WEATHERFORD OIL TOOL MIDDLE EAST LIMITEDversusBAKER HUGHES SINGAPORE PTE

996                      [2022]REPORTS
               SUPREME COURT   13 S.C.R. 996               [2022] 13 S.C.R.


A          WEATHERFORD OIL TOOL MIDDLE EAST LIMITED
                                        v.
                     BAKER HUGHES SINGAPORE PTE
                       (Arbitration Petition No. 03 of 2022)
B                             OCTOBER 20, 2022
        [UDAY UMESH LALIT, CJI AND BELA M. TRIVEDI, J.]
             Arbitration and Conciliation Act, 1996: s.11(6) read with
      s.11(12) – Appointment of arbitrator – Arbitration agreement in
      unstamped Contract – In the instant case, petitioner and respondent
C
      entered into three agreements – Respondent issued letters to the
      petitioner terminating the three agreements – Pursuant to this,
      petitioner asked respondent to pay certain amount which was
      refused by respondent – Thereafter, petitioner issued notices invoking
      arbitration clauses containing in three agreements – In reply,
D     respondent raised a contention that stamp duty was not paid on
      agreements – However, respondent proposed for referring the
      dispute to mediation, but it failed eventually – Consequently,
      respondent neither agreed nor suggested any of the names of
      arbitrators – Three Arbitration petitions filed by the petitioner under
      s.11(6) read with s.11(12) of the Act, 1996 seeking appointment of
E
      a sole arbitrator to adjudicate upon the aforesaid disputes - Held:
      Since the arbitration agreements contained in all the three
      agreements were not disputed by the respondent, and since the
      respondent itself had proposed to consolidate the disputes under
      the said agreements and to refer them to a sole arbitrator in one
F     single arbitration, it does not lie in the mouth of the respondent
      now to say that the petitions seeking appointment of a sole arbitrator
      should not be entertained, as the matter with regard to the
      determination of requisite stamp duty under the Maharashtra Stamp
      Duty Act on the two agreements is pending before the Collector –
      There is no legal impediment to the enforceability of the arbitration
G
      agreement pending payment of stamp duty on the substantive
      contract – Of course, the said issue is pending under consideration
      by the Constitution Bench, the matters which are still pending at a
      pre-appointment stage, cannot be left hanging until the larger Bench
      settled the issue – A former Judge of High Court appointed as a
H     sole arbitrator to adjudicate upon dispute – Stamp Duty.
                                       996
    WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                         997
           BAKER HUGHES SINGAPORE PTE

      Allowing the petitions, the Court                                 A
      HELD: 1. When the facts of the present petitions are
examined, it deserves to be noted that the execution of three
agreements, namely, Onshore Service Agreement, Lease
Agreement and Drilling Service Agreement between the
petitioner and the respondent has not disputed. The letters of          B
termination terminating the said three agreements by the
respondent on 9 th April, 2020, and other correspondence that
ensued between the parties as stated in the earlier part of the
judgment are also not disputed. Though the respondent, in
response to the arbitration notices given by the petitioner had
raised a contention in the letter dated 17th January 2021 that the      C
agreements were not stamped and that consequences would
follow as per the Maharashtra Stamp Act, the respondent
proposed to amicably resolve the disputes through Mediation,
and also suggested in the alternative to consolidate the disputes
under the three agreements to be heard by a sole arbitrator in          D
one single arbitration. The efforts to amicably resolve the disputes
through Mediation having failed, the petitioner thereafter also
agreed to consolidate the disputes under the three agreements
to be heard by a sole arbitrator in one single arbitration, as
proposed by the respondent. The petitioner also proposed the
names of the arbitrators, however, the said names were not              E
agreeable to the respondent. The respondent also failed to
propose any names for the appointment of a sole arbitrator. [Paras
14 and 15][1008-G-H; 1009-E-H]
       2. Since the arbitration agreements contained in all the
three agreements namely, Onshore Service Agreement, Lease               F
Agreement and Drilling Service Agreement were not disputed
by the respondent, and since the respondent itself had proposed
to consolidate the disputes under the said agreements and to
refer them to a sole arbitrator in one single arbitration, this court
is of the opinion that now it does not lie in the mouth of the          G
respondent to say that the petitions seeking appointment of a
sole arbitrator should not be entertained, as the matter with
regard to the determination of requisite stamp duty under the
Maharashtra Stamp Duty Act on the two agreements is pending
before the Collector. There is no legal impediment to the
                                                                        H
998            SUPREME COURT REPORTS                      [2022] 13 S.C.R.


