such as the
Contract Act, 1872 cannot override the specific words used in the special
law. That is to say, that an arbitration agreement cannot be rendered
“void” on insufficient stamping by a Section 11 judge when the scope of

63
G
Anandji Haridas and Co. (P) Ltd. v. S.P. Kasture [AIR 1968 SC 565 : (1968) 1 SCR
661] , Patna Improvement Trust v. Lakshmi Devi [AIR 1963 SC 1077 : 1963 Supp (2)
SCR 812] , Ethiopian Airlines v. Ganesh Narain Saboo [(2011) 8 SCC 539 : (2011) 4
SCC (Civ) 217] , Usmanbhai Dawoodbhai Memon v. State of Gujarat [(1988) 2 SCC
271 : 1988 SCC (Cri) 318] , South India Corpn. (P) Ltd. v. Board of Revenue [AIR
1964 SC 207 : (1964) 4 SCR 280] , Maharashtra State Board of Secondary and Higher
Secondary Education v. Paritosh Bhupeshkumar Sheth [(1984) 4 SCC 27] H
474 SUPREME COURT REPORTS [2023] 9 S.C.R.

A examination is only limited to the “existence” of the arbitration agreement
and not “validity”.
79.3. Coming back to the evidentiary bar under Section 35 of the
Stamp Act, 1899 it is important to understand that since the scope of a
Section 11 judge is limited, the court cannot receive evidence in such
B cases. Before the 2015 Amendment to the Arbitration Act, 1996, as
per the position laid down in SBP(supra), the Chief Justice had wide
powers to receive evidence, including affidavits, and get evidence
recorded at the stage of appointment of arbitrator. Under the amended
Section 11, as noted before, the scope is “confined” to the examination
of the “existence” of the arbitration agreement. Thus, post-amendment,
C it can most certainly not admit evidence. A Section 11 Court is “not an
authority to receive evidence” as provided in Section 35 of the Stamp
Act, 1899. Moreover, it is an undisputed position that Section 35 of the
Arbitration Act, 1996 does not preclude an arbitrator to impound or
admit evidence. It states “any person having by law or consent of parties,
D authority to receive evidence.” Thus, the statutory bar under Section
35 of the Stamp Act, 1899 would not apply when a document is produced
at the stage of a Section 11 proceeding of the Arbitration Act, 1996.
79.4. It is essential to interpret the special law in a way that gives
effect to its specific provisions, while also ensuring that it is consistent
E with the general law to the extent possible. Impounding at the stage of
Section 11 would stall arbitral proceedings right at the outset because
of the statutory bar under Section 35 of the Stamp Act, 1899. One way
to harmonise Section 35 of Stamp Act, 1899 and Section 11 of the
Arbitration Act, 1996 is for the Section 11 judge to defer necessary
stamping and impounding to the arbitrator/collector, as applicable. A plain
F reading of Section 35 of the Stamp Act, 1899 makes it clear that it does
not preclude an Arbitrator or Collector to impound the unstamped/
insufficiently stamped document.
79.5. In this context, even if we are to assume that the Stamp
Act, 1899 is a substantive law, the view taken by us is not intended to
G undermine the Stamp Act, 1899 in any substantial way. This is because
the primary objective being revenue generation, could still be achieved
even if the collection of stamp duty is deferred to the arbitrator and not
at the stage of a judge referring the matter for arbitration. Additionally, if
such a contention is raised before the referring judge, she/he can also
H caution the arbitrator on the aspect of no/deficient stamp duty on the
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 475
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

