Alliance Import and Export v. GHCL Ltd.

5. Mr. Bhogle, learned Advocate appearing for the Applicant has made the following common submissions in both matters:-

(i) In the present case, GHCL and Nirma have communicated their acceptance of the Fixture Note by signing it and returning a scanned copy of the signed Fixture Note by email. The email is received by the Applicant in Mumbai which is the place at which the contract is formed. Thus, a part of the cause of action in the present case has arisen in Mumbai. [Reliance is placed in this regard on the judgment of the Supreme Court in ABC Laminart Pvt. Ltd. Vs. A.P. Agencies[1], at Para 15 and Cotton Corp. of India Ltd. Vs. Alagappa Cotton Mills[2], at Para 6; Quadricon Pvt. Ltd. Vs. Shri Bajrang Alloys Ltd.3, at Paras 37 - 39]

(ii) GHCL and Nirma have paid the freight charges to the

(iii) Clause 18 of the Fixture Note is titled ‘Arbitration’ and states "ARBITRATION IN INDIA, ENGLISH LAW TO APPLY". The parties being commercial parties, the contract must be read in a manner that makes commercial sense and adheres to "commercial common sense". Reliance in this regard is placed on the judgment of the Supreme Court in MTNL Vs. Canara Bank[4] at Para 9.[4] – 9.7.

(iv) An Arbitration Agreement is not required to be in any particular form. It is not necessary that words such as "shall be resolved by arbitration" or that "decision of the arbitrator shall be final" are necessary. Reliance is placed on the judgment of the Supreme Court in Babanrao Rajaram Pund Vs. Samarth Builders & Developers[5], at paras 25-26 to submit that the lack of certain language like "final and binding" nature of the award cannot be stated as a reason to hold that the intention to refer disputes to arbitration is lacking. The Supreme Court also regarded the terms arbitration' and 'arbitrator' as relevant indicia that the parties intended a mandatory reference to arbitration.

(v) In the absence of any factors which show that the reference to arbitration was not final or mandatory, the Court should hold that the parties intended to resolve disputes by mandatory reference to arbitration. Reliance in this regard is placed on the commentary of Russell on Arbitration which is quoted below: “Many cases have been fought over whether a contract's chosen form of dispute resolution is expert determination or arbitration. This is a matter of construction of the contract, which involves an objective enquiry into the intentions of the parties.

First, there are the express words of the disputes clause. If specific words such as 'arbitrator', 'arbitral tribunal', 'arbitration' or the formula 'as an expert and not as an arbitrator' are used to describe the manner in which the dispute resolver is to act, they are likely to be persuasive although not always conclusive.” Reliance is also placed in this regard on Jagdish Chander Vs. Ramesh Chander,[6] Para 9.

(vi) Parties have, in incorporating GENCON 1994 by reference, chosen arbitration as per Clause 19(c) of GENCON 1994. Reliance in this regard is placed on the judgment of the Supreme Court in M.R. Engineers & Contractors Pvt. Ltd. Vs. Som Datt Builders Ltd.7, Para 24; Shakti Bhog Foods Ltd. Vs. Kola Shipping Ltd.8, Para

14. The judgment of Shakti Bhog (supra) was in the context of a fixture note and GENCON 1994. Reliance is also placed on the judgment of the Supreme Court in Groupe Chimique Tunisien Vs. Southern Petrochemicals Industries Corporation Ltd.9.

(vii) Various Courts have upheld the Arbitration Agreement similar to the one found in Clause 18 of the Fixture Note. Reliance is placed on the following judgments: a. Shagang South-Asia (Hong Kong) Trading Co. Ltd. Vs. Daewoo Logistics10 quoted with approval in BGS Soma JV Vs. NHPC Ltd.11 at Paras 69 – 70. b. Cliff Navigation S.A. Vs. LMJ International Ltd.12, at internal Pg. 11 c. Django Navigation Ltd. Vs. Indo Ferro Metal Pvt. Ltd.13, at Paras 20 – 22 d. MV Nicolaos A. Vs. Indian Farmers Fertilizer Cooperative14 at Para 21

(viii) Arbitration clauses are to be given effect to unless the language expressly provides that reference to arbitration is not mandatory such as by use of words like ‘if the parties so determine’ or other qualifying factors. In the absence of any qualifying factors or further contemplation, the arbitration clause is to be read as mandatory.