A     enforceability of the arbitration agreement pending payment of
      stamp duty on the substantive contract. Of course, the said issue
      is pending under consideration by the Constitution Bench, the
      matters which are still pending at a pre-appointment stage, cannot
      be left hanging until the larger Bench settled the issue. [Para
      16][1010-B-E]
B
            N.N Global Mercantile Unique Pvt. Ltd. v. Indo. Unique
            Flame Ltd. and Others (2021) 4 SCC 379, Inter-
            continental Hotels Group (India) Private Limited and
            Another v. Waterline Hotels Private Limited (2022) 7
            SCC 662 – followed.
C
            SMS Tea Estates (P) Ltd v. Chandmari Tea Co. (P) Ltd
            (2011) 14 SCC 66 : [2011] 9 SCR 382, Garware Wall
            Ropes Ltd. v. Coastal Marine Constructions & Engg.
            Ltd (2019) 9 SCC 209 : [2019] 5 SCR 579, Vidya Drolia
            v. Durga Trading Corporation (2021) 2 SCC 1 –
D           referred to.
                             Case Law Reference
      (2021) 4 SCC 379                 followed                    Para 3
      (2022) 7 SCC 662                 followed                    Para 4
E     [2011] 9 SCR 382                 referred to                 Para 11
      [2019] 5 SCR 579                 referred to                 Para 11
      (2021) 2 SCC 1                   referred to                 Para 11
            CIVIL ORIGINAL JURISDICTION: Arbitration Petition No. 03
      of 2022.
F
            Petition under Section 11(6) read with Section 11(12)(a) of the
      Arbitration and Conciliation Act, 1996 filed by the Petitioner for
      appointment of a Sole Arbitrator.
            With
G           Arbitration Petition Nos. 52 of 2021 and 02 of 2022.
           Amit Sibal, N Ritin Rai, Sr. Advs., Dr. Rishab Gupta, Sairam
      Subramanian, Neelabh Shreesh, S. S. Shroff, Advs. for the Petitioner.
           Jayant Mehta, Sr. Adv., Puneet Singh Bindra, Ms. Anshika Misra,
      Aditya Bhatt, Parimal Kashyap, Ms. Simran Jeet, Advs. for the
H     Respondent.
    WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                                 999
           BAKER HUGHES SINGAPORE PTE

      The Judgment of the Court was delivered by                                A
      BELA M. TRIVEDI, J.
       1. All these three Arbitration petitions filed by the petitioner under
Section 11(6) read with Section 11(12) of the Arbitration and Conciliation
Act, 1996 (hereinafter referred to as Arbitration Act, 1996), seeking
appointment of a sole arbitrator to adjudicate upon the disputes arising        B
out of the three agreements executed between the parties, being
intrinsically connected with each other were heard together, and are
being disposed of by this common order.
       2. The bare facts germane for deciding these petitions may be
stated as under:-                                                               C

      (i)    The petitioner is a company incorporated in the British Virgin
             Islands, engaged in the business of providing products and
             services for mud logging, drilling jars and fishing tools and
             exports of spare parts and oilfield equipments. The
             respondent is a company incorporated under the laws of             D
             Singapore and engaged in providing oilfield services, inter
             alia engaged in provision of well design, engineering, project
             management and well construction services to Vedanta
             Limited. (“Operator”).
      (ii)   In the year 2018, the respondent was considering the               E
             possibility of providing services to the Operator-Vedanta
             Ltd. at the Operator’s oil fields located in Rajasthan. The
             parties thereafter executed following three agreements:
             a)     Onshore Lease Agreement No. BHGE-DSA-WDI-
                    2018 dated 20th November, 2018 for the lease of Rigs        F
                    on a day-rate basis (“Lease Agreement”),
             b)     Onshore Drilling Service Agreement No. BHGE-
                    DSA-WDI-2018 (INTL HOLDING BVI) dated 20th
                    November, 2018 for drilling services (“Drilling
                    Service Agreement”), and                                    G
                                           th
             c)     Agreement dated 05 February, 2019 to provide (a)
                    mud logging; (b) drilling jars; (c) fishing tools; and
                    other services, with a full complement of crew,
                    equipment and materials at the Oil Fields (“Onshore
                    Service Agreement”). The said Agreement was                 H
1000         SUPREME COURT REPORTS                        [2022] 13 S.C.R.