concerned instrument. Such a course will also protect the interest of the A
revenue and the substantive law.
K. Implication of changing nature of transaction and the advent of the
technology
80. As we are proceeding on the basis that an arbitration
agreement is liable to stamp duty, this Court cannot also be oblivious of B
the technological advancements as commercial transactions are going
beyond pen and paper agreements. The 2015 amendment to Section 7
of the Arbitration Act, 1996 which defines arbitration agreement
recognizes electronic communication, bringing the process in conformity
with Article 7 of the UNCITRAL Model law which was amended in C
2006. It modernized and broadened the form of arbitration agreement to
conform with international contract practices. The exchange of letters,
telex, telegrams or other means of telecommunication including
communication through electronic means which provide a record of
the agreement are now recognized as valid arbitration agreement.
D
80.1. Dr. Peter Binder in International Commercial Arbitration
and Mediation in UNCITRAL Model Law Jurisdictions 64 notes:
“The wording in “exchange of letters,telex, telegrams or other
means of telecommunication” indicates Model law’s flexibility
towards future means of communication by being geared solely E
at the “record of the agreement” rather than the strict direct
signature of the agreement. Incidentally, Article 5(Section III)
of the Montreal Protocol No. 4 to the Warsaw Convention which
concerns the formal requirements of an air waybill, provided the
impetus for the wording “Any other means which would preserve
a record of the carriage to be performed may, with the consent of F
the consigner, be substituted for the delivery of an air waybill.”
The Protocol specifically had electronic means of communication
in mind, as the aviation industry was among the first to use this
technology in business.”
[emphasis supplied] G
80.2. What logically follows from the above is that the traditional
laws must not render these new forms of agreements unenforceable on
insufficient stamping. Recently, the Stockholding Corporation of India
64
Supra at note 40; P. 67-68 H
476 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Ltd. has been authorised to provide e-stamp services, which allows for
the payment of stamp duties for some Indian States. The Indian Stamp
Act (Collection of Stamp-Duty Through Stock Exchanges, Clearing
Corporations and Depositories) Rules 2019 as amended through the
Finance Act, 2021 has been brought about to build a pan-India securities
market and to enhance revenue. It amended the definition of “execution”
B
to include signature even in electronic form.
80.3. However, the definition of “duly stamped” in Section 2(11)
of the Stamp Act, 1899 remains unchanged:
“‘Duly Stamped’ as applied to an instrument means that the
C instrument bears an adhesive or impressed stamp of not less
than the proper amount and that such stamp has been affixed or
used in accordance with the law for time being in force.”
[emphasis supplied]
80.4. The penalty for an instrument which is not “duly stamped”
D is provided in Section 62 of the Stamp Act, 1899. In this discussion, we
must be conscious that the Stamp Act, 1899 was enacted nearly 125
years ago and the lawmakers could not have contemplated the march of
law and the myriad issues which would crop up through the advent of
technology and also the new enactments such as the Arbitration Act,
E 1996. The legal framework pertaining to e-contracts is still at a nascent
stage in India.
80.5. Richard Susskind in his book65, “The End of Lawyers?
Rethinking the Nature of Legal Services,” suggests that new
technologies and processes, such as artificial intelligence and blockchain,
F may be able to simplify and streamline the arbitration process in the
future. We now have the phenomenon of smart contracts and metaverse
in the sphere of commercial transactions where technology and artificial
intelligence are integrated. The developments in the legal framework
must attune to such developing trends in technology and be conscious of
their implications today and for the future.
G
80.6. Noticing the emerging trends, the Chief Justice of India in a
recent conference observed66 that legal professionals across the globe
65
Richard Susskind, The End of Lawyers? Rethinking the Nature of Legal Services,
Oxford University Press, 2010
66
Dr D.Y. Chandrachud, International Conference: Arbitration in the Era of Globalization
H (4th Edn., Dubai, 19-3-2022).
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 477
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

are recommending smart contract arbitration. Describing smart contracts A
and how arbitration can be used to resolve disputes, Chief Justice DY
Chandrachud commented:
“Technology and artificial intelligence are integrated into
commercial transactions. One such example of integration of
technology and contracts is a smart contrAct, where the terms B
and conditions of the contract are encoded. A breach in the terms
of the contract would automatically enforce the contract.
80.7. Modern arbitration law focuses on substance over form67.
Learned Counsel, Mr. Ramakanth Reddy appearing for Respondent No.
1, referred to a judgment delivered in 2008 in Great Offshore Ltd. v. C
Iranian Offshore Engineering and Construction Company68 where
the Court speaking through Dalveer Bhandari J. held as under:
“59. The court has to translate the legislative intention especially
when viewed in light of one of the Act’s “main objectives”: “to
minimise the supervisory role of Courts in the arbitral process. D
[See: Statements of Objects and Reasons of Section 4(v] of the
Act].If this Court adds a number of extra requirements such
as stamps, seals and originals, we would be enhancing our
role, not minimising it. Moreover, the cost of doing business would
increase. It takes time to implement such formalities. What is
even more worrisome is that the parties’ intention to arbitrate E
would be foiled by formality. Such a stance would run counter to
the very idea of arbitration, wherein tribunals all over the world
generally bend over backwards to ensure that the parties’ intention
to arbitrate is upheld. Adding technicalities disturbs the parties’
“autonomy of the will” (l’ autonomie de la volonti), i.e., their F
wishes. [For a general discussion on this doctrine see Law
and Practice of International Commercial Arbitration, Alan Redfern
and Martin Hunter, Street & Maxwell, London, 1986 at pages 4
and 53].
60. Technicalities like stamps, seals and even signatures are G
red tape that have to be removed before the parties can get
what they really want - an efficient, effective and potentially
cheap resolution of their dispute. The autonomie de la volonti
67
Supra at Note 59; P. 274
68
(2008) 14 SCC 240 H
478 SUPREME COURT REPORTS [2023] 9 S.C.R.