(ix) Number of Arbitrators is not required to be mentioned.

Failure to specify number of arbitrators does not invalidate the Arbitration Agreement or render it vague or inchoate. Reliance is placed on Section 10(2) of the Act. 10 [2015] EWHC 194 (Comm.)

(x) The use of the language ‘Arbitration in India’ in Clause

18 of the Fixture Note is a designation of seat of arbitration to be in India (and therefore Part I of the Act would apply). Reliance is placed on BGS Soma (supra) Paras 63, 64, 85 and Shagang (supra) Paras 20, 21, 22, 41.

(xi) GHCL’s submissions that there is no valid arbitration clause is entirely an afterthought as there is no pleading to this effect in the Affidavit in Reply filed to the Section 11 Application.

(xii) It is submitted that when parties have evinced clear intention to refer the dispute to arbitration and abide by the decision of the tribunal, the party autonomy to this effect deserves to be protected. The deficiency of words in an agreement which otherwise fortifies the intention of the parties to arbitrate their disputes, cannot legitimise the annulment of arbitration clause.

(xiii) A pedantic and technical approach must be avoided and the approach of a reasonable business person having business common sense must be adopted. The question before the Court is essentially: what did the parties intend? By using the phrase ‘arbitration in India’ the only answer is that parties intended for binding arbitration seated in India.

(xiv) Since GENCON 1994 is incorporated by reference, the arbitration clause at Clause 19 thereof also provides for mandatory arbitration.

(xv) GHCL and Nirma are attempting to persuade the Court that despite the use of the word "arbitration" in Clause 18, it does not amount to an arbitration clause. A heavy burden is placed on such Respondent.

(xvi) The challenge by GHCL and Nirma to the last paragraph of Clause 16 is on the merits of the dispute and does not affect the existence of the arbitration clause in any manner. The Court under Section 11 is only required to see whether an Arbitration Agreement exists, i.e. whether the agreement contains a clause which provides for arbitration pertaining to the disputes which have arisen between the parties to the agreement, and cannot go into preliminary questions such as accord and satisfaction. The Court’s role is limited to determining the existence of an Arbitration Agreement. Reliance in this regard is placed on the judgment of the Supreme Court in Mayavati Trading Pvt. Ltd. Vs. Pradyuat Deb Burman15.

(xvii) The essence of GHCL and Nirma's argument is that the parties negotiated for deletion of the last paragraph of Clause 16. They have produced correspondence in which they have requested for the same. However, they have not denied that subsequent to the said correspondence, they signed the Fixture Note which admittedly includes the said provision. Thus, parties gave their acceptance to the Applicant's offer (which included the said provision) by signing the document with open eyes and with consensus ad idem.

(xviii) There was no fraud played by the Applicant. It did not agree to the counteroffer to delete the said provision and hence, did not delete the same. It sent copies of the final Fixture Note to GHCL and Nirma, both of whom had the opportunity to examine its provisions. Both signed the Fixture Note without protest.

(xix) GHCL's claim of coercion is bereft of any material particulars. Coercion must be pleaded with particularity. A contention of economic duress must meet the specific test of being of such a nature that it leaves the person with no choice in the moment. Reliance in this regard is placed on the judgment of the Bombay High Court in Bajranglal Anilkumar Jaju Vs. Vyasya Bank Ltd.16; Palbro Intl. Vs. Federal Bank Ltd.17 and Pao On Vs. Lau Yiu18. There is no pleading of unequal bargaining position.

(xx) GHCL is India’s largest manufacturer of Soda Ash whereas the Applicant is only one among many charter party firms. The Respondents had every opportunity to choose another charterer. There is no element of coercive bargaining involved in the present dispute. In any event, this determination would fall squarely within the mandate of the arbitral tribunal.

(xxi) Civil aspects of fraud are arbitrable. Reliance in this regard is placed on the judgment of the Supreme Court in Avitel Post Studioz Ltd. vs.

6. Mr. Mishra, learned Advocate appearing for Respondent - GHCL in Arbitration Application (L) No.23497 of 2022 has made the following submissions:-

(i) The Fixture Note dated 12.05.2021 is not duly stamped.