 A                   amended vide the amendment agreements dated 22nd
                     November, 2019 and dated 7th January, 2020.
       (iii)   The respondent on April 9, 2020 issued three letters
               (identical) to the petitioner terminating the said three
               agreements. Pursuant to the said Termination Letters, the
 B             petitioner on April 13, 2020 informed the respondent of its
               obligation to pay the amount equivalent to the residual value
               of the “call out orders” in terms of the Agreements.
               However, the respondent denied to make payments to the
               petitioner. The petitioner thereafter issued three notices all
               dated December 18, 2020 invoking the arbitration clause
 C             contained in the respective three agreements raising its
               claims against the respondent.
       (iv)    The respondent in response to the said three Arbitration
               Notices gave a common reply on January 17, 2021 raising
               contentions inter alia that the stamp duty was not paid on
 D             the agreements and therefore, consequences would follow
               as per the Maharashtra Stamp Act, 1958. The respondent
               however made a proposal in the said letter for referring
               the disputes under the Agreements to Mediation. The
               respondent also made proposal for consolidation of the
 E             disputes under the Agreements and for referring the
               disputes for adjudication by a sole arbitrator, consolidating
               into a single arbitration. The respondent however, did not
               agree to any of the names of arbitrators suggested by the
               petitioner, and reserved its right to propose the names of
               arbitrators.
 F
       (v)     On January 29, 2021, the petitioner agreed to the
               respondent’s suggestion to refer the disputes to the
               Mediation. However, the Mediation having failed, the
               petitioner vide the Letter dated 1st September, 2021 agreed
               for the consolidation of disputes under the three agreements
 G             i.e., the Onshore Service Agreement, Lease Agreement and
               Drilling Service Agreement, to be heard by a sole arbitrator
               in one single arbitration, and further suggested two names
               of arbitrators. The petitioner in the alternative suggested
               that the Mumbai Centre of International Arbitration
 H             (“MCIA”) as the appointing authority under Rule 7.8 of
      WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                             1001
     BAKER HUGHES SINGAPORE PTE [BELA M. TRIVEDI, J.]

                MCIA Rules, 2016 may appoint a sole arbitrator in the         A
                Consolidated Arbitration.
         (vi)   The respondent did not agree to any of the proposals made
                by the petitioner vide the Letter dated September 07, 2021,
                nor did it propose any name for the appointment of a sole
                arbitrator. Thereafter, some correspondence had ensued        B
                between the parties, however the respondent did not propose
                any names of individuals for being appointed as a sole
                arbitrator in the consolidated arbitration. Hence, the
                petitioner has filed these three petitions.
       3) The bone of contention raised by the Learned Senior Advocate,       C
Mr. Jayant Mehta for the respondent is that out of the three agreements
only one agreement was stamped and the other two were not stamped
as required under the Maharashtra Stamp Act, 1958 (hereinafter referred
as the “Stamp Act”). Of course, he admitted that the matter in respect
of determination of stamp duty for the other two agreements is pending
with the Collector. However, according to him, a three-judge Bench of         D
this Court, in case of N.N Global Mercantile Unique Pvt. Ltd. Vs.
Indo. Unique Flame Ltd. and Others1 has referredthe issue as to
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 arbitration agreement         E
contained in such instrument which is not chargeable to the payment of
stamp duty as being non-existent, unenforceable or invalid, pending
payment of stamp duty on the substantive contract/instrument, to the
Constitution Bench of five judges, and therefore the present petitions
filed by the petitioner seeking appointment of a sole arbitrator may not
be entertained at this stage.                                                 F