A doctrine is enshrined in the policy objectives of the United Nations
Commission on International Trade Law (“UNCITRAL”) Model
Law on International Commercial Arbitration, 1985, on which
our Arbitration Act is based. [See Preamble to the Act]. The
courts must implement legislative intention. It would be
improper and undesirable for the courts to add a number of
B
extra formalities not envisaged by the legislation. The courts
directions should be to achieve the legislative intention.”
[emphasis supplied]
80.8 Relying on the above case, in Trimex International FZE vs
C Vedanta Aluminum Limited, India 69 , this Court held that the
implementation of a contract cannot be affected merely because offer
and acceptance was made via email.
80.9 In the context of the evolving law, it is important to observe
that although an arbitration agreement is liable to stamp duty under the
D residuary entry, the technicality of stamping places hurdles in ensuring
efficiency and efficacy in arbitration proceedings. An arbitration
agreement does not even mandatorily require signature for it to be valid
as per Section 7 of the Arbitration Act, 1996. The Stamp Act, 1899 is
rooted in the past and does not take into account the changing nature of
transactions and enactments such as the Arbitration Act, 1996. This is
E an aspect which would require the attention of the legislature.
J. Doctrine of Separability
81. It appears that the Court in Garware(supra) rejected the
concept of separability when it held:
F “15. …..it is difficult to accede to the argument made by the learned
counsel on behalf of the respondent that Section 16 makes it clear
that an arbitration agreement has an independent existence of its
own, and must be applied while deciding an application
under Section 11 of the 1996 Act.”
G 81.1. Historically, an arbitration agreement was treated as an
accessory to the main contract70. Even if the main contract was found
to be invalid or unenforceable, the arbitration agreement contained
69
2010 (1) SCALE 574
70
Gary B. Born, International Commercial Arbitration (3rd ed., Kluwer Law International
H 2014) P. 380
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 479
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

therein was also considered void71. This diminished the effectiveness A
of arbitration as a dispute resolution mechanism since it made the
enforceability of arbitration agreements dependent on the validity of
the underlying contract. Arbitration clauses are uniformly regarded in
almost every jurisdiction as separate from and not “an integral part” of
the parties’ underlying contract. It is regarded as a general principle B
reflected in International Arbitration Conventions, national arbitration
legislations, judicial decisions, institutional arbitration rules and arbitral
awards72. The early statutory recognition of the separability doctrine
has also been recognized in United States with the separability
presumption being a matter of substantive federal arbitration law.73
Even in English law, the principle of separability stands codified under C
Section 7 of the English Arbitration Act, 1996. It has been identified
as one of the cornerstones of arbitration in multiple jurisdictions.
81.2 The argument advanced by the learned Counsel, Gagan Sanghi
for the Appellants that the doctrine of separability is a legal fiction, should
not be accepted in light of the well-established jurisprudence in India as D
this doctrine has been consistently upheld by this Court74. Moreover, it
stands codified in Section 16(1) of the Arbitration Act, 1996 which
reads as under:
“16(1) The arbitral tribunal may rule on its own jurisdiction,
E
including ruling on any objections with respect to the existence or
validity of the arbitration agreement, and for that purpose, –
(i) an arbitration clause which forms part of a contract shall
be treated as an agreement independent of the other terms
of the contract; and F
(ii) a decision by the arbitral tribunal that the contract is null
and void shall not entail ipso jure the invalidity of the
arbitration clause.”

71
Union of India v Kishorilal Gupta & Bros (1959) 1 SCR 493 G
72
Supra at note 70; Page 379-380.
73
Buckeye Check Cashing Inc. v. Cardegna, 2006 SCC OnLine US SC 14
74
National Agricultural Co-operative Marketing federation India Ltd. v Gains Trading
Limited (2007) 5 SCC 692; Naihati Jute Mills Ltd. v Khayaliram Jagannath AIR 1968
SC 522; P Manohar Reddy & Bros. v. Maharashtra Krishna Valley Development
Corporation & Ors (2009) 2 SCC 494
H
480 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 81.3This Court in NN Global(supra) discussed judgments in
US,UK and France, noting the importance of this principle in modern
and contemporary arbitral jurisprudence:
“4. It is well settled in arbitration jurisprudence that an arbitration
agreement is a distinct and separate agreement, which is
B 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
C
agreement which contains the binding obligation of the parties to
resolve their disputes through the mode of arbitration.”