[Reliance is placed on the recent judgment of the Supreme Court delivered in N.N. Global Mercantile Pvt. Ltd. vs. M/s. Indo Unique Flame Ltd. & Ors.20

(ii) The Applicant pressurized GHCL to countersign the

Fixture Note dated 12.05.2021 by threatening to cancel the assignment / booking of GHCL. Thus, GHCL signed the Fixture Noted dated 12.05.2021 under coercion and threat.

(iii) Several discussions took place between the parties and thereafter changes were agreed to. However, those changes were not incorporated in the new Fixture Note.

(iv) Another Fixture Note dated 12.05.2021 was issued by the Applicant to GHCL who unsuspectingly signed and returned the Fixture Note on 25.05.2021 under the bonafide belief that the Applicant had deleted the disputed terms from Clause No.16.

(v) The word ‘Arbitration’ in Clause 18 of the Fixture Note is of passing usage and does not constitute an agreement to refer disputes to arbitration. It is a mere six word in total and casually refers to arbitration. It is a one-liner. Such an arbitration clause does not meet with the requirement of Section 7 of the Act. [Reliance in this regard is placed on the judgment of the Supreme Court in Mahanadi Coalfields Ltd. & Anr. Vs.

IVRCL AMR Joint Venture21 and Foomill Pvt. Ltd. Vs. Affle (India) Ltd. 22

(vi) Clause 18 of the Fixture Note is vague. The Fixture

(vii) The construction of Clause 18 shows that it is a statement and not an agreement clause. An agreement which provides the mere possibility to execute an Arbitration Agreement between the parties in the future cannot be considered as an Arbitration Agreement. [Reliance in this regard is placed on the judgment of the Bombay High Court in Nagreeka Indcon Products Pvt. Ltd. Vs. Cargocare Logistics (India) Pvt. Ltd.23,

(viii) That a casual construction of a clause with the usage of word ‘Arbitration’ and without its “mandatory and supporting prefix and suffix in its body” cannot be a founding clause to be called as an Arbitration Agreement. There has to be an explicit and mandatory intention by the parties to oust the jurisdiction of civil Courts and refer the dispute to arbitration. [Reliance in this regard is placed on the judgment of the Supreme Court in Avant Garde Clean Room & Engg Solutions Pvt. Ltd. Vs. IND Swift Ltd.24; followed in K.K. Modi Vs. K.N. Modi25; Bharat Bhushan Bansal Vs. U.P. Small Industries Corporation Ltd.26; Bihar State Mineral Development Corporation Vs. Encon Builders (India) Pvt. Ltd.27 ]

(ix) To interpret Clause 18 as a binding Arbitration

Agreement raises more questions than it answers such as: “i. When an Arbitration can occur? ii. Why an Arbitration will be carried out? iii. What will be referred in an Arbitration? iv. Whether Arbitration is mandatory? v. What will be the format and manner of Arbitration? vi. What will be the Seat and Venue of Arbitration?” That, the failure in getting these fundamental answers from Clause 18 also leads to a conclusion that Clause 18 is not in accordance with Section 7 of the Act. In the absence of an Arbitration Agreement within the meaning of Sections 2(b) and 7 of the Act, the very invocation of the arbitration by the Applicant under Section 11(6) of the Act is invalid.

(x) That on perusal of the present clause in question, it can only be presumed that the Applicant has mentioned that they may explore arbitration, but when and whether it is mandatory, is absent totally. There is no use of any mandatory language such as ‘parties shall’ or ‘refer disputes’ or ‘mutually agree’ or ‘bound by the outcome of the Arbitration award’. There is no language which shows that parties intended reference to arbitration to be mandatory.

(xi) Merely stating "Arbitration in India. English Law to

Apply" does not provide or derive any conclusive intention of the parties to refer the present dispute to the arbitration.

(xii) Only by using the word ‘shall’ can it be said that arbitration is the ‘one and only dispute resolution mechanism’ and where the word ‘shall’ is not used, arbitration will not be available as a remedy.

(xiii) Even if it is held that a valid Arbitration Agreement has been executed between the Applicant and GHCL, the jurisdiction to hear the present application would be at Courts in Ahmedabad, Gujarat.

(xiv) A complete copy of the Fixture Note is not produced.

The Fixture Note produced at Exhibit A of Arbitration Application (L) No. 23497 of 2022 is incomplete and starts at Clause 14.

(xv) The Bombay High Court lacks territorial jurisdiction to hear and decide Arbitration Application (L) No. 23497 of 2022.