       4. Per-contra, Learned Senior Advocate, Mr. Amit Sibal for the
petitioner placing heavy reliance on the decision of this Court in case of
Inter-continental Hotels Group (India) Private Limited and Another
versus Waterline Hotels Private Limited2 submitted that the three-
judge Bench in the said case, after considering all the earlier judgments     G
as also taking note of the reference of the issue made to the Constitution
Bench, had entertained the Arbitration Petition filed under Sections 11(6)

1
    (2021) 4 SCC 379
2
    (2022) 7 SCC 662                                                          H
1002             SUPREME COURT REPORTS                           [2022] 13 S.C.R.


 A     read with Section 11(12) of the Arbitration Act, holding that considering
       the time sensitivity in arbitration matters, the Court could not leave the
       matters hanging until the larger bench settled the issue. He further
       submitted that the insufficient payment or non-payment of stamp duty is
       a curable defect and there is no legal impediment to the enforceability of
       the arbitration agreement, pending payment of stamp duty on the
 B
       substantive contract. He further submitted that even otherwise as per
       the settled legal position, the Court is required to examine only the issue
       of existence of arbitration agreement and may not go into the issue of
       validity of the agreements in which the arbitration clause is contained.
              5. At the outset, it may be noted that Sub-section 6A of Section 11
 C     of the Arbitration Act, 1996 was inserted by the Act 3 of 2016 with
       retrospective effect from 23.10.2015, which read as under:-
             “(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) or sub-section (6), shall, notwithstanding any judgment,
 D           decree or order of any Court, confine to the examination of the
             existence of an arbitration agreement.”
             6. The said sub-sections 6 A came to be omitted by the Act 33 of
       2019 which came into force on 30.08.2019. Meaning thereby the said
       sub-section (6A) stands omitted as on the date.
 E
             7. Further, Section 16 of the Arbitration Act pertains to the
       competence of Arbitral Tribunal to rule on its own jurisdiction. The
       relevant sub-section 1 of Section 16 reads as under: -
             “Section 16 - Competence of arbitral tribunal to rule on its
 F           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
                      be treated as an agreement independent of the other
                      terms of the contract; and
 G
                  (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.”
              8. The bare reading of the afore-stated provision makes it clear
 H     that arbitral tribunal is competent not only to rule on its own jurisdiction
   WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                                    1003
  BAKER HUGHES SINGAPORE PTE [BELA M. TRIVEDI, J.]

but to rule on the issue of the existence or validity of the arbitration          A
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.
                                                                                  B
      9. The doctrine of separability and the doctrine of kompetenz-
kompetenz encompassed in the arbitration jurisprudence, have been
succinctly explained by a three-judge Bench of this Court in the recent
case of N.N. Global Mercantile(P) Ltd. (supra):
       “4. It is well settled in arbitration jurisprudence that an arbitration    C
       agreement is a distinct and separate agreement, which is
       independent from the substantive commercial contract in which it
       is embedded. This is based on the premise that when parties enter
       into a commercial contract containing an arbitration clause, they
       are entering into two separate agreements viz.: (i) the substantive
       contract which contains the rights and obligations of the parties          D
       arising from the commercial transaction; and (ii) the arbitration
       agreement which contains the binding obligation of the parties to
       resolve their disputes through the mode of arbitration.
       4.1. The autonomy of the arbitration agreement is based on the
       twin concepts of separability and kompetenz-kompetenz. The                 E
       doctrines of separability and kompetenz-kompetenz though inter-
       related, are distinct, and play an important role in promoting the
       autonomy of the arbitral process.
       4.2. The doctrine of separability of the arbitration agreement
       connotes that the invalidity, ineffectiveness, or termination of the       F
       substantive commercial contract, would not affect the validity of
       the arbitration agreement, except if the arbitration agreement itself
       is directly impeached on the ground that the arbitration agreement
       is void ab initio.
       4.3. The doctrine of kompetenz-kompetenz implies that the Arbitral         G
       Tribunal has the competence to determine and rule on its own
       jurisdiction, including objections with respect to the existence,
       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 Arbitration Act, the challenge before
                                                                                  H
1004            SUPREME COURT REPORTS                            [2022] 13 S.C.R.