81.4 My learned Brother, Justice K.M. Joseph in the majority
D opinion notes that the entire basis of the reference stands removed since
we are proceeding on the basis that even a standalone arbitration
agreement is liable to stamp duty. His opinion that the objective behind
the principle of treating an arbitration agreement as a separate agreement
is to create a mechanism, wherein, the arbitral agreement survives the
Contract so that the disputes falling within the Arbitration Agreement
E
can be resolved, is correct. But I’m unable to agree with the proposition
that is canvassed that since an arbitration agreement is liable to stamp
duty, the separability presumption doesn’t take us further in this case.
Let me set out the reason for my disinclination to accept such proposition.
81.5 As earlier stated in this opinion, the separability doctrine
F
protects the arbitration clause even if the validity of the main contract is
attacked. Therefore, if an arbitration agreement remains unaffected even
if the main contract is null/void on issues of fraud or misrepresentation,
it should not logically render an arbitration agreement, void on a
technicality/formality, like stamping. The underlying rationale behind the
G principle of separability would then be made nugatory. The idea that an
arbitration agreement is separate and independent with its own validity
requirements, is to ensure that there is no hindrance to the enforceability
of an arbitration agreement. This doctrine is also important to reduce
circumstances in which the arbitral process may be halted/delayed. In
H SMS Tea(supra), it was noted that the doctrine of separability can extend
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 481
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

to an unregistered document, but not to an unstamped document as the A
bar under Section 35 is absolute. As I have noted above, the bar under
Section 35 can be cured and the stamp duty can be collected at a later
stage. Thus, NN Global(supra) rightly overruled SMS Tea(supra) on
this aspect. Historically, the separability doctrine was introduced in order
to protect the arbitration clause which, in turn, enabled arbitrators to
B
adjudicate on the validity of the main contract75. Even though the doctrine
of separability and Kompetenz Kompetenz are distinct as noted in NN
Global(supra), reconciling the two principles would ensure that an
arbitrator can rule on the objections of validity, existence as well as
necessary stamping, if required. The doctrine of Kompetenz Kompetenz
is discussed in greater detail in the next section. C
82. Turning to the decision in Garware(supra), it appears that
the Court in Garware(supra) rejected the concept of severability only
by relying on SBP(Supra) when it held:
“15. In view of the law laid down by seven-Judge
Bench,[SBP(Supra)] it is difficult to accede to the argument made D
by the learned counsel on behalf of the respondent that Section
16 makes it clear that an arbitration agreement has an independent
existence of its own, and must be applied while deciding an
application under Section 11 of the 1996 Act.”
83. In SBP(Supra), as we have noticed earlier in this opinion, E
stood legislatively overruled as a judge at the Section 11 stage could
conduct detailed adjudication and make a conclusive determination at
the pre-referral stage without deferring it to the arbitrator. As highlighted
above, Section 16 and Section 11 of the Arbitration Act, 1996 indicates
that there is an overlap when it comes to the word “existence”. As F
Section 16 specifically deals with both existence and validity whereas
Section 11 only deals with existence, the former should be given more
weight. As such, the doctrine of Kompetenz Kompetenz comes into
play as the arbitrator can decide on the validity of an agreement and the
referral judge needs to confine his scrutiny to the existence of the
arbitration agreement. However, in SBP(supra) it was generally held G
that the referral judge should decide on all aspects. If such a view is to
be applied for answering the present reference, a mini-trial will have to
75
HM Holtzmann and JE Neuhaus,A Guide to the UNCITRAL Model Law on
International Commercial Arbitration: Legislative History and Commentary (Kluwer
Law and Taxation The Hague 1989) 485 H
482 SUPREME COURT REPORTS [2023] 9 S.C.R.

A be conducted by the referral judge. The question to be asked here is
should we then push the Section 11 judge to deal with so many things
that he/she left in a situation like Little Alice in the play Alice in
Wonderland as described in Praveen Electricals(supra)?
84. In the referral order in NN Global(supra),the paragraph 29
B in Garware(supra) was doubted. In the Garware(supra) decision, this
Court relied on United India Insurance Co. ltd. v. Hyundai Engg.
& Construction Co. Ltd. 76 (for short “Hyundai Engg.). The
paragraph 29 is extracted below for the discussion to be followed
thereafter:
C “29. This judgment in Hyundai Engg. case [United India Insurance
Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd., (2018) 17
SCC 607: (2019) 2 SCC (Civ) 530] is important in that what was
specifically under consideration was an arbitration clause which
would get activated only if an insurer admits or accepts liability.
Since on facts it was found that the insurer repudiated the claim,
D though an arbitration clause did “exist”, so ‘to speak, in the policy,
it would not exist in law, as was held in that judgment, when one
important fact is introduced, namely, that the insurer has not
admitted or accepted liability. Likewise. in the facts of the present
case. it is clear that the arbitration clause that is contained in the
E sub-contract would not “exist” as a matter of law until the sub-
contract is duly stamped, as has been held by us above. The
argument that Section 11 (6-A) 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.
F case [United India Insurance Co. Ltd. v. Hyundai Engg. &
Construction Co. Ltd., (2018) 17 SCC 607 : (2019) 2 SCC (Civ)
530] . as followed by us.”
84.1. In Hyundai(supra), the issue of stamping was not at all a
matter of consideration and the Court decided on the arbitrability of the
G dispute and whether it was an excepted matter and in that process, held
that the arbitration agreement would not “exist-in-law”, as the arbitration
clause was contingent on whether the insurer accepted liability. In these
circumstances, the application of the proposition in Hyundai