(xvi) The fact that the Arbitration clause did not expressly confer jurisdiction on the Courts of Mumbai would also clearly establish that the parties to the Fixture Note dated 12.05.2021 never intended to confer jurisdiction on the courts in Mumbai.

(xvii) The registered office of GHCL is in the State of Gujarat.

(xviii) The documents and contracts were negotiated and agreed upon by the agents of the Applicant and the officials of GHCL located at the registered office of GHCL (in Gujarat).

(xix) The product, Soda Ash, is produced in and supplied from Gujarat and is shipped from the Port at Porbandar in Gujarat to Chittagong at Bangladesh.

(xx) No part of the cause of action has arisen in Mumbai.

(xxi) The cause of action in the present case has arisen in

Gujarat and the Bombay High Court lacks the territorial jurisdiction to adjudicate the application filed by the Applicant seeking appointment of an Arbitrator.

7. Ms. Sheetal Parkash, learned Advocate appearing for Respondent - Nirma in Arbitration Application (L) No.23500 of 2022 has made the following submissions:-

(i) The Arbitration Clause / Agreement is vague and does not specify arbitration as a mandatory forum for resolution of disputes.

(ii) The Arbitration Clause / Agreement does not specify the seat of arbitration, or the number of arbitrators. This, as also the vagueness in failing to specify arbitration as a mandatory forum for dispute resolution, does not meet with the mandatory requirements of an Arbitration Agreement. The Arbitration Agreement is void for uncertainty under Section 29 of the Indian Contract Act, 1872.

(iii) The parties have excluded the applicability of Part I of the Arbitration and Conciliation Act, 1996.

(iv) Courts at Mumbai do not have jurisdiction to entertain the Section 11 Proceedings.

(v) The merits of the Applicant’s claim are frivolous, deadwood, and ought not to be referred to arbitration.

(vi) There must be common intention to submit disputes to arbitration. Reliance in this regard is placed on the judgment of the Supreme Court in State of Orissa & Anr. Vs. Sri Damodar Das [Appeal (civil) 2987 of 1982]. The intention to submit disputes to arbitration must be expressed in language where such intention is determined with a reasonable degree of certainty. Arbitration Agreements should be strictly constructed. Reliance in this regard is placed on M/s. Tramco Pvt. Ltd. Vs. T.M.S. Mani.

(vii) The Arbitration Clause in Clause 18 is a unilateral clause printed in a Fixture Note. The language is vague and uncertain. There is lack of clear, meaningful, and unambiguous language. Reliance in this regard is placed on the judgment of the Supreme Court in System for International Agencies Vs. Rahul Coach Builders Pvt. Ltd.28 and the judgment of the Bombay High Court in Nagreeka (supra).

(viii) At no point did Nirma consent to arbitration. Mere use of the word ‘Arbitration’ does not conclusively imply the mandatory nature of arbitration when the option is left to the parties to settle their disputes. The clause does not prescribe any procedure to follow nor does it specify the seat or the venue. The number of arbitrators is not specified.

(ix) Territorial jurisdiction is vested with Courts in Gujarat from where the cargo was shipped and the order for the same was placed. The registered office of Nirma is in Ahmedabad. The use of clever drafting to suggest that part of the cause of action has arisen in Mumbai to vest jurisdiction in the Bombay High Court is not permissible.

(x) The notice invoking arbitration is bad in law as it does not specify the name of an Arbitrator.

8. Mr. Kapadia, learned Amicus Curiae appointed by this Court would submit that in the facts and circumstances of the present case, the following issues arise for consideration in the present proceedings viz; (A) Whether Clause 18 of the Fixture Note dated 12.05.2021 constitutes a valid arbitration agreement? (B) Whether parties have, by implication, excluded the application of Part I of the Arbitration and Conciliation Act, 1996 (“Act”)?

(C) Whether the Bombay High Court has territorial jurisdiction to adjudicate the Section 11 Proceedings and appoint an arbitrator under Section 11 of the Act?

(D) Whether the reference can be made given the objection raised by the Respondent (GHCL) with respect to insufficiency of stamp duty?

8.1. He would submit that Clause 18 of the Fixture Note is required to be read alongwith Clause 30 simultaneously. Clause 18 reads as “18.

SUB FURTHER TERMS AS PER GENCON 1994”.