 A           the Court is maintainable only after the final award is passed as
             provided by sub-section (6) of Section 16. The stage at which 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 minimise judicial intervention
             at the pre-reference stage, and reduce unmeritorious challenges
 B
             raised on the issue of jurisdiction of the Arbitral Tribunal.”
              10. In the said case of N.N. Global Mercantile (P) Ltd. (supra),
       the issue whether the arbitration agreement contained in an unstamped
       contract can be acted upon had also arisen and the court observed as
       under:
 C
             “21. The issue which has arisen in the present case is whether
             the arbitration agreement incorporated in the unstamped work
             order dated 28-9-2015, would also be legally unenforceable, till
             such time that the work order is subjected to payment of stamp
             duty. Undisputedly, the work order is chargeable to payment of
 D           stamp duty under Item 63 of the First Schedule to the Maharashtra
             Stamp Act, 1958.
             22. In our view, the non-payment or deficiency of stamp duty on
             the work order does not invalidate the main contract. Section 34
             provides that an unstamped instrument would not be admissible in
 E           evidence, or be acted upon, till the requisite stamp duty is paid.
             This would amount only to a deficiency, which can be cured on
             the payment of the requisite stamp duty.
             23. The point for consideration is whether the non-payment of
             stamp duty on the work order, would render the arbitration clause
 F           invalid, non-existent, or unenforceable in law, till the stamp duty is
             paid on the substantive commercial contract.
             24. The arbitration agreement contained in the work order is
             independent and distinct from the underlying commercial contract.
             The arbitration agreement is an agreement which provides the
 G           mode of dispute resolution. 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 to resolve disputes arising out of a commercial
             agreement, through the mode of arbitration. On the basis of the
 H
     WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                              1005
    BAKER HUGHES SINGAPORE PTE [BELA M. TRIVEDI, J.]

       doctrine of separability, the arbitration agreement being a separate   A
       and distinct agreement from the underlying commercial contract,
       would survive independent of the substantive contract. The
       arbitration agreement 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
                                                                              B
       of stamp duty.
       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         C
       contract would, however, not proceed before complying with the
       mandatory provisions of the Stamp Act.
       27. The Stamp Act is a fiscal enactment for payment of stamp
       duty to the State on certain classes of instruments specified in the
       Stamp Act. Section 40 of the Stamp Act, 1899 provides the              D
       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)
       provides that after the document is duly stamped, it shall be
       admissible in evidence, and may be acted upon.”
                                                                              E
       11. The three-judge Bench in the said case (N.N. Global
Mercantile(P) Ltd.)overruled the judgment in SMS Tea Estates (P)
Ltd v. Chandmari Tea Co. (P) Ltd.3 in which it was held that an
arbitrationagreement in an unstamped commercial contract cannot be
acted upon and is unenforceable in law. The court further held therein        F
that the Judgment in case of Garware Wall Ropes Ltd. v. Coastal
Marine Constructions & Engg. Ltd.4 whichhad followed the judgment
in SMS Tea Estates (supra) did not lay down the correct position in law.
However, the Court noticed that the judgment in Garware Wall Ropes
Ltd. (supra) was cited with approval by the Co-ordinate Bench of this
Court in Vidya Drolia v. Durga Trading Corporation5, and therefore            G
the court (in N.N. Global Mercantile case) observed as under:

3
  (2011) 14 SCC 66
4
  (2019) 9 SCC 209
5
  (2021) 2 SCC 1                                                              H
1006      SUPREME COURT REPORTS                           [2022] 13 S.C.R.