76
H (2018) 7 SCC 607
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 483
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

Engg(supra) to deal with the issue of unstamped document in A
Garware(supra) appears to be an incorrect approach. This is because
in Garware(supra), the Court found that the issue of stamping would
go into the existence of the arbitration agreement in law. This was done
by erroneously importing the principle enunciated in Hyundai(supra)
and therefore the earlier Hyundai(supra) which had nothing to do with
B
the stamping of the document, should have been distinguished. At this
point, we may also notice the argument of the Learned Amicus who
argued that the Court in Hyundai Engg(supra) relied on Oriental
Insurance Co. Ltd. v. Narbheram Power and Steel (P) Ltd77 which
never had the occasion to interpret Section 11(6A). For these reasons, I
am of the considered view that applying the Hyundai(supra) principle C
to Garware(supra) is not acceptable. Consequently, the finding of the
Court in Para 147.1 in Vidya Drolia(supra) placing reliance on the
above paragraph viz. Para 29 in Garware(supra) also appears to be
incorrect. The proposition of law in NN Global(supra) is therefore found
to be correct. D
L. Kompetenz Kompetenz and the issue of Judicial Logjam in India
85. Legal scholars have noted that the principle of Kompetenz
Komptenz has been adopted in various forms in different countries78.
Article 16 of the UNCITRAL Model Law adopted the principle of
Kompetenz Kompetenz providing that an arbitral tribunal has the E
jurisdiction to investigate and rule on its own jurisdiction. In a recent
decision of the US Supreme Court in Henry Schein, Inc. v Archer and
White Sales, Inc79, it was held that where an arbitration clause delegates
the decision of arbitrability to arbitrators, Courts should have no say
even if they consider the argument in favour as “wholly groundless”. F
Justice Brett Kavanaugh opined:
“Just as a Court may not decide a merits question that the parties
have delegated to an arbitrator, a Court may not decide an
arbitrability question that the parties have delegated to an
arbitrator.” G

77
(2018) 6 SCC 534
78
John J. Barcello III, Who Decides the Arbitrators’ Jurisdiction? Separability and
Competence-Competence in Transnational Perspective, Vanderbilt Journal of
Transnational Law, Vol. 36, No.4, October 2003
79
2019 SCCOnline US SC 1 H
484 SUPREME COURT REPORTS [2023] 9 S.C.R.

A Proceeding further, Section 16(1) of the Arbitration Act, 1996
reads as under:
“16. Competence of arbitral tribunal to rule on its jurisdiction.—
(1) The arbitral tribunal may rule on its own jurisdiction,
including ruling on any objections with respect to the existence
B or validity of the arbitration agreement, and for that purpose,—
(a) an arbitration clause which forms part of a contract shall be
treated as an agreement independent of the other terms of the
contract; and

C (b) a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration clause.”
85.1 It is clear from Section 16(1) of Arbitration Act, 1996
which uses the word “including” that an arbitral tribunal can not only
rule on its own jurisdiction but also “any” objections on existence or
D validity. This Court in Weatherford Oiltool Middle East Limited vs
Baker Hughes Singapore PTE80 where the issue concerned the validity
of an unstamped document, noted as under:
“8. The bare reading of the afore-stated provision makes it clear
that arbitral tribunal is competent not only to rule on its own
jurisdiction but to rule on the issue of the existence or validity of
E
the arbitration agreement. It further clarifies that an arbitration
clause which forms part of a contract shall be treated as an
agreement independent of the other terms of the contrAct, and
that a decision by the arbitral tribunal that the contract is null and
void shall not entail ipso jure the invalidity of the arbitration clause.”
F
85.2. Discussing the Kompetenz Kompetenz principles in NN
Global(supra), it was noted:
“4.3. The doctrine of kompetenz – kompetenz implies that the
arbitral tribunal has the competence to determine and rule on its
own jurisdiction, including objections with respect to the existence,
G validity, and scope of the arbitration agreement, in the first instance,
which is subject to judicial scrutiny by the courts at a later stage
of the proceedings. Under the 8 Arbitration Act, the challenge
before the Court is maintainable only after the final award is passed