8.2. He would submit that GENCON 1994 is a standard voyage charter party agreement. It is a general purpose agreement for the services of a ship in exchange for freight and can be used in a variety of trades. It is accompanied by its own bill of lading, CONGENBILL

2016. The latest edition of this contract is GENCON 2022.

8.3. He would submit that GENCON 1994 is in two parts. Part I of GENCON 1994 is a form that has to be filled in and consists of numbered boxes. Box 25 of Part I of GENCON 1994 (which deals with law and arbitration) is to be filled in according to the following instructions:

25. Law and Arbitration (state 19 (a), 19(b) or 19(c) of Cl.19; if 19(c) agreed also state Place of Arbitration) (if not filled in 19(a) shall apply) (Cl.19) (a) State maximum amount for small claims / shortened arbitration (Cl.19)

8.4. Clause 19 referred to in Box 25 is to be found in Part II of GENCON 1994 and reads as under:

8.5. He would submit that neither the Applicant nor the Respondents have produced the duly filled GENCON 1994 Form which is Part I GENCON 1994. As such, Clause 18 of the Fixture Note is the only place where a clear reference to arbitration and governing law is made. Such arbitration is “in India” and “English law to apply”.

8.6. Next he would submit that GHCL does not dispute (at least in pleadings) that there is a valid Arbitration Agreement or that the Arbitration is seated in India. GHCL disputes the territorial jurisdiction of the Bombay High Court to hear the Arbitration Application (L) No.23497 of 2022. According to GHCL, Courts at Gujarat have jurisdiction. In the written submissions, however, GHCL has raised a submission that the Arbitration Agreement is not valid and is vague. Although the Court would be justified in applying the principle of estoppel against GHCL, the Court may nevertheless consider all objections raised by GHCL especially since similar submissions are made by Nirma.

8.7. He would submit that GHCL and Nirma have also submitted that the requirements of Section 7 of the Act which sets out the essentials of an Arbitration Agreement are not met in the facts of the present case.

8.8. On the basis of the pleadings and facts in the present case, he would conclude that Clause 18 of the Fixture Note constitutes a valid and enforceable Arbitration Agreement and that this Court has territorial jurisdiction to refer parties to arbitration under Section 11(6) of the Act (subject to the discussion on stamp duty below).

8.9. He would next submit that provisions of Section 7 of the said Act do not prescribe any specific format or word count for an Arbitration Agreement to be considered as valid and the said Section is in advisedly wide in its scope and in that view of the matter, Clause 18 of the Fixture Note complies with the requirement of Section 7 of the said Act. He would submit that Clause 18 is in writing, executed and signed by the parties, acted upon by the parties, it is not ‘unilateral’ but in fact ‘bilateral’ having been executed after prior negotiation and therefore binding on the parties.

8.10. He has drawn my attention to the decision of the Supreme Court in the case of Enercon (India) Ltd. Vs. Enercon Gmbh29 and the decision in the case of Jagdish Chandar (supra) in support of his above submissions. He has also distinguished the judgment in the case of Jagdish Chandar (supra), Mahanadi Coalfields (supra), Avant Garde (supra), K.K. Modi (supra), Bharat Bhushan Bansal (supra) and Bihar State Mineral Development (supra) referred to and relied upon by the Respondents’ GHCL and Nirma and would submit that in all the said cases the Arbitration Clauses who were materially different from clause 18 of the Fixture Note. Next he would submit that Applicants reliance on the decision of Queen’s Bench Division (Commercial Court) decision delivered by Hamblen J. on 05.02.2015 and Cliff Navigation (supra) are cases which are closes in terms of language of the Arbitration Clause in the present case. He would submit that the Courts have referred and/or upheld the reference to the Arbitration in those cases. He would submit that the decisions in the case of Shagang (supra) by the Queen’s Bench Division is in fact comprehensively analyses the Arbitration Agreement which was also under a Fixture Note read with GENCON 1994 (which is absolutely identical in the present case). He would therefore submit that in that view of the matter the Arbitration Clause of the Fixture Note would carry with an implied choice of Mumbai being the seat of Arbitration and English law to be apply as a curial law. He would thus submit that under the first part of Clause 18 (i.e. Arbitration in India) it is clear that intention of the parties is to designate India as also the choice of curial law to be Indian Law. He would next submit that the Supreme Court in the case of BGS Soma (supra) has infact favourable noted and applied in the judgment in Shagang (supra) although it is passed by a Foreign Court. He has drawn my attention to paragraph Nos.69 and 70 of the BGS Soma’s case.