 A     “33. We notice that the judgment in Garware Wall Ropes Ltd.
       has been cited with approval by a coordinate Bench of this Court
       in Vidya Drolia v. Durga Trading Corpn. [Vidya Drolia v.
       Durga Trading Corpn., Paras 146-147 of the judgment reads
       thus: (Vidya Drolia Case SCC pp. 115-16)
 B            “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 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
 C     between existence of an arbitration agreement and validity of an
       arbitration agreement. Such interpretation can draw support from
       the plain meaning of the word “existence”. However, it is equally
       possible, jurisprudentially and on contextualism, to hold that an
       agreement has no existence if it is not enforceable and not binding.
 D     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
       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
 E     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
       parties can be compelled to adhere and abide by the terms. A
       party cannot sue and claim rights based on an unenforceable
 F     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.
       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
 G     enforceable in law.
             147. We would proceed to elaborate and give further
       reasons:
            147.1. (i) In Garware Wall Ropes Ltd. this Court had
 H     examined the question of stamp duty in an underlying contract
 WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                                 1007
BAKER HUGHES SINGAPORE PTE [BELA M. TRIVEDI, J.]

   with an arbitration clause and in the context had drawn a distinction     A
   between the 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)
                                                                             B
           ‘29. This judgment in Hyundai Engg. case [United India
   Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd.,
   (2018) 17 SCC 607] 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        C
   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 in the sub-contract   D
   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                E
   expression “existence” in Hyundai Engg. case [United India
   Insurance Co. Ltd. v. Hyundai Engg. & Construction Co. Ltd.,
   (2018) 17 SCC 607 ] , as followed by us.’
          Existence and validity are intertwined, and arbitration
   agreement does not exist if it is illegal or does not satisfy mandatory   F
   legal requirements. Invalid agreement is no agreement.”
          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] . We consider
   it appropriate to refer the findings in paras 22 and 29 of Garware        G
   Wall Ropes Ltd. [Garware Wall Ropes Ltd. v. Coastal Marine
   Constructions & Engg. Ltd., (2019) 9 SCC 209] , which has
   been affirmed in paras 146 and 147 of Vidya Drolia [Vidya
   Drolia v. Durga Trading Corpn., (2021) 2 SCC 1] , to a
   Constitution Bench of five Judges.”
                                                                             H
1008                SUPREME COURT REPORTS                        [2022] 13 S.C.R.


 A           12. The Court ultimately referred the following issue to be
       authoritatively settled by a Constitution Bench of five Judges: -
                “58. We consider it appropriate to refer the following issue, to be
                authoritatively settled by a Constitution Bench of five Judges of
                this Court:
 B                    “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 is not chargeable to payment of stamp duty, as
 C              being non-existent, unenforceable, or invalid, pending payment of
                stamp duty on the substantive contract/instrument?”
              13. It may further be noted that recently a three-judge Bench of
       this Court in case of Intercontinental Hotels Group (India) Pvt. Ltd.
       & Anr. Vs. Waterline Hotels Private Limited6 while dealing with an
       application filed under Section 11(6) read with Section 11(12)(e) of the
 D
       Arbitration Act for appointment of a sole arbitrator on the basis of an
       arbitration clause contained in the agreement which was unstamped
       document, took notice of the earlier decisions as also the issue referred
       to the Constitution Bench and observed as under:-
                “25. Although we agree that there is a need to constitute a larger
 E
                Bench to settle the jurisprudence, we are also cognizant of time-
                sensitivity when dealing with arbitration issues. All these matters
                are still at a pre-appointment stage, and we cannot leave them
                hanging until the larger Bench settles the issue. In view of the
                same, this Court—until the larger Bench decides on the interplay
 F              between Sections 11(6) and 16—should ensure that arbitrations
                are carried on, unless the issue before the Court patently indicates
                existence of deadwood.”
             14. In the light of the afore-stated legal position, if the facts of the
       present petitions are examined, it deserves to be noted that the execution
 G     of three agreements, namely, Onshore Service Agreement, Lease
       Agreement and Drilling Service Agreement between the petitioner and
       the respondent has not been disputed. The identical clause-23 for
       Arbitration contained in all the three agreements has also not been
       disputed. The said clause reads as under:

 H     6
           (2022) 7 SCC 662
   WEATHERFORD OIL TOOL MIDDLE EAST LIMITED v.                                 1009
  BAKER HUGHES SINGAPORE PTE [BELA M. TRIVEDI, J.]