80
H 2022 SCC OnLine 1464
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 485
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

as provided by sub-section (6) of Section 16. The stage at which A
the order of the tribunal regarding its jurisdiction is amenable to
judicial review, varies from jurisdiction to jurisdiction. The doctrine
of kompetenz – kompetenz has evolved to minimize judicial
intervention at the pre-reference stage, and reduce
unmeritorious challenges raised on the issue of jurisdiction
B
of the arbitral tribunal.”
[emphasis supplied]
85.3. Justice Thakker emphasized this in his dissenting opinion in
SBP(supra) where it was held that the legislature intended to allow the
tribunal to rule on its own jurisdiction and the function of the Chief Justice C
under Section 11(6) was only to “appoint an arbitrator without wasting
any time.”
85.4. At this point we may benefit by referring to George A.
Bermann whose article titled “Role of Courts at the threshold of
Arbitration”81 would havesome relevance in this discussion: D
“Positions at the polar ends of the spectrum of judicial involvement
are not especially attractive. A system that permits plenary judicial
enquiries into all aspects of enforceability of arbitration agreements
prior to arbitration risks inviting costs, delay and judicial involvement
in a very big way, contrary to arbitration’s basis premises. On the E
other hand, a system that treats access to a court for these
purposes as wholly off-limits, irrespective of the seriousness of
the challenge, risks exacting too great a price in terms of arbitral
legitimacy. Efficacy may be achievable through less drastic
means.”
F
85.5. Specific to the Indian context, while discussing Kompetenz
Kompetenz, the overburdened judiciary and huge pendency of cases in
our Courts cannot also be overlooked. The intent behind preferring
arbitration would stand defeated, if the Court is expected to deal not
only with the issue of existence but also validity of the agreement, at the
G
stage of appointment of the arbitrator. In this context, the following
observations were made in the 246th LCI report (supra) noted:

81
George A. Bermann, The Role of National Courts at the Threshold of Arbitration, 28
American Review of International Arbitration 291 (2017) Available at https://
scholarship.law.columbia.edu/faculty_scholarship/3012 H
486 SUPREME COURT REPORTS [2023] 9 S.C.R.

A “22. Judicial intervention in arbitration proceedings adds significantly
to the delays in the arbitration process and ultimately negates the
benefits of arbitration. Two reasons can be attributed to such
delays. First, the judicial system is over-burdened with work and
is not sufficiently efficient to dispose cases, especially commercial
cases, with the speed and dispatch that is required. Second, the
B
bar for judicial intervention (despite the existence of section
5 of the Act) has been consistently set at a low threshold by
the Indian judiciary, which translates into many more
admissions of cases in Court which arise out of or are related
to the Act.”
C [emphasis supplied]
85.6.Considering the large pendency of cases as noted by the
246th LCI Report(supra), it is essential that Section 16 of the Arbitration
Act, 1996 is given full play. Discussing the history of arbitration law in
India, the 246th LCI Report(supra) quoted the observations of Justice
D D.A. Desai in Guru Nanak Foundation v Ratan Singh and Sons 82
where commenting on the working of the Arbitration Act, 1940, it was
noted that the challenge to arbitral proceedings in Courts have made
“lawyers laugh and legal philosophers weep”. The situation is not different
today as was recently observed by this Court in M/s Shree Vishnu
E Constructions v. The Engineer in Chief Military Engineering Service
and others83 where it was noted that several applications under section
11 were decided and disposed of after a period of four years which
defeated the very purpose of the amended Arbitration Act, 1996. Such
observation was made on a detailed report/statement on the number of
pending section 11 applications before the Telangana High Court. This
F Court noticed that even an application filed in the year 2006 was still
pending. The High Court Chief Justices across the country were
accordingly requested to ensure that applications under section 11, be
decided within a period of six months.
85.7 This Court in the recent judgment in Intercontinental Hotels
G Group (India) Private Ltd. v. Waterline Hotels Pvt. Ltd 84 on the
issue of insufficiently /incorrectly stamped documents, proceeded to
appoint the arbitrator under Section 11(6), considering the time-
82
(1981) 4 SCC 634
83
SLP(C) No. 5306/2022 dated 1.4.2022
H 84
2022 SCC OnLine SC 83
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 487
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