8.11. He has next made a further submission with respect to whether this court would have territorial jurisdiction to adjudicate the Section 11 of the said Act in view of the facts and circumstances of the present case. He would submit that the choice of seat carries with it the choice of exclusive jurisdictions of the seat Court. However, since the seat in the present case is India, it would not answer which Court in India would have jurisdiction to hear the Section 11 Applications. It is possible that more than one Court has territorial jurisdiction in which case Section 42 of the Act provides that the Court first seized of the matter alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.

8.12. He would further submit that in so far as the issue of territorial jurisdiction is concerned, it would be relevant to note the provisions of Sections 2(e) and 42 of the Act which read as under:- “(e) “Court” means— (i) in the case of an arbitration other than international commercial arbitration, the principal Civil Court of original jurisdiction in a district, and includes the High Court in exercise of its ordinary original civil jurisdiction, having jurisdiction to decide the questions forming the subjectmatter of the arbitration if the same had been the subjectmatter of a suit, but does not include any Civil Court of a grade inferior to such principal Civil Court, or any Court of Small Causes;

42. Jurisdiction.— Notwithstanding anything contained elsewhere in this Part or in any other law for the time being in force, where with respect to an arbitration agreement any application under this Part has been made in a Court, that Court alone shall have jurisdiction over the arbitral proceedings and all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court.”

8.13. He would submit that once a Court is held to have jurisdiction, all subsequent applications arising out of that agreement and the arbitral proceedings shall be made in that Court and in no other Court. Therefore, applications under Sections 9, 11, 27, 34, 37 etc. have to be filed in the Court in which the first application is filed. As such, it is important to determine whether this Court has jurisdiction in the matter.

8.14. He would submit that as such since the formation of contract was at Mumbai, where the Applicant carries on business and where it has received the signed copy of the Fixture Note, part cause of action would undoubtedly arise in Mumbai. Additionally, payments are said to be received by the Applicant in Mumbai to which there is no denial by the respondents. In the circumstances, since part cause of action has arisen in Mumbai, this Court would have territorial jurisdiction to decide the Section 11 Proceedings in the absence of designation of seat at any particular place within India.

8.15. On the aspect of misrepresentation, coercion and undue influence argued by the Respondents he would submit that these submissions do not make the dispute non-arbitrable. He has relied upon paragraph No.25 of the case in A. Ayyasamy Vs. A. Paramasivam30, in this regard and would submit that the Respondents case about the allegation of fraud which make a virtual case of criminal offence or where allegations of fraud are so complicated that it becomes absolutely essential that such complex issues can be decided only by the civil court” which is the standard in Ayyasamy (supra) and the reference ought not to be refused on this ground. He has also placed reliance on paragraph No.340 of the recent Constitution Bench of the Supreme Court in the case of NN Global (supra) and would submit that whether misrepresentation, fraud or coercion in the making of the contract the same would be something which the Arbitrator can decide through documentary evidence and cross-examination.

8.16. The final submission made by the learned Amicus Curiae is in respect to to insufficiency of stamp duty on the Fixture Note. He would submit that GHCL and Nirma have not pleaded any objection in terms of insufficiency of stamp duty on the Fixture Note. However, GHCL has raised a submission on insufficiency of stamp duty as part of its written submissions. Paragraph No.38 of GHCL’s written submissions are reproduced below:

8.17. He would submit that this submission was raised only in the written submissions, I have not come across any response from the Applicant. The Supreme Court in the recent Constitution Bench judgment in N.N. Global (supra) has held as follows:- “120.An instrument, which is eligible to stamp 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 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, we approve of paragraphs-22 and 29 of 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.

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

123. If the original of the instrument is produced and it is unstamped, the Court, acting under Section 11, is dutybound to act under Section 33 of the Stamp Act as explained herein before. 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.

124. 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 Act.

125. 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 instrument as being non-existent in law unless the instrument is validated under the Stamp Act.

126. 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 duty.”