      “ARBITRATION:                                                            A
      Any dispute, controversy or claim between the parties arising out
      of, relating to, or connected with this Agreement, the breach,
      termination or invalidity hereof, or the provisions contained herein
      or omitted here from (collectively, a “Dispute”) will be referred to
      and finally resolved by arbitration under the Indian Arbitration         B
      and Conciliation Act, 1996 and the rules made thereunder, which
      are deemed to be incorporated by reference into this Article 23.
      The arbitration shall be conducted as follows:
      i.     A sole arbitrator shall be mutually appointed in case the
             value of claim under dispute is less than US$10 million and       C
             in any other event by a panel of three arbitrators will be
             appointed with one arbitrator nominated by each Party and
             the presiding arbitrator selected by the nominated arbitrators.
      ii.    The language of the arbitration proceedings shall be English.
      iii.   The seat of arbitration shall be Mumbai, India.                   D
      iv.    The award made in pursuance thereof shall be final and
             binding on the Parties.
      v.     The arbitrators will have no power to award damages of a
             type described in Article 11(k).”
                                                                               E
        15. The letters of termination terminating the said three agreements
by the respondent on 9th April, 2020, and other correspondence that
ensuedbetween the parties as stated in the earlier part of the judgment
are also not disputed. Though the respondent, in response to the arbitration
notices given by the petitioner had raised a contention in the letter dated
                                                                               F
17 th January 2021 that the agreements were not stamped and that
consequences would follow as per the Maharashtra Stamp Act, the
respondent proposed to amicably resolve the disputes through Mediation,
and also suggested in the alternative to consolidate the disputes under
the three agreements to be heard by a sole arbitrator in one single
arbitration. The efforts to amicably resolve the disputes through Mediation    G
having failed, the petitioner thereafter also agreed vide letter dated 1st
September, 2021 to consolidate the disputes under the three agreements
to be heard by a sole arbitrator in one single arbitration, as proposed by
the respondent. The petitioner also proposed the names of the arbitrators,
however, the said names were not agreeable to the respondent. The
                                                                               H
1010              SUPREME COURT REPORTS                         [2022] 13 S.C.R.


 A     respondent also failed to propose any names for the appointment of a
       sole arbitrator.
               16. In view of the above, since the arbitration agreements contained
       in all the three agreements namely, Onshore Service Agreement, Lease
       Agreement and Drilling Service Agreement were not disputed by the
 B     respondent, and since the respondent itself had proposed to consolidate
       the disputes under the said agreements and to refer them to a sole
       arbitrator in one single arbitration, the court is of the opinion that now it
       does not lie in the mouth of the respondent to say that the petitions
       seeking appointment of a sole arbitrator should not be entertained, as the
       matter with regard to the determination of requisite stamp duty under
 C     the Maharashtra Stamp Duty Act on the two agreements is pending
       before the Collector. As held by this Court in N.N. Global Mercantile
       (supra) there is no legal impediment to the enforceability of the arbitration
       agreement pending payment of stamp duty on the substantive contract.
       Of course, the said issue is pending under consideration by the Constitution
 D     Bench, nonetheless as observed by this Court in Intercontinental Hotels
       Group (India Pvt. Ltd.) (supra), the matters which are still pending at
       a pre-appointment stage, cannot be left hanging until the larger Bench
       settled the issue. Following the said proposition and considering the time
       sensitivity in the arbitration cases, we deem it appropriate to entertain
       the present petitions and allow the same.
 E
              17. Since the respondent had proposed and the petitioner had
       agreed to consolidate all the disputes arising out of the three agreements,
       namely, Onshore Service Agreement, Lease Agreement and Drilling
       Service Agreement, and to refer them to a sole arbitrator in a single
       arbitration for adjudication, it is ordered as such. Accordingly, we appoint
 F     Mr. Suresh C. Gupte, former Judge, High Court of Bombay as a sole
       arbitrator to adjudicate upon the disputes arising out of the said three
       agreements treating it as one single arbitration. The other terms and
       conditions of the arbitration shall be as per Clause 23 contained in the
       three agreements, as may be suitably made applicable to the arbitration
 G     proceedings.
              18. All the three petitions stand allowed accordingly.

       Devika Gujral                                                Petitions allowed.
       (Assisted by : Shevali Monga, LCRA)
 H