sensitivity while dealing with arbitration. It left open the issue of A
stamping to be decided at a later stage.
85.8 Importantly, Section 11(13) of the Arbitration Act, 1996
provides that appointment of Arbitrators should be made within 60 days
and such a provision makes it amply clear that substantive adjudication
cannot be done by Courts, at the pre-referral stage. This was canvassed B
in Garware(supra) but the Court instead set a deadline for 45 days for
adjudication and 15 days for appointment of arbitrator with the following
observation:
“37. One reasonable way of harmonising the provisions contained
in Sections 33 and 34 of the Maharashtra Stamp Act, which is a C
general statute insofar as it relates to safeguarding revenue, and
Section 11(13) of the 1996 Act, which applies specifically to speedy
resolution of disputes by appointment of an arbitrator expeditiously,
is by declaring that while proceeding with the Section 11
application, the High Court must impound the instrument which D
has not borne stamp duty and hand it over to the authority 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 E
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 F
frame provided by Section 29A of the 1996 Act.”
85.9 The above enunciation in Garware(supra) as is apparent
goes against the legislative mandate which had prescribed the deadline
of 60 days for appointment of arbitrators under Section 11(13) of the
Arbitration Act, 1996. The criticism that a deadline of 45 days would G
be impractical, cannot also be brushed aside lightly.
N. Discussion on Vidya Drolia
86. This case was concerned with the arbitrability of landlord-
tenant disputes and the forum before which the issue of arbitrability
H
488 SUPREME COURT REPORTS [2023] 9 S.C.R.

A must first be raised. The paragraph 146 as quoted below may require a
relookin the context of the issue under consideration.
“146. 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
B 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
C possible, jurisprudentially and on contextualism, to hold that an
agreement has no existence if is not enforceable and not binding.
Existence of an arbitration agreement presupposes a valid
agreement which would be enforced by the court by relegating
the parties to arbitration. Legalistic and plain meaning interpretation
D would be contrary to the contextual background including the
definition clause and would result in unpalatable consequences. A
reasonable and just interpretation of existence requires
understanding the context. the purpose and the relevant legal norms
applicable for a binding and enforceable arbitration agreement.
An agreement evidenced in writing has no meaning unless the
E parties can be compelled to adhere and abide by the terms. A
party cannot sue and claim rights based on an unenforceable
document. Thus, there are good reasons to hold that an arbitration
agreement exists only when it is valid and legal. A void and
unenforceable understanding is no agreement to do anything.
F Existence of an arbitration agreement means an arbitration
agreement that meets and satisfies the statutory requirements of
both the Arbitration Act and the Contract Act and when it is
enforceable in law.”
86.1. As can be seen, the Court equated existence and validity
G and it was held that a contract only exists if it is valid. And it is valid only
if it is enforceable. As far as the issue in the present case is concerned,
the authors’ Comments in Russell on Arbitration85 (24th Edition) in the
context of English law provide useful pointers in this context:

85
H Supra at note 58; Chapter 7, P. 369
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 489
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

“Existence and Validity of the arbitration agreement. .. the A
Court draws a distinction between existence of the arbitration
agreement, which is likely to be a matter for the Court(unless a
stay under the inherent jurisdiction is granted) and its validity, which
wherever possible should be left to the arbitrators.”
[emphasis in original] B
86.2 I have already discussed that in the Indian regime, the
Arbitrator under Section 16 has the jurisdiction to decide on “existence”
and “validity”. A plain reading of Section 11(6A) would show that the
examination by Court is confined only to “existence” and not even
“validity”. Moreover, in the present reference, we are only concerned C
with the formal requirement of stamping and not arbitrability. Applying
contextual interpretation to render an arbitration agreement void on the
formal requirement of stamping would defeat the very purpose of the
Arbitration Act, 1996. A document cannot be rendered invalid or
unenforceable especially if the defect is curable under the Stamp Act, D
1899 as noted earlier. Moreover, none of the provisions in the Stamp
Act, 1899 have the effect of rendering a document invalid. Thus, we
find the position in Vidya Drolia(supra)to the extent that it relies on
Garware(supra) to be incorrect.
O. Conclusion E
87. Harking back to Charles Evans Hughes with whose words
we began the judgment, let us conclude with the following quote of the
same judge reflected in Prophets By Honor86:
“There are some who think it desirable that dissents should not be
F
disclosed as they detract from the force of the judgement.
Undoubtedly, they do. When unanimity can be obtained without
sacrifice of conviction, it strongly commends the decision to public
confidence. But unanimity, which is merely formal, which is
recorded at the expense of strong, conflicting views, is not desirable
in a court of last resort, whatever may be the effect on public G
opinion at the time. This is so because what must ultimately sustain
the court in public confidence of is the character and independence
of the judges.”