8.18. He would further submit that the decision of this Court in the case Vidya Amin Tata Capital Financial Services Ltd. Vs. Kunal Structure (India) Pvt. Ltd. and Others31 held that a submission of insufficiency of stamp duty must be pleaded with particulars, with reference the relevant applicable article of the schedule to the Stamp Act. Paragraph No.18 of the judgment reads as under:

8.19. In the present case, no particulars are given by the Respondents – GHCL and Nirma as to what Article of the Maharashtra Stamp Act would be attracted and what the duty payable thereunder would be. The submission is made in passing as part of the written submissions (without any supporting pleading) and without any material particulars. Be that as it may, a perusal of the Fixture Note does reveal that it is entirely unstamped (not merely insufficiently stamped). As such, the judgment in NN Global (supra) at Paragraph No.123 states that a Court, acting under Section 11, is duty-bound to act under Section 33 of the Stamp Act. As such, this Court may exercise powers under Section 33 of the Maharashtra Stamp Act, 1958 and impound the originals of the Fixture Notes and direct the learned Prothonotary and Senior Master, High Court to forward the same to the Collector of Stamps for adjudication of stamp duty and penalty, if any.

9. I have heard Mr. Bhogle, learned Advocate for the Applicant, Mr. Mishra, learned Advocate for Respondent in Arbitration Application (L) No.23497 of 2022, Mr. Parkash, learned Advocate for Respondent in Arbitration Application (L) No.23500 of 2022 and Mr. Priyank Kapadia, learned Amicus Curiae appointed by this Court and with their able assistance perused the pleadings of the case. Submissions made by Advocates has received due consideration of this Court.

10. Admittedly, it is seen that the Arbitration Agreement in the Fixture Note is unstamped in both the matters.

11. The Respondents’ have also raised the ground of insufficient stamping. In the recent decision of N.N. Global Mercantile Pvt. Ltd. (supra), the Constitution Bench of the Supreme Court has ruled that an unstamped instrument without the required stamp duty is not legally enforceable. If such an instrument with an arbitration clause is presented in a Section 11 Petition under the said Act, the Court must seize the instrument. That only after impounding the instrument, ensuring payment of stamp duty and obtaining the endorsement under Section 42 of the Stamp Act can the Court proceed with the Petition. That without proper stamping the Arbitration Agreement the unstamped instrument has no legal validity. That under the provisions of Section 2(h) and 2(g) of the Contract Act and Sections 33 and 35 of the Stamp Act, an unstamped agreement lacks legal enforceability and cannot be used as evidence in Court or before a public authority. That until properly stamped in accordance with the Stamp Act, an agreement without the necessary stamp or insufficient stamping is considered void and non-existent in legal terms.

12. I am bound by the above ruling of the Supreme Court dated 25.04.2023 passed in Civil Appeal No(s). 3802 – 3803 of 2020 in the case of M/s. N.N. Global Mercantile Pvt. Ltd. (supra) which is alluded to herein above. These matters were heard on 02.05.2023. Though the above decision was pronounced on 25.04.2023, the copy of the same was placed before me after the hearing was concluded in the present cases. In the interregnum the judgment was reserved.

13. After the decision was reserved in the present cases, the learned Amicus Curiae has brought to my notice the decision in M/s. N.N. Global Mercantile Pvt. Ltd. (supra) delivered by the Constitution Bench and had placed a copy of the same before me. I would like to record my appreciation for the efforts put in by the learned Amicus Curiae Advocate Mr. Priyank Kapadia at a very short notice after being appointed in order to assist me in hearing both the above matters. I would also like to record that the submissions made by the learned Amicus Curiae on all aspects of the matter concerning both rival submissions was with indepth analysis on facts as well as on law and this Court therefore appreciates the services rendered by the learned Amicus Curiae.

14. Hence in view of the above observations and findings, the two Fixture Notes both dated 12.05.2021 which contain the Arbitration Agreement in the present case are directed to be impounded by the learned Prothonotary and Senior Master of this Court and directed to be sent to the Competent Authority under the Stamp Act for stamping in accordance with law. It shall be open to the Applicant to deposit the insufficient stamp duty in accordance with law after adjudication and thereafter approach this Court for its enforcement. I clarify that I have not opined on any of the other issues which have been argued and alluded to herein above on merits.

15. With the above directions, both Arbitration Applications stand disposed. [ MILIND N. JADHAV, J. ] Ajay TRAMBAK UGALMUGALE