86
Alan Barth, Prophets with Honor,1974 Ed. P 3-6 H
490 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 87.1 The practice of dissent in judicial decision-making process
plays a critical role in revealing constitutional commitment to deliberative
democracy. Allowing judges to express differing views and engage in a
dialogue about the law and its interpretation can potentially lead toa more
nuanced and refined understanding of the law, as the Court grapples
B with competing interpretations and seeks to reconcile them in a principled
manner.
87.2 Confronted with a similar situation which is confronting
us today where the present opinion is the minority one, Justice Stephen
Breyer of the US Supreme Court in his dissenting opinion 87 in a
C question in the context of Federal Arbitration Act (FAA) spoke of
interpreting not only the purpose of the Statute but also the likely
consequence:
“When interpreting a statute, it is often helpful to consider not
simply the statute’s literal words, but also the statute’s purposes
D and the likely consequences of our interpretation. Otherwise, we
risk adopting an interpretation that, even if consistent with text,
creates unnecessary complexity and confusion.”
87.3. The objective behind the enactment of the Arbitration
Act, 1996 was to, inter alia, avoid procedural complexity and the
E delay in litigation before Courts. Impounding and stamping at the Section
11 stage would frustrate the very purpose of the amended Arbitration
Act, 1996 as the enforcement of arbitration agreements would be
stalled on an issue, which is capable of being resolved at a later stage.
To defer stamping to the stage of the arbitrator would in my view
F achieve the objective of both the Arbitration Act, 1996 and the Stamp
Act, 1899.

87.4. The contours of the jurisdiction of the judge referring matters
for arbitration, cannot be permitted to suffer from confusion and
ambiguity. As can be seen, the present 5 judge-Bench could not provide
G clarity on the issue referred to us, on account of the fractured verdict,
leading to legal uncertainty. The constitution of a larger Bench in this
Court is certainly not commonplace as the last occasion when 7 judges
assembled was in the year 2017. Around 5 matters as I am informed,

87
H Badgerow v. Walters, 596 U.S. 2022
M/s N. N. GLOBAL MERCANTILE PRIVATE LIMITED v. M/s 491
INDO UNIQUE FLAME LTD. & ORS. [HRISHIKESH ROY, J.]

are already awaiting the attention of 7 judges Bench. In such backdrop, A
the interplay between the Acts and how its objective is to be achieved
in the course of Arbitral proceedings either at the referral stage or
thereafter is much too important to be left lingering for a clarificatory
verdict by a larger Bench. Therefore, I would appeal to the legislative
wing of the State to revisit the Amendments which may be necessary B
in the Stamp Act, 1899 in its application to the Arbitration Act, 1996.
The State might put into place a convenient mechanism which would
efface the inconsistencies in both the Arbitration Act, 1996 and the
Stamp Act, 1899. If we look at the legislative intent of the Arbitration
Act, 1996 and what our country is hoping to be as the destination of
choice for Arbitration, I’m of the considered opinion that it would be C
appropriate to interpret the statutory interplay in a constructive manner
without defeating the legislative intent and thwarting the speedy referral
to arbitration.
88. Following the above discussion, my opinion on the referred
D
issue are as follows:
i) The examination of stamping and impounding need not be
done at the threshold by a Court, at the pre-reference stage
under Section 11 of the Arbitration Act, 1996.
ii) Non-stamping/insufficient stamping of the substantive E
contract/instrument would not render the arbitration
agreement non-existent in law and unenforceable/void,
for the purpose of referring a matter for arbitration.
Garware(supra) wrongly applied the principle in
Hyundai(supra) to hold that an arbitration agreement would F
not exist-in-law if it is unstamped/insufficiently stamped.
An arbitration agreement should not be rendered void if it
is suffering stamp deficiency which is a curable defect. To
this extent, Garware(supra) and Hyundai(supra) do not
set out the correct law.
G
iii) The decision in SMS Tea(supra) stands overruled.
Paragraphs 22 and 29 in Garware (supra) which were
approved in paragraphs 146 and 147 in Vidya Drolia(supra)
are overruled to that extent.
H
492 SUPREME COURT REPORTS [2023] 9 S.C.R.

A 89. The invaluable assistance rendered by Mr. Gourab Banerjee,
learned Senior Counsel as the Amicus Curiae deserves a special mention
in finalizing this opinion.

Bibhuti Bhushan Bose Reference answered.
B (Assisted by : Shubhansh Thakur, Sahil Rajan
and Rahul Rathi, LCRAs)

C

D

E

F

G

H